TMI Blog2014 (4) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... - The Special Power of Attorney is only a facilitator to perform certain actions and things on behalf of the assessee - the transfer took place vide sale deed executed on 23.10.2007 in favour of Sri G. Srinivasa Reddy and the lower authorities are justified in invoking the provisions of section 50C to determine the sale consideration and to bring the capital gain to tax – there was no infirmity in the order of the CIT(A) – Decided against Assessee. - ITA No. 2100/Hyd/2011 - - - Dated:- 4-4-2014 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Sri Ajay Gandhi For the Respondent : Sri B. Yadagiri ORDER Per Chandra Poojari,A. M. This appeal by the assessee is directed against the order of the CIT(A)-V, Hyderabad dated 28.10.2011 for assessment year 2008-09. 2. The assessee raised the following grounds: 1. The order of the CIT(A) is in gross violation of the provisions of law and hence is bad in law. 2. The CIT (A) has erred in sustaining addition made section 50C of the Income Tax Act for the sale of Jubilee Hills Property. 3. The CIT(A) has erred in upholding the adoption of Rs. 2,55,50,000 as sale consideration of the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the AO noticed that the SRO held the market value of the property on the date of sale at Rs. 2,55,50,000 and charged a stamp duty of Rs. 24,27,350 which was paid, accordingly, provisions of section 50C were applied and the addition in question was made. 5. On appeal, the CIT(A) observed that the fundamental issue is that the assessee claimed that the property was transferred in the year 1994 itself. Therefore, there were no capital gains in her hands in the current year. The CIT(A) observed the following discrepancies in the explanations and evidence submitted by the assessee: (i) If the property was sold in the year 1994, why was the application made to the Jubilee Hills Cooperative Society for transfer of shareholding in the year 1997. What took 3 years to move this petition? (ii) A sale is completed when all the rights of the seller are extinguished in that property and the purchaser obtains all the rights. In the present case, not a single right of the assessee ever extinguished in the said property and Smt. Neeraja Reddy never obtained a single right in that property. (iii) There is absolutely no evidence whatsoever of the payment of Rs. 1,00,000. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also further mentioned that there are no tax attachments with regard to the property. (xi) Further, the Assessing Officer has rightly pointed out that the assessee had made false affidavits stating that Smt. Neeraja Reddy is a sister of the assessee whereas, they are unrelated. During enquiries, she could not even give the address or phone numbers of Smt. Neeraja Reddy. 6. The CIT(A) observed that the plot was purchased by the assessee and the same was in her possession until 23.10.2007 until it was sold to Sri G. Srinivasa Reddy. The assessee has deliberately provided false assertions, unsubstantiated claims and has falsified information even in her sworn affidavits as discussed above. It is clear that she had purchased the plot and no right in the said plot was alienated to anyone right up to the date of transfer as per the registered sale deed. The entire web of false affidavits and wrong statements had been made only to escape tax liability. Accordingly, he held that the Assessing Officer has rightly applied the provisions of Section 50C of the Act. He found no infirmity in the same. Against this, the assessee is in appeal before us. 7. The learned AR submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n WP No. 24802 of 1998. By order dated 19th July 2000, the Sub-Registrar's directions were set aside. The assessee was not party to the Writ Petition. This is evidence that Smt. Neeraja Reddy was acting on her own to clear the hurdles of transfer of title. The WP judgment confirms that they have filed composite application for admission as members and for transfer of membership together with interest in the plot allotted to the other existing member. On 12.3.2001, Smt. Neeraja Reddy requested the Society to affect the change of ownership after the High Court order. To fulfil the regulatory and procedural requirements, the Society executed a sale deed in favour of the assessee in 2006 and gave an NOC to go ahead with construction. On Oct 23, 2007, sale deed was executed on from the assessee to Sr. G. Srinivas Reddy, the nominee of Smt. Neeraja Reddy. Smt. Neeraja Reddy executed this as a Consenting Party. The sale deed confirms that transactions were completed in 1994, possession was handed over in 1994. Preamble, para 3, page 30 APB; page 32, last para; para 3, page 33. Consenting party paid entire consideration and took possession of property APB 32 para 1 Purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions which do not apply at the time of entering into the transaction initially would also not apply at the time the transaction is completed. Section 50C came into existence only in 2003. All events happening after 1994 relate back to that date, 11. Regarding year of transfer, the learned AR submitted that all the evidence discussed above of the transaction points clearly to the fact that the transfer of the plot by way of delivery of possession, receipt of consideration along with necessary documentation was completed in 1994. As such, the transfer can be considered to have happened only to be taxable in assessment year 1995-96 and not 2008-09. The assessee disclosed/declared the capital gains in 2008-09 only as a matter of precaution and not as admission of transfer having happened in the relevant previous year. Even if the assessee made a mistake, it ought to be ignored and corrected. The AR relied on the following case-law: (i) Chaturbhujdas Dwarkadas, 260 ITR 491 (Bom) (ii) Jasbir Singh Sarkaraia, 164 Taxmann 108 (AAR New Delhi) (iii) G Sreenivasan vs DCIT, 28 taxmann.com 200 (Cochin) (iv) ACIT vs Sri Ravindra Singh Arora, ITA No. 58/Hyd/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required me to execute a Special Power of Attorney in favour of her nominees viz., Shri G. Yashwent Reddy s/o. G. Ram Reddy aged 32 years, Occupation: Business R/o. 2-2- 118/3/6/1, New Nallakunta, Hyderabad, India in connection with the above said plot. AND now by this Special Power of Attorney I the said Smt. Bhavya Udeshi wife of Anant Udeshi about 31 years, Occupation House Wife R/o. 8-2- 686/B/12, Road No. 12, Banjara Hills, Hyderabad, India do hereby appoint SHRI G. YESHWANT REDDY S/o. G. RAM REDDY aged 32 years R/o. 2-2-118/3/6/1, New Nallakunta, Hyderabad, India, as my Attorney in my name and on my behalf to do or execute all or any of the following acts or things in connection with the said Plot. 1. To prepare Plans, Sketches, Drawings, Designs, etc., and layouts for the construction in the Schedule mentioned property and to submit the same for approval of the Municipal Corporation of Hyderabad and other appropriate authority(ies). 2. To apply for permission(s), exemption(s), sanction(s) before any authority in connection with any matter relating to the sale of the Schedule mentioned property. 3. To make application(s) for copies of documents for inspection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws of the society. By this order it was not held by the Hon ble High Court that transfer of the impugned plot had taken place between the assessee and Smt. Neeraja Reddy. The High Court only directed the Jubilee Hills Society to consider transfer of membership together with the interest in the plot allotted to another existing member of the society i.e., the present assessee Smt. Bhavya Udeshi. So it cannot be said, as per the High Court order, that there is absolute transfer of the property in favour of Smt. Neeraja Reddy so as to hold that the transfer took place in the year 1994. Further, it is an admitted fact that in this case finally the property was not registered or transferred in favour of Smt. Neeraja Reddy by the assessee. On the other hand, the property was sold to one Mr. Srinivasa Reddy by the assessee along with Smt. Neeraja Reddy as a consenting party. Even from this point of view also, we are not in a position to hold that the registration of sale seed dated 23rd October, 2007 would relate back to the date on which the Special Power of Attorney was executed by the assessee in favour of Smt. Neeraja Reddy so as to hold that there was deemed transfer of property in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 2007 to Sri G. Srinivasa Reddy by way of sale deed. In our opinion, Smt. Neeraja Reddy has not derived any control over the ownership of the property in the year 1994 through the Special Power of Attorney executed by the assessee. The Special Power of Attorney is only a facilitator to perform certain actions and things on behalf of the assessee. Being so, various case-law relied on by the AR is not applicable to the facts of this case. 16. In view of the above discussion, in our opinion, the transfer took place in this case vide sale deed executed on 23.10.2007 in favour of Sri G. Srinivasa Reddy and the lower authorities are justified in invoking the provisions of section 50C to determine the sale consideration and to bring the capital gain to tax. We find no infirmity in the order of the CIT(A) on this issue. 17. Regarding initiation of penalty proceedings u/s. 271(1)(c) of the Act, the ground raised by the assessee at this stage is premature and preposterous and we decline to entertain this ground. 18. Being so, we have no hesitation in confirming the order of the CIT(A) and the grounds taken by the assessee are rejected. 19. In the result, appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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