KAMLA BAI,BUNDI vs. INCOME TAX OFFICER, WARD, BUNDI
Facts
The assessee filed her return of income declaring total income and agricultural income. The case was selected for scrutiny, and notices were issued. The assessee entered into an agreement to sell disputed rights in an immovable property for Rs. 5.50 crores. The Assessing Officer (AO) made an addition of Rs. 6,37,12,270 as long-term capital gains.
Held
The Tribunal noted that the appeal was dismissed by the CIT(A) without affording the assessee an opportunity of being heard. The assessee's primary contention is that the transfer of disputed rights in the immovable property does not constitute a transfer for capital gains tax purposes because the cost of acquisition is indeterminate. The Tribunal found that the assessee was deprived of justice due to non-receipt of hearing notices by the CIT(A).
Key Issues
Whether the transfer of disputed rights in an immovable property constitutes a taxable transfer for capital gains, and whether the CIT(A) erred in dismissing the appeal without providing an opportunity of being heard.
Sections Cited
143(3), 142(1), 2(14), 48, 2(47), 53A, 2(47)(v), 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 622/JP/2023
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 622/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2017-18 cuke Kamla Bai The Income Tax Officer, Vs. Ward No. 20, Mirapura Kparen Ward, Bundi Bundi, Keshoroypartan, Bundi, Rajasthan LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: CLJPB 0279 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Yogesh Parwal (CA) jktLo dh vksj ls@ Revenue by : Arvind Kumar (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 19/12/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 02/01/2024 vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM
This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 22/08/2023 [here in after (NFAC)/ ld. CIT(A) ] for assessment year 2017-18 which in turn arise from the order dated 28.12.2019 passed under section 143(3) of the Income Tax Act, by ITO, Ward, Bundi.
2 ITA No. 622/JP/2023 Kamla Bai vs. ITO 2. In this appeal, the assessee has raised following grounds: -
Ground No 1:
Based on facts and circumstances of the case and in law, the AO and CIT(A) has erred in making an addition of Rs 6,37,12,270 as long-term capital gains without appreciating that the Assessee had no possession on the disputed land so as to transfer any immovable property.
Ground No 2:
Based on facts and circumstances of the case and in law, the Ld CIT(A) has erred in confirming the addition of Rs 6,37,12,270 made by the AO by holding power of attorney to be a transferrable instrument contrary to the fact that it cannot be regarded as a transferrable instrument under the Transfer of Property Act, 1882.
Ground No 3:
Based on facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the Assessee had only transferred the disputed rights in the immovable property and as the cost of acquisition of those rights is indeterminate and the computation mechanism of capital gains as laid out in section 48 of the Act fails, no amount is chargeable to tax in the subject AY as held by the Hon’ble Supreme Court of India in the case of CIT vs B. C. Srinivasa Setty (1981) 128 ITR 294 (SC).
Succinctly, the fact as culled out from the records is that the
assessee has e-filed her return of income on 31.03.2018 vide ack. No.
591083920310318 showing total income of Rs. 9,34,970/- and Agriculture
Income at Rs. 74,999/- for rate purpose. The case was selected for
Complete scrutiny through CASS therefore, a notice u/s 143(2) of the
Income Tax Act was issued on 28.09.2018 through online e-proceedings
3 ITA No. 622/JP/2023 Kamla Bai vs. ITO required the assessee to produce or cause to produce any evidence on or
before 03.10.2018 which was served upon the assessee through e-mail.
Further, notice under section 142(1) of the Income Tax Act, 1961 was
issued on 25.02.2019 and served through registered email of the assessee.
Due to change of incumbent, a notice under section 142(1) of the Income-
tax Act, 1961 was issued to the assessee on 01.10.2019 to furnish the
information called for therein on or before 11.10.2019, the same was
served upon the assessee through e-mail. To complete the assessment
proceedings, various notices under section 142(1) of the Income Tax Act,
1961 were issued and served through regd. email but no compliance was
made by the assessee. Keeping in view of natural justice, before
finalization of assessment proceedings, one more opportunity was given to
the assessee by issue of notice u/s 142(1) of the Income Tax Act, 1961 and
the case was fixed for hearing on 02.12.2019. In the assessment
proceeding the assessee submitted copy of Ikrarnama, bank statement of
Union Bank of India, copy of Khasra Girdawari. The assessee is a lady
having parental agriculture land with her having approx. area of 25.8
Hectares at village Manpur Devri alia Golyawas, Tehsil Sanganer, Distt.
Jaipur. The assessee was earning agriculture income from the same only.
During the year under review, the assessee has sold her land and sale
4 ITA No. 622/JP/2023 Kamla Bai vs. ITO
proceed were deposited in bank. Out of which part amount was given as
loan to various parties and interest was earned on them. Considering the
details placed on record ld. AO noted that the assessee had sold
immovable property is a capital assets u/s 2(14) of the Income Tax Act,
1961 hence capital gains on transfer of the same has arisen. DLC value of
the immovable property has been taken as received from the Sub-
Registrar, Jaipur. Cost of acquisition has not been provided by the
assessee, hence the same are being taken on the basis of DLC value for
the year 1996 made available by the Sub Registrar-1, Jaipur u/s 133(6) of
the IT. Act, 1961 which is on record and thus long term capital gain was
worked as under:-
Sr. No. Particulars Amount 1 Total Value of sale consideration for the purpose of capital gain 6,96,60,000/- 2 Less: Index cost of acquisition 59,47,730/- 81967 x 6.45 x 1125/100 3 Long term capital gain 6,37,12,270/-
Aggrieved from the order of the assessment, assessee preferred an
appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant
finding of the ld. CIT(A) is reiterated here in below:
“I have carefully gone through the facts of the case. Moreover, all notices were duly served upon the appellant through email. The appellant opted not to
5 ITA No. 622/JP/2023 Kamla Bai vs. ITO respond the above notices for the reason best known to him. No documents were produced before me in support of his GOA or to rebut the assessment order. In view of the above facts, it is clear that the appellant is not interested in prosecuting the present appeal and therefore in absence of any rebuttal of the assessment order, the assessment order is confirmed and accordingly the appeal is dismissed. Hence Ground of appeal raised by the appellant is dismissed. 6. In result, the assessment order is confirmed.”
As the assessee did not find any favour from the order of the ld.
CIT(A), the assessee has preferred the present appeal before this Tribunal
on the ground as reproduced hereinabove. To support the various grounds
so raised by the ld. AR of the assessee, has filed the written submissions
and the same is reproduced herein below.
“Facts:
The Appellant filed return of income (“RoI”) on 31 March 2018 declaring a total income of Rs 9,34,970 (Acknowledgement enclosed at PB 1). She also declared an amount of Rs 74,999 as net agricultural income and an amount of Rs 5.5 crores as ‘Others’ under the Schedule Exempt Income. The RoI was picked for scrutiny and a notice under section 143(2) of the Act was issued. The Appellant furnished replies vide submission dated 2 December 2019 (PB 2-12), 13 December 2019 (PB 13-14), 15 December 2019 (PB 15-19) and on 25 December 2019 (PB 20-23). Thereafter, a show cause notice dated 27 December 2019 (PB 24-28) was issued to the Appellant. The Appellant furnished reply to the show cause notice on 28 December 2019 (PB 29- 32).
In the various submissions, the Appellant had submitted that it entered into an agreement to sell dated 28 September 2016 (PB 4-12) on stamp paper of Rs 500 in respect of 25.80 hectare of land at village Manpur, Devri alia Golyiwas, Kalyanpura, Tenshil Sanganeer which was inherited by her on death of his father. On the said land, the share of the Appellant was 1/16th. As per the agreement to sell, there were a
6 ITA No. 622/JP/2023 Kamla Bai vs. ITO number of legal cases pending over the land on which substantial expenditure was anticipated to be incurred to clear the title over the disputed land. Accordingly, the Appellant sold the rights in the disputed land to Shri Ritesh Agarwal (“Buyer”) for a consideration of Rs 5.50 crores with a condition that expenditure on settling the legal dispute will be borne by the Buyer and in case the Appellant does not get the sale deed executed in favour of the Buyer even after her name is recorded in the land records, the Buyer will have the right to get the sale deed executed through the court for which all expenditure would be recovered from the Appellant.
In the agreement to sell dated 28 September 2016, it has also been mentioned that if pursuant to the conclusion of the pending legal dispute the title of the Appellant is effected, the Buyer will not have right to recover the amount back from the Appellant. The Learned Assessing Officer (“AO”) passed assessment order dated 28 December 2019 making an addition of Rs 6,37,12,270 as long-term capital gains by adopting DLC value of the land at Rs 6,96,60,000 as against actual amount of Rs 5.5 crores as per the agreement to sell stating the following reasons (para 8 of the assessment order, page no 12):
A) The immovable property sold by the Appellant was urban agricultural land and covered under definition of capital asset under section 2(14) of the Act basis confirmation received from Tehsildar, Sanganer in his letter No 5058 dated 20 December 2019
B) The Appellant has herself claimed the amount as exempt income in the RoI.
C) As per ‘IKRARNAMA’, the immovable property has been transferred to the purchaser and the entire sale consideration was received by the assessee and possession had been given to the purchaser.
D) The entire rights have been transferred by the seller to the purchaser of the immovable property as clearly mentioned in the ‘IKRARNAMA’ ie यह �क उ�त बेची गई भू�म पर �र�सवर �नयु�त है इस�ल ये �थमप� ने ��वतीय प� को उ�त बेची गई हक खातेदार� व क�जा का�त क� भू�म का आज ऐला�नया क�जा संभला �द या है। और �थमप� ने ��वतीय प� को अ�धकार दे �दया है �क जब भी उ�त भू�म �र�सवर� से मु�त होगी तो ��वतीय प� को उ�त भू�म का मौके पर वा�त�वक क�जा �ा�त करने का पूण� अ�धकार होगा।
E) Condition of section 2(47) of the Act and section 53A of the Transfer of Property Act, 1882 are fulfilled
7 ITA No. 622/JP/2023 Kamla Bai vs. ITO
F) The Ld AO relied upon the decision of Hon’ble Supreme Court of India in the case of Poddar Cement P Ltd [1997] 226 ITR 625 taking a view that registration for the purpose of conferring ownership right is not necessary as regards taxability of income received in response of the property
Long term capital gains were computed by the AO as under:
Particulars Amount (Rs) Sale consideration 5,50,00,000 DLC value of immovable property sold 6,96,60,000 1@10800000 * 6.45 Bigha (25.8 hectare * 1/16) 1 hectare = 4 Bighas Total value of sales consideration for capital gains 6,96,60,000 Less: Index cost of acquisition 59,47,730 81967*6.45 *1125/100 Long term capital gains 6,37,12,270
The Appellant filed an appeal before the National Faceless Appeal Centre [“CIT(A)”]. In Form No 35, the Appellant the categorically mentioned that the communication notices be not sent on email, however mentioned email address as sunilsharma@gmail.com being a mandatory field. Inspite of this, the appeal hearing notices dated 24 May 2023, 27 July 2023 and 14 August 2023 were sent on the email address sharma_sunil1979@yahoo.com (PB 33-35) and no notice was sent by post on the address of the Appellant and thus, the hearing notice did not came to the knowledge of the Appellant. Hence, the Appellant could not represent the case before the CIT(A). Accordingly, the CIT(A) dismissed the appeal stating that Appellant is not interested in prosecuting the appeal and in the absence of rebuttal of the assessment order, the assessment order is confirmed. Against the order of the CIT(A) order, the Appellant is in appeal before your honours.
Submission:
As per agreement to sell dated 28 September 2016, the Appellant transferred disputed rights in the immovable property and not the immovable property. The Appellant was not having a clear title on the immovable property as there were a number of legal disputes pending on the date of entering of agreement to sell. Even as on date, the legal disputes are pending. The agreement to sell was entered on a stamp paper of Rs 500 only and cannot be regarded as a transferable instrument. The physical possession of the land was not handed over to the Buyer as the same is
8 ITA No. 622/JP/2023 Kamla Bai vs. ITO impossible due to pending legal disputes and therefore the observation of the AO is incorrect.
As per section 2(47) of the Act, "transfer", in relation to a capital asset, includes:
“(i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation 1.—For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA.
Explanation 2.—For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India” (emphasis supplied)
The Ld AO at para 9 of the assessment order has held the above transaction to be ‘transfer’ under section 2(47)(v) of the Act ie any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882.
Section 53A of the Transfer of Property Act, 1882 has been reproduced as under:
9 ITA No. 622/JP/2023 Kamla Bai vs. ITO “[53A. Part performance.—Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof]” (emphasis supplied)
The Ld AO at para 9 of the assessment order has analyzed the above section 53A of Transfer of Property Act as under:
“1. There should be contract for consideration; 2. It should be in writing; 3. It should be signed by the transferor; 4. It should pertain to the transfer of immovable property; 5. The transferee should have taken possession of property; 6. Lastly, transferee should be ready and willing to perform the contract”.
Thus, in order to constitute a transfer as per section 2(47)(v) of the Act, conditions of section 53A of the Transfer of Property Act, 1882 have to be fulfilled which, inter-alia, requires actual/ physical possession of the immovable property. If the said condition is fulfilled along with the order conditions, it will be regarded as transfer for the purpose of Income-tax Act, 1961 as well as for Transfer of Property Act, 1882 so as to debar the transferor from enforcing against transferee any right in respect of immovable property.
In the instant case, actual/ physical possession of the immovable property was not handed over to the Buyer due to pending legal cases. Further, even in the agreement to sell, it has been mentioned that only a declaratory possession (ऐला�नया
10 ITA No. 622/JP/2023 Kamla Bai vs. ITO
क�जा) has been given to the Buyer and the actual possession will be given only upon clear title on the immovable property. The relevant para reads as under”
“भू�म का आज ऐला�न या क�जा संभला �दया है। और �थमप� ने ��वतीय प� को अ�धकार दे �दया है �क जब भी उ�त भू�म �र�सवर� से मु�त होगी तो ��वतीय प� को उ�त भू�म का मौके पर वा�त�वक क�जा �ा�त करने का पूण� अ�ध कार होगा।“
Thus, it is clear that physical/ actual possession has not been given and therefore it cannot be regarded as a transfer as per Section 53A of the Transfer of Property Act, 1882 and therefore is not a transfer as per section 2(47)(v) of the Act.
Reliance in this regard is placed on the following decisions:
12.1 Suraj Lamp & Industries Pvt. Ltd. vs State of Haryana & Anr. [SLP (C) No. 13917 OF 2009] dated 11 October 2011 [PB 36-45]: The Hon’ble Supreme Court of India while dealing with legality of transfer of immovable property through sale agreement (“SA”) and power of attorney (“POA”) held as under:
“6. In this background, we will examine the validity and legality of SA/GPA/WILL transactions. We have heard learned Mr. Gopal Subramanian, Amicus Curiae and noted the views of the Government of NCT of Delhi, Government of Haryana, Government of Punjab and Government of Uttar Pradesh who have filed their submissions in the form of affidavits.
Relevant Legal Provisions
Section 5 of the Transfer of Property Act, 1882 (`TP Act' for short) defines `transfer of property' as under:
"5. Transfer of Property defined : In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself [or to himself] and one or more other living persons; and "to transfer property" is to perform such act."
xxx xxx
Section 54 of the TP Act defines `sales' thus:
11 ITA No. 622/JP/2023 Kamla Bai vs. ITO "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale how made. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property."
Section 53A of the TP Act defines `part performance' thus :
"Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof."
We may next refer to the relevant provisions of the Indian Stamp Act, 1999 (Note : Stamp Laws may vary from state to state, though generally the provisions may be similar). Section 27 of the Indian Stamp Act, 1899 casts upon the party, liable to pay stamp duty, an obligation to set forth in the instrument all facts and circumstances which
12 ITA No. 622/JP/2023 Kamla Bai vs. ITO affect the chargeability of duty on that instrument. Article 23 prescribes stamp duty on `Conveyance'. In many States appropriate amendments have been made whereby agreements of sale acknowledging delivery of possession or power of Attorney authorizes the attorney to `sell any immovable property are charged with the same duty as leviable on conveyance.
Section 17 of the Registration Act, 1908 which makes a deed of conveyance compulsorily registrable. We extract below the relevant portions of section 17.
"Section 17 - Documents of which registration is compulsory- (1) The following documents shall be registered, namely:--
xxxxx
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property.
xxxxx (1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.
Advantages of Registration
In the earlier order dated 15.5.2009, the objects and benefits of registration were explained and we extract them for ready reference:
"The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration.
Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or
13 ITA No. 622/JP/2023 Kamla Bai vs. ITO extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs. 100 and upwards to or in immovable property.
Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified."
Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent.
Scope of an Agreement of sale
Section 54 of TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. Kamtam and Anr. (1977) 3 SCC 247, observed:
A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Transfer of Property Act. See Rambaran Prosad v. Ram Mohit Hazra [1967]1 SCR
The fiduciary character of the personal obligation created by a contract for sale is recognised in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of
14 ITA No. 622/JP/2023 Kamla Bai vs. ITO the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein." In India, the word `transfer' is defined with reference to the word `convey'. The word `conveys' in section 5 of Transfer of Property Act is used in the wider sense of conveying ownership... ...that only on execution of conveyance ownership passes from one party to another...."
In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held:
"Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party."
It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred.
Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of TP Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter.
Scope of Power of Attorney
A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an
15 ITA No. 622/JP/2023 Kamla Bai vs. ITO irrevocable attorney does not have the effect of transferring title to the grantee. In State of Rajasthan vs. Basant Nehata - 2005 (12) SCC 77, this Court held :
"A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.
Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee."
An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.
Scope of Will
A will is the testament of the testator. It is a posthumous disposition of the estate of the testator directing distribution of his estate upon his death. It is not a transfer inter vivos. The two essential characteristics of a will are that it is intended to come into effect only after the death of the testator and is revocable at any time during the life time of the testator. It is said that so long as the testator is alive, a will is not be worth the paper on which it is written, as the testator can at any time revoke it. If the testator, who is not married, marries after making the will, by operation of law, the will stands revoked. (see sections 69 and 70 of Indian Succession Act, 1925). Registration of a will does not make it any more effective.
Conclusion
Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M.
16 ITA No. 622/JP/2023 Kamla Bai vs. ITO Jain v. Canara Bank - 94 (2001) DLT 841, that the "concept of power of attorney sales have been recognized as a mode of transaction" when dealing with transactions by way of SA/GPA/WILL are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance.
Transactions of the nature of `GPA sales' or `SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property.
They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales.
It has been submitted that making declaration that GPA sales and SA/GPA/WILL transfers are not legally valid modes of transfer is likely to create hardship to a large number of persons who have entered into such transactions and they should be given sufficient time to regularize the transactions by obtaining deeds of conveyance. It is also submitted that this decision should be made applicable prospectively to avoid hardship.
We have merely drawn attention to and reiterated the well-settled legal position that SA/GPA/WILL transactions are not `transfers' or `sales' and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale.
Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. The said `SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of
17 ITA No. 622/JP/2023 Kamla Bai vs. ITO allotments/leases by Development Authorities. We make it clear that if the documents relating to `SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.
We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding `SA/GPA/WILL transactions' are not intended to apply to such bonafide/genuine transactions. (emphasis supplied)
12.2 R. Krishnaswamy [TS-672-HC-2013] Madras High Court: Sale deed registration relevant for capital gains, not possession/ full payment date.
12.3 Abdul Wahab [TS-801-ITAT-2014(Bang)] [PB 46-64]: ITAT deletes capital gains addition, agreement for sale of property and execution of power of attorney ('POA') in favour of managing partner of purchasing firm do not result in taxable 'transfer' u/s 2(47); Rejects Revenue's argument that by virtue of POA (conferring wide powers including property alienation right), possession was passed by assessee to purchaser in part performance of sale agreement as per Sec 2(47)(v); Holds possession of the power agent can be only on behalf and for the principal. The possession of power agent is not in his independent capacity”.
12.4 Shri Vishnubhai Vithalbhai Patel (HUF) [TS-296-ITAT-2019(Ahd)] [PB 65-78]: ITAT rules that the transfer of property based on the POA is not a valid transfer.
Thus, as elaborated above by the Hon’ble Supreme Court, under the provisions of Transfer of Property Act, 1882, a legal transfer of immovable property can be construed only by way of a registered deed of conveyance (sale deed). An agreement to sell cannot confer any title nor transfer any interest in an immovable property and would fall short of the requirements of sections 54 and 55 of TP Act. Further, for the
18 ITA No. 622/JP/2023 Kamla Bai vs. ITO purpose of section 53A of the Transfer of Property Act, it is necessary to have the possession of the immovable property by the transfree.
In the instant case, the Assessee entered into an agreement to sell and a power of attorney on 28 September 2016 in respect of a disputed immovable property and received consideration as per the terms of agreement to sell. No sale deed has been executed or can be executed for the said immovable property as there are many pending legal disputes. Only by executing the POA or agreement to sell, it cannot be said that the Assessee has transferred immovable property as held by the Hon’ble Supreme Court and therefore ‘transfer of immovable property’ has not taken place as per the provisions of section 2(47)(v) of the Act and therefore, also section 50B of the Act cannot be attracted.
However, it may be argued that there is a “transfer” as per section 2(47)(ii) of the Act ie “extinguishment of any rights therein”. It is submitted that as per section 45 of the Act, any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to tax under the head “Capital Gains”. Further, the mechanism of computation of capital gains has been provided in section 48 of the Act as under:
Particulars Amount (INR) Full value of consideration received or receivable Less: Expenditure incurred wholly and exclusively in connection with transfer Less: Cost of acquisition and cost of improvement (including indexation, as the case may be)
In the absence of any one element of the computation mechanism, the computation mechanism fails and therefore the amount cannot be charged to tax under the head ‘Capital Gains’. Reliance in this regard is placed on the decision of CIT vs B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) (PB 79-84) wherein the Hon’ble Supreme Court held as under:
“8. The mode of computation and deductions set forth in s. 48 provide the principal basis for quantifying the income chargeable under the head "Capital gains". The section provides that the income chargeable under that head shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset:
"(ii) the cost of acquisition of the capital asset . . ."
19 ITA No. 622/JP/2023 Kamla Bai vs. ITO
What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money. That kind of case is covered by s. 49 and its cost, for the purpose of s. 48, is determined in accordance with those provisions. There are other provisions which indicate that s. 48 is concerned with an asset capable of acquisition at a cost. Sec. 50 is one such provision. So also is such s s. (2) of s. 55. None of the provisions pertaining to the head "Capital gains" suggests that they include an asset in the acquisition of which no cost at all can be conceived. Yet there are assets which are acquired by way of production in which no cost element can be identified or envisaged. From what has gone before, it is apparent that the goodwill generated in a new business has been so regarded. The elements which create it have already been detailed. In such a case, when the asset is sold and the consideration is brought to tax, what is charged is the capital value of the asset and not any profit or gain.
In the case of goodwill generated in a new business there is the further circumstance that it is not possible to determine the date when it comes into existence. The date of acquisition of the asset is a material factor in applying the computation provisions pertaining to capital gains. It is possible to say that the "cost of acquisition" mentioned in s. 48 implies a date of acquisition, and that inference is strengthened by the provisions of ss. 49 and 50 as well as sub-s. (2) of s. 55.
It may also be noted that if the goodwill generated in a new business is regarded as acquired at a cost and subsequently passes to an assessee in any of the modes specified in sub-s. (1) of s. 49, it will become necessary to determine the cost of acquisition to the previous owner. Having regard to the nature of the asset, it will be impossible to determine such cost of acquisition. Nor can sub-s. (3) of s. 55 be invoked, because the date of acquisition by the previous owner will remain unknown.
We are of opinion that the goodwill generated in a newly commenced business cannot be described as an "asset" within the terms of s. 45 and, therefore, its transfer is not subject to income-tax under the head "Capital gains". 17. In the instant case, the Appellant has not transferred any immovable property, instead has only transferred disputed rights in the immovable property in the subject AY. Cost of acquisition of such rights is indeterminate and therefore the Capital Gains mechanism fails to attract any capital gains tax in the subject AY. Cost of acquisition of such rights has also not been provided in section 55(2)(a) of the Act. Further, it is
20 ITA No. 622/JP/2023 Kamla Bai vs. ITO
submitted that Finance Act, 2023 amended section 55(2)(a) of the Act to include “any other right” with effect from 1 April 2023. Section 55(2)(a) of the Act as amendment by Finance Act 2023 is reproduced as under:
“(2) For the purposes of sections 48 and 49, "cost of acquisition",—
(a) in relation to a capital asset, being goodwill of a business or profession, or a trade mark or brand name associated with a business or profession, [or any other intangible asset] or a right to manufacture, produce or process any article or thing, or right to carry on any business or profession, or tenancy rights, or stage carriage permits, or loom hours, [or any other right]—
(i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and
(ii) in the case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49 and where such asset was acquired by the previous owner (as defined in that section) by purchase, means the amount of the purchase price for such previous owner; and
(iii) in any other case, shall be taken to be nil”
Prior to the amendment by the Finance Act, 2023, cost of acquisition of “any other right” was indeterminate and therefore in the absence of cost of acquisition, the computation mechanism of Capital Gains fails and therefore the amount received cannot be charged to tax under the head ‘Capital Gains’.
Further, the Ld AO has relied upon the decision of Hon’ble Supreme Court of India in the case of Poddar Cement P Ltd [1997] 226 ITR 625 (PB 85-102) taking a view that registration for the purpose of conferring ownership right is not necessary as regards taxability of income received in response of the property. The reliance placed by the Ld AO is misplaced as the Supreme Court had laid out the said principle in context of section 22 of the Act wherein the question of law before the Hon’ble Supreme Court was as under:
"Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the income derived by the assessee-company from flats from the building known as "Silver Arch" of Bombay is taxable under the head `income from other sources' under s. 56 of the IT Act and not income from "house property" under s. 22 of the IT Act, 1961?"
21 ITA No. 622/JP/2023 Kamla Bai vs. ITO The Hon’ble Supreme Court at para 26 held as under: “26. We are conscious of the settled position that under the common law `owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc. But in the context of s. 22 of the IT Act having regard to the ground realities and further having regard to the object of the IT Act, namely, `to tax the income', we are of the view, `owner' is a person who is entitled to receive income from the property in his own right.”
Thus, it is crystal clear that for taxing income under the head ‘House Property’ the ‘ownership’ requirement may not be required, but for taxing income under the head ‘Capital Gains’, there has to be transfer of immovable property which can be done only by way of a sale deed as held above. Thus, the reliance placed by the Ld AO on the said decision is misplaced and cannot be relied upon.
Reliance is also placed on the following decisions:
20.1 Shri Manohar Pyarelal Sadane vs ITO (ITA.No.220/PN/2011) [PB 103-108]. The Hon’ble Pune ITAT held as under:
“7. Nothing contrary was brought to our knowledge on behalf of Revenue in this regard. According to us for charging capital gains, the assets must have been acquired by incurring cost. In the instant case, the assessee has not incurred any cost for the acquisition of asset because the same was allotted to the assessee’s father by Government of India being refugee from Pakistan at relevant point of time. We also find that Hon’ble Gujarat High Court in the case of Mandharsinhji P.Jadeja (supra), wherein the assessee sold inherited property which was acquired by forefathers by conquest. The property did not have any cost of acquisition. Capital gain was held not assessable in respect of sale of such properties. Provisions relating to deeming cost of acquisition was held at nil for the purpose of computation of capital gain because deeming provision applies only to the specified item. Though provision of section 45 of the Act is charging section, the legislation has enacted detailed provisions in order to compute capital gain under that head and no provision on variance to such computation provisions can be applied for determining chargeable profits and gains. The assets referred to in section 45 of the Act has to be (i) in acquisition of which it is possible to envisage cost (ii) in acquisition whereof assessee has incurred a cost and onus of showing that assessee had incurred cost is on Revenue, if Revenue failed to show that assessee had incurred a cost, it would be impossible to compute the income chargeable to tax under the head capital gains. By Finance Act, 1987 w.e.f. April 1st, 1988, the amended section 55 of the Act only ropes in taxability of goodwill on transfer
22 ITA No. 622/JP/2023 Kamla Bai vs. ITO of the same even if there is no cost of acquisition. Similarly, section 55 has been amended from time to time to enable taxability of other assets wherein no cost of acquisition is envisaged. Therefore, even if amendment is taken into consideration, section 55 can be invoked in case of nil cost of acquisition for the purpose of bringing tax the entire sale consideration only in relation to specified assets, as held in CIT vs. Mandharsinhji P.Jadeja (supra), by driving strength from the decision of the Hon'ble Supreme Court in CIT vs. B.Srinivasa Setty (1981) 128 ITR 294 (SC). Even the case of the assessee does not fall in the specified assets to attract amended provisions of section 55.
In view of the above factual and legal discussion, we hold that the land in question was not having cost because the same was allotted to father of the assessee being refugee from Pakistan by Government of India at relevant point of time which is not in dispute. So the land in question was acquired by father of the assessee free of cost. Therefore, there is no question of capital gain on transfer of such land. More so because it does not fall in specified items under section 49(1)(i to iv) of the Act. Accordingly the same is not liable for capital gain. The Assessing Officer is directed accordingly.”
20.2 Yashod Deora vs ITO (ITA No. 835/Kol/2008 and ITA No. 281/Kol/2013) [PB 109-117]: The Hon’ble Tribunal held as under:
We have heard rival contentions of both the parties and perused the materials available. Ld. AR submitted written submissions along with paper book running pages from 1 to 28 and stated that it is clear case of adverse possession of the disputed flat by Mr & Mrs. Deora. None of them was having the right of possession of the flat neither as a Director or employee of M/s Mahavir Leather Board Pvt. Ltd. In fact the husband was allowed to reside in the flat on account of his directorship in Kedia Distilleries Ltd. The assessee and her husband have no knowledge regarding the arrangement between M/s Mahavir Leather Board Pvt. Ltd. and M/s Kedia Distilleries Ltd., Ld. AR further stated that it is correct that as his wife, the assessee was also co-occupying the said flat but she never had any legal right therein. Ld. AR submitted that so far as in the present case the assessee as alleged by AO (although without adducing any evidence in support of his claim), obtained rightful possessions of the flat concerned as a licensee holds no merit. Indeed, the purchaser of the flat viz., M/s Pecept Advertising Lt., had to bring a legal action by way of making an application before a judicial body viz., the Competent Authority, Konkan Division, Mumbai, for recovering the said possession from the assessee. As per the true facts of the case also, the husband of the assessee had acquired the right to possess the property as a director of M/s Kedia Distilleris Ltd., and
23 ITA No. 622/JP/2023 Kamla Bai vs. ITO
the wife acquired the right to reside in the flat on account of being her husband. Therefore, this was a valuable right acquired and also enjoyed by her which required a legal action by km/s percept Advertising Ltd., to take away the right. Finally, both the parties arrived at a mutual settlement for delivery of the possession by the assessee on payment of a sum of Rs.55 lakhs to the husband of the assessee by the other party. This settlement was also approved of and ratified by the Competent Authority. Hence, it can be seen that the right of possession of the flat was a legal right which had to be extinguished by not only a process of law but also substantial payment by the other party. Hence, it must be held that the said right of possessions was not only a 'property' as enunciated in the various judicial decisions cited above but it was also a valuable property having a substantial money value. Therefore, the right of possession must be considered to be a 'capital asset' for the purpose of Income Tax Act and especially for section 45 of the Act. Even the AO has treated the said right as a capital asset and has charged the amount received by the husband of the assessee as capital gains in the hands of the assessee. It can also be seen that under the settlement arrived at with the purchaser company, the assessee and her husband relinquished their above right of possessions of the disputed flat. There was also an extinguishment of the said right. Hence, in accordance with the different clauses of Sec.2(47) of the Act, there was a 'transfer' of the capital asset of the assessee during the year under consideration.
Any profit or gain arising out of this transfer is, thus, liable to be assessed to tax under the head 'capital gains' as has been done by the AO. However, this capital gain is required to be computed for tax purpose in accordance with the computation provisions of Sec. 48 of the Act. It may, however, be clearly seen that there was no cost of acquisition of the right of possessions of the said disputed flat, as the assessee did not spend anything for obtaining the said possession. Hence, the mechanism for Computation of capital gain with reference to 'cost of acquisition' of the asset transferred cleaerly fails. The ultimate result is, thus, that the above mentioned 'capital gains' is not exigible to income tax, as has been held by the Hon'ble Supreme Court in the case of Srinivasa Setty (B.C) 128 ITR 294 (SC) and repeated by the Hon'ble Supreme Court in case of PNB Finance Ltd. 220 CTR”
Conclusion: In view of the above, the various arguments basis which the Ld AO had made the addition is incorrect, due to the reasons tabulated under:
Argument by the Ld. AO Reason as to why the same is incorrect A. As per ‘IKRARNAMA’, the immovable Immovable property has not been transferred, property has been transferred to the purchaser rather disputed rights in the immovable property and the entire sale consideration was received by have been transferred. The cost of acquisition of the assessee and possession had been given to the said rights is indeterminate and therefore the
24 ITA No. 622/JP/2023 Kamla Bai vs. ITO
the purchaser. capital gain mechanism fails to attract tax under section 45 r.w.s 48 and 55A of the Act B. Condition of section 2(47) of the Act and Condition of section 2(47)(v) and section 53A of section 53A of the Transfer of Property Act, 1882 Transfer of Property Act, 1882 are fulfilled not are fulfilled fulfilled as there is no actual possession of the immovable property as the same is disputed and appeals are pending before the Revenue Board to resolve the dispute C. Relied upon the decision of Hon’ble As explained above, the decision relied upon by Supreme Court of India in the case of Poddar the AO is not applicable. Further, the Supreme Cement P Ltd [1997] 226 ITR 625 Court laid down the principle in context of taxing income under the head ‘House Property’ and not under the head ‘Capital Gains’
Further and without prejudice to above, it is submitted that the AO has incorrectly applied section 50C of the Act to consider stamp duty value as informed by the stamp valuation authority as deemed sales consideration for the purpose of computing capital gains under section 48 of the Act without appreciating that the Appellant has not transferred any land or building or both to attract section 50C of the Act. The Appellant has only transferred disputed rights in the immovable property and therefore section 50C is not applicable.
In view of the above, it is submitted that the addition made by the AO and confirmed by the CIT(A) be directed to be deleted.”
To support the contention so raised in the written submission reliance
was placed on the following evidence / records / decisions:
S.No. Particulars Page No. Filed before AO/ CIT(A) 1. Acknowledgement of filing of ITR 1 AO 2. Submission dated 2 December 2019 along with copy of 2-3 AO agreement to sell 4-12 3. Submission dated 13 December 2019 13-14 AO 4. Submission dated 15 December 2019 15-16 AO 5. Notice issued under section 142(1) of the Act and 17-19 AO submission dated 25 December 2019 20-23 6. Show cause notice dated 27 December 2019 24-28 AO 7. Reply to the show cause notice on 28 December 2019 29-32 AO 8. Screenshot of e-filing portal 33-35 For reference 9. Copy of decision of Hon’ble Supreme Court in the case 36-45 For reference of Suraj Lamp & Industries Pvt. Ltd. vs State of Haryana
25 ITA No. 622/JP/2023 Kamla Bai vs. ITO
& Anr. [SLP (C) No. 13917 OF 2009] dated 11 October 2011 10. Copy of decision of Bangalore Tribunal in the case of 46-64 For reference Abdul Wahab [TS-801-ITAT-2014(Bang)] 11. Copy of decision of Ahmedabad Tribunal in the case of 65-78 For reference Shri Vishnubhai Vithalbhai Patel (HUF) [TS-296-ITAT- 2019(Ahd)] 12. Copy of decision of Hon’ble Supreme Court in the case 79-84 For reference of CIT vs B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) 13. Copy of decision of Hon’ble Supreme Court in the case 85-102 For reference of Poddar Cement P Ltd [1997] 226 ITR 625 14. Copy of decision of Hon’ble Pune Tribunal in the case of 103-108 For reference Shri Manohar Pyarelal Sadane vs ITO (ITA.No.220/PN/2011) 15. Copy of decision of Kolkata Tribunal in the case of 109-117 For reference Yashod Deora vs ITO (ITA No. 835/Kol/2008 and ITA No. 281/Kol/2013)
The ld. AR of the assessee drawn our attention to form no. 35 filed by
the assessee where in assessee has categorically prayed that the no email
notices be issue and in that column assessee has written “no.” and
therefore on the notices so issued by the ld. CIT(A) the assessee was
unaware of the notices so issued and thereby caused prejudice to the
opportunity of being heard before the ld. CIT(A). The ld. AR of the assessee
also submitted that there is merits in their case as the AO has incorrectly
applied section 50C of the Act to consider stamp duty value as informed by
the stamp valuation authority as deemed sales consideration for the
purpose of computing capital gains under section 48 of the Act without
appreciating that the Appellant has not transferred any land or building or
both to attract section 50C of the Act. The Appellant has only transferred
26 ITA No. 622/JP/2023 Kamla Bai vs. ITO disputed rights in the immovable property and therefore section 50C is not
applicable.
The ld DR is heard who has relied on the findings of the lower
authorities and submitted that the assessee should aware about the legal
right and their obligations and looking to the facts on record the prayer of
the assessee is not maintainable.
We have heard the rival contentions and perused the material placed
on record. The bench noted that the appeal of the assessee dismissed
without affording the opportunity of being heard to the assessee. Before us
the ld. AR of the assessee submitted that the AO has incorrectly applied
section 50C of the Act to consider stamp duty value as informed by the
stamp valuation authority as deemed sales consideration for the purpose of
computing capital gains under section 48 of the Act without appreciating
that the Appellant has not transferred any land or building or both to attract
section 50C of the Act. The ld. AR of the assessee submitted that these
facts are not examined by the ld. CIT(A) and if given a chance the assessee
would like to plead these contentions before the ld. CIT(A) and based on
27 ITA No. 622/JP/2023 Kamla Bai vs. ITO these arguments he prayed to set aside the issue to the file of the ld.
CIT(A). On the other hand, we found that the ld. DR raise any general
objection but there is no specific objection as to why the prayer of the
assessee should be not be accepted based on the factual aspect of the
matter as the assessee has categorically stated that no email notices be
issued to him against the appeal so filed. These facts is not disputed by the
revenue. Therefore, we are of the considered view that the assessee is
deprived of justice. Based on these set of facts we are inclined to accept
the request of the ld. AR of the assessee to set aside the case to the file of
the ld. CIT(A) who shall decide the case of the assessee after giving proper
opportunity of being heard to the assessee as requested by the assessee.
At the same time, the assessee is directed to represent and present all the
facts before the ld. CIT(A) and should not ask for adjournment of trifle
grounds. At this stage, we remand back the matter without commenting
upon the merits of the case and ld. CIT(A) is directed to pass an
appropriate order in accordance with law.
In the result, the appeal of the assessee is allowed for statistical
purposes.
Order pronounced in the open court on 02/01/2024.
28 ITA No. 622/JP/2023 Kamla Bai vs. ITO
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur fnukad@Dated:- 02/01/2024 *Ganesh Kumar, PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Kamla Bai, Bundi izR;FkhZ@ The Respondent- ITO, Ward, Bundi 2. vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 622/JP/2023) vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत
