DCIT, V. M/s Satnam Singh & Sons (HUF), Mohali

ITA 1015/CHANDI/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1557 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Valuation report; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1015/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE D.C.I.T., VS. M/S SATNAM SINGH & SONS (HUF) CIRCLE-6(1), # 1668, PHASE-3B2, MOHALI. MOHALI. PAN: AAGHS5505L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL, DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 23.07.2015 DATE OF PRONOUNCEMENT : 03.08.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 18.7.2012 FOR ASSESSMEN T YEAR 2009-10, CHALLENGING THE DELETION OF ADDITION OF RS.34,41,131/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. 2. THE BRIEF FACTS AS ENUMERATED IN THE ASSESSMENT ORDER ARE REPRODUCED AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS ASKED TO FURNISH EVIDENCE REGARDING SOURCE OF INVEST MENT MADE IN 2 THE CONSTRUCTION OF THE HOUSE AND EVIDENCE IN SUPPO RT OF CONSTRUCTION. THE COUNSEL OF THE ASSESSEE FILED REPLY DATED 25.10.2011 STATING THEREIN THAT THE ASSESSEE INVESTED FUNDS IN THE HOUSE PROPERTY FROM, THE 1998-99 TO 2007-08. TOTAL IN VESTMENT IN THE CONSTRUCTION OF HOUSE UPTO 31.12.1999 THE ASSESSEE HAD SPENT RS.23,00,000/-. ANOTHER RS.71,000/- WAS SPE NT IN THE F.Y.2008-09. THE COUNSEL OF THE ASSESSEE HAS FURNIS HED EVIDENCE IN THE SHAPE OF BILLS FOR THE CONSTRUCTION CA RRIED OUT IN THE FINANCIAL YEAR 2008-09. NO EVIDENCE WAS FURNISHED IN RESPECT OF CONSTRUCTION MADE UPTO 31.12.1999. A PERUSAL OF THE D ETAILS FILED REVEALS THAT THE ASSESSEE WAS GRANTED SEWERAGE CONN ECTION BY THE PUDA ON 30.12.1999 WHICH IS INDICATIVE OF THE FA CT THAT NO CONSTRUCTION WAS CARRIED OUT BY THE ASSESSEE TILL 3 0.12.2009. IN ANOTHER COMMUNICATION DATED 8.12.1999 ADDRESSED TO SH. SATNAM SINGH WHO IS KARTA OF THE ASSESSEE, PUDA HAS ASKED TH E ASSESSEE TO PAY EXTENSION FEE FOR THE PERIOD 1993 TO 31.12.1 999. IT IS A COMMON KNOWLEDGE THAT URBAN AUTHORITIES CHARGE CERTA IN FEE IN THE SHAPE OF EXTENSION FEE WHERE NO CONSTRUCTION IS CAR RIED OUT BY THE ALLOTTEES ON THE PIECE OF PLOT ALLOTTED BY IT (I.E. PUDA). FROM THE FACTS AVAILABLE ON RECORD IT IS CLEAR THAT NO CONSTRUCTIO N WAS DONE BY THE ASSESSEE ON THE PLOT NO 1117, SECTOR 71, MOHALI TILL 31 .12.2009. AS SUCH, THE CLAIM OF THE ASSESSEE THAT IT HAS INCURRED AN EXPENDITURE OF RS.23,00,000/- UPTO 31.12.1999 IS IN CORRECT. CONSEQUENTLY, THE ASSESSEE IS NOT ENTITLED TO CLAIM IN DEXED COST OF CONSTRUCTION CLAIMED ON THIS AMOUNT. THUS, RS.34,41, 131/- CLAIMED AS COST OF CONSTRUCTION UPTO 31.12.1999 IS HEREBY DIS ALLOWED. LONG TERM CAPITAL GAINS SHOWN BY THE ASSESSEE SHALL BE INCREASED BY RS.34,41,131/-. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT (APPEALS) AND FILED THE WRITTEN SUBMISS IONS, THE RELEVANT PORTION OF THE SAME IS REPRODUCED BY THE L EARNED CIT (APPEALS) IN THE IMPUGNED ORDER, WHICH READS AS UND ER : ' GROUND NOS. 2 TO 4 ARE IN RESPECT OF DISALLOWANCE O F THE EXPENDITURE OF RS.23,00,000/- MADE ON CONSTRUCTION' RESULTING IN A N ADDITION OF 3 RS.34,42,131/- BEING THE INDEXED COST WITHOUT CONSI DERING THE VALUATION REPORT FILED BEFORE THE ASSESSING OFFICER . FACTS IN BRIEF ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAD SOLD A RESIDENTIAL HOUSE BEARING NO 1117, SECTOR 71, MOHAL I FOR RS.1,40,00,000/-. IT WAS STATED THAT THE ASSESSEE H AD MADE A TOTAL INVESTMENT OF RS.42,65,000/- IN THE CONSTRUCTION OF THE HOUSE FROM THE PERIOD 1998-99 TILL 2007-08. OUT OF THE TOTAL EXPEN DITURE INCURRED TOWARDS CONSTRUCTION, RS.23,00,000/- WAS SPENT TILL 31.12.1999. FURTHER, RELYING UPON A COMMUNICATION DATED 08.12.1 999 WHEREBY ASSESSEE WAS ASKED BY PUDA TO PAY EXTENSION FEE FOR THE PERIOD 1993 TO 31.12.1999 CONCLUDED THAT IT IS A COMMON KNOWLEDGE THAT URBAN AUTHORITIES CHARGE CERTAIN FEE IN THE SHAPE OF EXTE NSION FEE WHERE NO CONSTRUCTION IS CARRIED OUT BY THE ALLOTTEES. AS SU CH, HE DISALLOWED THE INDEXED COST OF CONSTRUCTION OF RS.24,41,131/- BASE D ON SURMISES, CONJECTURES AND SUSPICION. IT IS SUBMITTED THAT DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSEE PLACED ON RECORD ALL THE PAPERS INCLUDING THE VALUATION REPOT OF THE HOUSE BY CHARTERED ENGINEER & APP ROVED STRUCTURE ENGINEER CHANDIGARH ADMINISTRATION ER. J. S. SOD HI WHO MENTIONED THAT ONE PORTION OF THE BUILDING (GROUND FLOOR) AND CALCULATED THE CONSTRUCTION EXPENDITURE PREVAILING THE RATES OF TH AT TIME LE. 1997-99. COPY OF THE VALUATION REPORT IS PLACED AT PAGES ANN . 1-8 OF THE PAPER BOOK. THE ASSESSING OFFICER RELYI NG UPON A COMMUNICATION DATED 08.12.1999 WHEREBY ASSESSEE WAS ASKED BY PUDA TO PAY EXTENSION FEE FOR THE PERIOD 1993-31.12 .1999 DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO PLACE ON RECORD MORE EVIDENCE TO JUS TIFY HIS CLAIM THAT IN FACT GROUND FLOOR HAD BEEN CONSTRUCTED IN 1999. ON RECEIPT OF THE ASSESSMENT ORDER, THE ASSESSEE WAS SHOCKED AND TAKE N ABACK TO SEE THE ADDITION SO MADE. HE IMMEDIATELY COMMUNICATED W ITH THE CONCERNED AUTHORITIES IN RESPECT OF THE LETTER ISSUED FOR GRA NT OF SEWER CONNECTION AND TO FURTHER CLARIFY AS TO WHEN THE DWELLING UNIT WAS COMPLETED. THE ESTATE OFFICER GMADA, MOHALI HAS SINCE VIDE LETTER NO. 17356 DATED 09.12.2011 PLACED IN THE PAPER BOOK AT PAGE ANN. 9 CLARIFIED AS UNDER: 4 'IT IS INFORMED THAT TIME EXTENSION FOR THE CONSTRU CTION OF HOUSE WAS GRANTED UP TO 31-12-1999 FOR WHICH THE REQUIRED EXTENSION FEE HAS BEEN RECEIVED FROM YOU. SINCE ONE LIVING UN IT ON GROUND FLOOR WAS COMPLETED BY YOU WITHIN THE EXTENDED TIME LIMIT I.E. 31-12-1999 SEWER CONNECTION WAS SANCTIONED AND PERM ISSION TO OCCUPY THE SAME WAS GIVEN BY THIS OFFICE VIDE LETTE R NO. PUDA/SO(B)-1/99/5797 DATED 30-12-1999.' FURTHER, THE ASSESSEE HAD COMPLETED ONE DWELLING UN IT ON THE GROUND FLOOR IN 1999 IS EVIDENT FROM THE FACT THAT COMPLET ION CERTIFICATE IN FORM D WAS OBTAINED FROM THE APPROPRIATE AUTHORITY ON 30.1 2.1999 WHICH WAS ISSUED BY THE ESTATE OFFICER, PUDA, MOHAL I. PERUSAL OF THE LETTER WOULD SHOW THAT THE ASSESSEE WAS ACCORDED PE RMISSION FOR THE OCCUPATION AND USE OF THIS HOUSE AS WAY BACK ON 30. 12.1999. COPY OF THE SAME IS PLACE AT ANN. 10 OF THE PAPER BOOK. THI S IS SUFFICIENT EVIDENCE TO REFUTE THE HYPOTHETICAL STAND BASED ON SOME COMMON KNOWLEDGE TAKEN BY THE ASSESSING OFFICER THAT NO CO NSTRUCTION WAS DONE PRIOR TO 31.12.1999. HERE IS A DOCUMENT FROM T HE CONTEMPORANEOUS RECORD OF A GOVERNMENT OFFICE WITH THE TITLE 'PERMI SSION. FOR OCCUPANCY OF THE BUILDINGS' WHICH SHOWS THAT THE BU ILDING ON GROUND FLOOR WAS COMPLETE IN ALL RESPECTS AND WAS F IT TO OCCUPY AND LIVE. BOTH THE LETTERS ARE BEING PLACED AS ADDITIONAL EVI DENCE BEFORE YOUR GOODSELF WHICH ARE FROM THE RECORD OF THE GOVERNMEN T. THE SAME COULD NOT BE EARLIER FOR WANT OF PROPER OPPORTUNITY AS TH E ASSESSEE COULD NOT ANTICIPATE THAT THE ASSESSING OFFICER WOULD NOT AGR EE WITH THE SUBMISSIONS OF THE ASSESSEE. AS SUCH, IT IS PRAYED THE SAME MAY BE ADMITTED FOR ADJUDICATION OF THE INSTANT APPEAL AS THESE DOCUMENTS GO TO THE ROOT OF THE MATTER. IT IS MOST HUMBLY MENTIONED HERE THAT THE SEWERAGE CONNECTION IS ALLOWED WHEN AT LEAST ONE LIVING UNIT IS COMPLETE A S HAS BEEN DONE IN THE INSTANT CASE. THE ASSESSING OFFICER HAS BASED HIS F INDING ONLY THE BASIS OF SOME COMMON KNOWLEDGE WHICH IS NO MORE THAN SUSPICI ON. IT IS A TRITE LAW THAT SUSPICION HOWSOEVER GRAVE CANNOT TAKE THE PLACE OF PROOF WHICH HAS SINCE BEEN PLACED ON RECORD IN RESPECT OF COMPLETION OF GROUND 5 FLOOR OF THE PROPERTY SOLD BY THE ASSESSEE. IT IS T HEREFORE ADDITION MADE ON SUSPICION, SURMISES AND CONJECTURES BY DELETED.' 4. THE SUBMISSIONS FILED BY THE ASSESSEE WITH DOCUMENTS WERE FORWARDED TO THE ASSESSING OFFICER F OR HIS COMMENTS AND HE HAS REITERATED THE PORTIONS FROM TH E ASSESSMENT ORDER WITHOUT REBUTTING THE SUBMISSIONS OF THE ASSESSEE. THE LEARNED CIT (APPEALS) CONSIDERING T HE MATERIAL ON RECORD AND THE REPORT OF THE ASSESSING OFFICER D ELETED THE ENTIRE ADDITION. HIS FINDINGS IN APPELLATE ORDER IN PARAS 3.3 TO 3.3.1 ARE REPRODUCED AS UNDER : 3.3 1 HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER HAS MADE THE ADDITIO N MAINLY BECAUSE THE APPELLANT COULD NOT FURNISH ANY EVIDENCE IN SUPPORT OF CONSTRUCTION CARRIED OUT UPTO 31.12.1999 AND THAT SEWERAGE CONNECTION WAS GIVEN BY PUDA ON 30.12.1999 AND PUDA HAD ASKED THE APPELLANT TO PAY EXTENSION FEE FOR THE PER IOD 1993 TO 1999 VIDE COMMUNICATION DATED 8.12.1999. THE ASSESSING OFFICER HAS CONCLUDED THAT EXTENSION FEE IS CHARGED ONLY IF CONSTRUCTION WAS NOT CARRIED OUT. 3.3.1 THE ASSESSING OFFICER ASKED THE APPELLANT TO PRODUCE THE EVIDENCE REGARDING CONSTRUCTION CARRIED OUT UPTO 31 .12.1999 AND THE APPELLANT HAD PRODUCED THE VALUATION REPORT FOR TOTAL CONSTRUCTION CARRIED OUT UPTO F.Y. 2007-08, BUT THE S AME HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER. THE ASSESSING OFFICER SHOULD NOT EXPECT T HAT AN ASSESSEE COULD MAINTAIN BILLS FOR CONSTRUCTION CARR IED PUT MORE THAN 10 YEARS AGO. THE EVIDENCES PRODUCED BY THE AP PELLANT ARE RELEVANT TO THE GROUNDS OF APPEAL, SINCE ASSESSI NG OFFICER HAD NOT GRANTED SUFFICIENT OPPORTUNITY TO THE APPELLA NT IN RESPECT OF THIS ISSUE AND SO THESE EVIDENCES WERE FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS, BUT THE ASSESSIN G OFFICER HAS, WITHOUT COMMENTING ON THESE EVIDENCES, MERELY REITER ATED SOME 6 PORTIONS FROM THE ASSESSMENT ORDER. THE APPELLANT H AD BEEN ISSUED A COMPLETION CERTIFICATE DATED 30.12.1999 IN FORM D, WHICH IS PERMISSION FOR OCCUPANCY OF THE BUILDING BY THE ESTATE OFFICER, PUDA, MOHALI AND SO IT CANNOT BE SAID THAT A PPELLANT HAD NOT MADE ANY CONSTRUCTION UPTO 30.12.1999. IN FACT, THE PERMISSION HAD BEEN ACCORDED FOR OCCUPATION OF THE HOU SE VIDE THIS LETTER OF THE ESTATE OFFICER. AFTER RECEIPT OF THE ASSESSMENT ORDER, THE APPELLANT HAD WRITTEN TO THE ESTATE OFFICER , GMADA, MOHALI WHO HAS ALSO CONFIRMED VIDE LETTER DATED 9.1 2.2011 THAT SINCE ONE LIVING UNIT HAD BEEN COMPLETED ON GROUND F LOOR WITHIN THE EXTENDED TIME LIMIT I.E. 31.12.1999 AND SO SEWE R CONNECTION WAS SANCTIONED AND PERMISSION TO OCCUPY THE HOUSE WAS GRANTED VIDE LETTER DATED 30.12.1999. IN NUTSHE LL, THERE IS SUFFICIENT EVIDENCE TO THE EFFECT THAT THE APPELLANT HAD CONSTRUCTED GROUND FLOOR OF THE HOUSE BY 31.12.1999 . THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT THE S EWERAGE CONNECTION WAS GRANTED BY PUDA ON 30.12.1999 AND SO NO CONSTRUCTION HAD BEEN CARRIED OUT BY THE APPELLANT TILL THAT DATE IS NOT CORRECT. THE CONCLUSION DERIVED BY THE ASSESSING OFFICER THAT EXTENSION FEE IS CHARGED ONLY WHEN NO CONSTRUCTION IS CARRIED OUT BY THE ALLOTTEE IS ALSO NOT CORRECT IN VIEW OF THE LETTER DATED 9.12.2011, CITED SUPRA. HENCE, THE ASS ESSING OFFICER WAS NOT RIGHT IN DISMISSING THE CLAIM OF TH E APPELLANT THAT IT HAD INCURRED AN EXPENDITURE OF RS. 23,00,00 0/- UPTO 31.12.1999 ON CONSTRUCTION AND IN MAKING ADDITION O F RS. 34,41,131/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. THE ADDITION MADE IS ACCORDINGLY DELETED. GROUNDS OF APPEAL NO. 2 T O 4 ARE ALLOWED. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LEARNED D.R FOR THE REVENUE RELIED UPON THE ORD ER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE LEARNED CIT (APPEALS) AND ALSO REFERRED TO ALL THE DOCUMENTS 7 FILED BEFORE THE LEARNED CIT (APPEALS) AS HAVE BEEN FILED IN THE PAPER BOOK. ON CONSIDERATION OF THE RIVAL SUBMISS IONS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE ASSESSEE HAS FILED VALUATION REPORT ALONGWITH SUPPO RTING DOCUMENTS TO SHOW THAT THE CONSTRUCTION WAS CARRIED OUT ON THE PROPERTY IN QUESTION. THE ASSESSEE ALSO FILED COMPLETION CERTIFICATE TO SHOW THAT THE ASSESSEE HAS BEEN GRAN TED PERMISSION FOR OCCUPANCY AND USE OF THE HOUSE IN QU ESTION. THE VALUATION REPORT SUBMITTED BEFORE THE ASSESSING OFFICER WAS NOT CONTROVERTED BY THE ASSESSING OFFICER. TH E MATTER PERTAINS TO 10 YEARS BACK, THEREFORE, THE LEARNED C IT (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER SHOULD NOT EXPECT THAT THE ASSESSEE COULD MAINTAIN BILLS FOR C ONSTRUCTION CARRIED OUT MORE THAN 10 YEARS AGO. THE EVIDENCES PRODUCED BY THE ASSESSEE WERE RELEVANT FOR THE PURPOSE OF DI SPOSAL OF THE MATTER IN QUESTION AND THAT ALL THE DOCUMENTS W ERE CONFRONTED AT APPELLATE STAGE TO THE ASSESSING OFFI CER BUT THE ASSESSING OFFICER DID NOT REBUT THE DOCUMENTS FILED BY THE ASSESSEE AND HAS NOT ADVERSELY COMMENTED UPON THE S AME. THE LEARNED CIT (APPEALS) CONSIDERING THE COMPLETIO N CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY WAS C ORRECTLY SATISFIED THAT IF THE ASSESSEE HAD NOT MADE ANY CON STRUCTION UPTO 30.12.1999, THE COMPLETION CERTIFICATE FOR PER MISSION TO OCCUPY THE BUILDING IN QUESTION WOULD NOT HAVE BEEN ISSUED IN FAVOUR OF THE ASSESSEE. THE ESTATE OFFICER, GMADA , MOHALI HAS ALSO CONFIRMED IN THEIR COMMUNICATION THAT ONE LIVING UNIT HAD BEEN COMPLETED ON GROUND FLOOR WITHIN THE EXTENDED TIME LIMIT I.E. 31.12.1999. THUS, THE ASSESSEE PR ODUCED 8 SUFFICIENT EVIDENCE AND MATERIAL BEFORE THE AUTHORI TIES BELOW TO SATISFY THAT THE CONSTRUCTION WAS CARRIED OUT BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. DURGA PRASAD MORE, 82 ITR 540 HELD THAT THE COURTS AND TRIBUNALS HAVE TO JUDGE ALL EVIDENCES BEFORE THEM B Y APPLYING THE TEST OF HUMAN PROBABILITIES . IN THIS CASE, THE ASSESSEE HAS PRODUCED SUFFICIENT MATERIAL BEFORE THE AUTHORITIES BELOW TO SATISFY THAT THE ASSESSEE HAS RAISED THE CONSTRUCTI ON WITHIN TIME AS EXPLAINED BEFORE THE AUTHORITIES BELOW. T HE LEARNED CIT (APPEALS) WAS, THEREFORE, JUSTIFIED IN DELETING THE ENTIRE ADDITION. WE, THEREFORE, DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT (APPEALS) IN DELETING THE ADDITION. ADMITTEDLY, THE APPEAL HAS NO MERIT AND IS ACCORDIN GLY, DISMISSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF AUGUST, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD AUGUST, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9