ITO 20(3)(4), MUMBAI V. SUBHASH NADKARNI, MUMBAI

ITA 1959/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9223 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2000-2001
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V JHAVERI
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 147; 131; 148; 12; 10; 2; 11

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAW AN SINGH, JUDICIAL MEMBER ITA NO. 1959/MUM/2016 (ASSESSMENT YEAR 2000-01 ) ITO-20(3)(4) ROOM NO. 616, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012. VS. SHRI SUBHASH S. NADKARNI FLAT NO. 248, LEELA BAUGH, TELANG ROAD, MATUNGA (CR), MUMBAI-400019 . PAN: AADPN9763A APPELLANT RESPONDE NT APPELLANT BY : SHRI AIRIJU JAIKARAN WITH SHRI LOVE KUMAR (DR) RESPONDENT BY : SHRI B.V. JHAVERI (AR) DATE OF HEARING : 11.01.2019 DATE OF PRONOUNCEMEN T : 29.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-32 [HEREINAFTER REFERRED AS LD CIT (A)], MUMBAI DATED 22.01.2016 FOR ASSESSMENT YEAR 2000-01. THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE STATEMENT OF SHRI KIRA N SHAH RECORDED BY THE ADIT(INV.), UNIT 7(2), MUMBAI ON 10.10.2005 WHEREIN SHRI KIRAN SHAH WHILE EXPLAINING THE CONTENTS OF LOOSE PAPER BOOK MARKED AS A-27, I.E. PAYMENT MADE TO MR. NADKARNI, STATED THAT THE TOTAL CASH PA YMENT OF RS.1,04,50,000/- WERE MADE TO NADKARNIS IN ADDITION TO RS.49,50,000/ - PAID TO NADKARNIS IN CHEQUE.' ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 2 (2) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACTS THAT BOTH STATEM ENTS OF SHRI KIRAN SHAH RECORDED ON 10.10.2005 AND 28.11.2011 CONFIRM THAT BESIDES THE PAYMENTS OF RS.49,50,000/- IN CHEQUE TO NADKARNIS, M/S MOTTA CO NSTRUCTION PAID TOTAL CONSIDERATION OF RS.1,04,50,000/- AND IT IS CORROBO RATED BY SEIZED PAPER BOOK MARKED AS A-27.' (3) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN COMPUTING THE CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSETS ACQUIRED BY THE ASSESSEE UNDER INHERITANCE, BY TAKING INDEXED COST OF ACQUISITION WITH REFERENCE TO THE YEAR IN WHICH THE ASSESSEE'S ANCESTORS FIRST HELD THAT ASSETS AS AGAINST THE YEAR IN WHICH THE A SSESSEE FIRST HELD THE ASSET.' (4) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2000-01 DECLARING INCOME OF RS. 2,6 3,380/- ON 23.06.2000. THE ASSESSMENT WAS RE-OPENED UNDER SECT ION 147 BY RECORDING REASONS OF RE-OPENING. NOTICE UNDER SECTI ON 148 DATED 27.03.2007 WAS ISSUED TO THE ASSESSEE. THE ASSESSM ENT WAS REOPENED ON THE BASIS OF STATEMENT OF ONE KIRAN H SHAH DIRECTOR OF M/S MOTTA CONSTRUCTION PVT LTD, RECORDED UNDER SECTION 132(4) ON 10.10.2005 DURING THE SEARCH ACTION ON THEIR GROUP. IN THE SEA RCH SOME LOOSE PAPER WERE SEIZED. IN THE STATEMENT OF KIRAN SHAH IT WAS RECORDED THE ASSESSEE AND HIS NEPHEW WERE THE LANDLORD OF PLOT NO. 248, T ELANG ROAD, MATUNGA, MUMBAI. THE HOUSE CONSTRUCTED ON PLOT NO.2 48 ( KNOWN AS NADKARNI HOUSE) WAS ASSIGNED BY ASSESSEE AND HIS NE PHEW TO MOTTA CONSTRUCTION PVT LTD FOR REHABILITATION FOR A CONSI DERATION OF RS. ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 3 49,50,000/- ( 50% TO EACH) PAID BY WAY OF CHEQUE A ND IN ADDITION TO THAT THEY WERE WAS ALSO PAID IN CASH OF RS.1,04,50,000/- ( 50% TO EACH). THE ASSESSMENT ORDER WAS PASSED ON 24.12.2007 UNDER SEC TION 143(3) R.W.S 147 BY ASSESSING THE TOTAL INCOME OF ASSESSEE AT RS . 70,08,800/-. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R ADDED UNDISCLOSED LONG TERM CAPITAL GAIN (LTCG) OF RS. 52,25,000/- A ND DIFFERENCE DUE TO INDEXATION OF RS. 15,20,420/-. ON APPEAL BEFORE THE LD. CIT(A), THE APPEAL OF THE ASSESSEE WAS DISMISSED DUE TO NON-PRO SECUTION. ON FURTHER, APPEAL BEFORE THE TRIBUNAL, THE ORDER OF LD. CIT(A) WAS SET-ASIDE AND THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING O FFICER VIDE ORDER DATED 28.01.2011 IN ITA NO. 4856/MUM/2009. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF TRIBUNAL PASSED THE A SSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 254 OF THE ACT ON 28.12.2011. WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER AGAIN MADE THE ADDITION OF RS. 52,25,000/- AS UNDISCLOSED LONG TERM CAPITAL GAIN ( LTCG) AND ADDITION OF RS. 15,25,420/- BEING DIFFERENCE DUE TO WRONG INDEXATION. ON APPEAL BEFORE THE LD. CIT(A), BOTH THE ADDITION WAS DELETED. THEREFORE, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE H AVE SEEN THAT THE ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 4 GROUNDS NO. 1& 2 OF APPEAL ARE NOT DRAFTED/ FRAMED IN A PROPER MANNER. HOWEVER, FROM PERUSAL OF ORDERS OF THE AUTHORITIES IT IS REVEALED THAT LD CIT(A) DELETED THE ADDITION OF UNDISCLOSED LTCG OF RS. 52,25,000/-. THUS, IN OUR VIEW THE GROUND NO.1 & 2 RELATES TO DELETING THE ADDITION OF UNDISCLOSED LTCG. THE LD. DR FOR THE REVENUE SUP PORTED THE ORDER OF THE ASSESSING OFFICER. THE LD. DR SUBMITS THAT SEAR CH ACTION WAS CARRIED ON VIJAY GROUP IN OCTOBER 2005, DURING THE SEARCH ACTION CERTAIN LOOSE PAPER WAS SEIZED. PURSUANT TO SEARCH STATEMENT OF K IRAN H.SHAH DIRECTOR OF MOTTA CONSTRUCTION WAS RECORDED ON 10.10.2005 UN DER SECTION 132(4). IN THE STATEMENT KIRAN SHAH DISCLOSED THE ASSESSEE AND HIS NEPHEW WERE THE LANDLORD OF PLOT NO. 248, TELANG ROAD, MATUNGA, MUMBAI. THE HOUSE CONSTRUCTED ON THE SAID PLOT WAS KNOWN AS N ADKARNI HOUSE , WAS ASSIGNED BY ASSESSEE AND HIS NEPHEW TO MOTTA CONSTR UCTION PVT LTD FOR REHABILITATION FOR A CONSIDERATION OF RS. 49,50,000 /- ( 50% TO EACH) PAID BY WAY OF CHEQUE AND IN ADDITION TO THAT THEY WERE WAS ALSO PAID IN CASH OF RS.1,04,50,000/-( 50% TO EACH). THE LD CIT (A) D ISCARDED THE CATEGORICAL STATEMENT OF KIRAN H SHAH AND ITS EVIDE NTIARY. THE SAID STATEMENT WAS RECORDED ON OATH BY THE INVESTIGATING TEAM. IN SUPPORT OF HIS SUBMISSIONS THE LD DR FOR THE REVENUE RELIED ON THE DECISION OF MADRAS HIGH COURT IN B. KISHORE VS ITO [2014] 52 TA XMANN.COM 449( MADRAS). THE LD DR FURTHER SUBMITS THAT THE DECISIO N IN B. KISHORE HAS BEEN APPROVED BY HONBLE SUPREME COURT AS THE SPECI AL LEAVE PETITION ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 5 FILED BY THE ASSESSEE WAS DISMISSED ON 02.07.2015 R EPORTED VIDE B. KISHORE VS DCIT [2015] 62 TAXMANN.COM 215(SC) 4. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUPPOR TED THE ORDER OF THE LD CIT(A). THE LD. AR FOR THE ASSESSEE FURTHER SUBMIT S THAT THE STATEMENT OF KIRAN H SHAH HAS NO EVIDENTIARY VALUE. THE SAID KIRAN H SHAH WAS THIRD PARTY. HIS STATEMENT IS UNWORTHY OF CREDIT. DURING THE ASSESSMENT THE ASSESSING OFFICER NOT GAVE THE OPPORTUNITY OF C ROSS EXAMINATION OF SAID KIRAN SHAH DESPITE THE DIRECTION OF THE TRIBUN AL. THE LD CIT(A) DURING THE APPELLATE STAGE REMANDED THE MATTER TO P ROVIDE CROSS EXAMINATION. THE SAID KIRAN H SHAH WAS CROSS EXAMIN ED IN REMAND PROCEEDINGS; DURING HIS CROSS EXAMINATION HE MADE C ONTRADICTORY STATEMENT AS RECORDED BY ASSESSING OFFICER. THE STA TEMENT RECORDED BY THE INVESTIGATION TEAM DURING THE SEARCH ACTION WAS NOT CORROBORATED BY ANY DOCUMENTARY EVIDENCES. THE LD. CIT (A) APPRECIA TED THE EVIDENTIARY VALUE OF HIS STATEMENT AND HIS CROSS EXAMINATION AN D GAVE HIS FINDINGS. THE ASSESSEE HAS BROUGHT THE SUFFICIENT MATERIAL BE FORE ASSESSING OFFICER AS WELL AS CIT(A) TO DISCARD THE STATEMENT OF KIRAN SHAH. IT WAS FURTHER SUBMITTED THAT IN THE STATEMENT RECORDED ON 28.11.2 011 THE SAID KIRAN SHAH STATED THAT HE HAS PAID ONLY RS. 47,00,000/- T O THE ASSESSEE AND HIS NEPHEW AND BALANCE CONSIDERATION OF RS. 57,50,000/- WAS PAID BY ALLOTTING TWO FLATS. THE STATEMENT OF SAID KIRAN SH AH IS NOT CREDITWORTHY. THE SAID FLATS WERE GIVEN BY KIRAN SHAH, IN LIEU OF SURRENDER OF TENANCY ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 6 RIGHT BY SUJATA S NADKARANI AND BY SUKANT SUBASH NA DKARNI IN RESPECT OF TWO FLATS ON THIRD FLOOR. THESE FACTS ARE DULY R ECORDED IN THE AGREEMENT REGISTERED ON 15.01.2000 WITH SUB-REGISTRAR AS WELL AS IN THE DEED OF ASSIGNMENT DATED 23.12.1999. 5. THE LD. AR FOR THE ASSESSEE ALSO FILED THE FOLLOWIN G DOCUMENTS WITH THE CERTIFICATE THAT ALL THE DOCUMENTS WERE FURNISHED B EFORE THE LOWER AUTHORITIES. (A) WRITTEN SUBMISSION OF THE ASSESSEE FILED BEFORE THE CIT(A). (B) DEED OF ASSIGNMENT DATED 23 RD DECEMBER, 1999. (C) AGREEMENT DATED 15 TH JANUARY, 2000 BETWEEN M/S. MOTTA CONSTRUCTION PVT. LTD. AND SHRI SUBHASH S. NADKARNI FOR PROVIDING PERMANENT ALTERNATE ACCOMMODATION IN LIEU OF TENANC Y. (D) AGREEMENT DATED 15 TH JANUARY, 2000 BETWEEN M/S. MOTTA CONSTRUCTION PVT. LTD. AND SHRI SUBHASH S. NADKARNI FOR PROVIDING PERMANENT ALTERNATE ACCOMMODATION IN LIEU OF TENANC Y. (E) REPLY OF THE ASSESSEE DATED 9 TH DECEMBER, 2013 TO THE REMAND REPORT OF THE A.O. (F) STATEMENTS OF MR. KIRAN H. SHAH RECORDED ON 14 TH OCTOBER, 2005 AND ON 28 TH NOVEMBER 2011. (G) A STATEMENT OF MR. KIRAN H. SHAH RECORDED PURSUANT TO THE CROSS- EXAMINATION ON 17 TH SEPTEMBER, 2013. (H) REMAND REPORT DATED 29 TH SEPTEMBER, 2013. (I) AFFIDAVIT OF SHRI SUKANT S. NADKARNI DATED 6 TH DEC., 2013. (J) AFFIDAVIT OF SMT. SUJATA SUHAS NADKARNI DATED 6 TH DEC., 2013 (K) AGREEMENT DATED 15 TH JANUARY 2000 BETWEEN MOTTA CONSTRUCTION AND SUSHIL KUMAR SUHAS NADKARNI IN LIEU OF TENANCY. ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 7 (L) AGREEMENT DATED 15 TH JANUARY 2000 BETWEEN MOTA CONSTRUCTION AND MRS SUJATA SUHAS NADKARNI ALIAS BHINDE IN LIEU OF T ENANCY. (M) ASSESSMENT ORDER FOR AY 2000-01 DATED 31.12.2007 IN CASE OF SUKANT SUBASH NADKARNI (N) CERTIFICATE OF M/S LEELA BAUG CO-OP HOUSING SOCIET Y. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AS SESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER IN PURSUANCE OF THE DI RECTION OF THE TRIBUNAL DATED 28.01.2011 AND ADDED UNDISCLOSED LON G TERM CAPITAL GAIN (LTCG) OF RS. 52,25,000/- AND DIFFERENCE DUE TO IN DEXATION OF RS. 15,20,420/-. THE ASSESSING OFFICER MADE ADDITIONS O N HIS OBSERVATION THAT SUMMONS WERE ISSUED UNDER SECTION 131 TO KIRAN H SH AH ON 07.10.2011. THE STATEMENT OF KIRAN H SHAH WAS RECORDED ON 28.11 .2011. IN THE STATEMENT KIRAN SHAH CONFIRMED THAT BESIDES THE PAY MENTS IN CHEQUE OF RS. 49,50,000/-, HE HAS ALSO PAID IN CASH OF RS. 47 ,50,000/- TO ASSESSEE AND HIS NEPHEW ( RS. 23,50,000/- EACH) AND ALSO STA TED HE HAS MAKE TOTAL CASH PAYMENT OF RS.1,04,50,000/- TO NADKARNIS (ASSE SSEES AND HIS FAMILY/NEPHEW). HE HAD PAID CASH OF RS. 47.00 LAKHS AND BALANCE PAYMENTS WERE GIVEN TWO EXTRA FLATS IN LEELA BAUGH BUILDING. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE W AS CALLED TO CROSS EXAMINE KIRAN SHAH ON 28.11.2011, BUT THE ASSESSEE SOUGHT ADJOURNMENT. THE ASSESSING OFFICER ALSO RECORDED TH E STATEMENT OF ASSESSEE ON 22.12.2011. IN THE STATEMENT UNDER SECT ION 131 THE ASSESSEE ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 8 DENIED TO HAVE RECEIVED ANY CASH PAYMENT. WITH REG ARD TO THE FLATS GIVEN TO HIS SON AND WIFE OF HIS BROTHER, THE ASSESSEE CO NTENDED THAT THEY WERE TENANT IN THE BUILDING, WHICH FACT IS RECORDED IN T HE DEED OF ASSIGNMENT DATED 23.12.2000, THEREFORE, THEY WERE ALLOTTED SEP ARATE FLAT NO. 403 AND 404 IN LIEU OF SURRENDER OF TENANCY VIDE AGREEMENT DATED 15.01.2000. THE ASSESSING OFFICER NOT ACCEPTED THE STATEMENT OF THE ASSESSEE HOLDING THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCES IN SUPPORT OF HIS CONTENTIONS. THE ASSESSING OFFICER CONCLUDED THAT CASH PAYMENT TO LANDLORD IS NORMAL TRADE PRACTICE IN SUCH TYPE OF C ONSTRUCTION. THE ASSESSING OFFICER RETREATED THE ADDITIONS AS MADE D URING THE ORIGINAL ASSESSMENT PROCEEDINGS. 7. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS NOT GI VEN ANY FINDING ON THE VARIOUS AGREEMENTS FILED BY ASSESSEE INCLUDING THE AGREEMENT OF ASSIGNMENT DATED 23.12.1999 AND THE SURRENDER AGREE MENT EXECUTED BY THE SUJATA SUHAS NADKARNI AND SUKANT NADKARNI DATED 15.01.2000. BEFORE THE LD CIT(A) THE ASSESSEE URGED THAT THE AS SESSEE ASKED FOR CROSS-EXAMINATION OF KIRAN H. SHAH BEFORE RELYING H IS STATEMENT, WHICH WAS NOT GIVEN BY THE ASSESSING OFFICER. THE TRIBUNA L IN ITS ORDER DATED 28.01.2011 DIRECTED TO PROVIDE OPPORTUNITY OF HEARI NG, DESPITE THE DIRECTION OF TRIBUNAL THE OPPORTUNITY FOR CROSS-EXA MINATION OF KIRAN H. SHAH WAS NOT PROVIDED TO THE ASSESSEE. ON THE SUBMI SSION OF ASSESSEE, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO PR OVIDE OPPORTUNITY OF ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 9 CROSS-EXAMINATION OF KIRAN H. SHAH. THE ASSESSING O FFICER IN REMAND PROCEEDING PROVIDED THE OPPORTUNITY OF CROSS-EXAMIN ATION ON 17.09.2013. THE STATEMENT OF KIRAN H. SHAH WAS RECO RDED ON 14.10.2005 AND 28.11.2011 WAS ALSO PROVIDED TO THE ASSESSEE. A FTER RECORDING CROSS- EXAMINATION OF KIRAN H. SHAH, THE ASSESSING OFFICER FURNISHED ITS REMAND REPORT DATED 29.09.2013. IN THE REMAND REPOR T, THE ASSESSING OFFICER FURNISHED THE COPY OF CROSS-EXAMINATION REC ORDED ON 17.09.2013 AND REITERATED HIS CONTENTION FOR MAKING ADDITION F OR TREATMENT OF UNDISCLOSED LTCG. THE COPY OF REMAND REPORT WAS PRO VIDED TO THE ASSESSEE. THE ASSESSEE FILED HIS DETAILED REPLY DAT ED 19.12.2013 AND ALSO FURNISHED THE COPY OF DOCUMENTS ON WHICH THE ASSESS EE IS RELYING BEFORE US, WHICH WE HAVE RECORDED IN PARA-5 (SUPRA). AFTER FURNISHING REMAND REPORT BY ASSESSING OFFICER AND THE REPLY OF ASSESS EE, THE LD. AR OF THE ASSESSEE MADE DETAILED SUBMISSION ON THE SIMILAR LI NE AS SUBMITTED BEFORE US. THE LD. CIT(A) AFTER CONSIDERING THE STA TEMENT OF KIRAN H. SHAH RECORDED ON 14.10.2005, 28.11.2011 AND ON 17.0 9.2013 AND CONSIDERING THE LOSE PAPER SEIZED DURING THE COURSE OF SEARCH ON VIJAY GROUP OF MOTTA CONSTRUCTION PVT. LTD. PASSED THE FO LLOWING ORDER: '16.2 FROM THE UNDISPUTED FACTS EXTRACTED BY ME ABO VE, IT IS CLEAR THAT A TOTAL OF 4 FLATS WERE GIVEN TO THE NADKARNI FAMILY. ONE FLAT EACH TO THE APPELLANT, SUKANT, SUSHIL & SUJATA NADKARNI. THESE FLATS HAVE BEEN ALL OTTED ON THE STRENGTH OF AN AGREEMENT DATED 15/0112000. IN THAT AGREEMENT, THE APPELLANT AND SUSHHIL NADKARNI ARE THE ASSIGNORS WHILE SUKANT AND SUJATA ARE TENANTS. IN THE SAME DEED, MOTTA CONSTRUCTIONS HAS NOT ONLY SETTLED THE ASSIGNORS BUT ALSO SETTLED THE ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 10 TENANTS. IT IS ALSO CLEAR THAT THE MONEY CONSIDERAT ION WAS PAID ONLY TO THE APPELLANT AND SUSHIL NADKARNI VIDE ASSIGNMENT DEED DATED 23/12/1999. EVEN THOUGH THERE ARE TWO AGREEMENTS ONE FOR MONETARY CO NSIDERATION AND THE OTHER FOR CONSIDERATION IN KIND, THE TRANSACTION IS ONLY ONE AND PERTAINS TO THE REDEVELOPMENT OF NADKARNI HOUSE. WITH A VIEW TO VER IFY WHETHER THE APPELLANT OR HIS FAMILY MEMBERS HAVE BEEN ALLOTTED ANY MORE F LATS AND ALSO TO VERIFY WHETHER ALL TENANTS INCLUDING THOSE NOT BELONGING T O THE FAMILY HAVE BEEN ALLOTTED FLATS, I REQUESTED THE APPELLANT TO PRODUC E THE LIST OF MEMBERS OF THE NEW SOCIETY. ACCORDINGLY, THE APPELLANT HAS FURNISHED A CERTIFICATE OF LEELA BAUGH CO-OPERATIVE HOUSING SOCIETY DATED 9TH DECEMBER, 20 15 WHEREIN THE APPELLANT, SUSHIL S. NADKARNI, SUKANT SUBHASH NADKARNI AND MRS . SUJATA SUHAS NADKARNI ARE ALLOTTED FLATS IN LIEU OF THEIR TENANCY RIGHTS. THUS, THESE FOUR FLATS ARE ONLY GIVEN TO THE MEMBERS OF NADKARNI FAMILY. IT IS ALSO SEEN THAT MOTTA CONSTRUCTION PVT. LTD. HAS ALSO GIVEN ALTERNATE ACCOMMODATION TO OTHER FOUR TENANTS WHOSE NAMES ARE LISTED IN THE DEED OF ASSIGNMENT DATED 23 RD DECEMBER, 1999. IT IS THUS CLEAR THAT MOTTA CONSTRUCTIONS HAS GIVEN A TOT AL OF RS 49,50,000 IN CHEQUE TO THE APPELLANT AND SUSHIL OVER AND ABOVE WHICH ON E FLAT EACH AND NOTHING MORE HAS BEEN GIVEN TO THE APPELLANT AND HIS 3 FAMILY ME MBERS. 16.3 IF FOR A MOMENT IT IS TO BE BELIEVED THAT MR. KIRAN SHAH WAS REFERRING TO THE TWO FLATS GIVEN TO SUKANT & SUJATA, IT IS SEEN THAT STAMP DUTY AUTHORITY DETERMINED THE MARKET VALUE OF THE SAID FLAT AT RS. 4,12,000 EACH (AGREEMENTS DATED 15/0112000). THUS THE AGGREGATE CONSIDERATION OF THE SAID TWO FLATS WORKS OUT TO RS.8,24,000 WHICH DOES NOT MATCH WITH THE CO NSIDERATION OF RS.57 ,50,000 REFERRED TO BY MR. KIRAN H. SHAH AS PAID IN TERMS O F TWO EXTRA FLATS. THUS, THE STATEMENT OF MR. KIRAN H. SHAH RECORDED ON 28TH NOV EMBER, 2011 AND THE STATEMENT IN CROSS EXAMINATION IS NOT SUBSTANTIATED WITH CORROBORATIVE EVIDENCE. IN FACT THE EVIDENCE PRODUCED BY THE APPELLANT SUCC ESSFULLY REBUTS THE STATEMENT OF MR KIRAN SHAH INSOFAR AS THE PAYMENT OF RS 57,50 ,000 IS CONCERNED. AT THIS STAGE, THE FACTS INDICATE THAT ORIGINALLY IN 2005, MR. KIRAN SHAH CLAIMED TO HAVE PAID RS 1,04,50,000 ENTIRELY IN CASH. THEN SUBSEQUE NTLY HE CHANGED HIS STATEMENT TO STATE THAT HE HAS PAID RS. 47,00,000 I N CASH AND RS 57,50,000 IN KIND BEING TWO FLATS TO THE NADKARNIS. AS DISCUSSED ABOVE, THERE IS NO EVIDENCE TO SUBSTANTIATE THIS CLAIM OF HAVING PAID RS 57,50, 000 THROUGH TWO FLATS SIMPLY BECAUSE WHICHEVER FLATS WERE ALLOTTED TO THE NADKAR NI FAMILY WERE ORIGINALLY ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 11 CONTRACTED AGREEMENTS AT THE TIME OF REDEVELOPMENT. THUS THE EVIDENTIARY VALUE OF THE STATEMENT OF MR KIRAN SHAH IN ABSENCE OF ANY OTHER EVIDENCE IS IN SERIOUS DOUBT. 16.4 IN RESPECT OF THE ALLEGED EXTRA FLATS GIVEN TO THE NADKARNIS, THE DATES ALSO DO NOT TALLY. IN HIS STATEMENTS IN 2011 AND HIS CROSS IN 2013, KIRAN SHAH HAS STATED THAT RS 57,50,000 HAS BEEN PAID IN KIND TO THE NADK ARNIS ON 23/12/1999. THESE WOULD PRESUMABLY BE TWO EXTRA FLATS. HOWEVER THE 4 FLATS GIVEN TO 4 MEMBERS OF THE NADKARNI FAMILY HAVE BEEN REGISTERED IN JAN 200 0 AND THAT TOO AT CONSIDERATION OF APPROXIMATELY RS 4 LAKHS EACH. EVE N IF THE VALUE OF THESE 4 FLATS IS TOTALLED, THE SAME IS FAR LOWER THAN RS 57,50,00 0. IT IS NOT CLEAR THEREFORE WHICH FLATS IS MR KIRAN SHAH REFERRING TO IN HIS ST ATEMENTS IN 2011 & 2013. NEITHER HAS HE SPECIFIED THOSE SO CALLED FLATS, NOR HAS THE AO QUERIED HIM FURTHER IN THE MATTER. THE AO SEEMS TO HAVE TAKEN THE STATE MENT OF MR KIRAN SHAH AT FACE VALUE AND MADE ADDITION IN THE HANDS OF THE AP PELLANT. 16.5 IT IS SETTLED LAW, THAT A STATEMENT WITHOUT CO RROBORATIVE EVIDENCE WOULD BE ON A WEAK FOOTING. IN RESPECT OF PAYMENT OF RS.47,0 0,000 IN CASH, IN THE CROSS EXAMINATION MR. KIRAN H. SHAH MADE A GENERAL STATEM ENT TO THE EFFECT THAT HE HAD PAID IT TO THE APPELLANT AND HIS NEPHEW AT THEI R RESIDENCE IN THE PRESENCE OF MR. SUKANT SUBHASH NADKARNI AND MRS. SUJATA SUHAS N ADKARNI. AT THIS JUNCTURE ALSO MR. KIRAN H. SHAH HAS NOT BEEN ABLE TO SUBSTAN TIATE HIS STATEMENT BY ANY CIRCUMSTANTIAL EVIDENCE. I, THEREFORE, HAVE NO REAS ON TO ACCEPT THE STATEMENT OF MR. KIRAN H. SHAH RECORDED ON 28 TH NOVEMBER, 2011 AND HIS STATEMENT IN CROSS EXAMINATION AS CORRECT AND TRUTHFUL, MORE SO WHEN T HE SAID STATEMENTS CONTRADICTS HIS EARLIER STATEMENT AND IS NOT CORROB ORATED AND SUBSTANTIATED BY ANY DOCUMENTARY EVIDENCE OR CIRCUMSTANTIAL EVIDENCE. AS AGAINST THE SAME, MARKET VALUE DETERMINED BY THE STAMP DUTY AUTHORITY OF THE SAID TWO FLATS ALLOTTED TO MR. SUKANT SUBHASH NADKARNI AND MRS. SUJATA SUHAS NADKA RNI PROVES THAT THE SAID STATEMENT ALLOTTING TWO FLATS IN LIEU OF THE SUM OF RS.57,50,000 IS INCORRECT. THUS, THE CREDENTIALS OF SAID STATEMENT OF MR. KIRA N H. SHAH ARE DOUBTFUL. I, THEREFORE, CANNOT SUBSCRIBE TO THE VIEW OF THE AO T HAT CASH OR ANY MORE FLATS HAVE BEEN GIVEN TO THE APPELLANT AND/OR OTHER MEMBE RS OF HIS FAMILY. I THEREFORE DIRECT THE AO TO ADOPT THE SALE CONSIDERATION FOR C APITAL GAINS AS DIRECTED BY ME ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 12 IN PARA 15 ABOVE. THE ADDITIONS MADE BY THE AO TOWA RDS THE APPELLANTS SHARE OF CASH AND EXTRA FLAT RECEIVED IS DELETED. GROUNDS 1( 1) TO (6) ARE ALLOWED.' 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT PROPERLY APPRECIATED THE EVIDENTIAR Y VALUE OF STATEMENT OF KIRAN H. SHAH WHICH IS CONTRADICTORY AS REFERRED AB OVE. THE CONTENTION OF ASSESSEE THROUGHOUT THE PROCEEDING IS SUPPORTED BY THE DOCUMENTARY EVIDENCE THAT SUKANT NADKARNI AND SUJATA NADKARNI W ERE ALLOTTED FLAT IN THE NEW BUILDING IN LIEU OF THEIR RESPECTIVE RIGHT OF TENANCY IN TWO DIFFERENT FLATS. MOTTA CONSTRUCTION EXECUTED SEPARA TE AGREEMENTS DATED 15.01.2011 IN THEIR FAVOUR. THEREFORE, WE DO NOT FI ND ANY JUSTIFICATION FOR MAKING ADDITION ON ACCOUNT OF ALLEGED CASH PAYMENT. THE EXTRA TWO FLATS GIVEN TO SUKANT NADKARNI AND SUJATA NADKARNI WERE G IVEN ON ACCOUNT OF INDEPENDENT RIGHT BEING A TENANT IN THE BUILDING. T HUS, WE AFFIRMED THE ORDER OF LD. CIT(A). IN THE RESULT, GROUND NO.1 & 2 OF THE APPEAL RAISED BY REVENUE ARE DISMISSED. 9. GROUND NO. 3 RELATES TO INDEXATION OF COST OF ACQUI SITION. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICE R. 10. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPO RTED THE ORDER OF LD. CIT(A). THE LD. AR FURTHER SUBMITS THAT THE LD. CIT (A) GRANTED RELIEF TO THE ASSESSEE BY RELYING UPON THE DECISION OF HONBL E BOMBAY HIGH COURT IN CIT VS. MANJULA J. SHAH (355 ITR 474). THE LD. AR OF THE ASSESSEE SUBMITS THAT THE HONBLE HIGH COURT HELD T HAT BY APPLYING THE ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 13 DEEMING PROVISION CONTAINED IN EXPLANATION (1)(I)(B ) TO SECTION 2(42A), THE ASSESSEE WAS DEEMED TO HAVE HELD THE ASSET DURI NG THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER. THE REFORE, WHILE COMPUTING THE CAPITAL GAIN, INDEX COST OF ACQUISITI ON WOULD HAVE TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH PREVIO US OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH ASSESSEE BECOME THE OWNER OF THE ASSET. 11. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND FIND THAT THIS GROUND OF APPEAL IS SQUARELY COVERED BY THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN MANJULA J. SHAH (SUPRA). WE HAVE NOTE D THAT THE LD. CIT(A) BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT HAS DIRECTED THE ASSESSING OFFICER TO GRANT INDEXATION FROM 01.04.1981 AS CLAIMED BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD. CIT(A), WHICH WE AFFIRM. IN THE RESULT, GROUND NO.3 OF THE APPEAL IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2019. SD/- SD /- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 29.03.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) ITA NO. 1959 MUM 2016-SHRI SUBHASH S. NADKARNI 14 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI