2023 (1) TMI 1009

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.... appeal in ITA No. 1311/Ahd/2017 for the A.Y. 2012-13 is treated as a "lead case". In this appeal, the assessee has raised following ground of appeal: "1. On the facts and circumstances of the, the ld. CIT(A) has erred in confirming the addition made by Ld AO of short term capital gain of Rs. 27,28,584/- as against correct short term capital gain computed by appellant of Rs. 6,32,057/-. 2. On the facts and circumstances of the case, the ld. CIT(A) has erred in making enhancement of short term capital gain of appellant." 3. The appellant craves leave to add, amend, modify or delete any of the above grounds of appeal." 2. Brief facts of the case are that the assessee is an individual, filed his return of income for A.Y. 2012-13 on 30/03/2013 declaring income of Rs. 2,96,200/-. The case was selected for scrutiny. During the assessment, the Assessing Officer noted that as per information (AIR) filed by Sub- Registrar, Silvassa, the assessee sold and purchased several immovable properties. The Assessing Officer summarised the details in the following manner: Sr. No. Property Details Sale Consideration amount (in Rs.) Date 1. Immovable prop....

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....aimed in respect of non-agricultural land. The assessee submitted copies of seven bills aggregating of Rs. 6,76,125/- on account of levelling of land. On perusal of such bills, the Assessing Officer noted that one bill of Rs. 2.00 lacs were issued by Ramesh B. Mohite was not in bill format and merely a quotation and not allowable. Accordingly, the Assessing Officer allowed expenses of Rs. 4,45,800/-. The Assessing Officer computed capital gain in the following manner: "1. Land mentioned in para No. 4.     Sale consideration (14.3 acre) Rs. 42,90,000/-   Sale consideration (3 acre) Rs. 09,00,000/-   Total sale consideration   Rs. 51,90,000/- Less: Cost of purchase Rs. 33,50,000/-   Stamp duty Rs. 00,99,500/-   Registration charges Rs. 00,24,926/-   Cost of improvement Rs. Nil Rs. 34,74,426/- Short term capital gain   Rs. 17,15,574/- 2. Land mentioned in Para No. 5     Total sale consideration   Rs. 65,25,00,000/- Less Cost of purchase Rs. 22,25,000/-   Stamp duty Rs. 00,65,800/-   Registrat....

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.... contained the reference of cheque dated 28/03/2012 bearing No. 395568, 395569 and 395570 drawn of Dena Bank of Rs. 3.00 lacs each. Such consideration was not received by assessee and the same cannot be taxed. To substantiate such contention, the assessee furnished his bank statement for Financial Year (FY) 2010-11 and 2012-13. The assessee further stated that he produced Rajesh K Mehta during the hearing and filed his affidavit. The assessee further stated that Rajesh K Mehta was holding possession of land from last 11 years and he demanded huge amount from assessee and his co-owner, ultimately, it was mutually decided to transfer a piece of land without any consideration. Consideration was mentioned in the sale deed for the purpose of registration. Cheques mentioned on the sale deed were never realised either by assessee or by his co-owner. Such fact was admitted by the said purchaser before the Assessing Officer as well as Joint Commissioner of Income Tax (JCIT). There is no evidence that such sale consideration was passed from Rajesh K Mehta to the assessee. To support such contention, the assessee relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs Hemal ....

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....ani Navla Patel and others for purchase of land vide S.R. No. 227/2, it is noted that the assessee has referred the order of revenue department Dadra and Nagar Haveli dated 24/4/2010 to justify such expenses of Rs. 15.55 lacs. In para 18 of said order, it is referred that the seller's widow Nani Navla and others shall purchase agricultural land i.e. Survey No. 22/2 admeasuring 0.80 hectare out of 1.56 hectare of village Falandi from sale consideration of this land till that time the land records will not be mutated in favour of purchasers. On the basis of such observation, the ld. CIT(A) was of the view that from the said order, it was mandated that widow of Nani Navla will purchase 0.80 hectare of land at village Falandi out of sale consideration of land at S.R. No. 227/2. The assessee purchased land vide sale deed dated 12/08/2011 and the said sale deed nowhere mentioned over and above Rs. 22,25,000/- for 2.75 acres of land for SR No. 227/2. Thus, as per clause (18) of order of revenue department, the assessee was not required to pay any such amount. Such condition was on the sale, that prior to mutation of land in favour of purchaser, only to safeguard the interest of widow of l....

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....ircumstances, the lower authorities were not justified in considering such sale consideration. The ld. AR submits that only income earned, accrued or received or realised is to be taxed and not on a hypothetical basis. Since no such amount was received by the assessee, therefore, cannot be considered for taxation. The ld. AR further submits that the assessee along with other co-owner purchased land in Survey No. 227/2/69/1 situated at Moje Dadra & Nagar Haveli from Nani Navla Patel and others vide sale deed dated 22/08/2011 for a sale consideration of Rs. 37,80,000/-. As per para 18 of order of Collector, Dadra & Nagar Haveli dated 24/04/2010 that the sellers of land shall purchase agricultural land from the sale consideration and till that time land record shall not be mutated in favour of purchaser. Thus, in order to get peaceful possession and complete ownership, the assessee paid Rs. 9.00 lacs to seller i.e. Nani Navla Patel and others to purchase agricultural land in the name of sellers. Such amount was borne equally by assessee as well as other co-owner. To support such contention, the assessee filed copy of order of Collector, Dadra & Nagar Haveli dated 24/04/2010, affidavit....

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....o remove all his encumbrances, though, in the sale deed, the consideration of Rs. 9.00 lacs was shown. To prove such contention, the assessee has placed on record the copy of his bank statement as well as bank statement of Rajesh K Mehta. On careful perusal of bank statement of Rajesh K Mehta, I find cheque Nos. 395568, 395569 and 395570 all dated 28/03/2012 drawn on Dena Bank was never encashed or realised either from bank account of Rajesh K Mehta or in the account of assessee. Thus, consideration shown in the sale deed was never passed/received by assessee. Shri Rajesh K Mehta has confirmed his fact in his affidavit. Thus, the said amount was not received by the assessee. It is settled position under law that income which has earned or accrued can only be taxed. In my considered view, once it is shown and proved on record that Rs. 9.00 lacs is not received by the assessee, so such income cannot be considered for taxation in the hands of assessee. So the assessee get relief to that extent. 13. So far as other amount which consists of Rs. 15.55 lacs and Rs. 9.00 lacs which was allegedly incurred by assessee for purchasing of land in the name of Nani Navla Patel as per the direc....