ACIT, Meerut v. Sh. Mukesh Rastogi, Meerut

ITA 5668/DEL/2012 | 2009-2010
Pronouncement Date: 05-07-2013 | Result: Allowed

Appeal Details

RSA Number 566820114 RSA 2012
Assessee PAN AANPR7714F
Bench Delhi
Appeal Number ITA 5668/DEL/2012
Duration Of Justice 7 month(s) 27 day(s)
Appellant ACIT, Meerut
Respondent Sh. Mukesh Rastogi, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 05-07-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 05-07-2013
Date Of Final Hearing 07-05-2013
Next Hearing Date 07-05-2013
Assessment Year 2009-2010
Appeal Filed On 08-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI T. S. KAPOOR ACCOUNTANT MEMBER ITA NO.5668/DEL/ 2012 (ASSESSMENT YEAR : 2009-10 ) ACIT VS. MUKESH RASTOGI CIRCLE-1 S/O PARMANAND 32 JANTA NAGAR GARH ROAD MEERUT MEERUT PAN: AANPR7714F (APPELLANT) (RESPONDENT) REVENUE BY : MRS. A. S. AWASTHI SR.DR. ASSESSEE BY:SHRI R. K. GARG ADV. ORDER PER T. S. KAPOOR AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MEERUT DATED 0 8.08.2012 FOR THE ASSESSMENT YEAR 2009-10. THE GROUNDS TAKEN BY THE R EVENUE ARE AS UNDER: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE ADDITI ON OF RS.45 72 000/- ON A/C OF LONG TERM CAPITAL GAIN IGN ORING THE FACT MENTIONED IN THE SALE DEED THAT THE ASSESSEE WAS CO -OWNER OF THE PROPERTIES SOLD BY HIM WITH M/S AMIT KUMAR HUF. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN ITA NO.5668 /DEL/2012 2 NOT CONSIDERING THE ASSESSING OFFICERS FINDING THA T MERELY BY ENTERING INTO AN MOU OR FILING AFFIDAVIT THE FACT O F ASSESSEES OWNERSHIP OVER THE PROPERTY BY WAY OF REGISTERED SA LE DEED COULD NOT BE CHANGED OR ALTERED NOR IT COULD BE TRE ATED THAT THE ASSESSEE HAD NO INTEREST IN THE SOLD PROPERTIES WHI CH WERE NOT ONLY JOINTLY HELD BY THE ASSESSEE BUT HE WAS ALSO D ULY AND ADMITTEDLY RECEIVING THE RENT THERE FROM AN MNC. 3. WHETHER THE LD. CIT (A) HAS ERRED IN LAW IN IGNO RING THAT ANY INCOME CANNOT BE EXCLUDED FROM TAXATION BY AN I NTERNAL ARRANGEMENT LIKE EXECUTING AN MOU BETWEEN TWO PARTI ES OR FILING AFFIDAVIT WHICH ARE NOTHING BUT OF SELF SERV ING NATURE WHEREAS THE PROPERTIES WERE JOINTLY OWNED BY THE AS SESSEE AS PER REGISTERED SALE DEEDS AND THE INCOME OUT OF SAL E OF THE SAME WAS STATUTORILY AND PROPORTIONATELY TAXABLE IN THE HANDS OF THE ASSESSEE. 4. WHETHER THE LD. CIT (A) HAS ERRED IN LAW IN DISC ARDING THE OWNERSHIP OF THE ASSESSEE BASED UPON THE REGIST ERED SALE DEED MERELY ON THE FLIMSY GROUNDS OF ENTERING INTO AN MOU AND FILING AN AFFIDAVIT WHICH HAD NO LEGAL SANCTITY BUT MERELY A COLORABLE DEVICE FOR AVOIDANCE OF TAX AS HELD IN MC DOWELL AND CO. LTD. VS. CTO (1985) 154 ITR 148 (SC)- SINCE IN ACCORDANCE TO A LEGAL REGISTERED SALE DEED THE SALE IS TRANSFERRED AS OF PROPERTY AS ENVISAGED UNDER THE TRANSFER OF P ROPERTY ACT ON WHICH THE PROVISIONS OF LONG TERM CAPITAL GAIN S HALL APPLY IN CASE OF THE REAL OWNER(S) OF SUCH PROPERTY IRRESPEC TIVE OF ANY COLORABLE ARRANGEMENT ENTERED INTO BETWEEN THEM. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD MODIFY A ND/OR DELETE ANY GROUND(S) OF APPEAL. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESS ING OFFICER RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSEE HAD DECLARED INCOME FROM HOUSE PROPERTY SHARE ITA NO.5668 /DEL/2012 3 OF PROFIT REMUNERATION FROM ONE FIRM AND INCOME FR OM OTHER SOURCES. IN THIS CASE AIR INFORMATION WAS RECEIVED THAT ASSESSEE HAD PURCHASED TWO IMMOVABLE PROPERTIES FOR RS.22 40 000/- AND RS.72 9 0 000/- RESPECTIVELY. ON QUESTIONING THE ASSESSEE VIDE REPLY DATED 22.11. 2011 STATED THAT HE DID NOT PURCHASE ANY SUCH PROPERTIES. IN THE MEANTIME I NFORMATION WAS ALSO CALLED FROM THE SUB REGISTRAR OFFICE MEERUT. SUB R EGISTRAR MEERUT VIDE HIS LETTER DATED 26.11.2011 FURNISHED COPIES OF TWO SAL E DEEDS OF FLATS EXECUTED BY THE ASSESSEE ON 08.05.2008 AND 10.07.2008 FOR R S.15 00 000/- EACH AND IT WAS STATED THAT ASSESSEE HAD NOT PURCHASED ANY P ROPERTY BUT HAD EXECUTED SALE OF THESE TWO FLATS. THE ASSESSING OFFICER OBSE RVED THAT ASSESSEE HAD NOT DECLARED SALE OF THESE TWO FLATS IN HIS RETURN OF I NCOME. THEREFORE HE SHOW CAUSED THE ASSESSEE AS TO WHY THE SALE CONSIDERATIO N OF ABOVE SAID PROPERTIES SHOULD NOT BE CONSIDERED FOR TAXATION IN HIS HANDS. THE ASSESSEE IN HIS REPLY SUBMITTED THAT HE HAD NO DIRECT OR INDIRECT INTERES T IN THE ABOVE PROPERTIES AS NO PART OF SALE CONSIDERATION WAS RECEIVED BY HIM A ND HE WAS MADE A PARTY TO THE TRANSACTION FOR THE SATISFACTION OF THE BUYE R ONLY. THE ASSESSING OFFICER OBSERVED THAT THE NAME OF ASSESSEE WAS THE RE IN THE SALE DEED AND AS JOINT OWNER THERE WAS NO MENTION IN THE SALE DEED T HAT THE PROPERTY BELONGED TO M/S AMIT KUMAR HUF ONLY AS CLAIMED BY THE ASSESS EE. THE ASSESSING OFFICER FURTHER OBSERVED THE CIRCLE RATES OF THESE PROPERTIES WAS DIFFERENT ITA NO.5668 /DEL/2012 4 THAN THE AMOUNTS FOR WHICH SALE DEEDS WERE EXECUTED AND THEREFORE APPLYING THE PROVISIONS OF SECTION 50C HE TOOK THE CIRCLE RA TES FOR CALCULATION OF CAPITAL GAIN IN THE HANDS OF ASSESSEE. WHILE MAKING CALCULATIONS THE ASSESSING OFFICER DID NOT REDUCE COST OF PROPERTY O R INDEXED COST OF PROPERTY AS THE COST OF ACQUISITION WAS NOT PROVIDED TO THE ASSESSING OFFICER AND SINCE PERCENTAGE OF SHARE IN THE PROPERTIES SOLD WE RE NOT MENTIONED IN THE SALE DEED THEREFORE HE TOOK 50% OF DEEMED SALE CO NSIDERATION AS CAPITAL GAIN EARNED BY THE ASSESSEE. 3. DISSATISFIED WITH THE ORDER THE ASSESSEE FILED APPEAL BEFORE CIT (A) AND SUBMITTED AS UNDER: THAT THE APPELLANT HAD PURCHASED CERTAIN LANDS J OINTLY WITH M/S. AMIT KUMAR HUF IN FINANCIAL YEAR 2005-06 AND THE TOTAL AREA OF LAND WAS ABOUT 2049 SQ. YARDS WHICH WAS PURCHASED VIDE SIX DIFFERENT SALE DEEDS. THE APPE LLANT WAS A JOINT OWNER IN ONLY TWO SALE DEEDS AND HIS SHARE WERE ABOUT 367 SQ. YARDS WHICH IS APPROXIMATELY 1/6 TH OF TOTAL LAND AREA. THAT THE ENTIRE LAND WAS DEVELOPED AND CONSTRUCTED AS RESIDENTIAL AS WELL AS COMMERCIAL COMPLEX BY M/S AM IT KUMAR HUF AND DURING CONSTRUCTION PERIOD THERE WERE CERTA IN DISPUTES BETWEEN APPELLANT AND M/S AMIT KUMAR HUF AND TO AVO ID LITIGATION AND BUY PEACE OF MIND A MOU DATED 18.07. 2007 WAS SIGNED BETWEEN THE TWO PARTIES. THAT VIDE THIS MOU THE TWO PARTIES HAD PHYSICALLY DIVIDED THE CONSTRUCTED PROPERLY TWO WITH THE INTENTION THAT B OTH THE PARTIES SHALL HAVE CERTAIN SPECIFIED PORTION IN THE WHOLE ITA NO.5668 /DEL/2012 5 COMPLEX AND THEY SHALL NEGOTIATE SELL HOLD THE SA ME IN FUTURE AND SHALL NOT INTER-FEAR IN EACH OTHERS SPECIFIED PORTIONS. THAT SHRI AMIT KUMAR HUF SOLD TWO FLATS FROM THEIR PORTION IN THE COMPLEX DURING THE YEAR FOR A TOTAL CONSIDER ATION OF RS.30 00 000/-. AS PER THE TERMS OF THE MOU APPELLA NT HAD SIGNED THESE SALE DEEDS TO FACILITATE THE TRANSFER AND J UST FOR THE SATISFACTION OF BUYER. THAT THE ENTIRE SALE CONSIDERATION WAS RECEIVED BY SHRI AMIT KUMAR HUF AND WAS INCLUDED IN HIS GROSS INCOME FOR THE PURPOSE OF CALCULATION OF TAXABLE INCOME. AN AFFIDAVIT OF M/S AMIT KUMAR HUF WAS ALSO FILED AT THE TIME OF ASSESSMENT PROCEEDING S STATING AND AFFIRMING THE ABOVE FACTS. 4. THE LD. CIT (A) AFTER OBTAINING THE REMAND REPOR T FROM ASSESSING OFFICER AND AFTER GOING THROUGH THE SUBMISSIONS DEL ETED THE ADDITION MADE BY ASSESSING OFFICER BY HOLDING AS UNDER: I HAVE CONSIDERED THE ASSESSING OFFICERS ORDER ASSESSING OFFICERS REMAND REPORT ARS REJOINDER A ND PLETHORA OF DOCUMENTS PLACED ON RECORD. THE FOLLOWI NG FACTS UNMISTAKABLY EMERGE: I. THE APPELLANT HAD PURCHASED CERTAIN LANDS JOINTLY W ITH M/S AMIT KUMAR HUF A BUILDER IN FINANCIAL YEAR 2005-0 6. APPELLANTS SHARE IN THE TOTAL LAND PURCHASED WAS 1 /6 TH .DURING THE PERIOD OF CONSTRUCTION THE APPELLANT AND SHRI A MIT KUMAR HUF ENTERED INTO AN MOU DATED 18.07.2007 TO AVOID D ISPUTES AND LITIGATION. BY THE MOU THE TWO PARTIES DIVIDED THE ENTIRE PROPERTY BETWEEN THEMSELVES. AS PER CLAUSE 6 OF THE MOU BOTH PARTIES WERE FREE TO SELL LET OUT OR TRANSFER IN ANY MANNER THEIR PROPERTY OUT OF THEIR PORTION AND BOTH OF THE M WERE BOUND TO AGREE AND SIGN THE SALE DEED/ TRANSFER DEE D/ LEASE DEED ETC. OF THE PROPERTY OF EACH OTHER. THIS WAS AS STATED NECESSITATED DUE TO OWNERSHIP OF THE TITLE DEEDS OF ENTIRE LAND ON WHICH A BIG COMPLEX WAS CONSTRUCTED. ITA NO.5668 /DEL/2012 6 II. M/S. AMIT KUMAR HUF HAS CLARIFIED IN HIS AFFIDAVIT DATED 15.12.2011 THAT HE SOLD TWO FLATS FOR RS.15 LAKHS E ACH OUT OF HIS PORTION OF PROPERTY. THE ENTIRE SALE PROCEEDS W ERE RECEIVED BY CHEQUE BY HIM AND NOTHING WAS RECEIVED OR RECEIV ABLE BY SHRI MUKESH RASTOGI. M/S AMIT KUMAR HUF DECLARED TH E PROFITS ARISING FROM THESE SALE TRANSACTIONS IN HIS RETURN FOR A. Y. 2009-10 FILED WITH ITO WARD 1(1) MEERUT WITH P AN AAFHA02409. III. ON A CONSIDERATION OF ALL RELEVANT FACTS IT EMERGE S THAT THE APPELLANT HAD NO BENEFICIAL INTEREST IN THE TWO PRO PERTIES SOLD. HE WAS ONLY A SIGNATORY ON THE SALE-DEED FOR REASON S MORE THAN DULY CLARIFIED THROUGH THE MOU REFERRED TO ABO VE. ENTIRE SALE PROCEEDS WERE RECEIVED BY CHEQUES BY SHRI AMIT KUMAR HUF. THE PROFIT ARISING FROM THE SALE TRANSACTIONS WERE DECLARED BY SHRI AMIT KUMAR HUF IN HIS RETURN OF IN COME FOR A. Y. 2009-10. THE ASSESSING OFFICER HAS NOT BROUGH T ANYTHING ON RECORD WHICH COULD SHOW THAT THE APPELL ANT HAD ANY BENEFICIAL INTEREST IN THE TWO PROPERTIES SOLD. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. A T THE OUTSET THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT LD. CIT (A) HAS IGNORED THE OWNER SHIP OF LAND WHICH WAS IN THE NAME OF THE ASS ESSEE THROUGH A REGISTERED PURCHASE DEED. IT WAS CONTENDED THAT LD. CIT (A) HAD IGNORED THESE FACTS AND HAVE RELIED UPON A MEMORANDUM OF UN DERSTANDING ENTERED INTO BETWEEN THESE TWO PARTIES WHICH WAS NOT A REG ISTERED DOCUMENT AND IT WAS MERELY A DEVICE TO AVOID TAXES UNDER TRANSFER O F PROPERTY ACT AND UNDER INCOME TAX ACT AND HENCE CIT (A)S ORDER SHOU LD BE SET ASIDE. 6. THE LD. AR ON THE OTHER HAND EXPLAINED THE FACTS OF THE CASE AND INVITED OUR ATTENTION TO PAGE 12 OF PAPER BOOK WHER E A COMPLETE BREAK UP ITA NO.5668 /DEL/2012 7 OF VARIOUS PIECES OF LAND PURCHASED BY ASSESSEE ALO NG WITH SHRI AMIT KUMAR HUF AND THOSE PURCHASED BY SHRI AMIT KUMAR HU F INDIVIDUALLY WERE PLACED. OUR ATTENTION WAS ALSO INVITED TO MEMO RANDUM OF UNDERSTANDING DATED 18.07.2007 PLACED AT PAPER BOOK PAGE 8 TO 11 AND ON THE STRENGTH OF MOU ALONG WITH DIVISION OF CONSTRUC TED AREA BETWEEN THE PARTIES AS PLACED ON PAPER BOOK PAGE 12 THE LD. AR ARGUED THAT CONSTRUCTED PROPERTY WAS DIVIDED AND AS PER THIS DI VISION THE FLATS SOLD HAD BECOME THE PROPERTY OF SHRI AMIT KUMAR HUF AND SIGN ATURE OF ASSESSEE WERE TAKEN ON SALE DEEDS JUST FOR THE SATISFACTION OF BUYER. IT WAS FURTHER SUBMITTED THAT TOTAL SALE CONSIDERATION WAS DECLARE D BY SHRI AMIT KUMAR HUF IN HIS RETURN OF INCOME AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 13 TO 14 WHEREIN A COPY OF AN AFFID AVIT OF SHRI AMIT KUMAR HUF WAS PLACED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT WAS ARGUED THAT LD. CIT (A) HAS GONE THROUGH ALL TH ESE FACTS AND THEREFORE HAD DELETED THE ADDITION. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. FROM PAPER BOOK PAGE 12 WE OBSER VE THAT IN ALL THERE WAS A TOTAL LAND MEASURING 2049 SQ. YARDS OUT OF WH ICH ON A LAND MEASURING 734 SQ. YARDS SHARE OF ASSESSEE WAS 50% A ND THEREFORE THE SHARE IN TOTAL LAND WORKED OUT TO BE 1/6 TH TO ASSESSEE AND REMAINING 5/6 TH TO ITA NO.5668 /DEL/2012 8 SHRI AMIT KUMAR HUF. AS PER MOU DATED 18.07.2007 PL ACED AT PAPER BOOK PAGE 8 TO 11 THE ASSESSEE WAS ENTITLED TO THE FOLLOWING PROPERTIES: 1) ONE HALL MEASURING 1830 SQ. FIT ON PLOT NO.323 O N LAND OWNED BY ASSESSEE. 2) TWO FLATS OF 1625 SQ. FIT EACH ON GROUND FLOOR A ND FIRST FLOOR ON LAND OWNED BY SHRI AMIT KUMAR HUF. 8. THE REST OF THE PROPERTY CAME TOWARDS THE SHARE OF OTHER PERSON WHICH INCLUDED FLATS OUT OF WHICH TWO WERE SOLD DUR ING THE YEAR. AS PER CLAUSE 5 OF SUCH MOU EXPENDITURE ON CONSTRUCTION AL READY INCURRED OR TO BE INCURRED WAS TO BE SHARED BETWEEN THE ASSESSEE A ND OTHER PARTIES AS 1/6 TH AND 5/6 TH RESPECTIVELY. HOWEVER THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT OF SHRI AMIT KUMAR HUF PLACED AT PAPER BOOK PAGE 13 AN D 14 WHEREIN VIDE CLAUSE 5. M/S AMIT KUMAR HUF HAS STATED THAT ALL CO NSTRUCTION COST WAS BORNE BY HIM WHICH IS CONTRARY TO THE TERMS AND CO NDITIONS OF DIVISION AS ARRIVED AT THROUGH MOU DATED 18.07.2007. MOREOVER THE MOU ENTERED INTO BETWEEN PARTIES IS NOT A REGISTERED DOCUMENT A ND NEITHER ANY DECREE WAS TAKEN FROM A COURT FOR DIVISION OF THE PROPERTI ES. FURTHER IN THE SALE DEEDS OF FLATS EXECUTED BY ASSESSEE AND OTHER PARTY SHRI AMIT KUMAR HUF THERE IS NO MENTION OF THE FACT OF ANY MEMORANDUM O F UNDERSTANDING REACHED OUT BETWEEN ASSESSEE AND OTHER PARTY WHICH COULD HAVE CLARIFIED THE FACTS. SINCE THERE IS VIOLATION OF THE TERMS A ND CONDITIONS OF MOU AS ASSESSEE DID NOT CONTRIBUTE ANYTHING TOWARDS COST O F CONSTRUCTION AS PER ITA NO.5668 /DEL/2012 9 AFFIDAVIT OF SHRI AMIT KUMAR HUF WHEREAS HE HAD TO BEAR 1/6 TH OF COST THEREFORE MOU CANNOT BE RELIED UPON SPECIFICALLY IN THE ABSEN CE OF IT BEING UNREGISTERED AND ITS TERMS NOT BEEN COMPLIED WITH BY THE PARTIES. THOUGH THE ASSESSEE HAS SUBMITTED COPIES OF FORM NO.16A REGARDING RENT INCOME IN RESPECT OF HALL WHICH CAME AS HIS SHARE BUT IN THE ABSENCE OF VALIDITY OF MOU THESE CANNOT BE ACC EPTED AS THE ASSESSEE MIGHT HAVE CREATED ALL THESE WAYS AND MEANS TO AVOID TAXES UN DER TRANSFER OF PROPERTY ACT AND UNDER INCOME TAX ACT. 9. THE ASSESSING OFFICER HAS ALSO NOT GIVEN BENEFIT OF COST OF ACQUISITION AND INDEXATION THEREOF AND HAS TAKEN 50% SHARE AS BELON GING TO ASSESSEE WITHOUT CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE. THEREFORE IN THE INTEREST OF JUSTICE WE ARE OF THE OPINION THAT ASSESSING OFFIC ER SHOULD READJUDICATE ON THE ABOVE CASE BY INVESTIGATING ALL RELEVANT FACTS AND CIRCUM STANCES AND ARRIVE AT THE AMOUNT OF CORRECT CAPITAL GAIN IF ANY. NEEDLESS TO SAY THAT A SSESSEE WILL BE PROVIDED REASONABLE OPPORTUNITY OF BEING HEARD. IN VIEW OF THE APPEAL FILED REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 5 TH /07/ 2013 SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 5 TH DAY OF JULY 2013 S.SINHA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT) NEW DELHI. AR ITAT NEW DELHI.