ITO,Ward-35(3), Kolkata, Kolkata V. Smt. Lata Ben Patel, Kolkata

ITA 1025/KOL/2012

• Counselvise Citation: 102523514 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 09-07-2012
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD LD JCITSR DR
• Assessee Lawyers: GYAN RANJAN SAHA LD
• Keywords: Fair market value; Competent authority
• Section: 143(3)

Judgement Text

, A , INCOME TAX APPELLATE TRIBUNAL, BENCH- A KOLKATA ( ) BEFORE . , ! SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER '#$ /AND 1 & ' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER $( / ITA NO.1025/KOL/2012 A.Y 2006-07 I.T.O WARD 35(3), KOLKATA - #' - VERSUS - . SMT. LATA BEN PATEL PAN: AIMPP 4608H ( &* / APPELLANT ) ( +,&* / RESPONDENT ) $( / ITA NO.1026/KOL/2012 A.Y 2006-07 I.T.O WARD 35(3), KOLKATA - #' - VERSUS - . SMT. KUMUD BEN J. PATEL PAN: AFTPP7698P ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* .' / FOR THE APPELLANT /SHRI RAJENDRA PRASAD, LD.JCIT/SR.DR +, &* .' / FOR THE RESPONDENT: / SHRI GYAN.RANJAN.SAHA, ADVOCATE, LD.AR /'#0 1 2 /DATE OF HEARING : 05-02-2014 34 1 2 /DATE OF PRONOUNCEMENT:07-02-2014 5 / ORDER 1 &' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO.1025/KOL/2012 IS AN APPEAL FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XX, K OLKATA IN APPEAL NO. 171/CIT(A)- XX/WD.35(3)/2008-09/KOL DATED 24-04-2012 FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF SMT. LATA BEN PATEL AND ITA NO.1026/KOL/201 2 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-XX, KOLKATA IN APPEAL NO. 172/CIT(A)-XX/WD. 35(3)/2008-09/KOL DAT ED 24-04-2012 FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF SMT. KUMUD BEN J.PATEL. 2. AS THE ISSUES IN BOTH THE REVENUES APPEALS ARE IDENTICAL AND ARE INTER-CONNECTED, THE SAME ARE BEING DISPOSED OF BY THIS COMMON ORDER ITA NOS. 1025 & 1026/KOL/2012-SMT. LATA BEN PATEL/S MT. KUMUD BEN J.PATEL 2 3. SHRI RAJENDRA PRASAD, LEARNED JCIT/SR.DR REPRES ENTED ON BEHALF OF THE REVENUE AND SHRI GYAN RANJAN SAHA, ADVOCATE, LEARNED AR REPRESENTED ON BEHALF OF THE ASSESSEE. 4. IN THE REVENUE APPEAL IN ITA NO.1025/KOL/2012 F OR THE A.Y 2006-07, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- (I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.45,48 ,315/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AT RS.19, 07,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981 RELYING ON THE SUBMISSION OF THE ASSESSEE. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AT 19,07 ,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981 RELYING ON THE REPORT FROM A REGISTERED VALUER FURNISHED BY THE ASSESSEE DISREGA RDING THE FACT THAT ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 26.11.20 08 WHEREAS THE REGISTERED VALUER REPORT WAS OBTAINED ON 15.03.2010 WHICH CLEARLY SUBSTANTIATE THE ASSESSEES ATTEMPT TO INFLATE THE FMV AS ON 1 ST APRIL, 1981 WITH A VIEW TO REDUCE THE CAPITAL GAINS. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AS ON 1 ST APRIL, 1981 RELYING ON THE REPORT FROM A REGISTERED VALUER INSTEAD OF M AKING A REFERENCE TO THE DVO, WHO IS A COMPETENT AUTHORITY DISREGARDI NG THE FACT THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE ON 27 TH FEB. 1979 WITH BOOK VALUE OF RS.1,47,522/- BEING 25% SHARE OF THE ASSES SEE WHEREAS THE REGISTERED VALUER DETERMINED THE FMV AT 19,07,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN ALLOWING 50% OF THE EXPENSES ON ACCOUN T OF INCOME FROM OTHER SOURCES, DISALLOWED BY THE AO IN THE ASSESSME NT, WITHOUT VERIFYING THE NATURE OF EXPENSES AS TO WHETHER THEY WERE LAID OUT WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF EARNING SU CH INCOME. 5. IN THE REVENUE APPEAL IN ITA NO.1026/KOL/2012 F OR THE A.Y 2006-07, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- (I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.45,48 ,315/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AT RS.19, 07,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981 RELYING ON THE SUBMISSION OF THE ASSESSEE. ITA NOS. 1025 & 1026/KOL/2012-SMT. LATA BEN PATEL/S MT. KUMUD BEN J.PATEL 3 (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AT 19,07 ,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981 RELYING ON THE REPORT FROM A REGISTERED VALUER FURNISHED BY THE ASSESSEE DISREGA RDING THE FACT THAT ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 26.11.20 08 WHEREAS THE REGISTERED VALUER REPORT WAS OBTAINED ON 15.03.2010 WHICH CLEARLY SUBSTANTIATE THE ASSESSEES ATTEMPT TO INFLATE THE FMV AS ON 1 ST APRIL, 1981 WITH A VIEW TO REDUCE THE CAPITAL GAINS. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED BY ARBITRARILY ADOPTING THE FMV AS ON 1 ST APRIL, 1981 RELYING ON THE REPORT FROM A REGISTERED VALUER INSTEAD OF M AKING A REFERENCE TO THE DVO, WHO IS A COMPETENT AUTHORITY DISREGARDI NG THE FACT THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE ON 27 TH FEB. 1979 WITH BOOK VALUE OF RS.1,47,522/- BEING 25% SHARE OF THE ASSES SEE WHEREAS THE REGISTERED VALUER DETERMINED THE FMV AT 19,07,733/- BEING 25% SHARE OF THE ASSESSEE AS ON 1 ST APRIL, 1981. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN ALLOWING 50% OF THE EXPENSES ON ACCOUN T OF INCOME FROM OTHER SOURCES, DISALLOWED BY THE AO IN THE ASSESSME NT, WITHOUT VERIFYING THE NATURE OF EXPENSES AS TO WHETHER THEY WERE LAID OUT WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF EARNING SU CH INCOME. 6. IN REGARD TO GROUND NOS.(I) TO (IV) OF BOTH RE VENUES APPEALS, IT WAS SUBMITTED BY THE LEARNED JCIT/SR.DR THAT THESE WERE AGAINST THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE AO BY ARBITRARILY ADOPTING THE FAIR MARKET VALUE [FMV] AS ON 1-4- 1981 RELYING UPON THE SUBMISSIONS OF THE ASSESSEE. HE HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE AO. IT WAS THE SUBMISSION BY HIM THA T THE COMPUTATION OF CAPITAL GAINS AS MADE BY THE AO WAS LIABLE TO BE UPHELD. 7. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS SUBMITTED THAT THE PROVISIONS OF SECTION 55A(2)(B) OF THE I.T ACT 1961 HAD BEEN INVO KED BY THE AO AND DVOS REPORT HAD BEEN CALLED FOR. IT WAS THE SUBMISSION THAT AS THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF SECTION 55A OF THE ACT HAD NOT BEEN C OMPLIED WITH BY THE AO THE DVOS REPORT WAS NOT LIABLE TO BE CONSIDERED. IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. UMEDBHAI INTERNATIONAL P. LTD REPORTED IN (2011) 330 ITR 506 (CAL), THE ORDERS OF THE LD.CIT(A) ON THESE ISSUES WERE LIABLE TO BE SUSTAINED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE CONDITIONS PRESCRIBED IN SECTION 55A OF THE ACT HAVE NOT BEEN COMPLIED WITH BY THE AO, THE DVOS REPORT CANNOT BE CONSIDERED. CONSEQUENTLY, IN VIEW OF THE DECISION OF THE HONBLE ITA NOS. 1025 & 1026/KOL/2012-SMT. LATA BEN PATEL/S MT. KUMUD BEN J.PATEL 4 JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF UMEDBHAI INTERNATIONAL P. LTD (REFER TO SUPRA), THE FINDING OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED AND DOES NOT CALL FOR ANY INTERFERENCE. WE UPHOLD THE SAME. GROUND NOS.(I ) TO (IV) OF BOTH THE REVENUES APPEALS STAND DISMISSED. 9. IN REGARD TO GROUND NO. (V) OF BOTH THE REVENUE S APPEAL, IT WAS THE SUBMISSION BY THE LEARNED JCIT/SR.DR THAT IN THE COURSE OF ASSESS MENT THE AO HAD DISALLOWED THE EXPENSES REPRESENTING ACCOUNTING CHARGES, EXPENDIT URE A/C AND RETAINING FEES, WHICH WERE CLAIMED AS EXPENDITURE AGAINST THE COMPUTATIO N U/S. 57 OF THE ACT. IT WAS THE SUBMISSION THAT THE EXPENDITURE WERE NOT SHOWN TO B E WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF SUCH INCOME. IT WAS THE SUBMI SSION THAT THE LD.CIT(A) WAS WRONG IN ALLOWING SUCH CLAIM OF THE ASSESSEE TO THE EXTENT OF 50%. HE HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE AO. 10. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS V EHEMENTLY SUPPORTED THE ORDERS OF THE LD.CIT(A) ON THIS ISSUE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS BROUGHT OUT ADEQUATE REASONS FOR DISALLOWING OF SAID EXPENDITURE. A PERUSAL OF THE ORDER OF THE LD.CIT(A ) CLEARLY SHOWS THAT HE HAS ALLOWED THE EXPENDITURE ON AN ADHOC BASIS AND HAS NOT MET OUT T HE ISSUES RAISED BY THE AO. THE ASSESSEE HAS NOT SHOWN WHAT IS THE NATURE OF THE AC COUNTING CHARGES NOR THE EXPENDITURE A/C NOR THE RETAINING FEES. IN THE ABS ENCE OF ANY EVIDENCE IN RESPECT OF THE NATURE OF THE EXPENDITURE, THE SAME CANNOT BE ALLOW ED. IN THE CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE DELETION OF DISALLOWANCE TO THE E XTENT OF @50% BY THE LD. CIT(A) IS ERRONEOUS AND LIABLE TO BE REVERSED AND WE DO SO. G ROUND NO.5 OF BOTH THE REVENUES APPEALS STANDS ALLOWED. 12. IN THE RESULT, THE REVENUES APPEALS IN ITA N O. 1025 & 1026/KOL/2012 FOR THE ASSESSMENT YEAR 2006-07 STAND PARTLY ALLOWED AS ST ATED ABOVE. 5 / 6 /' 7 8 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 07/02 /2014 SD/- SD/- [ . , ! ] [ 1&' , ! ] [ ABRAHAM P.GEORGE, ACCOUNTANT MEMBER ] [GEORGE MATHAN, JUDICIAL MEMBER ] 2 / DATED 07/02 /2014 ITA NOS. 1025 & 1026/KOL/2012-SMT. LATA BEN PATEL/S MT. KUMUD BEN J.PATEL 5 * PRADIP SPS 5 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : I.T.O W 35(3) 18 RABINDRA SARAN I, PODDAR COURT, 3 RD FL., KOL-1. 2 +,&* / THE RESPONDENT- SMT. LATA BEN PATEL/SMT. KUMUD BEN J.PATEL 2 BRABOURNE ROAD, 3 RD FL., ROOM NO.5, KOL-1. 3 4. . .5' / THE CIT, .5' ( )/ THE CIT(A) 5 . #<.7 +.' / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, 5'// BY ORDER, $ /ASSTT REGISTRAR