THE ITO, WARD-5(3,, SURAT vs. SHRI MOHAMMED AMIN S M JARULLAH L/H OF ABDUL RAHIM MOHMMED JARULLA, SURAT

आदेश / O R D E R

PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the department against the order of the Commissioner of Income Tax(Appeals)-I, Surat, dated 28/02/2013, in the matter of assessment under section 143(3) of the Income tax Act, 1961 (‘the Act hereinafter’), for the Assessment Year (AY) 2008-09, on the following Grounds:

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 2 - i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,14,58,700/- made by the AO on account of income from unknown sources. ii. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in appreciating the fact found by the AO and ignored evidences collected by the AO for making addition of Rs.1,14,58,700/- on account of income from unknown sources. iii. On the facts and in the circumstances of the case and in law, the learned CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the learned CIT(A), Surat may be set aside and that of the Assessing Officer’s order may be restored. 2. The relevant facts as culled out from the materials on record are as under:- In the case, information was received from the investigation Wing, Surat stating that Mr. Mohamed Amin S M Jaharullah with other Co- owners has sold an immovable property bearing C.S. No.1/113, situated at Worli, Lower Parel, Mumbai. The appellant’s share was Rs.1,14,58,700/- which was deposited in appellant’s bank account No.10/8083 with the Surat District co-operative Bank Ltd. on 24/03/2008. However, the appellant claimed before the bank authorities that this amount does not belong to him and has not deposited by him. Consequently, the said amount was transferred to sundry account (suspense account) by the bank.

2.2 During the assessment proceedings, the appellant explained that he along with his brother Mr. Gulam Mohyuddin S M Jaharullah, and Sister

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 3 - Ms. Samsunnissa S M Jaharullah were 50% ownership of the said property. The remaining 50% ownership was with another group of seven persons. The appellant sold the 50% share to M/s. Om Apollo Medicare Pvt. Ltd. vide its deed registered on 08/04/2008. The date of transfer is claimed to be on 07/03/2008. i.e during the assessment year 2008-09. The appellant explained that all the ten co-owners entered into an agreement for sale with Om Dhanvantry Centers Pvt. Ltd. (now known as OM APOLLO MEDICARE PVT LTD) on 28.09.1995 and an advance of Rs.20,00,000/- was received by all the co-owners . The remaining payment was not made by the buyer and the matter went into litigation. The appellant, his brother and sister sold their 50 % share in the property for Rs. 3 Crores vide above referred 'Conveyance Deed’ registered on 08/04/2008 to M/s Om Apollo Medicare Pvt. Ltd.

2.3 The said consideration of Rs.3,00,000/- was divided into three co- owners in proportion to their respective shares and corresponding Capital gain/loss is claimed to Have been shown by them including the appellant, in their respective returns of income. In the meantime, the another group of remaining co-owners sold the said property to another party i.e M/s. Sumer Corporation for Rs.5.5 Crores. This sale was made by an agreement dated 19/03/2008 registered on the same date. In this deed, one Mr. Mohmmed Altaf Mohammedazam Jaharullah signed on behalf of appellant, his brother and sister on the strength of an irrevocable ‘Power of Attorney’ dated 18th March, 2008. The appellant, his brother, and sister have disputed the genuineness of said ‘Power of Attorney' and

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 4 - claimed that the said ‘Power of Attorney’ is forged. They also claimed that they never gave such ‘Power of Attorney’ and never sold the property to M/s Sumer Corporation. They also claimed that the demand drafts in respect of that sale were deposited in the appellant’s account by someone else and it was for this reason that the appellant wrote to the Bank authorities that the amount does not belong to the appellant.

2.4 In the meantime, various cases have been filed by different parties which are pending in different Courts of law. A criminal complaint no.3800111/MISC/8 of 2008 has been filed before Metropolitian Magistrate 38th Court Mumbai by Mr. Abdul Rahim Mohmmed Amin Jaharullah, the legal heir of the appellant (and his son) against seven co- owners of the other Group, M/s. Sumer Corporation, the notaries before whom the disputed ‘Power of Attorney’ is claimed to have been executed and the partners of M/s. Sumer Corporation regarding, the claim of forging the signature of the appellant his brother and sister on the said ‘Power of Attorney’ and consequent sale of property to M/s. Sumer Corporation.

2.5 Apart from this criminal case, a Civil Suit no. 713 of 2009 has also been filed on 07/01/2008 by the appellant alongwith his brother and sister against the remaining seven co-owners, partners of M/s. Sumer Corporation, the Power of Attorney holder, the notaries before whom the 'Power of Attorney ' was executed, etc for Civil rights in respect of the

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 5 - said property. This suit has been filed before the Hon’ble Bombay High Court. Both these cases are claimed to be pending.

2.6 In the meantime, the Surat District Co-op Bank Ltd also filed Civil Suit in 2010 before the Principal Civil Judge, Surat against the Commissioner of Income Tax, Surat, the appellant’s son and appellant’s brother in respect of notice u/s.226(3) issued by the Income Tax Officer.

2.7 In this background, the assessing officer held that by 31/03/2008, the assessee had not sold the property as the registration of the agreement of Rs3 Crores took place on 08/04/2008. However, the assessing officer observed that appellant’s share was sold twice. In view of pending litigations, Rs. 1,14,58,700/- deposited in the bank account but disowned by appellant was treated as assessee ‘income’ from ‘unknown source’ and added to the income. The present appeal is respect of the said addition.

2.8 The matter was also remanded to the AO vide letter dated 12/08/2010. The report dated 30/10/2010 was received by the Ld. CIT(A) which repeated contentions made in the assessment order and stated that all the contentions of appellant were considered by the AO and nothing new has been furnished by the appellant at the appellate stage.

2.9 The facts related to this appeal was examined by the Ld. CIT(A). As per appellant’s submission filed on 23/02/2013, (annexure-A), the

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 6 - appellant, his brother, and sister received an amount of Rs.3 crores as under:

Sr. Particulars Amount No. Advance Money 1995 Rs.10,00,000 1. Shamshunnisha S. Jarullah Date Amount 21/04/2008 Rs.9,00,000 21/04/2008 Rs.1,00,000 Rs.10,00,000 2. Esrow Account with Advocate Vinod Mistry & Co. Deposit Rs.35,00,000 3. M Amin S Jarulla 09/04/2008 Cheque No. Rs.45,00,000 10/04/2008 856069 Rs. 9,00,000 10/04/2008 856070 Rs. 9,00,000 10/04/2008 856071 Rs. 9,00,000 10/04/2008 856048 Rs. 3,00,000 25/04/2008 Rs.50,00,000 Rs.1,25,00,000 4. Gulam Mohiyuddin S. Jarullah Date Cheque No. Amount 09/04/2008 Rs.45,00,000 10/04/2008 856056 Rs. 9,00,000 10/04/2008 856057 Rs. 9,00,000 10/04/2008 856058 Rs. 9,00,000 10/04/2008 856059 Rs. 9,00,000 10/04/2008 856060 Rs. 9,00,000 11/04/2008 856049 Rs. 5,00,000 11/04/2008 856050 Rs. 7,00,000 11/04/2008 856061 Rs. 9,00,000 12/04/2008 856062 Rs. 9,00,000 Rs.1,20,00,000 Total Rs.3,00,00,000

2.10 It is noticed that M/s Om Apollo Medicare Pvt. Ltd. had filed a suit No.807 of 2008 in the Hon’ble Bombay High Court, against all the ten co-owners of the property for non execution of Conveyance Deed

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 7 - pursuant to agreement of sale of 1995 for which Rs.20,00,000/- was paid by the buyer. Consequent to the same, the appellant, his brother, and sister stated in the consent terms filed before the Hon'ble Court that the defendant Nos. 7,8 and 9 in the suit, (i.e. appellant, his brother, and sister) agreed to sell their undivided 50 % share of Rs.3 Crores to M/s Om Apollo Medicare Pvt. Ltd. Paragraphs 7 and 8 of the said consent terms dated 04/04/2008 are reproduced herein under :-

"7. Agreed, declared and confirmed that as per the settlement arrived at between the Plaintiff and Defendant Nos. 7, 8, and 9, Defendant No.7, 8 and 9 have agreed to sell their respective undivided share, right, title and interest as stated above for Rs.3,00,00,000/- ( Rupees three crores only) in full and final payment towards their respective undivided share of Defendant Nos.7, 8 and 9. 8. Agreed, declared and confirmed that the Plaintiff through their Advocate have sent Demand Drafts as set out in the Plaintiffs Advocate's letter dated 19.03.2008 addressed to M/s. Vinod Mistry & Co, the present Advocates for Defendant Nos.7, 8 and 9 and the said Demand Drafts shall remain in escrow with M/s. Vinod Mistry & Co till filing of these Consent Terms and execution of the Deed of Conveyance and registration thereof, whichever, is later. For the reference of number of Demand Drafts and the figures therein, the said letter is also annexed to these Consent Terms."

2.11 From a perusal of the above paragraphs, it is apparent that the consent terms were filed on 04/04/2008 i.e. after the disputed sale deed in favour of M/s. Sumer Corporation was registered. As far as sale deed of 50 % shares dated 07/03/2008, it was singed by M/s OM APOLLO MEDICARE PVT LTD on 17/03/2008 and was registered on

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 8 - 08/04/2008. This means that Hon'ble Court was not informed that the agreement was already signed on 07/03/2008/17.03.2008.

2.12 Since, the Hon’ble High Court was not informed that the sale deed had been executed in March, 2008 itself, this gives some weightage to the A.O's argument that deed was antedated. However, paragraph 8 of the consent terms mentions receipt of demand drafts on 19/03/2008 which established that the consideration was received on 19/03/2008 even if, the deed was not executed as held by the assessing officer.

2.13 Since the stamp duty rates were increased from 01/04/2008, if antedating is established, section 50C may get invoked. However, the words ‘assessable’ in Section 50C have been introduced with effect from 01/10/2009. Therefore, it may not be possible to invoke section 50C, unless stamp duty authorities/Courts hold it to be a case of ante dating and enhanced stamp duty is charged.

3 Assessee preferred statutory appeal before the learned CIT(A). Learned CIT(A) further held which is reproduced as under:

“9.5 Learned CIT(A) further stated that this appeal is concerned, there are two issues involved. 1. Whether the property was sold in A.Y. 2008-09 or in A.Y. 2009- 10? 2. What is the sale consideration?

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 9 - 9.6 As far as the present appeal for Asstt. Year 2008-09 is concerned, the appellant has shown the sale consideration of Rs.1,25,00,000/- in the return filed, which is his share in the 50 % property. The another group sold the same properly for Rs. 5.5 Crores, in which the share of the appellant, his brother, and sister is 50%.

9.7 The outcome of these pending litigations may either be in favour of OM APOLLO MEDICARE PVT LTD or in favour of M/s Sumer Corporation. If it is in favour of OM APOLLO MEDICARE PVT. LTD. the appellant, his brother, and sister will be assessed for sale consideration of Rs 3.00,00,000 /-.

9.8 If it is in favour of M/s Sumer Corporation, sale consideration will be 50 % of Rs. 5.5 Crores. Both these sales can be held to be valid, i.e sale consideration can never be 11.5 Crores (6 + 5.5) for all the ten Co-owners. It can either be Rs.6 Crores or Rs 5.5 Crores for all the Co- owners. Therefore, as far as addition made by the Assessing Officer is concerned, it cannot be sustained as that amounts accepting sale consideration of Rs.11.5 Crores and treating both the sales as valid. Consequently, the addition made by the Assessing Officer is deleted by the learned CIT(A). 9.9 It was further clarified that this appellant order is not a finding on any Civil or Criminal liabilities or rights of any party to any of the pending litigations in various Courts. It is also not a finding as to whether in which year, the Capital Gain should be assessable.

9.10 This appellate order is a finding only on the issue that if the property has been sold twice by different co-owners, finally, only one sale will be held as valid sale and in that case. Capital Gain will be only in respect on one side. The appellant can be taxed for consideration of both the sale consideration. Consequently, appeal is allowed.” 4. We have heard both the parties and perused the material on record. In this case, assessee’s share in the property was sold twice and registered twice. An amount of Rs.1,14,58,700/- deposited in the assessee’s bank account and later on same was transferred to bank’s

ITA No.1266/Ahd/2013 ITO vs. Mr. Mohammed Amin S M Jarullah. Asst.Year –2008-09 - 10 - sundry account. But till the date of filing of appeal no other claimant came forward for the same and both the sale transactions are under litigations and the entire issue is pending before the Hon’ble High Court, Mumbai. The dispute power of attorney in the name Mr. Mohammed Altaf Mohammedazam Jaharullah as given by the assessee is also challenged before the Hon’ble High Court. In our opinion, an amount, which is to be claimed by the assessee to be taxed. Therefore, whatever amount is claimed or to be claimed by the assessee will be taxed as per law.