KAMALUDDIN HAMED SALMANI,HYDERABAD vs. DCIT., CIRCLE 9(1), HYDERABAD

The brief facts of the case are that, the assessee is an individual and filed his return of income for the assessment year 2016-2017 u/sec.139(1) of the Income Tax Act, [in short “the Act”] 1961 on 05.08.2016 declaring total income of Rs.49,83,339/-. The Assessing Officer has completed the assessment u/sec.143(3) of the Act on 18.12.2018 by accepting the return of income filed by the assessee. As per the Information available with the Department, the assessee has executed sale deed agreement with a GPA holder, Sri Badruddin Hussain Salmani for a consideration of Rs.1,63,25,000/- which is to be adjusted with the loan amount owned by the GPA holder to the assessee. The GPA holder paid a sum of Rs.88,00,000/- and the remaining Rs.75,25,000/- shall be adjusted with development and repairs of the building which is to be made by the vendor. The assessee vendee deducted TDS of Rs.88,000/- u/sec.1941A taking into consideration of amount received by the assessee i.e., Rs.88,00,000/- as the net consideration. The Assessing Officer during the course of re- assessment proceedings noted that, the consideration for the purpose of TDS u/sec.194(1A) shall be on the total amount of Rs.1,63,25,000/- and not Rs.88,00,000/- and that, the TDS shall 3 Kamaluddin Hamed Salmani be deducted @ 1% on Rs.1,63,25,000/- which worked out to Rs.1,63,250/-. Therefore, the Assessing Officer noted that, the differential amount Rs.75,250/- (Rs.1,63,250/- - Rs.88,000/-) needs to be brought to tax. 2.1. The Assessing Officer noted that, the assessee has sold a land vide sale deed No.8230 dated 27.7.2015 for a consideration of Rs.2,01,85,000/-. The Assessing Officer observed from the sale deeds produced by the assessee that, out of the capital gain of Rs.2,00,35,049/- (total consideration of Rs.2,01,85,000/- cost of acquisition of Rs.1,49,951/-) that arise from the sale of the land mentioned above, only an amount of Rs.38,60,100/- was deposited in the capital gain scheme and the remaining Rs.1,63,25,000/- was not actually utilized for the purpose of purchase or construction of a residential house. The residential house stated to have been purchased by the assessee on 30.06.2016 was not actually purchased out of the capital gain derived by him from the sale of the land. The GPA holder of the house property, Sri Badruddin Hussain Salmani owned loan amount of Rs.1,63,25,000/- to the assessee, which he could not repay. Hence, the assessee has taken the house property into his

03.2022. The Assessing Officer after considering the submissions of the assessee observed as under : “The assessee vide reply dated 16.03.2022 has also stated that the amount of Rs.1,63,25,000/- was loaned out by the assessee to one, Sh. Badruddin Hussain Salmani. As Sh. Badruddin Hussain Salmani was unable to pay the loan, the property was handed over to the assessee. From the above it is evident that the amount of Rs.1,63,25,000/- invested was not out of the capital gain from the sale of the land vide sale deed No.8230 dated 27.7.2015. Therefore the amount of Rs.1,63,25,000/-has not been offered to tax and hence added back to the income of the assessee.” 2.2. The Assessing Officer accordingly made addition under the head “Long Term Capital Gains” amounting to Rs.1,63,25,000/- and assessed the total income of the assessee at Rs.2,12,98,340/- as against the returned income u/sec.143(3) order dated 18.12.2018 vide order dated 30.03.2022 passed u/sec.147 r.w.s.144 r.w.s.144B of the Income Tax Act, 1961. 3. Aggrieved by the re-assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), it was the submission of the assessee that, the assessment in the case of the assessee has already been completed by the Assessing Officer u/sec.143(3) of the Act by accepting the return