Referred Sections:
Section 69 of the Act.
Section 2(47) of the Income Tax Act, 1961
Section 50C of the Act
Referred Cases / Judgments:
CIT vs. C. Sugumaran dated 03.11.2014 in Tax Appeal No. 840/2014
Gyan Chand Agarwal vs. Addl. CIT dated 10.07.2017 ITA No. 266/JP/2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "SMC": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA.No.4217/Del./2015
Assessment Year 2009-2010
Smt. Upma Shukla L.R. of The Income Tax Officer,
Shri Vikas Shukla, Ward-2(2), HSIIDC
Proprietor UVSS vs., Building, Vanijaya Nikunj,
Engineers, House No.731, 5th Floor, Udyog Vihar,
Sector-9A, Gurgaon. Phase-V, Gurgaon.
PAN ACXPS5225Q
(Appellant) (Respondent)
For Assessee : Shri Kanishk Rana, Advocate
For Revenue : Shri Pradeep Singh Gautam, Sr. D.R.
Date of Hearing : 13.11.2019
Date of Pronouncement : 14.11.2019
ORDER
This appeal by Assessee has been directed
against the Order of the Ld. CIT(A)-1, Gurgaon, Dated
10.02.2015, for the A.Y. 2009-2010 on the following
grounds :
1. That the order passed by the Ld. CIT(A) is bad in law
to the extent it confirms the additions made by the
Assessing Officer on account of unexplained
investment.
2
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
2. That the Ld. CIT(A) erred on facts and in law in
partially confirming the addition of Rs. 17,50,000/-
made by the Assessing officer holding the same to be
unexplained investment in land and building taxable
under Section 69 of the Act.
2.1. That the Ld. CIT (A) erred in law and on facts to hold
the Ms. Upma Shukla i.e. wife of the assesse is the
owner of the land and building during the
assessment year 2009-2010.
2.2. That the Ld. CIT(A) erred in law and on facts in
holding that there was transfer of land and/or
building in term of Section 2(47) of the Income Tax
Act, 1961 by Ms. Upma Shukla i.e. wife of the
assesse to the assesse during the assessment year
2009-2010.
Without prejudice, even if it is assumed that there
was transfer of land by the assesse, the Ld. CIT(A)
failed to appreciate that transfer of land does not
result in transfer of superstructure/building.
3
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
2.3. That the Ld. CIT(A) erred on facts and in law in
holding that investment of Rs. 7,50,000/-(10,00,000
minus 2,50,000) has been made by the assesse in
the land during the assessment year 2009-2010
despite applying Section 50C of the Act to determine
full value of consideration.
2.4. That the Ld. CIT(A) erred on facts and in law in
holding that investment of Rs. 500,000/- has been
made by the assesse in the building during the
assessment year 2009-2010 merely on the basis of
conjectures and surmise.
2.5. That the Ld. CIT (A) erred in law in reiving upon the
incorrect entry made by the assesse in the books of
accounts."
2. The A.O. passed the Order in the name of Shri
Vikas Shukla who is expired during the course of appellate
proceedings, therefore, L.R. of the deceased-assessee moved
M.A. for bringing the L.R. on record. Smt. Upma Shukla is,
therefore, substituted as L.R. of the deceased-assessee.
4
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
3. Briefly the facts of the case are that from the
copy of the balance-sheet furnished by the assessee during
the course of assessment proceedings, it has been observed
that assessee has purchased land and building for
Rs.3,20,000/- during the year under consideration. From
the copy of the Title Deed it has been observed that assessee
has purchased this land and building from his wife Smt.
Upma Shukla. It has been observed by the Sub-Registrar
upon valuation that the land in question at circle rate and
in terms of Section 50C at Rs.10,00,000/-. The value of the
building constructed thereon which has not been declared
before the Sub-Registrar is estimated at Rs.10,00,000/-.
Thus, the fair market value of the land and building comes
to Rs.20 lakhs as against Rs.2,50,000/- declared in the Title
Deed. Since the assessee has failed to give any explanation
in this regard, therefore, Rs.17,50,000/- was considered as
unexplained investment and addition of the same was
accordingly made.
4. The assessee submitted before the Ld. CIT(A) that
land on which investment was made by assessee was sold to
5
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
him on 30.11.1996 by one Mr. Umed Singh who is an Army
Officer. But, the Deed could not be registered as there was a
restriction on the registry by the Sub-Registrar, Gurgaon for
control of the Title of the Property. However, buyers and
sellers had mutually decided to create GPA in favour of
purchaser's wife i.e., Smt. Upma Shukla (Wife of the
Assessee), was to act as the registered GPA on behalf of Shri
Umed Singh. The said land was later registered in
assessee's name on 23.07.2008 after gap of 12 years,
whereas, in actual facts, the land was in the custody of the
assessee Shri Vikas Shukla right from the year 1996
without transfer took place. Further, the same was being
utilised by the assessee for his business purposes right from
that time and incurring expenses for improvement of the
property for suitable working condition to carry-out his
business activities. It was, therefore, submitted that
assessee is owner of the said property since 1996 and
hence, no addition could be made. The A.O. submitted
remand report and assessee also commented on the same.
The Ld. CIT(A) noted that he has decided the appeal of
6
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
assessee's wife and held that his wife was chargeable to long
term capital gains which is to be calculated by deducting
from the amount of Rs.10 lakhs in indexed cost of
acquisition of Rs.2,50,000/- since 1996 in the year of
acquisition. It is also noted that he has held that assessee's
wife is chargeable to short term capital gain of Rs.5 lakhs on
account of sale of factory building. The Ld. CIT(A) following
the detailed reasoning given in the case of wife of assessee,
granted part relief to the assessee.
5. I have heard the Learned Representative of both
the parties. According to the Office, the appeal is time
barred by 50 days.
6. Learned Counsel for the Assessee submitted that
ITAT C-Bench in the case of Shri Upma Shukla in
ITA.No.4218/Del./2015 for A.Y. 2009-2010 vide Order
Dated 14.10.2019 condoned the delay of 50 days as well as
allowed the appeal of assessee. The Order is reproduced as
under :
7
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
"IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
&
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 4218/Del/2015
Assessment Year: 2009-10
Upma Shukla Proprietor ITO, Ward-2(2), HSIIDC
Troubleshooters, vs., Building, Vanijaya Nikunj,
Upma Shukla, House No. 5th Floor, Udyog Vihar,
731, Sector-9A, Gurgaon. Phase-V,
PAN No. ADZPS1670E Gurgaon.
(Appellant) (Respondent)
Assessee by Shri Kanishk Rana, Adv.
Revenue by Ms. Rakhi Vimal, Sr. DR
Date of Hearing 09.10.2019
Date of Pronouncement 14.10.2019
ORDER
PER SHRI BHAVNESH SAINI, J.M.
This appeal by the assessee has been directed
against the order of Ld. CIT(Appeals)-1, Gurgaon dated
10.02.2015 for AY 2009-10, challenging the additions
of Rs. 9,90,000/- on account of long term capital gains
8
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
arising from transfer of land and addition of Rs. 10
lakhs on account of short term capital gains arising
from transfer of building.
2. We have heard Ld. Representatives of both the
parties and perused the material on record. Earlier
appeal was dismissed for default which was restored
by allowing Miscellaneous Application of the assessee.
3. The appeal is time barred by 50 days. The
assessee has filed application for condonation of delay
explaining therein that impugned order was received on
11.03.2015. The husband of the assessee Shri Vikas
Shukla was suffering from mouth cancer and required
continuous attention and treatment and was admitted
in hospital on 20.04.2014, thereafter, many times he
was admitted to hospital later on the Chartered
Accountant who was pre-occupied could only be
attended on 17.03.2015. Again in the last week of
March, 2015 assessee's husband fell ill due to the
above ailment and his health started deteriorating and
9
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
ultimately his condition got worsened. The husband of
the assessee was later on admitted to hospital on
29.05.2015 to 31.05.2015 undergo Chemotherapy. The
husband of the assessee again underwent further
Chemotherapy sessions on 08.06.2015 to 15.06.2015
and ultimately husband of the assessee due to the long
illness expired in October, 2015. Assessee, therefore,
prayed that the delay in filing the appeal was due to
serious illness of the husband and, therefore, delay
may be condoned. Application for condonation of delay
is supported by medical certificates.
4. After considering the rival submissions, we are of
the view that assessee was prevented by sufficient
cause in not filing the appeal before the Tribunal within
the period of limitation. Therefore, normal delay in
filing the appeal is condoned.
5. Briefly the facts of the case are that assessee
filed return of income of Rs. 4,34,060/- on 31.03.2010
under the head "Income from other sources". The AO
10
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
considered the issue of long term capital gains and
short term capital gains and passed the order u/s
143(3) making the following additions:
i. Long Term Capital Gains Rs. 9,90,000/-
ii. Short Term Capital Gains Rs. 10,00,000/-
5.1 As regards additions on account of capital
gains, the AO observed that the assessee sold land and
claimed to have received only Rs. 2,50,000/- as
consideration. However, as per registered deed dated
23.07.2008, the value adopted for the purpose of
payment of stamp duty by the State Government, in
respect of the said transfer was Rs. 10 lakhs. The AO
applied provisions of section 50C of the I.T. Act and
made an addition of Rs. 9,90,000/- on this issue. In
addition, the AO formed that the assessee had also sold
factory building on the said land which was not
appearing in the registered sale deed. Since, the
assessee had transferred land and building together,
the AO held that short term capital gain accrued to the
11
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
assessee on account of transfer of the building was Rs.
10 lakhs which was also added to the income of the
assessee.
6. The assessee challenged both the additions
before Ld. CIT(A). The written submission of the
assessee is reproduced as under:
"Sir, the Ld. AO had erred on facts while
making an addition of Rs. 9,90,000/- as Long
Term Capital Gains on account of sale of
plot. He has completely ignored the fact that
the appellant was not the owner of the said
land but merely a holder of registered GPA.
The said land was sold on 30.11.1996 at a
consideration of Rs. 2,50,000/- by Sh. Umed
Singh to Shri Vikas Shukla (Husband of the
assessee). At the time of sale, the same could
not be registered in the name of Shri Vikas
Shukla as there was a restriction on the
registry by the Sub Registrar, Gurgaon. Sh.
12
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
Umed Singh was an Officer with the Indian
Army who due to his postings in different
parts could not be present in Gurgaon at all
times. Hence, to smoothen the process, and
to gain control on the title of the property, it
was mutually decided that the appellant Mrs.
Umpa Shukla (Wife of Shri Vikas Shukla)
would act as a registered GPA and an
authorized legal agent who would have the
authority to sign any document relating to the
Land of Sh.Umed Singh. This arrangement
was made so that future inconveniences could
be removed as the sale could not be registered
at that point of time. Further, the sale deed
was registered on the 23.07.2008 between
Vikas Shukla and Mrs. Upma Shukla in her
capacity as the registered GPA holder of Sh.
Umed Singh. It is evident that the right to
property was already given to Vikas Shukla
13
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
by Sh. Umed Singh and only the documents
were registered after a gap of 12 years.
At no point of time did the appellant become
the owner of the plot and was merely a
representative of Sh. Umed Singh for the
registry of the plot. Hence, to tax the same in
her hands as LTCG is harsh ignoring the facts
and genuinity of the case. The sale was in fact
effected between Sh. Umed Singh (original
owner and seller of the plot) and Sh. Vikas
Shukla (Buyer).
Further, the appellant in the relevant AY had
routed an entry through the Capital Account of
Rs. 2,50,000/- for the sale of land and
building. Sir, in this respect I would like to
submit that the same is only a book entry
between the appellant and the Vikas Shukla
(husband of the appellant). Further, this is
merely a notional entry and there was no
14
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
actual transaction. This entry was an error on
our part but there was no intention to evade
any taxes.
The Ld. AO has taxed Rs. 10,00,000/- as
short term capital gains in the hand of the
appellant stating that the land in question was
a vacant land and that the factory and
building was constructed on it by the
appellant. It being a depreciable asset, STCG
was computed by the Ld. AO at Rs.
10,00,000/-.
Sir, in this respect I would like to state that
here the land in question is the same one in
respect of which the appellant was the holder
of the registered GPA. Thus, this land as
already substantiated above was not the
property of the appellant. Hence, as there was
no question of transfer/sale of building by the
15
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
appellant, the ground for taxing the STCG also
stands nullified."
7. The Ld. CIT(A) called for the remand report of the
AO which is also reproduced in the appellate
order. The same reads as under:
"That as per the facts available on record the
assessee had filed GPA of Sh. Umed Singh in
her favour and copy of sale deed between the
assessee as GPA and her husband Sh. Vikas
Shukla during the assessment
proceedings. Now the assessee has filed an
`IkrarNama' (Agreement to sale) dated
03.11.1995 between Sh. Umed Singh and Sh.
Vikas Shukla, husband of the assessee to
prove the ownership of the property. The
assessee also filed a receipt of Rs. 2,50,000/-
dated 07.11.1996 vide which her husband
Sh. Vikas Shukla had paid this amount to Sh.
Umed Singh for the same land. Since the
16
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
assessee had been provided sufficient
opportunity to produce the evidence during
the assessment proceedings, any such
evidence at the appellate stage may kindly
not be admitted. Moreover, the Ikrar Nama is
not a registered document, therefore, its
authenticity is doubtful. Further, in the capital
account of the assessee an addition of Rs.
2,50,000/- has been shown on account of
sale and land & building. It also shows that
property in question belongs to assessee."
8. It may also be noted here that the assessee at
the appellate stage made a request for admission of
additional evidences which Ld. CIT(A) has allowed and
admitted the additional evidences.
9. Ld. CIT(A) considering the explanation of the
assessee and material on record did not accept
contention of the assessee. The Ld. CIT(A) noted that
Ikrar Nama is not registered document, therefore, it is
17
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
doubtful. The Ld. CIT(A) also noted that assessee had
disclosed an amount of Rs. 2,50,000/- in her capital
amount on account of sale of land and capital building
during the year under consideration. Therefore,
contention of assessee was rejected. The Ld. CIT(A) also
noted that in this case, since the total value of
consideration for the purpose of stamp duty was fixed
at Rs. 10 lakhs, the AO has rightly invoked the
provisions of section 50C of the Act. The Ld. CIT(A),
therefore, confirmed the addition on account of long
term capital gain. The addition on short term capital
gain was however, reduced to 50% of Rs. 5 lakhs.
10. Ld. Counsel for assessee referred to copy of
`Ikrar Nama' dated 03.11.1995, copy of Registered
General Power of Attorney in favour of the assessee,
affidavit of Shri Umed Singh and receipt issued by him
as well as sale deed in question dated
23.07.2008. Ld. Counsel for assessee submitted that
assessee acted as General Power of Attorney holder to
act on behalf of original owner of the property Shri
18
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
Umed Singh. Therefore, there is no transfer in the case
of the assessee and, as such, no long term capital gain
or short term capital gain would arise in the case of the
assessee. He has relied upon the judgment of Madras
High Court in the case of CIT vs. C. Sugumaran dated
03.11.2014 in Tax Appeal No. 840/2014 and order of
ITAT, Jaipur Bench in the case of Gyan Chand Agarwal
vs. Addl. CIT dated 10.07.2017 ITA No. 266/JP/2017
in which transaction conducted through General Power
Attorney holder was not considered as transfer of
property so as to attract capital gains.
11. On the other hand, Ld. DR relied upon the
orders of the authorities below and submitted that
assessee has shown the amount in question in her
capital amount which was received through registered
sale deed. Therefore, both the additions are justified.
12. We have considered the rival submissions. The
assessee filed copy of the `Ikrar Nama' dated
03.11.1995 which is executed by Shri Umed Singh
19
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
owner of the property in question in favour of Shri Vikas
Shukla for a sum of Rs. 2,50,000/-. It is signed by
both the parties as well as witnesses. Shri Umed Singh
has also executed affidavit in favour of Shri Vikas
Shukla confirming that he has sold the property in
question to assessee and executed General Power of
Attorney in favour of the assessee. The receipt is also
executed by Shri Umed Singh in favour of Shri Vikas
Shukla for sale of the above property for a sum of
Rs.2,50,000/-. Shri Umed Singh has also executed
Registered General Power of Attorney in favour of
assessee and given all the powers as a General
Attorney to look into the property or to execute Registry
or to purchase stamps or claim any refund etc. This
General Power of Attorney is not subjected to any
consideration. No amount has been paid by the
assessee to Shri Umed Singh through this Registered
General Power of Attorney. Therefore, General Power of
Attorney executed by Shri Umed Singh owner of the
property was without any consideration. The assessee
20
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
later on as General Power of Attorney holder of owner of
the property Shri Umed Singh executed sale deed in
question in favour of her husband i.e. Shri Vikas Shukla
in which it is specifically mentioned that sale
consideration is earlier paid of Rs. 2,50,000/-, it means
Shri Vikas Shukla has paid to Shri Umed Singh. It is
also mentioned in the registered sale deed that amount
of consideration of Rs. 2,50,000/- has already been
received. It would mean that at the time of execution of
the registered sale deed no consideration of
Rs.2,50,000/- passed on from Shri Vikas Shukla to the
assessee. It would further mean that the sale
consideration of property of Rs. 2,50,000/- has already
been received by Shri Umed Singh being original owner
of the property. These facts and material on record
clearly suggest that the assessee acted as a General
Power of Attorney Holder of the property in question on
behalf of Shri Umed Singh original owner of the
property. The right of assessee as a General Power of
Attorney holder was not greater to that of the owner of
21
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
the property i.e. earlier right in favour of Shri Umed
Singh and later on right transferred in favour of her
husband Shri Vikas Shukla. There was no justification
for Ld. CIT(A) to doubt the Ikrar Nama executed
between Sh. Umed Singh and Sh. Vikas Shukla
because it is supported by the affidavit of Sh. Umed
Singh and the receipt. If Ld. CIT(A) was having doubt
over the same, he could have examined the marginal
witnesses who have signed the agreement and the
receipt in question. Further, when in the registered
power of attorney no consideration has passed on from
assessee to Sh. Umed Singh, there was no question of
any transfer of property in favour of the
assessee. Therefore, there is no question of her
transferring the same property in favour of her husband
for consideration. It is well settled law that entries in
the books or capital account are not determinative of
earning of income. It depends upon facts of the case.
The real income only could be taxed as per law.
Considering the totality of the facts and circumstances
22
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
and the documents on record, it is clearly proved that
Sh. Umed Singh has entered into an agreement to sale
with Sh. Vikas Shukla for sale of property for a sum of
Rs. 2,50,000/- which Sh. Vikas Shukla paid to Sh.
Umed Singh. Documents to that effect were executed.
The General Power of Attorney was executed in favour
of the assessee so that assessee could registered the
sale deed at appropriate time on behalf of Sh. Umed
Singh in favour of her husband. Therefore, there is no
transfer of capital asset from the side of the assessee,
so as to attract provisions of long term capital gains and
short term capital gains. The decisions relied upon by
the Ld. Counsel for assessee squarely apply to the facts
and circumstances of the case. There was no
justification for authorities below to made addition in
the hands of assessee on account of long term capital
gains and short term capital gains. In this view of the
matter, we set aside the orders of the authorities below
and delete both the additions.
13. In the result, the appeal is allowed."
23
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
7. After considering the rival submissions, I am of
the view that the matter requires reconsideration at the level
of the A.O. In the case of Smt. Upma Shukla also on the
same reasoning delay in filing of the appeal for 50 days was
condoned because the assessee Shri Vikas Shukla was
suffering from cancer. The same reasoning is given in the
present appeal. Therefore, following the same reasoning in
the case of Smt. Upma Shukla (supra), I condone the delay
in filing the appeal. Since in the case of Smt. Upma Shukla
she has acted as GPA holder of the original owner Shri
Umed Singh, it was, therefore, held that no long term
capital gains is liable to be taxed in her hands. However, in
the case of the deceased assessee Shri Vikas Shukla, he has
purchased the property through the documents in the year
1996. Therefore, the issue shall have to be re-examined in
the light of the Order in the case of Smt. Upma Shukla
(supra). The Ld. CIT(A) also decided this issue following the
Order in the case of Smt. Upma Shukla (supra), which have
now been settled by the Division Bench of ITAT, Delhi
Bench. In this view of the matter, I set aside the Orders of
24
ITA.No.4217/Del./2015 Smt. Upma Shukla
L.R. of Shri Vikas Shukla, Gurgaon.
the authorities below and restore the matter in issue to the
file of A.O. with a direction to re-decide the matter in issue
as per Law, in the light of decision of the Tribunal in the
case of Smt. Upma Shukla (supra) Dated 14.10.2019.
Appeal of assessee allowed for statistical purposes.
8. In the result, appeal of Assessee allowed for
statistical purposes.
Order pronounced in the open Court.
Sd/-
(BHAVNESH SAINI)
JUDICIAL MEMBER
Delhi, Dated 14th November, 2019
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "SMC" Bench
6. Guard File
// BY Order //
Asst. Registrar : ITAT Delhi Benches :
Delhi.
|
