INCOME TAX OFFICER WARD-3(3)(5), SURAT vs. SHRI CHTURBHAI KARSHANBHAI VASANI, SURAT

आदेश / O R D E R PER Dr. A. L. SAINI, ACCOUNTANT MEMBER: By way of this appeal, the Revenue has challenged correctness of the order dated 15.09.2017, passed by the learned CIT(A), in the matter of assessment under section 143(3)r.w.s 147 of the Income Tax Act 1961( for short ‘the Act’), for the assessment year 2009-10. Grievances raised by the Revenue are as follows: “1. Whether, on the facts and in law, the Ld. CIT(A) was justified in allowing the appeal of the assessee and deleting the addition of Rs. 1,53,41,618/- made by the AO on account of alleged on-money received on sale of immovable property. 2. The Ld. CIT(A) has erred in facts as the decision of Hon'ble Supreme Court in the case of Suraj Lamps in Special Leave Petition (C) No. 13917/2009 is clearly applicable in the case of assessee. 3. On the facts and circumstances, Ld. CIT(A) has erred in issuing direction u/s 150(1) of the I T Act, 1961 as the case of the assessee was reopened u/s 147 of the Act and as per section 150(2) direction cannot be given in such case. 4. On the facts and circumstances of the case and in law, it is therefore, prayed that the order of the Ld.CIT(A) Surat may be set aside to that extent and that of the AO’s may be restored to that extent.”

From the above facts, Assessing officer noticed that the transfer of property has actually been done for a total consideration of Rs. 7,92,08,090/-, whereas the registered sale deed was executed only for Rs. 25,00,000/-. Accordingly, the amount of Rs. 7,67,08,090/- [Rs. 7,90,08,090 - Rs. 25,00,000] has been received in cash by the assessee and other co-owners from the purchasers i.e. Shri Pitamber B. Ruchandani and others. In view of these facts, case of the assessee was re- opened under section 147 and notice u/s 148 of the Act was issued on 31.03,2016. The Re-opened assessment was completed on 24.11.2016 u/s 143(3) r.w.s. 147 of the Act determining total income at Rs.1,54,94,960/- after making addition of Rs. 1,53,41,618/- being assessee's share in on-money received from purchasers of the property.

Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani 3. During the course of re-assessment proceedings, AO observed that assessee has not shown any capital gains arose on transfer of subject property. Further, AO issued various statutory notices to the assessee but did not file any details called for except copy of computation of income. Further, AO observed that during the post search enquiries, Shri Pitamber B. Ruchandani was confronted with these evidences and specifically asked to explain the same. In response, he furnished a copy of the final sale deed No. SRT/l/ATV/9705/2008 entered between Shri Pitamber B. Ruchandani, Shri Vasudev D. Gopani HUF &. others as purchasers with Shri Chaturbhai Kishanbhai Vasani and others as sellers. In the statement recorded on 06.06.2013, it was stated by him that the noting on these loose papers were written by his brother, Late Shri Arjundas B. Ruchandani. He however, stated that they have received sale consideration through cheque only and he has no knowledge about these papers. Under circumstances, the only alternative available is to reply on the evidences found and seized during the course of search. A comparison of the noting on the loose papers found and seized with the copy of final sale deed reveals that the location, description and area of the property in both the evidences are the same. Further, these evidences were found from the residence of Shri Pitamber B. Ruchandani, who holding 30% share in this property. Therefore, his statement that he has no knowledge about these loose papers cannot be believed. In view of these facts assessee was asked to show caused as to why the difference of Rs. 1,53,41,618/- received as on-money paid by Shri Pitamber B. Ruchandani and others being share in Rs. 7,67,08,090/- should be treated as income for the period under consideration and added to the total income.

Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani Vs. State & Anr. The Supreme Court has held that transfer by General Power of Attorney (GPA) or sale by execution (SA) or Will, is not a valid transfer as these kinds of transaction were evolved to avoid prohibition/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payments of capital gain on transfer, to invest unaccounted money (black money) and to avoid payment of 'unearned increases' due to development authorities in transfer. Therefore, the AO added Rs.1,53,41,618/- to the total income of the assessee for the assessment year 2009-10 under consideration.

Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. The ld. DR, in order to support her plea, relied on the judgment of Hon'ble Supreme Court in the case of Narandas Karsondas vs. S.A. Kamtam and Anr. (1977) 3 SCC 247. This way, she prayed the Bench that order passed by the assessing officer may be upheld.

On appeal, Ld CIT(A), in case of one co-owner (Shri Mehendra Kumar M. Mehta) on identical facts held that "appellant has produced the copy of sale deed which mentions the date of sale of stamp duty of Rs. 1,25,000/- on 30.03.2008 for which payment was made through Kalupur Commercial Bank on 30.03.2008. The total payment of Rs.25,00,000/- to all the sellers was made on 28.03.2008 and 30.08.2008 by cheques drawn in favour of various banks. In this case the appellant had transferred the ownership of the property and the possession of the property

Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani on 30.03.2008 u/s 2(47)(v) of the Act before the registration of the sale deed.” The appellant had filed the return of income for AY 2008-09 showing income from the sale of land. The facts of this case are covered by the judgment of the Hon'ble ITAT Ahmedabad in the case of Hemant Ishwarlal Desai in the for A.Y, 2009-10 wherein vide its order dated 29.01.2016, the Bench further relying on decision of Hon'ble jurisdictional High Court in CIT Vs. Mormasji Mancharji Vaid (2001) 250 ITR 542 (PB) held that such a transfer has to be assessed to tax in the assessment year relevant to the previous year within which the date of execution of the deed of transfer year relevant to the date of execution of the deed of transfer falls and not that pertaining to its registration since that later is only an act of the officer appointed by law to register the documents. The revenue fails to point out any exception to this principle. The Ld. CIT(A) further held that facts of the case are similar and respectfully following the decision of Id CIT(A)-2 in co-sellers case on identical facts and above bidding decisions of the Hon'ble ITAT and Hon'ble Court of Gujarat, the ground of appeal allowed in favour of appellant (Shri Chaturbhai Karshanbhai Vasani). Thus, ld. CIT(A) has directed the Assessing Officer to delete the addition of Rs.1,53,41,618/-, and further he directed the Assessing Officer u/s 150(1) to reopen assessment of A.Y. 2008-09.

“5. On careful consideration of above rival submission and from the relevant part of the first appellant order as noted above undisputedly the assessee had already the transferred the ownership and possession of the property and only registration of sale deed was done in June 2008. The ITAT Ahmadabad in the case of Hemant Ishwarlal Desai (supra) by following the ratio of the judgment of the Full Bench of Hon'ble jurisdictional High Court of Gujarat in the case of Mormasji M Vaid 250 ITR 242 (Full Bench), wherein it was held that such a transfer has to be assessed to tax in the assessment year relevant to the previous year within which the transfer of property falls and note that assessment year in which registration of document was made. In view of above, the Ld. CIT(A) was Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani right in following the order of the Tribunal (Supra) and in directing the AO u/s 150(1) of the Act to issue notice u/s 148 of the Act for A.Y. 2008-09 and to reopen the relevant assessment year regarding the transactions recorded in the seized material as discussed above. From the copy of the notice dated 27.06.2017 u/s 148 of the Act it is clear that the AO has initiated reassessment proceedings for A.Y.2008-09 as per directions of the CIT(A). Therefore, we are inclined to hold that the CIT(A) was right in holding that the capital gain is taxable in A.Y.2008- 09 and not in A.Y.2009-10 and in directing the AO to take appropriate action in this regard. There is no ambiguity or perversity in the first appellate order in following order of the Tribunal(supra) which has been rendered by following rato of the decision of full Bench Hon'ble Gujarat High Court. Therefore, conclusion drawn by the CIT(A) requires no interference and thus we uphold the same. Accordingly the grounds of the revenue are dismissed.

“4With the assistance of the Ld. Representatives, we have gone through the record carefully. We find that agreement was executed before 31.3.2008. Payments were made through account payee cheque partly and part payment was shown through post-dated cheque. The Ld. Commissioner has observed that transfer within the meaning of section 2(47) of the Act was complete once possession was delivered on receipt of consideration. This fact was not disputed. He also took note of the order of the ITAT, Ahmedabad on identical issue rendered in the case of Hemant Ishwarlal Desai in ITANo.1705/Ahd/2012. It is also pertinent to observe that in the case of vendor receipt of on-money has been stated to be assessed in the Asstt. Year 2008-09. Considering the fact that transaction was materialized in the accounting year relevant to the Assessment year 2008-09, we find that the Ld. CIT(A) has rightly issued directions under section 150(1) of the Income Tax Act for reopening of the assessment in the Assessment year 2008-09. We do not find any error in the finding of the Ld. CIT(A), hence, this ground of appeal is rejected.”

11. As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in the case of Shri Jaykumar S. Goplani, in ITANo.16/SRT/2017 for A.Y.2009-10, and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). Ld. DR cited the judgment of Hon'ble Supreme Court in the case of Suraj Lamp and Industries Pvt. Ltd (supra), which applies to “Will” and “GPA”, therefore does not apply to the assessee’s case under consideration. We find no reason to interfere in the said order of the Coordinate

Assessment Year.2009-10 Chaturbhai Karshanbhai Vasani Bench therefore, respectfully following the above binding precedent, we dismiss the appeal of the Revenue and confirm the order passed by ld. CIT(A).

Order is pronounced on 01/02/2021 at the time of Virtual Court Hearing.