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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI S. S. GODARA
ORDER
PER S. S. GODARA, JM:
This assessee’s appeal for assessment year 2012-13 arises against the CIT(A)-5, Pune’s order dated 09.10.2017 passed in case no.PN/CIT(A)-5/ITO, Wd-13(3), Pune/200/2015-16 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused.
The assessee’s sole substantive grievance raised during the course of hearing challenges correctness of both the lower authorities’ action disallowing his payment of Rs.32 lakhs made to his mother; for the purpose of computing long term capital gains, in the relevant previous year. The CIT(A)’s detailed discussion affirming the Assessing Officer’s action to this effect reads as follows :- “4.4 I have perused the material on record and the contention of the Appellant carefully. I find the Appellant has contended that, the settlement with the mother (and the father) was essential to make the Agreement. The Appellant has also contended that, the amount paid to the mother was not income in the hands of the Appellant by following the 'Real income' theory. The Appellant has also raised the issue of double taxation as the mother of the Appellant had shown this amount in her Return of Income. The Appellant has relied on the case of his brother wherein, the ITO has accepted the amount shown by the brother and the father has shown the amount received in his Return of Income. He has contended that, opposite views on the same facts by two different Assessing Officer's are not justifiable. 4.5 I do not agree with the contention of the Appellant regarding the 'Real Income' theory. From the copy of Agreements and other documents submitted during the course of Appellate Proceedings, I find that the date of Agreement with the builder is 18.02.2012 and does not mention anything about the payments to the parents of the Appellant. The date on which the amount was received from the builder of Rs.50,00,000/- is 18.02.2012. The Agreement with the parents is dated 18.05.2012 and the cheques given to the mother (and father) is dated 02.08.2012. In a roundabout manner by claiming that the payment made to the mother was not his Income, the Appellant has contended that this was diversion of Income. I find that, the Appellant has made an 'application' of the money received as sale proceeds from the sale of the ancestral land. The Appellant has received the amount on 18.02.2012 and therefore, the Capital Gains have already accrued to the Appellant. The Appellant, has made a feeble attempt to claim diversion of income. The basic fundamental requirement for this transaction to be treated as diversion of income, that of having an overriding title and diversion by it is nonexistent in this case. In fact, in my view an botched up attempt has been made to distribute the Sale proceeds from one hand to another to lessen the liability of Capital Gains in the hands of the sons. The dates of the Agreement 18.02.2012 with the builder and 18.05.2012 with the parents (cheque given to parents 02.08.2012) also proves that, the contention of the Appellant of the parents not signing without the money paid to them, is devoid of merit. The contention of the Appellant that, the parents refused to sign the Agreement without the payment of Rs.32,00,000/- for 'Bread butter in old age', from the Appellant, which he gave to the mother and the brother gave to the father, lacks strength. It is clear from the Agreement itself, that the father has received Rs. 1,89,13,857/- in a span of nearly a year (16.05.2011 to 18.02.2012) whereas, the mother has received Rs.50,00,000/- on 18.02.2012. 4.6 Regarding the other contention of the Appellant of the brothers payment being treated as 'Not income' in his hands, by the Assessing Officer, suffice it to say that, an error made in reading of facts cannot be allowed to continue as it has resulted in escapement of revenue. The concerned Assessing Officer is directed to take necessary steps to bring the escaped revenue to Tax. Regarding the plea of double taxation, both the Assessing Officer's are directed to take the necessary steps to Tax the right amount in the right hands. The Appellant fails in these Grounds of Appeal
s which are accordingly dismissed subject to the above remarks.”
3. Learned counsel referred to both the contents of sale in issue dated 15.02.2012 (pages 1 to 100 in Marathi and English) as well as sought to place reliance on the assessee’s family tree starting from the common ancestor Shri Sakharam P. Pathare. His case is that this assessee had paid the impugned sum to his mother so as to meet out the latter’s share in the land sold. And that the above-stated sale deed not only comprise of this assessee as seller but also approvers and confirming parties wherein it was duly agreed with the