M. Basheer Ahamed vs Commissioner of Income Tax

R. Banumathi, J.—Being aggrieved by dismissal of his appeal in I.T.A. No. 101 of 2009 (October 30, 2009), the assessee has preferred this appeal. The tax case (appeal) was admitted on the following substantial question of law:

Whether the adoption of Rs. 6,48,000 as the full sale consideration of the property relying on the confession statement of the purchasers without furnishing the appellant copy of such information gathered behind his back and without any additional materials is valid in law?

The assessee was the owner of a vacant plot measuring 4800 sq. ft. in Old R.S. No. 466, New R.S. No. 396/1A at Letchathoppu village, Thanjavur Taluk, Thanjavur District. The assessee sold the said property under sale deed dated August 21, 2000, for a sum of Rs. 2,33,760 to A. Helan and M. Meena, who were both partners of M/s. Marble World, a partnership firm at Thanjavur.

There was a survey in the premises of M/s. Marble Word. During the course of survey, a copy of sale agreement executed on September 9, 1999, between Asiya Basheer, wife of the assessee and the above said two purchasers (A. Helan and M. Meena) were seized. In the said agreement, Asiya Basheer, wife of the assessee had agreed to sell her husband''s vacant plot to the said purchasers for a sale consideration of Rs. 6,48,000 at the rate of Rs. 135 per sq. ft. As per the said agreement, the purchasers were paid an advance of Rs. 1,50,000 to Asiya Basheer on the date of the agreement. On the other hand, the registered sale deed dated August 21, 2000, showed the consideration as Rs. 2,33,760. Notice u/s 148 of income tax Act was issued to the assessee on September 9, 2004. In response to which, the assessee had returned a total income of Rs. 40,393 comprising property income, business income and income from other sources. Agricultural income of Rs. 6,000 was also disclosed. The capital gains on sale of property was not disclosed. Therefore, the assessee was asked to produce books of account, bank accounts, etc. In response to the same, the assessee filed a revised return showing capital gains at Rs. 59,193. The assessee was asked to explain the difference in the sale consideration in the two documents, viz., sale agreement and sale deed. The assessee submitted an application u/s 144A of the Act to the Additional Commissioner of income tax. The Additional Commissioner of income tax noted that the assessment in the case of the purchaser had been completed as per the income returned by her which represented her share by purchase of property at Rs. 6,48,000 and, hence, the objection of the assessee was rejected. The Assessing Officer completed the assessment u/s 143(3) on March 28, 2006, adopting the sale consideration at Rs. 6,48,000 as per the sale agreement dated September 9, 1999, and thereby adopting the long-term capital gains at Rs. 5,13,826. The Assessing Officer found that the said sale consideration was adopted as considered in the case of the purchaser.

In the appeal filed by the assessee, the Commissioner of income tax (Appeals) confirmed the order of Assessing Officer by observing that the purchaser had admitted to have paid the sale consideration of Rs. 6,48,000 for purchase of the property. In the further appeal filed by the assessee, the Tribunal highlighted three aspects and most importantly, the amount of Rs. 6,48,000 has been accepted as the purchaser''s investment in her income tax assessment. The Tribunal further held that "it would be an anomaly if in the case of the purchaser the sale consideration of Rs. 6,48,000 is accepted and it is not accepted in the case of the seller".

Mr. J. Balachandran, learned counsel for the assessee, contended that the alleged sale agreement dated September 9, 1999, was signed by Asiya Basheer only on the part of vendors and by both purchasers and at that time, the assessee was not in India and there was no power/authorisation given by the assessee to anyone to deal with the property. Learned counsel further submitted that the agreement to sell the property by a person without proper registered power of attorney from the real owner does not have any legal existence in the eye of law and while so, the Additional Commissioner of income tax erred in believing that the assessee''s wife obtained necessary instructions from her husband for executing the sale agreement. It was also contended that Asiya Basheer is not the owner of the property and the authorities did not consider as to why she could execute the agreement and she has no right and further the sale deed dated August 21, 2000, was executed by one party only, i.e., Basheer Ahmed, and, hence, the sale deed dated August 21, 2000, cannot said to have been effected consequent to an earlier sale agreement dated September 9, 1999, as claimed by the Revenue.

Mr. J. Narayanasamy, learned counsel for the Revenue, supported the orders of the lower authorities and submitted that when the agreement dated September 9, 1999, showed the sale consideration of Rs. 6,48,000 and when the returns filed by the purchaser showing an amount of Rs. 6,48,000 has been accepted as the purchaser''s investment, the authorities rightly calculated the capital gains taking the sale consideration at Rs. 6,48,000 and the order of the Tribunal does not suffer from any legal infirmity.

Even though strenuous contentions were advanced disputing the agreement dated September 9, 1999, the assessee cannot dispute the signature of his wife, Asiya Basheer, in the agreement. In the said agreement, Asiya Basheer signed for herself and on behalf of her husband. The assessee has honoured the agreement entered into by his wife. The sale deed dated August 21, 2000, also refers to the receipt of consideration prior to the sale deed. When the assessee was asked to produce books of account and bank accounts, etc., the assessee himself filed the revised return showing the capital gains at Rs. 59,193 and when the assessee himself had shown the capital gains, the factum of sale of the property has to be accepted.

In the agreement of sale dated September 9, 1999, executed by Asiya Basheer, wife of the assessee, the sale consideration was stated as Rs. 6,48,000 ; whereas the sale deed was executed on August 21, 2000, stating the sale consideration as Rs. 2,33,760. In her return, the purchaser of the property shown that an amount of Rs. 6,48,000 was invested for purchase of the property in Nilgiri Therkku Thottam. The amount of Rs. 6,48,000 has been accepted as the purchaser''s investment in her income tax assessment. The purchaser had shown investment at Rs. 6,48,000 as the sale consideration for acquisition of property at Nilgiri Therkku Thottam. As pointed out by the Tribunal, it would be an anomaly if in the case of purchaser the sale consideration of Rs. 6,48,000 is accepted and it is not accepted in the case of the seller. Referring to the recitals in the agreement of sale and that it was executed by Asiya Basheer, wife of the assessee which is substantiated by the income tax returns filed by the purchaser, the Assessing Officer rightly held that the sale consideration was Rs. 6,48,000 which was confirmed by the Commissioner of income tax (Appeals) and the Tribunal. We do not find any legal infirmity warranting interference with the order of the Tribunal. The substantial question of law raised in this appeal is answered in favour of the Revenue and tax case (appeal) is dismissed. No costs.