SUSHILA DEVI MEENA,JAIPUR vs. ITO, JAIPUR

PER BENCH: These are five appeals by the assessees who are family

members: mother, three sons and one daughter-in-law arising from

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

separate orders of ld. CIT(A) all dated 26.02.2016 for the assessment

year 2006-07.

r.w.s. 144 of the Act. The Assessing Officer has reopened the

assessment by issuing notice u/s 148 of the Act to assess the capital

gain arising from sale of agricultural land in the hands of Smt. Dhapu

Devi Meena and the deposits in the bank accounts of the sons/

daughter in law of Smt. Dhapu Devi Meena. In the reassessment the

AO assess the capital gain arising from sale of agricultural land in the

hands of Smt. Dhapu Devi Meena and the income on account of

deposits made in the bank accounts of the sons and daughter in law of

Smt. Dhapu Devi Meena. The assessees challenged the action of the AO

before the ld. CIT(A) and contended that the agricultural land in

question was inherited by all the assessees on death of Shri Bhawara

@ Bhura in the year 2004 and thereafter the land in question was sold

vide sale deed dated 11.08.2005 for a consideration of Rs.

1,76,34,000/-. Since, there was no response to the notice issued u/s

142(1) of the Act the AO also made addition in the hands of Smt.

Dhapu Devi Meena on account of unexplained deposits in bank account

of Rs. 32,95,345/-. However, it was contended before the ld. CIT(A)

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

that all the legal heirs of late Shri Bhawara @ Bhura were heaving equal

shares in the land in question and therefore, the sale consideration was

also received in equal shares. Since, there was relinquishment deed

dated 14.06.2005 prior to the transfer of the property, therefore, the ld.

CIT(A) did not accept this contention of the assessee and confirmed the

entire capital gain in the hands of Smt. Dhapu Devi Meena widow of

Late Shri Bhawara @ Bhura. The additions made by the AO on account

of unexplained deposits in the bank account was also confirmed by the

ld. CIT(A) in the hands of the sons and daughter-in-law and the

explanation of the assessees that the deposits were made out of the

sale proceeds of land in question was not accepted.

by the authorities below and also filed additional grounds which are

common in these appeal as under:-

“4) Under the facts and circumstances of the case and under the law, the learned A.O. grossly erred in ignoring Sales Receipts of the Agricultural Land i.e. Sales consideration received by the appellant, ignoring Sec. 8 and Sec. 10 of the Hindu Succession Act, 1956, read with Sec. 4, 45 and 48 of the Income Tax Act, 1961. This is in connection with the matter of her mother-in-law Dhapu Devi Meena (PAN: BZSPD1376G)

4.1) Under the facts and circumstances of the case and under the law, the learned A.O. has admitted that the agricultural 4

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

land in question was ancestral and still, the Ld. AO has not divided the gross sale proceeds amongst the six sons and the widow appellant. By compulsion of law, the sons had legal and valid right to receive the property and the sale consideration thereof.

4.2) Under the facts and circumstances of the case and under the law, the widow assessee was, by law, bound to divert the gross receipts under Sec. 8 and Sec. 10 of the Hindu Succession Act, 1956, as the cost of transfer, read with Section 4, 45, 47, 48 (mode of computation) of the Income Tax Act, 1961.

5) Under the facts and circumstances of the case and under the law, the Appellant Assessee was entitled for the Fair Market Value as cost of acquisition of the said agricultural land, which was acquired before 01/04/1981. The Learned A.O. has not calculated the Cost of Acquisition, which is against the principles of natural justice.

6) Under the facts and circumstances of the case and under the law, the learned A.O. has not allowed the deduction under section 54F in respect of construction of new residential house.”

Thus, the assessees raised the issue that the cost of acquisition was

taken by the AO at nil whereas when the land was acquired by the

ancestor prior to 01.04.1981 then, as per provisions of section 48 to 49

of the Income Tax Act the cost of acquisition shall be deemed as per 5

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

the fair market value of the land as on 01.04.1981. Further, the

additional grounds is also raised regarding the sharing of the sale

consideration among all the legal heirs of late Shri Bhawara @ Bhura

and therefore, the capital gain if any arising from the sale of the land

has to be assessed in the hands of the legal heirs who had shared the

sale consideration.

grounds raised by the assessees. We find that the AO has applied the

cost of acquisition of the land at nil without considering the provisions

of the Income Tax Act in respect of the asset which was acquired by

the assessee as under succession/ inheritance and previous owner the

land had acquired the agricultural land prior to 01.04.1981. Therefore,

we find substance and merit in the additional ground raised by the

assessee so far as the cost of acquisition has to be determined by

considering the relevant provisions of the Act as well as the fair market

price of the land as on 01.04.1981. As regards the issue of assessing

the capital gain in the hands of the legal heirs who have inherited the

agricultural land in question instead of in the hand of only the widow of

late Shri Bhawara @ Bhura there was a relinquished deed by the

daughters and sons of late Shri Bhawara @ Bhura in favour of Smt.

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

Dhapu Devi Meena whereby released their rights in land to facilitate the

sale of the land vide sale deed dated 11.08.2005. It is pertinent to note

that apart from the sons, the daughters of late Shri Bhawara @ Bhura

have executed relinquishment deed dated 14.06.2005 but the sale

consideration has been shared by the widow and 6 sons. Therefore

once, the sale consideration was shared among the mother and 6 sons

being co-owner of the land in question and excluded the daughters then

long term capital gain arising from sale of land in question is required to

be assessed in the hands of 7 legal heirs who have inherited the land

and also shared the sale consideration in equal share. We further note

that the amount which is shared by these 7 legal heirs of late Shri

Bhawara @ Bhura is duly reflected in their respective bank account. The

transaction of sale of land and the amounts deposited in their

respective bank account of these persons/assessees are

contemporaneous. Thus, once the amount deposited in the bank

account and the sale transactions in question are at the same point of

time and there is no other source of income then the explanation of the

assessee that the amount deposited in the respective bank accounts is

nothing but their shares in the sale consideration received on transfer of

agricultural land in question. The ld. DR has raised the contention that

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

once sons have signed and executed the relinquishment deed along

with the daughters of late Shri Bhawara @ Bhura in favour of their

mother then the subsequent sale would be treated as the sale by only

one assessee Smt. Dhapu Devi Meena. We find that the relinquishment

deed was executed as per their family arrangement and mutual

understanding so that the family of the daughters of late Shri Bhawara

@ Bhura and Smt. Dhapu Devi Meena would not claim the amount in

future and therefore, the sole purpose of executing relinquishment deed

was to avoid the future dispute/litigation in respect of the share in the

land. Thus, the relinquishment deed made it possible to share and

distribute the sale consideration among the mother and sons excluding

the daughters. Since, one of the sons expired therefore, the wife of the

son is representing as legal heirs of the appeal in ITA No. 419/JP/2016.

Accordingly, all sons and mother have shared the sale consideration

received on transfer of the land in question and the deposit in bank

account of the assessees is from amount received being represented as

sale consideration. Hence, we find that the non acceptance of the

explanation of source as well as the sharing of the sale consideration by

these assessee by the authorities below is not proper and justified.

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO

Accordingly, in view of the above facts and circumstances of the case

we admit the additional amount raised by the assessees.

the sale consideration in equal share therefore, the matter requires

afresh consideration for assessing the capital gain in equal shares in the

hands of the 7 assessees out of which 5 assessees are before us. The

details of these legal heirs are as under:-

Total amount of sale consideration is Rs. 1,77,41,000/-

Widow (mother) Dhapu Devi 25,34,429/- Son1 Arjunram 25,34,429/- Son2 Nemichand 25,34,429/- Son 3 Jagdish 25,34,429/- Son4 Mannalal 25,34,429/- Son5 Prabhudayal 25,34,429/- Son 6 Madanlal 25,34,429/-

Accordingly, we set aside these matters to the record of the Assessing

Officer for fresh adjudication of the same by consideration the capital

gain in the hands of these assessees in equal shares as well as

considering the other claims of the assessees as per law. The other

issues in these appeals are also accordingly stand set aside to the

record of the AO. Since, the AO is required to consider the cost of

acquisition as per fair market value as on 01.04.1981 therefore all other

ITA No. 419 to 423/JP/2016 Smt. Sushila Devi Meena and others vs. ITO claim of index cost and other deductions are also required to be considered by the AO. Accordingly, all these appeals are set aside to the record of the Assessing Officer in the above terms. In the result, all the appeals of the assessees are allowed for statistical purposes.

Order pronounced in the open court on 04/04/2018.

Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 04/04/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Smt. Sushila Devi Meena, Shri Jagdish Prasad Meena, Shri Manna Lal Meena, Smt. Dhapu Devi Meena & Shri Nemi Chand Meena, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward 7(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 419 to 423/JP/2016} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत