Income-tax Officer, Dhule V. Shri Gopal Babanlal Agrawal, Dhule

ITA 1646/PUN/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2001 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER, AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER. ITA.NO.1646/PN/2007 (ASSTT. YEAR : 2005-06) ITO, WARD-3(1), DHULE. .. APPELLANT VS. SHRI GOPAL BABANLAL AGRAWAL, PROP: TIRUPAT DISTRIBUTORS, J.B.ROAD, DHULE. .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO DEPARTMENT BY : MS.SHAILJA RAI DATE OF HEARING : 23.01.2013 DATE OF PRONOUNCEMENT : 31.01.2013 ORDER PER R.S.PADVEKAR, JM : IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT(A)-I, NASHIK DATED 26.09.2007 FOR TH E A.Y. 2005-06. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LEARNED COMMISSIONER OF INCOME TAX (A-I), NASHIK ERRED IN D ELETING ADDITION MADE BY THE ASSESSING OFFICER OF RS.49,01, 977/- ON ACCOUNT OF CAPITAL GAIN FOR A.Y. 2005-06 IN RESPECT OF THE FINAL PLOT NO.98 CTS NO.455A ON THE GROUND THAT THE PROPE RTY IN QUESTION WAS STILL IN THE NAME OF THE APPELLANT AND THE SALE DEED ENTER IN TO BY THE APPELLANT BECAME IN OPERATI VE IN VIEW OF THE REVENUE COMMISSIONER STAY ORDER. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (A-I), NASHI K ERRED IN NOT GRANTING THE OPPORTUNITY TO THE ASSESSING OFFIC ER TO EXPLAIN THE CASE AND PUT UP THE CASE WHICH HE HAD MADE REQU EST TO THE CIT(A)-I NASHIK VIDE THIS OFFICE LETTER DTD. 22.08. 2007. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX, NASHIK ERRE D IN ADMITTING NEW EVIDENCE/GROUND WHICH WAS NEVER CLAIM ED/PUT UP BY THE RESPONDENT BEFORE THE ASSESSING OFFICER S UCH AS PART OF POSSESSION IS WITH THE ASSESSEE IN THE FORM OF G ODOWN ON THE SAID OPEN PLOT. 2 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (A-I), NASHI K ERRED IN ADMITTING THE GROUNDS REGARDING THE 24 ENCROACHERS ON THE SAID PROPERTY WHICH WERE NEVER CLAIMED BEFORE THE A.O. 5. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (A-I), NASHI K ERRED IN ADMITTING THE AMOUNT OF COMPENSATION PAID TO THE NE W ENCROACHERS WHICH IS TOTALLING TO RS.8,78,000/-. 6. THE ORDER OF THE CIT(A)-I, NASHIK MAY BE VACATED AN D THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND HAS SOLD PLOT NO.98 I N CITY SURVEY NO.455A IN URBAN AREA OF DHULE DISTRICT FOR A CONSI DERATION OF RS.60,00,000/-. THE ASSESSING OFFICER WORKED OUT T HE CAPITAL GAINS IN THE A.Y. 2005-06 BY HOLDING THAT THERE WAS A TRA NSFER IN THE FINANCIAL YEAR RELEVANT TO A.Y. 2005-06. THE ASSES SEE CONTENDED THAT PART POSSESSION OF THE SMALL AREA OF PLOT WAS WITH THE ASSESSEE AND SUBSTANTIAL AREA WAS OCCUPIED BY 24 ENCROACHERS. A S PER THE TERMS OF THE AGREEMENT TO SALE, THE ASSESSEE WAS LIABLE T O VACATE THE STAY ORDER AGAINST THE OWNERSHIP OF THE PROPERTY. THE R EVENUE COMMISSIONER HAS STAYED THE TRANSFER OF PROPERTY IN CITY SURVEY RECORD IN THE NAME OF THE PURCHASER. IN CONSEQUENC E OF THE STAY ORDER BY THE REVENUE COMMISSIONER, THE PROPERTY SUB JECTED TO THE AGREEMENT TO SALE, COULD NOT BE TRANSFERRED TO THE PURCHASER. THE ASSESSEE ENTERED INTO SETTLEMENT WITH THE PERSON CL AIMING PART OWNERSHIP OF THE SAID PROPERTY BEFORE THE REVENUE C OMMISSIONER FOR THE CONSIDERATION IN THE F.Y. 2005-06. IN RESPECT OF THE OTHER LITIGANTS, THE REVENUE COMMISSIONER HAS DIRECTED TH EM VIDE ORDER DATED 29.03.2007 TO CHALLENGE THE MATTER IN CIVIL C OURT AND NOT BEFORE HIM AS IT WAS A RIGHT FORUM FOR THEM. THE NA ME OF THE PURCHASER WAS ENTERED IN THE CITY SURVEY RECORD AFT ER THE PROCEEDINGS BEFORE THE REVENUE COMMISSIONER WAS CLOSED SOMEWHER E IN THE MONTH OF APRIL, 2007. THE ASSESSEE HAS ALSO PAID C ONSIDERATION TO SOME OF THE ENCROACHERS TO VACATE THE PROPERTY IN T HE SUBSEQUENT YEARS. THE ASSESSEE CONTENDED THAT THERE WAS NO TR ANSFER IN THE F.Y. 2004-05 AND, HENCE, NO CAPITAL GAIN CAN BE BROUGHT TO TAX IN THE A.Y. 2005-06. THE ASSESSEE ALSO CLAIMED THAT THE CAPITAL GAINS SHOULD, THEREFORE, BE TAXED IN THE A.Y. 2008-09 AFT ER ALLOWING 3 EXPENDITURE INCURRED BY THE ASSESSEE TO VACATE THE STAY ORDER OF THE REVENUE COMMISSIONER AND TO CLEAR THE TITLE OF THE PROPERTY AND ALSO TO EVICT THE ENCROACHERS IN THE SAID PROPERTY. 2.1. THE ASSESSING OFFICER WAS NOT IMPRESSED WITH T HE STAND OF THE ASSESSEE AND HE HELD THAT THERE WAS A TRANSFER OF T HE PROPERTY IN THE A.Y. 2005-06 AND HE ACCORDINGLY WORKED OUT LONG TER M CAPITAL GAINS (LTCG) OF RS.49,04,077/- AFTER ALLOWING DEDUC TION TOWARDS INDEXED COST OF ACQUISITION. THE MATTER WAS CARRIE D BEFORE THE LD. CIT(A) AND THE LD. CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT THERE WAS NO TRANSFER AS SUCH IN THE F.Y. 2004-05 RELEVAN T TO A.Y. 2005-06 AND IN TRUE SENSE THE TRANSFER WAS IN THE FINANCIAL YEAR RELEVANT TO A.Y. 2008-09 WHEN THE NAME OF THE PURCHASER WAS ENT ERED INTO CITY SURVEY RECORD. THE LD. CIT(A) ALSO DIRECTED THE AS SESSING OFFICER TO ALLOW THE EXPENDITURE ACTUALLY INCURRED BY THE ASSE SSEE AFTER DUE VERIFICATION WHILE ASSESSING THE INCOME IN THE F.Y. 2007-08. NOW THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE CI T(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. DR FILED A PAPER BOOK AT THE T IME OF HEARING WHICH IS TAKEN ON RECORD. THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE LD. DR IS THAT AS PER THE TERMS OF THE AGREE MENT BETWEEN THE ASSESSEE AND THE PURCHASER, THE POSSESSION WAS GIVE N IN THE F.Y. 2004-05 AND HENCE, THERE WAS A TRANSFER IN A.Y. 200 5-06 AND THE ASSESSING OFFICER WAS RIGHT IN ASSESSING THE CAPITA L GAINS IN THE SAID YEAR. SHE FURTHER SUBMITTED THAT AFTER THE ASSESSM ENT WAS COMPLETED, THERE WERE DEVELOPMENTS WHICH WERE NOT B EFORE THE ASSESSING OFFICER. SHE FURTHER SUBMITTED THAT THE ASSESSEE FILED THE ADDITIONAL EVIDENCE BEFORE THE CIT(A) AND THE ASSES SING OFFICER HAS NO OPPORTUNITY TO CONSIDER THE SAME. SHE FURTHER S UBMITTED THAT THE ORDER OF THE LD. CIT(A) MAY BE VACATED. PER CONTRA , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN FACT THE LEGAL T RANSFER IS ONLY IN THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08 AND ASSES SING OFFICER WAS TOTALLY WRONG IN ASSESSING THE CAPITAL GAINS IN THE A.Y. 2005-06. HE FAIRLY SUBMITTED THAT WITHOUT PREJUDICE TO THE RIGH TS OF THE ASSESSEE, THE MATTER MAY BE REMANDED TO THE FILE OF THE ASSES SING OFFICER FOR 4 FRESH CONSIDERATION AS AFTER THE ASSESSMENT ORDER W AS PASSED, THERE WERE MANY DEVELOPMENTS IN THIS MATTER AND THE RELEV ANT DOCUMENTS WERE NOT AVAILABLE TO THE ASSESSING OFFICER. THE LD. DR HAS NO OBJECTION FOR SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. THE LD. COUNSEL ALSO SUBMITTED THAT ASSES SEE HAS PAID COMPENSATION TO THE ENCROACHERS FOR CLEARING THE TI TLE AND ALSO INCURRED EXPENDITURE FOR PROTECTING HIS INTEREST AN D THE SAID EXPENDITURE MAY BE DIRECTED TO BE ALLOWED. AS PER THE CONSENT OF BOTH THE PARTIES, WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE OF YEAR OF TAXABILITY O F THE CAPITAL GAINS AS WELL AS THE DEDUCTION OF EXPENDITURE TO BE ALLOWED WHILE COMPUTING THE CAPITAL GAINS DENOVO. NEEDLESS TO SAY THE ASSE SSING OFFICER SHOULD GIVE DUE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE IN COMPLIANCE OF THE PRINCIPLES OF NATURAL JUSTICE. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF JANUARY, 2013. SD/- SD/- ( G.S.PANNU ) ( R.S.PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 31 ST JANUARY, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-3(1), DHULE. 3. THE CIT(A)-I, NASHIK. 4. THE CIT-I, NASHIK. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.