Sri Y.Ramanjaneyulu (HUF), Kurnool V. ITO,Ward-1, Kurnool

ITA 1068/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7665 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Assessee Lawyers: K NEERAJA
• Keywords: Gift; Additional evidence; Cost of acquisition; Fair market value
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 1068/HYD/2014 ASSESSMENT YEAR 2010-11 SRI Y. RAMANJANEYULU (HUF), KURNOOL PAN: AAAHY1321E VS THE INCOME TAX OFFICER WARD-1 KURNOOL APPELLANT RESPONDENT APPELLANT BY: SMT. K. NEERAJA RESPONDENT BY: SRI B. RAMA KRISHNA DATE OF HEARING: 25 .0 9 .2014 DATE OF PRONOUNCEMENT: 25 .0 9 .2014 ORDER PER P. MADHAVI DEVI, JM: THIS APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A)-IV, HYDERABAD DATED 7.3.2014 FOR ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE COMPUTATION O F CAPITAL GAINS BY THE ASSESSING OFFICER BY ADOPTING THE COST OF ACQUISITION AS ON 1.4.1981 IN ACCORDANCE WITH TH E SRO'S CERTIFICATE AND ALSO IN CONFIRMING THE ADDITI ON OF CASH CREDITS OF RS. 20,63,500 U/S. 68 OF THE INCOME -TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR A.Y. 201 0-11 2 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== ADMITTING THE INCOME OF RS. 93,856 UNDER THE HEAD L ONG TERM CAPITAL GAINS. DURING THE ASSESSMENT PROCEEDI NGS U/S. 143(3) OF THE ACT, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE CLAIMED TO HAVE SOLD 58.4 CENTS OF VAC ANT PLOT OF LAND AT SY. NO. 96, MAMIDALAPADU VILLAGE, K URNOOL DISTRICT ON 1.8.2009 WHICH WAS STATED TO HAVE BEEN GIFTED TO HIM BY HIS FATHER THROUGH REGISTERED GIFT DEED D ATED 9.8.2000 AND THE SAID PROPERTY WAS ACQUIRED BY ASSESSEE'S FATHER PRIOR TO 1981. WHILE WORKING OUT THE LONG TERM CAPITAL GAINS, THE ASSESSEE TOOK THE VALU E OF THE LAND AT RS. 8,00,000 AS ON 1.4.1981 AND WORKED OUT THE INDEXED COST OF ACQUISITION. THE ASSESSING OFFICER , THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN THE BAS IS FOR ADOPTING THE VALUE OF THE LAND AT RS. 8 LAKHS AS ON 1.4.1981. THE ASSESSEE COULD NOT FURNISH THE BASIS FOR ADOPTION OF THE VALUE OF THE LAND AT RS. 8 LAKHS. THE ASSESSING OFFICER, THEREFORE, ASCERTAINED FROM THE SRO, KURNOOL VIDE HIS OFFICE LETTER DATED 18.12.2012. T HE SUB- REGISTRAR, KURNOOL VIDE CERTIFICATE DATED 10.1.2013 INTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 IN THE SAME SY. NO. I.E., SY. NO. 96 (PLOT NO. 52) TO BE RS. 1,00,000 PER ACRE (100 CENTS) AS PER THE REGISTERED DOCUMENT NO. 860/1981. THE ASSESSING OFFICER, THEREFORE, WORKED OUT THE COST PER CENT OF LAND AT SY. NO. 96 AS ON 1.4.1981 AT RS. 1000 AND WORKED OU T THE COST OF ACQUISITION OF THE PROPERTY AS ON 1.4.1981 AT RS. 58,400. THE ASSESSEE'S EXPLANATION AS TO WHY THE F AIR MARKET VALUE AS FURNISHED BY THE SRO SHOULD NOT BE ADOPTED WAS CALLED FOR. IN RESPONSE, THE ASSESSEE FILED A LETTER ACCEPTING THE VALUE ADOPTED BY THE SRO, KURN OOL. IN VIEW OF THE SAME, THE AO ARRIVED AT THE INDEXED COST OF ACQUISITION AT RS. 3,69,088, COST OF COMPOUND WALL AT RS. 3 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== 2,72,144 AND ARRIVED AT THE LONG TERM CAPITAL GAINS AT RS. 47,80,768. 4. AGGRIEVED BY THE COMPUTATION OF LONG TERM CAPITAL GAINS AS ABOVE BY THE ASSESSING OFFICER, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THOUGH THE ASSESSEE HAS ERRONEOUSLY ACCEPTED THE COMPUTATI ON OF THE COST OF LAND AS ON 1.4.1981 AS PER THE CERTIFIC ATE FURNISHED BY THE SRO, THE ASSESSEE WISHES TO DISTIN GUISH THE NATURE OF LAND OF THE ASSESSEE WITH THAT OF THE LAND FOR WHICH THE SRO HAS GIVEN CERTIFICATE. HE SUBMITTED THAT THE LAND IN SRO'S CERTIFICATE WAS AGRICULTURAL LAND WHICH WAS MEASURED IN ACRES WHILE THE ASSESSEE'S PLOT OF LAND WAS DEVELOPED AND SOLD IN TERMS OF CENTS. THEREFOR E, THE COMPARISON OF ASSESSEE'S LAND WITH THE AGRICULTURAL LAND WAS NOT JUSTIFIED. THE CIT(A) HELD THAT THE ASSESS EE HAS ACCEPTED THE SRO VALUE BEFORE THE AO AND, THEREFORE , THERE IS NO REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, SHE CONFIRMED AO'S COMPUTATION OF CAPI TAL GAINS. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEF ORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE THE CIT(A), SUBMITTED THAT THE ASSESSEE WAS UNDER ERRONEOUS IMPRESSION THAT THE SRO CERTIFICATE WAS C ORRECT AND, THEREFORE, DID NOT CONTEST THE SAME BEFORE THE ASSESSING OFFICER BUT SUBSEQUENTLY, IT WAS FOUND TH AT THE NATURE OF ASSESSEE'S LAND WAS TOTALLY DIFFERENT FRO M THE NATURE OF THE LAND FOR WHICH THE SRO HAS GIVEN THE CERTIFICATE AND, THEREFORE, THE ASSESSEE HAS CONTES TED THE SAME BEFORE THE CIT(A). IT WAS FURTHER SUBMITTED T HAT IT WAS A KNOWN FACT THAT THE ACTUAL MARKET VALUE OF TH E 4 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== PROPERTY IS MOSTLY HIGHER THAN THE REGISTERED VALUE OF THE PROPERTY AND, THEREFORE, REGISTERED VALUE CANNOT BE TAKEN AS THE FAIR MARKET VALUE OF THE PROPERTY. ACCORDING TO HER, THE VALUE REPORTED BY THE SRO IS NOT CORRECT. 6. THE LEARNED DR, ON THE OTHER HAND, WHILE SUPPORTING THE ORDER OF THE ASSESSING OFFICER, SUBM ITTED THAT THE ASSESSEE HAD HIMSELF AGREED TO ADOPT THE V ALUE AS CERTIFIED BY THE SRO AND, THEREFORE, CANNOT AGITATE THE SAME BEFORE THE CIT(A) AS ALSO THE TRIBUNAL. 7. HAVING REGARD TO THE CONTENTIONS OF BOTH THE PARTIE S AND MATERIAL ON RECORD, WE FIND THAT THE SAID PROPE RTY WAS ACQUIRED BY ASSESSEE'S FATHER PRIOR TO 1981 AND, TH EREFORE, FOR DETERMINING THE COST OF ACQUISITION OF THE SAID PROPERTY, THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 IS TO BE ADOPTED. THE ASSESSEE HAS ESTIMA TED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.198 1 OF THE SAID LAND AT RS. 8 LAKHS BUT THERE IS NO BASIS FOR ARRIVING AT SUCH A FIGURE. THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN NOT ACCEPTING ASSESSEE'S CONTENTION. HOWE VER, THE ASSESSING OFFICER WHILE ADOPTING THE FAIR MARKET VA LUE AS 1.4.1981, HAS TO ASCERTAIN THE FAIR MARKET VALUE ON THE BASIS OF COMPARABLES IN THE SAME LOCALITY. FOR THI S PURPOSE, THE ASSESSING OFFICER IS NOT ONLY REQUIRED TO ASCERTAIN THE MARKET VALUE OF THE PROPERTY IN THE S AME LOCALITY AND, IF POSSIBLE, IN THE SAME SY. NO., BUT HAS ALSO TO SEE THE NATURE OF PROPERTY AND NATURE OF TRANSAC TION FOR ARRIVING AT THE MARKET VALUE. IT IS THE ASSESSEE'S CONTENTION THAT THE PROPERTY FOR WHICH THE SRO HAS REPORTED THE FAIR MARKET VALUE WAS AGRICULTURAL LAN D WHEREAS THE PROPERTY SOLD BY THE ASSESSEE WAS A FUL LY 5 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== DEVELOPED PIECE OF LAND. THEREFORE, THE NATURE OF PROPERTY IS DIFFERENT AND THE FAIR MARKET VALUE OF SUCH PROP ERTY WILL ALSO BE DIFFERENT. IN SUCH CIRCUMSTANCES, THE FAIR MARKET VALUE OF THE AGRICULTURAL LAND CANNOT BE ADOPTED AS FAIR MARKET VALUE OF ASSESSEE'S PLOT OF LAND. THUS, WE ARE OF THE OPINION THAT THE VALUE ADOPTED BY THE ASSESSING OFFICER IS ALSO INCORRECT. 8. IN VIEW OF THE SAME, WE SET ASIDE THE ORDER OF THE AO AND REMAND THE ISSUE BACK TO THE FILE OF THE ASSESS ING OFFICER WITH A DIRECTION TO OBTAIN FAIR MARKET VALU E OF THE LAND FOR SIMILARLY PLACED PROPERTIES AS ON 1.4.1981 AND ASSESSEE IS PERMITTED TO FILE SUCH EVIDENCE AS IS N ECESSARY TO SUGGEST THE CORRECT FAIR MARKET VALUE OF HIS PRO PERTY AS ON 1.4.1981 AND AFTER CONSIDERING THE SAME, THE ASSESSING OFFICER SHALL ARRIVE AT THE FAIR MARKET V ALUE OF THE PROPERTY AS ON 1.4.1981 AND COMPUTE THE LONG TE RM CAPITAL GAINS IN ACCORDANCE WITH LAW. 9. THE NEXT GROUND IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER U/S. 68 OF A SUM OF RS. 20,63 ,500. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSE SSEE HAS CONSTRUCTED A BUILDING IN HIS INDIVIDUAL CAPACITY A ND WHILE EXAMINING THE SOURCE FOR INVESTMENT MADE IN T HE SAID BUILDING, IT WAS EXPLAINED THAT THE INVESTMENT IN THE CONSTRUCTION HAD BEEN MADE OUT OF WITHDRAWALS FROM THE BOOKS OF THE HUF, I.E., THE ASSESSEE HEREIN. THE A SSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF INVESTMENT. THE ASSESSEE STATED THAT THE INVESTMENT IN THE CONSTRUC TION HAD BEEN MADE OUT OF WITHDRAWALS FROM THE BOOKS OF THE HUF, THE SOURCES OF WHICH WAS STATED TO BE THE SALE PROCEEDS OF LAND AND ADVANCE OF RS. 20,63,500 FOR 6 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== CONTRACT WORKS RECEIVED BY THE HUF. THE ASSESSEE W AS THEN ASKED TO FURNISH THE DETAILS OF PERSONS FROM W HOM AMOUNTS WERE RECEIVED FOR PERFORMING CONTRACT WORKS . IN RESPONSE, THE ASSESSEE VIDE HIS LETTER DATED 6.3.20 13 STATED THAT HE HAS RECEIVED TWO CHEQUES ON TWO DIFF ERENT DATES AND THE SAME WERE DEPOSITED IN SAVINGS BANK ACCOUNT WITH AXIS BANK. THE ASSESSING OFFICER, THE REFORE, REQUIRED THE ASSESSEE TO FURNISH DETAILS OF PERSONS AND ALSO FURNISH LETTERS FROM THE CREDITORS. THE ASSES SEE COULD NOT FURNISH THE SAME. THEREFORE, THE ASSESSI NG OFFICER TREATED THE SAME AS NOT EXPLAINED AND MADE THE ADDITION U/S. 68 OF THE ACT. 10. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND ALSO FILED COPIES OF CHEQUES AND BANK STATEMENT OF THE ASSESSEE AS WELL AS CONFIRMATION L ETTERS FROM THE CREDITORS AND PRAYED FOR ADMISSION OF THE ADDITIONAL EVIDENCE AND ADJUDICATION OF THE ISSUE THEREAFTER. THE CIT(A), HOWEVER, REFUSED TO ADMIT THE ADDITIONAL EVIDENCE ON THE GROUND THAT THE SAME WAS NOT FILED BEFORE THE ASSESSING OFFICER IN SPITE OF OPPO RTUNITIES GIVEN TO THE ASSESSEE. SHE, THEREAFTER, CONFIRMED THE ADDITION U/S. 68 OF THE ACT. AGGRIEVED, THE ASSESS EE IS IN SECOND APPEAL BEFORE US. 11. HAVING HEARD BOTH THE PARTIES AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE CASH CREDITS BY LETTER DATED 14.3.2013 AND THE ASSESSMENT WAS COMPLETED ON 22.3.2013 WHICH SHOWS THAT TIME GIVEN TO THE ASSESSEE TO FURNISH NECESSARY DETAILS MAY NOT HAVE BEEN SUFFICIENT. HOWEVER, SINCE THE 7 ITA NO. 1068/HYD/2014 SRI Y. RAMANJANEYULU (HUF) ====================== DETAILS WERE FURNISHED BEFORE THE CIT(A) IN THE APPEA L PROCEEDINGS, THE CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE AND CONSIDERED THE SAME BEFORE CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL EVIDENCE AND REMAND THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO DECISION IN ACCORDANCE WITH LAW. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 25 TH SEPTEMBER, 2014 SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED THE 25 TH SEPTEMBER, 2014 TPRAO COPY TO: 1. SRI Y. RAMANJANEYULU (HUF), D. NO. 40 - 301, BHAGYA NAGAR, KURNOOL. 2. THE INCOME TAX OFFICER, WARD - 6(4), KURNOOL. 3. THE CIT(A) - IV, HYDERABAD. 4. THE CIT - III, HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.