MANOJ PATEL, MUMBAI V. ACIT - 24(2) ERSTWHILE DCIT - 20(2), MUMBAI

ITA 1593/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7371 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CIRCUMSTANCES OF CASE; C OF ACT IV ON FACTS
• Keywords: Unexplained investment; Cost of acquisition
• Section: 143(3); 234B; 69; 10

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1593/MUM/2018 (ASSESSMENT YEAR 201 1-12 ) MANOJ PATEL, 314B,SAMARTHA AAGAN II OFF KL WALAWALKAR ROAD, ANDHERI WEST , MUMBAI 400053 ------- APPELLANT (APPELLANT THROUGH SH. MAYUR KISANDWALA -AR) VRRSUS ACIT-24(2) ERSTWHILE DCIT-20(2), PIRAMAL CHAMBERS, MUMBAI-400020 ------- RESPONDENT (RESPONDENT THROUGH SHRI RAJESH KUMAR YADAV (DR) DATE OF RESERVE ON 26 TH APRIL 2018 ORDER ANNOUN CED ON 27 APRIL 2018 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER, PAWAN SINGH, JUDICIAL MEMBER; 1. THE INSTANT APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS)-36, MUMBAI DATED 15 JANUARY 2018, FOR ASSESSMENT YEAR 2011- 12. THE APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) ARISES FROM THE ASSESSMENT ORDER PASSED O N 14 MARCH 2014 UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE HAS R AISED FOLLOWING GROUNDS OF APPEAL; ITA NO. 1593/M/2018 MANOJ PATEL 2 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING ADDITION UNDER SECTION 69 OF THE ACT OF RS. 14,75,000/-. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER (APPEALS)ERRED IN CONFIRMING T HE ACTION OF ASSESSING OFFICER OF NOT GRANTING DEDUCTION OF C OST OF ACQUISITION OF RS.14,75,000/- AND THE INDEXATION TH EREON WHILE COMPUTING LONG-TERM CAPITAL GAIN. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT ADJUDIC ATING THE ADDITIONAL GROUND REGARDING LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. (IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT ADJUDIC ATING THE GROUND REGARDING INITIATION OF PENALTY UNDER SECTIO N 271(1) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE RELATED WITH THE ISSUE RAISED HEREIN IS THAT ASSESSEE, AN INDIVIDUAL ENGAGED IN PROVIDING ARCHIT ECTURAL DESIGN AND DRAFTING SERVICES FILED HIS RETURN OF INCOME FOR AS SESSMENT YEAR 2011-12 ON 29 SEPTEMBER 2011, DECLARING TOTAL INCOME OF RS. 49 ,02,522/-. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED LONG-TERM CAPITAL GA IN ON CANCELLATION OF BOOKING OF A FLAT FROM SPAM CONSTRUCTION COMPANY PR IVATE LIMITED. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R DISALLOWED A PART OF COST OF ACQUISITION OF FLAT TO THE EXTENT OF RS. 14 ,75,000/-. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFI CER WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. COMMISS IONER (APPEALS) THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LEARNED AUTHORIZED REPRESENTATIVE (LD . AR) OF THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE (LD. DR ) FOR THE REVENUE AND ITA NO. 1593/M/2018 MANOJ PATEL 3 PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OU TSET OF HEARING THE LEARNED AR OF THE ASSESSEE SUBMITS THAT IS NOT PRES SING GROUND NO 3 AND 4. CONSIDERING THE SUBMISSION OF LEARNED AR THE GROUND NO 3 AND 4 ARE DISMISSED AS NOT PRESSED. THE LD AR FOR THE ASSESSE E FURTHER SUBMITS THAT DURING THE ASSESSMENT YEARS 2006-07, THE ASSESSEE H AD BOOKED THE RESIDENTIAL PREMISES AT A-1607, SWAPANLOK TOWERS, PIMPRO ROAD, MALLARD (E), WITH SPAIN CONSTRUCTION COMPANY LIMITED, ON 1 8 AUGUST 2005 FOR RS. 35,40,000/-. THE CONSIDERATION OF RS. 14,75,000 /- FOR THE SAID FLAT WAS PAID BY ASSESSEE FROM CITIBANK, WASHINGTON, AMERICA , WHILE THE ASSESSEE WAS SERVING IN USA. THE ASSESSEE WAS NON-RESIDENT I NDIAN DURING THE RELEVANT PERIOD AND WAS NOT FILING RETURN OF INCOME IN INDIA. THE REMAINING CONSIDERATION OF RS.20,65,000/- WAS PAID BY ASSESSE E FROM BANK OF INDIA AFTER RETURNING TO INDIA. DURING THE ASSESSMENT YEA R UNDER CONSIDERATION THE ASSESSEE CANCELLED THE BOOKING. THE ASSESSEE RE CEIVED A SUM OF RS.73,95,000/- IN LIEU OF COMPENSATION. THE ASSESSE E STARTED MAINTAINING BOOKS OF ACCOUNTS FROM ASSESSMENT YEAR 2007-08, WHE N HE STARTED BUSINESS. THUS, PAYMENT MADE UP TO 31 MARCH 2006 AG GREGATING TO RS.14,75,000/- WHEN THE ASSESSEE WAS NOT IN INDIA, STAYING IN US A, WAS INADVERTENTLY MISSED TO BE ACCOUNTED IN THE BOOKS A S AN OPENING BALANCE OF CAPITAL BROUGHT FORWARD. THEREFORE, WHILE COMPUTING THE CAPITAL GAIN ON COST OF THE SAID FLAT WAS INADVERTENTLY TAKEN AT RS . 20,65,000/- INSTEAD OF ITA NO. 1593/M/2018 MANOJ PATEL 4 TOTAL AMOUNT PAID RS.35,40,000/-. DURING THE ASSESS MENT THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO CONSIDER THE REV ISE COST OF ACQUISITION FOR COMPUTATION OF CAPITAL GAIN. THE ASSESSING OFFICER INSTEAD OF CONSIDERING THE CONTENTION OF THE ASSESSEE TREATED THIS AMOUNT AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE ASSESSI NG OFFICER ALSO CONCLUDED THAT THE COST OF RS. 14,75,000/- WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME AND WAS BROUGHT TO THE NOTICE DURI NG THE COURSE OF ASSESSMENT PROCEEDING WITHOUT FILING THE REVISE RET URN OF INCOME. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE RAISED THE CONTENTION THAT THE ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUND OF APPEAL IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CA SE OF CIT VS PRUTHVI BROKER AND SHAREHOLDER LTD (349 ITR 336) (BOMBAY). THE ASSESSEE ALSO URGED ALL BEFORE THE LD. COMMISSIONER (APPEALS) TO CONSIDER THE ADDITIONAL CLAIM, AND ALLOW THE CLAIM OF COST OF ACQUISITION. THE LD. COMMISSIONER (APPEALS) INSTEAD OF CONSIDERING THE ADDITIONAL GRO UNDS OF APPEAL, CONCLUDED THAT THE EXPLANATION OFFERED BY THE ASSES SEE IS NOT REASONABLE. THE INVESTMENT MADE BY ASSESSEE WAS NOT REFLECTED I N THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ASSESSEE HAS NOT FILED RETURN O F INCOME IN EARLIER YEARS. THE ASSESSEE TRIED TO RECTIFY THE ALLEGED INADVERTE NT MISTAKE ONLY AFTER DETECTION. ITA NO. 1593/M/2018 MANOJ PATEL 5 4. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPOR TED THE ORDER OF AUTHORITIES BELOW. THE LD DR FURTHER SUBMITS THAT T HE ASSESSEE HAS NOT SHOWN THE AMOUNT OF RS. 14,75,000/- IN THE STATEMEN T OF ACCOUNT NOR THE ASSESSEE WAS FILING RETURN OF INCOME IN EARLIER YEA RS, THE ADDITION UNDER SECTION 69 WAS MADE WHEN THE INVESTMENT WAS DETECTE D. THE AMOUNT CLAIMED BY ASSESSEE WAS NOTHING BUT UNEXPLAINED INV ESTMENT. IN THE REJOINDER SUBMISSION THE LD. AR OF THE ASSESSEE SUB MITS THAT ALL AMOUNT WAS REMITTED THROUGH BANK ACCOUNT MAINTAINED BY ASS ESSEE IN CITIBANK WASHINGTON, USA. THE ASSESSEE WAS NOT RESIDENT INDI AN AND NO INCOME WAS EARNED OR ACCRUED IN INDIA, DURING THE ASSESSME NT YEAR 2006-07, THUS, THE ASSESSEE WAS NOT LIABLE TO FILE RETURN OF INCOM E. IN SUPPORT OF HIS SUBMISSION THE LANDED AR OF THE ASSESSEE RELIED UPO N THE DECISION OF MUMBAI TRIBUNAL IN SHANKAR R. MHATRE VERSUS ACIT [2 009] 117 ITD 241 (MUMBAI), DECISION OF GUJARAT HIGH COURT IN USHAKAN T N PATEL VERSUS CIT (282 ITR 553) (GUJARAT), RAJASTHAN HIGH COURT IN ROOPCHAND GANDHI VERSUS CIT (216 CTR 273) (RAJASTHAN) ALLAHABAD HIGH COURT IN SHRI RAM JAISWAL VERSUS CIT (226 ITR 235). THE LD AR ALSO R ELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN PRUTHVI BR OKERS AND SHAREHOLDER PRIVATE LIMITED VERSUS CIT (349 ITR 336 BOMBAY). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFI CER DURING THE ITA NO. 1593/M/2018 MANOJ PATEL 6 ASSESSMENT PROCEEDING ASKED THE ASSESSEE TO FURNISH ED THE DETAILS OF WORKING OF LONG-TERM CAPITAL GAIN. THE ASSESSEE VID E HIS SUBMISSION DATED JANUARY 2013, SUBMITTED THAT THE ASSESSEE BOOKED TH E SAID FLAT ON 18 AUGUST 2005, PURSUANT TO THAT THE ASSESSEE PAID RS. 35,40,000/-, WHICH CONSIST OF PAYMENT OF RS. 20,65,000/- MADE THROUGH BANK OF INDIA AND RS.14,75,000/- THROUGH CITIBANK, WASHINGTON, AMERIC A. THE ASSESSEE ALSO FURNISHED THE DATE WISE DETAILS OF PAYMENT MADE TO THE BUILDER ALONG WITH THE COPY OF PASSBOOK. THE ASSESSEE FURTHER SUBMITTE D THAT WHILE COMPUTING THE COST OF THE SAID FLAT THE ASSESSEE INADVERTENTL Y TAKEN THE COST AT RS. 20,65,000/- INSTEAD OF RS. 35,40,000/-, DUE TO ERRO RS THE CAPITAL GAINS WAS COMPUTED AT RS. 53,30,000/- INSTEAD OF RS. 23,00,7 34/-. THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO CONSIDER THE REV ISE COMPUTATION. THE ASSESSING OFFICER INSTEAD OF CONSIDERING THE CONTEN TION OF THE ASSESSEE, ISSUED SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 14,75 ,000/- SHOULD NOT BE ADDED UNDER SECTION 69 AS UNEXPLAINED INVESTMENT. I N RESPONSE TO THE SO- CAUSE NOTICE THE ASSESSEE CONTENDED THAT DURING TH E ASSESSMENT YEAR 2006- 07, HE SEND THE AMOUNT THROUGH HIS BANK ACCOUNT WIT H CITIBANK IN AMERICA AS THE ASSESSEE WAS HAVING A STATUS OF NON-RESIDEN T AND WAS NOT HAVING TAXABLE INCOME EARNED OR ACCRUED IN INDIA. THUS, TH E ASSESSEE WAS NOT REQUIRED TO FILE RETURN OF INCOME IN INDIA. THE CON TENTION OF THE ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT INVESTMENT CLAIMED BY ITA NO. 1593/M/2018 MANOJ PATEL 7 ASSESSEE IS NOT REFLECTING IN HIS REGULAR BOOKS OF ACCOUNT FURTHER THE CONTENTION OF THE ASSESSEE THAT MONEY WAS INVESTED OUT OF NRE ACCOUNT IS NOT TENABLE. THE ASSESSEE HAS NOT DISCLOSED THIS TR ANSACTION IN HIS EARLIER RETURN OF INCOME NOR IN THE YEAR UNDER CONSIDERATIO N. THEREFORE, THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED AND THE INV ESTMENT OF RS.14,75,000/- WAS TREATED AS UNDISCLOSED INVESTMEN T WITHIN THE MEANING OF SECTION 69 OF THE ACT. WE HAVE NOTED THAT LD. CO MMISSIONER (APPEALS) HAS CONFIRMED THE ACTION OF ASSESSING OFFICER WITH SIMILAR LINE. 6. BEFORE US THE ASSESSEE HAS FURNISHED VARIOUS DOCUME NTARY EVIDENCES, WHICH CONSIST OF COMPUTATION OF INCOME. AUDITED ACC OUNTS OF THE ASSESSEE. THE WORKING OF CAPITAL GAIN FURNISHED BEFORE THE AS SESSING OFFICER VIDE LETTER DATED 3 DECEMBER 2013. THE LETTER DATED 13 D ECEMBER 2013, REVISING CLAIM OF CAPITAL GAIN. COST OF ACQUISITION AND ALLOTMENT LETTER OF THE FLAT ON WHICH CAPITAL GAIN WAS CLAIMED. THE COP Y OF CITIBANK NRE ACCOUNT EVIDENCING PAYMENT OF PART OF THE COST OF A CQUISITION TO THE EXTENT OF RS. 14,75,000/-. PASSBOOK OF BANK OF INDIA NRE ACCOUNT EVIDENCING PAYMENT OF BALANCE COST OF ACQUISITION TO THE EXTEN T OF RS. 20,65,000/-. COPY OF LETTER DATED 30 DECEMBER 2013 EXPLAINING TH E CIRCUMSTANCES OF THE COST OF ACQUISITION TO THE EXTENT OF RS. 14,75, 00/-, WHICH WAS NOT PART OF THE ACCOUNTS. THE LD AR OF THE ASSESSEE FURNISHED A CERTIFICATE THAT ALL THESE DOCUMENTS WERE FURNISHED/ AVAILABLE WITH ASSESSING OFFICER AND BEFORE ITA NO. 1593/M/2018 MANOJ PATEL 8 COMMISSIONER (APPEALS). THE PERUSAL OF BANK STATEME NT OF CITIBANK WASHINGTON AMERICA CLEARLY SHOWS THAT THE FOLLOWING PAYMENTS WAS SEND /REMITTED TO SPAN CONSTRUCTION COMPANY; DATE AMOUNT (RS.) 17 AUGUST 2015 225000 24 OCTOBER 2005 300000 7 NOVEMBER 2005 150000 9 DECEMBER 2005 150000 6 JANUARY 2006 150000 13 FEBRUARY 2006 150000 TOTAL 14,75,000/- 7. THE COPY OF PASSBOOK OF CITIBANK AGAINST EACH AND E VERY REMITTANCE CLEARLY SHOWS DRAFT PAYABLE TO SPAN CONSTRUCTION P RIVATE LIMITED. THEREFORE, THE SAID AMOUNT WAS REMITTED/ SENT TO SP AN CONSTRUCTION PRIVATE LIMITED. SPAN CONSTRUCTION PRIVATE LIMITED HAS ALSO CONFIRMED THE RECEIPT OF RS. 35,40,000/-, RECEIVED AGAINST THE ALLOTMENT OF FLAT NO.A/1601, SWAPANALOK TOWER, FILMCITY ROAD, GOREGAON (EAST). T HE AMOUNT RECEIVED BY SPAN CONSTRUCTION PRIVATE LIMITED CONSIST OF RS. 14,75,000/0 RECEIVED THROUGH CITI BANK AND REMAINING THROUGH BANK OF IND IA. DURING THE RELEVANT PERIOD, (FROM AUGUST 2005 TO FEB 2006) WHE N THE REMITTANCE WAS SENT TO SPAN CONSTRUCTION PRIVATE LIMITED, THE ASSE SSEE WAS HAVING STATUS OF NON-RESIDENT INDIAN. THE ASSESSING OFFICER HAS N OT DISPUTED THE STATUS OF ITA NO. 1593/M/2018 MANOJ PATEL 9 ASSESSEE DURING THE RELEVANT PERIOD. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT ASSESSEE WAS HAVING ANY TAXABLE INCOME IN INDIA OR UNDER OBLIGATION TO FILE RETURN OF INCOME UNDER INCOME-TAX ACT, DURING THE PERIOD WHEN THE ASSESSEE MADE THE PAYMEN T AGAINST THE FLAT THROUGH HIS BANK ACCOUNT IN CITI BANK, WASHINGTON A MERICA. WE HAVE FURTHER NOTED THAT DURING THE ASSESSMENT PROCEEDING THE ASSESSEE FURNISHED REVISE COMPUTATION OF LONG-TERM CAPITAL GAINS. THE ASSESSING OFFICER INSTEAD OF CONSIDERING THE REVISED COMPUTATION OF L ONG-TERM CAPITAL GAIN DATED THE AMOUNT AS INVESTMENT OF UNDISCLOSED INCOM E. HERE, WE MAY REFER THE CIRCULAR NO.14 (XL) DATED 11 TH APRIL 1955, ISSUED BY CBDT DIRECTING THE OFFICERS OF THE DEPARTMENT NOT TO TAKE ADVANTAG E OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHT. THE CBDT FURTHER DIRECTED THAT IT IS THEIR DUTY TO ASSIST THE TAXPAYER IN EVERY REASONABLE WAY, PARTIC ULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEF AND IN THIS REGARD THE OFFICERS SHOULD TAKE INITIATIVE IN GUIDING THE TAXPAYER WHERE PROCEEDING OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME FOUND NO RELIEF IS D UE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT THEY MAY BE SHORT OF WRITING A SQUARE DEAL FROM THE DEPARTMENT. WE HAVE NOTED HERE THAT THE ASSESSING O FFICER AND THE LD. COMMISSIONER (APPEALS), INSTEAD OF ADHERING TO THE INSTRUCTION OF CBDT AND CONSIDERING THE LEGITIMATE CONTENTION OF THE AS SESSEE MADE THE ADDITION ITA NO. 1593/M/2018 MANOJ PATEL 10 UNDER SECTION 69 OF THE ACT. IN OUR CONSIDERED VIEW THE ASSESSEE HAS PROVED BEYOND REASONABLE DOUBT THAT AMOUNT OF RS. 1 4,75,000/- WAS PAID AGAINST THE COST OF ACQUISITION OF FLAT. THEREFORE, THE ASSESSEE IS ENTITLED FOR INCLUSION OF COST OF RS. 14,75,000 /-, WHILE CLAIMI NG LONG-TERM CAPITAL GAIN. MOREOVER, THE INCOME OF RS. 14,75,000/- RELATES TO ASSESSMENT YEARS 2006- 07, WHICH CANNOT BE ADDED IN THE ASSESSMENT YEAR UN DER CONSIDERATION. AS WE HAVE ALREADY OBSERVED THAT THE ASSESSEE HAVING A STATUS OF NON-RESIDENT INDIAN WAS NOT UNDER OBLIGATION TO FILED RETURN OF INCOME UNDER INCOME TAX ACT FOR ASSESSMENT YEAR 2006-07. FURTHER, THE ASSES SEE HAS HIMSELF BROUGHT THE SAID AMOUNT IN HIS BOOKS OF ACCOUNTS, SOON AFTE R THE MISTAKE REALIZED BY HIM IN NOT CLAIMING THE SAID AMOUNT IN COMPUTATI ON OF LONG TERM CAPITAL GAIN. THE REVENUE OFFICIAL SHOULD NOT HAVE DOUBTED THE BONAFIDE CLAIM OF THE ASSESSEE, WHEN HE HAS EXPLAINED THE INADVERTENT MISTAKE. IN VIEW OF THE ABOVE DISCUSSION THE GROUND NO.1 AND 2 OF APPEAL RA ISED BY ASSESSEE ARE ALLOWED. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 27.04.2018 SK (PS) ITA NO. 1593/M/2018 MANOJ PATEL 11 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI