IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF DECEMBER, 2019 PRESENT THE HON'BLE MR.JUSTICE ARAVIND KUMAR AND THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ I.T.A. No.8 OF 2018 BETWEEN:
SMT. JOSHNA RAJENDRA NO.674, 4TH ‘C’ MAIN ROAD OMBR LAYOUT, BHUVANAGARI BANASAVADI, BENGALURU-560043 ... APPELLANT (BY SRI. ASHOK A KULKARNI, ADVOCATE) AND:
THE INCOME TAX OFFICER WARD-13(3) BENGALURU-560032 ... RESPONDENT (BY SRI. K.V. ARAVIND, ADVOCATE) ***** THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 18.08.2017 PASSED IN ITA NO.1038/BANG/2014 AND C.O.NO.95/B/2015, FOR THE ASSESSMENT YEAR 2009- 2010, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND SET ASIDE THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.1038/BANG/2014 AND C.O.NO.95/8/2015 DATED: 18.08.2017 IN ANNEXURE ‘A’ AND RESTORE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V NO.2/SAL/CIT(A)-V/2013-14 DATED 20.05.2014 IN ANNEXURE ‘C’ AND ETC.
THIS APPEAL COMING ON FOR ADMISSION THIS DAY, ARAVIND KUMAR, J., DELIVERED THE FOLLOWING:-
J U D G M E N T 1. Though matter is listed for admission by consent of learned advocates appearing for parties, it is taken up for final disposal.
2. Heard Sri.Ashok A.Kulkarni, learned advocate appearing for appellant and Sri.K.V.Aravind, learned Panel Counsel appearing for respondent.
3. Appellant-assessee filed return of income for the assessment year 2009-10 on 31.07.2009 declaring a total income of Rs.2,25,550/-. Same was processed under Section 143(1)(a) of the Income Tax Act (hereinafter referred to as the ‘Act’, for short) on 20.12.2010. Based on alleged information received, Assessing Officer issued notice to assessee under Section 148 of the Act on 17.02.2012. Subsequently, notices under Sections 143(2) and 142(1) of the Act came to be issued to assessee on 16.03.2012 and 20.09.2012 respectively. On the basis of the reply received, assessment order came to be passed on 19.03.2013 (Annexure-B).
4. Being aggrieved by said order, an appeal came to be filed before Commissioner of Income Tax (Appeals)-V, which came to be partly allowed by order dated 20.05.2014.
5. Being aggrieved by the order of Commissioner of Income Tax (Appeals), assessee filed further appeal before Income Tax Appellate Tribunal in ITA No.1038 (Bang) 2014, which was allowed in part by the Tribunal. In the said appeal, assessee filed Cross-objections raising an issue with regard to the jurisdiction of the Assessing Officer exercised under Section 147 of the Act and contending that there was no material evidence available on record to arrive at a conclusion that the income has escaped from assessment and as such, reopening of the reassessment was bad. However, the said contention came to be negatived by the Tribunal and insofar as issue relating to determination of the value of immovable property, matter came to be remanded back to Commissioner of Income Tax (Appeals) for adjudication.
6. As could be seen from the order of Tribunal, reason for issuance of notice for reopening of the assessment was on the basis of the information received from the office of Inspector General of Stamps and Registration, Bangalore through the Commissioner of Income Tax, Bangalore-V, Bangalore whereunder it was noticed that appellant along with Mrs.Ananda Yogendra Naidu had sold the immovable property bearing Old No.1A, now bearing Corporation No.119/2, Mahatma Gandhi Road, Bangalore to M/s.Gerdie Constructions Private Limited for a sale consideration of Rs.59,00,000/- on 28.06.2008 as against the guidance value as per Registration Authorities, it was Rs.3,29,17,500/- and as such, difference in sale consideration being to an extent of Rs.2,70,17,500/-, it attracted capital gains tax as per the provisions of Section 50C of the Act. The basis for determining the capital gains tax is valuation. The market value of the property or actual sale consideration whichever is higher was required to be adopted. Assessing Officer found that in the return of income, assessee neither declared the capital gains or claimed exemption from capital gains tax. As such, it came to be held by Assessing Officer that there was reason to believe that income chargeable to tax under capital gains had escaped assessment within the meaning of Section 147 of the Act.
7. Though Mr.Ashok Kulkarni, learned advocate appearing for appellant-assessee has made valiant attempt to contend that Tribunal erred in considering the cross-objection filed before Tribunal on the ground after having observed that there was no direction to the Assessing Officer and as such, there was no basis for re-opening of the assessment by exercising of powers. We are not inclined to accept said contention for simple reason that in the very same order of Tribunal it has been noticed that in the paper book which came to be filed by assessee which was found at Page 43, information which necessitated the Assessing Officer to reopen the assessment had been found namely the communication received from the office of Inspector General of Stamps and Registration, Bangalore addressed to Commissioner of Income Tax, Bangalore which was forwarded to the jurisdictional Assessing Officer by communication dated 09.02.2012 as well as to the Directorate of Income Tax (Intelligence) vide letter dated 01.02.2012. This material which was available before the Assessing Officer had persuaded him to form an opinion that income chargeable to tax had escaped from assessment. This finding would not give rise for us to formulate substantial question of law as sought for in the appeal memorandum.
8. Insofar as handing over possession of the property is concerned, learned counsel appearing for the assessee has contended that under the agreement of sale dated 27.01.1995, possession has been delivered and the said document was not disputed and as such, question of construing the possession delivered at a later date that too under sale deed dated 28.06.2008 would not arise and as such, question of determination of the valuation based on said data does not arise, is an argument though at first blush look attractive is not so, for the simple reason that agreement of sale which is placed on record before this Court at Annexure-A2 (agreement of sale 27.01.1995) has been perused by us and Clause 6 of the said agreement reads:-
“6. The Vendors has this day delivered the symbolic possession of the Schedule Property to the Purchasers and authorize the Purchasers to negotiate with the tenants and obtain vacant possession.”
9. A plain reading of above clause would clearly indicate that possession of the property which has been delivered is symbolic possession and not physical possession.
10. By applying Section 53A of Transfer of Property Act and Section 2(47) (v) of I.T.Act, it has been rightly held that physical possession of the property was not transferred to the purchaser under the agreement of sale. In other words, it has been held by Tribunal that in the absence of any finding about handing over of possession in any earlier year, it cannot be said that property was transferred in any earlier year and for ascertaining same, matter has been remanded back to Commissioner of Income Tax (Appeals) with regard to issue of possession and said finding recorded by the Tribunal cannot be found fault with. That apart, issue relating to valuation, Tribunal has noticed that Assessing Officer had not referred the matter to the valuation officer as required under Section 50C(2). Said valuation would be the basis for determining the amount of capital gains tax which would be taxable for the relevant year. The finding recorded by the Tribunal is purely question of facts not giving rise to substantial question of law being formulated. As such, we do not find any other ground to entertain this appeal. Accordingly, it stands dismissed.
We do not express any opinion with regard to valuation and contention of both parties in this regard is kept open to be urged before the Commissioner of Income Tax (Appeals) insofar as Section 50C of the Act is concerned.
Sd/- JUDGE Sd/- JUDGE Prs*