Shri Piyushbhai S. Kapadia, Ahmedabad V. The ACIT, (OSD), Circle-11, Ahmedabad

ITA 121/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8150 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Keywords: Cost of acquisition
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER PIYUSH S. KAPADIA 5/B, GIRIKUNJ SOCIETY OPP. SHARDA NAGAR POST OFFICE, PALDI, AHMEDABAD PAN: AEZPK7767H (APPELLANT) VS THE ACIT (OSD), CIRCLE - 11 AHMEDABAD (RESPONDENT) REVENUE BY : S H RI SAUR ABH SINGH , SR. D . R. ASSESSEE BY: S H RI HARDIK VORA , A.R. DATE OF HEARING : 10 - 05 - 2 018 DAT E OF PRONOUNCEMENT : 25 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOU NTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , ARISES FROM ORDER OF THE CIT(A) - XV I, AHM EDABAD DATED 22 - 09 - 2014 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1.1 THAT THE LEARNED HONORABLE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5,05,000/ - IN RESPECT OF EXPENDITURE INCURRED ON THE PROPERTY SOLD DURING THE YEAR. 1.2 THAT THE VARIOUS REASONS ADVANCED BY ID. CIT(A) IN CONFIRMING THE ADDITION ARE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD. 1.3 THE APPELLANT RESPECTFULLY SUBMITS THAT HE HAS INCURRED EXPENDITURE OF RS. 4,60,500/ - ON ALTERATION OF PROPERTY. WHILE THE DISALLOWANCE IS MADE FOR RS. 5,05,500/ - . 1.4 THE AP PELLANT HAS INCURRED EXPENSES ON THE PROPERTY SOLD DURING THE YEAR. THE EXPENDITURE IS SUPPORTED BY BILLS AND EVIDENCES. THE APPELLANT THEREFORE SUBMITS THAT THE EXPENDITURE OF RS. 4,60,500/ - BE ALLOWED WHILE COMPUTING SHORT TERM CAPITAL GAIN ON SALE OF PR OPERTY. THE APPELLANT FURTHER SUBMITS THAT HE HAS INCURRED BROKERAGE OF RS. I T A NO . 121 / A HD/20 15 A SSESSMENT YEAR 2009 - 10 I.T.A NO. 121 /AHD/20 15 A.Y. 2009 - 10 PAGE NO PIYUSHBHAI S. KAPADIA VS. ACIT 2 45,000/ - WHICH IS SUPPORTED BY RECEIPTS ISSUED BY BROKER. THE PAYMENT IS MADE BY CHEQUE ONLY. THE APPELLANT THEREFORE SUBMITS THAT THE EXPENDITURE ON BROKERAGE BE ALLOWED WHILE COM PUTING THE SHORT TERM CAPITAL GAIN. 3. ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE INTER - CONNECTED, SO, THEY ARE ADJUDICATED TOGETHER FOR THE SAKE OF CONVENIENCE BY THIS COMMON ORDER. 4 . IN THIS CASE, RETURN OF INCOME, DECLARING INCOME OF RS. 11 ,54, 9 90/ - WAS FILED ON 30 TH SEP, 2009. SUBSEQUENTLY, THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY BY I SSUING OF NOTICE U/S. 143(2) ON 27 TH AUGUST, 2010. 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED T H AT ASSESSEE HAS SOLD PROPERTY SITUATED AT BUNGALOW N O. 16 AT DEV KUTIR BUNGALOW - II, VILLAGE MOGE, AMBLI, BOPAL AHMEDABAD AT RS. 70 LACS 6 TH AUGUST , 2008 AS PER THE SALE DEED. THE SAID PROPERTY WAS JOINTLY HELD BY THE ASSESSEE WITH HIS BROTHER SHRI BIPUL KUMAR SUMANLAL KAPADIA. THE ASSESSING OFFICER CLAIMED EXPENSES TOW ARDS ALTERCATION O F THE SOLD PROPERTY. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH THE BILL AND SUPPORTING MATERIAL TO SUBSTANTIATE THE GENUINENESS OF THE CLAIM AND EXPENSES. THE ASSESSING OFFICER HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE AFTER MAKING REFERENCE TO THE STATEMENT OF MR. AMARNATH DATTA, BUYER OF T HE PROPERTY WHO HAS STATED THAT AFTER PURCHASING THE PROPERTY FROM THE ASSESSEE , HE HAS SPENT RS. 10 LACS ON THE RENOVATION . REGARD ING THE CLAIM OF THE ASSES SEE OF EXPENSES OF RS. 78,000/ - SPENT ON INSTALLIN G THE MAIN GATE AT THE BUNGALOW, T HE ASSESSING OFFICER HAS STATED THAT ON SPOT VERIFICATION, THE INSPECTOR HAS REPORTED THAT NO SUCH GATE WAS INSTALLED AT THE BUN GALOW. THE ASSESS ING OFFICER CONCLUDED THAT ASSESSEE ALSO COULD NOT PROVE GENUIN ENESS OF OTHER EXPENDITURE , THEREFORE, T HE ASSESSING OFFICER HAS DISALLOWED A N AMOUNT OF RS. 5,05 , 000/ - . 6 . AGAINST THE DECISION OF ASSESSING OFFICER, ASSESSEE FILED APPEAL BEFORE THE LD. CI T(A). T HE LD. CIT(A) HAS SUSTAINED THE ADDITION. THE FINDINGS OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - I.T.A NO. 121 /AHD/20 15 A.Y. 2009 - 10 PAGE NO PIYUSHBHAI S. KAPADIA VS. ACIT 3 6.2 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. IT IS SEEN FROM THE ASSESSMENT ORDER TH AT THE BUYER HAS CATEGORICALLY STATED THAT THE RENOVATION AND CONSTRUCTION WORK IN THE BUNGALOW UNDER QUESTION WERE MADE BY HIM. HE HAS ALSO IN HIS STATEMENT LISTED OUT THE WORK CARRIED OUT AND THE AMOUNTS SPENT ON THE SAME. FURTHER, THE BILLS PRODUCED BY THE APPELLANT ARE ALSO PROVED TO BE UNRELIABLE SINCE ONE OF THE BILLS OF RS. 78,000/ - WAS FOUND TO BE FAKE. NOWHERE DURING ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS HAS THE APPELLANT GIVEN ANY JUSTIFICATION OR MADE ANY CLARIFICATION REGARDING THIS FA KE BILL OF RS. 78,000/ - , WHICH CLEARLY IMPLIES THAT HE HAS NOTHING TO SAY IN HIS DEFENCE AND IS ACCEPTING THE DECISION OF THE A O IN THIS REGARD. THE APPELLANT HAD STATED IN HIS SUBMISSION MADE DURING APPELLATE PROCEEDINGS THAT AT THE TIME OF EXECUTION OF THE SALE DEED OF THE BUNGALOW THERE WERE DIFFERENCES OF OPINION BETWEEN HIM AND THE BUYER BECAUSE OF WHICH THE PRESENT OWNER MADE THE STATEMENT REGARDING HIS HAVING INCURRED THE RENOVATION AND CONSTRUCTION EXPENSES. HOWEVER, THERE IS NOTHING TO SUBSTANTIAT E THIS CLAIM OF THE APPELLANT AND NEITHER IS THERE ANYTHING ON RECORD TO DISPROVE THE STATEMENT MADE BY THE PRESENT OWNER. MERE PRODUCTION OF BILLS, SOME OF WHICH HAVE BEEN FOUND TO BE BLATANTLY BOGUS, IS NO INDICATION THAT THE ACTUAL CONSTRUCTION WORK IN THE BUNGALOW HAS BEEN CARRIED OUT BY THE APPELLANT. I THEREFORE FIND NO REASON TO INTERFERE WITH THE FINDING OF THE A O AND THE DISALLOWANCE OF RS. 5,05,500/ - IS CONFIRMED. GROUND OF APPEAL NO. 3 IS DISMISSED . 7 . DURING THE COURSE OF APPELLATE PROCEEDING S BEFORE US, THE LD. COUNSEL HAS SUBMITTED PAPER BOOK CONTAINING DETAILS OF SUBMISSION MADE BEFORE THE ASSESSING OFFICER AND CIT(A) ALONG WITH SHOW CA USE NOTICE , BILL AND VOUCHER OF EXPENSES AND COPY OF SALE DEED ETC. HE HAS CONTEND ED THAT T H E LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION WITHOUT DISPROVING THE CLAIM OF THE EXPENSES SUPPORTED WITH RELEVANT MATERIAL. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF THE LOWER AUTHORIZES. 8 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAD CLAIMED EXPENSES ON SALE OF PROPERTY OF RS. 5 ,0 5 , 000/ - WHICH THE ASSESSING OFFICER HAS DISALLOWED ON THE BASIS OF STATEMENT OF BUYERS OF THE PROPERTY AND REPORT OF INSPECTOR IN RESPECT OF VERIFICATION O F PART OF THE EXPENDITURE. ON PERUSAL OF THE MATERIAL ON RECOR D , WE NOTICED THAT T H E ASSESSEE HAD SOLD BUNGALOW NO. 16 AT DEV KUTIR, B H OPAL, AHMEDABAD FOR RS. 70 LA CS ON 06 - 06 - 2008 IN WHICH THE ASSESSEE WAS HAVING 50% SHAREHOLDING . W HILE SHOWING THE CAPITAL GAIN OF RS. 14,94,500/ - , THE ASSESSEE HAD CLAIMED THE FOLLOWING EXPENSES : - BROKER AGE RS. 45 , 000/ - EXPENSES ON ALTERCATION RS. 460,500/ - I.T.A NO. 121 /AHD/20 15 A.Y. 2009 - 10 PAGE NO PIYUSHBHAI S. KAPADIA VS. ACIT 4 THE ABOVE EXPENSES HAS BE E N CLAIMED OVER AND ABOVE THE COST OF ACQUISITION OF RS. 15 LACS T O WA R DS THE ASSSESSEE S SHA RE OF OWNERSHIP IN THE SOLD PROPERTY , WE FIND THAT OUT OF THE AFORESAID EXPENSE S, THE ASSESSEE HAS CLAIMED RS . 78 , 000/ - EXP ENSES FOR INSTALLING MAIN GATE WITH WEIGHT OF RS. 1250 KG. AT THE BUNGALOW. T HE ASSESSING OFFICER HAS MADE VERIFICATION AND FOUND THAT NO SUCH BILL ISSUING PERSON WAS EXISTED AT THE GIVEN ADDRESS. FUR THER, TH E ASSESSING OFFICER DEPUTED INCOME TAX INSPECTOR FOR VERIFICATION AT T HE BUNGALOW W H O HAD REPORTED THAT NO SUCH MAIN GATE WAS INSTALLED AT THE BUNGALOW. ON PERUSAL OF THE RECORD , WE OBSERVE THAT THE ASSESSEE COULD NOT CONTROVERT THESE SPECIFIC FINDINGS OF THE ASSESSING OFFICER , THE REFORE, WE UPHOLD THE DISALLOWANCE OF THIS PART OF THE EXPENSE S . 8 .1 REGARDING REMAINING EXPENSE S , W E FIND THAT T H E ASSESSING OFF ICER HAS SIMPLY DISALLOWED THE CLAIM ON THE GROUND THAT THE BUYER OF THE BUNGALOW HAS SPENT RS. 10 LACS ON THE RENOVATION W ORK OF THE BUNGALOW . W E OBSERVE THAT THE ASSE SSING OFFICER HAS NOT EXAMINED SUPPORTING BILLS/VOUCHERS IN RESPECT OF RENOVATION WORK CARRIED OUT AT T H E BUNGALOW . IN VIEW OF THE ABOVE, WE CONSIDER IT WILL BE APPROPRIATE TO RESTORE THE ISSUE OF CLAIM OF RE MAI NI NG EXPENS ES OF RS. 4,27,000/ - (RS. 5 ,0 5 , 00 0 / - - RS. 78,000/ - ) TO THE FIL E OF THE ASSESSING OFFICER FOR DECID ING AFRESH AFTER VERIFICATION OF SUPPORTING MATERIAL AND AFTER AFFORDING ADEQUATE OPPORTUNITIES TO THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PR ONOUNCED IN THE OPEN C OURT ON 25 - 05 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 25 /05 /2018 I.T.A NO. 121 /AHD/20 15 A.Y. 2009 - 10 PAGE NO PIYUSHBHAI S. KAPADIA VS. ACIT 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,