Smt Kavuta U Peerannavar , Hubli V. The Income Tax Officer Ward-1(3), Hubli

ITA 1221/BANG/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1090 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Cost of acquisition; Valuation report
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1 221 / BANG/201 7 ASSESSMENT YEAR : 2 0 09 - 10 SMT. KAVITA U PEERANNAVAR, GOVT. HIGH SCHOOL, HOSA GABBUR P.B. ROAD, HUBLI. PAN: AJIPP9616Q VS. THE ITO, WARD 1 (3), HUBLI. APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, CA RESPONDENT BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 13 .0 3 .2019 DATE OF PRONOUNCEMENT : 15 .0 3 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT (A), HUBLI DATED 06.02.2017 FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE SAME. THE IMPUGNED ORDER CONFIRMED BY THE CIT (A) BEING BAD IN LAW IS REQUIRED TO BE QUASHED. 2.1 IN ANY CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT (A) ACCEPTING THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE @ RS. 11, 60,000/- FOR 1,357 SQ. FT. AND ADOPT ESTIMATED COST OF CONSTRUCTION @ RS. 4,50,000/- FOR 1,357 SQ. FT.. (B) ALLOWING FULL EXEMPTION U/S 54 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE INVESTING ENTIRE AMOUNT OF COMPENSATION RECEIVED AND FURTHER TAKING LOAN FROM STATE BANK OF INDIA OF RS. 12,29,000/- 2.2 IN ANY CASE, THE COST OF CONSTRUCTION FOR THE RESIDENTIAL HOUSE (2001-02) ADOPTED BY THE LEARNED ASSESSING OFFICER IS ARBITRARY, AND ON ESTIMATE BASIS HENCE DELETED AND THE ASSESSEE'S COST TO BE ADOPTED. 3. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR AT LEAST THE ADDITION MADE BY NOT ALLOWING EXEMPTION U/S 54, ADOPTING LESS COST OF CONSTRUCTION THAN ACTUAL COST BE DELETED. ITA NO.1221/BANG/2017 PAGE 2 OF 4 3. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAINS OF RS. 17,81,419/- ARISING OUT OF THE COMPENSATION OF RS. 37,19,904/- RECEIVED ON ACQUISITION OF THE RESIDENTIAL PLOT AND HOUSE OF THE ASSESSEE BY THE KIADB, DHARWAD. THE AO HAS ALSO NOTED IN SAME PARA OF ASSESSMENT ORDER THAT ASSESSEE HAS CLAIMED INVESTMENT OF RS. 11.31 LAKHS AS INVESTMENT IN FDR UNDER CAPITAL GAIN ACCOUNTS SCHEME AND RS. 6.50 LAKHS AS INVESTED IN PURCHASE OF NEW RESIDENTIAL PLOT ON WHICH A RESIDENTIAL HOUSE IS BEING CONSTRUCTED. THE DISPUTE IN THE PRESENT CASE IS REGARDING THE CLAIM OF THE ASSESSEE THAT COST OF ACQUISITION OF THE RESIDENTIAL BUILDING FOR WHICH ASSESSEE HAS RECEIVED COMPENSATION FOR ITS ACQUISITION WAS RS. 11.60 LAKHS. BUT THE AO HAS HELD THAT THE SAME IS RS. 4.50 LAKHS. IN THIS MANNER, THE AO MADE COMPUTATION OF CAPITAL GAIN AT RS. 12,61,398/- AS AGAINST NIL LONG TERM CAPITAL GAIN COMPUTED BY THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN SUPPORT OF THE CLAIM MADE FOR ADOPTION OF COST OF THE RESIDENTIAL BUILDING ACQUIRED AT RS. 11.60 LAKHS. HE FURTHER SUBMITTED THAT THE AO HAS ADOPTED COST OF CONSTRUCTION OF THE RESIDENTIAL HOUSE AT RS. 4.50 LAKHS ON THIS VAGUE BASIS THAT COST OF CONSTRUCTION OF THE RESIDENTIAL HOUSE IS ONLY RS. 4.50 LAKHS IN SIMILAR CASE. HE SUBMITTED THAT NO SUCH DETAIL WAS CONFRONTED BY THE AO TO THE ASSESSEE AND THERE CANNOT BE EXACT SIMILARITY IN THE QUALITY AND TYPE OF CONSTRUCTION OF TWO RESIDENTIAL HOUSES EVEN IF SITUATED NEARBY. SHE ALSO SUBMITTED SOME ADDITIONAL EVIDENCE IN SUPPORT OF THE COST OF CONSTRUCTION IN THE FORM OF VALUATION REPORT BY WAY OF ADDITIONAL EVIDENCE AND SHE REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCE. 5. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE STRONGLY SUBMITTED THAT NO ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED AT THE PRESENT STAGE AND THE ORDER OF CIT(A) SHOULD BE CONFIRMED. ITA NO.1221/BANG/2017 PAGE 3 OF 4 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OUR CONSIDERED OPINION, THE BASIS ADOPTED BY THE AO FOR HOLDING THAT THE COST OF CONSTRUCTION OF RESIDENTIAL HOUSE IS ONLY RS. 4.50 LAKHS IS VERY VAGUE BECAUSE THE AO HAS SIMPLY STATED THAT IN A SIMILAR CASE FOR WHICH EVIDENCE IS AVAILABLE, COST OF CONSTRUCTION OF RESIDENTIAL HOUSE IS ONLY RS. 4.50 LAKHS. WE FIND FORCE IN THE SUBMISSION OF LD. AR OF ASSESSEE THAT AREA, TYPE AND QUALITY OF CONSTRUCTION OF TWO RESIDENTIAL HOUSES CANNOT BE IDENTICAL AND HENCE, WITHOUT ANY COMPARISON OF FACTORS SUCH AS AREA, TYPE AND QUALITY OF CONSTRUCTION, THE COST OF CONSTRUCTION OF ONE HOUSE CANNOT BE ADOPTED FOR SOME OTHER HOUSE ALSO. SINCE THERE IS NO DISCUSSION ON THIS ASPECT IN THE ORDER OF AO OR OF CIT(A), WE FEEL IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION AFTER PROVIDING DETAILS OF THAT HOUSE FOR WHICH COST OF CONSTRUCTION IS RS. 4.50 LAKHS AND FOR WHICH EVIDENCE IS AVAILABLE AS PER THE AO AND THE SAME SHOULD BE CONFRONTED TO THE ASSESSEE AND IF THE ASSESSEE IS ABLE TO ESTABLISH THAT BOTH THE HOUSES ARE NOT SIMILAR AND THE CASE OF THE ASSESSEE FOR ADOPTING A HIGHER VALUE IS REASONABLE THEN THE COST OF CONSTRUCTION OF THAT HOUSE CANNOT BE ADOPTED ON THIS VAGUE BASIS OF A DIFFERENT HOUSE. UNDER THESE FACTS, WE DO NOT FEEL IT NECESSARY TO DISCUSS AND DECIDE ABOUT ADDITIONAL EVIDENCE FOR WHICH REQUEST IS MADE BY THE LD. AR OF ASSESSEE BECAUSE ONCE WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION, THE ASSESSEE IS AT LIBERTY TO BRING ON RECORD ANY EVIDENCE OR DETAILS WHICH THE ASSESSEE WANTS TO BRING ON RECORD IN SUPPORT OF HER CLAIM. NEEDLESS TO SAY, THE AO SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. IN VIEW OF THIS DECISION, NO ADJUDICATION ON MERIT IS CALLED FOR AT THE PRESENT STAGE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH MARCH, 2019. /MS/ ITA NO.1221/BANG/2017 PAGE 4 OF 4 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.