ABHIJIT AVARSEKAR, MUMBAI V. ASST CIT CEN CIR 8(2), MUMBAI

ITA 161/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0233 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA LD
• Assessee Lawyers: RAKESH MOHAN LD
• Keywords: Capital asset; Document seized; Cost of acquisition; Documents seized
• Section: 143(3); 153A; 132; 154; 139

Judgement Text

ABHIJIT AVARSEKAR SHWETA AVARSEKAR ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.161/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) A BHIJIT AVARSEKAR 1401, 14 TH FLOOR SHRUSHTI APARTMENT OLD PRABHADEVI ROAD PRABHADEVI, MUMBAI-400 025 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-8(2) MUMBAI ./PAN : AAAPA-5573-E ( /APPELLANT ) : ( ! / RESPONDENT ) & ./I.T.A. NO.160/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) SHWETA AVARSEKAR 1401, 14 TH FLOOR SHRUSHTI APARTMENT OLD PRABHADEVI ROAD PRABHADEVI, MUMBAI-400 025 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-8(2) MUMBAI ./PAN : AAEPA-2258-E ( /APPELLANT ) : ( ! / RESPONDENT ) ASSE SSEE BY : RAKESH MOHAN, LD. AR REVENUE BY : ANADI VERMA, LD. CIT-DR / DATE OF HEARING : 19/11/2018 / DATE OF PRONOUNCEMENT : 05/12/2018 AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY DIFFERENT ASSESSEE FOR ASSE SSMENT YEAR [AY] 2009-10 AGITATE SEPARATE ORDERS OF FIRST APPELLATE AUTHORITY ON COMMON GROUNDS OF APPEAL. SINCE COMMON ISSUES ARE INVOLVED , WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE & BREVITY. FIRST, WE TAKE UP ITA NO.161/MUM/2016 WHIC H CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 48, M UMBAI, [CIT(A)], APPEAL NO.CIT(A)-48/IT-248/ACCC-45/2014-15 DATED 23 /11/2015 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.53,94,499/- O N ACCOUNT OF COST OF IMPROVEMENT WHILE CALCULATING LONG TERM CAPITAL GAI NS ON SALE OF MATUNGA PROPERTY IN THE ABSENCE OF ANY INCRIMINATING MATERI AL RELATING TO COST OF IMPROVEMENT OF THE PROPERTY FOUND DURING THE COURSE OF SEARCH. THE APPELLANT PRAYS THAT THE SAID ADDITION MAY PLEASE BE DELETED. 2. WITHOUT PREJUDICE TO THE ABOVE GROUND, ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CON FIRMING AN ADDITION OF RS.52,94,499/- ON ACCOUNT OF COST OF IMPROVEMENT WH ILE CALCULATING LONG TERM CAPITAL GAINS ON SALE OF MATUNGA PROPERTY. THE APPE LLANT PRAYS THAT THE SAID ADDITION MAY PLEASE BE DELETED. 2.1 FACTS GERMANE TO THE ISSUE ARE THAT THE ASSESSE E BEING RESIDENT INDIVIDUAL WAS ASSESSED FOR IMPUGNED AY U/S 153A READ WITH SECTION 143(3) ON 31/03/2014 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-45, MUMBAI [AO] AT RS.225.83 LACS AFTER CERTAIN ADDITIONS / ADJUSTMENTS AS AGAINST INCOME OF RS.58.36 LACS AS SESSED U/S 143(3) OF THE ACT ON 24/11/2011. 2.2 THE ASSESSEE WAS SUBJECTED TO AFORESAID ASSESSM ENT PURSUANT TO A SEARCH & SEIZURE ACTION U/S 132 ON 10/12/2012 AT OFFICE PREMISES OF AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 3 M/S UNITY INFRAPROJECTS PVT. LTD. THE ASSESSEE BEING ONE OF THE DIRECTORS OF THE GROUP WAS ALSO SUBJECTED TO SEARCH PROCEEDIN GS AND COVERED UNDER THE PROVISIONS OF SECTION 153A. 2.3 IN RESPONSE TO NOTICE U/S 153A DATED 14/12/2012 , THE ASSESSEE FILED RETURN OF INCOME ON 02/12/2013 AT RS.192 LACS WHICH WAS FOLLOWED BY ANOTHER RETURN OF INCOME ON 06/01/2014 AT RS.171 .89 LACS. IN THIS LATEST RETURN OF INCOME, THE ASSESSEE REFLECTED CAPITAL GAINS OF RS.117.89 LACS ON SALE OF PLOT AT MATUNGA , THE COMPUTATION OF WHICH IS THE SOLE SUBJECT MATTER OF THIS APPEAL. THE PLOT WAS HELD BY THE ASSESSEE JOINTLY WITH HIS WIFE, SHWETA AVARSEKAR , WHO IS ANOTHER APPELLANT BEFORE US. 2.4 THE PERUSAL OF SEIZED DOCUMENTS REVEALED THAT T HE ASSESSEE WAS IN RECEIPT OF ADDITIONAL CASH CONSIDERATION OF RS.2 65 LACS AGAINST THE SALE OF STATED PLOT APART FROM DECLARED / AGREED SA LE CONSIDERATION OF RS.277 LACS. THE ASSESSEE AS WELL AS HIS WIFE, IN R ETURN FILED U/S 153A, INCLUDED THE ADDITIONAL CASH RECEIPTS OF RS.265 LAC S ON PROPORTIONATE BASIS WHILE COMPUTING CAPITAL GAIN ON SALE OF THE P ROPERTY. IN THE RETURN FILED U/S 153A ON 02/12/2013, THE GAINS WERE REFLEC TED AS SHORT TERM CAPITAL GAINS FOR RS.135.66 LACS. HOWEVER, IN SECOND RETURN FILE D ON 06/01/2014, THE GAINS WERE REVISED TO RS.117.89 LAC S AND THE SAME WERE CLAIMED TO BE LONG TERM IN NATURE. THE SUBJECT MATTER OF THE PRESENT APPEAL IS INDEXED COST OF IMPROVEMENT OF RS.53.94 LACS AS CLAIMED BY THE ASSESSEE IN THE FINAL RETURN OF INCOME U/S 153A . THESE COSTS ARE NOTHING BUT CERTAIN INTEREST COST & FEES PAID TO MU NICIPAL AUTHORITY BMC, THE DETAILS OF WHICH HAVE BEEN EXTRACTED AT PARA 8.6 OF THE QUANTUM ASSESSMENT ORDER. THESE COSTS HAVE BEEN DISALLOWED BY LD. AO IN TERMS OF THE PROVISIONS OF SECTION 55(1) BY OBSERVI NG THAT ONLY THE VALUE AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 4 ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSETS CONS TITUTE COST OF IMPROVEMENT IN THE HANDS OF THE ASSESSEE. THE LD. A O ALSO NOTED THAT BMC FEES WAS NOTHING BUT ANNUAL FEES PAYABLE FOR MAINTENANCE OF THE PROPERTY AND THE SAME COULD NOT CONSTITUTE COST OF IMPROVEMENT . RESULTANTLY, THE INDEXED COST OF IMPROVEMENT OF RS. 53.94 LACS WAS DISALLOWED AND THE INCOME WAS ENHANCED TO THAT EXTE NT. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE ADDITIONS ON LEGAL GROUNDS AS WELL AS ON MERITS BEFORE LD. CIT(A) BY SUBMITTIN G THAT NO INCRIMINATING MATERIAL WAS FOUND QUA ADDITIONS MADE BY LD. AO. HOWEVER, NOT CONVINCED, LD. CIT(A) CONFIRMED THE STAND OF LD. AO WITH FOLLOWING OBSERVATIONS:- 4.7 I HAVE GIVEN A CAREFUL CONSIDERATION TO THE APP ELLANTS CONTENTION. THE ASSESSEE HAS CLAIMED IN ITS WRITTEN SUBMISSION THAT THE COST OF IMPROVEMENT WAS CLAIMED AS DEDUCTION IN ITS ORIGINAL RETURN OF INCO ME UNDER SECTION 139 FILED ON 16.08.2010. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 24.11.2011 WHERE TOTAL INCOME IS ASSESSED AT RS.58,36,960/-. O N PERUSAL OF THE SAID RETURN, IT IS SEEN THAT THE APPELLANT HAD SHOWN SHORT TERM CAPITA L LOSS ON SALE OF MATUNGA PLOT AT RS.4,49,379/- AGAINST WHICH COST OF ACQUISITION AFT ER INDEXATION IS CLAIMED AT RS.1,80,621/- AND COST OF IMPROVEMENT AFTER INDEXAT ION IS SHOWN AT RS. NIL. THE APPELLANT HAS CLAIMED BEFORE ME THAT HE HAD FILED A RECTIFIED COMPUTATION OF INCOME DATED 27.07.2011 BEFORE AO SHOWING REVISED COST OF ACQUISITION AT RS.1,33,86,940/- WHEREIN BMC FEES IS INCLUDED AND COST OF IMPROVEMEN T OF RS.21,03,146/- CLAIMED ON ACCOUNT OF INTEREST PAYMENT WAS SHOWN SEPARATELY . IN THIS REGARD, IT IS PERTINENT TO MENTION HERE THAT THE APPELLANT HAD FILED A BELA TED RETURN FOR AY 2009-10 ON 16.08.2010 THEREBY LOSING HIS RIGHT TO FILE A REVIS ED RETURN. FURTHER, THE RECTIFIED COMPUTATION SHOWING INDEXED COST OF ACQUISITION AND COST OF IMPROVEMENT IS CLAIMED TO HAVE BEEN FILED VIDE LETTER DATED 27.09.2011. BU T NO EVIDENCE OF HAVING IT FILED BEFORE AO DURING THE ASSESSMENT PROCEEDINGS IS DISC ERNIBLE AND FURTHER, AO DID NOT TAKE COGNIZANCE OF IT IN THE ASSESSMENT ORDER. IT I S SEEN THAT THE AO SOON AFTER 143(3) ORDER, PASSED AN ORDER U/S 154 DATED 26.12.2 011 WHEREBY THE TOTAL INCOME OF THE ASSESSEE REMAINED UNCHANGED AT RS.58,36,960/ - AS SHOWN IN THE ORIGINAL RETURN FILED ON 16.08.2010. FURTHER THE APPELLANT C OULD NOT GIVE NO DETAILS AND SOURCES OF COST OF IMPROVEMENT EITHER BEFORE AO OR BEFORE ME WHICH UNEQUIVOCALLY GOES TO PROVE THAT SUCH EXPENSES HAD NEVER BEEN INC URRED BEFORE AND THEREFORE, THERE WAS NO OCCASION FOR APPELLANT TO SHOW THEM IN THE RETURN OF INCOME FILED U/S 139. THERE IS NO MENTION OF ANY SUCH COST OF IMPROV EMENT IN THE STATEMENTS WITHER BY THE ASSESSEE OR SHRI MADHAV NADKARNI, CFO FROM W HOSE PREMISES THE DOCUMENTS OF ON MONEY RECEIPTS WERE FOUND. EVEN BEF ORE ME, THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THESE EXPENSES A ND HOW THE SAME WERE CLAIMED AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 5 IN THE RETURN U/S 139. THE CLAIM MADE IN 153A RETUR N IS A FRESH CLAIM, WHICH IS SIMPLY AN AFTERTHOUGHT WITH AN INTENTION TO REDUCE HIS TAX ABLE INCOME. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL INDIA VS ACIT (2013) 269 CTR 281, HAS HELD THAT, IT IS NOT OPEN FOR ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE IN ASSESSMENT UNDER SECTION 153A, WHICH HAD NOT BEEN C LAIMED IN ORIGINAL ASSESSMENT ALREADY COMPLETED. ACCORDINGLY THIS GROUND OF APPEA L TAKEN BY THE ASSESSEE IS DISMISSED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI RAKESH MOHAN, AGITATED THE ADDITIONS ON LEGAL GROUNDS AS WELL AS ON MERITS BY SUBMITTING THAT THE COST OF IMPROVEMENT AS CLAIMED BY THE ASSESSEE WAS AN ALLOWABLE DEDUCTION UNDER LAW. PER CONTRA, LD. CIT-DR SUBMITTED THAT THE ADDITIONS WERE PERFECTLY JUSTIFIED. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED RELEVANT MATERIAL ON RECORD. THE BASIC FACTS ARE NO T UNDER DISPUTE. SO FAR AS THE LEGAL GROUNDS RAISED BY LD. AR IS CONCERNED, WE FIND THAT CERTAIN INCRIMINATING MATERIAL WAS FOUND DURING SEARCH OPER ATIONS WHICH INDICATED RECEIPT OF ADDITIONAL CASH CONSIDERATION BY THE ASSESSEE. THE SAME HAS DULY BEEN ACCEPTED BY THE ASSESSEE IN RETU RN OF INCOME FILED U/S 153A WHEREIN THE ASSESSEE HAS REVISED THE CAPITAL GAINS COMPUTATIONS. IN THE FIRST RETURN FILED U/S 153A, T HE GAINS WERE CLAIMED TO BE IN THE NATURE OF SHORT TERM, HOWEVER, IN THE SECOND RETURN THE GAINS WERE CLAIMED TO BE LONG TERM IN NATURE AND THE ASSESSEE CLAIMED INDEXATION BENEFIT AGAINST COST OF ACQUISITION AS W ELL AS AGAINST COST OF IMPROVEMENT. THEREFORE, THE MATTER OF COMPUTATION O F CAPITAL GAINS, IN OUR OPINION, WAS QUITE OPEN AND SUBJECTED TO SCRUTI NY OF LD. AO U/S 153A PROCEEDINGS AND THEREFORE, IT WOULD BE INCORRECT TO SAY THAT THE MATTER OF COMPUTATION OF COST OF IMPROVEMENT DURING ORIGINAL PROCEEDINGS U/S 143(3) HAD ALREADY ATTAINED FINALITY AND LD. AO HAD NO JURISDICTION TO AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 6 DELVE INTO THE SAME. WE FIND NO FORCE IN THE SAME A ND THEREFORE, DISMISS THIS GROUND OF APPEAL. 6. NOW THE ONLY QUESTION THAT SURVIVES FOR OUR CON SIDERATION IS THAT WHETHER INTEREST COST AND BMC FEES PAID THE BY THE ASSESSEE COULD BE TERMED AS COST OF IMPROVEMENT WITHIN THE MEANING OF SECTION 55(1)(B)(2)(II). AS PER THESE PROVISIONS, COST OF I MPROVEMENT MEANS ALL EXPENDITURE OF A CAPITAL NATURE INCURRED IN MAKING ANY ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSETS AND DO NOT INCLUD E ANY EXPENDITURE WHICH IS DEDUCTIBLE IN COMPUTING THE INCOME CHARGEA BLE UNDER ANY HEAD OF INCOME AS SPECIFIED. UPON PERUSAL, WE FIND THAT THE CONDITIONS TO CLAIM AN EXPENDITURE AS COST OF IMPROVEMENT IS THAT (1)THE EXPENDITURE IS CAPITAL IN NATURE (2) THE SAME IS INCURRED IN MAKIN G ANY ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSETS (3) THE EXPENDITU RE IS NOT DEDUCTIBLE UNDER ANY SPECIFIED HEADS OF INCOME. JUDGING THE NA TURE OF IMPUGNED EXPENDITURE AT THE THRESHOLD OF STATUTORY PROVISION S, WE FIND THAT THE EXPENDITURE FAILS TO QUALIFY TO BE TERMED AS COST OF IMPROVEMENT SINCE THE SAME WAS NEITHER INCURRED TO MAKE ANY ADDITIONS OR ALTERATIONS TO THE PLOT SOLD BY THE ASSESSEE NOR COULD BE SAID TO BE C APITAL IN NATURE. FURTHER, MUNICIPAL TAXES AS WELL AS INTEREST COSTS ARE DEDUCTIBLE IN SPECIFIED MANNER UNDER THE HEAD INCOME FROM HOUSE PROPERTY UPON FULFILLMENT OF PRESCRIBED CONDITIONS. THEREFORE, TH E SAME COULD NOT BE TERMED AS COST OF IMPROVEMENT AND THE BENEFIT OF THE SAME COULD NOT BE ALLOWED TO THE ASSESSEE. HENCE, WE CONFIRM THE DISA LLOWANCE OF THE SAME AS DONE BY LD.AO. THIS GROUND STANDS DISMISSED . RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMISSED. AMIT V.HARMALKAR ASSESSMENT YEARS-2005-06 & 2006-07 7 ITA NOS. 160/MUM/2016 7. THE ASSESSEE, IN SIMILAR MANNER, HAS BEEN DENIED DEDUCTION OF INDEXED COST OF IMPROVEMENT OF RS. 28.37 LACS IN ASSESSMENT MADE ON 31/03/2014. THE SAME UPON, CONFIRMATION BY FIRST AP PELLATE AUTHORITY, IS UNDER APPEAL BEFORE US ON SIMILAR GROUNDS OF APPEAL S. FACTS BEING PARI- MATERIA THE SAME, WE DISMISS THE APPEAL. CONCLUSION 8. BOTH THE APPEALS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2018. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :05/12/2018 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT 3. ( ( ) / THE CIT(A) 4. ( / CIT CONCERNED 5. )* #+ , + , / DR, ITAT, MUMBAI 6. *,-. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.