Case Law Details
ITO Vs Late Smt. Seema Mukharjee (ITAT Jaipur)
It has been clearly mentioned that the capital gain income has been declared in the return of income of Smt. Gyanwati Dhakar, who has actually sold this property. The assessee has just signed as a confirming party.
Even otherwise, independent of the computation of income of Smt. Gyanwati Dhakar for the AY 2008-09, it is evident that the property was not sold by the appellant as the AO has failed to brought on record that the sale consideration of Rs. 45 Lac was received by the appellant or used directly or indirectly for its benefit and also in view of the order of Addl. Collector (Stamps), it is held that the AO was not justified in making addition of Rs.87,75,759/- to the income of the deceased Seema Mukherjee through her legal heirs as long term capital gain as the property was not sold by Smt. Seema Mukherjee during the year under consideration. If any addition was required to be made and that too u/s 50C of the Act, it should have been made in the hands of Smt. Gyanwati Dhakhar and not in the hands of the appellant. Hence, the addition of Rs. 87,75,759/-made by the AO is hereby deleted.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This is an appeal filed by the revenue emanates from the order of the ld. CIT(A)-I, Jaipur dated 02/03/2017 for the A.Y. 2008-09. The only issue involved in the appeal is deleting the addition of long term capital gain amounting to Rs. 87,75,759/-.
2. While pleading on behalf of the revenue, the ld DR has relied on the order of the Assessing Officer.
3. On the other hand, the ld AR of the assessee has relied on the order of the ld. CIT(A).
4. The Bench have heard both the sides on this issue. The ld. CIT(A) has granted relief to the assessee by holding as under:
“3.2.1 Determination
(i) In this ground of appeal, it was stated by the appellant that the deceased appellant had not sold plot no. 55B, Hathi Babu Ka Bagh, Station Road, Jaipur for Rs. 45 Lac and the said property was sold by Smt. Gyanwati Dhakhar and the deceased appellant was just a lgefrdrkZ through power of attorney of Shri Madan Gopal Khatri. In support of its claim, a copy of registered sale deed dated 30.08.2007 was enclosed with the appeal filed in Form No. 35. The computation’ of income of Smt. Gyanwati Dhakhar for the AY 2007-08 was also filed wherein long term capital gain of Rs. 1,83,143/- was shown.
(ii) During the appellate proceedings, vide this office letter dated 15/02/2017, which is reproduced as under, the AO was required to submit his report:
“In this case, the assessment order was passed u/s 144 of the Act. Even, no compliance was made by the appellant during the appellate proceedings. However, it is noted that the appellant has filed a copy of sale deed dated 30.08.2007 wherein Smt. Gyanwati Dhakar has sold the property at Plot. No. 55A East Portion, Hathi Babu Ka Bagh, Kanti Nagar, Jaipur for an apparent sale consideration of Rs. 45 Lac and the Late Smt. Seema Mukherjee was just mentioned as lgefrdrkZ . From the said sale deed, it appears that Late Smt. Seema Mukherjee had sold her share in the property under consideration to Smt. Gyanwati Dhakar in the year 1965.
The appellant has also filed a copy of computation of income of Smt. Gyanwati Dhakar for AY 2008-09 and it appears that she has shown the sale of the property at Rs. 45 Lac thereof. A copy of the same is enclosed herewith.
You are hereby directed to examine the material placed on relevant assessment record and to submit the documentary evidences, on the basis of which, it has been held that the appellant has sold the property under consideration for which addition has been made in the assessment order.”
(iii) Vide its report dated 23.02.2017 received in this office on 27/02/2017.
it was submitted by the AO that:
“Kindly refer to your letter No. 2005 dated 15.02.2017 requiring to submit documentary evidences, on the basis of which, it has been held that the appellant has sold the property under consideration for which addition has been made in the assessment order.
At the outset, it is submitted that the case of Late Smt. Seema Mukherjee for A.Y. 2008-09 was completed u/s 144 of the Income Tax Act, 1961 on the basis of information available on record.
Addition of Rs. 87,75,759/- was made on account of LTCTG for sale of Plot No. 55B, Hathi Babu Ka Bagh, Kanti Nagar, Jaipur taking into account the evaluated value of the property determined at Rs. 91,42,019/- by the Addl.. Collector (Stamps), Jaipur vide his order No. 667/08 dated 23.09.2011. A copy of the order is enclosed.
Since the assessee had not complied with the requirements of legal notices issued by the department despite having been given ample opportunities, the then AO was constrained to finalize the assessment in terms of the provisions of Sec. 144 of the Act in the absence of any explanation from the assessee.
Copy of computation of income of Smt. Gyanwati Dhakar was not produced before the AO during the assessment, hence it is requested that it should not be accepted. Copy of computation of income of Smt. Gyanwati Dhakar is also not enclosed with your kind letter. Further, an important question arises – if Smt. Gyanwati Dhakar had purchased the aforementioned property way back in the year 1965, what was the need for obtaining late Smt. Seema Mukherjee’s consent at the time of sale of the property on 30.08.2007. Therefore, the word *gikcci’,c1Z mentioned in the sale deed is nothing but a colourable statement in the deed to hide the fact that Smt. Gyanwati Dhakar sold the property as power of attorney holder of late Smt. Seema Mukherjee. Hence, the real seller was late Smt. Seema Mukherjee and accordingly addition has rightly been made. It was the assessee’s onus to prove all the facts of the case during the assessment proceedings in which assessee’s legal heirs have utterly failed.
It is, therefore, humbly requested that the contention of the assessee should not be accepted and additions be upheld.”
(iv) As inadvertently, copy of the income tax return of Smt. Gyanwati Dhakhar for AY 2007-08, as obtained from the concerned AO, could not be enclosed with the above referred letter, a copy of the same was also provided to the AO. Vide its remand report dated 28/02/2017 it was further submitted by the AO that:
“In continuation of this office letter No. 2700 dated 23.02.2017, it is submitted that the reopened case of Late Smt. Seema Mukherjee was completed in terms of the provisions of Sec. 144 of the I. T. Act, 1961 since no explanation on the issue of taxability of Sec. 50C of the Act was submitted by the assessee. In the absence of any explanation from the side of the assessee additions have rightly been made.
Now, the assessee has submitted computation of total income of Smt. Gyanwati Dhakar for A.Y. 2008-09 before your good self in support of the claim that the real seller was Smt. Gyanwati Dhakar and not Late Smt. Seema Mukherjee. This is an additional evidence which kindly may not be accepted. Further, copy of ITR of Smt. Gyanwati Dhakar for A.Y. 2008-09 received shows that she had shown capital gains of Rs.183143/- on sale of some property for Rs. 45,00,000/-. This sale consideration of Rs. 45,00,000/- incidentally resembles the sale consideration mentioned in the sale deed dated 30.8.2007. In the absence of any explanation from the assessee, it would be a simple assumption that due tax has been paid by Smt. Gyanwati Dhakar on the same property as has been sold by the assessee.”
(v) In the remand report, it was submitted by the AO that if Smt. Gyanwati Dhakhar had purchased the property under consideration in the year 1965, then what was the need of obtaining the signature of Smt. Seema Mukherjee as lgefrdrkZ in the sale deed dated 30/08/2007 and the mentioning of the word lgefrdrkZ in the said sale deed is nothing but a colorable statement in the deed to hide the fact that Gyanwati Dhakhar sold the property as power of attorney holder of Late Smt. Seema Mukherjee. It was further submitted that the real seller was Late Smt. Seema Mukherjee and accordingly, the addition had rightly been made to the income of Late Smt. Seema Mukherjee.
(vi) I have duly considered the assessment order, remand report of the AO and the material placed on record. It is noted from the registered sale deed dated 30.08.2007 that the property under consideration was sold by Smt. Gyanwati Dhakhar in its own capacity and not as power of attorney holder of Late Smt. Seema Mukherjee, as claimed by the AO in its remand report. The contention of the AO that the mentioning the name of Smt. Seema Mukherjee in the said sale deed is a colorable device is devoid of any merit as no evidence was submitted by the AO to support such contention. The AO could not brought on record that actually the funds arising out of the sale of property under consideration were transferred or used directly or indirectly for the benefit of Late Smt. Seema Mukherjee. Further, it is evident from the order dated 23.09.2011 of Addl. Collector (Stamps), as provided by the AO, that the property under consideration was purchased by Smt. Gyanwati Dhakhar on 15.04.1965 through agreement to sell on which stamp duty was not paid at that point of time and consequently, vide above referred order, the property, for the sale transaction on 15.04.1965 was valued at Rs. 91,42,019/- on 30.08.2007 for the purpose of charging stamp duty. Thus, it is evident from the above referred order of the Addl. Collector (Stamps) that the property under consideration was sold by Late Smt. Seema Mukherjee to Smt. Gyanwati Dhakhar on 15.04.1965. It may be mentioned that it is a very common practice in real estate transactions not to get register the agreement to sell with the sub registrar in order to avoid payment of stamp duty and the consent of the original seller is taken in the sale deed to avoid any dispute to the title of the property at a later stage.
(vii) Further, it is evident from the income tax return of Smt. Gyanwati Dhakhar for the AY 2008-09 that while computing the capital gains, she had declared sale consideration at Rs. 45 Lac and had shown long term capital gain at Rs. 1,83,143/-. It was the contention of the AO that it could not be verified that the sale consideration shown is related to the property under consideration. It is matter of fact that in the registered sale deed dated 30.08.2007, the sale consideration was stated at Rs. 45 Lac only and in the computation of capital gains, Smt. Gyanwati Dhakar has stated the sale consideration at Rs. 45 lac only.
(viii) Even otherwise, independent of the computation of income of Smt. Gyanwati Dhakar for the AY 2008-09, it is evident that the property was not sold by the appellant as the AO has failed to brought on record that the sale consideration of Rs. 45 Lac was received by the appellant or used directly or indirectly for its benefit and also in view of the order of Addl. Collector (Stamps), it is held that the AO was not justified in making addition of Rs.87,75,759/- to the income of the deceased Seema Mukherjee through her legal heirs as long term capital gain as the property was not sold by Smt. Seema Mukherjee during the year under consideration. In my opinion, if any addition was required to be made and that too u/s 50C of the Act, it should have been made in the hands of Smt. Gyanwati Dhakhar and not in the hands of the appellant. Hence, the addition of Rs. 87,75,759/-made by the AO is hereby deleted.”
The issue has been elaborately dealt by the ld. CIT(A) in his order. It has been clearly mentioned that the capital gain income has been declared in the return of income of Smt. Gyanwati Dhakar, who has actually sold this property. The assessee has just signed as a confirming party. Considering all these facts and also the facts recorded by the ld. CIT(A), which the ld. DR was not able to controvert the same, therefore, the Bench uphold the order of the ld. CIT(A) on this issue.
5. In the result, the appeal of the revenue stands dismissed.
Order pronounced in the open court on 04/01/2018.
