Rajesh PremajKabra, Jalgaon V. Deputy Commissioner of Income Tax , Circle-1, Jalgaon, Jalgaon

ITA 156/PUN/2023

AI Insights

The case involves Mr. Rajesh Premraj Kabra, the legal heir of Ramchandra Dhondiram Kabra, who appealed against the order of the National Faceless Appeal Centre (NFAC) concerning a rectification under section 154 of the Income Tax Act, 1961, for the assessment year 2011-2012. The primary issue was the incorrect computation of long-term capital gains due to the adoption of the historical value of land acquired prior to 01.04.1981 instead of the Fair Market Value (FMV) as on 01.04.1981, as required under section 55(2)(b)(i) of the Act. The Tribunal noted that the assessee's co-owner had their capital gains computed using the FMV, which was not applied in the assessee's case, leading to a claim of inconsistency and a mistake apparent from the record.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138033 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 07-02-2023
• Other Referred Cases: Collector, Land Acquisition vs. MST Katiji [1987] 167 ITR 471 (SC), Atul C. Shah [ITA.No.594/Ahd/2019]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Capital Gains
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI GD PADMAHSHALI, ACCOUNTANT MEMBER ITA.No.156/PUN./2023 Assessment Year 2011-2012 Mr. Rajesh Premraj Kabra, Legal Heir of Ramchandra Dhondiram Kabra, 95, Polan Peth C/o. Jayant Commercial Corporation, Jalgaon – 425 001. Maharashtra. PAN ABFPK9721Q vs., The DCIT, Circle-1, Old B.J. Market, Jilha Peth, Jalgaon. Maharashtra. PIN – 425 001. (Appellant) (Respondent) For Assessee : Shri Sanket Joshi For Revenue : Shri M.G. Jasnani Date of Hearing : 05.04.2023 Date of Pronouncement : 11.04.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for assessment year 2011- 2012, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/ 250/2022-23/1047625720(1), dated 24.11.2022, involving proceedings u/s. 154 of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case file perused. 2. Learned counsel for the assessee at the outset prayed for condonation of 16 days delay in filing the instant appeal in the interest of substantial justice. Hon’ble apex 2 ITA.No.156/PUN./2023 Mr. Rajesh Premraj Kabra, Jalgaon. court’s landmark decision Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) has settled the law long back that all such technical aspects must make way for the cause of substantial justice. The impugned delay of 16 days in filing of the instant appeal stands condoned therefore. 3. The assessee pleads the following substantive grounds in the instant appeal : 1. “The learned CIT(A) erred in holding that the mistake that had crept in the original ITR by way of adopting the historical value of land acquired prior to 01.04.1981 as against the Fair Market Value of land as on 01.04.1981 as per the provisions of section 55(2)(b)(i) was not a mistake apparent from record and thereby upholding the order u/s 154 passed by the A.O. [Rs.26,98,050]. 2. The learned CIT(A) failed to appreciate that the computation of long term capital gains without applying the provisions of section 55(2)(b)(i) constituted a mistake apparent from record and hence, the said mistake ought to have been rectified u/s 154 by considering the FMV of the property as on 01.04.1981 while determining the LTCG on sale of the same. [Rs.26,98,050]. 3. The learned CIT(A) further erred in not appreciating that in case of co-owner, the Dept, has adopted FMV of the said land as on 01.04.1981 as cost of acquisition u/s 55(2)(b)(i) 3 ITA.No.156/PUN./2023 Mr. Rajesh Premraj Kabra, Jalgaon. and therefore, taking a different view on identical facts in case of the assesssee constitutes a mistake apparent from record and therefore, the said mistake ought to have been rectified u/s 154 in the interest of justice. [Rs.26,98,050]. 4. Without prejudice to the above grounds, the learned CIT(A) erred in rejecting the claim of the appellant purely on technical grounds even after impliedly accepting the correctness of claim on merits without appreciating the law laid down by Hon’ble ITAT, Ahmedabad in Atul C. Shah [ITA.No.594/Ahd/2019] under similar facts holding that the quasi-judicial authorities are being respected not on account of their powers to legalize the injustice on technical ground, but for their capabilities of removing injustice and therefore, the claim of the appellant ought to have been accepted in the interest of justice. 5. The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal.” 4. It emerges during the course of hearing that the relevant facts regarding the instant sole issue of the assessee’s sec.154 rectification claiming correct computation of his long term capital gains; after adopting cost of acquisition itself as the fair market value “FMV”, hardly requires us to delve deeper in the relevant factual matrix. The undisputed factual position is that he had filed his return declaring income of 4 ITA.No.156/PUN./2023 Mr. Rajesh Premraj Kabra, Jalgaon. Rs.98,69,146/- on 29.09.2012 followed by a revised one dated 29.03.2012 disclosing income of Rs.33,48,326/-. And also that the assessee’s former return stood “summarily” processed on 02.02.2013. He thereafter filed his rectification application dated 01.03.2017 claiming therein that the above return(s) followed by sec.143(1) processing dated 02.02.2013 is a clear- cut case of rectification since the capital gains in issue had remained to be computed correctly after determining the appropriate corresponding cost of acquisition as on 01.04.1981. Both the assessing authority’s order dated 27.03.2017 as well as the NFAC’s impugned lower appellate discussion hold that such a course of action is not available in sec.154 rectification. This is what leaves the assessee aggrieved. 5. We have given our thoughtful consideration to the vehement rival stands. Learned counsel first of all referred to this tribunal’s coordinate bench’s order in Atul C. Shah vs. DCIT ITA.Nos.595 & 595/Ahd/2019 dated 10.01.2002 that such a correct cost of indexation and its appropriate computation indeed forms subject matter of section 154 rectification. Learned counsel also sought to highlight the fact that the assessee’s co-owner’s capital gains had been computed after determining the very cost of acquisition/indexation which has been denied in the 5 ITA.No.156/PUN./2023 Mr. Rajesh Premraj Kabra, Jalgaon. impugned sec.154 proceedings. Faced with the situation, we deem it appropriate to reverse the learned lower authorities action declining the assessee’s instant rectification petition as not maintainable and leave it open for the learned Assessing Officer to decide the same afresh as per law and after due factual verification preferably within three effective opportunities of hearing. Ordered accordingly. 6. This assessee’s appeal is allowed for statistical purposes. Order pronounced in the Open Court on 11.04.2023. Sd/- Sd/- (G.D. PADMAHSHALI) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 11 th April, 2023 VBP/- Copy of the Order is forwarded to: 1. The Appellant; 2. The Respondent; 3. The CIT(A), Nashik. 4. 5. 6. The CCIT, Pune The DR ‘B’, ITAT, Pune Guard File BY ORDER, // True Copy // Senior Private Secretary ITAT : Pune