Wp/14716/2016 Of Smt.rajeswari Iyer v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved On 12.02.2021Pronounced On 19.02.2021 CORAM THE HON'BLE MR.JUSTICE C.SARAVANANW.P.Nos.14716 of 2016 & 1613 of 2017andW.M.P.Nos.12861 & 12862 of 2016 andW.M.P.Nos.1575 & 1576 of 2017 (Through Video Conferencing) Smt. Rajeswari Iyer,Rep. by Power of Attorney,Smt. Sumithra Ravichandran.33,53[rd] Street, Ashok Nagar,Chennai -83 ..Petitioner in WP.No.14716 of 2016 Smt.Rajeswari Iyer,D/o.Balasubramanian, 33/16, Second Main Road, R.A.Puram, Chennai -28. ..Petitioner in WP.No.1613 of 2017 1.The Income Tax Officer, (International Taxation)-1 (2), 7[th] Floor, Annexe Building, Aayakar Bhawan, 121, Mahatma Gandhi Road, Nugambakkam, Chennai 600 034. 2.The District Valuation Officer, Valuation Cell, Income Tax Department, 5[th] Floor, Kannammai Building, 611, Anna Salai, Chennai – 600 006.... Respondents in both W.Ps. Writ Petitions filed under Article 226 of the Constitutionof India, to issue a Writ of Certiorari calling for the recordsin PAN No. ACEP17246J dated 31.03.2016 relating to theAssessment Year 2013-2014 and in PAN No. ACEP17246J dated30.12.2016 relating to the Assessment Year 2014-2015 on thefiles of the 1[st] respondent and quash the same. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.M.P.Senthil Kumar in both W.Ps. For Respondent : Mr.Prabhu Mukunth Arunkumar for M/s.Hema Muralikrishnan Senior Standing Counsel in both W.Ps. C O M M O N O R D E R By this common order, both the writ petitions are beingdisposed of. 2. In these Writ Petitions, the petitioner has challengedthe impugned assessment orders dated 31.03.2016 and 30.12.2016passed by the first respondent for the Assessment Year 2013-2014and for the Assessment Year 2014-15 respectively. 3. By the impugned orders, income from long-term capital ofthe petitioner from the sale of property has been re-computedand accordingly the petitioner has been called upon to pay thedifferential taxes. 4. The petitioner along with her sister sold a propertywhich sale was apparently negotiated by their father during hislifetime. However, before the sale could be completed, theirfather passed away on 15.01.2012 and therefore the buyersnegotiated the sale price with the petitioner and concluded thesale in respect of two parcels of land in VaradharajapuramVillage, Sriperumbadur Taluk, Kancheepuram District, Tamil Naduand in Kundrathur Sriperumbadur Taluk, Kancheepuram District,Tamil Nadu to two different buyers. 5. A dispute arose as to the value declared by thepetitioner and the income tax returns for the purpose ofcomputation of long-term capital gains. Under thesecircumstances, a reference was made under Section 55A read withSection 50C of the Income Tax Act, 1961 for valuation by thesecond respondent District Valuation Officer, Valuation Cell,Income Tax Department. 6. In respect of the land in Varadharajapuram Village,Sriperumbadur Taluk, Kancheepuram District, Tamil Nadu, thesecond respondent gave a Preliminary Valuation Report dated24.03.2016 on reference under Section 55A of the Income Tax Act,1961. The petitioner asked for time for giving her objection tothe report and therefore time was extended up to 20.04.2016 videcommunication dated 31.03.2016. https://hcservices.ecourts.gov.in/hcservices/ 7. Two reports were given in respect of two parcels of landsold to two different buyers, namely M/s.Tatia DevelopmentPrivate Limited and to Mr.S.Dhansekharen and Mrs.D. Sasirekha inVaradharajapuram Village, Sriperumbadur Taluk, KancheepuramDistrict, Tamil Nadu. The first respondent proceeded to completethe assessment vide impugned order dated 31.03.2016 for theAssessment Year 2013-2014 based on the preliminary report of thesecond respondent as the time for completing the assessment wasexpiring on 31.03.2016 for the Assessment Year 2013-14. https://hcservices.ecourts.gov.in/hcservices/ 7. Two reports were given in respect of two parcels of landsold to two different buyers, namely M/s.Tatia DevelopmentPrivate Limited and to Mr.S.Dhansekharen and Mrs.D. Sasirekha inVaradharajapuram Village, Sriperumbadur Taluk, KancheepuramDistrict, Tamil Nadu. The first respondent proceeded to completethe assessment vide impugned order dated 31.03.2016 for theAssessment Year 2013-2014 based on the preliminary report of thesecond respondent as the time for completing the assessment wasexpiring on 31.03.2016 for the Assessment Year 2013-14. 8. In respect of the lands in Kundrathur SriperumbadurTaluk, Kancheepuram District, Tamil Nadu, which were sold toMr.S.Dhansekharen and Mrs.D.Sasirekha pursuant to twounregistered sale agreements both dated 13.12.2013, though areference was made to the second respondent under Section 55Aread with Section 50C of the Income Tax Act, 1961, the firstrespondent proceeded to pass the impugned assessment order dated30.12.2016 for the Assessment Year 2014-15 under Section 143(3)of the Income Tax Act, 1961 as the time for passing theassessment order was also expiring on 30.12.2016. The petitionerhad also sold another property in Ashok Nagar, Chennai. 9. These orders are challenged by the petitioner primarilyon the ground that the sale price was negotiated by thepetitioner’s father with the respective buyers during hislifetime on 11.01.2012 and that their late father had received asum of Rs.50 lakhs for the proposed sale of the land inVaradharajapuram Village, Sriperumbadur Taluk, KancheepuramDistrict, Tamil Nadu and a sum of Rs.1.3 crores from therespective buyers in respect of the land in KundrathurSriperumbadur Taluk, Kancheepuram District, Tamil Nadu. 10. It is submitted that before the petitioner’s fathercould complete the sale during his lifetime, unfortunately hedied on 15.01.2012. After his death, the petitioner along withher sister, entered into a formal sale agreement dated28.06.2012 and 03.08.2012 in respect of VaradharajapuramVillage, Sriperumbadur Taluk, Kancheepuram District, Tamil Naduwith the two buyers and thereafter completed the formalities forthe sale. Copies of the sale deed have not been filed for thepurpose of writ petitions. 11. Similarly, for the other properties in KundrathurSriperumbadur Taluk, Kancheepuram District, Tamil Nadu, whichwere sold to Mr.S.Dhansekharen and Mrs.D.Sasirekha pursuant totwo sale agreements both dated 13.12.2012, the agreement wassigned by the petitioner in her capacity. 12. Though it was argued that the property belonged to thepetitioner’s father who died on 15.01.2012, the sale agreementsdated 28.06.2012 and 03.08.2012 in respect of VaradharajapuramVillage, Sriperumbadur Taluk, Kancheepuram District, Tamil Naduwith the two buyers indicate that the petitioner and her sisterhad executed a deed of general power of attorney in favour ofthe first buyer sometime in 2012. 13. The agreement has certain blanks which have not beenfilled up. Similarly, in respect of the second parcel of landsoldtoMr.S.DhansekharenandMrs.D.SasirekhainVaradharajapuram Village, Sriperumbadur Taluk, KancheepuramDistrict, Tamil Nadu the sale agreement was directly negotiatedby the petitioner herself with the buyers. 14. The two other parcels of land in KundrathurSriperumbadur Taluk, Kancheepuram District, Tamil Nadu, whichwere sold to Mr.S.Dhansekharen and Mrs.D.Sasirekha vide twoseparate sale agreements both dated 13.12.2013 again werenegotiated by the petitioner herself. 15. In these writ petitions, it is the contention of thepetitioner that the respondents ought not to have adopted thehigher value as the price of the land in 2012 had increasedmanifold time and that the sale price was negotiated by thepetitioner’s father during his lifetime in 2010. 14. The two other parcels of land in KundrathurSriperumbadur Taluk, Kancheepuram District, Tamil Nadu, whichwere sold to Mr.S.Dhansekharen and Mrs.D.Sasirekha vide twoseparate sale agreements both dated 13.12.2013 again werenegotiated by the petitioner herself. 15. In these writ petitions, it is the contention of thepetitioner that the respondents ought not to have adopted thehigher value as the price of the land in 2012 had increasedmanifold time and that the sale price was negotiated by thepetitioner’s father during his lifetime in 2010. 16. In support of the present writ petitions, learnedcounsel for the petitioner has relied upon the bank statementsof petitioner’s father for the period between 2010 to 2011, tosubstantiate the receipt of Rs.50 lakhs as advance. Then it wasfor the petitioner also relied on the following case laws insupport of the above writ petitions:- i. Commissioner of Income Tax Vs. Vammudi Amarendran120 taxmann.com 171 (Madras-High Court).ii.Radhakishan Kungwani Vs. Income Tax Officer, 120taxmann.com 2016 (T). 17. The impugned orders are sought to be defended by therespondents on the ground that the petitioner has an alternateremedy by way of an appeal against respective orders before theCommissioner of Income Tax (Appeals) under Section 246 of theIncome Tax Act, 1961. It is further submitted that there are norecords to substantiate that there was any previous saleagreement with the buyers in 2010 and a mere confirmation of theexistence of a previous agreement by the buyers was notsufficient. If such agreement was entered into, these aspectsought to have been reflected in the corresponding returns forthe Assessment Year 2011-12, whereas, the petitioner had offeredlong term capital gain only in the year 2013-14. https://hcservices.ecourts.gov.in/hcservices/ 18. I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned standing counsel forthe respondents. 19. All these agreements are unregistered agreements.Though it is the case of the petitioner that the sales of theproperties were negotiated by her father during his lifetime andhad received an advance of Rs.50 lakhs in respect of the firstproperty in Varadharajapuram Village, Sriperumbadur Taluk,Kancheepuram District, Tamil Nadu from M/s.Tatia DevelopmentPrivate Limited on various dates and manifold increase in theguideline value by the Registration Department in 2012 cannot bethe basis to countermand the value adopted in the saleagreement. It is therefore submitted that the higher valueadopted was liable to be quashed. 20. Such submission cannot be entertained in absence of anydocument particularly in absence of documents to substantiatethat there was a concluded sale agreement in respect of theseproperties by the petitioner’s father during his lifetime. Thepetitioner’s father may also have had independent transactionsand merely by looking at banking transactions in the BankPassbook, one cannot determine existence of any concluded saleagreement. Therefore, it cannot be construed that the bankingtransactions of the petitioner’s father pertain to theproperties which were subject matter of the sale agreements.Further, under Section 17(1)(g) of the Registration Act, 1908,an agreement for sale of immovable property has to bemandatorily registered. 21. There are several disputed questions of fact which inmy considered view are best left open to be decided by theauthorities under the hierarchy of the Income Tax Act, 1961.Since none of the agreements which have been produced by thepetitioner are registered documents, this Court cannot concludethat the value adopted by the petitioner reflected the correctvalue for the purpose of payment of stamp duty. Therefore, evenotherwise, based on the sale agreements enclosed by thepetitioner, no relief can be granted to the petitioner in thesewrit petitions. 21. There are several disputed questions of fact which inmy considered view are best left open to be decided by theauthorities under the hierarchy of the Income Tax Act, 1961.Since none of the agreements which have been produced by thepetitioner are registered documents, this Court cannot concludethat the value adopted by the petitioner reflected the correctvalue for the purpose of payment of stamp duty. Therefore, evenotherwise, based on the sale agreements enclosed by thepetitioner, no relief can be granted to the petitioner in thesewrit petitions. 22. The petitioner has an alternate and efficacious remedyby way of an appeal against the respective assessment ordersbefore the Commissioner of Income Tax (Appeals). Therefore, I donot find any reasons to interfere with the impugned orders.Under these circumstances, there is no merit in these writpetitions. 23. The petitioner is however given a liberty to file astatutory appeal against respective assessment orders before theCommissioner of Income Tax (Appeals), within a period of thirtydays from date of receipt of a copy of this order. Thoughcertain observations have been made touching on the merits ofthe case, it is made clear that the Commissioner of Income Tax(Appeals) shall dispose the appeal to be filed by the petitioneron merits uninfluenced by any observations contained herein. 24. Pending disposal of the writ petitions, no suchrecovery proceedings have been initiated. Since the petitionerhas enjoyed the benefit of protection during the pendency ofthese writ petitions, such protection shall be continued up tothe disposal of the appeal by the Commissioner of Income Tax(Appeals) if the petitioner files appeals before theCommissioner of Income Tax (Appeals) within the specified timeherein. If the petitioner fails to file appeal, the protectionshall stand automatically vacated after the expiry of time givento the petitioner to file appeals.25. These Writ petitions stand disposed of with the aboveobservation. No cost. Consequently, connected MiscellaneousPetitions are also closed. Sd/-Assistant Registrar (CS.II)Sub Assistant Registrar /True Copy/ To 1.The Income Tax Officer, (International Taxation)-1 (2), 7[th] Floor, Annexe Building, Aayakar Bhawan, 121, Mahatma Gandhi Road, Nugambakkam, Chennai 600 034. 2.The District Valuation Officer, Valuation Cell, Income Tax Department, 5[th] Floor, Kannammai Building, 611, Anna Salai, Chennai – 600 006. 3.The Commissioner of Income Tax Appeals, Chennai. +2cc to M/s.G.Baskar, Advocate SR.NOS..9823 & 9824 +2cc to M/s.Hemamuralikrishnan, Advocate SR.NOS..9791 & 10394AKM/17.03.21/6P- 8C/ common order inW.P.Nos.14716 of 2016 & 1613 of 2017 andW.M.P.Nos.12861 & 12862 of 2016and W.M.P.Nos.1575 & 1576 of 201719.02.2021