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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI G. MANJUNATHA & SHRI RAHUL CHAUDHARY
आयकर अपीलीय अिधकरण,‘ डी’ �ायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी जी मंजूनाथा ,लेखासद�य,एवं �ी रा�ल चौधरी, �याियक सद�य के सम� BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER आयकर अपीलसं./I.T.A No.:1459/CHNY/2019 िनधा�रण वष�/Assessment Year: 2010 - 2011 Smt. R. Saraswathi, No.14/279, Lakshmi Nagar, Palani – 624 601. T.N. अपीलाथ�/Appellant PAN: HBIPS 3781L …………… Vs. The Income Tax Officer - Ward 3, Income Tax Department Palani Bye Pass Road, Kottapatti, ��थ�/Respondent Begambur, Dindigul 624002. …………… Appearances: For the Appellant/Assessee : Mr. S. Sridhar, Advocate For the Respondent/Department : Ms. R. Uma Maheshwari, JCIT Date of conclusion of hearing : 31.05.2022 Date of pronouncement of order : 26.08.2022 आदेश /O R D E R Per Rahul Chaudhary, Judicial Member:
By way of the present appeal the Appellant/Assessee has challenged the Order, dated 22.02.2019, passed by the Learned Commissioner of Income Tax (Appeals)-1, Madurai [hereinafter referred to as the ‘the CIT(A)’], dismissing the appeal against the assessment order, dated 29.12.2016, passed under Section 153C read with Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2010-11.
Brief facts as culled out from the record are that Appellant, a housewife having no taxable income since the assessment year 2007-08 till the relevant assessment year, along with her 6 siblings entered into a sale agreement with M/s Ramesh Real Estates, Coimbatore, a partnership
firm, to sell their inherited immovable land/property measuring 19.375 cents situated at SF 679/1, Uppilipalayam Village, Singanallur, Coimbatore vide agreement dated 26.12.2006. According to the Appellant the total sale consideration of INR 6,78,000/- was received by the Appellant and other 6 co-owners as under: Date Particulars Amount(INR)
26.12.2006 Advance on entering into agreement 25,000
28.12.2006 Balance received as full and final 6,53,000 settlement Total consideration 6,78,000 2.1. On receiving full consideration, as per the request from the Managing Partner of M/s Ramesh Real Estates, the Appellant and her 6 siblings issued a registered Power of Attorney, dated 28.12.2006, authorizing Mr. M S Raj Seckhar to execute the sale deed on their behalf. They also executed a non-revocable letter of confirmation of sale in favour of M/s Ramesh Real Estates confirming the receipt of the full consideration. Out of the total consideration of INR 6,78,000, the Appellant’s share was only 1/7th which worked out to INR 96,857/-. The Appellant did not file return of Income for the Assessment Year 2007-08 since her share was well below the basic exemption limit of INR.1,35,000/-.
2.2. On the basis of the above Power of Attorney issued by the Appellant (along with her 6 siblings) and another similar Power of Attorney issued by one Sh. KP.Velumayil for another land/property, M/s Ramesh Real Estates sold the land/property to Sh. A. Joseph vide Sale Deed, dated 23.05.2008 which was executed by the Sh. M.S. Raj Seckhar. M/s Ramesh Real Estates disclosed income of INR 42,000/- in the return of income arising from the aforesaid transactions of sale of land/property in the return of income for the Assessment Year 2009-10.
2.3. A search action was carried out on one Sh. S. Arputharaj wherein certain documents were seized. The Appellant was issued notice under Section 153C of the Act for the Assessment Year 2010-11 as according to the Assessing Officer certain loose sheets with noting of cash payments made on 23.02.2010 with respect to the land transferred by the Appellant along with 6 siblings were seized.
2.4. In response to the above notice received, the Appellant filed return of income for Assessment Year 2010-11 on 28.12.2016 declaring a ‘Nil’ income. The Assessing Officer passed order under Section 153C r.w.s 143(3) on 29.12.2016 framing protective assessment in the hands of the Assessee holding as under:
“On verification, it is found that the sale document has been registered in the month of August 2008. It is found from the loose sheets seized during the search, the amount was finally settled on 23.02.2010. Thus the capital gain to be assessed in assessment year 2009-10 instead of 2010-11 because the registration date should be taken for capital gain. However, the amount was finally settled in February 2010, the assessment is passed protectively in the assessment year 2010-11 subject to the initiation proceedings u/s 153C for the assessment year 2009-10 in which the capital gain to be assessed substantively.”
2.5. Being aggrieved, the Appellant went in appeal before the CIT(A) which was dismissed. Further, The CIT(A) converted protective assessment into substantive assessment in the hands of the Appellant holding as under: “I have perused the assessment order, grounds of appeal and written submission filed by the appellant. The appellant is one of the owners of the land and has a 1/7th share in the same. The assessing officer has passed the protective assessment whereas the same should have been a substantive assessment, as nothing has been assessed in the hands of any other person in relation to the profits from the said property. Admittedly, as recorded by the assessing officer, the land was actually registered in the financial year 2009-10, therefore, there is no merit in the appellant’s claim and the same has been rightly assessed by assessing officer in the assessment year 2010-11. In view of the above all the grounds of appeal of the appellant are dismissed and the order of the assessing officer is confirmed.”
2.6. Being aggrieved, the Appellant is now in appeal before us challenging the order passed by the CIT(A). All the grounds raised by the Appellant are directed at the aforesaid addition of INR 4,76,847/- made by the Assessing Officer/CIT(A), and are, therefore, taken up together. Since, the grounds raised were argumentative the same are not reproduced herein for the sake of brevity.
The Learned Authorized Representative of the Appellant took us through the Assessment Order, the Statement of Facts filed before the CIT(A) as well as the impugned order passed by the CIT(A) to support his submission that the transfer as per Section 2(47) of the Act took place on 28.12.2006 when the registered power of attorney was executed by the Appellant along with her siblings after receiving the full consideration and handing over the possession of the land/property to the purchaser (i.e., M/s Ramesh Real Estates). Therefore, the capital gains, if any, could have been brought to tax during the Assessment Year 2007-08 and not in Assessment Year 2010-11. He further submitted that there was no incriminating material. Referring to the Assessment Order, he submitted that even the Assessing Officer had only framed a protective assessment in the Assessment Year 2010-11 subject to initiating of the proceedings under Section 153C of the Act for the Assessment Year 2009-2010. According to the Learned Authorised Representative for the Appellant, the CIT(A) had dismissed the appeal without appreciating the documents filed before him and had incorrectly converted the protective assessment into substantive assessment by holding that the capital gains are to be assessed in the hands of the Appellant in the Assessment Year 2010-2011.
In response to a query from the Bench regarding the incriminating material and its nexus with the Appellant, the Learned Departmental Representative placed on record a copy of the letter dated, 06.11.2015, sent by the Assistant Commissioner of Income Tax, Central Circle-1, Coimbatore to the Income Tax Officer, Ward – 3, Dindigul forwarding the information/documents for initiation of proceedings against the Appellant under Section 153C of the Act for the Assessment Year 2010-2011 - 4 -
which was accompanied by a copy of the impounded loose sheet no.95, dated 10.12.2013, containing hand written particulars of the payments/advances made to the land sellers of Nanjundapuram property and details of land purchased. The Learned Departmental Representative referred to an entry of INR 35,00,000/- in the aforesaid note and submitted that the same reflected the cash received by the Appellant during the previous year relevant to the Assessment Year 2010-11. The Learned Departmental Representative relied upon the orders passed by the lower authorities in support of the case of the Revenue.
We have heard the rival submissions and perused the materials on record. The copy of the hand-written note forms the basis of the additions made by the Assessing Officer. An entry of INR 35 Lakhs is reflected in the abovesaid hand-written note and according to the Revenue the same represents cash paid to the Appellant and her siblings. However, the same does not refer to or mention the name of the Appellant or her siblings. Even in the Assessment Order, the Assessing Officer has observed as under: “On correlation of the aforesaid seized documents, it is evident that Smt. R. Saraswathi along with other family members sold the above said property to Shri A. Joseph (Power of Attorney) of Shri S. Arputharaj, through Shri S. Mukundan for a total consideration of Rs.47,22,500/- finally settling the dues on payments of cash of Rs.35,00,000/- on 23.02.2010.” (Emphasis Supplied)
Though the Assessing Officer has stated that ‘on correlation’ of the seized documents, it is evident that the Appellant along with her siblings had sold the property and received cash of INR 35,00,000/- on 23.02.2010, no such co-relation can be established on the basis of the materials placed before us. There is no material to link the entry of cash of INR 35,00,000/- with the Appellant. The findings of the Assessing Officer are based on conjecture and surmises. There is no incriminating material qua the Appellant. Even, the finding returned by the CIT(A) that the land was actually sold during the previous year relevant to the Assessment Year 2010-2011 has no basis and runs contrary to the - 5 -
Assessment Year : 2010 - 2011 finding of the Assessing Officer that the land was sold to Sh. A Joseph vide registered document No.6813/2008 on 11.08.2008. The conclusion drawn by the CIT(A) seems to be driven by the fact that nothing has been assessed in the hands of any other person in relation to the transfer of land/property. In our view, approach adopted by the authorities below cannot be countenanced as there is no basis to make any addition in the hands of the Appellant for the Assessment Year 2010-11. Accordingly, we reverse the decision of the CIT(A) and delete the addition of INR 4,76,847/- made by the Assessing Officer in the hands of the Appellant.
In view of the above, the present appeal is allowed.
Order pronounced in the court on 26.08.2022 at Chennai.