SHRI BHAWANI SINGH, ALWAR V. INCOME TAX OFFICER, WARD-1-3, ALWAR

ITA 1297/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2080 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-03-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA JCIT DHK
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Salary income; Additional evidence; Cost of acquisition; Fair market value
• Section: 143(3); 50C; 131; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 1297/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2008-09 SHRI BHAWANI SINGH, MOHALLA- SHIVPURA, KADAL GANJ, ALWAR. CUKE VS. ITO, WARD 1(3), ALWAR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AFGPS 7360 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. ANURADHA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/03/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 19/06/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 04/09/2018 FOR THE A.Y. 2008-09 IN THE MATTER OF ORDER PASSED U/S 148 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING AN ADDITION OF RS. 13,73,716/- MADE BY THE AO ON ACCOUNT OF SHORT-TERM CAPITAL GAIN BY ADOPTING THE DEEMED SALE CONSIDERATION U/S 50C AT RS.13,73,176/- AS AGAINST THE ACTUAL CONSIDERATION OF RS.8,50,000/- WITHOUT REFERRING TO THE DVO. ITA 1297/JP/2018 BHAWANI SINGH VS ITO 2 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ABOVE ADDITION WITHOUT ALLOWING THE DEDUCTION OF RS.7 LACS ON ACCOUNT OF COST OF ACQUISITION AND RS.22,000/- ON ACCOUNT OF TRANSFER EXPENSES. 1.2 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE CLAIM OF DEDUCTION OF RS.7 LACS ON ACCOUNT OF COST OF ACQUISITION OF THE PROPERTY ONLY ON THE GROUND THAT PURCHASE AGREEMENT IN SUPPORT OF THE CLAIM COULD NOT BE PRODUCED BY IGNORING OTHER CONTEMPORARY EVIDENCES FURNISHED IN SUPPORT OF THE SAME AND ALSO FOR THE REASON THAT EVIDENCE OF SOURCE OF INVESTMENT IS NOT PRODUCED WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSEE AND IGNORING THAT SOURCE OF SUCH INVESTMENT IS REFLECTED IN THE BALANCE SHEET FILED BY THE ASSESSEE. 1.3 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE CREDIT OF INCOME OF RS.1,28,000/- ALREADY DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME ON ACCOUNT OF THE SALE OF PLOT WHILE CONFIRMING THE ABOVE ADDITION. 2. THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL. 3. NECESSARY COST BE AWARDED TO THE ASSESSEE.' 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS HAVING INCOME FROM SALARY AND OTHER SOURCES. DURING THE YEAR ASSESSEE SOLD A PLOT NO.G-1-197-A, MIA, ALWAR TO M/S S INTERNATIONAL VIDE SALE DEED DATED 03.08.2007 FOR CONSIDERATION OF RS.8,50,000/-. ON SUCH SALE OF PLOT, HE DECLARED SHORT TERM CAPITAL GAIN OF RS.1,28,000/- SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES IN COMPUTATION OF INCOME. DURING THE COURSE OF ASSESSMENT, STATEMENT OF ASSESSEE WAS RECORDED U/S 131 OF THE ACT ON 23.02.2016 WHEREIN AT ITA 1297/JP/2018 BHAWANI SINGH VS ITO 3 QUESTION NO.2 (REPRODUCED AT PG 4 OF ASSESSMENT ORDER) THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF RS.1,28,000/- DISCLOSED UNDER THE HEAD OTHER INCOME IN THE RETURN, IN RESPONSE TO WHICH ASSESSEE STATED THAT THIS INCOME WAS EARNED ON SALE OF PLOT AT MIA. THE INCOME FROM SALE OF PLOT IS WORKED OUT AS UNDER:- SALES CONSIDERATION RS.8,50,000/- LESS:- COST OF ACQUISITION RS.7,00,000/- LESS:- COST OF TRANSFER EXPENSES RS.22,000/- GAIN ON SALE OF PLOT RS.1,28,000/- 3. IN THE ASSESSMENT ORDER, THE AO OBSERVED THAT SUB-REGISTRAR HAD ASSESSED THE VALUE OF PROPERTY AT RS.13,73,716/- WHICH SHOULD BE CONSIDERED FOR CAPITAL GAIN PURPOSE. FURTHER THE ASSESSEE HAS FAILED TO PRODUCE EVEN SINGLE DOCUMENT IN RESPECT OF TRANSFER EXPENSES AND COST OF ACQUISITION. ACCORDINGLY, HE WORKED OUT THE SHORT-TERM CAPITAL GAIN AT RS.13,73,716/- AND MADE ADDITION OF THE SAME WITHOUT GIVING CREDIT OF RS.1,28,000/- ALREADY DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 4. BEFORE THE LD. CIT(A), VIDE LETTER DATED 06.02.2018, THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCES UNDER RULE 46A OF IT RULES TO SUBSTANTIATE HIS CLAIM OF COST OF ACQUISITION. THE LD. CIT(A) CALLED FOR REMAND REPORT. IN REMAND REPORT DATED 22.05.2018 AO SUBMITTED THAT ASSESSEE HAS NOT PRODUCE THE COPY OF PURCHASE AGREEMENT, THEREFORE, THE COST OF ACQUISITION CLAIMED BY ASSESSEE IS NOT SUBJECT TO VERIFICATION. ITA 1297/JP/2018 BHAWANI SINGH VS ITO 4 FURTHER, ASSESSEE HAS NOT FILED ANY EXPLANATION REGARDING SOURCE OF INVESTMENT OF RS.7 LACS. THUS, EVEN IF AMOUNT OF RS.7 LACS IS TREATED AS INVESTED BY THE ASSESSEE IN PURCHASE OF PROPERTY, THEN SOURCE OF INVESTMENT REMAINED UNEXPLAINED AND NECESSARY ADDITION SHOULD BE MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTY. THE REJOINDER TO THE REMAND REPORT WAS FILED BY THE ASSESSEE VIDE LETTER DATED 17.08.2018. HOWEVER, THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT ASSESSEE DOES NOT HAVE ANY PURCHASE AGREEMENT/ DEED IN SUPPORT OF THE CLAIMS MADE. DURING REMAND PROCEEDINGS THE ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE DOCUMENTS/ EVIDENCE IN SUPPORT OF SOURCE OF INVESTMENT IN THE PURCHASE OF PROPERTY INVOLVED. THUS, NO DEDUCTION ON ACCOUNT OF COST OF ACQUISITION IS ALLOWABLE IN ABSENCE OF ANY PROOF/ EVIDENCE OF THE SAME HAVING BEEN INCURRED. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 5. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE AO IN COMMUTING THE CAPITAL GAIN HAS NOT ALLOWED THE DEDUCTION ON ACCOUNT OF COST OF ACQUISITION OF RS.7 LACS AND ON ACCOUNT OF TRANSFER EXPENSES OF RS.22,000/- FOR THE REASON THAT PURCHASE AGREEMENT/ EVIDENCE OF EXPENSES IN SUPPORT OF THE CLAIM HAS NOT BEEN PRODUCED. IT IS SUBMITTED ITA 1297/JP/2018 BHAWANI SINGH VS ITO 5 THAT THOUGH THE AGREEMENT TO SALE IS NOT AVAILABLE WITH THE ASSESSEE BUT THE FACT THAT AT THE TIME OF PURCHASE OF THE PROPERTY FROM SH. SATPAL SINGH, ASSESSEE EXECUTED 3 DOCUMENTS, I.E. AGREEMENT TO SALE, POA AND THE WILL IS EVIDENT FROM THE REGISTER MAINTAINED BY THE NOTARY PUBLIC SH. RAMESH CHAND GUPTA WHERE ALL THESE 3 DOCUMENTS ARE DULY ENTERED AT ENTRY NO.27, 28 & 29 OF THE REGISTER. THIS FACT IS NOT DENIED BY THE LOWER AUTHORITIES. AT ENTRY NO.27, THE FACT OF SALES CONSIDERATION OF RS.7 LACS IS RECORDED. THIS PROVES THAT ASSESSEE PURCHASED THE PROPERTY FROM SH. SATPAL SINGH FOR RS.7 LACS AND THEREFORE, THE SAME BE DIRECTED TO BE CONSIDERED AS COST OF ACQUISITION IN WORKING OUT THE CAPITAL GAIN. SO FAR AS TRANSFER EXPENSES OF RS.22,000/- IS CONCERNED, THE FACT OF INCURRING SUCH EXPENDITURE IS EVIDENT FROM THE REGISTERED POA WHERE THE EXPENDITURE ON STAMP DUTY AND REGISTRATION CHARGES OF RS.15,090/- IS RECORDED. THE REMAINING EXPENDITURE OF RS.6,910/- IS IN RESPECT OF EXECUTION OF THE DOCUMENTS LIKE SALE AGREEMENT, WILL AND NOTARY CHARGES AS IS EVIDENT FROM THE REGISTER OF NOTARY. THEREFORE, EXPENDITURE OF RS.22,000/- INCURRED BY THE ASSESSEE BE DIRECTED TO BE ALLOWED. 6. THE LD AR FURTHER CONTENDED THAT THAT ASSESSEE HAS MADE PAYMENT OF THIS AMOUNT TO SH. SATPAL SINGH OUT OF SALE PROCEEDS OF PLOT SOLD TO M/S S.INTERNATIONAL FOR RS.8,50,000/-. THIS FACT IS EVIDENT FROM ITA 1297/JP/2018 BHAWANI SINGH VS ITO 6 THE STATEMENT OF ASSESSEE RECORDED U/S 131 OF IT ACT ON 23.02.2016 WHERE IN REPLY TO Q.NO.7 (REPRODUCED AT PG 5 OF ASSESSMENT ORDER) ASSESSEE STATED THAT THE AMOUNT RECEIVED FROM THE SALE OF PLOT WAS GIVEN TO SH. SATPAL SINGH. THIS FACT IS NOT CONTROVERTED BY THE AO BY BRINGING ANY MATERIAL ON RECORD AND THUS, THE SOURCE OF INVESTMENT IS ALSO FULLY EXPLAINED. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE A.O. HAS ASSESSED FAIR MARKET VALUE OF THE PROPERTY U/S 50C AT RS. 13,73,716/- WITHOUT REFERRING THE MATTER TO THE DVO. I ALSO OBSERVE THAT PAYMENT OF RS. 7.00 LACS TO SHRI SATPAL SINGH WAS MADE OUT OF SALE PROCEEDS OF PLOT TO M/S S.INTERNATINOAL FOR RS. 8.50 LACS. THIS FACT IS EVIDENT AS PER STATEMENT RECORDED BY THE A.O. U/S 131 OF THE ACT ON 23/02/2016. HOWEVER, ALL THESE FACTS WERE NOT CONSIDERED BY THE A.O., THEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ENTIRE APPEAL IS RESTORED BACK TO THE FILE OF THE A.O. FOR DECIDING AFRESH AFTER CONSIDERING THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE EVEN DURING REMAND PROCEEDING BEFORE THE LD. CIT(A) AND ALSO OBTAINING REPORT FROM THE DVO. I DIRECT ACCORDINGLY. ITA 1297/JP/2018 BHAWANI SINGH VS ITO 7 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2019. SD/- JES'K LH 'KEKZ (RAMESH C SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKA D@ DATED:- 19 TH JUNE, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI BHAWANI SINGH, ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O. WARD 1(3), ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1297/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR