Rajendra Gopalrao Manathkar, Nanded V. Income-tax Officer, Ward - 4, Nanded

ITA 1157/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1806 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1157/PUN/2018 / ASSESSMENT YEAR : 2013-14 RAJENDRA GOPALRAO MANATHKAR, S GIRIRAJ MOTORS, MAIN ROAD, HADGAON, DIST. NANDED-431712. PAN : AHYPM5973D . /APPELLANT VS. ITO, WARD-4, NANDED. . / RESPONDENT / APPELLANT BY : SHRI ABHAY AVCHAT / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 25.04.2019 / DATE OF PRONOUNCEMENT: 14.06.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, AURANGABAD DATED 05.04.2018 FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED INCOME TAX OFFICER, WARD 4, NANDED, HAS ERRED IN RE- OPENING THE ASSESSEES CASE AND RE-ASSESSING THE INCOME UNDER PROVISIONS OF SECTION 148 OF THE INCOME TAX ACT, 1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, AURANGABAD ERRED IN CONFIRMING THE SAME. 2. THE LEARNED INCOME TAX OFFICER, WARD 4, NANDED, HAS ERRED IN MAKING ASSESSMENT UNDER PROVISIONS OF SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 WITHOUT FOLLOWING DUE PROCESS OF LAW AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, AURANGABAD ERRED IN CONFIRMING THE SAME. 3. THE LEARNED INCOME TAX OFFICER, WARD 4, NANDED, HAS ERRED IN MAKING ON DISALLOWANCE OF RS 9,50,534/- TO THE RETURNED INCOME BY REJECTING THE ASSESSEES CLAIM FOR INDEXED COST OF IMPROVEMENT COST IN RESPECT OF CAPITAL GAIN ON SALE OF LAND, AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 1, AURANGABAD ERRED IN CONFIRMING THE SAME. ITA NO.1157/PUN/2018 - 2 - 4. THE ASSESSMENT ORDER DATED 28.12.2016 PASSED BY THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, AURANGABAD ERRED IN CONFIRMING THE SAME. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3. GROUNDS NO.1, 2 AND 4 ARE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME HEARING. THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.3 RELATES TO THE DISALLOWANCE OF RS.9,50,534/- MADE BY THE ASSESSING OFFICER QUA THE INDEXED COST OF IMPROVEMENT IN RESPECT OF THE CAPITAL GAINS ON SALE OF LAND. THE DISALLOWANCE WAS FURTHER CONFIRMED BY THE CIT(A). 5. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A JOINT OWNER OF LAND SINCE THE ASSESSMENT YEAR 1983-84. THE ASSESSEES FATHER AND MOTHER ARE THE CO-OWNERS OF THE SAID PROPERTY. THE ASSESSEES FATHER EXPIRED IN MAY, 2011, THEREBY THE ASSESSEE GOT 50% OWNERSHIP OF THE SAID LAND APART THROUGH HIS MOTHER, WHO OWNS OTHER 50%. THE SAID PROPERTY WAS FINALLY SOLD BY THE CO-OWNERS IN THE YEAR UNDER CONSIDERATION AND OFFERED THE SALE CONSIDERATION AS LONG TERM CAPITAL GAINS. WHILE COMPUTING THE CAPITAL GAINS, THE ASSESSEE CLAIMED INCURRING OF EXPENDITURE ON ACCOUNT OF COST OF IMPROVEMENT AMOUNTING TO RS.9,50,534/- IN HIS HANDS. SIMILARLY, THE OTHER CO-OWNER CLAIMED TO HAVE INCURRED EQUIVALENT SUM OF RS.9,50,534/- IN HER HANDS. IN SUPPORT OF THE SAME, THE ASSESSEE FILED THE COMPUTATION OF INCOME AS WELL AS THE ASSESSMENT ORDER DATED 18.12.2017 IN THE HANDS OF SMT. SHANTABAI GOPALRAO MANATHKAR ITA NO.1157/PUN/2018 - 3 - (MOTHER/CO-OWNER OF THE ASSESSEE). THE ASSESSING OFFICER PARTLY ALLOWED THE CLAIM OF COST OF IMPROVEMENT AND THE BENEFIT OF INDEXATION THEREON WHILE MAKING THE ASSESSMENT DATED 18.12.2017 IN HER CASE. IN THE PRESENT CASE, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE THE SAID DISALLOWANCE OF RS.9,50,534/- ON ACCOUNT OF INDEXED COST OF IMPROVEMENT IN RESPECT OF THE CAPITAL GAINS ON SALE OF LAND. THE CIT(A) CONFIRMED THE SAME. 6. AGGRIEVED WITH THE DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUND NO.3 7. BEFORE ME, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DENIAL OF ENTIRE CLAIM OF COST OF IMPROVEMENT IS UNSUSTAINABLE IN LAW WHEN HIS CO- OWNER (MOTHER) GOT PART RELIEF IN HER CASE AS GRANTED BY THE DEPARTMENT. BRINING MY ATTENTION TO PAGE 19 OF THE PAPER BOOK, LD. COUNSEL SUBMITTED THAT MOST OF THE PAYMENTS ARE MADE BY THE ASSESSEE TO THE GOVERNMENT AUTHORITIES BY WAY OF DDS TO THE DISTRICT MINING OFFICER TOWARDS SAND ETC. AND THE SAME BEING MATERIAL USED FOR CONSTRUCTION, SHOULD BE ALLOWED AS COST OF IMPROVEMENT AFTER GRANTING THE BENEFIT OF THE INDEXATION. PRINCIPLE OF PARITY QUA HIS MOTHERS CASE IS PLEADED BEFORE ME. REFERRING TO THE ASSESSEES NAME IN THE VOUCHERS, THE DEFICIENCY POINTED BY THE LD. DR OF REVENUE, LD. COUNSEL SUBMITTED THAT THE FATHER OF THE ASSESSEE WAS MANAGING THE DEVELOPMENT ACTIVITIES OF THE LAND AND, THEREFORE, BEING ELDER MEMBER OF THE FAMILY, HIS NAME APPEARED ON THE FACE OF THE BILLS/EVIDENCES. THEREFORE, THE SAME SHOULD NOT BE THE REASON FOR DENIAL OF BENEFIT OF COST OF IMPROVEMENT. FURTHER, HE SUBMITTED THAT THE ORDER OF THE ASSESSING ITA NO.1157/PUN/2018 - 4 - OFFICER IN THE CASE OF ASSESSEES MOTHER AND THE COMPUTATION OF INCOME ON THE CAPITAL GAINS ARE PLACED FIRST TIME BEFORE THE TRIBUNAL. HE PLEADED THAT THESE PAPERS/EVIDENCES ARE BE ADMITTED AND THE ISSUE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 8. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 9. ON HEARING BOTH THE SIDES AND CONSIDERING THE ASSESSEES REQUEST FOR REMANDING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AFTER ADMITTING THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF CO-OWNER/MOTHER OF THE ASSESSEE ALONG WITH THE INCOME PARTICULARS FOR THE YEAR UNDER CONSIDERATION, I FIND THE ASSESSING OFFICER SHOULD BE PARTLY ALLOWED THE CLAIM OF THE ASSESSEE AFTER INDEXATION ON ACCOUNT OF COST OF IMPROVEMENT. 10. FURTHER, ON THE VOUCHERS BY WAY OF PAPER BOOK FURNISHED BEFORE ME, I FIND SOME OF THE PAYMENTS ARE FOUND PAID TO THE GOVERNMENT AUTHORITIES ALTHOUGH THE PAYMENTS ARE SHARED BY THE NAME OF OTHER CO-OWNERS OF THE PROPERTY. IN MY CONSIDERED VIEW, CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE, SUCH TYPE OF HYPER-TECHNICAL APPROACH OF THE ASSESSING OFFICER IS NOT PROPER. FURTHER, I FIND, IN THE COMBINED FAMILIES, THE FATHERS NAME NORMALLY APPEARS ON THE VOUCHERS THAT TO, WHEN HE IS ALSO THE CO-OWNER OF THE PROPERTY. THEREFORE, IN MY VIEW, THE CLAIM SHOULD BE ACCEPTED TOWARDS COST OF IMPROVEMENT AND SHOULD ALSO BE INDEXED AS PER LAW. WITH THESE OBSERVATIONS, I AM OF THE OPINION THE ENTIRE MATTER QUA COST OF IMPROVEMENT NEED TO BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ITA NO.1157/PUN/2018 - 5 - ADJUDICATION. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THE GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 14 TH DAY OF JUNE, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 14 TH JUNE, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, AURANGABAD; 4. THE CCIT, NASHIK; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE