Case Law Details
Sudha Karbhari Nagre Vs ITO (ITAT Pune)
Explore ITAT Pune’s decision in Sudha Karbhari Nagre vs ITO case. LTCG addition on property sale contested. Timeliness, ownership, and re-assessment issues analyzed. Order dated 30th October 2023.
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Pune heard the appeal of Sudha Karbhari Nagre against the order dated 01.02.2023, passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in the National Faceless Appeal Centre (NFAC), Delhi. The appeal was related to the assessment year 2011-12 and primarily contested the addition of Rs.3,78,420/- towards Long-Term Capital Gains (LTCG) on the sale of a residential house. The ITAT Pune’s order, dated 30th October 2023, sheds light on the key issues and the Tribunal’s findings.
Background: The appellant, Sudha Karbhari Nagre, failed to file her return of income for the relevant assessment year. The Assessing Officer (AO) received information suggesting that the appellant had suppressed LTCG on the sale of a property. Subsequently, a notice under section 148 of the Income-tax Act, 1961, was issued. In response, the appellant did not disclose any LTCG on the property transfer, claiming that her husband was the one who had transferred the property.
During the assessment proceedings, the AO examined the registered agreement for sale and found that the appellant was the absolute owner of a 50% share in the property. The appellant eventually agreed to the addition towards LTCG, subject to the benefit of indexation. The AO, treating half of the sale consideration as the appellant’s share, after deducting the indexed cost of acquisition, calculated the LTCG at Rs.3,78,420/-. Dissatisfied with this decision, the appellant appealed to the CIT(A) and subsequently to the ITAT Pune.
Key Issues:
- Timeliness of Appeal: The appellant’s appeal was filed 141 days beyond the stipulated time. The appellant submitted an affidavit stating reasons for the delay, and the ITAT Pune, after reviewing the reasons, condoned the delay, allowing the appeal to proceed on its merits.
- LTCG Addition and Re-assessment Proceedings: The primary issue pertained to the addition of LTCG and the challenge against the initiation of re-assessment proceedings by the AO.
ITAT Pune’s Findings:
The ITAT Pune, after considering the arguments presented by both parties, found the following:
- Ownership of Property: The registered agreement for sale clearly indicated the appellant’s 50% share in the property. The appellant, however, did not include the LTCG in her original return or in the return filed in response to the notice under section 148.
- Date of Transfer: The appellant argued that the property was transferred in the subsequent year when her husband declared the entire sale consideration in his return. The ITAT clarified that, as per amendments to the Registration Act in 2001, the date of registration is considered the date of transfer. Since the agreement was registered within the relevant assessment year, the taxability had to be examined in the year under consideration.
- Invalid Return of Assessee’s Husband: The ITAT dismissed the argument that the appellant’s husband had included the entire amount in his return, noting that the return filed by the husband was invalid and should be presumed as never filed.
- Initiation of Re-assessment Proceedings: The ITAT rejected the appellant’s challenge to the initiation of re-assessment proceedings, emphasizing that the appellant had admitted before the AO to the inclusion of LTCG in the total income, and this fact was not challenged in the first appeal.
Conclusion:
In light of the foregoing discussion, the ITAT Pune concluded that the addition of LTCG had been rightly made and sustained. As a result, the appeal filed by Sudha Karbhari Nagre was dismissed. The order was pronounced in the Open Court on 30th October 2023.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee is directed against the order dated 01.02.2023 passed by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi in relation to assessment year 2011-12.
2. The appeal is time barred by 141 days. The assessee has filed an affidavit stating the reasons, which led to the late filing. I am satisfied with the reasons so stated. Therefore, the delay is condoned and the instant appeal is admitted for disposal on merits.
3. The only issue raised in this appeal is against the addition of Rs.3,78,420/- made by the Assessing Officer (AO) towards Long term capital gains on sale of residential house. The assessee has also challenged the initiation of reassessment proceedings.
4. Briefly stated, the facts of the case are that the assessee did not file her return of income in relation to the assessment year under consideration. The AO got some information about the assessee having suppressed Long term capital gains on sale of property. Notice u/s 148 of the Income-tax Act, 1961 (hereinafter also called „the Act‟) was issued. Again, the assessee did not disclose any Long term capital gain on the transfer of the property in the return filed in response to notice u/s 148. The assessee took a stand that the property was transferred by her husband and she had nothing to do with its ownership. During the course of assessment proceedings, the AO observed from the registered agreement for sale that the assessee was the absolute owner of 50% share. When confronted, the assessee agreed for the addition towards Long term capital gains subject to the benefit of cost of indexation. That is how, the AO took one-half of the sale consideration treating the same as her share and after reducing the indexed cost of acquisition, worked out the Long term capital gain of Rs.3,78,420/-. The assessee remained unsuccessful before the ld. CIT(A) and has come up in appeal before the Tribunal.
5. I have heard both the sides and perused the record. It is seen as an admitted position that the registered agreement for sale provides for the assessee‟s 50% share in the property which was transferred. The assessee did not file original return. Thereafter, notice u/s 148 was issued. In response to the said notice, again the assessee did not include Long term capital gains from the transfer of her share in the return of income. The ld. AR contended that the property was transferred in the subsequent year when the husband offered full sale consideration in his hands. This position is not correct because the agreement for sale was registered on 07.02.2011. After the amendment to the Registration Act and the corresponding amendment to the Transfer of Property Act in 2001, the date of registration is the date of transfer of property and not when the actual possession is handed over. Since the agreement for the sale was registered on 07.02.2011, which falls within the previous year relevant to the assessment year under consideration, taxability has to be examined in the year under consideration only. The contention of the ld. AR that the husband included the entire amount in his return of income again does not support the point of view. The return so claimed by the assessee‟s husband was actually filed on 12.12.2014, which is admittedly an invalid return. This invalid return has to be presumed as never filed. If this return is excluded, the fact remains that the assessee was one half owner of the property transferred; the transfer took place in the year under consideration; the assessee had not offered income from the transfer of such property either in the original return or in the return filed in response to notice u/s 148. This being a clear-cut case falling within the ambit of section 147, cannot be agitated by the assessee. The additional ground raised by the assessee challenging initiation of re-assessment proceedings is thus of no consequence. Further, the assessee did not challenge the initiation of re-assessment proceedings before the AO at the stage of issuance of notice. Moreover, the assessee admitted before the AO for the inclusion of Long term capital gain in the total income, which fact was also not challenged in the first appeal. The cases relied upon by the ld. AR are distinguishable on facts. In view of the foregoing discussion, I am of the considered opinion that the addition has been rightly made and sustained.
6. In the result, appeal is dismissed.
Order pronounced in the Open Court on 30th October, 2023.
