The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that amount paid by the purchaser of property to the tenant can’t be taxed in the capital asset of the owner.
The four assessees are members of the same family. Smt. Halima obtained the property measuring 4,400 sq. ft from her father Shri N. Aziz Noor Mohamed, through a settlement deed dated 02.02.2007.During the search under section 132 of the Income Tax Act, 1961 [Act], it was revealed that the on-money of ₹.2,39,21, 100/- was paid in cash to Shri A. Imtiaz and his family members in addition to the documented sale value. No one filed an income tax return for the assessment year 2012-13 relevant to the previous year 2011-12.
The Assessing Officer levied a penalty under section 271F of the Act by his order dated 21.08.2014 in case of all the four family members imposing a penalty of Rs.5,000/- each for default of not filing the income tax returns by the due date allowed under section 139(1) of the Act and completed the assessments in all four cases by adding the on-money for computation of Long term Capital Gains at ₹.87,58,114/- in the case of each of the family members.
It was also very clear that dealings are only between the purchaser of the property and tenants occupied in that premises where the purchaser has not given any details/break-up for arriving at the figure of ₹.7.40 crores/₹.6.65 crores, which it was aggrieved to pay for vacation of tenants of the premises or how many tenants have occupied in that premises.
The Tribunal observed that whatever amount paid by the buyer to the tenant for the vacation of tenancy should not be taxed in the hands of the owner of the capital asset. It was evident that there was no search and seizure operation carried out on the premises of the assessees and no evidence to show that the assessees have received on-money for the sale of the property.
Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member observed that no allegation shall be sustained without evidence and set aside the order of the CIT(A) in confirming the addition and direct the Assessing Officer to adopt the guideline value adopted for the stamp duty purposes by the SRO of ₹.1,52,65,558/- as FMV of the property under section 50C of the Act.
The appeals filed by the assessees are allowed for statistical purposes. Shri Yeswanthram appeared for the appellant and Shri V. Nandakumar appeared for the respondent.
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