Sri. Lingaiah Chandra, Bengaluru V. Income Tax Officer, Ward 6(2)(3), Bengaluru

ITA 1851/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2323 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD
• Assessee Lawyers: S R RAGHUNATHAN
• Keywords: Capital asset; Gift; Principle of natural justice; Additional evidence; Cost of acquisition; Reasonable cause; Condonation of delay
• Section: 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B SMC BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.1 851/BANG/2018 (ASST. YEAR 2013-14) SRI LINGAIAH CHANDRA, NO.219, 1 ST MAIN ROAD, 2 ND STAGE, WEST OF CHORD ROAD, MAHALAKSHMIPURAM, BENGALURU. . APPELLANT PAN AEJPC6623C. VS. THE INCOME-TAX OFFICER, WARD-6(2)(2), BENGALURU. . RESPONDENT APPELLANT BY : SHRI S.R RAGHUNATHAN, C.A RESPONDENT BY : DR. SHANKAR PRASAD, ADDL. CIT DATE OF HEARING : 11-7-2018 DATE OF PRONOUNCEMENT : 07-9-2018 O R D E R PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER DISMISSING THE APPEAL PASSED BY THE LEARNED CIT (APPEALS) IS ARBITRARY, WHIMSICAL AND OPPOSED T O THE PRINCIPLES OF NATURAL JUSTICE. 2. THE APPELLANT DENIES ITSELF TO BE ASSESSED ON A TOTAL INCOME OF RS.44,44,548/- AS DIRECTED BY THE LEARNED CIT(A) AS AGAINST ITA NO.1851/B/18 2 THE RETURNED INCOME OF RS. 9,47,170/-UNDER THE FACT S & CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) ERRED IN SUSTAINING THE ADDI TION OF RS.34,97,378/TOWARDS LONG TERM CAPITAL GAIN WITHOUT ANY BASIS DESPITE PRODUCTION OF EVIDENCE BY THE APPELLA NT AND THUS THE ADDITION IS LIABLE TO BE DELETED UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT (APPEALS) ERRED IN OBSERVING TH AT EVEN AFTER PROVIDING SEVERAL OPPORTUNITIES THERE WAS NONCOMPLIANCE ON THE PART OF THE ASSESSEE AND THE S PECIFIC DETAILS CALLED FOR BY THE AO WERE NOT PRODUCED BEFO RE FINALISATION OF THE ASSESSMENT ORDER. 5. THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIA TING THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE IN NOT FURNISHING THE DOCUMENTS IN SUPPORT OF CLAIMS MADE IN SUPPORT OF COST OF IMPROVEMENT, IN THE RETURN OF INCOME DUR ING THE ASSESSMENT PROCEEDINGS. SINCE THE APPELLANT HAD REC ENTLY SHIFTED HIS RESIDENCE AND DURING THE SHIFTING HE HA D MISPLACED THE SUPPORTING DOCUMENTS OF IMPROVEMENTS MADE DURIN G THE YEAR 1995 & 2000. 6. THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIA TING THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE IN NOT FURNISHING THE DOCUMENTS IN SUPPORT OF CLAIMS MADE IN THE RETURN OF INCOME DURING THE ASSESSMENT PROCEEDINGS, SINCE THE UNTIMELY DEMISE OF HIS CLOSE RELATIVES HAD SHATTERE D HIM AND HE WAS BUSY IN PREPARATION FOR THE LAST RITE'S AND OTHER RITUALS ITA NO.1851/B/18 3 OF THE LOVED ONES AND COULD NOT CONCENTRATE ON SEAR CHING OF THE DOCUMENTS REQUESTED BY THE ASSESSING OFFICER. 7. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECI ATED THAT, EVEN THOUGH THE AUTHORISED REPRESENTATIVE SHRI CA R AMALINGA H.B APPEARED BEFORE THE ASSESSING OFFICER ON SEVERA L OCCASION LIKE 22.09.2015, 07.10.2015, 09.11.205 & 07.01.2016 , THE LEARNED ASSESSING OFFICER NEVER SOUGHT/ REQUESTED T O PRODUCE THE EVIDENCE FOR THE COST OF THE IMPROVEMENT MADE, HOWEVER, IN THE MONTH OF MARCH 2016 WHICH WAS THE DEADLINE F OR COMPLETION OF THE ASSESSMENT, THE LEARNED ASSESSING OFFICER SENT LETTER ASKING FOR SUBMISSION OF DOCUMENTS TOWA RDS IMPROVEMENT COST OF THE HOUSE. IT IS ALSO SUBMITTED THAT, THE ORAL REQUEST MADE BY THE AUTHORISED REPRESENTATIVE FOR GRANT OF FURTHER TIME WAS REJECTED BY THE LEARNED ASSESSI NG OFFICER. THIS ITSELF SHOWS THAT, THE ASSESSING OFFICER NEVER GAVE' PROPER OPPORTUNITY TO THE APPELLANT TO PROVIDE THE DOCUMEN TS WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 8. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECI ATED THAT, THE INDIVIDUAL PERSON WILL NEVER ANTICIPATE THAT, H E WILL BE ASKED TO PRODUCE THE DOCUMENTS FOR THE COST OF IMPR OVEMENT MADE TO THE HOUSE DURING THE YEAR 1995 & 2000 IN TH E YEAR 2016. 9. THE APPELLANT AS PER RULE 46A OF THE ACT, SUBMI TTED THE ADDITIONAL EVIDENCE IN THE FORM OF 2 BILL FROM THE CONTRACTOR FOR CONSTRUCTION/ IMPROVEMENT OF RESIDENTIAL HOUSE DURING THE YEAR 1995 & 2000 AMOUNTING TO RS. RS.5,95,000/- & RS.6,63,950/- RESPECTIVELY. THE LEARNED CIT(APPEALS ) REJECTED ITA NO.1851/B/18 4 THE ADDITIONAL EVIDENCE WHICH IS UNSUSTAINABLE IN T HE EYES OF LAW. 10. AS PER SECTION 250(4), THE LD. CIT(A) MAY, BEF ORE DISPOSING OF ANY APPEAL, MAKE FURTHER ENQUIRY OR DI RECT THE AO TO MAKE FURTHER ENQUIRY AND REPORT THE RESULT OF THE SAME TO THE COMMISSIONER (APPEALS). IN THE PRESENT FACTS AND CIRCUMSTANCES, THE LEARNED CIT(A) AFTER ACCEPTING T HE ADDITIONAL EVIDENCE HAS HIMSELF NOT MADE ANY ENQUIR Y NOR DIRECTED THE ASSESSING OFFICER TO MAKE ANY ENQUIRY AND SUBMIT THE REPORT ON THE SAME. IT WAS NECESSARY FOR THE LE ARNED CIT(A) TO MAKE ENQUIRY ON THE ADDITIONAL EVIDENCE S UBMITTED BY THE APPELLANT BEFORE DERIVING ANY ADVERSE CONCLU SION. THE LEARNED CIT(A) VIDE PARA 9 OF HIS ORDER HAS GIVEN H IS OPINION THAT, THE EVIDENCE PRODUCED IS FLIMSY AND NOT BELIE VABLE. ANY CONCLUSION BY THE LEARNED CIT(A) ON THE BASIS OF SU RMISE CANNOT BE HELD TO BE A VALID CONCLUSION WHICH IS BA SED ON NO MATERIAL NOR ANY ENQUIRY MADE. 11. IT IS SUBMITTED THAT, THE COMPUTATION OF INCOM E MADE BY THE LEARNED ASSESSING OFFICER SUFFERS FROM NON-APPL ICATION OF MIND AND IS FILLED WITH CLERICAL ERRORS. THE ACTUAL NET LONG TERM CAPITAL GAIN TO THE APPELLANT AFTER ALLOWING I NDEXED COST OF ACQUISITION SHOULD HAVE BEEN RS.2,12,39,515/- IN STEAD OF RS.2,15,39,515/- AS COMPUTED BY THE LEARNED ASSESSI NG OFFICER. (WHEREIN RS.3,00,000/- EXCESS INCOME HAS BEEN WRONG LY ADDED TO THE TOTAL INCOME ). THE ASSESSMENT ORDER P ASSED BY THE AO SHOULD BE QUASHED FOR THIS REASON ALONE AS I T SUFFERS FROM NON-APPLICATION OF MIND BY THE ASSESSING OFFIC ER. ITA NO.1851/B/18 5 12. IT IS SUBMITTED THAT, THE LEARNED ASSESSING OF FICER HAS ERRED IN APPLYING THE PROVISIONS OF THE INCOME TAX ACT WH ILE CALCULATING THE TAX ON TOTAL INCOME OF THE APPELLAN T WHICH IS INCLUSIVE OF LONG TERM CAPITAL GAIN, HOUSE PROPERTY INCOME AND INCOME FROM OTHER SOURCES. INSTEAD OF TAXING TH E LONG TERM CAPITAL GAIN AT SPECIAL RATE OF 20%, THE LEARN ED ASSESSING OFFICER HAS ERRED AND LEVIED THE TAXES ON THE TOTAL INCOME ARRIVED BY HIM RS. 44,44,548/- AT NORMAL RAT ES AND ARRIVED AT THE TAX OF RS. 11,63,365/- AS AGAINST TH E CORRECT TAX AMOUNT WHICH SHOULD HAVE BEEN RS. 7,58,910/-. THIS SHOWS THAT, THE ASSESSING OFFICER HAS PASSED THE ORDER IN HURRIED MANNER WITHOUT APPLICATION MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND ADDITIONS MADE NEEDS TO BE DELETED IN TOTO. 13. IT IS ALSO SUBMITTED THAT, THE APPELLANT ACQUI RED THE PROPERTY IN ONE OF THE MODES SPECIFIED IN SECTION 4 9(1) OF THE ACT, IE., BY WAY OF GIFT AND COST OF ACQUISITION SH ALL BE COST OF ACQUISITION TO PREVIOUS OWNER AND INDEXATION BENEFI T TO BE GIVEN FROM THE YEAR IN WHICH THE PREVIOUS OWNER ACQ UIRED THE ASSET AND NOT FROM THE YEAR IN WHICH APPELLANT ACQU IRED THE ASSET. AS PER THE DECISION IN THE CASE OF SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS MANJULA J SHAH REPO RTED IN 318 ITR (AT)417 IT WAS HELD THAT 'UNDER EXPLANATION 1 (I)(B) TO S. 2(42A), IN DETERMINING THE PERIOD FOR WHICH A NY ASSET IS HELD BY AN ASSESSEE UNDER A GIFT, THE PERIOD FOR WH ICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER HAS TO BE INCL UDED. ACCORDINGLY, THOUGH THE ASSESSEE ACQUIRED THE CAPIT AL ASSET ON 30.6.2003, SHE WAS DEEMED TO HAVE 'HELD' THE ASSET FROM 29.1.1993 ONWARDS. THIS FICTION WILL APPLY TO CLAUS E (III) OF THE ITA NO.1851/B/18 6 EXPLANATION TO S. 48 AS WELL FOR DETERMINING THE 'I NDEXED COST OF ACQUISITION'. THE OBJECT OF THE LEGISLATURE IS T O TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ACQUIRED UNDER A G IFT OR WILL BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS H ELD BY THE PREVIOUS OWNER. THIS OBJECT CANNOT BE DEFEATED BY E XCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER WHILE DETERMINING THE INDEXED COST OF ACQUISI TION OF THAT ASSET TO THE ASSESSEE'. 14. IT IS SUBMITTED THAT, WHILE COMPUTING THE CAPI TAL GAIN THE APPELLANT HAS ERRED IN CALCULATING THE INDEXED COST OF ACQUISITION AND PROVIDED THE INDEXATION FROM THE YE AR HE RECEIVED THE PROPERTY BY WAY OF GIFT INSTEAD OF CAL CULATING THE INDEXATION FROM THE YEAR IN WHICH THE PREVIOUS OWNE R ACQUIRED THE ASSET. AS PER THE PROVISIONS OF THE AC T & AS PER THE CIRCULAR NO. 14 (XI-35) OF 1955, DATED APRIL 11 , 1955, EVEN IF THE ASSESSEE HAS NOT CLAIMED THE LEGITIMATE DEDUCTIONS WHICH IS ALLOWABLE UNDER THE PROVISIONS OF THE ACT, THE ASSESSING OFFICER IS DUTY BOUND TO GIVE SUCH DEDUCT IONS. IN THE INSTANT CASE EVEN THOUGH APPELLANT HAD WRONGLY CALC ULATED THE INDEXATION BENEFIT, THE ASSESSING OFFICER WAS DUTY BOUND TO RECALCULATE THE INDEXED COST OF ACQUISITION FROM TH E DATE WHEN THE PREVIOUS OWNER ACQUIRED THE ASSET, THE ASSESSIN G OFFICER HAS ERRED IN APPLICATION OF MIND AND IN GIVING THE LEGITIMATE DEDUCTIONS DUE TO THE APPELLANT AND HENCE IN THE IN TEREST OF JUSTICE AND EQUITY AND ORDER PASSED BY THE ASSESSIN G OFFICER NEEDS TO BE DELETED. RELIANCE IS PLACED ON THE BELO W MENTIONED CASE LAWS ITA NO.1851/B/18 7 * M/S. RAJESHWARI COTTON GINNING AND PRESSING IND USTRIES VS. ACIT CIRCLE-I (2015) , KARNATAKA HIGH COURT * KERALA HIGH COURT IN CASE OF PAREKH BROTHERS VS . COMMISSIONER OF INCOME TAX. (1984) 150 ITR 105 * RAKESH SINGH VS. ACIT , ITAT, BANGALORE (2012) 15. THE LEARNED ASSESSING AUTHORITY HAS REJECTED T HE OTHER CLAIMS WITHOUT APPLICATION OF MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND CERTAINLY NOT ON ACCO UNT OF NON- PRODUCTION OF THE EVIDENCE. THE LEARNED CIT (APPEAL S) ERRED IN REJECTING THE CLAIM, WITHOUT LOOKING INTO THE ME RITS OF THE CASE. 16. THE ORDERS OF LEARNED ASSESSING OFFICER & CIT( A), IN SO FAR AS THESE ARE AGAINST THE APPELLANT IS OPPOSED T O LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES AND THE F ACTS & CIRCUMSTANCES OF THE CASE. 17. THE APPELLANT DENIES ITSELF LIABLE TO BE LEVIE D TO INTEREST UNDER SECTION 234B AND 234C OF THE ACT AND FURTHER THE COMPUTATION OF INTEREST WAS NOT PROVIDED TO THE APP ELLANT AS REGARD TO THE RATE, PERIOD AND METHOD OF CALCULATIO N OF INTEREST UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE. THE APPELLANT EXPRESSLY URGES THAT THE PERIOD OF LEVY O F INTEREST IS NOT IN ACCORDANCE WITH SECTION 234B AND 234C OF THE ACT. 18. WITHOUT PREJUDICE, THE INTEREST LEVIED UNDER S ECTIONS 234B AND 234C OF THE ACT REQUIRES TO BE WAIVED OFF UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1851/B/18 8 19. THE APPELLANT CRAVES LEAVE OF YOUR HONOURS TO ADD, ALTER, AMEND, SUBSTITUTE, CHANGE AND DELETE ANY OF THE GRO UNDS URGED ABOVE. 20. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PR AYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED. 2. DURING THE COURSE OF HEARING, IT HAS BEEN PO INTED OUT THAT THERE WAS A DELAY OF 57 DAYS IN FILING THE APPEAL, FOR WHICH AN APPLICATION FOR CONDONATION OF DELAY HAVE BEEN MOVED. 3. HAVING CAREFULLY EXAMINED THE APPLICATION F OR CONDONATION OF DELAY, THROUGH WHICH, IT WAS STATED THAT THE DELAY WAS CAU SED ON ACCOUNT OF ILL HEALTH OF THE ASSESSEE AND FINDING FORCE THEREIN, I AM OF THE VIEW THAT THE ASSESSEE HAS REASONABLE CAUSE FOR THE DELAY IN FILI NG THE APPEAL. ACCORDINGLY, I CONDONE THE DELAY AND ADMIT THE APPE AL FOR HEARING. 4. ON MERIT, THERE IS ONLY ONE ISSUE OF DISALLO WANCE ON COST OF IMPROVEMENT WHILE COMPUTING THE CAPITAL GAIN. DURI NG THE COURSE OF HEARING, THE LD COUNSEL FOR THE ASSESSEE HAS CONTE NDED THAT THE AO DID NOT ALLOW THE COST OF IMPROVEMENT INCURRED BY THE ASSES SEE WHILE COMPUTING THE CAPITAL GAIN IN TRANSFER OF CAPITAL ASSET. THE ASSESSEE HAS FILED EVIDENCE RELATING TO COST OF IMPROVEMENT BEFORE THE CIT(A) B UT CIT(A) DID NOT CONSIDER THE SAME AND CONFIRMED THE DISALLOWANCE. THE ASSESSEE HAS ALSO FILED THE DETAILS OF IMPROVEMENT BEFORE THE TRIBUNA L. THE LD. COUNSEL FOR THE ASSESSE FURTHER CONTENDED THAT SINCE THE ASSESS EE HAS PLACED RELEVANT EVIDENCE WITH REGARD TO COST OF IMPROVEMENT THEY SH OULD HAVE BEEN ALLOWED WHILE COMPUTING THE LONG TERM CAPITAL GAIN ON TRANSFER OF CAPITAL ASSET. 5. THE LD DR PLACED RELIANCE UPON THE ORDER OF THE CIT(A). ITA NO.1851/B/18 9 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE A UTHORITIES BELOW IN THE LIGHT OF THE RIVAL SUBMISSIONS, I FIND THAT THE ASS SESSEE HAS FILED RELEVANT EVIDENCES WITH REGARD TO COST OF IMPROVEMENT BEFORE THE CIT(A) BUT CIT(A) DID NOT ENTERTAIN THE SAME AND HAS CONFIRMED THE DISALLOWANCE. THE ACTION OF THE CIT(A) IS NOT PROPER AS HE SHOULD HAVE ADMITTED THE EVIDENCE AFTER CALLING THE RECORDS/COMMENTS FROM T HE AO AND EXAMINED THE SAME AND TAKEN A DECISION THEREAFTER. BUT HE DI D NOT DO SO. IN THE LIGHT OF THESE FACTS, I AM OF THE VIEW THAT LET THE MATTE R BE SENT BACK TO THE FILE OF CIT(A) FOR CONSIDERATION OF THE ADDITIONAL EVIDENCE S. ACCORDINGLY, I SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATT ER TO HIS FILE WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE OF COMPUTATION OF CAPITAL GAIN IN THE LIGHT OF DETAILS OF COST OF IMPROVEMENT FILED BY TH E ASSESSEE. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2018 . SD/- (SUNIL KUMAR YADAV) JUDICIAL MEMBER BANGALORE DATED : 7/9/2018 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED.+ 5.DR 6.GF BY ORDER SR. PRIVATE SECRET ARY, ITAT, BANGALORE ITA NO.1851/B/18 10 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..