Gampa Santhi, Vijayawada V. Commissioner of Income Tax(Appeals), , Vijayawada

ITA 187/VIZ/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4038 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Capital Gains
• Section: 147; 148; 54; 144; 54F; 142(1); 143(2)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.187/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2009-10) Gampa Santhi W/o Srinivasa Rao D.No.58-5-27/2, Rangarao Street Patamata, Vijayawada [PAN : AXXPG3087D] Vs. Income Tax Officer Ward-2(3) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : None प्रत्यधथी की ओर से / Respondent by : Shri ON Hari Prasadarao, DR सुनवधई की तधरीख / Date of Hearing : 18.07.2022 घोर्णध की तधरीख/Date of Pronouncement : 23.08.2022 O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”], Vijayawada in Appeal No.262/CIT(A)/VJA/2016-17 DIN :ITBA/APL/M/250/2019- 20/1026336587(1) dated 09.03.2020 for the Assessment Year (A.Y.) 2009-10. 2 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada 2. Brief facts of the case are that the assessee has sold vacant land of 105 sq.yds vide document No.1725/2008 dated 14.05.2008 for a consideration of Rs.17,50,000/- during the F.Y.2008-09, relevant to A.Y.2009-10 to Sri Golla Narayana RAO, Vijayawada, but has not filed return of income for the A.Y.2009-10. Notice u/s 148 of the Income Tax Act, 1961 (in short ‘Act’) was issued on the assessee and in response to which the assessee filed her return of income admitting ‘Nil’ income and also filed computation of income, claiming exemption u/s 54 of the Act. Statutory notice u/s 143(2) and 142(1) were issued to the assessee , but could not be served, as the assessee had shifted to Hyderabad as informed by her husband, Sri Srinivasa Rao. Thereafter, final show cause netter dated 10.10.2016 was issued to the assessee and served by affixure proposing addition of Rs.17,50,000/- as capital gains income for the A.Y.2009-10. But the assessee has neither complied with the notices issued nor furnished any written explanation regarding claim of deduction u/s 54 of the Act and also the evidences in respect of indexed cost of acquisition claimed. Hence, the sale consideration of Rs.17,50,000/- is treated as income from capital gains of the assessee for the A.Y.2009-10. 3 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). After considering the submissions of the assessee, the Ld.CIT(A) has partly allowed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal and raised the following grounds : The learned Assessing Officer made huge and unjust addition of Rs.17,50,000/- under the head capital gain and treated the entire sale proceeds as income without considering the capital gain indexation and land levelling expenditure. The Honorable Commissioner of Income Tax (Appeals), Vijayawada has considered the house construction expenditure of Rs.12,00,000/- and not considered land levelling expenditure of Rs.3,00,000/- since vouchers were not produced. I have maintained the vouchers and lorry transport receipts but all the vouchers and receipts were misplaced and could not be traced out, since 12 years were elapsed. I could not produce the vouchers and receipts as they were misplaced and all my efforts to locate the old records are in vain. I request the honourable Tribunal to consider the land levelling expenditure and capital gain indexation as expenditure incurred by me is genuine and I swear an oath that the said land levelling expenditure is incurred by me. I have constructed a residential house within the year with the sale proceeds of site of 105 sq.yards amounting to Rs.17,50,000/-. I have no other house except the newly constructed house, since I have fully utilized the sale proceeds for the investment in new house, the capital gain arising on sale of original asset is wholly exempt u/s 54F of IT Act. Under the facts and in the circumstances the Appellant humbly prays to kindly allow the land levelling expenditure of Rs.3,00,000/- and the difference in the eligible exemption u/s 54F 4 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada computed on a proportionate basis Rs.1,64,564/- totalling to Rs.4,64,564/- may kindly be allowed. 5. None appeared on behalf of the assessee despite issue of notice to the assessee and hence we proceed to hear the submissions of the Ld.DR. 6. It was the submission of the Ld.DR that the assessee has not filed any return of income, therefore, notice u/s 148 was issued, but since the assessee did not appear, the AO issued order u/s 144 r.w.s. 147 of the Act . Aggrieved by which, the assessee preferred appeal before the Ld.CIT(A). The Ld.CIT(A) called for remand report and after considering the submissions, the Ld.CIT(A) partly allowed the assessee’s appeal. The Ld.DR further submitted that there is no infirmity in the orders passed by the Ld.CIT(A) and the orders passed by the Ld.CIT(A) to be confirmed. 7. We have heard the Ld.DR, considered the material available on record and also we have perused the order of the Ld.CIT(A), the extract of which is as under : 16. I have carefully considered the facts of the case, the assessment order, the written submission of the assessee, the remand report of the AO and the rejoinder submitted by the assessee. In the assessment order, the entire sale consideration of Rs.17.50 lakhs from sale of vacant site was treated as the income from long term capital gains by making disallowance of claim of deduction for indexed cost of acquisition and exemption u/s 54 of the Act in view of the failure of the assessee to comply with the notices and furnish evidence in support of the said claims. During the course of the appellate proceedings, the assessee furnished additional evidence with regard to the said claims and the same was admitted. 5 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada 17. As per the copy of the partition deed dated 22.03.2000 furnished by the assessee, the site sold by the assessee during the year was received by her from her grandfather, who acquired the same prior to 01.04.1981. The market value of the site as on 01.04.1981 is therefore required to be adopted as the cost of acquisition. However, the records pertaining to the F.Y 1981-82 are not available with the Sub-Registrar for ascertaining the market value as on 0l.O4.1981 since the records were burnt in the agitation in the year 1988. The assessee therefore obtained a certificate of the Sub-Registrar regarding the market value of the site for the F.Y 1995-96 and adopted the value worked out on the basis of the same as the cost of acquisition. The indexed cost of acquisition was worked out at Rs.2,71,842/- by claiming the indexation from the said financial year. As rightly pointed out by the AO in the remand report, the indexed cost of acquisition works out to Rs.2,71,842/- only even if the market value as on 01.04.1981 is worked out in a reverse manner by considering the market value for the F.Y 1995-96 and the cost Inflation index for the respective years. Hence, it is held that the assessee is eligible for deduction of indexed cost of acquisition of Rs.2,71,842/- while computing the income from long term capital gains. The long term capital gains prior to the exemption u/s 54F therefore works out to Rs,14,78,158/-. 18. The assessee claimed exemption u/s 54F in respect of the said long term capital gains of Rs.14,78,158/- on the basis of investment of Rs.15 lakhs stated to have been made towards construction of a new residential house, which consisted of cost of construction of Rs.12 lakhs and cost of leveling of the site of Rs.3 lakhs, The construction of the new residential house by the assessee within the period specified in the provisions of section 54F is evidenced by the copies of municipal tax assessments and electricity bill payments made by the assessee with regard to the said house. Further, the assessee does not own any other house. Hence the assessee is found to be eligible for exemption u/s. 54F of the Act. 19. As regards the quantum of investment eligible for the exemption, it is seen that the investment made towards the construction of the house of Rs.12 lakhs is evidenced by the copy of the registered vaIuer’s report by the assessee. However, it is noticed that the claim of the assessee of having incurred expenditure of Rs. 3 Iakhs towards levelling of the site is not supported by any documentary evidence.. The assessee failed to furnish evidence in support of the said expenditure either during the assessment proceedings or the appellate proceedings. In fact, the assessee failed to furnish any documentary or circumstantial evidence that leveling of the site was undertaken by the assessee before commencing the construction of the house, Hence, it is held the said expenditure of Rs.3 lakhs cannot be considered for the purpose of eligible investment for exemption u/s 54F. 20. The investment eligible for exemption u/s. 54F is therefore required to be adopted at Rs.12 Iakhs, being the cost of construction of the house as per the report of the registered valuer. As the said investment in the new asset is less than the net consideration of Rs17.50 lakhs received by the assessee on sale of the original asset, the eligible exemption u/s. 54F is required, to be computed on a proportionate basis 6 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada as per the provisions of sec. 54F(1)(b). The eligible exemption accordingly works out to Rs.10,13 ; 594/- (Rs.14,78,158 X Rs.12,00,000/ Rs.17,50,000). The income from long term capital gains after the said exemption u/s. 54F works out to Rs.4,64,564/-. 21. In view of the foregoing discussion, the AO is directed to adopt the income from long term capital gains at Rs.4,64,5645/- as against Rs.17,50,000/- determined in the assessment order. These grounds of appeal are therefore partly allowed. After considering the detailed order passed by the Ld.CIT(A), we do not find any infirmity in the order passed by the Ld.CIT(A). We uphold the order of the Ld.CIT(A) and dismiss the grounds raised by the assessee. 8. In the result, appeal of the assessee is dismissed. Order Pronounced in open Court on 23 rd August, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयकसदस्य/JUDICIAL MEMBER Dated : 23.08.2022 L.Rama, SPS 7 ITA No.187/Viz/2020, A.Y.2009-10 Gampa Santhi, Vijayawada आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Gampa Santhi, W/o Srinivasa Rao, D.No.58-5- 27/2, Rangarao Street, Patamata, Vijayawada 2. रधजस्व/The Revenue – Income Tax Officer, Ward-2(3), Vijayawada 3. प्रधान आयकर आयुक्त / The Principal Commissioner of Income Tax, Vijayawada 4. The Commissioner of Income Tax (Appeals), Vijayawada 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam