Yogendra Kumar Gupta, V. ITO, Ward-2(4),

ITA 1901/DEL/2006

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0139 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 26-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Cost of acquisition; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 250; 68; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1901/DEL/2006 ASSESSMENT YEAR : 2001-02 SHRI YOGENDRA KUMAR GUPTA, C/O RISHI & ASSOCIATES, 60-VILVESHWARPURI, BEHIND SADAR THANA, MEERUT CANTT. (UP) 250 001. PAN : ABAPG2456P VS. ITO, WARD 2 (4), MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SMT. MONA MOHANTY, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER OF THE CIT (A) DATED 27 TH MARCH, 2006 FOR ASSESSMENT YEAR 2001- 02. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (APPEALS) IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREBY RENDERING THE SAID ORDER AS BAD IN LAW AND LIABLE TO BE SET ASIDE. 2. THAT THE ADDITIONS PREFERRED THEREIN THE ASSESSMENT ORDER AND CONFIRMED VIDE THE IMPUGNED APPELLATE ORDER ARE EXCESSIVE AND ARBITRARY. 3. THAT THE LD. APPELLATE AUTHORITY ERRED IN CONFIRMING THE VIEWS OF THE ASSESSING OFFICER, WHO WAS NOT JUSTIFIED IN COMPUTING THE LONG TERM CAPITAL GAINS ON THE BASIS OF VALUATION OF JEWELLERY DECLARED UNDER VDIS SCHEME AS ON 01.04.1987, INSTEAD OF THE VALUATION OF THE SAME AS ON 01.04.1981. ITA NO.1901/DEL/2006 2 01.04.1981. 4. THAT THE INTEREST CHARGED IS AT A HIGHER RATE AND IS LIABLE TO BE REVISED. 5. THAT THE APPELLANTS CRAVE LEAVE TO ADD OR ALTER ANY OF THE SUBMISSION MADE HEREINABOVE. 2. THE RETURN OF INCOME WAS FILED ON 26 TH JULY, 2001 AT AN INCOME OF `1,28,960/-. THE ASSESSEE HAD SOLD JEWELLERY WORTH `6,4 7,000/-, BUT DID NOT DISCLOSE ANY CAPITAL GAIN. IN THE COURSE OF R E-ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT A COMPLETE DISCLOSUR E WAS MADE IN THE ORIGINAL RETURN ABOUT THE SALE OF JEWELLERY BY W AY OF A NOTE . THE LONG-TERM CAPITAL GAIN WAS NOT SHOWN FOR THE REASON TH AT AFTER WORKING OUT THE INCOME, THE LONG-TERM CAPITAL LOSS HAD OCCURR ED TO THE ASSESSEE TO THE EXTENT OF ` 1,17,436/-. THE ASSESSING OFFI CER DID NOT ACCEPT SUCH SUBMISSIONS OF THE ASSESSEE AS, ACCORDING TO THE ASSESSING OFFICER, THOUGH THE JEWELLERY WAS PURCHASED IN ASSESSMENT YEAR 1980-81 AS FOUND TO BE DISCLOSED IN THE DECLARAT ION FORM, BUT THE CORRECT VALUATION OF THE JEWELLERY AS ON 01.04.8 1 WAS NOT KNOWN AND THE ASSESSEE, FOR THE PURPOSE OF VDIS 97 HAD TAKEN T HE BASE AS ON 01.04.87. IT IS IN THESE CIRCUMSTANCES, THE ASSESSING OFFI CER TOOK THE BASE YEAR AS 1987-88 AND WORKED OUT THE LONG-TERM CAP ITAL GAIN ACCORDINGLY WHICH HAS BEEN WORKED OUT AT ` 1,03,105/ - AND HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE. LEARNED CIT (A) H AS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE ASSESSEE IS AGGRIE VED, HENCE, IN APPEAL. 3. THE PRESENT APPEAL WAS FIXED FOR HEARING ON 8 TH MARCH, 2011 WHEN IT WAS ADJOURNED TO 14 TH MARCH, 2011 AT THE REQUEST OF THE LEARNED COUNSEL OF THE ASSESSEE. AGAIN, ON 14 TH MARCH, A REQUEST HAS BEEN RECEIVED FROM THE COUNSEL OF THE ASSESSEE FOR ADJOU RNMENT OF THE APPEAL. IT IS A VERY SMALL APPEAL AND TIME AND AGAIN ADJOURNMENT HAVE BEEN GIVEN TO THE ASSESSEE. THEREFORE, WE REJECT THE A DJOURNMENT ITA NO.1901/DEL/2006 3 APPLICATION FILED BY THE LEARNED AR AND PROCEED TO DECIDE THE PRESENT APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING LEARNED DR AND AFTER CONSIDERING THE MATERIAL AVAILABLE ON OUR RECORD. 4. LEARNED DR RELIED UPON THE ORDER OF THE ASSESSING OF FICER AND CIT (A). 5. ALONG WITH THE APPEAL THE ASSESSEE HAS ENCLOSED COPY O F CERTIFICATE ISSUED U/S 68 (2)OF VDIS 1997 IN WHICH IT HAS BEEN ACCEPTED THAT THE ASSESSEE HAS DECLARED AN INCOME OF ` 2,01,242 I N RESPECT OF INCOME RELATING TO ASSESSMENT YEAR 1980-81 IN THE SHAPE OF JEWELLERY ON WHICH TAX PAYABLE HAS BEEN WORKED OUT AT ` 60,373 /- AND PAYMENT HAS BEEN MADE OF A SUM OF ` 63,995/- WHICH INCLUDE IN TEREST OF ` 3,622/-. THE SAID CERTIFICATE IS SIGNED BY SHRI G.R. JOSHI, COMMISSIONER OF INCOME-TAX, MEERUT AND THE CERTIFICATE IS DATED 2 1 ST APRIL, 1998. COPY IS PLACED AT PAGE 20 OF THE PAPER BOOK. THE ASSE SSEE HAS ALSO FILED VALUATION REPORT OF JEWELLERY COPY OF WHICH I S PLACED AT PAGE 19 OF THE PAPER BOOK IN WHICH THE VALUE OF THE JEWELLERY AS ON 01.04.87 HAS BEEN SHOWN AT ` 2,01,242/-. THE ASSESSEE HAS ALSO ENCLOSED COPY OF COMPUTATION OF INCOME WHICH IS PLACED AT PAGES 21-23 OF THE PAPER BOOK. FOR WORKING OUT THE INDEX VALUE, THE ASSESSEE HA S TAKEN AN AMOUNT OF ` 66,779/- IN RESPECT OF GOLD COMPONENT O F THE JEWELLERY AS ITS FAIR MARKET VALUE ON 01.04.81 AND COST INDEX OF 4 06 HAS BEEN APPLIED AND, THUS, THE INDEXED VALUE HAS BEEN ARRIVED AT ` 2,71,123/- IN RESPECT OF GOLD. SIMILARLY, FOR DIAMOND, THE FAIR M ARKET VALUE AS ON 01.04.81 HAS BEEN TAKEN AT ` 95,000/- AND APPLIED CO ST INDEX OF 406 AND INDEXED VALUE HAS BEEN ARRIVED AT ` 3,85,700/-. FOR THE SAKE OF CONVENIENCE THE COMPUTATION DONE BY THE ASSESSEE WITH R EGARD TO CAPITAL GAIN IS REPRODUCED BELOW:- ITA NO.1901/DEL/2006 4 INCOME FROM CAPITAL GAIN INCOME FROM CAPITAL GAIN INCOME FROM CAPITAL GAIN INCOME FROM CAPITAL GAIN LONG TERM CAPITAL GAIN GOLD JEWELLERY 20/03/2001 SALES CONSIDERATION 162710 LESS: INDEXED COST 271123 VALUE F.Y. 1981-82 66779/100*406 271123 -108413 DIAMOND JEWELLERY 20/03/2001 SALES CONSIDERATION 485090 LESS: INDEXED COST 385700 VALUE F.Y.1981-82 95000/100*406 385700 99390 TOTAL LONG TERM CAPITAL GAIN -9023 CAPITAL LOSS RS.9023/- WILL NOT SET OFF FROM ANY OTHER HEAD OF INCOME THAT I HAVE MADE A DISCLOSURE UNDER VDIS SCHEME, 19 97 OF RS.201242.00 FOR WHICH CERTIFICATE DATED 21.4.1998 WAS ISSUED BY CIT, MEERUT. THIS AMOUNT OF DISCLOSURE W AS CALCULATED ON THE BASIS OF VALUATION AS ON 1.4.1987 . THE JEWELLERY WAS OLDER THAN 1.4.1987 WHICH IS EVID ENT FROM THE CERTIFICATE UNDER VDIS ISSUED TO ME AS IN COL.3 OF THE SAID CERTIFICATE ASSESSMENT YER (S) TO WHICH TH E INCOME RELATES IS MENTIONED 80-81. 6. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT SUCH SUB MISSIONS OF THE ASSESSEE AND BY TAKING THE ENTIRE DECLARED VALUE AS ON 01.04.87 AT `2,01,248/-, HE HAS WORKED OUT THE INDEXED COST AT ` 5,44,695/- AND HAS COMPUTED CAPITAL GAIN OF ` 1,03,105/- AS BELOW:- ITA NO.1901/DEL/2006 5 INDEXED COST OF ACQUISITION = COST IN 1.4.87 X CAPITAL GAIN INDEX IN THE YEAR SALE TOOK PLACE --------------------------------------------------- ------ CAPITAL GAIN INDEX OF F.Y. 1987-88 = RS.201242 X 406 --------------------------- 150 = RS.5,44,695/- THUS, BY SELLING THE JEWELLERY FOR RS.6,47,800/- THER E IS LONG TERM CAPITAL GAIN OF RS.1,03,105/-, THIS IS BEING ADDED IN INCOME. 7. WE HAVE CAREFULLY GONE THROUGH THE VDIS 1997 ACC ORDING TO WHICH WHERE ANY PERSON MAKES ON OR AFTER THE DATE OF COMMENCEMENT OF THE SAID SCHEME WHICH HAS COME INTO FORCE ON 1 ST JULY, 1997, A DECLARATION IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 65 IN RESPECT OF ANY INCOME CHARGEABLE TO TAX UNDER INCOME TAX AC T FOR ANY ASSESSMENT YEAR FOR WHICH HE HAS FAILED TO FURNISH A RETU RN U/S 139 OF THE ACT OR REGARDING WHICH HE HAS FAILED TO DISCLOSE A NY RETURN OF INCOME FURNISHED BY HIM UNDER INCOME TAX ACT BEFORE THE DATE OF COMMENCEMENT OF THE SCHEME AND WHICH INCOME HAS ESCAPE D ASSESSMENT FOR THE REASON OF THE COMMISSION OR FAILURE ON THE PART OF SUCH PERSON SHALL BE CHARGED IN RESPECT OF INCOME SO DE CLARED IN A CASE OF DECLARANT BEING A PERSON OTHER THAN A COMPANY OR A FIRM, 30% OF THE VOLUNTARILY DISCLOSED INCOME. WHERE THE INCOM E HAS BEEN DISCLOSED IN THE SHAPE OF JEWELLERY OR BULLION, ITS MAR KET VALUE WAS TO BE TAKEN AS ON 1 ST APRIL, 1987 AND THE RELEVANT PORTION OF THE SAID SCHEME IN THIS REGARD IS REPRODUCED BELOW:- THE VALUE OF THE JEWELLERY OR BULLION SO DECLARED S HALL BE TAKEN TO BE ITS MARKET VALUE AS ON APRIL 1, 1987, WHERE THE D ISCLOSURE IS MADE IN RESPECT OF AN ASSESSMENT YEAR EARLIER THAN ASSESSMENT YEAR 1987-88 AND FOR THE PURPOSES OF THIS C HAPTER THE EXPRESSION JEWELLERY SHALL HAVE THE SAME MEANIN G ASSIGNED TO IT IN EXPLANATION 1 TO CLAUSE (VIII) OF SUB -SECTION (1) OF SECTION 5 OF THE WEALTH-TAX ACT. ITA NO.1901/DEL/2006 6 8. THUS, IT CAN BE SEEN THAT WHERE THE DECLARATION IS IN RESPECT OF JEWELLERY OR BULLION, ITS VALUE WAS TO BE DECLARED AS ON 1 ST APRIL, 1987 IRRESPECTIVE OF THE INCOME RELATED TO ANY YEAR EARLI ER TO THAT. THUS, IN THE PRESENT CASE WHAT HAS BEEN DONE BY THE ASSESSEE IS THAT INCOME RELATING TO ASSESSMENT YEAR 1980-81 HAS BEEN DECLARED AN D AS PER THE PROVISIONS OF THE SCHEME, ITS VALUE FOR TAXATION PURPOSE S WAS TAKEN AS ON 1 ST APRIL, 1987. TAKING THE SAID VALUE AS ON 1 ST APRIL, 1987 WAS THE REQUIREMENT OF THE SCHEME. THE LONG-TERM CAPITAL GAI N, IF ANY, HAS TO BE WORKED OUT AS PER THE PROVISIONS OF THE ACT AND NOT AS PER THE PROVISIONS OF THE SCHEME. THE FACT THAT THE ASSESSEE HAS DECLARED THE INCOME FOR ASSESSMENT YEAR 1980-81 HAS EVEN BEEN ACKNOWL EDGED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ITSELF. IF IT IS SO, THEN, ACCORDING TO THE PROVISIONS OF INCOME-TAX ACT, THE DA TE WHEN ASSESSEE HELD SUCH PROPERTY WHICH IS SUBJECT TO CAPITAL GAIN IS THE RELEVANT DATE FOR WORKING OUT THE INDEXED COST. THEREFORE, THE ASSESSE E WAS RIGHT IN TAKING THE FAIR MARKET VALUE AS ON 1.4.81 AS PRIOR TO THAT DATE THE ASSESSEE HELD THAT JEWELLERY AND, THEREFORE, THE ASSESSING OFFICER WAS WRONG IN APPLYING THE FAIR MARKET VALUE AS ON 01.04. 87 FOR THE PURPOSE OF COMPUTING THE INDEXED VALUE OF THE SOLD ASSET. 9. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT CALLED FOR AND IS ORDERED TO BE DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.20 11. SD/- SD/- [A.K. GARODIA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 14.03.2011. ITA NO.1901/DEL/2006 7 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES