MAHESH MATADIN VERMA,JAIPUR vs. ITO, JHUNJHUNU

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ITA 173/JPR/2015Status: DisposedITAT Jaipur17 May 2018AY 2007-0814 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the capital gain was rightly taxed in the year under consideration by invoking the provisions of Section 50C of the Act. The Tribunal noted that the assessee never gave possession of the land in earlier years, and there was no execution of a sale deed in earlier years. The agreement dated 27/09/1992 was cancelled, and the development agreement dated 06/08/2002 was not with the same party as the sale executed on 27/10/2006. The facts suggested that the agreements in 1992 and 2002 were made to avoid tax liability on the transfer of property. The Tribunal found that the purchaser party in the 1992 agreement was different from the purchaser party in the 2006 sale deed, and the development agreement was also with a different party. Therefore, the sale transaction on 27/10/2006 was considered an independent sale, even if documents reflected it as a continuation of the earlier agreement. The Tribunal confirmed the AO's addition as long-term capital gain. The ground regarding the assessee not inheriting the property was also dismissed as contrary to facts, as the property transferred to the assessee as a legal heir. The appeal was dismissed.

What were the facts?

The assessee, Mahesh Matadin Verma, filed an appeal against the order of the CIT(A)-3, Jaipur, dated 31/12/2014, for Assessment Year 2007-08. The assessment was reopened under Section 147 of the Income Tax Act, 1961, based on a sale deed executed on 27/10/2006. The Stamp Duty Authority valued the property at Rs. 2.5 crores. The Assessing Officer (AO) calculated long-term capital gains, including indexation benefits, and made an addition. The CIT(A) dismissed the assessee's appeal on grounds of reopening and merits. The assessee contended that the property was transferred by his mother in 1992, capital gains were assessed in earlier years, and subsequent agreements, including a cancellation deed and a development agreement, did not constitute a fresh transfer. The assessee also argued against the application of Section 50C and the valuation officer's role.

What were the issues?

1. Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961, was valid? 2. Whether the Assessing Officer erred in assessing long-term capital gain at Rs. 48,48,452/- in respect of the property 'Saraswati Bhavan' by not accepting the assessee's contentions regarding prior transfer, cancellation deeds, development agreements, and the applicability of Section 50C of the Income Tax Act, 1961? Assessee's Contentions: - The property was transferred by Smt. Bhanwari Devi in 1992, and capital gains were assessed in AY 1993-94 and 1995-96. - A cancellation deed in 2002 was not acted upon, and the original agreement was revived by a development agreement in 2002. - The sale deed in 2006 was executed by legal heirs in continuation of the original agreement, and the property was already transferred under Section 2(47)(v) of the IT Act read with Section 53A of the Transfer of Property Act, 1882, thus no capital gain is assessable in the current year. - Application of Section 50C treating sale consideration based on stamp valuation is not as per law. - Application of Section 50C without reference to the valuation officer under Section 50C(2) is illegal. - The assessee did not inherit the property but executed the sale deed as a moral duty to fulfill his mother's agreement. Revenue's Contentions: - The AO's case was that the assessee executed a sale deed on 27/10/2006 for Rs. 2.50 lakh, while the market value as per stamp duty was Rs. 2.5 crore, justifying action under Section 147/148.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 2(47),Section 53A,Section 50C,Section 50C(2),Section 159

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR

Before: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM

For Appellant: Shri P.C. Parwal (CA)
For Respondent: Smt. Neena Jeph (JCIT)
Hearing: 15/05/2018Pronounced: 17/05/2018

per sale deed dated 27.10.2006. Further even the development agreement dated 06.08.2002 was made with all together different party. Therefore the transaction of sale dated 27.10.2006, was independent sale transaction though in the documents it is reflected in a manner to be showing in continuance to agreement dated 27.09.1992. Another important point to be taken into consideration is that why a person will transfer or sale a property for Rs. 18 Lacs on the rate applicable in AY 1993-94 to a all together different purchaser party when the prevailing market rate of the property were so high. The corroborative facts also indicate that the actual sale consideration may have been for Rs. 2.5 Crores or more but to avoid the tax liability it was shown for Rs. 2.50 Lacs, that too in continuance to earlier agreement. Keeping in view these facts it is held that on sale of the property as per sale deed dated 27.10.2006, the AO has rightly taxed assessee’s share as long term capital gain. Accordingly the addition made by the AO is confirmed.”

7.

We have heard both the sides and considered the case laws

relied upon. We have also considered the written submissions of the ld

AR. After considering all these, we are of the view that the capital gain

by invoking the provisions of Section 50C of the Act are rightly taxed in

the year under consideration. The assessee has never given possession

of the land in earlier years. There was no execution of the sale deed in

the earlier years. The agreement dated 27/09/1992 was cancelled. The

development agreement dated 06/8/2002 was not with the person

which whom the sale was executed on 27/10/2006. The facts on

ITA 173 /JP/2015_ 13 Mahesh Matadin Verma Vs ITO record also suggest that such agreement in 1992 and 2002 are simply

to avoid the payment of various taxes on transfer of property.

Considering all these aspects of the matter, we confirm the order of the

ld. CIT(A) on this issue. Accordingly, this ground of assessee’s appeal is

dismissed.

8.

In the ground No. 3 of the appeal, the issue raised has no merit

wherein it is claimed that the assessee has not inherited the property

but this claim is contrary to the facts of the case after the death of the

mother of the assessee. The property got transferred in the name of

the assessee as legal heir and the assessee is one of the executor of

the sale deed alongwith other legal heirs. Therefore, this ground is also

not supported by the facts on record. Hence, this ground of appeal is

dismissed.

9.

Grounds No. 4 and 5 of the appeal are general in nature and

does not require any adjudication.

10.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on 17/05/2018.

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सहायक पंजीकार@Aेेज. त्महपेजतंत

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