Shri Pravinbhai Mafatlal Joshi, Ahmedabad V. The Income tax Officer,Ward-13(3), Ahmedabad

ITA 1039/AHD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6363 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice; Cost of acquisition; Fair market value
• Section: 143(3); 6; 263

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.1039/AHD/2013 (ASSESSMENT YEAR : 2008-09) SHRI PRAVINBHAI MAFATLAL JOSHI, 2, ANURAG FLATS, NR. BHAIRAVNATH MAHADEV, MANINAGAR, AHMEDABAD 380 028 / VS. ITO, WARD 13(3), AHMEDABAD. ! ./ '#$# ./ PAN/GIR NO. : ACBPJ 8790 K ( %&!' / APPELLANT ) .. ( (!' / RESPONDENT ) %&!' ) / APPELLANT BY : SHRI S. N. DIVETIA, AR (!' * ) / RESPONDENT BY : SHRI SURENDRA KUMAR, SR.D.R. + , * -. / DATE OF HEARING 20/12/2017 /012 * -. / DATE OF PRONOUNCEMENT 02/01/2018 # 3 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VII, AHMEDABAD , DATED 08/03/2013 FOR ASSESSMENT YEAR (A.Y.) 2008-09, ON T HE FOLLOWING: 1.1 THE ORDER PASSED U/S.263 ON 08.03.2013 FOR A.Y. 2008-09 BY CIT, ABAD-VII, ABAD REVISING THE ASSTT. U/S.143 (3) MAD E BY AO IS ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 2 - WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD.CIT HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ORDER OF ASSTT. PASSED U/S.143(3) ON 19.10 .2010 BY AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE SO THAT THE PROCEEDINGS INITIATED U/S.263 WERE JUSTIFI ED. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT OUGHT NOT TO HAVE REVISED THE ORDER OF A SSTT. PASSED U/S.143(3) ON 19.10.2010 BY AO, SINCE IT WAS NEITHE R ERRONEOUS OR PREJUDICIAL AND AO HAD PASSED IT AFTER MAKING EN QUIRY AND TAKING ONE OF THE POSSIBLE VIEWS. 3.1 THE LD.CIT HAS ERRED IN HOLDING THAT (I) THE QU ANTUM OF SHARE OF THE APPELLANT IN THE PROPERTY SOLD (II) THE YEAR OF ACQUISITION AND ITS INDEXATION (III) THE COST OF IMPROVEMENT BY WAY OF PAYMENT TO SLUMS AND HUTMENTS (IV) REFUND OF RS.39 LAKHS PAID ON 18.03.2008 AS PER SAUDA CHITTI DUE TO CANCELLATION OF DEED WERE REQUIRED TO BE VERIFIED. IT IS, THEREFORE, PRAYED THAT THE ORDER PASSED BY T HE CIT MAY KINDLY BE CANCELLED. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E, RETURN OF INCOME WAS FILED ON 29/01/2009 DECLARING TOTAL INCOME OF R S.3,22,080/- FOR A.Y. 2008-09. THE CASE WAS SELECTED FOR SCRUTINY AS PER CASS AND CONSEQUENTLY THE ASSESSMENT U/S.143(3) WAS FINALIZE D ON 19/10/2010 AT TOTAL ASSESSED INCOME AT RS.3,36,730/-. THE ORDER P ASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF REVENUE AS THE AO HAS FINALIZED THE ASSESSMENT W ITHOUT PROPER INQUIRY ON VITAL ISSUES. ON GOING THROUGH THE SAID ASSESSME NT ORDER, IT HAS BEEN FOUND THAT THE FOLLOWING ISSUES OF INCOME WERE NOT EXAMINED BY THE ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 3 - ASSESSING OFFICER BEFORE COMPLETION OF ASSESSMENT U /S.143(3) FOR WHICH DETAILED ORDER U/S.263 ISSUED ON DATE 28/08/2012 & 22/02/2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE DAUGHTER O F THE ASSESSEE MS DEEPTI JOSHI HAS ATTENDED FROM TIME TO TIME AND FIL ED SUBMISSIONS ALONG WITH DOCUMENTS IN SUPPORT OF HER CONTENTIONS. ON VERIFICATION OF CASE RECORDS AND DOCUMENTS IT IS SEEN THAT THE ASSESSEE AND HIS FAMILY HAS SOLD PROPERTY AND RECEI VED TOTAL CONSIDERATION OF RS.59,06,350/- ON 17/03/2008 OUT OF WHICH ASSESS EE'S SHARE WAS 1/6 TH IN THE SAID CONSIDERATION I.E. RS.9,84,390/-. FURTH ER ON VERIFICATION OF SALE DEED, IT WAS NOTICED THAT THE PROPERTY WAS PURCHASE D ON 06/07/1999 AND SAID PROPERTY WAS REGISTERED BY HE SUB-REGISTRAR OF FICE, SURAT AT SR.NO.19852 AND THAT IS WHY IT CANNOT BE SAID THAT THE PROPERTY WAS HELD BY THE ASSESSEE PRIOR TO 06.07.1999 BECAUSE THE ASS ESSEE DID NOT HAVE ANY LEGAL TITLE IN PROPERTY NOR THERE IS ANY EVIDENCE O F ACTUAL POSSESSION BEFORE THE 06.07.1999. AS PER EXPLANATION (II) TO S EC. 48 OF THE ACT FOR THE PURPOSE OF THIS SECTION 'INDEXED COST OF ACQUIS ITION' MEANS AN AMOUNT WHICH BEARS TO THE COST OF ACQUISITION THE S AME PROPORTION AS COST OF INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION FOR THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 1981 WHICHEVER IS LATER,' IN THIS CASE, ASSESSEE SHOULD HAVE CONSI DERED THE COMPUTATION OF INDEXED COST OF ACQUISITION ON RS.50,000/- FOR THE YEAR 1999-2000 (I.E. 1 ST YEAR IN WHICH THE PROPERTY IS HELD BY THE ASSESSES. ) ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 4 - COST OF ACQUISITION INFLATION INDEX FOR 1999-2000 3 89 COST OF INFLATION INDEX FOR 2007-08 (I.E. YEAR IN WHICH THE ASSET IS TRANSFERRED) 551 INDEXED COST OF ACQUISITION (RS.50000 * 551 * 389) 70,823 AS AGAINST, ASSESSEE HAS CLAIMED INDEX COST OF ACQU ISITION 2,75,500 THIS HAS RESULTED INTO UNDER ASSESSMENT OF INCOME U NDER THE HEAD CAPITAL GAINS OF RS.2,04,677/- (RS.2,75,000 - 70,82 3) AND THEREBY SHORT LEVY-OF CAPITAL GAINS AFTER INDEXATION @ 20% PLUS E DUCATION CESS AND INTEREST U/S.234B RS. 2,530; U/S.234C RS.13,870/-. TOTAL SHORT LEVY OF TAX AND INTEREST COMES TO RS.58,563/-. THE AO HAD TO VE RIFY THIS ISSUE THOROUGHLY BEFORE COMPLETING THE ASSESSMENT. IT IS FURTHER NOTICED THAT THE PROPERTY IN QUESTION WAS PURCHASED BY SMT. BAKULABEN WIFE OF THE ASSESSEE & THEREAFTER TH ERE IS A CORRECTION MADE & THE PROPERTY IN REGISTERED IN THE NAME OF 5 MORE FAMILY MEMBERS JOINTLY WHICH ALSO INCLUDES THE ASSESSEE. THIS ISSU E HAS REMAINED UNVERIFIED HENCE, FACTS ARE NOT REFLECTED IN THE AS SESSMENT ORDER. THE ASSESSEE HAD CLAIMED THAT THE PROPERTY IN QUEST ION WAS ACQUIRED BY HIM BY WAY OF A SAUDA CHITHY ON 03/07/1 980 AND SUBSEQUENTLY REGISTERED IN THE YEAR 2008. THIS IS M ENTIONED IN PARA/PAGE 10 OF THE SALE DEED - 'ACQUIRED AS PER BANAKHAT ON 03/07/1980 PAID FROM THE FAMILY FUND,' IT IS ALSO MENTIONED IN THE SALE DEED THAT THE SAID PLOT CONTAINED ZUPADAS AND FOR REMOVAL OF THE SAME AMOUN TS PAID AS PER SURAT CIVIL JUDGE COURT ORDERS. THE CONTENTION OF ASSESSE E WAS ACCORDINGLY ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 5 - ACCEPTED WITHOUT SUPPORTING FOR INDEXATION OF COST INFLATION INDEX FOR THE YEAR 1981, WHILE FINALIZING THE ASSESSMENT. IN THE SAME YEAR THE ASSESSEE HAS PURCHASED ANOTHER PROPERTY VALUING TO RS.70,00,000/- (RUPEES SEVENTY LACKS ONL Y) THROUGH A SAUDA CHITTI WHICH IS FOUND ON RECORD. THE ASSESSEE HAS M ADE A PAYMENT OF RS.39,00,00/- (RUPEES THIRTY NINE LACKS ONLY) ON 18 /03/2008 AND AS PER SAUDA CHITTI HE IS TO MAKE THE REMAINING PAYMENT BY 30/06/2009. THE ASSESSEE HAS SUBMITTED THAT THIS AGREEMENT TO SALE DID NOT MATERLISE & THE AMOUNT OF RS.39,00,000/- WAS RECEIVED BACK BY THE A SSESSEE. THE AO HAD TO VERIFY THIS ISSUES THOROUGHLY. AFTER TAKING INTO CONSIDERATION ALL SUBMISSIONS, TH E FACTS AND LEGAL POSITION, IN MY VIEW THE ORDER DATED 19/10/2010 PAS SED UNDER SECTION 143(3) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEA R 2008-09 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN EXERCISE OF POWERS CONFERRED ON ME UNDER THE PROVISIONS OF SECT ION 263 OF THE I.T. ACT, 1961, THE ASSESSMENT ORDER DATED 19/10/2010 IS SET ASIDE. 3. AGAINST THE SAID ORDER ASSESSEE IS BEFORE US. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN THIS CASE, THE APPELLANT IS AN INDIVIDUAL AND DERIV ES INCOME BY WAY OF PENSION, INTEREST ETC. HE HAD FILED HIS RETURN OF I NCOME FOR A.Y.2008-09 DECLARING TOTAL INCOME OF RS.3,22,080/-. THE AO COM PLETED REGULAR ASSTT. ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 6 - U/S.143(3) ON THE TOTAL INCOME OF RS.3,36,730/- AFT ER CALLING FOR VARIOUS DETAILS AND DUE VERIFICATION OF THE MATERIAL ON REC ORD. LATER ON, THE LD. CIT ISSUED SHOW CAUSE NOTICE U/S. 263 PROPOSING TO REVISE THE ORDER OF REGULAR ASSTT. ON THE GROUND THAT THE SAID ASSESSMENT WAS COMPLETED WITHOUT MAKING PROPER INQUIRY AS TO T HE CORRECT QUANTUM OF CAPITAL GAINS AND CORRECT HANDS IN WHICH IT WAS CHARGEABLE. IT WAS MENTIONED THAT THERE WAS NO EVIDENCE ON RECORD TO E STABLISH THE QUANTUM OF COST OF ACQUISITION AND COST OF IMPROVEMENT SO T HAT IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS STATED BY TH E APPELLANT THAT PROPERTY WAS PURCHASED FROM JOINT FAMILY FUNDS UNDER AN AGRE EMENT DATED 03.07.1980 FOR RS.64,750/- FROM MANJULABEN D/O. MAG ANLAL NARAYANDAS AND EVEN POSSESSION WAS ALSO TAKEN. THEREFORE, THE COST OF ACQUISITION OF THE SAID PROPERTY SHOULD BE TAKEN AT ITS FMV AS ON 01.04.1981 AT RS.1,50,000/- AND INDEXATION SHOULD BE DONE ACCORDI NGLY. THE APPELLANT HAD ALSO CLAIMED BY WAY OF COST OF IMPROVEMENT RS.3 ,25,000/- JOINTLY INCURRED BY THE FAMILY MEMBERS TOWARDS REMOVAL OF S LUM AND HUTMENTS ON THIS LAND DURING 01.04.1989 TO 31.03.1991. ON TH E OTHER HAND CIT HAS STATED THAT THE SAID PROPERTY WAS PURCHASED ON 06.0 7.1999 AS STATED IN THE SALE DEED SO THAT THE TITLE WAS ACQUIRED ON 06.07.1 999 AND INDEXATION WAS TO BE MADE ON THE BASIS OF F.Y. 1999-2000 BY TAKING THE COST OF ACQUISITION AT RS.50,000/-. 5. WE SET ASIDE THE ORDER OF THE LD. CIT AND REMIT THIS MATTER BACK TO THE FILE OF THE AO TO EXAMINE WHETHER APPELLANT WAS IN POSSESSION OF ITA NO.1039 /AHD/2013 SHRI PRAVINBHAI MAFATLAL JOSHI VS. I TO A.Y. 2008-09 - 7 - PROPERTY ON 03/07/1980 OR WAS NOT. THE APPELLANT IS ALSO DIRECTED TO FILE THE RELEVANT DOCUMENTS IN SUPPORT OF HIS CONTENTION BEFORE THE AO AND THEREAFTER, MATTER WILL BE DECIDED BY THE AO AS PER LAW. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/01/2018 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/01/2018 ! ' / COPY OF THE ORDER FORWARDED TO : 1. %&!' / THE APPELLANT 2. (!' / THE RESPONDENT. 3. 67- # # + 8- / CONCERNED CIT 4. # # + 8- (%&) / THE CIT(A) 5. 9:; -67 , # %&. %672 , % / DR, ITAT, AHMEDABAD 6. ;< =, / GUARD FILE. # $ / BY ORDER, (9&- - //TRUE COPY// %/$ &' ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD