Shri Dnyaneshwar Narayan Mulik, v. DCIT (Head Quarter -II),

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 1698 /PN/200 7 ( ASSTT. YEAR : 1999 - 2000 ) SHRI. DNYANESHWAR NARAYAN MULIK OPP. MARUTI MANDIR AT & P. VADGAON SHERI TAL. HAVE LI DIST. PUNE 411010 PAN : NOT AVAILABLE .. APPELLANT V. DEPUTY COMMISSIONER OF INCOME - TAX (HEAD QUARTERS II) PMT BUILDING PUNE - 411037 . RESPONDENT APPELLANT BY : MRS. DEEPA KHARE RESPONDENT BY : S/ SHRI HARESHWAR SHARMA / A.S.SINGH ORDER PER I.C. SUDHIR J M THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ASSESSMENT OF CAPITAL GAIN AS MADE BY THE LEARNED A O & IN FURTHER ENHANCING THE SAME TO RS. 10 2616503/ - WITHOUT APPRECIATING THE FACTS & CIRCUMSTANCES OF THE CASE & ON INCORRECT INTERPRETATION OF LAW IN HOLDING THAT THERE WAS ANY TRANSFER DURING THE YEAR UNDER APPEAL. 2. THE DECISION OF HONORABLE TRIBUNAL ON WHICH THE LEARNED CIT(A) RELIED FOR HOLDING THAT THERE WAS A TRANSFER HAS NOT BECOME FINAL AS THE SAME IS SUBJECT MATTER OF FURTHER APPEAL BEFORE THE HONORABLE BOMBAY HIGH COURT. THE DECISION EVEN OTHERWISE REQUIRES RECONSIDERATION AS THE ASSUMPTIONS MADE THEREIN ARE INCORRECT. 3. THE LE ARNED CIT(A) ERRED IN NOT APPRECIATING THAT M/S. KOLTE PATIL ENTERPRISES WERE NOT THE PURCHASERS OF THE PROPERTY BUT MERELY ENTRUSTED TO EFFECT THE SALE OF THE PROPORTIONATE LAND OF THE ASSESSEE TO THE UTIMATE BUYERS OF FLATS / UNITS & THAT THEREFORE THE POSSESSION & POWER OF ATTORNEY GIVEN TO THEM HAD NO RELEVANCE FOR DETERMINING THAT THERE WAS ANY TRANSFER OF LAND TO THEM. HE SHOULD HAVE DETERMINED THE QUESTION OF TRANSFER WITH REFERENCE TO EACH INDIVIDUAL PURCHASER OF FLAT / UNIT. ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 2 4. THE LEARNED CIT(A ) FAILED ALSO TO APPRECIATE THAT THE SO - CALLED 225 AGREEMENTS WERE FICTIONAL & THEY WERE IN ALL RESPECT SHAM & INEFFECTIVE IN LAW & THE COMPUTATION OF CAPITAL GAIN COULD NOT BE BASED ON THE SAME. 5. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THAT NO PR OPER COMPLIANCE WAS MADE BY THE LEARNED AO IN GIVING EFFECT TO THE ORDER OF HONORABLE TRIBUNAL. THE OPPORTUNITY TO BE HEARD EVEN IF MEANT FOR COMPUTATION OF CAPITAL GAIN COULD RESULT IN COMPUTATION AT NIL IF THE FACTS & CIRCUMSTANCES SO WARRANTED. 6. W ITHOUT PREJUDICE TO GR. NO. 1 TO 5 ABOVE & ASSUMING WITHOUT ADMITTING THAT ANY CAPITAL GAIN DID ARISE IN THE YEAR UNDER APPEAL THE REASONS GIVEN BY THE LEARNED CIT(A) FOR ENHANCEMENT WERE NOT TENABLE IN LAW & ON FACTS. 7. THE LEARNED CIT(A) FAILED TO GR ANT OPPORTUNITY TO THE ASSESSEE IF THE CAPITAL GAINS WERE ASSESSABLE AT ALL TO BRING ON RECORD THE CORRECT VALUE OF THE LAND AS ON 01.04.1982. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE LOWER AUTHORIT IES MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF AS PER THE ORDERS OF THE AUTHORITIES BELOW ARE THAT ASSESSEE OWNED ANCESTRAL LAND ADMEASURING 8.25 HECTARES IN TAL: HAVELI UNDER DISTRICT PUNE. THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 20 TH JUNE 1996 WITH M/S. KOLTE PATIL ENTERPRISES AND DEVELOPER/PROMOTER/BUILDER TO SELL PROPORTIONATE UNDIVIDED SHARE OF FSI IN THE SAID PROPERTY FOR A CONSIDERATION OF RS. 550/ - PER SQ. FT. IT WAS AGREED THAT THE PROMOTER/DEVELOPE R WOULD COLLECT SUCH AMOUNTS FROM PROSPECTIVE PURCHASERS AT THE TIME OF AGREEMENT AND HAND OVER THE SAME TO THE OWNERS AS PER ACTUAL COLLECTION. THE ASSESSEE ALSO EXECUTED A GENERAL POWER OF ATTORNEY DATED 29 TH JUNE 1996 IN FAVOUR OF THE ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 3 BUILDER/DEVELOPER M/S. KOLTE PATIL ENTERPRISES. STILL ANOTHER AGREEMENT WAS ENTERED INTO WITH THE BUILDER/DEVELOPER ON THE SAME DAY WHEREIN THE BUILDER/DEVELOPER WAS REQUIRED TO CONSTRUCT CERTAIN AMENITIES AND COMPLEX BEING MANGAL KARYALAY GRDEN HOTEL CINEMA HALL HOTE L RESIDENTIAL BUNGALOW ETC. AND COST OF CONSTRUCTION WAS AGREED TO BE ADJUSTED AGAINST THE AMOUNT DUE AND PAYABLE BY M/S. KOLTE PATIL ON ACCOUNT OF PURCHASE/TRANSFER OF FSI AT THE RATE OF RS. 500/ - SQ.FT. IN TERMS OF EARLIER AGREEMENT ON THE SAME DAY. A SURVEY WAS CONDUCTED U/S. 133A OF THE ACT. FURTHER ENQUIRIES WERE MADE BY THE A.O AND INFORMATION WAS RECEIVED FROM BUILDER/DEVELOPER. ON THESE BASIS THE A.O ASSESSED THE CAPITAL GAIN AT RS.3 92 74 464/ - . THE SAME WAS UPHELD BY THE LD CIT(A) . THE TRI BUNAL HOWEVER SET ASIDE THE ORDER AND REMANDED THE MATTER TO THE FILE OF THE A.O FOR MAKING AVAILABLE ALL THE INFORMATION/DOCUMENTS FILED BEFORE THE A.O BY THE BUILDER/DEVELOPER TO THE ASSESSEE AND TO GIVE OPPORTUNITY TO CROSS - EXAMINE AND COMPUTE THE QUA NTUM OF CAPITAL GAINS TO BE ASSESSED IN THE A.YS. 1997 - 98 AND 1998 - 99 AND 1999 - 2000. IN THE ASSESSMENT ORDER U/S. 143(3) READ WITH SECTION 254 DATED 29.12.2006 THE A.O HAS COMPUTED THE CAPITAL GAIN AT RS. 8 83 15 353/ - AND TOTAL INCOME HAS BEEN DETERMINE D AT RS. 9 01 39 370/ - . THE LD CIT(A) HAS ENHANCED THE CAPITAL GAIN OF RS. 8 83 15 353/ - TO RS. 10 26 16 503/ - AFTER ALLOWANCE OF INDEXED COST ENHANCING INCOME BY 1 43 01 150/ - . THE ASSESSEE HAS QUESTIONED THIS FIRST APPELLATE ORDER BEFORE US. 4. BEFO RE THE TRIBUNAL THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WITH ASSERTION THAT M/S. KOLTE PATIL ENTERPRISES (DEVELOPER) WAS NOT THE PURCHASER OF THE PROPERTY BUT WAS ONLY ENTRUSTED TO EFFECT THE SALE OF THE PROPORTIONATE L AND OF THE ASSESSEE TO THE ULTIMATE BUYERS OF FLATS/UNITS AND THEREFORE THE POSSESSION AND POWER OF ATTORNEY GIVEN TO THEM DO NOT HAVE RELEVANCE FOR DETERMINING THAT THERE WAS ANY TRANSFER OF LAND TO THEM. THE AUTHORITIES BELOW SHOULD HAVE DETERMINED TH E QUESTION OF TRANSFER WITH REFERENCE TO EACH INDIVIDUAL PURCHASER OF FLAT/UNIT. SHE SUBMITTED THAT THE SO - ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 4 CALLED 225 SALE AGREEMENTS WERE FICTIONAL AND THEY WERE IN ALL S H AM AND INEFFECTIVE IN LAW. THUS THE COMPUTATION OF CAPITAL GAIN COULD NOT BE B ASED ON THE SAME. THE LD. A.R SUBMITTED FURTHER THAT THE LD CIT(A) ALSO FAILED TO CONSIDER THAT THE ORDER DT. 21 ST JUNE 2005 OF THE TRIBUNAL IN ITA NO. 994 995/PN/2003 AND 315/PN/2005 HAS NOT BEEN FULLY COMPLIED WITH BY THE A.O. SHE SUBMITTED THAT NO F SI HAS BEEN SOLD DURING THE YEAR. SHE ALSO REFERRED THE FOLLOWING LIST OF EVENTS REPRODUCED BY THE LD CIT(A) AT PAGE NO. 18 & 19 OF THE FIRST APPELLATE ORDER. SR.NO. DATE EVENTS 1 4.10.95 LAND AT S.NO.16/1 VADGAON SHERI PUNE - 14 RELEASED U/S(1) OF UL C ACT 1976. 2 20.6.96 AGREEMENT WITH KOLTE - PATIL ENTERPRISES PUNE FOR SELLING UNDIVIDED FSI ON LAND AT S.NO. 16/1 VADGAON SHERI PUNE 411 014 TO THE PROSPECTIVE BUYERS OF A FLAT / TENEMENT PURCHASERS WHO SHALL ENTER INTO AN AGREEMENT WITH THE PRTOMOT ER/BUILDER. 3 20.6.96 POWER OF ATTORNEY IN RESPECT OF LAND OF SR. NO. 16/1VADGAON SHERI PUNE 411 014 WAS GIVEN TO SHRI. RAJESH A. PATIL & MILIND D. KOLTE IN ORDER TO FACILITATE THE AGREEMENT TOOK PLACE AS ABOVE. 4. 20.06.96 ASSESSEE ENTERED INTO AN AG REEMENT FOR CONSTRUCTION OF MANGAL KARYALAYA GARDEN HOTEL CINEMA HALL & RESIDENTIAL BUNGALOW. 5. 21.06.96 SUPPLEMENTARY AGREEMENT ENTERED WITH M/S. KOLTE PATIL ENTERPRISES PUNE 6. 08.08.96 COLLECTOR PUNE PASSED THE N.A. ORDER FOR ABOVE LAND. 7 31 .08.97 RETURN OF INCOME TAX FOR A.Y. 1997 - 98 FILED. 8 05.06.98 PLAN SANCTIONED BY PMC 9 12.11.98 ASSESSEE TERMINATED AGREEMENT DT. 20.06.1996 FOR CONSTRUCTION OF AMENITIES FOR THE ASSESSEE. 10 24.12.98 POWER OF ATTORNEY DT. 20.06.1996 CANCELLED. 11 31.12.98 FACT OF CANCELLATION OF POWER OF ATTORNEY PUBLISHED IN LOCAL NEWSPAPER. 12 05.01.99 ASSESSEE CANCELLED AGREEMENT FOR SALE OF FSI TO PROSPECTIVE BUYERS DT. 20.06.1996 & 21.06.1996 13 13.01.99 FACT OF CANCELLATION OF AGREEMENT PUBLISHED IN LOCAL N EWSPAPER. 14 17.02.99 RETURN OF INCOME FOR A.Y. 1998 - 99 FILED. 15 - VARIOUS CIVIL SUITS FILED BY THE ASSESSEE AGAINST KOLTE PATIL ENTERPRISES. ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 5 16 31.08.99 RETURN OF INCOME FOR A.Y. 1999 - 2000 FILED. 17 12.01.01 LETTER BY KOLTE PATIL ENTERPRISES TO THE A SSESSING DCIT CIRCLE 2(4) PUNE 18 31.01.01 LETTER BY KOLTE PATIL ENTERPRISES TO THE ASSESSING DCIT CIRCLE 2(4) PUNE 19 08.02.01 LETTER BY KOLTE PATIL ENTERPRISES TO THE ASSESSING DCIT CIRCLE 2(4)PUNE. 20 11.12.01 SEARCH & TITLE REPORT OF ADV. VAMAN S . SOLANKAR OBTAINED 21 15.12.01 LETTER FROM P M C STATING DATE OF COMMENCEMENT AS 12.11.1998 22 20.02.03 REMAND REPORT SUBMITTED BY AO TO CIT(A) CONTAINING DETAILS & COPIES OF ALLOTMENT LETTER. 23 21.06.05 ORDER OF ITAT PUNE PASSED DIRECTING REASSESS MENT IN THE MATTER BY GIVING CROSS EXAMINATION TO THE ASSESSEE OF CERTAIN PERSONS 24 30.12.06 RE - ASSESSMENT PROCEEDINGS COMPLETED BY LEARNED DCIT CIRCLE - II PUNE ' 5. THE LD. A.R. REFERRED PAGE NO. 39 CONTENTS OF CL AUSE NO. 3 AT PAGE NOS. 6 OF THE AGREEMENT DATED 20 TH JUNE 1996 WITH THE DEVELOPER COPY MADE AVAILABLE AT PAGE NOS. 384 TO 406 OF THE PAPER BOOK. IN THIS CLASUE NO.3 AT PAGE NO. 6 IT WAS AGREED UPON THAT IT SHALL BE RESPONSIBILITY OF PROMOTER/DEVELOPER TO COLLECT THE AGREED AMOUNT OF CONSIDERATION FROM INDIVIDUAL PROSPECTIVE PURCHASER AT THE TIME OF AGREEMENT AND /AS BEYOND THE CONVEYANCE BETWEEN THE OWNERS AND FLAT PURCHASERS AND HAND OVER THE SAME TO THE OWNER AS PER ACTUAL COLLECTIONS. THE DEVELOPER HOWEVER VIOLATED THESE TERMS OF AGREEMENT AS NONE OF THE AGREEMENTS OR CONVEYANCE WERE EXECUTED BY THE DEVELOPER WITH/TO THE BUYERS WITH CONSENT OF THE OWNER AS NONE OF THESE DOCUMENTS HAS BEEN SIGNED BY THE OWNER AS PER THE TERMS OF THE AGREEMENT. THE DEVELOPER THE POWER ATTORNEY HOLDER WAS SUPPOSED TO ENTER IN AGREEMENT WITH THE PURCHASER FOR CONSTRUCTION OF FLAT/TENEMENT. THUS IF AT ALL THE PROMOTER/DEVELOPER CLAIMS TRANSFER OF ANY FSI TO ANY OF THE SO - CALLED BUYERS HE WAS FIRST SUPPOSED TO PRODUCE THE AGREEMENT WITH THE SAME BUYER FOR CONSTRUCTION OF THE FLAT/TENEMENT. IN THE PRESENT CASE THE DEVELOPER/PROMOTER HAS NOT BROUGHT ANY ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 6 AGREEMENT FOR CONSTRUCTION OF FLAT/TENEMENT WITH THE SAME BUYER. THE SO - CALLED CLAIM OF TRANSFER OF FSI VIDE LETTER DATED 13 TH JANUARY 2001 28 TH JANUARY 2001 AND 10.2.2001 HAS BEEN FURNISHED BY THE DEVELOPER TO SUBSTANTIATE HIS CLAIM FOR TRANSFER OF FSI HAVE BEEN FURNISHED FOR THE FIRST TIME DURING THE COURSE OF ENQUIRY DIRECTED BY THE LD CIT(A). THESE LETTER S WERE NOT MADE AVAILABLE BEFORE THE A.O THOUGH IT WAS SPECIFICALLY ASKED BY THE A.O TO SUBSTANTIATE HIS CLAIM FOR TRANSFER OF FSI. THESE LETTERS DO NOT CONTAIN THE SIGNATURES OF THE SO - CALLED PURCHASERS OF FSI. THEIR IDENTITY ADDRESS HAVE ALSO NOT BEE N WRITTEN ON THOSE ALLOTTMENT LETTERS. THE LD. A.R. SUBMITTED FURTHER THAT AS PER THE DIRECTIONS OF THE TRIBUNAL THE ASSESSEE HAD REQUESTED THE A.O FOR ALLOWING HIM CROSS - EXAMINATION OF DEVELOPER/BUILDER AND CERTAIN OTHER PERSONS WHO WERE CLAIMED TO BE THE SO - CALLED PURCHASER OF FSI. THE A.O HOWEVER DID NOT ALLOW THE SAID REQUEST OF THE ASSESSEE. INSTEAD THE A.O ALLOWED CROSS - EXAMINATION OF MR. MILIND KOLTE INSTEAD OF MR. RAJESH A. PATIL WHO WAS THE OTHE R PARTNER OF THE DEVELOPER FIRM WHO HAD ACT UALLY DEALT WITH 89% OF THE SALE DEEDS AND THUS HE WAS FULLY CONVERSANT WITH THE ALLEGED TRANSACTIONS. OUT OF 225 SALE DEEDS REGISTERED 200 WERE REGISTERED ON 15.12.1998 WHICH WERE SIGNED BY MR. RAJESH PATIL. ON THE CONTRARY MR. KOLTE HAD SIGNED ONLY 25 SALE DEEDS REGISTERED ON 16.12.1998. BOTH THESE PARTNERS WERE POWER OF ATTORNEY HOLDER FOR THE FIRM ON BEHALF OF THE ASSESSEE. EVEN THE A.O HELD THAT NON - ATTENDANCE OF MR. RAJESH PATIL FOR CROSS - EXAMINATION WOULD NOT SUFFICE THE PURPOSE FOR WHICH T HE TRIBUNAL HAD SET ASIDE THE MATTER. THE LD. A.R. SUBMITTED FURTHER THAT ON QUERIES REGARDING THE EXISTENCE OF SO - CALLED PURCHASERS AND ACTUAL HANDING OVER OF MONEY BY THE DEVELOPER TO ASSESSEE AS AGREED UPON MR. KOLTE HAS GIVEN EVASIVE REPLY. THE LD . A.R. SUBMITTED FURTHER THAT SENSING FOUL PLAY BY THE DEVELOPER THE ASSESSEE HAD CANCELLED THE AGREEMENT DATED 20 TH JUNE 1996 AND POWER OF ATTORNEY OF THE SAME DATE I.E. 20.6.1996. VARIOUS CIVIL SUITS WERE FILED BY THE ASSESSEE AGAINST THE DEVELOPER. SHE SUBMITTED THAT IN ANSWER TO QUESTION NOS. 16 & 17 SHRI KOLTE REPLIED THAT HE DID NOT KNOW AS TO WHETHER THE ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 7 AMOUNT COLLECTED BY M/S. KOLTE PATIL ENTERPRISES FOR SALE OF FSI WAS APPEARING IN THE BALANCE SHEET OR INCOME - TAX RETURN AS ALSO THE INCOME OF THE FIRM BY WAY OF SALE OF SUPER STRUCTURE ITSELF PROVED THAT THE REGISTERED SALE DEEDS WERE FAKE DOCUMENTS ONLY AND WERE REGISTERED IN ORDER TO CREATE THIRD PART Y INTEREST AND ALSO TO BRING THE ASSESSEE IN TROUBLE BEFORE THE INCOME - TAX AUTHORITIES. IN ANSWER TO QUESTION NOS. 22 AND 23 MR. KOLTE REPLIED THAT HE DID NOT KNOW WHETHER THERE WERE SOME ALLOTTMENT LETTERS ISSUED BY HIS FIRM OR NOT AND THE IDENTITIES OF PEOPLE TO WHOM THE FIRM SOLD FSI WAS ALSO NOT KNOWN TO HIM. IN REPLY TO QUESTION NO . 24 MR. KOLTE ANSWERED THAT SIGNATURE FOR ACCEPTANCE OF FSI WAS NOT NECESSARY. THE LD. A.R. SUBMITTED THAT AS PER REPORT OF THE COLLECTOR ( STAMPS ) SIGNATURE OF OTHER PARTY IS A M U ST AND THIS FACT HAS BEEN CERTIFIED BY THE COLLECTOR ( STAMPS ) IN HIS CERTI FICATES. SHE SUBMITTED THAT THERE REMAINS SEVERAL CONTRADICTIONS IN THE CROSS - EXAMINATIONS OF SHRI. KOLTE. IN REPLY TO QUESTION NO. 25 HE SUBMITTED THAT ADDRESSES OF PURCHASES WERE AVAILABLE IN HIS OFFICE AND HE HAD TO VERIFY OFFICE RECORDS WHEREAS IN REPLY TO QUESTION NO. 30 HE COULD NOT COMMENT ANYTHING. UNDER THESE CIRCUMSTANCES IT COULD BE SAFELY INFERRED THAT THE SO CALLED BUYERS WERE NOT IN EXISTENCE AND NO TRANSFER HAS BEEN TAKEN PLACE. MR. KOLTE ALSO COULD NOT ANSWER AS TO WHETHER HIS FIRM WAS SUPPOSED TO SALE SUPER STRUCTURE CORRESPONDING TO THE AVAILABLE FSI OR NOT. THE LD. A.R. SUBMITTED THAT IN ANSWER TO QUESTION NO. 34 MR. KOLTE CLAIMED THAT FSI ADMEASURING 3 63 622 SQ. FT. WAS SOLD. SAME IS NOT CORRECT AS IT HAS BEEN ARGUED EARL IER THAT NO FSI WAS EFFECTIVELY TRANSFERRED AS ALL THE 225 REGISTERED SALE DEEDS WERE AB - INITIO VOID AND THERE WAS NO OTHER REGISTERED DOCUMENTS OTHER THAN THE SAME. THE STATEMENTS GIVEN BY MR. KOLTE WAS MISLEADING AND NOT SUPPORTED BY FACTS . THE LD. A .R. SUBMITTED FURTHER THAT THE TRIBUNAL ON FIRST OCCASION VIDE ITS ORDER DATED 21.6.2005 HAS MADE OBSERVATIONS ABOUT THE COMPLETION OF TRANSFER OF LAND AS PER CLAUSE (V) OF SECTION 2(47) OF THE ACT RELATING TO THE LAND BETWEEN ASSESSEE AND THE DEVELOPER AN D NOTHING HAS BEEN CO VENANTED ABOUT THE TRANSFER OF FSI BETWEEN ASSESSEE AND THE BUYERS. ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 8 ADMITTEDLY THE DEVELOPER WAS NOT THE PURCHASER OF THE LAND BUT THEY HAD TO SALE THE FSI AFTER DEVELOPMENT AGAINST CONSIDERATION RECEIPT ON BEHALF OF THE ASSESSEE M AKING ASSESSEE A SIGNATORY ON EACH COVENANT. LD. A.R. SUBMITTED THAT MR. KOLTE PATIL DURING HIS STATEMENT HAD CLAIMED THAT HE HAD PAID RS. 13 CRORES TO THE ASSESSEE. HE CLAIMED TO HAVE BEEN PAID RS. 21 LAKHS AS DEPOSIT RS. 58 LAKHS TOWARDS ALLEGED FSI S ALE RS. 4 50 000 00/ - BY WAY OF ALLOCATED CONSTRUCTION AND RS. 7 68 94 875/ - TOWARDS DAMAGES DEBITED. SHE SUBMITTED THAT THE FACTUAL POSITION IS THAT THE ASSESSEE GOT ON RECORD THE PART CONSTRUCTION VALUED AT RS. 38.12 LAKHS (APPROXIMATELY) THEREFORE THE AMOUNT CLAIMED FROM ASSESSEE WAS 11.81 TIMES HIGHER THAN THE REAL ONE. 6. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW AND CITED DECISIONS RELIED UPON BY THEM. 7. CONSIDERING THE ABOVE SUBMISSIONS WE ARE OF THE VIEW THAT THE DIRECTIONS OF THE TRIBUNAL VIDE ITS ORDER DT. 21 ST JUNE 2005 ON FIRST OCCASION HAS NOT BEEN PROPERLY COMPLIED WITH BY THE A.O. THOUGH LAW OF EVIDENCE AND EQUITY DOES NOT APPLY IN THE MATTERS OF INCOME - TAX IN ITS STRICT SENSE STILL JU STICE IS REQUIRED TO BE DONE WHILE ADJUDICATING THE MATTER OR FRAMING THE ASSESSMENT. THE AUTHORITIES BELOW SHOULD HAVE DETERMINED THE QUESTION OF TRANSFER WITH REFERENCE TO EACH INDIVIDUAL PURCHASER OF FLAT/UNIT. CAPIITAL GAIN IN THE HANDS OF THE ASSESS EE IS REQUIRED TO BE COMPUTED ON THE AMOUNT ACTUALLY RECEIVED BY THE ASSESSEE ESPECIALLY WHEN THERE IS SERIOUS DISPUTE BETWEEN THE ASSESSEE AND DEVELOPER ON THE VALIDITY OF THE SALE TRANSACTIONS ENTERED INTO BY THE DEVELOPER WITH 225 INDIVIDUALS AND ON THE PASSING OF COLLECTED MONEY BY THE DEVELOPER TO THE ASSESSEE ON THOSE ALLEGED TRANSACTIONS. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT A.O. IS REQUIRED TO FRAME JUST AND PROPER ASSESSMENT. WHEN AN ASSESSEE PROPOSES TO GIVE EVIDENCE OF A MATERIAL F ACT GOES TO THE ROOT OF THE MATTER AND REQUEST FOR SUMMONING SOME WITNESSES IN THIS REGARD IT IS THE DUT Y OF THE A.O TO ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 9 ALLOW THE SAME ESPECIALLY WHEN THERE WAS SPECIFIC DIRECTIONS TO THIS EFFECT BY THE TRIBUNAL TO THE A.O. IT WAS NOT CORRECT TO SAY BY THE AO THAT THE CALLING OF SO - CALLED BUYERS AND SHRI RAJESH PATIL THE OTHER PARTNER OF THE DEVELOPER FIRM M/S. KOLTE PATIL ENTERPRISES ( WHO REMAINED PARTY ON BEHALF OF THE FIRM TO 200 SALE - DEEDS EXECUTED ON 15.12.1998 OUT OF TOTAL SALE DEEDS OF 225 ) WA S NOT RELEVANT ON THE PART OF THE ASSESSEE. IT IS RIGHT OF THE CLAIMANT TO ESTABLISH ITS CLAIM BY FURNISHING EVIDENCE. S UCH DENIAL OF SUCH RIGHT BY THE A.O IS SERIOUS IN NATURE AS IT GOES AGAINST THE MOST REQUIRED PRINCIPLE OF NATURAL JUSTICE. EVEN FOR C OMPUTATION OF CAPITAL GAIN IN THE HANDS OF ASSESSEE AS FELT BY THE TRIBUNAL ON FIRST OCCASION IN ITS ORDER DT. 21 ST JUNE 2005 THAT AFFORDING OPPORTUNITY TO CROSS EXAMINE TO THE ASSESSEE ON THE INFORMATION/DOCUMENTS FILED BY BUILDER DEVELOPER WAS NECESS ARY. IT WAS NECESSARY ALSO BECAUSE A.O WHILE COMPUTING CAPITAL GAIN IN THE HANDS OF THE ASSESSEE HAD RELIED UPON THE INFORMATION/DOCUMENTS FILED BEFORE HIM BY THE BUILDER/DEVELOPER VALIDITY OF WHICH HAS BEEN DISPUTED BY THE ASSESSEE. UNDER THE CIRCUMSTA NCES EXAMINATION OF THE STATED BUYERS AT LEAST SOME OF THEM CHOOSEN BY THE ASSESSEE OUT OF 225 WAS NECESSARY TO VERIFY THE CLAIMED SELLING OF FSI TO THEM BY THE DEVELOPER. THE A.O WAS VERY MUCH EMPOWERED TO SECURE THE PRESENCE OF A WITNESS WHO AVOIDS H IS PRESENCE BEFORE HIM . IN OUR VIEW IN THE PRESENT CASE SHRI RAJESH PATIL THE OTHER PARTNER OF THE DEVELOPER FIRM WHO HAD ENTERED INTO 200 SALE DEEDS ON BEHALF OF THE DEVELOPER IS AN IMPORTANT WITNESS FOR VERIFICATION OF ACTUAL F ACT OF THE ALLEGED TRAN SACTION . SIMILARLY 225 PURCHASERS ARE EQUALLY IMPORTANT WITNESSES TO VERIFY THE ACTUAL TRANSACTION TO COMPUTE CAPITAL GAIN IF ANY IN THE HANDS OF THE ASSESSEE OUT OF THOSE TRANSACTIONS WITH THE SAID PURCHASERS. SINCE THE A.O HAS FAILED IN HIS DUTY BY DENYING OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE ABOVE STATED RELEVANT WITNESSES DESPITE SPECIFIC REQUEST OF THE ASSESSEE TO THIS EFFECT AND DIRECTIONS OF THE TRIBUNAL ON ITS FIRST OCCASION IN THIS REGARD WE ARE HAVING NO OPTION BUT TO REMAND THE MATT ER TO THE FILE OF THE A.O TO AFFORD OPPORTUNITY TO CROSS EXAMINE THE ABOVE STATED WITNESSES AS REQUESTED BY THE ASSESSEE AND COMPUTE THE ITA NO 1698 /PN/200 7 SHRI.DNYANESHWAR NARAYAN MULIK A .Y. 1999 - 2000 PAGE OF 10 10 CAPITAL GAINS IF ANY IN THE HANDS OF THE ASSESSEE OUT OF THE TRANSACTIONS IN QUESTION. SINCE IT IS AN OLD MATTER AND F URTHER OPPORTUNITY IS GIVEN TO THE PARTIES THE A.O IS DIRECTED TO COMPUTE THE CAPITAL GAIN IF ANY IN THE HANDS OF THE ASSESSEE WITHIN 4 MONTHS FROM THE DATE OF RECEIPT OF THE PRESENT ORDER. IT IS NEEDLESS TO MENTION THAT WHILE DETERMINING CAPITAL GAIN IF ANY IN THE HANDS OF THE ASSESSEE BASED ON EVIDENCE AS DIRECTED THE A.O WILL AFFORD ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT APPERAL IS ALLOWED FOR STATISTICAL PU RPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22ND FEBRUARY 201 1 . SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 22 ND FEBRUARY 20 1 1 US COPY OF THE ORDER IS FO RWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT I I PUNE 4. THE CIT(A) - I I PUNE 5. THE D.R. B BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE