TaxTMI 
TaxTMI 
2025 (3) TMI 2166
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....f 1.27 acres of land situated at Ramanathapuram Village, Coimbatore on 31.03.2016 to M/s. Hindusthan Educational & Charitable Trust, Coimbatore for a consideration of Rs. 18,92,30,000/- vide document No.1213/2016 dated 31.03.2016 registered in the Sub- Registrar Office, Peelamedu, Coimbatore. According to AO, the impugned transfer of land was not disclosed by the assessee in the return of income and that he did not offer the corresponding capital gains to tax and therefore he formed a reasonable belief that income chargeable to tax had escaped assessment in the relevant year and accordingly reopened assessment for AY 2016-17 u/s. 147 of the Act. It is noted that, in response to notices u/s. 142(1) of the Act, the assessee filed physical copy of income-tax return along with computation of total income and that he did not admit any capital gain qua the aforesaid property. The assessee is noted to have contended that, he was only the title owner of the property which he had conveyed during the year but the property was beneficially owned and was in physical possession of one Mr. T.S.R. Khannaiyann (in short 'TSRK') having PAN AFZPK7832C, who had actually transferred the proper....
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....ansfer of the impugned property viz., in excess of Rs. 18 Cr., as his taxable capital gains in his return of income for AY 2016-17. It was further pointed out to the Ld.CIT(A) that the AO conveniently didn't take notice of the later developments i.e., pursuant to search in the premises of Mr. TSRK on 06.03.2019, the Central Circle AO framed assessment u/s.153A of the Act wherein Mr. TSRK had again admitted and offered capital gains on sale of this impugned property and that upon verification of the facts, the same was accepted by the Department. The assessee also brought to the notice of the Ld. CIT(A), that Mr. TSRK by letter dated 05.06.2024 filed before his Ld. CIT(A) had withdrawn the grounds of appeal raised in the original assessment matters, against the action of the AO adding the capital gains of Rs. 18 CRs. from the sale of ibid property registered vide document No.1213/2016 dated 31.03.2016. On these contemporaneous facts, the assessee is noted to have urged before the Ld. CIT(A) that, the reasons given by the AO in the present case to repel the contention of the assessee that Mr. TSRK had not accepted the taxability of capital gains arising from sale of impugned prop....
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....sed u/s.153A of the Act dated 10.08.2021 in the case of Mr.TSRK [refer Page Nos.46-48 of PB]. (v) Order passed u/s.148A(d) of the Act dated 07.04.2023 in the matters of Mr. TSRK for AY 2016-17 [refer Page Nos.49-51 of the PB] 7. Per contra, the Ld. DR for the Revenue supported the order of the lower authorities and argued that since the assessee was a party to the Sale Deed, the capital gains was rightly brought to tax in his hands. 8. We have heard both the parties and perused the records. The sole issue involved in the present appeal is regarding the taxability of the capital gains arising from the transfer of immovable property at Coimbatore which was registered vide document No.1213/2016 dated 31.03.2016. From the material placed on record, it is noted that, the assessee, Shri Ramasami Palanisamy, had originally purchased the property in question [1.27 acres of land situated at Ramanathapuram village, Coimbatore] by Sale/Purchase Deed dated 19.11.1991 and further by Release Deed dated 31.05.1993. It is observed that, for purchasing this property, the assessee had availed loan of Rs. 1,29,307/- from Mr. TSRK. However, since the assessee could not re-pay the loan, ....
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....se of assessment proceedings, he sought to withdraw his capital gains offered in respect of the property in question, but the AO didn't accept the same and treated Mr. TSRK to be the seller/transferor of the impugned property and assessed the capital gains to tax in his hands and accordingly passed the assessment order u/s.143(3) of the Act dated 30.12.2018, by observing as under: - 12. ...........The entire sale consideration has been received by him and his wife from the Trust and the TDS has been deducted for the entire amount only in the name of the assessee. ....................... The payment of sale consideration by the HindusthanEductaional and Charitable Trust, the purchaser, to the assessee and his wife, deduction of tax at source in the PAN of assessee, the assessee admitting long term capital gain in his ) return of income, wrong PAN quoted in sale deed, non-appearance of the said seller Shri Palanisamy in response to summons u/s 131, all of these go on prove that the property in question is in fact belongs to the assessee and he transferred the same to Hindusthan Educational and Charitable Trust and the entire sale consideration was received by him and his....
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....note of by us, is as follows: - i) That capital gains from the sale of property as per document No.1213/2016 dated 31.03.2016 should not be taxed in his hands. ii) The gain from the sale of property couldn't have been taxed as business income but only as capital gains. 13. It has been brought to our notice that, by letter dated 05.06.2024, Mr. TSRK has withdrawn Ground No.1 meaning that he has withdrawn the grounds raised against the action of the AO taxing the profit/gains from the sale of property vide document No.1213/2016 dated 31.03.2016, copy of which is found placed at Page Nos.42-43 of the Paper Book. Accordingly, we observe that, the only issue impugned in appeal is regarding the correct `head of income' under which the gains from sale of property is to be taxed; and that, Mr. TSRK had admitted, and accepted the AO's action of assessing him as the rightful owner/seller of the property. Having regard to these facts, which could not be controverted by the Ld. DR as well, we agree with the assessee that, when Mr. TSRK had already been assessed to tax qua the income from sale of impugned property treating him to be the owner for income-tax purp....
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....omputed at Rs. 35,17,44,221/-. Accordingly, the assessment is completed as under: Returned Income u/s 153A Rs. 35,13,69,000 Less: LTCG admitted by the assessee Rs. 35,07,66,456 Income from other heads of income Rs. 6,02,544 Add: LTCG treated as income from business Rs. 35,17,44,221 Add: Income from House Property Rs. 2,39,567 Assessed Income Rs.35,25,86,332 15. Thus, from the events discussed (supra), it is noted that the capital gains/profit from the transfer of property in question registered vide document No.1213/2016 dated 31.03.2016 had already been brought to tax by the Revenue in the hands of Mr. TSRK treating him to be the rightful owner for income-tax purposes. However, it is observed that, the Revenue still did not stop there in the matters of Mr. TSRK, but again issued notice u/s.148A(b) of the Act on 20.03.2023 for AY 2016-17 conveying their intention to again re-open his assessment for AY 2016-17 on this same issue (information shared by the AO of the assessee) that, since the payment upon sale of property was received by Mr. TSRK in his bank account, the same was to be brought to tax in his hands i.e. Mr. TSRK. We observe that, t....
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....second time. 9. It is also gathered from records that, a sum of Rs. 25,14,24,600/- has been added in the hands of M/s. Hindusthan Educational and Charitable Trust for the same year (AY 2016-17) as excess consideration. 10. After considering the material available on record and the reply of the assessee, I am satisfied that it is not a fit case for issue of notice u/s.148 of the I.T. Act. This order u/s.148A(d) is issued with the prior approval of DGIT(Inv), Chennai for the AY 2016-17 as per the provisions of section 151(ii) of the IT Act. (emphasis supplied) 16. Thus, from the above, it is noted that not only the AO, but his superior authorities including the DGIT(Inv), Chennai had agreed to the fact that, the ownership of the impugned property for income-tax purposes was with Mr. TSRK, and that the sale consideration of Rs. 18.32 crores belonged to him and that he being the right person was assessed to tax in relation income from sale of the impugned property. Accordingly, we find that the Revenue had identified and already held Mr. TSRK to be the right person who is liable to be taxed, in accordance to law, with respect to the income/gain arising from tran....