Amit Jolly, Chandigarh V. ITO, W-1, Panchkula

ITA 1531/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8349 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 07-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Bonafide belief; Additional evidence; Cost of acquisition; Corroborative evidences; Valuation report
• Section: 68; 54

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , !' # $ % &' , '( BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1531/CHD/2018 / ASSESSMENT YEAR : 2013-14 SHRI AMIT JOLLY, 4 TH FLOOR, SCO 80-81, SECTOR 17-C, CHANDIGARH THE ITO, PANCHKULA ./PAN NO: ACNPJ9934D / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI T.N. SINGLA, CA ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR.DR # $ % /DATE OF HEARING : 29.04.2019 &'() % / DATE OF PRONOUNCEMENT : 12.07..2019 ')/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 2.11.2018 OF THE COMMISSIONER OF INCOME TAX(APPEALS), PANCHKULA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDERS OF CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN ADDITION TO OUR INCOME. ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 2 2. THAT THE CIT(A) HAS NOT CONSIDERED THE FACT THAT AP PELLANT ENTERED INTO AGREEMENT TO SELL TWICE BEFORE BUYING THE PROPERTY AND CLAIMED DEDUCTION U/S 54. 3. THAT THE C1T(A) HAS NOT CONSIDERED THE FACT THAT PE RSONAL AND HOUSEHOLD GOODS WERE SOLD ON SELLING OF OLD HOU SE AND THE SALE | PROCEEDS WERE RECEIVED IN CASH WHICH WER E DEPOSITED IN BANK ACCOUNT. 4. THAT THE CIT(A) HAS ERRED IN TAKING THE ORIGINAL CO ST OF PURCHASE ONLY WHILE CALCULATING THE CAPITAL GAINS. HE HAS NOT FOLLOWED COST INFLATION INDEX TO BE APPLIED FOR PROPERTY PURCHASED IN 1997. 5. THAT THE CIT(A) HAS ERRED IN NOT ALLOWING INDEXED C OST OF THE AMOUNTS SPENT ON CONSTRUCTION / MODIFICATION OF THE PROPERTY AFTER 31.03.2000 UPTO THE DATE OF SALE OF THE PROPERTY. 6. THAT THE APPEAL BE ALLOWED AND ADDITIONS OF RS. 1,42,19,318/-MADE IN OUR INCOME IS DELETED. 7. THAT THE APPELLANT CRAVE TO ADD OR AMEND ANY GROUND OR GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DIS POSED OFF. 3. GROUND NO.1 : GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION ON ANY SPECIFIC ISSUE. 4. GROUND NO.2 : AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AS PER THE INSTRUCTIONS OF HIS CLINE T, HE DOES NOT PRESS GROUND NO.2. GROUND NO.2 IS, THEREFORE, DISMISSED A S NOT PRESSED. ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 3 5. GROUND NO.3 : VIDE GROUND NO.3, THE ASSESSEE IS AGGRIEVED OF THE ACTION OF THE LD. CIT(A) IN GIVING ONLY PART RELIEF TO THE ASSESSEE IN RESPECT OF THE ADDITIONS MADE BY THE ASSESSING OFF ICER U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS. THE PLEA OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE HAD SOLD HIS HOUSE AND HAD SHIFTED TO THE RENTAL ACCOMMODATION WHICH WAS A SMALL ACCOMMODATION AS COMPARED TO THE OWN HOUSE OF THE A SSESSEE, WHICH WAS SOLD. THE ASSESSEE CLAIMED THAT THE HOUSEHOLD A RTICLES AND FURNITURE ETC. WERE SOLD AT RS. 7,95,400/- . FURTHER, THAT TH E ASSESSEE WAS A PERSON OF MEANS AND WAS EARNING HANDSOME SALARY. AN AMOUNT OF RS. 97,500/- WAS DEPOSITED INTO THE BANK BY THE ASSESSEE OUT OF HIS OPENING CASH IN HAND. THE ASSESSING OFFICER, HOWEVER, DID NOT GET S ATISFIED WITH THE ABOVE CONTENTION OF THE ASSESSEE AND ADDED A SUM OF RS. 8,92,900/- IN TO THE TAXABLE INCOME OF THE ASSESSEE ON ACCOUNT OF U NEXPLAINED CASH DEPOSITS 5. IN APPEAL, THE LD. CIT(A) CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD NOT GIVEN A NY EVIDENCE AS TO WHICH ITEMS WERE SOLD AND AT WHAT PRICE. SHE FURTHE R OBSERVED THAT GENERALLY THE OLD FURNITURE IS SOLD AS SCRAP, THERE FORE, THE CLAIM OF THE ASSESSEE OF SALE PROCEEDS OF RS. 7,95,400/- WAS HIG HLY EXAGGERATED AND DID NOT SEEM TO BE PROBABLE IN THE ABSENCE OF ANY S UPPORTIVE EVIDENCE. ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 4 SHE, THEREFORE, ACCEPTED THE SALE VALUE OF THE OLD GOODS AND FURNITURE AT RS. 1 LAC ON A REASONABLE BASIS AND FURTHER ACCEPTE D THE DEPOSIT OF RS. 50,000/- OUT OF THE OPENING CASH IN HAND AS AGAINST RS. 97,500/- CLAIMED BY THE ASSESSEE. SHE CONFIRMED THE ADDITION OF THE REMAINING AMOUNT OF RS. 7,42,900/- U/S 68 OF THE INCOME TAX ACT. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT H AS BEEN FURTHER CONTENDED THAT IN THE CASE OF SALE OF OLD HOUSE HOL D GOODS AND FURNITURE, GENERALLY, NO BILLS OR RECEIPTS ARE TAKEN. THAT THE ASSESSEE WAS NOT EXPECTING ANY QUERY OR ENQUIRY BY ANY AUTHORITY IN THIS RESPECT. HENCE, IN THE NORMAL COURSE, THE RECEIPTS WERE NOT TAKEN F ROM THE PERSONS TO WHOM THE OLD HOUSEHOLD GOODS WERE SOLD. 8. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E FINDINGS OF THE LD. CIT(A). 9. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES, THE CLAIM OF RS. 7,95,400/- FROM THE SALE OF OLD FURNITURE AND HOUSE HOLD GOODS IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, SEEMS TO BE EXA GGERATED. HOWEVER, WE ARE OF THE VIEW, THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AMOUNT OF RS. 3 LACS WILL BE THE REASONAB LE AMOUNT ON ACCOUNT OF VALUE OF THE OLD FURNITURE AND HOUSE HOLD GOODS CLAIMED TO HAVE BEEN ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 5 SOLD BY THE ASSESSEE. SO FAR AS THE AMOUNT OF RS. 9 7,500/- CLAIMED AS OPENING BALANCE OF CASH IN HAND BY THE ASSESSEE IS CONCERNED, THE FACT THAT THE ASSESSEE IS GETTING HANDSOME SALARY AND O THER INCOME HAS NOT BEEN DISPUTED BY THE REVENUE. THE AMOUNT OF RS. 97, 500/- AS CASH IN HAND SEEMS TO BE A REASONABLE AMOUNT. WE, ACCORDING LY, DIRECT THE ASSESSING OFFICER TO GIVE THE BENEFIT TO THE ASSESS EE OF RS. 3 LACS ON ACCOUNT OF SALE OF HOUSE HOLD GOODS AND OLD FURNITU RE AND OF RS. 97,500/- ON ACCOUNT OF OPENING CASH IN HAND OUT OF THE TOTAL ADDITION OF RS. 8,92,000/- MADE BY THE ASSESSING OFFICER ON THI S ISSUE. THIS GROUND IS ACCORDINGLY PARTLY ALLOWED. 10. GROUND NOS. 4, 5 & 6: THE ASSESSEE VIDE THESE GROUNDS HAS AGITATED THE ACTION OF THE LD. CIT(A) IN NOT ALLOWI NG THE CLAIM OF THE ASSESSEE OF EXPENDITURE INCURRED FOR RENOVATION / I MPROVEMENT OF THE HOUSE WHILE COMPUTING THE CAPITAL GAINS ON THE SAL E VALUE OF THE HOUSE. THE ASSESSING OFFICER WHILE COMPUTING THE CAPITAL G AINS IN RESPECT OF THE HOUSE SOLD BY THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION, WHICH WAS PURCHASED IN THE YEAR 1997, CALCULATED TH E COST OF ACQUISITION AT RS. 1,27,139/- AND COST OF CONSTRUCTION AT RS. 1 3 LACS AFTER GIVING THE BENEFIT OF INDEXATION. HE, THEREFORE, WORKED OUT THE CAPITAL GAINS AT RS. 1,33,26,518/-. ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 6 11. DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE HAD SPENT SUBSTANTIAL A MOUNT IN CONSTRUCTION / RENOVATION OF THE HOUSE FROM THE YEAR 1999 TO YE AR 2010. THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAD NOT ALLOWE D THE BENEFIT OF COST OF IMPROVEMENT ON THE GROUND THAT THE ASSESSEE HAD NOT CLAIMED THE SAME DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSE E EXPLAINED THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE ASSES SEE WAS ENTITLED TO CLAIM DEDUCTION U/S 54 OF THE ACT, HOWEVER, SINCE I T HAS BEEN HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIMED DEDUCTION U/S 54 OF THE ACT, HENCE, THE CLAIM OF THE ASSESSEE ON ACCOUNT OF EXPE NDITURE INCURRED FOR IMPROVEMENT / RENOVATION OF THE HOUSE FOR CALCULATI NG THE COST OF ACQUISITION / PURCHASE FOR THE PURPOSE OF COMPUTATI ON OF CAPITAL GAINS BE CONSIDERED. THE ASSESSEE ALSO FURNISHED ADDITIONAL EVIDENCES SUPPORTING HIS CLAIM IN THIS RESPECT. 12. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FRO M THE ASSESSING OFFICER IN RESPECT OF THE EVIDENCES FURNISHED BY TH E ASSESSEE. AFTER CONSIDERING THE REMAND REPORT, THE LD. CIT(A) ACCEP TED THE CLAIM OF THE ASSESSEE OF THE LOANS TAKEN BY THE ASSESSEE FROM L IC HOUSING FINANCE LIMITED AT RS. 6,75,000/- AND RS. 2,25,000/- ON 8 .4.1999 AND 16.6.1999 RESPECTIVELY. THE LD. CIT(A) FURTHER OBSERVED THAT THE AFORESAID LOAN TAKEN OVER FROM THE LIC HOUSING FINANCE LTD WAS TAK EN OVER BY THE ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 7 BANK OF INDIA, HENCE, THE ASSESSEE COULD NOT BE ALL OWED A SEPARATE DEDUCTION IN RESPECT OF LOAN TAKEN FROM BANK OF IND IA. SO FAR AS THE LOAN TAKEN BY THE ASSESSEE FROM INDIA BULLS HOUSING FIN ANCE LIMITED AT RS. 13,20,000/- ON 29.2.2008 AND FROM CORPORATION BANK AT RS. 10 LACS ON 25.2.2010 TO FINANCE THE REPAIR / RENOVATION OF HOU SE WAS CONCERNED, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD FAILED T O PRODUCE THE RELEVANT BILLS AND VOUCHERS TO PROVE THAT THE ACTUA L WORK WAS CARRIED OUT AFTER TAKING THOSE LOANS. SHE, THEREFORE, DOUBTED T HE UTILIZATION OF THE LOANS TAKEN BY THE ASSESSEE AND ACCORDINGLY REJECTE D THE CLAIM OF THE ASSESSEE IN RESPECT OF THE AFORESAID LOAN TAKEN BY THE ASSESSEE FROM INDIA BULLS HOUSING FINANCE LIMITED. 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IT IS NOT DISPUTED THAT THE ASSESSEE HAD TAKEN HOUSING LOANS FROM RESPECTIVE BANKS / FINANCE COMPANIES NAMELY INDIA BULLS FINANC E LIMITED AND CORPORATION BANK. THE LOANS WERE GRANTED FOR SPECIF IC PURPOSES. HE, INVITED OUR ATTENTION TO THE VALUATION REPORT DATED 14.3.2003 IN RESPECT OF THE HOUSE SUBMITTED TO THE BANK OF INDIA FOR TAK ING THE LOANS IN RESPECT OF RENOVATION / CONSTRUCTION OF THE HOUSE I N QUESTION. IN THE VALUATION REPORT DATED 14.3.2003, IT HAS BEEN MENTI ONED THAT THERE IS A MARBLE FLOORING ON THE GROUND FLOOR AND KOTA STONE FLOORING IN THE BASEMENT. FURTHER THAT HOLLOCK WOOD HAS BEEN USED F OR CONSTRUCTION OF ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 8 THE DOORS AND WINDOWS. THE LD. COUNSEL HAS SUBMITTE D THAT FROM THE ABOVE, IT IS CLEAR THAT THE FLOORING WAS DONE ONLY IN THE FIRST FLOOR AND THAT THERE WAS NO FLOORING IN SECOND FLOOR OF THE H OUSE. THAT THE INTERNAL FLOORING, FURNISHING ETC. IN RESPECT OF THE SECOND FLOOR WAS NOT DONE AT THAT TIME. THE LD. COUNSEL HAS FURTHER INVITED OUR ATTENTION TO THE VALUATION REPORT OF THE YEAR 2010 PLACED AT PAPER B OOK PAGE NO. 5 WHICH WAS A REPORT SUBMITTED TO THE CORPORATION BANK TO S HOW THAT BY THAT TIME THE SECOND FLOOR WAS COMPLETED AND FURTHER THA T THERE WAS A MENTION OF OTHER AMENITIES, SUCH AS, WOOD PANELING , GATE, RAILINGS, GRILLS ETC. AND MISC. ITEMS. THE LD. COUNSEL HAS FU RTHER SUBMITTED THAT THE ASSESSEE HAD ALSO TAKEN LOAN FROM INDIA BULLS H OUSING FINANCE COMPANY LTD FOR REPAIR / RENOVATION OF THE HOUSE. T HAT EARLIER THE HOLLOCK WOOD WAS USED WHICH FINDS MENTION IN THE VA LUATION REPORT FOR THE YEAR 2003 WHICH WAS REPLACED WITH TEAK WOOD WH ICH FINDS MENTION IN THE REPORT OF YEAR 2010. FURTHER, THE CUPBOARD S ETC. WERE ALSO MADE / ERECTED AFTER USING OF THE LOANS TAKEN. IT HAS BE EN FURTHER SUBMITTED THAT THE BANKS / HOUSING LOAN COMPANIES GRANTED THE LOANS ONLY AFTER VERIFICATION OF THE ACTUAL POSITION ON THE SPOT AND THEY ALSO VERIFY THE UTILIZATION OF THE LOANS BY WAY OF PERSONAL VISIT O F THEIR OFFICERS AT THE SITE. THAT MERELY BECAUSE THE ASSESSEE HAS NOT PRES ERVED THE BILLS IN THIS RESPECT, THAT ITSELF WAS NOT A GROUND TO DOUBT THE TAKING AND UTILIZATION OF THE LOANS BY THE ASSESSEE FROM INDIA BULLS HOUS ING FINANCE COMPANY ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 9 LTD AND CORPORATION BANK, FOR IMPROVEMENT AND RENOV ATION OF THE HOUSE IN QUESTION. 14. CONSIDERING THE EVIDENCES PLACED ON THE FILE BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS SHOWN WITH DOCUMENTARY E VIDENCE THE PURPOSE OF LOAN TAKEN. THE CERTIFICATE OF THE BANK ABOUT THE HOUSING LOAN TAKEN FOR REPAIR / RENOVATION OF THE HOUSE AS ALSO THE VA LUATION REPORT PROVE THAT BEFORE TAKING THE LOAN, THE AMENITIES IN SECO ND FLOOR INCLUDING FLOORING WAS NOT COMPETED AND THERE WAS REPLACEMENT OF THE WOOD PANELS, WINDOWS ETC. WITH A BETTER QUALITY WOOD AND ERECTION OF CUPBOARDS. WE, THEREFORE, DO NOT FIND ANY JUSTIFIC ATION ON THE PART OF THE LD. CIT(A) IN DISALLOWING THE DEDUCTION TOWARDS LOANS TAKEN BY THE ASSESSEE FROM INDIA BULLS HOUSING FINANCE LTD AND C ORPORATION BANK FOR REPAIR / RENOVATION OF THE HOUSE. WE, ACCORDING LY DIRECT THE ASSESSING OFFICER TO TAKE INTO CONSIDERATION THE LO ANS TAKEN BY THE ASSESSEE FROM INDIA BULLS HOUSING FINANCE LTD AND C ORPORATION BANK FOR THE PURPOSES OF COMPUTATION OF COST OF ACQUISITION AND IMPROVEMENT FOR COMPUTING THE CAPITAL GAINS ON SALE OF HOUSE. IN VIEW OF OUR DIRECTIONS GIVEN ABOVE, THESE GROUND S TAKEN BY THE ASSESSEE ARE TREATED AS PARTLY ALLOWED. ITA NO. 1531/CHD/2018- SHRI AMIT JOLLY, CHANDIGARH 10 15. GROUND NO.7: GROUND NO.7 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. IN OUR OF THE FINDINGS GIVEN ABOVE, THE APPEAL OF T HE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.07.2019. SD/- SD/- ( # $ % &' / ANNAPURNA GUPTA) '( / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 12.07.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR