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Income Tax Appellate Tribunal, LUCKNOW BENCH ‘SMC’, LUCKNOW
Before: SHRI T. S. KAPOOR
This is an appeal filed by the assessee against the order of learned CIT(A) dated 30/09/2021 pertaining to assessment year 2012-13. In this appeal the assessee has raised the following grounds:
“1. Because the proceedings u/s 147 are not in accordance with law and as much as no approval has been taken in terms of section 151(2) of the Income Tax Act from the JCIT, the entire assessment are void-abinito and be quashed.
Because there being no reason to believe nor there being any material assessment proceeding initiated are bad in law and be quashed.
Because the AO as well as CIT(A) has failed to appreciate the fact of the case that entire sale consideration was received by Shri Prabhat Singh Ralhore, in his bank account, elder brother
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of the assessee. The assessee has handover the right of this property to his elder brother Shri Prabhat Singh Rathore vide affidavit executed on 25.03.2019.
Because the AO ignored the affidavit dated 25.03.2019 and made the addition of Rs.8,42,000/- without any fact, the CIT(A) has also upheld the same, which addition is arbitrary, liable to be deleted.
Because the CIT(A) has erred on facts and in law in upholding the finding of the AO that the property in question belongs to the assessee and, as such the assessee is liable for capital gains tax which in fact, is not true. The assessee vide affidavit dated 25.03.2019 handover the right to his elder brother Shri Prabhat Singh Rathore so the said property was sold ;by his elder brother of the assessee and entire case consideration was credited in his elder brother's bank account, as such, there arises no liability for capital gains tax in assessee's hand.”
At the time of hearing of the appeal, Learned counsel for the assessee submitted that he will not be pressing ground No. 1 & 2 which are on legal issue and will be arguing the case only on merits. Therefore, ground No. 1 & 2 are dismissed as not pressed.
Learned counsel for the assessee, explaining the facts of the case, submitted that the mother of the assessee was holding a property and which, on her death, was inherited by the assessee and his brother and he had given up his rights in favour of his brother and therefore, his brother was exclusive owner of the property and when he sold the property for a sum of Rs.7,00,000/-, the entire sale proceeds was credited to his personal bank account and in this respect my attention was invited to pages 28 to 31 of the paper book where copy of bank statement, belonging to the brother of the assessee, was placed. My specific attention was invited to page 30 of the paper book where the entire proceeds of Rs.7,00,000/- was found credited in the account of brother of the assessee. It was submitted that
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the case of the brother of the assessee was also reopened u/s 148 and he had submitted the reply to the Assessing Officer where he had mentioned that the entire amount of Rs.7,00,000/- was received by him and the entire amount was invested in a new residential property in the name of his wife and therefore, he had claimed exemption u/s 54F of the Act. It was submitted by Learned counsel for the assessee that on receipt of reply of brother of the assessee, the Assessing Officer dropped the proceedings u/s 148 against the brother of the assessee and in this respect my attention was invited to page 41 of the paper book where a copy of order sheet of the Assessing Officer was placed. Learned counsel for the assessee further invited my attention to pages 43 & 44 of the paper book wherein the brother of the assessee Shri Prabhat Singh Rathore had mentioned that his brother had nothing to do with the amount which he had received on account of sale of ancestral property. My attention was also invited to pages 45 & 46 of the paper book by which the assessee had also submitted an affidavit to the Assessing Officer narrating therein that after the death of his mother, his brother became the owner of the property and which he had sold and had received the money in his bank account. In view of these facts and circumstances, Learned counsel for the assessee argued that since the entire amount was received by the brother of the assessee and in the case of his brother the case was also reopened u/s 148 of the Act and the brother of the assessee had explained to the Assessing Officer regarding receipt of full amount of Rs.7,00,000/- in his bank account and after going through the submissions of brother of the assessee, the Assessing Officer had dropped the proceedings, therefore, the same amount cannot be taxed again in the hands of the assessee and therefore, it was prayed that the appeal of the assessee may be allowed.
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Learned D. R., on the other hand, submitted that merely by saying that the amount was received by the brother of the assessee, does not absolve the assessee from his tax liability which arose on account of capital gain on the sale of property. It was submitted that the decision to give up his right in the ancestral property is an application of income and therefore, the authorities below have rightly made and sustained the addition.
I have heard the rival parties and have gone through the material placed on record. I find that the assessee along with his brother executed a sale deed in favour of purchaser of property, a copy of sale deed is placed at pages 9 to 27 of the paper book. The assessee along with his brother became owners of the said property after the death of their mother. The brother of the assessee received the full amount of Rs.7,00,000/- and which he deposited in his personal bank account with State Bank of India, a copy of which is placed at pages 28 to 31 of the paper book. The paper book page 28 is first page of pass book which shows the name of Shri Prabhat Singh Rathore as the account holder and the mode of holding the account is single as mentioned on the first page of the pass book. In this copy of pass book, the brother of the assessee received Rs.7,00,000/- on 29/06/2011 which is on account of sale proceeds of the property. The brother of the assessee along with the assessee received notices u/s 148 and brother of the assessee, during assessment proceedings u/s 148, Assessing Officer owned up the sale proceeds. The brother of the assessee also declared the Long Term Capital Gain in his return of income, a copy of computation sheet is placed at page 39 of the paper book. It was claimed before the Assessing Officer that the brother of the assessee Shri Prabhat Singh Rathore had invested the sale proceeds towards purchase of new residential house in the name of his wife and therefore, the Assessing Officer had dropped the proceedings against the brother of the assessee u/s 148 of the Act. A copy
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of the order sheet, dropping the proceedings against the brother of the assessee is placed at page 41 of the paper book. From the above evidences and documents, I find that the brother of the assessee had already declared the sale of proceeds of entire property in his own account and had declared the same in the income tax return and therefore, taking the same amount as income of the assessee under the head ‘capital gain’ is not justified. In view of the above facts and circumstances, I allow the grounds of appeal taken by the assessee vide ground No. 3 to 5.
In the result, the appeal of the assessee stands partly allowed.
(Order pronounced in the open court on 29/08/2022)
Sd/. ( T. S. KAPOOR ) Accountant Member Dated:29/08/2022 *Singh
Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow
Assistant Registrar