Kailash Gupta, Jaipur vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 20/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Income Tax Officer, cuke Kailash Gupta Ward 4(2), Jaipur. Vs. 5/2, Khandelwal Tower, Sector-1, Vidhyadhar Nagar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AATPG 5359 B vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.)

lquokbZ dh rkjh[k@ Date of Hearing : 23/03/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/03/2015

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

This is an appeal filed by the Revenue against the order dated

29/10/2012 passed by the learned CIT (A)-II, Jaipur for A.Y. 2008-09.

The sole ground of appeal is as under:-

"On the facts and in the circumstances of the case and in law the Ld. CIT(Appeals) has erred in deleting the addition made in the case of the assessee when in reality, the legal ownership of the property sold belonged to the assessee and not his brother Sh.

2 ITA 20/JP/2013_ ITO Vs. Kailash Gupta

B.S. Gupta who has claimed exemption U/s on the sale proceeds of the property in question."

2. The revenue challenged the deletion of addition in case of

assessee on the ground that even legal owner of property is assessee.

The ld. Assessing Officer observed that the assessee purchased a plot

for Rs. 17,081/- bearing plot No. E-67, Shastri Nagar, Jaipur out of

which Rs. 4,265/- was deposited at the time of participation in auction

and balance Rs. 12,823/- was deposited subsequently. The entire

amount was paid by Shri B.S. Gupta out of his own sources of income.

The assessee at that point of time has no source of income and was

residing at village. He has already filed an affidavit before the Assessing

Officer and claimed that he constructed the house in 1975 and started

residing there. However, the allotment of plot was taken by him in the

name of his younger brother Shri K.C. Gupta. Since he was in

government service and posted outside Jaipur. The assessee sold the

property situated at E-67, Shastri Nagar, Jaipur for a consideration of

Rs. 50 lacs on 04/8/2007. The assessee has not shown any income

from capital gain. In case of B.S. Gupta, the Assessing Officer made

addition of Rs. 50 lacs being the sale proceed of house on protective

basis. The legal heirs of B.S. Gupta filed appeal before the ld. CIT(A).

The ld. CIT(A) after considering the entire facts, held that B.S. Gupta 3 ITA 20/JP/2013_ ITO Vs. Kailash Gupta

was the real owner of the said house and accordingly held that capital

gain on sale of the house is to be charged in the hands of B.S. Gupta.

Without prejudice to the above the assessee also claimed that if the

property is assessed to tax in the hands of assessee then benefit of

Section 54 may kindly be allowed as the entire sale proceed has been

invested in the purchase of the house. The Ld. Assessing Officer after

considering the detailed submissions made by the assessee as held that

Shri K.C. Gupta is real owner of property at E-67, Shastri Nagar, jaipur

and capital gain arise from the transfer of this property is assessable in

the hands on substantive basis.

3. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the ld. CIT(A), who had deleted the

addition made by the Assessing Officer by observing as under:-

"It is seen that my predecessor through his order dated 11/10/2011 in the case of Smt. Shakuntala Devi Gupta- legal heir of Late Shri B.S. Gupta in A.Y. 2008-09 had held that the property at E-67, Shastri Nagar, Jaipur was actually owned by Late Shri B.S. Gupta. His final finding on page 15 of the appellate order is as under:-

"In view of above facts, I hold that capital gain of Rs. 28,48,074/- on the sale of house has to be charted to tax in the hands of appellant. Since the appellant had purchased residential house on 23/08/2007 and a flat on 06/09/2007, the deduction U/s 54 for Rs. 28,48,074/- has to be allowed to the appellant. Since the receipts on sale of house were credited in

4 ITA 20/JP/2013_ ITO Vs. Kailash Gupta

the bank account of the appellant and the amount was disclosed as capital gain, the opinion of the A.O. that it was income of the appellant from undisclosed sources, had no legal sanctity. I therefore direct the A.O. to delete the addition of Rs. 50,00,000/- on account of undisclosed income. These grounds of appeal are allowed.

In the result, the appeal of the assessee is treated as allowed." The department did not file appeal against the appellate order in the case of Shri B.S. Gupta. In other workds, the A.O's action of taxing Rs. 50,00,000/-as Income from other sources was not upheld, and Long Term Capital Gains on sale proceeds of Rs. 50,00,000/- were found assessable in the hands of the actual owner -Late Shri B.S. Gupta, though no long term capital gains were found finally taxable because the same were reinvested in house properties and were thus exempt from taxation U/s 54. Therefore, there is no basis for taxing the long term capital gain from sale of the property at Shastri Nagar in the hands of the appellant, because the same have been considered in the hands of the real owner- Late Shri B.S. Gupta and the appellant is not taxable for capital gains which never reached his on the property which was also not actually owned by hi. I agree with the findings of my predecessor in the case of Smt. Shankuntala Devi Gupta- the legal heir of Late Shri B.S. Gupta in order dated 11/10/2011, therefore, the A.O. is directed to delete the addition of Rs. 39,89,830/-."

4. Now the Revenue is in appeal before us. The learned D.R. fairly

accepted that in case of legal heir of Late B.S. Gupta, no second appeal

has been filed by the department and the ld CIT(A) has held that this 5 ITA 20/JP/2013_ ITO Vs. Kailash Gupta

property is owned and belonged to legal heir of Late B.S. Gupta. The

ld. AR of the assessee has also accepted the factual position of the

case.

5. We have heard the rival contentions of both the parties and

perused the material available on record. When the ld. CIT(A) has

decided that this property is belonged to legal heir of Late B.S. Gupta

and the ld Assessing Officer has assessed to tax in the hands of legal

heir, which has been held correct in case of legal heir of Late B.S.

Gupta. The department has not filed an appeal before the ITAT on the

findings of legal heir of Late B.S. Gupta for A.Y. 2008-09. Therefore, we

do not find any reason to intervene in the order of the ld CIT(A).

Accordingly we upheld the order of the ld. CIT(A).

6. In the result, the revenue's appeal is dismissed.

Order pronounced in the open court on 27/03/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 27th March, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- ITO, Ward 4(2), Jaipur 6 ITA 20/JP/2013_ ITO Vs. Kailash Gupta

2. izR;FkhZ@ The Respondent- Kailash Gupta, Jaipur.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 20/JP/2013)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar