The ITO, Ward-2, Palanpur V. Smt. Prabhaben Nanalal Doshi, Deesa

ITA 1863/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6211 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Cost of acquisition; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 1863/AHD/2014 (ASSESSMENT YEAR:2006-07) I.T.O., WARD-2, PALANPUR 1 ST FLOOR, SHREE HARI COMPLEX, ABU HIGHWAY, PALANPUR (B.K.) 385002 APPELLANT VS. SMT. PRABHABEN NANALAL DOSHI, C/O. MEGHDOOT ENGINEERING CO., NR. FUVARA, DEESA - 385535 RESPONDENT PAN: ACKPD5755F /BY REVENUE : MR. PRASOON KABRA, SR. D.R. /BY ASSESSEE : NONE /DATE OF HEARING : 12.04.2017 /DATE OF PRONOUNCEMENT : 12.04.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 A RISES AGAINST THE CIT(A)-XX, AHMEDABADS ORDER DATED 27.03.2014 IN CA SE NO. CIT(A)- XX/125/12-13, REVERSING ASSESSING OFFICERS ACTION IN MAKING ADDITION OF ITA NO. 1863/AHD/2014 (ITO VS. SMT. PRABHABEN NAN ALAL DOSHI) A.Y. 2006-07 - 2 - RS.31.60LACS IN THE NATURE OF UNDISCLOSED INCOME RE CEIVED FROM SALE OF PROPERTY IN ASSESSMENT ORDER DATED 31.12.2012, IN P ROCEEDINGS U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. 2. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES B EHEST. HE IS ACCORDINGLY PROCEEDED EX PARTE. 3. THE REVENUE PLEADS THE FOLLOWING SUBSTANTIVE GRO UNDS IN THE INSTANT APPEAL: 1A). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)- XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 31,60,000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME RECEIVED FROM SALE OF PROPERTY. 1B). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X X, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT IT IS EVIDENT FROM THE SALE DEED OF THE PROPERTY THAT THE PROPERTY WAS PURCHASED BY SHRI NANALAL MANEKLAL DOSHI IN HIS INDIVIDUAL CAPACITY AND NOT IN THE CAP ACITY OF HUF. 1C). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X X, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT AS PE R SALE DEED THE NAMES OF THE VENDORS ARE 1. SMT. PRABHABEN N. DOSHI., 2. SHR I RAJESH N. DOSHI 3. SHRI SUNIL N. DOSHI, 4. MISS MEENA N. DOSHI, 5. MIS S NEEPA N. DOSHI WHEREAS MEMBERS OF SHRI NANALAL MANEKLAL DOSHI, HUF ARE: 1- NANALAL MANEKLAL DOSHI, 2- PRABHABEN N. DOSHI., 3- RAJESH N . DOSHI 4- SUNIL N. DOSH. HENCE, THE CLAIM OF THE ASSESSEE THAT THE PR OPERTY BELONGS TO SHRI NANALAL MANEKLAL DOSHI, HUF IS NOT CORRECT. 1D) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE A SSESSEE HAS RECEIVED THE ENTIRE CONSIDERATION OF RS.31,60,000/- I.E., RECEIV ED DEMAND DRAFTS AND PAY ORDERS IN FAVOUR OF HER NAME SMT. PRABHABEN N. DOSH I. HENCE, IT IS CLEAR THAT THE PROPERTY BELONGS TO SHRI NANALAL MANEKLAL DOSHI, HUF IS NOT CORRECT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. 4. THE REVENUES PLEADINGS INDICATE THAT ITS SOLE S UBSTANTIVE GRIEVANCE SEEKS TO REVIVE THE ABOVESTATED ADDITION OF RS.31.6 0LACS MADE IN THE COURSE ITA NO. 1863/AHD/2014 (ITO VS. SMT. PRABHABEN NAN ALAL DOSHI) A.Y. 2006-07 - 3 - OF ASSESSMENT IN THE NATURE OF UNDISCLOSED INCOME R ECEIVED FROM SALE OF PROPERTY. WE NOTICE AT THIS STAGE THAT THE LD. CIT (A) DISCUSSES ASSESSING OFFICERS FINDINGS AS WELL AS ASSESSEES ARGUMENTS IN THE LOWER APPELLATE ORDER UNDER CHALLENGE AS FOLLOWS: 4.5. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. IN THIS CASE, THE A.O. HAS MADE THE ADDI TION OF RS.31,60,000/- BEING THE SALE PROCEEDS OF THE PROPERTY AT CTS NO. 1401 RADHA KRISHNA ROAD, HINDWADI, BELGAUM WHICH WAS BELONGING TO SHRI NANALAL MANCHAN D DOSHI (HUF). THE AO HAS HELD THAT THIS PROPERTY WAS ALTHOUGH BELONGING TO SHRI NANALAL M. DOSHI HUF BUT THE APPELLANT WAS THE ACTUAL BENEFICIARY AND OT HER 4 FAMILY MEMBERS BEING CO- PARCENERS WERE THE SIMPLE BENEFICIARIES. THE A.O. H AS TREATED THE ENTIRE SALE PROCEEDS OF THE PROPERTY AT RS.31,60,000/- AS LONG TERM CAPITAL GAIN WITHOUT REDUCING THE COST OF ACQUISITION OF THE PROPERTY AF TER INDEXATION AND ANY OTHER IMPROVEMENT COST MADE' IF ANY IN VIEW OF THE PROVIS IONS OF SECTION 48 OF I.T. ACT WHILE WORKING OUT THE COMPUTATION OF LONG TERM CAPI TAL GAIN. ALTHOUGH DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT VID E HIS REPLY DTD. 26.12.2012 IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE A.O . DTD. 24.12.2012 HAS GIVEN ALL THE DETAILS AND EVIDENCES BESIDES WORKING OF THE LO NG TERM CAPITAL GAIN BUT THE SAME HAVE NOT BEEN CONSIDERED AT ALL. THE A.O. HAS ALSO OBSERVED THAT THE LONG TERM CAPITAL GAIN WAS LIABLE TO BE TAXED EXCLUSIVEL Y IN THE HANDS OF THE APPELLANT ONLY AS THE SAME PERTAINS TO THE APPELLANT AND NOT TO N.M. DOSHI (HUF) AND OTHER FAMILY MEMBERS WHO WERE SIMPLY BENEFICIARIES. HE HA S NOT GIVEN ANY DEDUCTION OUT OF THE SALE PROCEEDS IN RESPECT OF THE COST OF ACQUISITION FOR THE PROPERTY FOR THE REASON THAT NO DETAILS AND EVIDENCES OF THE PURCH ASE AND THE BALANCE SHEET OF THE ASSESSEE OR HUF WERE FURNISHED. 4.6. ON THE OTHER SIDE THE APPELLANT HAS CLAIMED TH AT THIS PROPERTY WAS PURCHASED BY NANALAL DOSHI (HUF) IN F.Y. 1995-96 WAS ON RECOR D. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT THE PLOT OF LAND OF THIS PROPERTY WAS PURCHASED BY THE HUF ON 22.10.1980 FOR RS.48,00 0/-. THEREAFTER THIS WAS CONSTRUCTED AS A RESIDENTIAL HOUSE FROM A.Y. 1991-9 2 TO 1995-96. THE BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED IN THE CASE OF HUF FR OM A.Y. 1991-92 TO 1995-96. YEAR-WISE SUMMARY OF CONSTRUCTION EXPENSES WAS FURN ISHED SHOWING DATE OF PAYMENT, AMOUNT, CASH/CHEQUE ETC. AND ACCORDINGLY T OTAL EXPENDITURE UPTO CONSTRUCTION AS PER THE BOOKS OF ACCOUNTS AS ON 31. 3.1996 WAS AT RS. 18,38,5917- IN THE BOOKS OF N.M. DOSHI, HUF. IN SUPPORT OF THE COST OF CONSTRUCTION, THE VALUATION REPORT OF THE GOVERNMENT APPROVED VALUER SHRI S.D. MODNUR DTD. 5.11.1997 WAS SUBMITTED . THE BUILDING WAS CONSTRUC TED OUT OF THE CAPITAL OF SHRI N.M. DOSHI (HUF) AS WELL AS LOAN TAKEN FROM THE MEM BERS OF HUF. IT WAS ALSO SUBMITTED THAT THIS PROPERTY WAS BELONGING TO SHRI N.M. DOSHI HUF WHO IS ASSESSED TO TAX SINCE LONG AND HAS BEEN FILING ITS RETURN OF INCOME SINCE A.Y, 1993- 94. SINCE NO PARTITION HAD TAKEN PLACE IN THE AFORE SAID HUF NOR ANY ORDER U/S.171 HAS BEEN PASSED BY THE A.O. TILL DATE AND AS SUCH H UF CONTINUES TO BE ASSESSED AS SUCH A SEPARATE ENTITY. HENCE THE PROPERTY SOLD IS BELONGING TO SHRI N.M. DOSHI HUF ONLY NOT OF ANY MEMBERS OF THE HUF. IN THE AFOR ESAID HUF THE APPELLANT IS ONE OF THE CO-PARCENERS LIKE OTHER 4 CO-PARCENERS. SO THE LONG TERM CAPITAL ARISED ITA NO. 1863/AHD/2014 (ITO VS. SMT. PRABHABEN NAN ALAL DOSHI) A.Y. 2006-07 - 4 - IF ANY ON THE AFORESAID PROPERTY OWNED BY THE SHRI N.M. DOSHI HUF IS LIABLE TO BE TAXED IN ITS HANDS ONLY AND NO PART THEREOF CAN BE TAXED IN THE HANDS OF THE APPELLANT IN THE CAPACITY OF THE CO-PARCENERS OF TH E SAID HUF. SINCE THERE WAS NO TAXABLE INCOME IN THE HANDS OF THE HUF HENCE NO RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION HAS BEEN FILED. 4.7. IT HAS BEEN ARGUED THAT A.O. HIMSELF HAS CONTR ADICTED IN THE ASSESSMENT ORDER BY GIVING THE REMARKS THAT THE APPELLANT HAS NOT CORRECTLY SHOWN HER 1/5 SHARE OF MEMBER AS HUF WITH REGARD TO THE LONG TERM CAPITAL GAIN WHILE ON THE OTHER SIDE TIE ENTIRE SALE PROCEEDS WERE TAXED IN T HE HANDS OF THE APPELLANT ONLY RATHER THAN TO TAX ONLY 1/5 TH SHARE. THERE IS NO BASIS GIVEN BY THE A.O. TO TREA T IN WHAT MANNER THE APPELLANT WAS THE SOLE OWNER OF THE PROPERTY AND THE N.M. DOSHI HUF WAS NOT THE OWNER OF THE PROPERTY. ALSO IT HAS NOT BEEN CLARIFIED BY THE A.O. THAT HOW THE APPELLANT AMONG FIVE CO-PARCENERS OF T HE N.M. DOSHI HUF WAS LIABLE TO BE TAXED FOR THE LONG TERM CAPITAL GAIN AND NOT THE OTHER REMAINING 4 CO- PARCENERS NOT LIABLE TO TAX ON THEIR SHARE IN LONG TERM CAPITAL GAIN. 4.8. EVEN THE A.O. HAS NOT GRANTED ANY DEDUCTION IN RESPECT OF THE COST OF THE PROPERTY BY MAKING INDEXATION EVEN THOUGH THE DETAI LS WERE AVAILABLE WITH HIM DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS ALSO FAILED TO APPRECIATE THAT ONCE THE PROPERTY WAS BELONGING TO THE HUF THEN HOW THE SAME COULD BE REFLECTED IN THE BALANCE SHEET OF THE APPELLANT. EVEN THE APPELLANT HAS MIXED UP THE ISSUE OF THE DEPRECIABLE ASSET WITH THE ALLEGED PROPERTY WHICH W AS THE RESIDENTIAL HOUSE AND AS SUCH NO DEPRECIATIONS COULD BE CLAIMED UPON THE RES IDENTIAL HOUSE HENCE THERE WOULD NOT HAVE BEEN ANY WDV OF THE PROPERTY AT ZERO AFTER DEDUCTION OF THE ADMISSIBLE DEPRECIATION, MORE PARTICULARLY WHEN THE SOURCE OF INCOME OF THE APPELLANT AS WELL AS THAT OF HUF WAS INCOME FROM OT HER SOURCE ONLY I.E. INTEREST INCOME. 4.9. THE AO HAS FAILED TO CONSIDER THE BALANCE SHEE T OF N.M. DOSHI HUF PERTAINING TO A.Y. 1996-97 WHEREIN THE COST OF THE PROPERTY OF BUILDING IS SHOWN AT RS. 18,3 8,591/- AND THE WORKING OF LONG TERM CAPIT AL GAIN GIVEN DURING THE ASSESSMENT PROCEEDINGS TO A.O. THE COPY OF THE SALE DEED AND THE ABOVE REFERRED BALANCE SHEET WAS ON RECORD, SINCE IN THE ORIGINA L ASSESSMENT THOSE HAVE BEEN FURNISHED TO A.O. IT HAS BEEN NOTICED THAT THE PLOT OF LAND WAS PURCHASED BY SHRI N.M. DOSHI HUF ON 22.10.1980 FOR THE CONSIDERATION OF RS.48,000/-. SUBSEQUENTLY, THE CONSTRUCTION HAS TAKEN PLACE FROM F.Y. 1992-93 WHICH WAS CARRIED OUT TILL A.Y. 1995-96. IN SUPPORT, THE COPY OF THE STATEMENT OF TOTAL INCOME OF N.M. DOSHI HUF FROM A.Y. 1989-90 TO 1993-94 WERE SUBMITTED. DURING THAT PERIOD, SHRI N.M. DOSHI HUF WAS HAVING SHARE OF PRO FIT FROM THE FIRM AND INTEREST INCOME TILL 1990-91 AND THEREAFTER INTEREST INCOME ONLY. IT HAS BEEN NOTICED THAT IN RESPECT TO THE QUERIES RAISED BY THE A.O. THE AP PELLANT VIDE HIS LETTER DTD. 26.12.2012 HAS REPLIED TO THE A.O. THAT THE AFORES AID PROPERTY BEARING CTS NO. 1401, RADHAKRISHNA ROAD WAS BELONGING TO N.M. DOS HI HUF AND ALONGWITH THE SUBMISSION THE COPY OF THE BALANCE SHEET OF HUF FOR F.Y. 1995-96 WAS ENCLOSED ALONG WITH THE WORKING OF THE LONG TERM CAPITAL LO SS OF RS.91,8857- ON SALE OF THE AFORESAID PROPERTY. 4.10. IN ALTERNATE, IT WAS ALSO PLEADED THAT EVEN I F THE L/5 TH OF HIS SHARE AS A MEMBER OF THE HUF IS ADDED IN APPELLANT'S CASE THEN THERE WOULD BE LONG TERM ITA NO. 1863/AHD/2014 (ITO VS. SMT. PRABHABEN NAN ALAL DOSHI) A.Y. 2006-07 - 5 - CAPITAL LOSS OF RS. 18,3887- WHICH COULD BE SET-OFF AGAINST THE LONG TERM CAPITAL GAIN OF RS.27,3047- SHOWN BY THE APPELLANT IN RESPE CT OF HER ANOTHER INDIVIDUAL PROPERTY SOLD AND IN NO WAY THERE NEEDS ANY ADDITIO N IN THE HANDS OF THE APPELLANT. SO THE APPELLANT HAD FURNISHED THE DETAILS OF THE O WNERSHIP OF THE PROPERTY ALONG WITH ITS COST SHOWN IN BALANCE SHEETS AND ITS SUBMI SSION TO THE A.O, FROM THE SALE DEED COPY OF THE AFORESAID PROPERTY DTD. 14.6.2005 WHICH WAS ALREADY SUBMITTED IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S. 143(3) OF I.T. ACT TO THE A.O. IT WAS SEEN THAT THE APPELLANT ALONG WITH OTHER FOUR CO-PARCENE RS NAMELY SHRI RAJESH SON OF NANALAL DOSHI, SHRI SUNIL SON OF NANALAL DOSHI, MIS S. MEENA D/O. NANALAL DOSHI, MS. NEEPA D/O. NANALAL DOSHI HAD SHOWN AS VENDORS O F THE PROPERTY. SO IT IS APPARENT FROM THE ABOVE THAT THE 5 COPARCENERS OF T HE HUF INCLUDING APPELLANT HAVE EXECUTED THE SALE DEED ON BEHALF OF THE N.M. D OSHI HUF. FURTHER ON PERUSAL OF THE BALANCE SHEET OF THE N.M. OF F.Y.1995-96 A C OPY OF THE SAME FILED BEFORE THE A.O. IN THE ASSESSMENT PROCEEDINGS THAT THE COST OF THE PROPERTY WAS SHOWN AT RS.18,38,591/-. 4.11. IN VIEW OF THE ABOVE, THE PROPERTY SOLD WAS B ELONGING TO SHRI N.M.DOSHI, HUF ONLY AND CONTENTION OF APPELLANT IS FOUND CORRE CT FOR THE REASON THAT NO PARTITION OF THE HUF HAS TAKEN PLACE YET AS SUBMITT ED BY THE APPELLANT AND NO ADVERSE COMMENTS FROM THE A.O. IN THIS REGARD HAVE BEEN BROUGHT ON RECORD. THEREFORE, THE LONG TERM CAPITAL LOSS/GAIN ON AFORE SAID PROPERTY, IF ANY, HAS TO BE CONSIDERED IN THE CASE OF N.M. DOSHI HUF ONLY AND N OT IN THE CASE OF THE APPELLANT. EVEN OTHERWISE ALSO IF THE PROPERTY HAS TO BE CONSIDERED IN THE HANDS OF THE CO-PARCENERS OF THE N.M. DOSHI HUF IN THAT CASE ALSO ONLY SHARE OF THE APPELLANT TO THE EXTENT OF 1/5 TH OF THE PROPERTY HAS TO BE CONSIDERED IN THE HANDS OF THE APPELLANT AND NOT THE ENTIRE PROPERTY. THE A.O. HAS NOT GIVEN ANY ADVERSE VIEW ON THE SUBMISSION OF THE APPELLANT GIVEN BEFORE THE A.O. IN ASSESSMENT PROCEEDINGS VIDE LETTER DTD. 26.12.2012 ABOUT THE WORKING OF TH E LONG TERM CAPITAL LOSS WORKED AT RS.91,885/- ON THE AFORESAID HUF PROPERTY AND BE ING L/5 TH SHARE THEREIN THE LONG TERM CAPITAL LOSS OF RS.18,388/- COULD BE SET- OFF AGAINST THE LONG TERM CAPITAL GAIN SHOWN BY THE APPELLANT ON AN ANOTHER SOLD PROP ERTY AT RS.27,304/-. IN ANY CASE THERE COULD NOT BE ANY ADDITION OF THE ENTIRE SALE PROCEEDS OF RS.31,60,000/- IN THE HANDS OF THE APPELLANT. SO, THE ADDITION MA DE BY THE A.O. IS NOT FOUND IN ORDER AND HENCE COULD NOT BE SUSTAINED AND SAME IS DELETED. THUS, THE GROUNDS OF THE APPELLANT ARE ALLOWED. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO LD . DEPARTMENTAL REPRESENTATIVES VEHEMENT CONTENTION SEEKING TO ADD THE AMOUNT IN QUESTION IN ASSESSEES HANDS. THE ABOVE EXTRACTED PARA 4.11 REVEALS THAT THE LD. CIT(A) IS OF THE OPINION THAT IT IS NOT THE ASSESSE E BUT THE HUF CONCERNED WHO IS TO BE ASSESSED QUA THE SUM IN QUESTION. HE FURTHER HOLDS THE INSTANT ASSESSEE TO BE HAVING 1/5 TH SHARE ONLY IN THE SAID HUF. THE REVENUE FAILS TO REBUT THIS CLINCHING FINDING. WE THEREFORE DO NOT SEE ANY JUSTIFIABLE REASON TO ITA NO. 1863/AHD/2014 (ITO VS. SMT. PRABHABEN NAN ALAL DOSHI) A.Y. 2006-07 - 6 - INTERFERE LD. CIT(A)S WELL THOUGHT CONCLUSION UNDE R CHALLENGE. THE REVENUES SOLE SUBSTANTIVE GROUND IS ACCORDINGLY DE CLINED. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF APRIL, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 12/04/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0