TMI Blog2013 (1) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of revenue Capital Gain – Sale of Land – Bringing to tax by way of LTCG - Held that:- Following the decision on identical issue in case of the assessee’s husband Shri V. S. Balasubramanyam. The issue raised by the assessee is akin to the issue considered in the case of the assessee’s husband. Accordingly, this issue goes against the assessee. - ITA No.814/Bang/2011 - - - Dated:- 21-9-2012 - George George K and Jason P Boaz, JJ. Appellant Rep by: Shri V Srinivasan, CA Respondent Rep by: Shri Farhat Hussan Qureshi, CIT-II ORDER Per: George George K: This appeal filed by the assessee is directed against the order of the CIT (A)-II, Bangalore dated 11.8.2011. The relevant assessment year is 2005-06. 2. The assessee has raised seven grounds in her grounds of appeal. Ground Nos.1 and 7 are general in nature and, therefore, they are dismissed as inconsequential. In ground No.6, the assessee objects to the charging of interest u/s 234B and u/s 234C of the Act. Charging of interest u/s 234B and 234C of the Act is mandatory and consequential in nature. Therefore, this ground is not maintainable and, hence, the same is dismissed. The remaining grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore, clear that the AO had no opportunity to examine and form an opinion on the assess-ability or otherwise of the long term capital gains arising from the transfer of the appellant s property mentioned supra. It was only on receipt of information that, since on similar set of facts the assessment in the case of the appellant s husband (Shri V.S. Balasubramanyam) had resulted in bringing consideration arising from transfer of his property to tax under the head Long term capital gains , it transpired to the AO that in the appellant s case also the consideration received by her from transfer of her property was liable to tax under the head long term capital gains . He, therefore, issued a Notice u/s 148 of the Act to re-open the appellant s case u/s 147 of the Act for bringing to tax the long-term capital gains arising from the transfer by the appellant of her property in favour of Shri K.L.Srihari through devious means after recording in the file the reasons for such a belief reproduced at para 3.1 supra. .. 5. Extensively and elaborately analyzing and quoting the ruling of the Hon ble Supreme Court in the case of ACIT v. Rajesh Jhavery St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the CIT (A) had confirmed the stand of the AO in bringing to tax the sum of Rs.2.87 crores as LTCG in the hands of the assessee. The relevant portions of the observations of the CIT (A) are extracted hereunder: 3.3. I have carefully considered the submissions of the appellant and perused the facts of the case as borne out by the assessment records as also the assessment order. The facts that emerge are: (i) the appellant was owner of property bearing survey No.43, Ittemedu village, Uttarahalli, Bangalore South; (ii) payment for this transfer was received by the appellant from 13.6.03 to 30.9.04 as per 3.2 (xii) above; (iii) the appellant s claim that this amount had been transferred to M/s.Highland Enterprises as capital contribution on 23.12.1988 and received back by her on 22.5.2004 following her retirement there-from and reconstitution of the firm, is not acceptable; (iv) there is no proof of alleged partnership having been constituted as on 23.12.1988 as claimed. No original deed was produced at the time of assessment proceedings or during the appeal proceedings by the appellant or her husband; (v) no bank account in the name of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(xii)(supra) for details of payments received]. 3.4. In view of these facts which emerge from the records available, I am in agreement with the findings of the AO that the formation of the partnership and its reconstitution are merely tools to avoid payment of tax and not a partnership firm in reality. 3.5. the sum of Rs.2.2 crores received by the appellant is taxable as capital gains. The AO has rightly done so after giving the benefit of indexation. 3.6. The only new argument and fact brought on record by the appellant is the judgment of the Hon ble H.C of Karnataka in Civil Misc. Petition No.34/2002 dated 13/11/2007 between the appellant and her husband Shri V.S. Balasubramanyam on the one hand as petitioners and K.L. Srihari and others on the other hand as respondents wherein it is held that the alleged partnership deed does not provide for the appointment of arbitrator in the event of any dispute arising between the parties concerned; 3.7. I have already discussed at para 3.3. (ix)(supra) that this judgment does not mean that the High Court has held that the partnership is valid or genuine as this issue was not before the Hon ble High Court; 3.8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant taking retirement from the partnership firm indicated that the appellant wanted to avoid the payment of tax on the capital gains arising from such transfer of the said property as the AO has exposed the fraud intended by the appellant and come to the correct conclusion in this regard. In other words, the entire scheme was sham in nature as held by the Hon ble Supreme Court in the case cited above. 3.12. Subsequent to the so called retirement-cum- reconstitution of the partnership deed, the aforesaid land was transferred to M/s. Prestige Estate Project Pvt. Ltd vide agreement dated 23.12.2005 by M/s. Highland Enterprises represented by its partners viz., M/s. L.K. Trust, Sri K.L. Srihari and Sri K.L.A. Padmanabhasa. Nowhere in the agreement, have the appellant and her husband Shri V.S. Balasubramanyam been made parties to the transfer of the property. In view of the fact that the transfer has been effected by agreement dated 22.5.2004, the appellant and her husband have received their respective shares during the period relevant to the assessment year in question. Besides, it is seen from the records that the value of the property in question was taken at Rs.2 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed the transaction or not and, therefore, there were no justifiable reasons recorded by the AO to hold that income had escaped assessment. Strong reliance was placed on the following case laws: (a) Calcutta Discount Co. Ltd 41 ITR 181 (SC); (b) Lakhmani Mewaldas 103 ITR 437 (SC); (c) Gamgasaran 130 ITR 1; (d) Chhugmal Rajpal - 79 ITR 603 (SC). 7.3 In conclusion, it was submitted that the re-opening of the assessment was totally unjustified and, accordingly, prayed that the same requires to be cancelled. 8. On the other hand, the learned DR submitted that the CIT (A) was fully justified in rejecting the assessee s claim with regard to the reopening of the assessment by the AO. In respect of assessing the capital gains in the hands of the assessee, the learned DR prayed that the submission made in the case of the assessee s husband [Shri V.S.Balasubramanyam] be considered in the case of the present assessee also as the issue involved in both the cases is identical. 9. We have carefully considered the rival submissions, perused the relevant materials on record and also the case laws on which the learned AR had placed strong reliance. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made was bad in law and requires to be cancelled having regard to the decision of the Hon ble Supreme Court in the case of GKN Driveshafts cited (supra) etc., 9.4 In the case of GKN Driveshafts, the substance of the ruling of the Hon ble Supreme Court was that reasons for issuing the impugned notices have been disclosed and that the petitioner can raise objections before the AO and the AO has to dispose of the objection, if filed by the petitioner. However, in the present case, on receipt of Notices u/s 143(2) and 142(1) dated 3.2.2010, the assessee sought for the reasons recorded in writing for reopening the case. According to the AO, the reasons recorded for reopening of the case was communicated to the assessee. In response, the assessee had furnished a detailed reply on 17.3.2010 in which she had stated that 1. I have originally filed my return of income on 29.07.2005 reporting an income of Rs.1,38,320/- which consisted of income from house property and income from other sources and no income from capital gains was reported by me as no capital gains in fact and law arose to me liable to tax in my hands. Later, there was a notice issued to me u/s 148 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ss. 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of s. 147 separate cls. (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under s. 147(a), two conditions were required to be satisfied, firstly, the AO must have reason to believe that income profits or gain chargeable to income-tax have escaped assessment and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the A O could have jurisdiction to issue notice u/s 148 rws. 147(a). But under substituted s. 147 existence of only the first condition suffices. In other words, if the AO for whatever reason has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment .. [Paras 17,18 20] 9.7 In consonance with the ratio laid down by the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
