B.Balmanga, Secunderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 140/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7559 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 14-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: BHUPESH KUMAR D
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 50C; 142(1); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMEBR ITA NO. 140/HYD/2018 ASSESSMENT YEAR: 2009-10 SMT. B. BALMANGA, 1-2-31, TEMPLE ALWAL, SECUNDERABAD. PAN AERPB3754P VS. ITO WARD 15(1), HYDERABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI BHUPESH KUMAR D REVENUE BY : SHRI NILANJAN DEY DATE OF HEARING : 14-02-2019 DATE OF PRONOUNCEMENT : 18-04-2019 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10, AGAINST THE ORDER OF THE LD. CIT(A)-7, HYDERABAD DATED 16.11.2017. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL HAS SOLD A RESIDENTIAL PROPERTY FOR A CONSIDERATION OF RS. 11,02,500/-. THE A.O RECEIVED THE INFORMATION THAT THE MARKET VALUE OF THE PROPERTY ON WHICH THE STAMP DUTY IS PAID IS RS. 13,20,000/-. ON VERIFICATION, THE A.O FOUND THAT THE ASSESSEE HAS NOT FILED HER RETURN OF INCOME FOR THE A.Y 2009-10. SINCE, THE CAPITAL GAIN ON SALE OF PROPERTY CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICES U/S 148 OF 2 ITA.NO. 140/HYD/2018 SMT. BALAMANGA., SECUNDERABAD. THE ACT AND NOTICES U/S 142(1) AND 143(2) OF THE ACT WERE ISSUED. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE FILED HER RETURN OF INCOME ON 30.06.2016, ADMITTING TOTAL INCOME OF RS. 3,95,660/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O VERIFIED THE RETURN OF INCOME AND FOUND THAT THE ASSESSEE HAS SHOWN THE SALE CONSIDERATION AT RS. 13,20,000/- AND FROM THE SAME CLAIMED COST OF ACQUISITION AT RS. 42,500/-, COST OF IMPROVEMENT AT RS. 3,75,000/- MADE IN THE YEAR 1994 AND CLAIMED INDEXATION OF THE SAME AND ALSO CLAIMED TRANSFER EXPENSES TO ARRIVE AT CAPITAL GAIN OF RS. 3,13,160/-. HE OBSERVED THAT IN SUPPORT OF THE COST OF IMPROVEMENT CLAIMED, THE ASSESSEE FILED A COPY OF UNREGISTERED AGREEMENT DATED 01.02.1994, ENTERED BY THE ASSESSEE WITH M/S. SANJAY CONSTRUCTIONS, A PROPRIETARY CONCERN, REPRESENTED BY ITS PROPRIETOR SRI B. SANJIV RAO, WHEREIN THE ASSESSEE CLAIMS TO HAVE GOT THE PLOT LEVELLED BY REMOVING THE BOULDERS THEREIN AND CONSTRUCTING TWO ROOMS ON THE SAID PLOT FOR A CONSIDERATION OF RS. 3,75,000/- AND THE SAME WAS PAID TOTALLY IN CASH. THE A.O ASKED THE ASSESSEE TO PRODUCE THE ORIGINAL COPY OF THE AGREEMENT. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE SAME, AND THE A.O ALSO OBSERVED FROM THE PURCHASE DEED OF THE ASSESSEE, IT IS SEEN THAT THERE WAS ALREADY A ROOM IN THE SAID PLOT. THEREFORE, HE WAS NOT CONVINCED ABOUT THE COST OF IMPROVEMENT AND DISALLOWED THE SAME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE A.O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3 ITA.NO. 140/HYD/2018 SMT. BALAMANGA., SECUNDERABAD. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT PERTAINS TO A.Y 2009-10, WHEREAS THE ASSESSMENT WAS REOPENED IN THE YEAR 2016 I.E AFTER MORE THAN 6 YEARS AND THE A.O HAD REQUIRED THE ASSESSEE TO PRODUCE THE COPY OF AGREEMENT OF 1994 WHICH COULD NOT BE TRACED BY THE ASSESSEE AS IT WAS MORE THAN 20 YEARS LATER. HE SUBMITTED THAT IT IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF THAT WHEN THE ASSESSEE HAD PURCHASED THE PLOT, THERE WAS ONLY ONE ROOM OF 10X10 AND THE FACT THAT THE ASSESSEE HAD CONSTRUCTED TWO ROOMS THEREON IS NOT DISPUTED BY THE REVENUE. HE SUBMITTED THAT THE ROOM IN EXISTENCE WHEN THE PLOT WAS PURCHASED WAS IN A DILAPIDATED CONDITION AND THEREFORE THE ASSESSEE HAD TO REMOVE THE SAME AND RECONSTRUCT TO ROOMS THEREON AND ALSO HAD TO REMOVE BOULDERS AND LEVEL THE PLOT FOR WHICH SHE HAS INCURRED A SUM OF RS. 3,75,000/-. HE THEREFORE PRAYED FOR ALLOWING OF THE COST OF IMPROVEMENT. 4. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE IS NOT DISPUTING THE APPLICATION OF SEC. 50C BUT IS ONLY CLAIMING THE COST OF IMPROVEMENT AND THE COST OF INDEXATION ON SUCH COST OF IMPROVEMENT. IN SUPPORT OF ASSESSEES CONTENTION THAT SHE HAD CONSTRUCTED TWO ROOMS AND HAD INCURRED THE SUM OF RS. 3,75,000/-, THE PHOTO COPY OF THE ORIGINAL AGREEMENT IS PRODUCED AS PER WHICH THE SUM IS NOT ONLY FOR CONSTRUCTION OF ROOMS, BUT IT IS ALSO FOR LEVELLING OF THE PLOT BY REMOVING THE BOULDERS. WE AGREE WITH THE LD. COUNSEL 4 ITA.NO. 140/HYD/2018 SMT. BALAMANGA., SECUNDERABAD. FOR THE ASSESSEE, THAT IT IS NOT REASONABLE ON THE PART OF THE DEPARTMENT TO INSIST UPON PRODUCING THE ORIGINAL DOCUMENT WHICH IS MORE THAN 20 YEARS OLD. IT IS ALSO NOT IN DISPUTE THAT THERE EXISTED A ROOM WHEN THE ASSESSEE HAD PURCHASED THE PLOT, AND THAT SUBSEQUENTLY THE ASSESSEE HAS SOLD THE PLOT WITH TWO ROOMS THEREON. THEREFORE, IT HAS TO BE ACCEPTED THAT THE ASSESSEE HAS CONSTRUCTED THE ROOMS ON THE PLOT. SINCE THE CONSTRUCTION WAS ALLEGEDLY 20 YEARS BACK, WE CANNOT INSIST ON THE ASSESSEE TO PRODUCE EVIDENCE IN SUPPORT OF HER CONSTRUCTION THAT SHE HAS INCURRED THE SUM OF RS. 3,75,000/- FOR THE ABOVE PURPOSE. HOWEVER, SINCE THE ASSESSEE COULD NOT PRODUCE THE ORIGINAL OF THE SAID DOCUMENT, WE ARE OF THE OPINION THAT ONLY A PERCENTAGE OF THE CLAIM OF IMPROVEMENT CAN BE DISALLOWED. THEREFORE, WE DIRECT THE A.O TO ALLOW SUM OF RS. 3,00,000/- AS COST OF IMPROVEMENT AND ALLOW THE COST OF INDEXATION THEREON, WHILE COMPUTING THE LONG TERM CAPITAL GAIN. ACCORDINGLY, THE ASSESSEE APPEAL IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 18 TH APRIL, 2019 5 ITA.NO. 140/HYD/2018 SMT. BALAMANGA., SECUNDERABAD. KRK 1) SMT. B. BALMANGA, 1-2-31 TEMPLE ALWAL, SECUNDERABAD. 2) ITO, WARD 15(1) HYDERABAD. 3) CIT(A)-7, HYDERABAD. 4) PR.CIT-7, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE.