LATE PRATAPSINH SHOORJI VALLABHDAS,LOWER PAREL vs. INCOME TAX OFFICER, MUMBAI

Before us, learned counsel appearing for the assessee reiterated the stand taken before the Departmental Authorities. He submitted, identical addition was made at a hands of the other co-owner, namely, Ms. Jyotsna Vikramsinh in the very same assessment year. However, he submitted, when the issue finally came up before the Tribunal, the Tribunal vide order dated 28.06.2019 in deleted the addition. Thus, he submitted, the issue is squarely covered by the decision of the Tribunal in case of another co-owner.

Leaned D.R. strongly relied upon the observations of the AO and learned First Appellate Authority.

We have considered rival submissions and perused the materials on record. It is the case of the assessee that he along with two other co-owners had sold a property to a Builder & Developer for a total sale consideration of Rs.1,80,00,000/- in F.Y. 2010-11 corresponding to A.Y. 2011-12. It is the further say of the assessee that 1/3rd share falling to each of the co-owners was offered as capital gain in A.Y. 2011-12. It is further case of the assessee that since the cheques issued by the Builder were not deposited in the bank accounts of the co-owners as per the instructions of the Builder subsequently cash equivalent sale consideration was paid by the Builder to the co-owners in F.Y. 2012-13, which was deposited in the Bank account.

/Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer 7. On perusal of bank statement of the assessee for the F.Y. 2010-11, we have not noticed any credit of Rs.60,00,000/- through the cheque issued by Builder in favour of the assessee. Thus, the contention of the assessee that the cheque issued by the Builder towards sale consideration of the property never credited in the bank account remains uncontroverted. In view of the aforesaid, the claim of the assessee that the cash amount received in F.Y. 2012-13, represents sales consideration appears plausible. In fact, while considering identical dispute arising in case of another co-owner, namely, Smt. Jyotsna Vikramsinh, the Coordinate Bench in vide order dated 28.06.2019 has held as under: “7. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that assessee had sold the land jointly owned by her with Mr. Pratapsinh Shoorji Vallabhdas and Mr. Dilipsinh Shoorji Vallabhdas. Thus, the assessee was having 1/3rd share therein. The plot was sold for Rs.1.80 Crores through conveyance deed on 03/11/2010. According to the conveyance deed, assessee was entitled to receive Rs.60,00,000/- (equivalent to her 1/3rd right in the land) which was paid through cheque by the purchaser M/s. Kanchi Koncept Builders & Developers Pvt. Ltd. Subsequent to the execution of the conveyance deed, the buyer asked the assessee not to deposit the cheque till he gives the clearance. However, thereafter, the buyer has paid Rs.60,00,000/- in the F.Y.2012- 13 on different dates as stated above. The said amount was deposited by the assessee in her bank account. It is also a matter of record that profit earned on the sale proceeds of Rs.60,00,000/- out of the sale of land was already offered as capital given in the A.Y.2011-12 which was under scrutiny by the Assessing Officer and assessment order was passed on 30/03/2014 for the A.Y.2011-12. The AO had dealt with the issue of capital gains on sale of this land at para 13 and after giving deduction on account of indexed cost of acquisition brought capital gain of Rs.52,09,409/- to tax net. It is also a matter of record that tax liability on the said capital gains was also paid by the assessee in the A.Y.2011-12, no further liability remain to be paid on the said transactions. It is also not a case of AO that cheques received in the A.Y.2011-012 was credited by assessee in her bank account. On the /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer contrary, the audited balance sheet clearly indicates that the amount of Rs.60,00,000/- given by cheque which was not cleared was shown in the audited balance sheet under the head ‘loans and advances’ in the A.Y.2011-12 and 2012-13. This clearly establishes the fact that the said amount of Rs.60,00,000/- was not recovered by the assessee from the purchaser in the A.Y.2011-12 and 2012-13. Since the assessee has correctly disclosed and offer to tax capital gains on the said transactions in the A.Y.2011-12, the same cannot be brought to tax once again by the AO in the A.Y.2013-14. No positive material was brought on record by the AO to decline the explanation of the assessee with regard to receipt of cash during the year in respect of the cheque which could not be deposited in the bank account in the A.Y.2011-12. Therefore, the action of the AO to bring the amount of Rs.60,00,000/- to tax which was already offered by the assessee in the A.Y.2011-12 is bad in law. The observation of CIT(A) to the effect that the amount received by the assessee in the A.Y. 2013-14 and the sale of the said land in the A.Y. 2011-12 are separate transactions is incorrect since the amount recoverable from the Purchaser is not only shown in the audited accounts of the assessee but also can be clearly seen from the bank statements of the assessee which corroborate the fact that the said amount of Rs. 60,00,000/- was never received by the assessee in the A.Y. 2011-12. Therefore, the amount received by the assessee during the A.Y. 2013-14 is nothing but the consideration received as part of the said transaction of sale of land and the stand taken by the A.O. and upheld by the CIT(A) is erroneous on the facts and in the circumstances of the case.

Further, the CIT(A) has also erred in observing that the assessee did not advance any reason as to why the cheque of Rs. 60,00,000/- received from the Purchaser was not deposited in the bank. In fact the assessee has offered the explanation that the assessee along with other co- owner, Mr. Pratapsinh Shoorji Vallabhdas, were restrained by the Purchaser from depositing the cheques and were warned of the consequences such as cheques being dishonoured due to insufficiency of the balance in the bank account of purchaser M/s. Kanchi Concept Builders and Developers Pvt. Ltd. As a result, the assessee and Mr. Pratapsinh Shoorji Vallabhdas did not deposit the cheques in the bank account. At this backdrop it was factually incorrect on the part of the CIT(A) to conclude that the assessee did not offer any reason for holding the cheque and not deposited the same for a long period of time and such conclusion deserves to be quashed.”

/Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer 8. On careful scrutiny, we find no difference in the factual position, qua the issue so far as the present assessee is concerned. Therefore, respectfully following the decision of the Coordinate Bench in case of the co-owner, we hold that the addition is unsustainable. Accordingly, we direct the AO to delete the addition. 9. In the result, appeal is allowed.