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Income Tax Appellate Tribunal, ‘A’ BENCH, BENGALURU
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAOShri Vijay,
Date of hearing : 24/08/2017 Date of pronouncement : 22/11/2017 O R D E R
Per INTURI RAMA RAO, AM :
This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-4, Bangalore, [CIT(A)] dated 30th November 2015 for the assessment year 2005 06.
The assessee raised the following grounds of appeal :
Page 3 of 7 3. Briefly facts of the case are as under: The assessee is an individual. The assessee had not filed return of income voluntarily for the assessment year 2005-06. The Assessing Officer, after receipt of information from the office of the Sub Registrar Krishnarajapura, Bangalore, that the assessee at sold property for a consideration of Rs. 59,37,500/- on 23/11/2004 had issued notice u/s 142 of the Income-tax Act,1961 [hereinafter referred to as 'the Act'] on 13/09/2007 asking the assessee to file return of income on or before 26/09/2007. However, assessee had not complied with the said notice. Therefore, the AO had proceeded to make ex-parte assessment u/s 144 of the Act assessing the entire consideration as deemed income u/s 69 of the Act.
Being aggrieved, assessee filed an appeal before the CIT(A) contending inter alia that the property which was sold does not belong to the assessee but to the HUF of father of the assessee, as the property was inherited from his grand-father’s HUF. It was further contended without prejudice to this that the share of the assessee’s father’s HUF is only Rs.8,99,900/- and therefore entire amount cannot be assessed in his hands and also a claim was made for exemption u/s 54F as an amount of Rs.8,99,900/- was stated to have been invested in construction of residential property. The CIT(A), after considering the remand report submitted by the AO, confirmed the addition only to the extent of Rs.8,99,900/-. The relevant paragraph is extracted below:
Being aggrieved, the appellant is before us in the present appeal. The written submissions filed by the learned AR of the assessee read as under:
Thus, learned AR of the assessee submitted that the sale consideration received of Rs.8,99,900/- belonged to HUF of his father and therefore, cannot be assessed in his hands. He has signed the Sale Deed only as a confirming party. He further submitted that, in any event, the assessee’s father had brought vacant site bearing No.73, Nalurhalli Village, Krishnarajapura Hobli, Bangalore East, which is eligible for exemption u/s 54F of the Act. Thus, he prayed that the amount is not taxable in the individual capacity. Therefore, the addition
Page 6 of 7 should be deleted. He further submitted that even assuming that said amount is taxable in the hands of HUF of his father, no capital gains arose since sale proceeds have been invested in the construction of new house and the same are exempt from tax. Therefore, no return of income was filed.
On the other hand, learned departmental representative relied on the orders of the lower authorities.
We heard rival submissions and perused material on record. The only issue in the present appeal sale consideration of Rs.8,99,900/- received on account of sale of property situated at Nallurahalli Village, K.R.Puram Hobli, Bangalore East is taxable in the hands of the appellant. On perusal of the recitals to the Sale Deed, it is clear that this property was originally owned by one Mr Venkataramanappa who was the absolute owner of the property situated at Sy.No.76/1, Nallurhalli village, KR Puram Hobli, Bangalore East. After death of Shri Venkataramanappa, his son Chikkaramaiah became absolute owner. On the demise of Chikkaramaiah, through a partition deed, between two sons viz., Nanjunda Reddy and Gur Reddy, in terms of which this property has fallen to the share of late Nanjunda Reddy, and accordingly mutation entries were passed in the name of late Nanjunda Reddy. On the death of late Nanjunda Reddy, his six sons viz., S/Shri (i) Hanuma Reddy, (ii) Venkatesh (iii) Rajappa Reddy (iv) Gopal Reddy (v) Kumar Reddy and (vi) Ravindra Reddy became owners of the property and accordingly mutatin entries were made. These six sons of late Nanjunda Reddy jointly sold this property for a consideration of Rs.59,37,500/- vide registered sale deed dated 23/11/2004 in favour of one Bhaskaran. The appellant is the son of Venkatesh who is the son of one of the 6 sons of late Nanjunda Reddy. Thus there is no evidence on record to show that the appellant is the absolute owner of the property sold. However, his name was found as one of the sellers in the sale deed vide serial No.5. It does not mean that he has an interest or absolute owner of this property. There is merit in the submission made by the learned AR of the assessee that the appellant was made a party to the sale deed
Page 7 of 7 as a confirming party. There is no evidence brought on record to show that there is partition among Venkataramanappa and his sons. In the circumstances, this amount cannot be taxed in the hands of the assessee. It is a settled proposition of law held by the Hon’ble Supreme Court in the case of ITO vs. Ch.Atchaiah (218 ITR 239)(SC) that right amount should be taxed in the right hands only Therefore, we hold that this amount cannot be taxed in the hands of the appellant. Hence, the appeal filed by the assessee is allowed.
In the result, the appeal of the assessee is allowed.