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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI
BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER)
ITA No. 1757/MUM/2019 Assessment Year: 2010-11
Mr. Santosh Raju Shetty Pr. CIT-21, 5th floor, 705-705, Vaibhav Paradise, Vs. Piramal Chambers, Aaram Society Road, Parel, Mumbai- Vakola, Santacruz East, 400016. Mumbai-55. PAN No. AAGPS4066G Appellant Respondent Assessee by : Mr. Vijay Mehta, AR Revenue by : Ms. Vidisha Kalra, CIT(DR) Date of Hearing : 05/08/2019 Date of pronouncement : 28/10/2019
ORDER PER N.K. PRADHAN, AM This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order passed by the Principal Commissioner of Income Tax-21 [in short ‘Pr. CIT’], Mumbai u/s 263 of the Income Tax Act 1961, (the ‘Act’).
In the instant case, there has been a delay of 665 days on the part of the appellant in filing the appeal before the Tribunal.
ITA 1757/Mum/2019 Santosh Raju Shetty 2
The assessee has filed an affidavit dated 06.05.2019 stating as under :
“I, Santosh R Shetty, son of Raju Shetty, aged about 50 years, Residing at 704/705 Vaibhav Paradise, Aaram Society Road, Vakola Santacruz East Mumbai 400055 having Pan No. AAGPS4066G hereby solemnly Affirm and state as follows.
I was under the bona fide and genuine belief that the order passed u/s 263 of the act need not be appealed but I can challenge the consequential order passed by the assessing officer before the commissioner of income tax (appeals) and thereafter before the Hon'ble Tribunal. Accordingly I have not filed the appeal against the order passed u/s 263 of the act, nor intimated the same to my C A. under bona fide belief. 2. When the order passed by the assessing officer u/s 143(3) read with the section 147 read with 263 of the act received by me I preferred an appeal against the said order to the commissioner (appeal). 3. I state that when I consulted the tax counsel in connection with the hearing of above appeal, he advised me to prefer an appeal immediately against the order passed u/s 263 of the Act. Accordingly I preferred an appeal before the ITAT immediately after coming to know of the same.
I state that, in the interest of justice the condonation petition shall be allowed and the appeal be decided on merit. Otherwise grave and irreparable damages may befall on me.
I state that whatever is stated herein above is true to the best of my knowledge and belief the same to be true.” 2.1 The assessee has also filed an affidavit by Shri Inna Ravindra Shetty , the Chartered Accountant dated 25.03.2019 which his produced below:
“I, Inna Ravindra Shetty, Partner of I. R. Sherry & Associates, Chartered Accountants, having my office at 507-509 Sai Chambers, Santacruz East Mumbai - 400055, hereby solemnly affirm and state as follows:
I was under the bona fide and genuine belief that the order passed under section 263 of the Act need not be appealed but the Petitioner can challenge
ITA 1757/Mum/2019 Santosh Raju Shetty 3 the consequential order passed by the assessing officer before the Commissioner of Income Tax (Appeals) and thereafter before the Hon'ble Tribunal. Accordingly, I had not advised the Petitioner to file appeal against the order passed under section 263 of the Act. 2. When the order passed by the assessing officer under section 143(3) read with section 147 read with 263 of the Act was received by the Petitioner, I advised then to prefer an appeal against the said order to the Commissioner of Income Tax (Appeals). 3. I state that when we consulted the tax Counsel in connection with the hearing of the above appeal, he advised us to immediately prefer an appeal against the order passed under section 263 of the Act. 4. I state that in the interest of justice the Petitioner's condonation Petition may be allowed and the appeal be decided on merits. Otherwise grave and irreparable damage shall be caused to the Petitioner. 5. I state that whatever is stated herein above is true to the best of any knowledge and I believe the same to be true.” 2.2 Filing the above affidavits, the Ld. counsel submits that the Pr. CIT passed the order u/s 263 in the present case on 27.03.2017 and the Chartered Accountant, who was looking after the Income tax matters of the appellate was under the genuine and bona fide belief that the assessee need not challenge the order u/s 263 but can prefer an appeal against the consequential order passed by the AO to the CIT (A) and thereafter an appeal to the ITAT, if need be. It is thus explained that the appellant, accordingly, did not challenge the order passed u/s 263, but preferred an appeal to the CIT (A) against the order passed by the AO u/s 143 (3) r.w.s. 147 r.w.s 263. Further, it is explained that when the notice for hearing of the said appeal was received by the appellant, he along with his Chartered Accountant consulted their tax counsel in connection with the hearing of the said appeal and in the said meeting, the counsel opined that the appellant should have preferred an appeal against the order u/s 263 to the
ITA 1757/Mum/2019 Santosh Raju Shetty 4 Tribunal and thereafter as per the advice of the counsel, the appellant took immediate steps to file this appeal. Thus, it is stated that on the facts and circumstances narrated above, there is a bona fide and genuine inadvertent error committed by the appellant in not filing this appeal.
2.3 The Ld. counsel relied on the decision in Collector, Land Acquisition vs. Mst. Katiji and others (1987) 167 ITR 471 (SC), N Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123, Baburao Deorao Wankhede vs. Sewa Sahakari Sanstha and Ors. (WP No. 1974 of 1979) (Bombay High Court), Vijay Vishin Meghani vs. DCIT (2017) 398 ITR 250 (Bom), Hardillia Chemicals Ltd. vs. CIT (1996) 221 ITR 194 (Bom), the order of the Tribunal in M/s DBS Bank Ltd. vs. DDIT (CO No. 189/Mum/2013 for AY 1995-96), Urudavan Investment and Trading P. Ltd. vs. CIT (ITA No. 3815/Mum/2019 for A.Y. 2004-05, Shri Ashok Pandurang Gaikwad vs. CIT (ITA No. 6191/Mum/2009 for A.Y. 2005-06), Mr. Kewal Kumar Jain vs. ACIT (ITA No. 193/PN/2012 for A.Y. 2003-04).
On the other hand, the Ld. Departmental Representative (DR) explains that there is no justification for condoning delay of 665 days as it is not supported by documents/evidence.
We have heard the rival submissions and perused the relevant material on record. In the case of Vijay Vishin Meghani (supra), the Hon’ble Bombay High Court has held that condonation of delay is not to be refused unless delay in filing appeals is shown to be deliberate and intentional. In Baburao Deorao Wankhede (supra), the Hon’ble Bombay High Court has held that interest of justice demands that the petition has to be decided on merit and dismissing it on technical grounds of limitation would result in meritorious matter being thrown out at very threshold. In N. Balakrishnan (supra), the Hon’ble Supreme Court has held that in absence of anything
ITA 1757/Mum/2019 Santosh Raju Shetty 5 showing mala fide or deliberate delay as a dilatory tactic, Court should normally condone the delay ; acceptability of explanation for the delay is the sole criterion, length of delay not relevant.
We find that in the instant case, there is nothing mala fide or deliberate delay as a dilatory tactic adopted by the assessee. Therefore, following the ratio laid down in the above decisions, we condone the delay of 665 days.
The issue on which the order has been passed by the Pr. CIT u/s 263 falls in a narrow compass. The facts are that the assessee had purchased a plot of land vide agreement of sale dated 23.11.2006, along with others for a total consideration of Rs. 29,00,000/- which was registered on 23.11.2006 by paying full stamp duty and registration charges of Rs. 1,45,000/- and Rs. 29,480/- respectively. The said property had been sold vide deed of conveyance dated 14.12.2009 along with others for a total consideration of Rs. 2,35,00,000/- in which the assessee’s proportionate share of sale proceeds was Rs. 85,00,000/-. The document of conveyance deed was registered on the same date i.e. 14.12.2009 and acknowledgement of registration charges of Rs. 30,440/- and payment of stamp duty of Rs. 11,75,000/-.
The Pr. CIT relied on the following para of the conveyance deed dated 14.11.2007 which indicates that the NOC for transfer of the property was received only on 26.07.2007 ;
“And whereas the parties have applied to the Dy. Collector and competent Authority, Thane Urban Agglomeration, Thane and surrounding 8 k.m. peripheral area of Greater Mumbai Urban Agglomeration , for obtaining no objection for transfer of the said property and accordingly No Objection Certificate is granted under No. ULC/TA/T-7 / Owale/16 dated 26.07.2007
ITA 1757/Mum/2019 Santosh Raju Shetty 6 under provisions of the section 26 (1) of the Urban Land (Ceiling and Regulation Act, 1976 to effectuate the legal and perfect transfer of the said property as intended under these presents.”
The Pr. CIT thus observed that the property sold by the assessee was held only from 14.11.2007 as stated in the sale deed and accordingly the said property was sold vide deed dated 14.12.2009, therefore, the period of holding of the property is only for 25 months. Therefore, he held that the gain for the sale of property does not qualify as long term capital gain (LTCG) and has to be taxed as short term capital gain (STCG). Accordingly, the Pr.CIT set aside the order of the AO with the direction to revise the order after considering the gain from sale of land as STCG and withdrawing the claim allowed u/s 54F and after due verification and providing reasonable opportunity of being heard to the assessee.
Before us, the Ld. counsel for the assessee submits that the assessee along with others entered into deed of conveyance dated 24.11.2007 by paying a token stamp duty of Rs. 200/- just to supplement and strengthen the earlier agreement of sale, though the property have been purchased and registered on 23.11.2006. It is stated that the deed dated 14.11.2007 had been prepared just to substitute the name “Conveyance Deed” in place of “Agreement for Sale” and this is because when there is sale of land, it should be named as “Conveyance Deed” instead of “Agreement to Sale” or “Sale Deed” etc. The Ld. counsel thus submits that just to rectify the nomenclature , conveyance deed has been prepared on 14.11.2007 with a token stamp duty of Rs. 200/- and a token registration charges of Rs. 580/- that too without any consideration. Thus, it is explained by him the conveyance deed dated 14.11.2007 had been prepared just to rectify minor technical details such as caption of the agreement/nomenclature etc.
ITA 1757/Mum/2019 Santosh Raju Shetty 7 The Ld. counsel thus submits that the assessee has rightly accounted for the sale of property as LTCG since the date of purchase of property by paying stamp duty was 23.11.2006, date of sale of property by paying stamp duty was 14.12.2009 and the time difference being 3 years and 21 days, it is a case of LTCG.
On the other hand, the Ld. DR submits that the Pr. CIT has rightly referred to the conveyance deed dated 14.11.2007 , wherein the NOC of transfer of the property was received only on 26.07.2007. Therefore, it is argued by the Ld. DR that the order passed by the Pr. CIT be affirmed.
We have heard the rival submissions and perused the relevant material on record. The reasons for our decision are given below.
It is well-settled that immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant. Once the executed documents are registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents. In this regard, we rely on the decision in Alapati Venkataramiah v. CIT (1965) 57 ITR 185 (SC), CIT v. Podar Cements Pvt. Ltd. (1997) 226 ITR 625 (SC) and CIT v Vishnu Trading & Investment Co. (2003) 259 ITR 724 (Raj).
In the instant case, as mentioned earlier, the assessee had purchased a plot of land vide agreement of sale dated 23.11.2006 along with others for a total consideration of Rs.29,00,000/- which was registered on 23.11.2006, by paying full stamp duty and registration charges of Rs.1,45,000/- and Rs. 29,480/- respectively. The said property was sold vide deed of conveyance dated 14.12.2009 along with others for a total
ITA 1757/Mum/2019 Santosh Raju Shetty 8 consideration of Rs.2,35,00,000/- , in which the assessee’s proportionate share of sale proceeds was Rs.85,00,000/-.
The assessee, along with others entered into a deed of conveyance dated 14.11.2007 by paying a token stamp duty just to supplement and strengthen the earlier agreement of sale, though the property had been purchased and registered on 23.11.2006. There is merit in the contentions of the Ld. counsel that an immovable property cannot be conveyed/sold/transferred on a mere stamp duty of Rs.200/- and registration charges of Rs.580/- and that too without consideration as has been done in the conveyance deed dated 14.11.2007.
As mentioned here-in-above, immovable property is conveyed by a duly registered deed. Further, it is the date of the execution of registered document which is relevant. In the instant case, the date of registration is undoubtedly 23.11.2006. Thus, the assessee has rightly shown the sale as arising out of LTCG.
In view of the above facts and position of law, we have no hesitation in quashing the order u/s.263 dated 27.03.2017 passed by the Pr. CIT.
In the result, the appeal is allowed.
Order pronounced in the open Court on 28.10.2019.
Sd/- Sd/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated: 28.10.2019 S. Samanta, P.S.(On tour)
ITA 1757/Mum/2019 Santosh Raju Shetty 9
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai