SH. JAI DAYAL ALIAS JAI PRAKASH,MEERUT vs. ITO, MEERUT

This appeal is filed by assessee against order dated 08/01/2015 passed by Commissioner of income tax (appeals), Meerut.

The only grievance of the assessee is that Ld. assessing officer has ignored the facts completely that the full consideration of money was received by the assessee for transfer at the time of agreement for sale and the possession of the land was given to the purchaser on 14/05/2007. Therefore, the transaction based on sale deed could not have been assessed in assessment year 2009 – 10, is in error in not considering the provisions of section 247 of the income tax act, 1961. The other grievance without prejudice to ground No. 1 was that there the assessing officer is not Page 2 of 7 justified in taking the cost of acquisition as on 01/04/1981 at the rate of Rs. 70 per square yard whereas the agricultural land situated in similar locality as per circle rate the value was Rs. 150 to Rs. 200 per square yard. Therefore, the cost of agricultural land as on 01/04/1981 of Rs. 100/- per square yard is justified.

The brief fact of this ground is that assessee is an individual. For FY 2008 – 09 annual information return revealed that assessee has sold property on 25th of April 2008 for Rs. 34 Lacs. Notice under section 148 of the income tax act, 1961, was issued on 27th of July 2011. In response to this notice assessee filed his return of income on 27th November 2012, declaring income of Rs. 4250/– and agricultural income of Rs. 1,55, 200/- . In response to reasons recorded assessee filed his objection by filing an affidavit dated 26th of October 2012 stating that he has not purchased any such immovable property. After that Ld. assessing officer issued a letter under section 133 (6) of the income tax act, 1961 on 13/12/2012 to the registrar asking for a correct copy of the purchase deed who in turn sent the same which is dated 25th of April 2008. According to that assessee along with others, has sold 3010 m² land for Rs. 60,20,000/-to Sh. Ananda Parkash and Mrs. Meena Agrawal. Before assessing officer, it was submitted that assessee has sold his agricultural land, which was acquired by ancestor before 01/04/1981 and full consideration, as well as the possession has been transferred before 01/04/2008. He stated that the assessee has not received consideration disclosed in the sale deed. As everything has happened other than, registration and execution of sale deed in FY 2007 – 08-sale transaction cannot be subject to tax in A. Y 2009 – 10. Ld. assessing officer recorded the salient features of the transaction, which are as under:- a. The assessee owned 6019 m² land, which was ancestral. on 2nd November 2016 assessee entered into agreement for sale with Page 3 of 7 others for sale of land for Rs. 10,80,0000/-and received advance of Rs. 50 Lacs on 2 different dates. b. On 14/05/2007, assessee received Rs. 50 Lacs further and for balance amount of Rs. 50.80 lakhs assessee received 2 separate cheques of Rs. 25.40 lakhs each. c. On 25th of April 2008 out of the above land, half of the land measured at 3010 m² was sold to Sh. AnandPrakash Aggarwal and Mrs. Meena Aggarwal for Rs. 60,20,000/-.

Based on above facts Ld. assessing officer was of the view that as the possession of the property was given on 25th of April 2008 i.e. the date on which property was sold and sale deed is also executed on that date, transfer has taken place on 25/04/2008 and therefore capital gain of rupees 46,79,250/- is chargeable to tax.

Aggrieved with the order of the assessing officer appeal before Ld. Commissioner of income tax (Appeals) was filed and wherein identical arguments were raised. However, the 1st appellate authority confirmed the action of Ld. assessing officer holding that transfer of property has taken place during FY 2008 – 09, and consequently the capital gain is arising from transfer of such asset subject to taxation for A. Y. 2009-10. Therefore, assessee has filed appeal before us.

Ld. authorized representative submitted before us the paper book containing 66 pages, wherein he has placed bank statements, agreements, sale deed, circle rates of the property, valuation report in the case of Mrs. Sarala Kumari and orders of coordinate bench in case of P.K.Shah. Before us, he contended the same arguments, which were before CIT (A). His main submission was that if the possession of any immovable property is given in part performance of contractas referred to under section 53A of transfer of property act 1982, then the transfer of that property is complete. Hence, according to him as the assessee has already received the full consideration in previous years, and possession has also been given of Page 4 of 7 that property capital gain thereon cannot be charged in the hands of assessee in this year.

Against this Ld., departmental representative relied on the orders of lower authorities and submitted that there is no reference of handing over possession in any of the agreement to sell. However, sale deed clearly says that possession of the property is given at the time of sale deed executed by the assessee and hence the capital gain has rightly been taxed in the hands of assessee for this year. He further argued that assessing officer has noted that on reverse of page No. 1 of the sale agreement stated by the assessee shows that sale agreement was without handing over possession. Therefore, he submitted that the story of transferring the possession to the buyers happened along with the sale agreement isincorrect.

We have carefully considered the rival contentions and also perused the paper book submitted by the Ld. authorized representative.According to agreement to sale executed by assessee in favour of Mr Neeraj Kumar and Mr Rajendra Singh shows that it has been executed for agreed sale price of Rs. 1,08,00,000/- and part of the consideration has been paid. The real dispute is that on which date assessee has given possession of the property to the buyer. According to agreement dated 02/11/2006 as per para No. 4, the possession has been given to the buyers, however, sale deed executed by the assessee at page No. 18, it is mentioned that on the date of execution of the sale deed, the possession of the property is given. Therefore, there is a contradiction between the dates of possession given by assessee to the buyer. Furthermore, the assessing officer has stated that on the reverse side of the page No. 1 of the agreement to sell it is specifically mentioned that there is no handing over of the possession to the buyer.Therefore, CIT (A) as well as the assessing officer has not believed the version of the assessee that possession was not given at the time of execution of sale deed but at the time of agreement to sell. The evidence that is when produced by the assessee for the transfer of land is a notarized agreement for sale Page 5 of 7 dated 14th of May 2007. In view of contradictory agreements/documents executed by assessee himself it would be always preferred to give credence to the document that has been submitted before the land revenue authorities. In this case, before land revenue authorities sale deed is executed where assessee has confirmed that possession of the property is given at the time of execution of sale deed. The other agreement which is agreement to sell, which is not registered with any statutory authority, but only between buyer and sellers which is notarized does not give any credence to the transaction entered by the assessee. Further, before the assessing officer and Commissioner (A) , it was never controverted by the assessee that why on the reverse of page 1 of the sale agreement fact of agreement without giving possession to the buyer is mentioned. In view of this facts, we confirm the order of CIT (A)’s and hold that the no weightage can be given to a notarized agreement to sell executed between the parties on 14th may 2007 in preference to registered sale deed executed by the assessee before registrar wherein it is stated that the possession is given along with the sale deed executed on that date. In view of this, we are of the view the capital gain is required to be assessed in assessment year 2009 – 10, and there is no error in the order of assessing officer as well as Commissioner of income tax (A). In the result ground No. 1 of the appeal is dismissed.

The 2nd ground of appeal is adoption of the cost of acquisition of this property is at 01/04/1981. Ld. A R in this regard submitted that the Ld. assessing officer has taken the price of the land as on date for working out fair market value of the property for the purpose of indexation at the rate of Rs. 70 per square yard. This rate has been taken at a very low figure and therefore, he submitted a copy of valuation report in case of Mrs. Sarala Kumari, wherein the rate of property was taken to Rs. 150to Rs. 200 per square yard. Against this Ld. departmental representative submitted that there is no such ground taken by the assessee before CIT (A) and the Page 6 of 7 assessee also raised no objection before assessing officer, therefore, this ground of appeal