TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 581
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....essment year is 2009-10. Since connected issues are involved, these appeals were heard together and are being disposed off by way of this common order for the sake of convenience. 2. Briefly stated, the facts of the case essential for disposal of these appeals are as under :- 2.1 Shri Raghuram P Nambyar purchased in his name a vacant site situated at No.1088, HAL 2nd Stage, Indiranagar, Bangalore-560 038 vide registered sale deed dt.8.12.1986 from one Dr. R. Syed Umar for a consideration of Rs. 13 lakhs. Subsequently, a residential property was constructed thereon in the financial year 1991-92 and thereafter both these assessees i.e. husband and wife, resided therein. After sometime, the said property was let out and the assessees both husband and wife declared 50% of the rent received from tenants in their respective hands in their returns of income from Assessment Year 1993-94 onwards. 2.2 The said property in the name of Raghuram Nambyar was sold to one Sri S. Venkata Ramanan vide registered sale deed dt.30.6.2008 for a total consideration of Rs. 7,04,00,000. The Long Term Capital Gains ('LTCG') on sale of the aforesaid property was computed at Rs. 6,00,90,049 after claiming ....
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.... Assessing Officer completed the assessment under Section 143(3) of the Act vide order dt.27.12.2011 determining the assessee's taxable income at Rs. 7,47,817 comprising only of the income declared under the head "Other Sources" as against income of Rs. 69,17,415 declared by the assessee. 2.5 Smt. Veena Nambyar, being aggrieved by the order of assessment dt.27.12.2011 for Assessment Year 2009-10, preferred an appeal before the CIT (Appeals) - 4, Bangalore which was dismissed by the learned CIT (Appeals) holding that " Since the issue of taxability of capital gains offered by the assessee in the hands of Smt. Raghuram P Namabyar is yet to be finalized by the Assessing Officer and the final outcome in appeal is not clear, the action of the Assessing Officer is confirmed on protective basis subject to the outcome in the case of Sri Raghuram P Nambyar in the higher appellate stages." 2.6 In the case of Sri Raghuram P Nambyar, the assessment proceedings for Assessment Year 2009-10 was initiated by the Assessing Officer under Section 147 of the Act, in view of the fact that the Assessing Officer in the case of the wife Smt. Veena Nambyar, held that the appropriation of LTCG on sale....
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....ning of assessment becomes bad in law and consequently the order as passed/confirmed being also bad in law is required to be quashed. 2.2 The learned Commissioner of Income tax (Appeals) has instead of quashing the impugned order on the above grounds, has just confirmed the order of Assessing Officer without properly considering the fact and circumstances of the case, submissions of the appellant and the law applicable. 3. The assessing officer had in any case, erred in assessing the Long term capital gain earned on sale of residential house held jointly by the appellant as well as the wife of the appellant in the hands of appellant only and the learned CIT(A) has erred in confirming the same. On the facts and circumstances of the case and the law applicable, the action of authorities below being totally erroneous both on facts and law is to be disregarded. 4.1 In any case and without further prejudice, the authorities below have erred in: a) Not appreciating the fact that the property sold was held by the appellant and the wife of the appellant jointly. b) Not appreciating the fact that the rentals received from letting of aforesaid property were offered to tax in e....
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....he Immovable Property sold. 4. The learned CIT (Appeals) failed to appreciate the fact that the revenue has accepted the return filed by the appellant for the earlier years offering 50% of the total rental receipts as income from the house property and the ld. Assessing Officer failed to apply the rule of consistency and now cannot change his opinion for this assessment year under the facts and circumstances of the case. 5. The learned CIT (Appeals) is not justified in law in upholding the disallowance of the claim of exemption under Section 54EC of the Act of Rs. 50,00,000 invested in the REC Bonds under the facts and circumstances of the case. 6. The learned CIT (Appeals) is not justified in law in upholding the disallowance of the claim of exemption made by the ld. Assessing Officer under Section 54 of the Act of Rs. 1,68,75,427 invested in the purchase of the new residential property at 'Mantri Espana' under the facts and circumstances of the case. 7. The learned CIT (Appeals) is not justified in law in not allowing the further claim of exemption under Section 54 / 54F in respect of the sum of Rs. 20,00,000 deposited into the capital gains account of the appellant o....
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....e purchase of the aforesaid property was effected by equal contributions by both of them. According to the assessees, pursuant to the purchase of the said property, both husband and wife came into joint possession of the said property and thereafter in F.Y. 1991-92, both of them jointly constructed the residence thereon with equal contributions from both of them from out of their earnings and savings. It was also submitted by the assessees that the rent received from letting out the said property was also equally shown in their respective hands as income from house property in the earlier year and the same has been accepted by the Department. Therefore, according to the assessees, their intentions were that the said property was a joint property and both of them having equal share therein, are both co-owners thereof. It is the assessee's contention that merely because in the purchase deed dt.8.12.1986 and sale deed dt.30.6.2008, under which the said property together with house constructed thereon was sold was only in the name of Sri Raghuram P Nambyar, it does not take away the 50% right in the ownership and enjoyment of the property sold from Smt. Veena Nambyar. In this regar....
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....that the said property was purchased by Shri Raghuram P Nambyar alone and he is the sole owner of the said property. It was also submitted that no evidence to controvert this admission has been brought on record to establish the assessee's claims that Smt. Veena Nambyar had contributed 50% of the purchase consideration for purchase of the aforesaid property in 1986. Moreover, in the assessment for Assessment Year 2007-08 in case of Smt. Veena Nambyar, the Assessing Officer has not considered the issues of joint ownerships of the aforesaid property, therefore the assessee's contention that Department has accepted her joint ownership of the property is incorrect. It was further argued that the assessee Smt. Veena Nambyar was a citizen of Malaysia when the property was purchased in 1986 and as per law permission of the RBI is required for her to acquire or hold or transfer or dispose by sale any immovable property situated in India and it has not been established with any documentary evidence to the effect that such permission was obtained by her in respect of the purchase of the aforesaid property. In this factual situation of the matter, Smt. Veena Nambyar cannot enjoy the b....
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.... before the sale thereof on 30.6.2008 was offered / declared by both the assessees, Shri Raghuram P Nambyar equally in their returns of income and were assessed in their respective hands. In our considered view, after a careful consideration of the relevant material on record in this regard, the mere fact that both the husband Shri Raghuram P Nambyar and wife Smt. Veena Nambyar have suo moto offered rental income equally in their returns of income, does not confer ownership in the aforesaid property on Smt. Veena Nambyar. As per the recitals in the purchase and registered sale deeds of the aforesaid property, Shri Raghuram P Nambyar alone is the sole legal owner of the said property to the exclusion of all others, including his wife Smt. Veena Nambyar whose name does not appear in the capacity of owner / co-owner in either the purchase or sale deed of the aforesaid property. Ownership has to be considered from the recitals of the relevant documents and not from any stated intention or claim made which is legally unsustainable. In this factual matrix of the cases on hand, we find no merit in the assessee's contentions that Smt. Veena Nambyar had 50% ownership in the aforesaid pr....
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....r husband Shri Raghuram P Nambyar. 4.3.4 One of the contentions taken by the learned Authorised Representative for the assessee, Smt. Veena Nambyar, was that she had contributed to the purchase of the vacant site originally and also contributed an equal share towards the construction of the residential thereon. In this regard copies of certain Bank Accounts of Andhra Bank (Placed at pages 73 to 83 of Paper Book) filed before the authorities below were also placed before us in an attempt to show that Smt. Veena Nambyar had contributed equally to the purchase of the aforesaid vacant site No.1088, HAL II Stage, Indiranagar, Bangalore vide Registered Purchase Deed dt.8.12.1986. In our view, this claim is factually and legally untenable as at that time, admittedly, the assessee Smt. Veena Nambyar was a Malaysian citizen employed in Saudi Arabia and could not have purchased any property in India without the permission of the Reserve Bank of India (RBI). No such permission of the RBI as required by law has been placed before the authorities below or us. In this factual and legal matrix of the case, we uphold the view of the authorities below that Shri Raghuram P Nambyar alone is the purc....
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....erial on record; including the judicial pronouncements cited. On an appraisal of the aforesaid material on record and the orders of the authorities below, we find that the reasons recorded by the Assessing Officer for initiating proceedings under Section 147 of the Act have been properly recorded, setting out the facts of the case on hand leading to formation of belief that income of the assessee, Shri Raghuram P Nambyar, had escaped assessment due to the fact that, in spite of his being the sole owner of the property purchased on 8.12.1986 and sold on 30.6.2008 as per the recitals in the registered deed, he had offered only 50% LTCG in his hands and incorrectly offered the remaining 50% LTCG in the hands of his wife Smt. Veena Nambyar. In our view, there was tangible material before the Assessing Officer to form the reason to believe that income of the assessee had escaped assessment. At the stage of initiation of proceedings it is not necessary that escapement of income need be established, but there should be formation of belief by a reasonable person based on relevant material. In our view, the Assessing Officer has succinctly set out the facts of the case and recorded the reas....