Shri Prabhashankar D. Dave, RAJKOT-GUJARAT V. The Commissioner of Income Tax-2, RAJKOT-GUJARAT

ITA 182/RJT/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0471 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D M RINDANI CA
• Keywords: Unexplained cash credit; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , , ! BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.182/RJT/2015 ( / ASSESSMENT YEAR : 2006-07) SHRI PRABHASHANKAR D.DAVE C/O.SHUKLA & CO. 310/311, AALAP B, 3D FLOOR OPP.SHASTRI MAIDAN LIMDA CHOWK, RAJKOT-1 / VS. THE CIT-2 RAJKOT & ./ ./ PAN/GIR NO. AIKPD 7793 H ( &( / APPELLANT ) .. ( )&( / RESPONDENT ) &( * / APPELLANT BY : SHRI D.M.RINDANI,C.A. (AR) )&( + * / RESPONDENT BY : SHRI YOGESH PANDEY, D.R. ,-. + / DATE OF HEARING 07/12/2015 /0 + / DATE OF PRONOUNCEMENT 09/12/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX, RAJKOT-II, RAJKOT [CIT IN SHORT] ITA NO.182/RJT/ 2015 SHRI PRABHASHANKAR D. DAVE VS. THE CIT ASST.YEAR 2006-07 - 2 - DATED 20/03/2015 PERTAINING TO ASSESSMENT YEAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX, RAJKOT -2, RAJKOT ERRED IN ASSUMING JURISDICTION U/S.263 OF THE ACT, PARTICULA RLY IN THE LIGHT OF REASONS STATED BY HIM IN THE SHOW CAUSE NOTICE AND THE ORDER PASSED U/S.263 OF THE ACT AND HENCE THE IMPUGNED ORDER IS BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX, RAJKOT-2, R AJKOT ERRED IN HOLDING THAT THE ASSESSMENT WAS MADE WITHOUT VERIFI CATION, WHEN ALL REQUIRED DETAILS WERE DULY FILED DURING RE-ASSESSME NT PROCEEDINGS AND THE A.O. HAD MADE DETAILED INQUIRIES ON ALL ASP ECTS OF THE INCOME RETURNED WHILE ASSESSING THE INCOME OF THE A PPELLANT U/S.143(3) R.W.S.147 OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX, RAJKOT-2, R AJKOT ERRED IN REJECTING VALUERS CERTIFICATE BY HOLDING THAT THE SAID CERTIFICATE WAS A CONCOCTED DOCUMENT AND DEVOID OF ANY MERIT. 4. ON MERITS, THE LEARNED COMMISSIONER OF INCOME-TAX, RAJKOT-2, ERRED IN REJECTING PROPERTY IMPROVEMENT COST OF RS1 ,64,500/- AND INDEXATION THEREON AND THEREBY ASSESSING INCOME FRO M LONG TERM CAPITAL GAIN AT RS.5,85,880/- AGAINST RS.1,10,552/- SHOWN BY THE APPELLANT. 5. ON MERITS, THE LEARNED COMMISSIONER OF INCOME-TAX, RAJKOT-2 ERRED IN MAKING ADDITION OF RS.44,000/- BY TREATING LOAN FROM RELATIVE AS UNEXPLAINED CREDIT IN BANK. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND WITHDRAW ANY GROUND OF APPEAL ANYTIME UP TO THE HEARING OF THIS APPEAL. 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST THE ACTION OF THE LD.CIT-RAJKOT IN EXERCISING HIS POWER JURISDICTION U/S.263 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) . 2.1. BRIEF FACTS OF THE CASE ARE THAT THE LD.CIT ISSUED A SHOW-CAUSE NOTICE DATED 31.7.2014, WHICH IS ENCLOSED AT PAGE N OS.14 & 15 OF THE PAPER-BOOK, CALLING UPON THE ASSESSEE TO EXPLAIN WI TH REGARD TO THE COST ITA NO.182/RJT/ 2015 SHRI PRABHASHANKAR D. DAVE VS. THE CIT ASST.YEAR 2006-07 - 3 - OF IMPROVEMENT INCURRED IN THE YEAR OF PURCHASE WHI CH HAS BEEN INDEXED TO RS.4,75,328/-. THIS HAS RESULTED INTO REDUCTION OF LONG TERM CAPITAL GAIN SUBSTANTIALLY. THE LD.CIT FURTHER OBSERVED TH AT THE LOAN AMOUNTING TO RS.40,000/- WAS SHOWN HAVE TAKEN BY THE ASSESSEE THROUGH CHEQUE FROM THE RELATIVE. THE AO HAS FAILED TO CONDUCT INQUIRY IN THIS ASPECT. THEREFORE, THE LD.CIT SOUGHT EXPLANATION AS TO WHY THE ASSESSMENT SHOULD NOT BE SET ASIDE U/S.263 OF THE ACT. IN RES PONSE THERETO, THE ASSESSEE FILED SUBMISSIONS WHICH ARE ENCLOSED AT PA GE NOS.16 TO 19 OF THE PAPER-BOOK AND ALSO THE SUBMISSIONS MADE ON 02/09/2 014 AT PAGE NO.20 OF THE PAPER-BOOK. DURING THE PROCEEDINGS U/S.263 OF THE ACT, THE ASSESSEE ALSO PLACED ON RECORD THE VALUATION REPORT OF THE REGISTERED VALUER. THE LD.CIT WITHOUT CONSIDERING THE SUBMISS IONS OF THE ASSESSEE PROCEEDED TO PASS THE IMPUGNED ORDER, THEREBY THE L D.CIT ASSESSED INCOME AT RS.6,41,926/-. AGGRIEVED BY THE ORDER OF THE LD.CIT, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT A LL THE DETAILS WERE SUBMITTED BEFORE THE AO WHILE THE REOPENING THE ASS ESSMENT. THE AO HAD APPLIED HIS MIND AND THERE WAS NO SCOPE FOR RE VISING THE ORDER. HE FURTHER SUBMITTED THAT STRANGELY THE LD.CIT HAS NOT TAKEN INTO ACCOUNT THE VALUATION REPORT AS FURNISHED BY THE ASSESSEE. HE SUBMITTED THAT THE LD.CIT OUGHT TO HAVE GIVEN REASON AS TO WHY HE IS N OT ACCEPTING THE VALUATION REPORT. HE FURTHER SUBMITTED THAT ASSUMI NG THAT THE ORDER OF THE AO WAS ERRONEOUS ON ACCOUNT OF NON-CONDUCTING THE I NQUIRY. BUT THE ITA NO.182/RJT/ 2015 SHRI PRABHASHANKAR D. DAVE VS. THE CIT ASST.YEAR 2006-07 - 4 - LD.CIT ALSO FAILED TO TAKE INTO ACCOUNT THE EVIDENC ES FURNISHED BY THE ASSESSEE. THE LD.CIT HAS NOT PLACED ON RECORD ANY VALUATION BY THE INDEPENDENT PERSON AND HAS PROCEEDED TO MAKE ADDITI ON ON THE BASIS OF CONJECTURES AND SURMISES. 3.1. ON THE CONTRARY, LD.DR SUPPORTED THE ORDER OF THE LD.CIT AND SUBMITTED THAT PROCEEDINGS WERE INITIATED ON ACCOUN T OF FAILURE OF THE AO TO CONDUCT INQUIRY. HE SUBMITTED THAT THERE IS AN ABSENCE OF INQUIRY ON THE ISSUE AS POINTED OUT BY THE LD.CIT IN THE IMPUG NED ORDER. HE FURTHER SUBMITTED THAT NON-CONDUCTING THE INQUIRY AND PASSI NG THE ORDER WITHOUT APPLICATION OF MIND IS CLEARLY A CASE OF ORDER BEIN G ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT IN THE RE-ASSESSMENT PROCEEDINGS THE ASSESSEE HAS DISCLOSED ALL MATERIAL BEFORE THE AO. THE AO HAS NOT MADE ANY QUERY WITH REGARD TO COST OF IM PROVEMENT. UNDISPUTEDLY, THE ASSESSEE DID NOT FURNISH ANY VALU ATION REPORT WITH REGARD TO COST OF IMPROVEMENT BEFORE THE ASSESSING OFFICER. HOWEVER, THE SAME WAS SUBMITTED FIRST-TIME BEFORE THE LD.CIT . 4.1. SO FAR AS INITIATION OF PROCEEDINGS ARE CONCER NED, WE ARE OF THE VIEW THAT THE SAME IS IN ACCORDANCE WITH LAW. HOWE VER, DURING THE COURSE OF PROCEEDINGS U/S.263 OF THE ACT, THE ASSES SEE HAS FURNISHED CERTAIN EVIDENCES IN THE FORM OF VALUATION REPORT. THE LD.CIT HAS NOT ITA NO.182/RJT/ 2015 SHRI PRABHASHANKAR D. DAVE VS. THE CIT ASST.YEAR 2006-07 - 5 - TAKEN THOSE EVIDENCES INTO CONSIDERATION AND NO INQ UIRY WAS MADE. IN OUR CONSIDERED VIEW, THE LD.CIT OUGHT NOT TO HAVE D ISCARDED THE EVIDENCES WITHOUT MAKING INQUIRY ON SUCH EVIDENCES. THEREFORE, WE HEREBY SET ASIDE THE ORDER OF LD.CIT AND RESTORE TH E ISSUE OF VERIFYING THE VERACITY OF VALUATION REPORT TO THE AO IN RESPECT O F CLAIM OF COST OF IMPROVEMENT. THE AO IS HEREBY DIRECTED TO MAKE NEC ESSARY INQUIRY IN RESPECT OF VALUATION REPORT AS SUBMITTED BY THE ASS ESSEE AND RECOMPUTE THE CAPITAL GAIN. NEEDLESS TO SAY THAT THE AO WOUL D PROVIDE SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THUS, GROUNDS OF ASSE SSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 9 TH DAY OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/ 12 /2015 ..,, -. ,../ T.C. NAIR, SR. PS ITA NO.182/RJT/ 2015 SHRI PRABHASHANKAR D. DAVE VS. THE CIT ASST.YEAR 2006-07 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )&( / THE RESPONDENT. 3. 4 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-II, RAJKOT 5. 7-8 , , , /DR,ITAT, RAJKOT 6. 8CD E. / GUARD FILE. / BY ORDER, )7 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION 18.12.15 (DICTATION-PAD 9 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 18.12.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 9.12.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 9.12.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER