ABDUL AZIZ LOKHANDWALA,MUMBAI vs. ITO 5(1), MUMBAI

The Central Bank of India vide letter dated 27/10/2008 asked the assessee to handover the possession of the property. When the recovery proceedings were going on the assessee made a gift of the mortgage property in favour of his mother Smt. Fatima Abdul Majid. As per the Annual Information Report the gift deed was registered at the value of Rs. 72,27,000/-. The assessee was accordingly asked to provide the detail and explain the same. However, the assessee expresses his inability to provide any detail.

In response to the notice u/s 133 (6) of the Act, the Central Bank of India furnished the details. From the said details it revealed that the gift deed was held void ab initio by the DRT. The assessee was again asked to furnish the Assessment Years 2009-2010 details but the assessee neither appeared nor filed any explanation. Accordingly, the AO rejected the assessee’s claim of deduction under chapter VIA and set off the losses claimed in the return of income and assessed the income of the assessee at Rs. 5,87,900/-.

The assessee has raised the following effective grounds of appeal

This case was fixed for hearing on 26.10.2017. However, when the case was called for hearing, none appeared on behalf of the assessee. We noticed that for the last three successive hearings this case has been adjourned either at the request of the assessee or due to non appearance of the assessee. From the conduct of the assessee we are satisfied that the appellant/assessee is no longer interested in pursuing its appeal. Hence, we decided to proceed further Assessment Years 2009-2010 to dispose of these appeals on the basis of material on record, after hearing the departmental representative (DR).

The Ld. DR relying on the concurrent findings of the authority below submitted that the order passed by the Ld. CIT(A) does not suffer from any infirmity to interfere with. The assessee was given sufficient opportunity to substantiate his claim and despite that the assessee failed to justify his claim. Since, the order under challenge is in accordance with the law laid down by the Hon’ble Supreme Court, there is no merit in the appeal of the assessee. Hence, the same is liable to be dismissed.

We have perused the orders passed by the authorities below and also gone through the cases relied upon by the Ld. CIT(A). The assessee has challenged order of the Ld. CIT(A) on the ground that the reopening of assessment is bad in law and the CIT(A) has wrongly upheld the action of the AO in computing the capital gain in the hands of the assessee. So far as the first issue is concerned we notice that the Ld. CIT(A) has upheld the action of the AO on the ground the after receiving information from the Central Bank of India that the appellant’s property which was mortgaged with the Bank had been sold in auction during the financial year relevant to the assessment year under consideration, the AO had reason to believe that taxable income has escaped assessment. Since, the AO had reason to believe that taxable income has escaped assessment the AO has rightly reopened the assessment after recording the reasons. So we do not find any infirmity in the findings of the Ld CIT(A) to interfere with the same. We, therefore, uphold the findings of the Ld. CIT(A) and dismiss this issue raised by the assessee .

The second issue involved in this case is regarding taxability of capital gains on the sale of assessee’s property. The issues before the Ld. CIT(A) for adjudication were whether sale by auction of the property of the assessee by Assessment Years 2009-2010 the Bank is a transfer to attract the provisions of the capital gains and whether the assessee is entitled for deduction of the liability of the Bank loan against which the property was mortgaged. The Ld. CIT(A) has rejected the contention of the assessee and held that the assessee is the real owner of the property sold by the Bank, therefore the assessee is liable to pay tax on the capital gains on transfer of the same. Since, the assessee had failed to repay the loan, recovery proceedings were initiated and the property in question was sold to recover the loan amount due from the assessee. Hence in our considered opinion the Ld CIT(A) has rightly upheld the findings of the AO. So far as the alternative claim of the assessee regarding deduction of loan liability is concerned the Ld. CIT(A) has held that the assessee is only entitled to indexation cost of acquisition and improvement if any. As pointed out by the LD. CIT(A), AO has worked out the quantum of capital gains by allowing the statutory deductions. We further notice that the Ld. CIT(A) has relied upon the judgment of Hon’ble Supreme Court delivered in CIT vs. Attili N. Rao, 252 ITR 880.. Hence, in our considered opinion, there is no infirmity in the order of the Ld. CIT (A). We therefore, uphold the findings of the Ld. CIT (A) on this issue. Since, the assessee had filed application u/s 145 of the Act against the same assessment order i.e. for the assessment year 2009-10, we do not consider it necessary to repeat the facts of the case again in this case. The assessee has raised the following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):- a) “The Ld. CIT Appeals has erred in law and in facts that neither the notice was issued nor opportunity of being heard was provided. Assessment Years 2009-2010 b) The Ld. CIT Appeals has erred in law and in facts that this material facts which has been relied upon by the Ld. A.O. was already disclosed and gone to the Assessing Officer in the last Assessment Year i.e. 2009-10. c) The Ld. CIT Appeals has erred in law and in facts and has not brought any tangible material on record to do the re- assessment u/s 147 & 148 of the I.T. Act, 1961. d) The Ld. CIT Appeals has erred in law and in facts that the Ld. A.O. was well aware of this material facts last year and has not brought it to tax during the last A.Y. and has brought to tax during this A.Y. This tantamount to the change of opinion only and this cannot be ground for opening for re-opening the Assessment. e) The Ld. CIT Appeals has erred in in law and in facts and has not passed the judicial reasoned order by A.O. f) The Ld. CIT Appeals has erred in law and in facts that the said transfer does not come under the definition of Transfer u/s 2 (47) of the Income Tax Act. g) The Ld. CIT Appeals has erred in law and in facts that it was the transfer to Court action the receipient of the Consideration is the Central Bank of India and it is not the act of the parties and the transfer is by the operation of the law as defined u/s 2 (D) of the Transfer of the Property Act. h) The Ld. CIT Appeals has erred in law and in facts after receipt of the reason by the Appellant has raised fresh objections which is not been answered by the Ld. A.O. thus the mandatory provisions of Section 147 & 148 is not satisfied.

Since, we have also dealt with the issue involved in the present appeal in the assessee’s appeal Assessment Years 2009-2010 favour of the revenue, the present appeal of the assessee has become infructuous. Hence, we dismiss this appeal as infructuous.