RAJA GIRIDHAR KUMAR NIMMAGADDA,HYDERABAD vs. ACIT., CIRCLE 3(2), HYDERABAD
आयकर अपीलीय अधिकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad
BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER
आ.अपी.सं /ITA No.287/Hyd/2024
(निर्धारण वर्ा/Assessment Year:2016-17)
Raja Giridhar Kumar Nimmagadda,
Hyderabad.
PAN:ABHPN4519K
Vs.
Asst. Commissioner of Income Tax,
Circle-3(2), Hyderabad.
(Appellant)
(Respondent)
निर्धाररती द्वधरध/Assessee by: Shri M. Madhusudan, C.A.
रधजस् व द्वधरध/Revenue by:: Shri SPG Mudaliar, SR-DR
सुिवधई की तधरीख/Date of hearing: 24/12/2024
घोर्णध की तधरीख/Pronouncement: 16/01/2025
आदेश/ORDER
PER MADHUSUDAN SAWDIA, A.M.:
This appeal is filed by Raja Giridhar Kumar Nimmagadda
(“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National
Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated
01.02.2024 for the A.Y. 2016-17. 2. The assessee has raised the following grounds of appeal :
“ 1. The order of the Ld. CIT(A) NFAC, Delhi passed under Sec.250 dt.
1.2.2024 for the A.Y. 2016-17 may be erroneous both in law and also on facts of the case.
Taking cognisance of the fact that the property under consideration, viz.. was alienated by the assessee in favour of M/s Maytri constructions by means of PART PERFORMANCE referred to in Sec.53A
ITA No.287/Hyd/2024 2
of Transfer of property Act, 1882 read with Sec 2(47) (v) of the I.T. Act.
1961,the CAPITAL GAIN arising out of such transaction by virtue of the Sale Agreement dt.24.11.2014 which is authenticated by payments reflected in the Bank account, the Authorities ought to have noticed that the LTCG, referred to therein, may be liable to be brought to tax for the AY 2015-16 and not for the A.Y.2016-17 and hence the aforesaid
Order dt, 24.12.2018 may be VOID AB INITIO.
As it being a 'legal issue', the claim that the assessment proceedings pertaining to charging LTCG under consideration may have to be initiated for the A.Y.2015-16 may be admitted and adjudicated in conformity with the provisions of law.
Also considering, the fact that the UNREGISTERED Sale Agreements, Dt 4.1.2007. 4.1.2007, 3.3.2008, 3.3.2008 established the PURCHASE CONSIDERATION OF Rs..2,35,65,595/-(assessee's share therein), the same may not be liable to be IGNORED AS NON EST.IN LAW on the mere ground that the same was an UNREGISTERED DOCUMENT and hence the INDEXED COST OF ACQUISITION claimed by the appellant and the resultant CAPITAL LOSS of RS.1,97,41,203 may not be liable to be rejected and such loss may not be liable to be SUBSTITUTED with Capital gain of Ra.95,02,388/- as per the enacted law and also judge made law.
In the context of receipt of actual Sale price of Rs.2,42,10,000/- as disclosed in the ITR for the A.Y.2006-17 (vide SCHEDULE CG) and as authenticated by the Agreement of Sale, dt. 24.11.2014, the Ld. A.O. ought not have substituted the sale price of Rs.1,84,81,000/- as reflected in the Regular Conveyance deeds at. 10.5.2015 Documents No. 4447/2015, 4440/2015, 4449/2015 and 4450 / 2015) and thereby the addition of Rs.95,82,388/- towards L.T.C.G. may be superfluous and may not be SUSTAINABLE in the eyes of low.”
The brief facts of the case are that the assessee is an individual, filed his Return of Income (“ROI”) for A.Y. 2016-17 on 31.03.2017 declaring total income of Rs.4,78,430/-. Subsequently, the case of the assessee was selected for scrutiny and the Learned Assessing Officer (“Ld. AO”) completed the assessment u/s.143(3) of the Income Tax Act, 1961 ("the Act") on 24.12.2018 making addition on account of Long Term Capital Gain (“LTCG”) of Rs.95,82,388/- and under the head ‘income
ITA No.287/Hyd/2024 3
from other sources’ towards unexplained cash credit of Rs.57,29,000/-.
Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) accepting the view of Ld. AO, dismissed the appeal of the assessee.
Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, the assessee along with Smt. Muppavarapu Rajakumari (“co-owner”) entered into agreement for purchase of following lands through unregisterd agreement :
S.
No.
Name of the Vendor
Extent of land
(Acres)
Sale Price Rs.
Reference
1
Sri Malreddy Ram Reddy
(Agreement dt.4.1.2007)
1.07
1,15,83,500.00
Paper
Book pages 1 to 3. 2
Smt. Malreddy Anuradha
(Agreement dt.4.1.2007)
1.05
1,11,12,500.00
Paper
Book pages 26 to 27
3
Sri Sam Reddy Bal Reddy
(Agreement dt.3.3.2008)
1.07
1,22,50,600.00
Paper
Book pages 53 to 55
4
Smt. Sam Reddy Sarala
(Agreement dt.3.3.2008)
1.06
1,19,90,020.00
Paper
Book pages 80 to 82
Total
4,69,36,620.00
Regi. Charges
1,94,570.00
Total Cost
4,71,31,190.00
Assessee's share (50%) come to Rs.2,35,65,595/-
As such, the total purchase cost of lands including the registration charges were Rs.4,71,31,190/- as per the ITA No.287/Hyd/2024 4
unregistered agreement. He further submitted that, as per the unregistered agreement the purchase consideration include
Rs.4,24,59,030/- towards settlement of land disputes and development cost of land and it was agreed that the land will get registered at Rs.44,77,590/-. Subsequently, all the four lands were registered in the name of the assessee and the co-owner through registered deed, the details of which are as under :
S.No.
Doc No.
Date of Reg.
Amount (Rs.)
1
1309/2008
18.03.2008
11,31,455.00
2
1310/2008
18.03.2008
11,07,365.00
3
1744/2008
08.04.2008
11,31,430.00
4
1745/2008
08.04.2008
11,07,340.00
Total
44,77,590.00
Assessee's share (50%) comes to Rs.22,38,795/-.
The Ld. AR further submitted that, out of total purchase cost of land, only Rs.12,16,620/- was paid in cash and rest of the payments were made through banking channel, for which, the details of payments made to the vendor was filed by the Ld. AR before the bench.
1 On 24.11.2014, the assessee along with the co-owner entered into an unregistered agreement for sale of all the four lands with M/s. Mytri Constructions for a total consideration of Rs.4,84,20,000/- (assessee's share of 50% comes to Rs.2,42,10,000/-), out of which an amount of Rs.2,99,39,000/- was towards settlement of disputes of land and development cost of land. As per the unregistered agreement, it was agreed that ITA No.287/Hyd/2024 5
the land will be registered at Rs.1,84,81,000/-. Accordingly, on 10.05.2015, all the four lands were transferred to M/s. Mytri
Constructions through registered deed. The details of which are as under :
S.No. Reg.
Doc.
No.
Date of Document
Amount(Rs.)
1
4447/2015 10.05.2015
49,00,000.00
2
4448/2015 10.05.2015
42,00,000.00
3
4449/2015 10.05.2015
47,65,000.00
4
4450/2015 10.05.2015
46,10,000.00
Total
1,84,81,000.00
Assessee's share(50%)
93,40,500/-
The Ld. AR also submitted that, out of the total sales proceeds, the assessee received Rs.4,10,91,000/- through banking channel and Rs.73,29,000/- could not be recovered by the assessee from the buyer. However, the assessee has offered the total agreed sale value of Rs.2,42,10,000/-
(his share of 50%
of Rs.4,84,20,000/-) for the purpose of taxation.
2 In the ROI, for the A.Y. 2016-17, the assessee worked out the LTCG on the sale of all the lands, on the basis of consideration paid / received as per unregistered purchase deed and sale deed. However, during the assessment proceedings, the Ld. AO rejected the working of the assessee, contending that the unregistered sale deeds are not reliable and are not valid in the eyes of law. The Ld. AO took the sale consideration of ITA No.287/Hyd/2024 6
Rs.1,84,81,000/- as per the registered deed and allowed the index cost on the purchase of land on the basis of cost mentioned in registered deed. Accordingly, the Ld. AO worked out the LTCG at Rs.95,82,388/-. Further, the Ld. AO made an addition of Rs.57,29,000/- under the head ‘income from other sources’ as unexplained cash credit treating the excess amount received by the assessee as per unregistered deed, over the amount reflected in the registered deed on account of sale of land. The Ld. AR submitted that, the assessee on the basis of unregistered sale agreement had purchased the land and took the possession of the land on the date of agreement and have made most of the payments through banking channel. Therefore, the action of the Ld. AO in rejecting the purchase cost of land as per unregistered sale deed is not correct. Likewise, the assessee has sold the land on the basis of unregistered sale agreement and recovered most of the payment through banking channel. Hence, the action of the Ld. AO rejecting the sales consideration as per unregistered sale agreement is not correct. Therefore, the Ld. AR prayed before the bench to consider the purchase cost on the basis of unregistered purchase agreement and to consider the sale consideration on the basis of unregistered sale agreement, for the purpose of calculation of LTCG.
Per contra, the Learned Department Representative (“Ld. DR”) relied on the orders of revenue authorities and prayed before the bench to dismiss the appeal of the assessee.
ITA No.287/Hyd/2024 7
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It is evident that the most of the payment for both purchase as well as sale were made through banking channel as per the unregistered agreements. The payments through banking channel substantiate the assessee’s claim with the unregistered agreements and reflect the actual transactions. We also observe that the principle of substance over form should apply in the present case. The registered purchase / sale agreements were executed merely for procedural compliance and do not capture the true nature of the transaction. Section 50C of the Act also recognise unregistered prior agreement subject to the condition that the payment of consideration is made through banking channel. Therefore, ignoring the unregistered agreements would lead to distorted computation of capital gain, which is against the principle of fair taxation. The reliance on the registered agreement by the Ld. AO and Ld. CIT(A), without considering the substantial evidence in the form of banking transactions and the unregistered agreement to sale / purchase are not correct. In our considered opinion, the assessee has provided sufficient documents to support the claim that the unregistered sale / purchase agreement reflect the actual transactions. Therefore, we make a direction to Ld. AO to recompute the LTCG by considering the purchase cost at Rs.2,35,65,595/- and sales consideration at Rs.2,42,10,000/- i.e. on the basis of the unregistered purchase / sale agreements respectively. We also ITA No.287/Hyd/2024 8
direct the Ld. AO to delete the addition of Rs.57,29,000/- made u/s.69A of the Act.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 16th Jan., 2025. (VIJAY PAL RAO)
ACCOUNTANT MEMBER
Hyderabad.
Dated: 16.01.2025. * Reddy gp
Copy of the Order forwarded to :
1. Raja Giridhar Kumar Nimmagadda, Plot No.1046,
Road No.52, Jubilee Hills, Hyderabad-500 033
2. ACIT, Circle 3(2), Hyderabad.
3. Pr.CIT, Hyderabad.
4. DR, ITAT, Hyderabad.
5. Guard file.
BY ORDER,