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TMI Blog2021 (7) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ble CIT(A) ought to have observed that the assessing officer erred in assessing the capital gains of Rs. 40 lakhs in the hands of the appellant in the status of individual. 3. The Hon'ble CIT(A) ought to have appreciated that the transaction of sale of property belonging to the share of K.Vishweshwar Reddy [HUF] has taken place on 02.02.2006 and therefore no capital gains arises in the hands of the individual i.e. K.Vishweshwar Reddy. 4. The Hon'ble CIT(A) ought to have appreciated that the fact of partition as per document dt. 31.12.1966 between Uma Maheshwar Reddy, K.Surendranath Reddy and K.Vishweshwar Reddy, in which the subject property is divided among the three brothers and formed independent HUF's. 5. The Hon'ble CIT(A) ought to have observed that the assessing officer erred in assuming that the income from capital gains is to be taxed in the hands of individual status, ignoring the family tree drawn by himself wherein the status of K.Uma Maheshwar Reddy, K.Vishweshwar Reddy, K.Surendranath Reddy & K.V.Krishna Reddy is shown as that of HUF. 6. The Hon'ble CIT(A) ought to have observed that the notice u/s.148 was issued without mentioning any stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suring Ac2-10Gts situated at Road NO.10, Banjara Hills of Shaipet Village & Mandal, Hyderabad District, in the capacity of Karta of the Hindu Undivided Family. It was further stated that a total partition was taken place on 31.12.1966 among Sri K. Uma Maheswar Reddy. (late) K. Vishweswara Reddy & Sri K. Surendranath Reddy, being co-parceners of the HUF. The bigger HUF was divided Into three independent HUF's as per the custom of the Hindu families, which is. also recognized by the I.T. Act. After demise of K. Uma Maheshwar Reddy, his son Sri K.V. Krishna Reddy became Karta of the HUF, in respect of late Uma Maheshwar Reddy's share of properties received on partition. The property at Banjara Hills was also partitioned and' agreed to 'be shared 1/3rd each, by the three HUFs. The ARs of the assessee further stated that subsequently. this property was transferred to Smt.V. Kamalamma, Sri T. Ashok Kumar and M/s. Shanta Sri Ram Constructions Pvt. Ltd., on 2.2.2006, vide agreement of sale-cum-GPA registered as oocurnern No.P113/06. dt.3.2.2Q06, for a consideration of Rs. 2 crores, which is to be shared among the three HUF assessees equally. 2.4. The ARs of the assessee fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of capital gain taxes. In fact, he has filed a manual return for the A.Y.2006-07, showing 'Nil' income in Individual capacity in response to the notice u/s.148. Without PANo., how can he file a 'Nil' Return of income? But he has filed it by post. No other person including the present assessee is having PANo. in the entire family, except Sri K.V. Krishna Reddy (Individual). He has no PANo. in HUF capacity also as well as he has not been filing returns of income in HUF capacity also. 2.7 Referring to the family tree of the assessee-group, which is drawn at page 4 of his order, the AO observed that from the above chart, it is not known that the schedule property which were sold, originally purchased by late K. Uma Maheswar Reddy in HUF capacity or Individual capacity. But, the assessee has to establish that whether from the total family fund of the Bigger HUF of father (name not known) of Sri K. Uma Maheswar Reddy, the schedule property has come to three co-parceners, namely, 1.(18te) Sri K. Uma Maheswara Reddy (HUF), 2. Sri K. Thirumaleswara Reddy (HUF) - the present assessee; and. 3. Sri K. Nagarjuna Reddy (HUF), or not? The assessee has not established the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written submissions, which are as under: "3. K.V Krishna Reddy, succeeding karta of late Uma Maheshwara Reddy HUF; K. Visheswara Reddy, s/o K. Bheem Reddy and K. Surendranath Reddy, s/o Bheem Reddy, all constituted HUF in their own rightly by virtue of having acquired land in Survey No. 112 (Old); 167/1 (New) admeasuring 2 Acres 15 Guntas situated at Road No. 10, Banjara Hills of Shekpet (Village & Mandai) having purchased this property in the year 1962. 4. K. Umamaheshwara Reddy; K. Vishweshwara Reddy and K. Surendranath Reddy being brothers constituted a HUF and K. Umamaheshwar Reddy purchased the aforesaid property in the year 1962 with joint family funds. 5. K. Umamaheshwar Reddy died on 11/1/1993, K. Surendranath Reddy died on 16/05/2018 and K. Vishweshwara Reddy died 9n 01/04/2009. The eldest male Member of aforesaid HUF's became the Karta subsequently. 6. K. Umamaheshwar Reddy, K. Vishweshwar Reddy and K. Surendranath Reddy constituted HUF which was partitioned on 31/12/1966 including the aforesaid property in equal shares. English Translation of the partition deed along with its Telugu version was filed along with letter dated 15/1/2021 of Vinay Bhushan Reddy s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the capital gains in the hands of K. Nagarjuna Reddy; K. Bheem Reddy and K. Tirumaleshwara Reddy who were not parties to the sale deed as they were members of the respective aforesaid HUFs. 13.At this juncture, it would be useful to reproduce as to how the sale consideration was assessed in the hands of the respective HUFs as well as in the hands of Sri K. Tirumaleshwar Reddy; K. Bheemi Reddy and K. Nagarjuna Reddy. The attention of the Hon'ble Tribunal is invited to the tabular statement at page 11 of the paper book filed in the case of K. Surendranath Reddy on 20/02/2017. A perusal of the Tabular statement would show that the total sale consideration adopted was Rs. 3,20,00,000/- as against Rs. 2,00,00,000/- shown in the sale deed. Thus a sum of Rs. 1,20,00,000/- @ Rs. 40,00,000/- each was assessed in the hands of K. Tirumaleshwar Reddy; K. Bheemreddy and K. Nagarjunreddy who were not parties to the sale deed. Thus, the sale proceeds were adopted in excess by Rs. 1,20,00,000/- (supra). 14. The Assessing Officer while accepting the status as HUF as could be seen from the assessment order observed at para 4.1 of the AO that there was no order u/s. 171(1) of the Act recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was unable to prove that when the partition was taken place. He is also not clear that the property belongs to bigger HUF or smaller HUF or it belongs to the individual. He submitted that the AO has examined the issue in detail and family tree was also drawn while making assessment. 7. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. It is observed that the immovable property which was purchased in the year 1962 was sold on 02/02/2006 for a sum of Rs. 2 crores under a registered agreement of sale-cum-GPA and the sale deed was entered into by the following: (i) K. V. Krishna Reddy (S/o. Late K. Umamaheswara Reddy) (ii) K. Vishveshwar Reddy (iii) K. Surendranath Reddy 7.1 It is fact that the property was sold by aforementioned three persons, who belong to HUF, whereas the notice has been issued in the name of individual capacity and the assessment has also been made in the individual hands. In this connection, we refer to the Agreement of sale-cum-GPA, wherein at page 2 of the agreement, the clause reads as under: "WHREAS the schedule property was held to be a part of the joint fami ..... X X X X Extracts X X X X X X X X Extracts X X X X
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