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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: SHRI JASON P.BOAZ (AM) & SHRI RAM LAL NEGI (JM)
This appeal has been preferred by the assessee against impugned order dated 18/07/2011 passed by the Ld. CIT (Appeals)-26, Mumbai, for the Asst. year 2008-09, whereby the Ld CIT(A) partly allowed the appeal filed by the assessee against order dated 30/12/2010 passed u/s 143(3) of the Income Tax Act, 1961 (for short ‘the Act’).
Case was called for hearing, however, none appeared on behalf of the assessee. We noticed that this is the fourth occasion that the assessee either did not appear on the dates fixed for hearing or sought adjournment. The assessee did not appear successively for the last two dates when the case was fixed for hearing nor any request was received for adjournment. From the conduct of the assessee we are satisfied that the assessee is not interested in pursuing its appeal. We accordingly, decided to proceed ex parte against the appellant/assessee on the basis of material on record after hearing the departmental representative (DR).
Brief facts of the case are that the assessee, an individual, filed its return of income for the relevant assessment year declaring the total income of Rs. 4,29,200/-. The same was processed u/s 143(1) of the Act. On the basis of details furnished by the assessee and submissions made in response to the notice issued u/s 142(2) of the Act, assessment order was passed u/s 143(3) of the Act determining the total income of the assessee at Rs. 67,01,200/- after making addition of Rs. 62,72,000/-as short term capital gain u/s 50C of the Act. In appeal, the Ld, CIT(A) partly allowed the appeal of the assessee and modified the order assessment order by directing the AO to compute the taxable capital gain after considering the DVO’s report.
Still Aggrieved, the assessee is in appeal before the tribunal on the following grounds of appeal:-
“1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the addition made of short- term capital gain in respect of the property belongs to S/Shri S.A. Fereira, F.A. Fereira and Mrs. Y.L. Dias sold by the appellant on the strength of power of attorney.
2. On the facts and in the circumstances of the case and in law, the AO has made the assessment by adding short term capital gain of Rs. 62,72,000/- (as per the departmental valuation the market value at Rs. 25,76,000/-) of the appellant, although the appellant has put forward all the true and correct information, by making an addition of Rs. 62,72,000/- (as per the valuation report Rs.25,76,OOO/-) as short term capital gain on the property sold by the appellant as per
the power of attorney dated 6/7/2007 given by S/Shri S.A. Fereira, F.A. Fereira and Mrs. Y.L. Dias to the appellant,
3. On the facts and in the circumstances of the case and in law, the AO has not made any inquiry with the landlords S/Shri S.A. Fereira. F.A. Fereira and Mrs. Y.L. Dias, although the appellant has given the full address and also mentioned payment details made to the land lords.
4. On the facts and in the circumstances of the case and in law, the learned CIT Appeal has not called for any remand report from the AO in respect of the payment made by the appellant to the landlord.
5. On the facts and in the circumstances of the case and in law, the AO as well as the CIT (Appeal) have determined that the cost of the land to the appellant is "O”, although the appellant has paid Rs. 9 lakhs by way of cheque to the three landlords, Rs. 1,30,000/- paid as stamp duty and registration and paid Rs. 60,000/- on the date of power of attorney day. The appellant has truly and correctly submitted that remaining amount of 11 lakhs has also been paid to the landlords immediately after the sale of the land on which the power of attorney given to the appellant by the landlords. Thus the appellant has paid Rs. 22 lakhs to the landlords. These facts can be verified from the return of income of the assessment year, wherein it is clearly mentioned that the appellant has taken the loan of Rs. 6 lakhs from wife and sister- in-law and paid Rs. 9 lakhs to the landlord and the loan amount taken from wife and sister-in-law of Rs. 6 lakhs have been returned immediately after the receipt of sale consideration. These facts can also be verified from the bank statement.
On the facts and in the circumstances of the case and in law, the AO has not sincerely tried to find out the truth and exact nature of transaction done by the appellant and the landlords.
7. On the facts and in the circumstances of the case and in law, the AO has not enquired with the landlords whether the sales proceeds
have been received from the appellant, which was sold by the appellant on the strength of power of attorney given by the landlord.
8. On the facts and in the circumstances of the case and in law, the appellant has not challenged the assessment order passed by the AO before the learned CIT(Appeal) that the assessment is as bad-in- law and void, wherein the first para it is stated that "return of income was filed on 30/7/2008 declaring total income of Rs. 4,29,200/-. The same was processed under section 143(1) of the IT Act.
9. On the facts and in the circumstances of the case and in law the learned CIT(Appeal) erred not allowed the appeal although the appellant was on 100% belief that the learned CIT(Appeal) will give the benefit of doubt to the appellant and thereby delete the short term capital gain of Rs. 62,72,000/- since the appellant is the only power of attorney holder given by the landlords.
On the facts and in the circumstances of the case in law, the AO has not supplied with the intimation under section 143(1) of the IT Act along with the refund claim on the revised return submitted by the appellant on 30/7/2009, but the AO has considered the return of income filed on 30/7/2008 and the notice under section 143(2) dated 13/9/2010. The notice under section 143(2) is served out of date as the notice under section 143(2) of the IT act should have been served to the appellant on or before 30/9/2009. Hence the order passed under section 143(3) dated 30.12.2010 by the AO is bad in law and void.
On the facts and in the circumstances of the case in law, the appellant prays that either the addition made by the AO under the head short time capital gain may be deleted, since the appellant is only a power of attorney holder of the land lords S/Shri S.A Fereira, F.A Fereira and Mrs .Y. L Dias (power of attorney holder cannot be considered as the owner of the property and no tax can be levied on the power of attorney holder) or request your honour to cancel the assessment made on the appellant as void and band in law, since the AO has passed the order under 143(3) on the original return of income filed 30/7/2008 and as such notice under section 143(2) should have been served on the appellant on or before 30/9/2009 and in the appellant's case the notice under section 143(2) is served on 30/9/2010, which is not a valid service.
The appellant therefore prayed to your goodselves that the addition made as short time capital gain of Rs. 62,72,000/- (as per the valuation report 25,76,000/-) may please be deleted or cancel the assessment order passed under section 143(3) dated 30/12/2010 as invalid and bad in law.”
Before us, the Ld. DR relying on the order passed by the Ld.CIT(A) submitted that there is no infirmity in the impugned order to interfere with the same. The Ld. CIT(A) has rightly directed the AO to recomputed the taxable capital gain after taken into consideration the DVO’s report.
6. We have gone through the material on record. The only issue involved in this appeal is whether the Ld. CIT (A) has erred in directing the AO to compute the short term capital gain after considering DVO’s report. In order to decide this issue it is necessary to discuss the material facts of the present case. The assessee entered into an agreement for development of land owned by Mrs. Y.L. Dias, Mr. Francis A. Pareira and Mr. Stephen A. Pareira vide power of attorney dated 02.07.2007. The assessee instead of developing the said land sold some portion of the said land for Rs. 22,00,000/-. The buyer paid Rs. 3,13,600/-towards stamp duty on the market value Rs.62,70,000/- of the said land. During assessment proceedings the assessee was asked as to why capital gain should not be worked out u/s 50C of the Act on market value of Rs. 62,72,000/-. The assessee submitted that the market value has been over assessed. Secondly, the assessee contended that the land was sold in the capacity of an attorney of the land owners and the consideration received was handed over to the owners concerned.
As requested by the assessee, the AO referred the matter regarding valuation of the land to the departmental valuation officer (DVO) for its report and the owners of the land were summoned to verify the contention of the assessee. No response was received from any of the owner. The assessee failed to produce any evidence to prove that the consideration was paid to the owners. The AO then made addition of short term capital gain of Rs. Rs. 62,72,000/-subject to rectification u/s 154 of the Act as per DVO report.
During the first appellate proceedings, the assessee submitted that DVO has sent its report to the AO and the fair market value has been estimated at Rs. 25,76,000/-. The assessee further submitted that AO may be directed to pass a protective assessment on the till substantive assessment is made in the hands of the landlords. Even during the first appellate proceedings the assessee did not produce any evidence to prove that consideration amount was paid to the owners of the land. Under these circumstances, we do not find any factual or legal infirmity in the order of the Ld. CIT(A). We therefore, uphold the findings of the Ld. CIT(A) and dismiss the sole ground of the appeal of the assessee
In the result, the appeal filed by the assessee for the A.Y. 2008-09 is dismissed. Order pronounced in the open court 18th January, 2017.