LATE SHRI INDULAL N. SHETH, MUMBAI V. ITO 11(2)(3), MUMBAI

ITA 1684/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83493 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 28-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CIRCUMSTANCES OF CASE
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; ,OA ,OA ,OA ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.1684/MUM/2013 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2008-09 LATE SHRI INDULAL N. SHETH 501, VANMALI APARTMENTS, MAHAKALI, ANDHERI (EAST) MUMBAI- 400 020. VS.` THE INCOME TAX OFFICER- 11(2)(3) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. PAN:- AAWPS9592B APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.01.2013 OF CIT(A) FOR THE A.Y. 2008-09. THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS IN THIS APPEAL:- 1 THE LD. CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN NOT ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 2. THE LEARNED CIT(A) ERRED ON FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW IN NOT ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE . 46A OFHTE I.T. RULES, 1962 PARTICULARLY IN VIEW OF THE FACTS THAT HE HAD SENT THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER FOR HIS COMMENTS. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD. CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE DISALLOWANCE OF THE ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI KIRIT SANGHVI REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI SUMIT KUMAR DATE OF HEARING 28.07.2014 DATE OF PRONOUNCEMENT 06.08.2014 LATE SHRI INDULAL N. SHETH 2 | P A G E ACTUAL COST OF IMPROVEMENT OF HOUSE, AT RS. 6,00,00 0/- CLAIMED WITH INDEXATION AT RS. 7,14,039/- 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S SOLD HIS FLAT FOR A CONSIDERATION OF RS. 75,00,000/- ON WHICH LONG TERM CAPITAL GAIN IS SHOWN AT NIL AFTER CLAIMING INDEXED COST AT RS. 10,19,350/-, INDEXED C OST OF IMPROVEMENT OF RS. 7,14,039/- AS WELL AS EXEMPTION U/S 54 OF RS. 57,3 8,111/-. THE ASSESSING OFFICER QUESTIONED THE COST OF IMPROVEMENT OF RS. 6,00,000 /- AS THE ASSESSEE HAS NOT PRODUCED THE NECESSARY DOCUMENTS IN RESPECT OF THE IMPROVEMENT CARRIED OUT IN THE FLAT. THE ASSESSEE SUBMITED BEFORE THE ASSESSING OF FICER THAT IN THE F.Y. 2003-04, THE ASSESSEE HAS MADE DRAWINGS OF RS. 14,36,294/- W HICH WAS DEBITED IN THE CAPITAL ACCOUNT WHICH INCLUDES RS. 6,00,000/- IN RESPECT O F FLAT IMPROVEMENT EXPENSES. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N AND CONTENTION OF THE ASSESSEE AND HAS OBSERVED THAT THE DRAWINGS SHOW IN THE CAPI TAL ACCOUNT AT RS. 14,36,294/- CANNOT BE TAKEN AS IMPROVEMENT OF FLAT AS IT WAS NO T SHOWN IN THE ASSET ACCOUNT. ACCODINGLY THE ASSESSING OFFICER DISALLOWED THE CLA IM OF THE ASSESSEE OF IMPROVEMENT OF RS. 6,00,000/- AND INDEXED COST OF I MPROVEMENT OF RS. 7,14,039/-. 3. ON APPEAL, THE ASSESSEE HAS FILED ADDITIONAL EVI DENCE BEFORE CIT(A) IN RESPECT OF COST OF IMPROVEMENT OF RS. 6,00,000/- G IVING DETAILS OF BILLS RAISED AND PAYMENT MADE TO THE CONTRACTORS. THE EVIDENCE FILED BY THE ASSESSEE WAS SENT TO THE ASSESSING OFFICER FOR IS COMMENTS, ADMISSIBILIT Y AND EXAMINATION. THE ASSESSING OFFICER VIDE ITS REMAND REPORT DATED 20.10.2012 OBJ ECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE. HOWEVER ON MERITS THE ASSESSIN G OFFICER STATED IN THE REMAND REPORT THAT THE SUMMON ISSUED TO MR. PRAKASH DHAME WAS RETURNED UNSERVED AND STATEMENT OF SHRI BABULAL MISTRY WAS RECORDED BY TH E ASSESSING OFFICER U/S 131, WHEREIN HE HAS STATED THAT HE CARRIED OUT WORK IN T HE FLAT BUT DID NOT KNOW HOW MUCH PAYMENT WAS RECEIVED BY HIM. AFTER CONSIDERING THE REMAND REPORT, THE CIT(A) CONFIRMED THE DISALLOWANCE MADE BY ASSESSING OFFICE R. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE BILLS AS WELL AS THE DETAILS OF PAYMENTS FOR RENOVATION OF WORK CARRIED OUT IN THE FLAT DURING T HE FINANCIAL YEAR 2002-03. HE HAS LATE SHRI INDULAL N. SHETH 3 | P A G E ALSO REFERRED THE DETAILS OF PAYMENT MADE TO THE CO NTRACTORS WHO HAVE CARRIED OUT THE IMPROVEMENT WORK. THUS THE LD. AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED ALL RELEVA NT RECORD IN RESPECT OF HIS CLAIM COUPLED WITH DETAILS OF DRAWINGS FOR FIVE YEARS WHI CH SHOWS THAT THE DRAWINGS OF RS. 14,36,294/- IS MORE THAN FOUR TIMES OF THE AVERAGE DRAWINGS OF THE EARLIER FOUR YEARS. THEREFORE, THE LD. AUTHORIZED REPRESENTATIVE HAS SU BMITTED THAT MERELY BECAUSE THE EXPENDITURE WAS NOT PROCEEDED TO THE ASSET ACCOUNT AND DEBITED TO THE P&L ACCOUNT WILL NOT NEGATE THE FACT THAT THE ASSESSEE HAS INCU RRED THE EXPENDITURE FOR RENOVATION WORK OF THE FLAT IN QUESTION. 5. ON THE OTHER HAND. THE LD. DR HAS RELIED UPON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE DRAWINGS FOR THE FINANCIAL YEAR 2003-04 HAS BEEN UTILISED FOR THE PU RPOSE OF RENOVATION WORK IN THE FLAT. EVEN THE ASSESSEE FAILED TO PRODUCE THE CONTR ACTOR FOR VERIFICATION AND, THEREFORE, THE ASSESSEE HAS NOT DISCHARGED ITS ONUS OF PROVING THE CLAIM. THE LD DR HAS FURTHER CONTENDED THAT THOUGH SHRI BABULAL MIST RY APPEARED BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, HOWEVE R, HE FAILED TO EXPLAIN HOW MUCH PAYMENT WAS RECEIVED FROM THE ASSESSEE IN RESP ECT OF THE ALLEGED IMPROVEMENT/RENOVATION WORK CARRIED OUT IN THE FLAT . NO BANK DETAILS OR OTHER EVIDENCE WAS PRODUCED TO SHOW THE RECEIPT OF THE PA YMENT FROM ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CLAIMED THE RENOVATION EX PENSES OF RS. 6,00,000/- AS PART OF THE ACQUISITION OF THE FLAT IN QUESTION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. THE ASSESSEE CLAIMED TO HAVE INC URRED THE EXPENSES OF RS. 6,00,000/- IN THE YEAR 2003-04 AND IN SUPPORT OF HI S CLAIM THE ASSESSEE HAS EXPLAINED THAT DURING THE SAID YEAR THE ASSESSEE HA S MADE A DRAWING OF RS. 14,36,295/-. IN THE REMAND PROCEEDINGS THE ASSESSEE COULD NOT PRODUCE ONE OF THE TWO PARTIES TO WHOM THE PAYMENT WAS ALLEGEDLY MADE. AS REGARDS THE PAYMENT TOWARDS THE RENOVATION WORK TO MR. PRAKASH DHAME IS CONCERNED, THE ASSESSEE HAS FAILED TO ESTABLISH THE CLAIM AS NEITHER THE PAYMEN T WAS PROVED NORE THE CONFIRMATION OR VERIFICATION OF THE PARTIES WAS BRO UGHT ON RECORD AS THE SAID PARTY LATE SHRI INDULAL N. SHETH 4 | P A G E HAD NOT APPEARED BEFORE THE ASSESSING OFFICER FOR T HIS PURPOSE. EVEN OTHERWISE, THE ASSESSEE HAS FURNISHED THE DETAILS ONLY TO THE EXTE NT OF RS. 4,15,701/- TOWARDS THE RENOVATION EXPENDITURE OUT OF WHICH RS. 2,37,711/- WAS PAID TO SHRI BABULAL MISTRY AND THE BALANCE OF RS. 1,77,590/- TO SHRI PRAKASH DHAME. WE NOTE THAT SHRI BABULAL MISTRY APPEARED BEFORE THE ASSESSING OFFICE R AND MADE THE STATEMENT THAT HE HAS CARRIED OUT THE RENOVATION WORK IN THE FLAT OF THE ASSESSEE IN THE YEAR 2003- 04, THOUGH, HE WAS NOT ABLE TO BRING THE PASS-BOOK FOR THE RELEVANT PERIOD TO SHOW THE RECEIPT OF PAYMENT FROM THE ASSESSEE. THERE IS NO DISPUTE THAT THE DRAWINGS FOR THE F.Y. 2003-04 OF RS. 14,36,295/- IS MORE THAN FO UR TIMES FROM THE AVERAGE DRAWINGS FOR THE LAST FOUR YEARS BUT AT THE SAME TI ME IT WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS INCURRED THE SAID AMOUNT FOR THE PURPOSE OF RENOVATION OF THE FLAT IN QUESTION. WE NOTE THAT SO ME OF THE PAYMENTS IN THE F.Y. 2003-04 HAS BEEN MADE BY THE ASSESSEE THROUGH CHEQU ES AS IT IS EVIDENT FROM THE BANK STATEMENT OF THE ASSESSEE. THE ASSESSEE HAD FU RNISHED THE DETAILS OF THE CHEQUES IN RESPECT OF THE PAYMENT TO SHRI BABULAL MISTRY. THE DETAILS FURNISHED BY THE ASSESSEE IN THE REMAND PROCEEDINGS ARE AS UNDER :- DATE OF PAYMENT CHEQUE NO. AMOUNT RS. 20.06.2003 004953 12000 20.08.2003 004964 10000 22.09.2003 004974 10000 24.09.2003 004975 15000 10.10.2003 004981 10000 03.11.2003 004984 20000 5.11.2003 004986 13000 21.11.2003 004992 20000 6.12.2003 004994 50000 17.12.2003 004996 15000 29.12.2003 004999 25000 20.02.2004 043284 25000 08.03.2004 043288 10000 TOTAL 235000.00 7. THESE CHEQUE PAYMENTS WERE ALSO SUPPORTED BY THE BANKS STATEMENTS FURNISHED BY THE ASSESSEE, THEREFORE, PRIMA FACIE, THE ASSESSEE HAS PROVED THAT THE LATE SHRI INDULAL N. SHETH 5 | P A G E PAYMENT OF RS. 2,35,000/- WAS MADE THROUGH CHEQUE T O SHRI BABULAL MISTRY DURING THE YEAR 2003-04 WHICH COULD NOT BE DOUBTED AS AN A FTERTHOUGHT OR A BOGUS PAYMENT WHEN THE ASSET HAS BEEN SOLD AFTER A GAP OF FIVE YE ARS. THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO SAY THAT THE DETA ILS FURNISHED BY THE ASSESSEE ARE NOT PERTAINING TO THE PAYMENT MADE TO BABULAL MISTR Y, ACCORDINGLY WE FIND THAT THE ASSESSEE HAS PROVED ITS CASE TO THE EXTENT OF PAYME NT OF RS. 2,35,000/- TO SHRI BABULAL MISTRY BY WAY OF PRODUCING THE PAYMENTS THR OUGH CHEQUES IN THE YEAR 2003- 04 AND FURTHER THE AMOUNT OF DRAWINGS IN THE SAID Y EAR IS MORE THAN SUFFICIENT TO MAKE SUCH PAYMENT. ACCORDINGLY THE CLAIM OF THE ASS ESSEE IS PARTLYL ALLOWED TO THE EXTENT OF RS. 2,35,000/-. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 6-8- 2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 6-8 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI