VASANT SHIVRAM MADHAVI,PANVEL vs. ITO WARD - 5, PANVEL

PER R. K. PANDA, VP :

This appeal filed by the assessee is directed against the order dated
19.06.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2015-16. 2. Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income for the assessment year 2015-16 despite having sold immovable properties for a total consideration of Rs.9,25,45,000/- during the financial year 2014-15. Information was received from the insight portal that the assessee has sold immovable property for a total consideration of Rs.9,25,45,000/- but has not filed the return of income for the year under consideration. Therefore,

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the Assessing Officer held that the capital gain derived from the sale of such immovable property remained undeclared. Thereafter, following the due procedure as provided by section 148A of the Act, a show cause notice u/s 148A(b) of the Act was issued on 22.03.2022 after obtaining prior approval of the competent authority u/s 151 of the Act. The assessee was also asked to explain as to why a notice u/s 148 of the Act shall not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year. However, the assessee did not respond to the show cause notice issued u/s 148A(b) of the Act. Therefore, the Assessing Officer, on the basis of material available on record initiated proceedings u/s 147 of the Act as provided by section 148A r.w.s. 148 of the Act. Accordingly, the Assessing
Officer issued notice u/s 148 of the Act.

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from the side of the assessee. Therefore, the Assessing Officer issued a show cause notice asking the assessee to explain as to why the net consideration at Rs.9,25,45,000/- should not be brought to tax as short term capital gain. The assessee thereafter filed his response to the said notice.

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At the outset, the assessee has responded and uploaded his response only to the show cause notice issued on 29-01-2024. The assessee has not furnished his response to the show cause notice issued on 09-02-2024 even after the time sought has been granted in the notice u/s 142(1) of the I.T.Act issued on 15-02-2024. The ground for non uploading of the response to the show cause notice dt 09-02-2024
is as demanded in notice, need time to prepare and produce necessary records before authority" and "since in earlier notice, translation of document named development agreement drafted in marathi language to English language is demanded which agreement run into more than 45 pages, it needs time for translation which is not possible within 4-5 days, so kindly accept our adjournment sought and extend time for reply" (sic). Even the response of the assessee to the actions proposed in the show cause notice issued to him on 29-01-
2024 is not specific and point-wise and not with complete details, description and supporting evidences. Hence, the same merits no consideration. Further, in his responses to the show cause notice dt. 29-01-2024 which are also appended above, the assessee stated that he had admitted his income from capital gains in the AY 2019-20 and paid taxes thereon.

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In his reply dt.03-02-2024, the assessee has stated that the assessee along with 5 others was allotted plot No.07 at Sector 19, Ulwe Taluka- Panwel, Dist-
Raigad under 12.5% of Goathan Expansion Scheme by CIDCO Ltd., registered on 12-12-2014 and that the plot was actually allotted to the assessee on 09-04-2014
and it was given for development to M/s. Radiant Builders. In this regard, the relevant extract of 'note on working of capital gains furnished by the assessee in his reply is appended below.

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Note on working of Capital Gain:

A. TAXABILTY U/S 45(5A) UNDER HEAD CAPITAL GAIN

Section 45 (5A) provides as follows: In case of an assessee being
INDIVIDUAL/HINDU UNDIVIDED FAMILY who enters into a specified agreement for development of a Project, the capital gain arising from such Transfer shall be chargeable
Contd..3
to Income Tax as income of the previous year in which the Certificate of completion for the whole or part of the project is issued by the Competent
Authority.

Considering Above provisions, This being JOINT DEVELOPMENT
PROJECT, Tax liability of assessee arises in the year in which Certificate of Completion Of CONSTRUCTED PROJECT has been received. Since Certificate of Completion of above Project has been received on 25-05-2018 i.e. in F.Y.2018-19, A.Y.2019-20, Assessee had paid all Tax liability by filing Income-
Tax Return for A.Y.2019-20 (Assessee got Actual Possession of Developed
Property ON 31-12-2018 i.e. in FY 2018-19, Α.Υ.2019-20.)

Assessee had paid All his Tax liability considering Total On-Money received up to date THAT IS IN TOTAL Rs.1,80,00,000/- (This ON-Money that are TOTAL Rs.1,80,00,000/- received in Various Financial Years) from Radiant Builders, along with Stamp duty/Govt. Value of All Developed Property received i.e. Flats & Shops received as mentioned in Development Agreement on 31-12-2018, Total Stamp Duty Value of ALL Developed Property-
Rs.6,95,00,100/-, THUS Total Consideration Received by Assessee was Rs.8,75,00,100. That is (Rs.1,80,00,000 + Rs.6,95,00,100/-). Assessee had paid
All his Tax Liability under Head Capital gain on Above Total Consideration of Rs.8,75,00,100/- in F.Y.2018-19, A.Y.2019-20. 3
Here, at the first place, the assessee failed to furnish complete information of the properties in regard to which he derived income from capital gains, their values viz. date & cost of acquisition and indexed cost of acquisition workings with supporting evidences, date, basis and evidences for value of consideration received by him to work out his income from capital gains, complete workings of computation of capital gains on the basis of these details and evidences. The flagged information as well as the regd document (received from Designated
Verification Unit of I.T. Department as detailed above) that was forwarded to the assessee are all related to the period under consideration and hence the capital gains on transfer of these properties during the FY 2014-15 are taxable in the hands of the assessee for the AY:2015-16 only AND NOT as stated by the assessee in the AY:2019-20 on the basis of receipt of possession certificate. Provisions of Sec.45(5A) of the I.T. Act have been inserted by Finance Act, 2017 w.e.f.01-04-
2018 which stipulate that the incidence of tax on the capital gains shall be chargeable to Income Tax as income of the previous year in which the certificate

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of completion for the whole or part of the project is issued by the competent authority.

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Insofar as the period under consideration i.e. FY:2014-15 is concerned, it is not in dispute that the JDA with builder registered on 04-03-2015 which is in the FY:2014-15 relevant to the Assessment Year 2015-16 under consideration.
Hence the incidence of tax on the value of assessee's share in the property to be received from the builder as on the date of execution of the JDA has to be calculated and should have been offered to tax in the AY:2015-16 itself and not in the AY:2019-20 as per the relevant provisions of the statute applicable for the AY:2015-16. 5
In the light of all the foregoing facts, legal obligations as per the prevailing provisions of I.T. Act relevant to the AY:2015-16, it is obvious that the assessee derived income from capital gains on transfer of the properties as detailed in the show cause notice issued. Further, the assessee's response did not contain specific reply with supporting details & evidences to each of the actions proposed in the show cause notice. Hence, the contentions of the assessee are rejected as devoid of merit.

The assessee failed to substantiate his contention as to why the flagged value of information should not be taxed in his hands for the year under consideration by furnishing details & supporting evidences for sources of acquisition, date of acquisition, cost of acquisition, date of transfer of the properties in regard to which the assessee derived capital gains, amount of consideration and the detailed workings thereof, etc. The assessee has not furnished details with evidences to show that the uploaded data viz. regd documents and the flagged information are one and the same. Therefore, the net sale consideration at Rs.9,25,40,000/- by way of Short Term Capital Gains and net consideration of Rs.99,95,000/- by way of Long Term Capital Gains as detailed in the show cause notices remained unexplained and hence the same, as proposed in the Show Cause Notices issued, are brought to tax as the income of the assessee for the year under consideration and the assessment is completed accordingly.”

“6. FINDINGS & DECISION

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6.2. Based on information available with Ld. AO, it was observed that the appellant had sold properties worth Rs.9,25,45,000/- and the appellant had not filed his return of income. Thus, in order to compute taxable capital gain, the Ld.
AO re-opened the assessment after undertaking proceedings U/s 148A. It is pertinent to note that the Ld. AO has mentioned at para serial numbered 1 on page
3 of assessment order that the appellant has sold two properties worth
Rs.4,01,32,000/- and Rs.5,24,13,000/-.