Case Law Details

Case Name : Sayed Sikander Vs PCIT (Telangana High Court)
Appeal Number : I.A.No.1 of 2022 in/& I.T.T.A. No. 251 of 2022
Date of Judgement/Order : 20/09/2022
Related Assessment Year :

Sayed Sikander Vs PCIT (Telangana High Court)

Telangana High Court held that Tribunal rightly held the addition of LTCG as execution of registered sale deed is valid transfer u/s 2(47)(V). Hence, as the finding of fact by the Tribunal is clear the same doesn’t require any interference.

Facts-

Appellant is an association under the Act having the status of ‘individual’. In the assessment (re-assessment) proceedings for the assessment year 2010-11, assessing officer added Rs.2,81,88,700.00 as long term capital gains vide the assessment order dated 22.01.2014 passed under Section 143(3) of the Act read with Section 147 of the said Act.

Conclusion-

Held that according to the Tribunal, appellant had already executed a registered sale deed which is treated as valid transfer under Section 2(47)(V) of the Act. The other documents relied upon by the appellant were only pleadings before civil and criminal courts, which proceedings were yet to attain finality. Accordingly, Tribunal upheld the addition of long term capital gains made by the assessing officer as confirmed by the CIT(A).

On thorough consideration of all aspects of the matter, we are of the view that no substantial question of law arises out of the order of the Tribunal dated 02.09.2021. Findings returned by the Tribunal are clear findings of fact which does not call for any interference.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Manmohan Dundu, learned counsel for the appellant.

2. This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (briefly ‘the Act’ hereinafter) against the order dated 02.09.2021 passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad (Tribunal) in I.T.A.No.781/Hyd/2015 for the assessment year 2010-11.

Clear finding of fact by Tribunal doesn’t require any interference of High Court

3. This appeal has been filed proposing the following questions as substantial questions of law:

1. Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in confirming the addition made by the Assessing Officer, overlooking the peculiar facts and circumstances of the case, more particularly intention of the parties with regard to the conditional sale transaction, and also provisions of the Law, which would render the ultimate conclusions of the Tribunal perverse ?

2. Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in rejecting the adjournment request and treating it as heard in violation of the principles of natural justice, overlooking the fact that counsel on record was not well and the person who had appeared on behalf of the counsel was not the power of attorney holder but only requested to seek adjournment ?

3. Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in passing the order without considering the plea of the appellant dt.16.04.2022, wherein it was requested to keep the matter in abeyance till the outcome of civil suit (OS.No.89 of 2021) ?

4. Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in passing the order after the period of 3 months from the date of hearing misunderstanding the letter and spirit of Rule 34(5) of Income Tax (Appellate Tribunal) Rules, 1963 and judicial precedents by wrongly taking aid from Apex Court directions dt.27.04.2021 in M.A.No.665/2021 in SM(W)C.No.3/2020 overlooking the decision of supreme court in the case of Anil Rai (supra) ?

4. To appreciate the above questions, we may briefly refer to the orders passed by the revenue authorities.

5. Appellant is an association under the Act having the status of ‘individual’. In the assessment (re-assessment) proceedings for the assessment year 2010-11, assessing officer added Rs.2,81,88,700.00 as long term capital gains vide the assessment order dated 22.01.2014 passed under Section 143(3) of the Act read with Section 147 of the said Act.

6. We have carefully gone through the order of assessment dated 22.01.2014 and find that assessing officer had elaborately considered the agreement of sale, power of attorney and sale deed registered on 20.04.2009. Assessing officer thereafter held as follows:

Accordingly, in the present case, the capital gain is computed on the basis of sale deed registered on 20th April 2009 and applied the 50C provision since the market value of the property was mentioned Rs.3,05,11,300/-. The assessment is concluded accordingly.

Penalty proceedings U/s.271(1)(c) is initiated separately with the reason that there is a clear escapement of income was found and the assessee has not filed his return of income till the issue was unearthed by the revenue and even in the return filed in response to notice served U/s.148, the assessee is trying to make belief with the unregistered transactions entered into.

The assessee has not provided details such as cost of acquisition of land and cost of construction. Hence, the value of the land and construction cost of the building put together is adopted @ Rs.500/- per Sq. Yd. as 01.04.1981, since, the property acquired is before 01.04.1981. Total area of the land is 735 Sq.Yds and the cost of acquisition is worked out to Rs.23,22,600/- after indexation.

7. Aggrieved by the aforesaid order of assessment, appellant preferred appeal before the Commissioner of Income Tax (Appeals)-4, Hyderabad (briefly ‘CIT(A)’ hereinafter). By the appellate order dated 27.02.2015, CIT(A) considered the submissions made by the appellant and noted that though the appellant had taken 21 grounds in appeal, those relate to only one issue i.e., assessment of capital gains on account of transfer of property situated at road No.4, Banjara Hills, Hyderabad vide document dated 29.04.2009.

8. First appellate authority noted the basic contention of the appellant which was that registration document could not be taken as a conclusive proof to hold that there was transfer resulting in capital gains. It was urged on behalf of the appellant that preceding and subsequent events should also be taken into account to arrive at the true character of the transaction. Appellant had contended that transaction was done only to avail the loan by mortgaging the property. After considering the contention of the appellant, CIT(A) dismissed the appeal by holding as under:

The assessment order, the submissions of the assessee during the assessment proceedings and the appellate proceedings and the documents placed on record are considered. It is seen that there is no ambiguity as to whether there is transfer within the meaning to Section 2(47) on account of execution of the document dated 29/04/2009. The document clearly records that the consideration has been received and the possession has been handed over to the purchaser. The assessee’s reliance on earlier transaction and application of part of consideration for repayment of money to Sri K. Vijaya Bhaskar Reddy with whom an earlier agreement of sale / GPA was entered into is of no relevance to decide the nature of the transaction. The distribution of money between the broker, assessee and the purchaser of the property from the loan raised against the property is a subsequent act which would not change character of the transaction already entered into by the assessee with the purchaser of the property. The fact that ultimate purchaser Smt. Manju Devi Taparia has admitted on oath that the consideration as recorded in the document was passed on and the transaction duly recorded in her accounts and shown in the return of income filed by her for the AY 2010-11. The above documentation duly confirmed by the ultimate purchaser is of utmost importance to arrive at the true nature of the transaction. As regards of the MOU dated 29/04/2009, it is seen that there is no reference of any such agreement in the registration deed entry into on 29/04/2009. Similarly the agreement of free conveyance allegedly entered into on 18th May, 2009, is un-registered and cannot completely relied upon. Further, the possession of the property and receiving the rent from the tenant would depend on later understanding between parties. This cannot be a consideration to decide whether the assessee property was passed on through a document conferring enforceable rights to the purchaser. In view of the discussion as above, I hold that there was a ‘transfer’ within the meaning of Section 2(47) of the Income Tax Act, 1961 giving rise to capital gains as evidenced by the document dated 29/04/2009 between the assessee and Smt. K. Manju Devi Taparia. Accordingly, the action of AO in assessing the capital gains is confirmed and the assessee’s appeal on this ground is dismissed.

9. On further appeal, Tribunal dismissed the appeal on 02.09.2022 holding as follows:

We have given our thoughtful consideration to rival pleadings against and in support of the impugned addition. We find no reason to express our concurrence with this taxpayer’s stand. This is for the reason that he has already executed the impugned registered sale deed; treated as a valid transfer u/s.2(47)(v) of the Act which is deemed to have superceded the oral as well as un-registered documents between the vendor and the vendee; as the case may be. And also that whatever are the documents sought to be filed by way of additional evidence, the same only contain pleadings before the respective civil and criminal courts (supra) which are yet to attain finality. We are unable to treat the assessee or his family members’ pleadings or evidence therein as forming the sole basis so far as assessment of his impugned capital gains is concerned. We wish to refer to hon’ble apex court’s decision in CIT VS. Balbir Singh Maini (2017) [86 taxmann.com 94] rejecting the department’s plea seeking to invoke a transfer of registered document, thereby squarely covering the issue so far as the facts herein are involved as this assessee had not only appeared before the registration authority claiming therein that he had indeed transferred peaceful vacant possession of the relevant capital asset but received the entire corresponding sale consideration. Any prior or subsequent document therein to, oral as well as unregistered one ought to be taken as superceded by the foregoing registered transfer document in issue. We there quote hon’ble apex court’s yet another decision CIT K.Y.Pilliah (1967) [63 ITR 411] (SC) to express our concurrence with the CIT(A)’s detailed discussion under challenge. The assessee’s strong endeavour to rely on the foregoing litigation (supra) as well as evidence deserves to be declined in light of his registered sale deed dt.20-04-2009. We accordingly uphold the impugned long term capital gain addition in assessee’s hands. All the assessee’s applications/petitions seeking to admit additional grounds and evidence shall be deemed to have been disposed of in light of our foregoing detailed discussion.

We lastly acknowledge that although the instant lis is being decided after a period of 90 days from the date of hearing as per Rule 34(5) of the IT(AT) Rules 1963, the same however, does not apply in the covid lockdown situation as per hon’ble apex court’s recent directions dated 27-04-2001 in M.A.No.665/2021 in SM(W)C No.3/2020 ‘In Re Cognizance for extension of limitation’ making it clear that in such cases where the limitation period (including that prescribed for institution as well as termination) shall stand excluded from 14th of March, 2021 till further orders in above terms.

10. Thus according to the Tribunal, appellant had already executed a registered sale deed which is treated as valid transfer under Section 2(47)(V) of the Act. The other documents relied upon by the appellant were only pleadings before civil and criminal courts, which proceedings were yet to attain finality. Accordingly, Tribunal upheld the addition of long term capital gains made by the assessing officer as confirmed by the CIT(A). After holding so, Tribunal noted that the appeal was decided after a period of 90 days from the date of hearing; the same was because of the covid lock down situation and referred to the orders passed by the Supreme Court extending limitation.

11. On thorough consideration of all aspects of the matter, we are of the view that no substantial question of law arises out of the order of the Tribunal dated 02.09.2021. Findings returned by the Tribunal are clear findings of fact which does not call for any interference.

12. Appeal as well as I.A.No.1 of 2022 filed for condonation of delay of 76 days in filing the appeal are accordingly dismissed. No costs.

As a sequel, miscellaneous petitions, pending if any, stand dismissed.

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