Sri Muniyellappa, Bangalore V. Income Tax Officer ward-4(3)(2), Bangalore

ITA 1507/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5612 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 29-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR G MANOJ KUMAR
• Assessee Lawyers: G SATHYANARAYANA
• Keywords: Opportunity of being heard; Valuation report
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1507 / BANG/201 7 ASSESSMENT YEAR : 20 11 - 12 SHRI MUNIYELLAPPA, NO. 992, SRINIVAGILU, TANK BED LAYOUT, 4 TH BLOCK, KORAMANGALA, BANGALORE 560 095. PAN: AFPPM 7134M VS. THE INCOME TAX OFFICER, WARD 7(3), [NEW ITO WARD 4(3)(2)], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI G. SATHYANARAYANA, CA RESPONDENT BY : DR. G. MANOJ KUMAR , ADDL. CIT (DR) DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 11 .0 1 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A)-4, BANGALORE DATED 22.03.2017 FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LD CIT (APPEAL) 4, BENGALURU IN THE PRESENT CASE IS OPPOSED TO LAW. 2. THE LD CIT (APPEAL) ERRED BOTH IN LAW AS WELL AS IN FACT IN DENYING TO ACCEPT THE SUBMISSION MADE DURING APPEAL PROCEED INGS WITH THE REASON IT IS NOT SUPPORTED BY BANK STATEMENT/INVOIC ES FOR CONSTRUCTION AS IN THE CASE OF BUSINESS ENTITY. 3. THE LD CIT(APPEAL) HAS NOT CONSIDERED THE ADDITI ONAL EVIDENCE RELATING TO THE INDEXED COST OF BUILDING AMOUNTING TO RS. 23,57,437/- WHILE CALCULATING THE LONG TERM CAPITAL GAIN BASED ON THE FACTS AND THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. THE LD CIT (APPEAL) ERRED BOTH IN FACT AS WELL A S IN LAW IN NOT ITA NO.1507/BANG/2017 PAGE 2 OF 4 GIVING CREDENCE TO THE SUBMISSION FILED BY THE AR O PPOSING THE PROPOSAL TO DISALLOW THE VALUE OF BUILDING TO CLAIM INDEXED COST OF IMPROVEMENT. 5. THE LD CIT (APPEAL) ERRED IN FACTS AS WELL AS IN LAW IN NOT ADJUDICATING THE ISSUE ON THE BASIS OF SUBMISSION M ADE BEFORE HER AND UNDERLINED LEGAL PRINCIPLES BUT RELYING SOLELY ON O BSERVATION OF THE AR. 6. THE APPELLANT PRAYS BEFORE THE HONOURABLE MEMBER S TO ACCEPT THE VALUATION REPORT AS AN EVIDENCE FOR CALCULATING BUI LDING VALUE AND TO RENDER THE JUSTICE. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO U/S. 144 AND THEREFORE, IT IS APPA RENT THAT FULL & PROPER SUBMISSION COULD NOT BE MADE BY THE ASSESSEE BEFORE THE AO. HE FURTHER SUBMITTED THAT BEFORE THE CIT(A), CERTAIN NEW EVIDE NCES WERE MADE AVAILABLE BY THE ASSESSEE BUT THE SAME WERE NOT CONSIDERED BY CIT(A) IN PROPER PERSPECTIVE BY HOLDING THAT IT IS APPARENT THAT THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS HAD ACCEPTED THE FACT THAT N O EVIDENCE WAS AVAILABLE TO EXPLAIN THE COST OF CONSTRUCTION OR IMPROVEMENT IN RESPECT OF THE PROPERTY ACQUIRED / CONSTRUCTED IN THE YEAR 2001. HE SUBMIT TED THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO / CIT(A) FOR FRESH DECISION IN THE LIGHT OF VALUATION REPORT PRODUCED BY ASSESSEE BEFORE CIT(A). THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A) . 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE ASSESSMENT ORDER IN QUESTION HAS BEEN PASSED BY THE AO U/S. 144. IN TH E ASSESSMENT ORDER, THE AO HAS NOTED THAT NOTICE U/S. 143(2) WAS ISSUED ON 01.08.2012 AND IN RESPONSE TO THE FINAL OPPORTUNITY NOTICE ISSUED; TH E ASSESSEE HAS APPEARED AND FILED THE DETAILS CALLED FOR. THEREAFTER, THE AO N OTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DEPOSITED CASH OF RS. 10 LAKHS OR MORE IN THE SAVINGS BANK ACCOUNT AND THE ASSESSEE WAS ASKED TO FURNISH THE R ETURN DETAILS ALONG WITH THE BANK STATEMENT AND SALE DEED. THE AO ALSO NOTED TH AT IT IS FOUND THAT THE DATE OF REGISTRATION IS 20.10.2000. HE FURTHER ASKED TH E ASSESSEE TO PRODUCE THE ITA NO.1507/BANG/2017 PAGE 3 OF 4 PROOF TOWARDS COST OF CONSTRUCTION AND THE YEAR OF CONSTRUCTION AND THE ASSESSEE ACCEPTED THAT HE HAS NO DOCUMENTARY PROOF OF CONSTRUCTION. IN VIEW OF THIS, THE AO DISALLOWED THE COST OF CONSTRUCTION AND CAPITAL GAIN WAS COMPUTED BY DEDUCTING SELLING EXPENSES OF RS. 2.05 LAKHS AND INDEXED COST OF RS. 6,42,352/- FROM THE SALE PROCEEDS OF RS. 41 LAK HS. BEFORE THE CIT(A), THE ASSESSEE HAS SUBMITTED THAT THIS FACT THAT THE HOUS E WAS CONSTRUCTED IN THE YEAR 2001 IS EVIDENT FROM THE SALE DEED DATED 19.05 .2010 AND HENCE, THE COST OF CONSTRUCTION OF THE PROPERTY IN QUESTION IN THE YEAR 2001 SHOULD BE CONSIDERED IN THE LIGHT OF VALUATION REPORT SUBMITT ED BY THE ASSESSEE BEFORE THE CIT(A) AS PER WHICH THE VALUER HAS VALUED THE COST OF CONSTRUCTION AT RS. 8.30 LAKHS. IT IS ALSO SUBMITTED BY ASSESSEE BEFORE THE CIT(A) THAT THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS ACTIVITY AND ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS AND THEREFORE, ASSESSEE IS NOT ABLE TO PRO DUCE DOCUMENTARY EVIDENCE AND BOOKS OF ACCOUNTS WITH REGARD TO CONSTRUCTION O F HOUSE DURING THE YEAR 2001. THE BASIS OF THE DECISION OF CIT(A) IS THIS THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF SUCH EXPENDITURE OR THE CO NSTRUCTION / BUILDING INVOICES. THE PROPERTY IN QUESTION WAS PURCHASED BY THE ASSES SEE AS PER REGISTERED SALE DEED ON 20.10.2000. THE COPY OF THIS PURCHASE DEED IS NOT AVAILABLE ON RECORD ALTHOUGH COPY OF SALE DEED DATED 19.05.2010 AS PER WHICH THE ASSESSEE SOLD THE PROPERTY IS AVAILABLE ON RECORD. IN THE SCHEDU LE OF PROPERTY AS PER SALE DEED DATED 19.05.2010, THE BUILT UP AREA AND YEAR O F CONSTRUCTION IS MENTIONED ALONG WITH THE QUALITY OF ROOF, WALLS, FLOORING, DO ORS AND WINDOWS ETC. BY OBTAINING THE PURCHASE DEED DATED 20.10.2000, IT SH OULD BE COMPARED AS TO WHETHER THE BUILT UP AREA AND OTHER DETAILS OF THE PROPERTY MENTIONED IN THE SAME IS SIMILAR AS MENTIONED IN THE SALE DEED DATED 19.05.2010 BECAUSE ON SUCH COMPARISON, IT WILL COME OUT AS TO WHETHER THE ASSESSEE HAS MADE ANY IMPROVEMENT IN THE PROPERTY AFTER THE PURCHASE OF T HE SAME IN THE YEAR 2000. THE COST OF PURCHASE AS PER THE DEED DATED 20.10.20 00 SHOULD BE CONSIDERED ALONG WITH THE ESTIMATED COST OF IMPROVEMENT IF IT IS FOUND THAT THERE IS SOME ADDITION/IMPROVEMENT MADE BY THE ASSESSEE AFTER THE PURCHASE OF THE PROPERTY IN QUESTION AS PER THE SAID PURCHASE DEED. THE VAL UATION REPORT BROUGHT ON RECORD BY THE ASSESSEE DETERMINING THE COST OF PROP ERTY IN THE YEAR 2001 AT RS. 6.30 LAKHS BEING THE VALUE OF MAIN BUILDING AND RS. 2 LAKHS AS THE VALUE OF ITA NO.1507/BANG/2017 PAGE 4 OF 4 OTHER STRUCTURES LIKE SUMP TANK, COMPOUND WALL AND GATE ETC. SHOULD ALSO BE CONSIDERED IF FOUND RELEVANT AFTER EXAMINING SUCH C OMPARISON OF THE PURCHASE DEED AND SALE DEED AND THEN THE ISSUE SHOULD BE DEC IDED AFRESH REGARDING THE ACTUAL COST OF CONSTRUCTION AND IMPROVEMENT AND THE N THE CAPITAL GAIN SHOULD BE COMPUTED. WITH THESE OBSERVATIONS, I RESTORE TH E MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH JANUARY, 2018. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.