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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-9, Ahmedabad (‘CIT(A)’ in short), dated 29.11.2013 arising in the assessment order dated 22.11.2012 passed by the Assessing Officer (AO) under S. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2010-11.
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The relevant ground of appeal raised by the assessee reads as under:
“1. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of long term capital gains of Rs.61,18,591/- in the hands of the appellant. 2. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.1,37,474/- as undisclosed interest income. 3. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.19,000/- as unexplained bank deposit.”
The relevant facts apropos to Ground No.1 are as follows:
Assessee, an individual, filed his return of income for AY 2010-11 which was selected for compulsory scrutiny through CASS. In the course of the assessment, the assessee was confronted with the facts of sale of immovable property. In response, the assessee disclosed that he has sold immovable property situated at Bodakdev, Ahmedabad and received sale consideration of Rs.63Lakhs thereon. The assessee claimed before the AO that there are four joint owners of the property sold and assessee is only one of the co-owners alongwith three other co-owners. The assessee admitted that long term capital gains on sale of the property was not disclosed in the return of income and agreed to pay taxes for such voluntary disclosure in the course of the assessment. The assessee further submitted that he being the joint owner of the property the capital gain attributable to assessee works out to Rs.15,29,648/- but however wanted to pay tax on the whole amount of capital gains of Rs.61,18,591/-. The assessee accordingly accepted the capital gains of Rs.61,18,591/- accrued in his hands and paid taxes. The AO noted that the assessee could not produce the purchase deed of the
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property but however as per the sale deed, the property was stated to be inherited property. It was further observed that the assessee became de facto owner of the property and also received and appropriated entire sale consideration to his bank account. Based on the categorical admission of the assessee and willingness of the assessee to own up the payment of tax for whole of sale consideration without any reservation despite name of three other co-sellers included in the sale deed, the AO determined and assessed the entire capital gain of Rs.61,18,591/- as undisclosed long term capital gains in the hands of the assessee.
Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) also endorsed the action of the AO on the ground that assessee has duly accepted that he has to pay tax on entire amount and other co-owners were thus not taxed owing to such admission.
Further aggrieved by the denial of relief by the CIT(A), the assessee preferred appeal before the Tribunal.
Before the Tribunal, the learned AR for the assessee submitted that the admitted facts on record are that the assessee is only one of the joint owners alongwith other three joint owners and therefore whole of the capital gains cannot be taxed in the hands of the assessee notwithstanding wrongful admission made by the assessee in this regard before the AO. The learned AR further contended that the correct entity for the taxation of the capital gain in the instant case is an HUF as the property is inherited property and thus, cannot be taxed in the hands of the individual. The learned AR relied upon the decision of the co-ordinate bench referred in the case of Shri Kishore R. Pithva vs. ITO ITA No. 2931/Ahd/2010 order dated
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17.10.2014 for the proposition that the tax liability is to be determined as per the law and the wrongful admission of the assessee for taxability of capital gain in his hands cannot operate as an estoppel being in contravention of law.
Per contra, the learned DR strongly objected to the plea raised on behalf of the assessee and submitted that the assessee has not disclosed the sale consideration either in his hands or in the hands of the joint owners or in the hands of so called HUF. The case of the assessee was picked up on the basis of specific information on execution of sale by the assessee. The assessee belatedly and left with no option declared the capital gains under his PAN number and thus protected the other joint owners from inquiry and prevented the Revenue from collection of tax from other so called stake holders. The learned DR significantly emphasized that the assessee has received the entire sale consideration which was not appropriated to other co-owners. The whole of the income by way of capital gains has thus accrued in the hands of the assessee for the purposes of s.45 of the Act. The learned DR also contended that the AO has successfully demonstrated on the facts available before him that assessee is the de facto owner. The assessee has also suo motu came forward expressed its willingness to own up the entire capital gain in his hands in individual capacity sans other co-owners. The learned DR thus submitted that where the other co-owners have neither received the sale consideration nor has the assessee shifted the responsibility towards other co-owners in this regard based on knowledge of facts available to the assessee, the presumption has rightly drawn against the assessee by the Revenue authorities. The learned DR further contended that the issue of taxability of capital gains in the hands of one or more of the joint owners is essentially a
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question of fact and therefore, the doctrine of estoppel would not apply as wrongfully contended by the other side. The learned DR supported the aforesaid argument on the premise on the fact that whole of the sale consideration has received and thus accrued in the hands of the assessee owing to transfer of so called inherited property. The learned DR further contended that the assessee could not demonstrate as to how the property belonged to HUF. It was contended that the inheritance of the property under succession laws does not become the property of the HUF automatically by implication under general law. The assessee has failed to demonstrate the relevant facts in this regard. The learned DR accordingly contended that Revenue authorities were fully justified in taxing the entire undisclosed long term capital gain in the hands of the individual assessee herein. The learned DR accordingly submitted that no interference with the order of the Revenue authorities is warranted in the peculiar facts of the case.
We have carefully considered the rival submissions. The case of the assessee is twofold; (i) the income arising from sale of inherited property should be taxed in the hands of the right person i.e. HUF and secondly & alternatively, the taxability of long term capital gain in the hands of the assessee requires to be restricted in proportion to the extent of his co-ownership. We do not find any force in either of the submissions. The claim of the assessee that the inherited property must be taxed in the hands of the HUF alone is without any sound basis. The inherited property does not necessarily devolve in hands of HUF automatically under general laws. The assessee has failed to demonstrate the intention for devolvement of such property in the hands of HUF. Further, HUF can be a broader or narrower family structure and may not be in
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sync with the existing co-ownership. It is for the assessee to demonstrate that the aforesaid property came to be belonging to HUF by operation of law or by any other means. Therefore, the tax liability on a nonexistent HUF of the sellers cannot be fastened nor was such plea taken before the Revenue authorities. The first contention is accordingly rejected.
We now advert to the second line of argument on behalf of the assessee that profits & gains arising from transfer of property should be chargeable in the hands of the assessee in proportion to his joint ownership. The relevant facts as pointed out on behalf of the Revenue are cardinal to determine the issue. Admittedly, the assessee herein has received the entire sale consideration to his credit in exclusion to other co-owners. The assessee himself has admitted the tax liability and expressed his willingness to pay tax on entire amount. This clearly gives rise to a presumption that the de facto assessee alone was the owner of the property notwithstanding inclusion of other co-owners in the purportedly inherited property. This conscious act of the assessee therefore would clearly lead to an interference that he has acted on the basis of specific knowledge of facts to which he alone was privy to. The assessee now therefore cannot plead the opposite and contend that what he stated before the quasi judicial authority was a lie or untrue statement and is entitled to shift the position so taken at a belated state at whims to the prejudice of revenue. A joint ownership in a property does not necessarily mean that the tax liability would accrue in the same proportion of the joint ownership in so far as scheme of the Income Tax is concerned. The plea of doctrine of estoppel is also not well founded in the absence of any contravention of statute in such admission per se. We thus find no
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merit in the contentions marshaled on behalf of the assessee. Hence, we see no reason to interfere with the view taken by the Revenue authorities. Ground No.1 of the assessee’s appeal is dismissed.
Ground Nos. 2 & 3 are also stands dismissed in the absence of any plea on behalf of assessee to displace the action of the CIT(A).
In the result, appeal of the assessee is dismissed.
This Order pronounced in Open Court on 29/03/2019
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 29/03/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।