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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-10, Chennai in 15/CIT(A)-10, dated 16.06.2016.
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2. Shri V.K. Eswaran, the assessee, an individual, running a petrol bunk filed his return for assessment year 2006-07 0n 31.10.2006 admitting an income of Rs. 1,13,430/- from business and an agricultural income of Rs.30 lakhs. The AO began the scrutiny assessment by serving the notice by affixure on 31.10.2007. In the assessment order passed u/s. 144 on 31.12.2008, the AO levied tax on capital gains, on the sale of land which was not included in the return, at Rs. 1,03,25,100/- and determined the total income at Rs. 1,04,38,530/-. The assessee filed an appeal before the CIT(A) in which, inter alia, had taken a ground that “The officer erred in taking the capital gains belong to HUF as that of the assesse”. The CIT(A)-IX, Chennai dismissed the appeal in his order dated 27.03.2012 for non-prosecution. On further appeal, this tribunal in its order in dated 15.11.2012 remitted the case back to the officer with the following observations:
“In this view of the matter, we deem it appropriate that the issue in hand be restored back to the file of the Assessing Officer, who will decide it afresh in accordance with law on merits after affording adequate opportunity of hearing to the assessee, who will be at liberty to lead further evidence also, if any, in support of the claim raised.”
3. Subsequently, the ITO, Business Ward- VI(2), Chennai passed an order u/s. 143(3) r.w.s. 254 determining the total income at Rs. 4,38,80,049/-.
While doing so, he adopted the sale consideration shown in the sale deed u/s. 50C for the first time while in the original assessment order made u/s. 144
:-3-: I.T.A. N0. 2265/Mds/2016 dated 31.12.2008, the AO has adopted the sale value shown in the documents as the sale consideration. Thus, in the consequential order there was an enhancement of tax liability. Aggrieved, apart from other issues, on the issue u/s 50C , which was neither before the CIT(A) nor before the ITAT in the first round of appeal, the assessee filed an appeal before the CIT(A) .
The CIT(A) -10, Chennai upheld the assessment in to-to. Aggrieved against the CIT(A) order, the assessee filed this appeal challenging, inter alia, the legality of the original assessment ie that there was no proper service notices u/ss. 143(2)& 142 (1), the CIT(A) is not correct in upholding the capital gains on sale of agricultural land belonging to HUF in the hands of individual assessment, the CIT(A) is also not correct in upholding the deemed sale consideration u/s 50C in the remand order whereas there was no computation of income u/s. 50C in the original order and the issue of 50C was not before the appellate authorities in the first round. Without prejudice to the above, it is also submitted that the CIT(A) ; erred in upholding the deemed sale consideration u/s. 50C without referring to the valuation of the capital asset to the District Valuation Officer , erred in upholding the assessment without taking the correct cost value as on 01.04.81, correct cost of improvement and exemption on further investments in agricultural lands and house property etc.
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4. The assessee also filed a petition for admissions of additional evidence under Rule 29 of the Appellant Tribunal Rules, 1963 submitting as under:
“1. The Assessing Officer has taken the cost of the purchase in 1971 as the value as on 01.08.01981 in the computation of long term capital gains, in the exparte assessment made on 31.12.2008. On the remand by the honourable ITAT, again the AO has passed on 25.03.2014 only exparte order. So the assessee could not place before the AO, the document copy to claim the value as on 01.04.1981. At the time of hearing before CIT(A) on 23.05.2016, the assessee had submitted the sale deed copy dtd 30.03.1981, Document No. 1572/81 but the CIT(A) had omitted to take cognizance of the same in the appellate order.
In the circumstances now the appellant places the same registered document as additional evidence before the honourable bench which are enclosed in the paper book pages 175-185.
There is no wilful default or any contumacious disregard of any obligation cast on the appellants.
The above evidence will help the honourable bench in arriving the correct value as on 01.04.1981.”
We heard the rival contentions and accept the additional evidence for the merits stated in the petition. The AR pleaded that no proper service of notice u/s. 143(2) was made at the time of original assessment, notices u/s. 142(1) dated 11.09.2008 and 20.04.2008 were time barred. The CIT(A) is not correct in upholding the capital gains on sale of agricultural land belonging to HUF in the hands of the individual assessment, the impugned landswere purchased in the name of the assessee and his brother by his father when they were students, father settled agricultural land in the benefit of the family
:-5-: I.T.A. N0. 2265/Mds/2016 which are HUF properties only. He exchanged HUF properties with his brother which shall also be HUF properties only. By relying on case laws, it is submitted that individual properties, by own volition and intention, could also become HUF properties. The assessee’s family i.e., himself, wife, sons K.E.
Gnanavel Raja& K.E. Sridhar and daughter P. Shanthini were brought up, educated, got married through the income from these properties and day to day family expenses were also made from the agricultural income. The properties were disposed to meet the necessity for funds, inter alia, towards family expenses, to discharge the undivided half share, family debts etc., Cases were filed before the Fourth Additional District Court Coimbatore by his sons and daughter claiming that the property were joint family propertyand their respective shares. Thereafter, a compromise petition was filed before Civil Court and a final decree was passed by the Hon’ble Fourth Additional District Court, Coimbatore on 19.06.2014 in OS No. 114/14-ITA No. 393/14.
The final decree speaks that “the compromise petition filed and signed byboth sides. The suit properties are ordered to partition as per compromise petition and the terms of compromise read over and explained , admitted by both parties are correct. Final decree is passed in terms of compromise” and if the properties to the disputes are not HUF properties then the children would not have any right in it and the shares cannot be allotted to them. In the individual return, the assessee has not admitted any capital gain on sale of agricultural land since the impugned lands belong to the HUF. The final
:-6-: I.T.A. N0. 2265/Mds/2016 decree passed by the Civil Court is binding between the parties and the consequential effect is to be given by the IT authority as decided in CIT vs Rattan lal, 284 ITR 162 (Ali). When the assessee has placed materials to substantiate that the land sold are HUF properties then the Onus shifts on the department to prove that the property belong to individual only. The Assessing Officer cannot travel beyond the directions of ITAT in the remand order i.e., the assessee cannot be put in a worse position than the one in the original assessment proceedings , when there is no such direction in the order of the ITAT. Section 50C was not in the issue of the original assessment order dated 31.12.2008. The AO has not raised any issue u/s. 50C in the original assessment order and sec 50C was not an issue either before the CIT(A) or the ITAT. The Hon’ble ITAT has clearly stated in its order dated 15.11.2012.
So, in the second innings, the officer cannot make an addition u/s. 50C. The Assessing Officer cannot venture to take new issue which was not adjudicated before the CIT(A) or ITAT. When a reference to the valuation officer is not madeand no other additional evidence was relied on by the AO , the consideration in the sale deed to be accepted. The value mentioned in the sale deed is correct, because the sales were distress sales etc. The AR also sought our attention to the valuation made on certain properties as on 3.4.2004 under Tamilnadu Court fees and suits valuation Act and a sale made by him on 31.03.1981 of his own properties at the same locality and pleaded that the Assessing Officer while computing the long term capital gains in the :-7-: I.T.A. N0. 2265/Mds/2016 exparte order made on 31.12.2008, has taken the cost of the purchase in 1971 as the value as on 01.08.01981. He could not place before the AO, the document copy to claim the value as on 01.04.1981. At the time of hearing before CIT(A) on 23.05.2016, he had submitted the sale deed copy dt 30.03.1981, Document No. 1572/81 but the CIT(A) had omitted to take cognizance of the same in the appellate order. In the circumstances , the assessee pleaded that the registered document may be admitted as an additional evidence for the purposes of determination of value as on 01.4.1981, cost of improvement etc and render justice. Per contra, the DR supported the order of the CIT(A).
We heard the rival contentions and perused the orders, documents and paper book. The issue is that the AO held that the assessee has sold 10.35 acres of land and its capital gain has to be assessed in the assessee’s hands.
However, the assessee with detailed background submitted that the land belonged to HUF which included the properties got in exchange of HUF properties also. In this regard, the assessee relied on the evidences of various documents, compromise petition filed by the family members viz sons & daughter of the assessee under order 23 Rule 3 of the Civil procedure Code in 2014 and the final decree passed in the court of Fourth Additional Court, session judge in IA 393/14 in OS No. 114/2014 dated 19.06.2014. In order to justify that the property belonged to HUF, the AR relied before the CIT(A) the :-8-: I.T.A. N0. 2265/Mds/2016 family settlement deed dated 06.11.1971 as per which the father of the appellant settled the property for the benefit of the family including the appellant and the assessee makes out a case that the assessee and his brother were students at the time of acquisition of the impugned property etc.
In such facts and circumstances, the decision as to ownership of the impugned property is sine qua non in this case. However, we are not able to appreciate the AR’s submissions that the decree and the order passed by the Civil Court is binding between the parties and therefore the consequential effect is to be given by the IT authorities in their order, for the reason that the compromise petition was filed in 2014 , almost after 2 years after this Tribunal passed the order on 15.11.2012. In the facts and circumstance, we are of the view that the ownership of the property should be decided, afresh, on appreciation of the relevant documents and other material and hence we remit this issue back to the AO to re-examine the assessee’s claim, afresh , and decide the same in accordance with law. On the issue is determination of correct market value as on 01.04.1981 etc , the assessee placed a copy of sale deed executed by him on 30th March, 1981 in document No. 572/81 by way of additional evidence and sought our attention to the valuation made on certain properties as on 3.4.2004 under Tamilnadu Court fees and suits valuation Act at the same locality etc and pleaded that the correct value as on 01.4.1981, the cost of improvement etc be determined based on these materials and render justice. Since, we have admitted additional evidence, we
:-9-: I.T.A. N0. 2265/Mds/2016 deem it fit to direct the AO to re-examine the issue of correct market value based on this document and other materials which are already collected or likely to be collected by him and decide this issue in accordance with law.
Since, the primary issues are remitted back, we deem it fit that the associated grounds are also remitted for re-examination in accordance with law . After considering the facts and circumstances of this case, we deem it fit to direct the assessee to furnish relevant material before the AO and actively cooperate in the early disposal of the assessment in accordance with law.
In the result, the assessee’s appeal is treated as allowed for statistical purposes.
Order pronounced on Tuesday, the 19th day of September, 2017 at Chennai.