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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: SHRI R.K. PANDA & SHRI K. NARASIMHA CHARY
This appeal filed by the Revenue is directed against the order dated 31.03.2014 of the learned CIT (A)-V, Hyderabad relating to A.Y 2008-09.
There is a delay of 5 days in filing of this appeal by the Revenue for which a condonation application has been filed explaining the reasons for such delay. After considering the contents of the condonation petition and after hearing both the sides, the delay in filing of this appeal by the Revenue is condoned and the appeal is admitted for adjudication.
Facts of the case, in brief, are that the assessee is an individual and derives income from salary, income from truck plying, share of income from ITA 1469 of 2014 partnership firm and interest on capital etc. He filed his return of income on 23.09.2010 declaring total income of Rs.6,10,760/-. In this case the Investigation Wing of the department gathered information to the effect that the assessee purchased 9 acres 35 guntas of land at Survey No. 219/AA of Malkapur village, Nalgonda district from Smt. Tahera Abeda for a consideration of Rs.9,87,500/- on 16.01.08 and sold the same on 05.02.08 to Maytas County Developers Pvt. Ltd for a consideration of Rs.4,44,37,500 vide sale deed No. 254/08. But the assessee has neither disclosed the sources for the purchase nor the profit on transfer of the lands to the department. To bring to tax the escaped income, notice u/s 148 was issued by Income Tax Officer, Nalgonda on 10.12.2009 requiring the assessee to file his return for the assessment year 2008-09. In response to the notice u/s 148 of the I.T. Act, the assessee stated that the return of income filed on 23.09.2010 be treated as return in response to notice u/s 148. Statutory notices u/s 143(2) & 142(1) were issued and served on the assessee to which the AR of the assessee appeared from time to time and filed the requisite details.
During the course of assessement proceedings, the Assessing Officer noted that the assessee has purchased agricultural land admeasuring 9acres 35guntas at Survey No. 219/AA of Malkapur village, Nalgonda district from Smt. Tahera Abeda for a consideration of Rs.9,87,500/- on 16.01.08 and sold the same on 05.02.08 to Maytas County Developers Pvt. Ltd for a consideration of Rs.4,44,37,500 vide sale deed No. 254/08, dated 5.2.2008. It was explained by the assessee that the actual consideration paid to Smt. Tahera Abeda was Rs.4,28,16,500/- and in support of the claim, the assessee filed two receipts by one Shri Shaik Fakruddin Arif acknowledging sale consideration of Rs.4,28,16,500/-. However, the Assessing Officer noted that no return of income was filed by Smt. Tahera Abeda or on her behalf for the ITA 1469 of 2014 A.Y 2008-09. According to the Assessing Officer, even if the contention of the assessee that the transferred property is agricultural land and that the gain on such transfer is exempt, still, prima facie, wealth tax liability arises. He therefore, rejected the claim of the assessee that the consideration of Rs.4,28,16,500/- was paid to Smt. Tahera Abeda. Accordingly, the Assessing Officer determined the sale consideration of the property at Rs.4,44,37,500/- . After considering the cost of the land at Rs.9,87,500/-, he proceeded to assess the same on protective basis.
The Assessing Officer further noted that the assessee purchased the land on 16.01.2008 and sold the same on 5.2.2008 thus holding the property only for about 20 days. According to the Assessing Officer, it is clear from the statement of affairs filed by the assessee that he did not have sufficient funds to pay the sale consideration to Smt. Tahera Abeda. He therefore, came to the conclusion that after the deal of purchase from Smt. Tahera Abeda, the assessee was intending to sell the same to the ultimate purchaser M/s. Maytas Hill County Developers. Since according to the assessee he had paid the sale consideration to Smt. Tahera Abeda only after receiving the sale proceeds from Maytas Hill County Developers, therefore, the assessee, according to the Assessing Officer, did not intend to purchase and hold the impugned land in his name for some time. Therefore, this transaction is essentially is an adventure in nature of trade by him and therefore, the profit on sale of the impugned land is chargeable to tax u/s 28 and not u/s 45 as claimed by the assessee. Relying on the decision of the Hon'ble Supreme Court in the case of G. Venkataswamy Naidu & Co vs. CIT (1959) 35 ITR 594, the Assessing Officer held that the transaction is adventure in nature of trade. After deducting the cost as per sale deed and registration expenses, etc., and the profit declared on the regular basis, the Assessing Officer added an amount of Rs.4,43,51,900/- in the hands of the assessee on protective basis.
ITA 1469 of 2014
In appeal, the learned CIT (A) deleted the addition by observing as under:
ITA 1469 of 2014
ITA 1469 of 2014
The learned CIT (A) further held that the land sold by the assessee is agricultural land and hence the sale consideration was exempt from capital gain tax by observing as under:
Aggrieved with such order of the learned CIT (A), the Revenue is in appeal before the Tribunal by raising the following grounds: “
1. The learned CIT (A) erred both in law and on facts of the case.
2. The learned CIT (A) ought to have upheld the protective assessment made in the hands of assessee, as the substantive assessment has not yet reached finality.
3 Without prejudice to the above, the learned CIT (A) ought to have upheld the treatment of profit on sale of land as business income.
4 Whether the learned CIT(A) is correct in concluding that the assessee is not the beneficiary of the sale proceeds, by merely relying on the receipts of the alleged GPA holder, even as the original land holder Mrs. Tahera Abeda neither admitted the receipt of any amount nor she filed return of income disclosing the huge receipts ?
5. Any other ground(s) that may be urged at the time of hearing”
ITA 1469 of 2014 9. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case made addition of Rs.4,43,51,900/ in the hands of the assessee on protective basis on account of profit on sale of 9 acres and 35 guntas of land sold by the assessee to M/s. Maytas Hill County Developers for a consideration of Rs.4,44,37,500/- which was purchased by the assessee on16.01.2009 from Smt. Tahera Abeda for a consideration of Rs.9,87,500/-. According to the Assessing Officer, the assessee held the land only for a period of 20 days and did not have sufficient funds to pay the sale consideration to Smt. Tahera Abeda which according to the assessee was paid by him only after receiving the sale proceeds from Maytas Hill County Developers. He therefore, treated the transaction as an adventure in nature and accordingly made addition of Rs.4,43,51,900/- on protective basis. We find the learned CIT (A) deleted the addition on the ground that the Assessing Officer has made protective addition whereas substantive addition has been made in the hands of Smt. Tahera Abeda and the land in question is agricultural land. He has further given a finding that the assessee has paid Rs.4,28,16,500/- to Smt. Tahera Abeda through her GPA holder who confirmed the receipt of the same. We find the learned CIT (A) in the instant case has not properly gone through the record. A perusal of the statement given by Shri Shaik Fakruddin Arif u/s 131 of the I.T. Act on 27.3.2015 before the Assessing Officer shows that he had denied to have issued any receipt to Shri Konda Laxmaiah on behalf of Smt. Tahera Abeda. Relevant question No.7 to 11 are as under:
ITA 1469 of 2014
Further, the learned CIT (A) before deciding the nature of the land as agricultural land has not considered the parameters laid down by the Hon'ble Supreme Court in the case of Ms.Sarifabibi Mohd. Ibrahim vs. CIT reported in 204 ITR 631. We find the order of the learned CIT (A) in the instant case is very cryptic and does not address the various issues involved in the present appeal. He has not stated as to why and how a person can give on money after the sale transaction took place. The order of the learned CIT (A) is completely Page 8 of 10
ITA 1469 of 2014 silent on this issue also. Under these circumstances and considering fact that the order of the learned CIT (A) is very cryptic and perfunctory in nature, we deem it proper to restore the issue to the file of the learned CIT (A) to readjudicate theissue by passing a speaking order. We hold and direct accordingly. The grounds raised by the Revenue are allowed for statistical purposes.
In the result, appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the Open Court on 29th December, 2023.