Anil Verma, V. ITO,

ITA 20/LKW/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9147 (ITAT-LUCKNOW)
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: SAMEER SAXENA
• Keywords: Cost of acquisition; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, LUCKNOW. BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.20(LKW.)/2011 A.Y. : 2006-07 SHRI ANIL VERMA, VS. THE ITO, PROP. M/S. SHREE MOTI RAJ JEWELLERS, SHAHJAHANPUR. SADAR BAZAR, SHAHJAHANPUR. PAN ABQPV 7069P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER SAXENA, ADVOCATE RESPONDENT BY : SHRI P.K.BAJAJ, SR.D.R. O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A), BAREILLY DATED 14.9.2010 RELATING TO ASSESS MENT YEAR 2006-07. 2. THE REGISTRY HAS POINTED OUT THAT THE APPEAL IS BARRED BY LIMITATION BY FIVE DAYS. THE ASSESSEE MOVED AN APPLICATION FOR C ONDONATION OF DELAY STATING THEREIN AS UNDER : MAY IT PLEASE YOUR HONOUR THE HON'BLE INCOME TAX APPELLANT TRIBUNAL, BENCH - SMC, LUCKNOW HAS GIVEN A SHOW CAUSE TO THE APPELLANT AS TO WHY THE APPEAL SHALL NOT BE DISMISSED AS TIME BARRED OR TO APPLY FOR CONDONING THE DELAY TO THE APPELLANT'S GROUND OF AP PEAL IN ITA NO 20 / LKW / 2011 BY ITS NOTICE DATED 20/01/2011 ON T HE GROUND THAT THE ASSESSEE HAS SENT ITS GROUND OF APPEAL ALONG WITH F ORM NO 36 , WHICH IS RECEIVED TIME BARRED BY 5 DAYS. THE APPELLANT HUMBLY SUBMITS THAT THE FORM NO 36 AL ONG WITH GROUND OF APPEAL AND CHALLAN ALONG WITH OTHER RELEV ANT DOCUMENTS 2 FOR FILING OF APPEAL WAS SENT ON 12.01.2011 AS AGAI NST THE RECEIPT OF ORDER OF COMMISSIONER OF INCOME TAX(APPEALS) BAREIL LY ON 15.11.2011. THAT THE APPEAL IN FORM NO. 36 ALONG WITH ALL RELEV ANT DOCUMENTS WAS SENT BY SPEED POST ON 12.01.2011 WHIC H WAS WELL IN TIME BEFORE I.E. 14.01.2011. IT IS HUMBLY SUBMITTED THAT DELAY MAY KINDLY BE CON DONED END RECEIPT OF APPEAL TIME BARRED BY 5 DAYS ON 19.01.20 11 MAY KINDLY BE CONDONED. PRAYER IN VIEW OF THE AFORESAID FACTS AND THE CIRCUMSTANCE S OF THE CASE, IT IS PRAYED THAT THE AFORESAID APPEAL MAY KINDLY BE COND ONED AND BE HEARD ON MERITS. YOUR'S FAITHFULLY SD. M/S. SHREE MOTI RAJ JEWELLERS (ANIL VERMA) APPELLANT 3. I FIND SUBSTANCE IN THE AFORESAID EXPLANATION GI VEN BY THE ASSESSEE IN THE APPLICATION FOR CONDONATION OF DELAY. ACCORDIN GLY, THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED. 4. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE ADDITION OF RS.65,000 CONFIRMED BY THE LD.CIT(A). 5. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE FILED RETURN OF INCOME ON 29.12.2006 DECLARING TOTAL INCOME OF RS. 96,390 AND LONG TERM 3 CAPITAL GAIN OF RS.9,191. THE SAID RETURN WAS PROCE SSED UNDER SECTION 143(1)OF THE INCOME-TAX ACT,1961. LATER ON, THE CAS E WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE SOLD TWO PIECES OF LAND- ONE FOR RS.1,35,0 00 AND THE OTHER FOR RS.1,18,000. THE TOTAL SALE CONSIDERATION OF THE AB OVE LAND WAS SHOWN AT RS.2,48,000. IN THE COMPUTATION OF INCOME CHART E NCLOSED WITH THE RETURN OF INCOME, THE ASSESSEE DEDUCTED AN AMOUNT OF RS.1,85 ,593 FROM THE SALE CONSIDERATION AS TILLING EXPENSES IN ADDITION TO CO ST OF ACQUISITION DEDUCTED AT RS.12,476. THE ASSESSEE SUBMITTED TO THE AO THA T THE TILLING OF THE LAND WAS DONE TO MAKE THE LAND FIT FOR LIVING AS IT W AS A VERY UNEVEN PLOT NOT FIT FOR CONSTRUCTION OR OF ANY OTHER USE. IN SUPPORT O F HIS VERSION, THE ASSESSEE FURNISHED RECEIPTS ON ACCOUNT OF PAYMENTS MADE AGAI NST THE TILLING EXPENSES TO TWO PERSONS, NAMELY, SHRI MOHD.MIAN AND MOHD.BIB I HADAM. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE FOR THE FOLLOWING REASONS: (I) THE ASSESSEE HAS ENCLOSED THE SALES DEED THR OUGH WHICH THE ABOVE LAND WAS PURCHASED BY HIM IN THE YEAR 1984. I N THE SALE DEED THE NO DESCRIPTION OF LAND HAS BEEN GIVEN REGA RDING THE REQUIREMENT OF TILLING. (II) THE ASSESSEE HAS PURCHASED THE ABOVE LAND IN THE YEAR 1984 AND HAS CLAIMED THE TILLING EXPENSES ITSELF IN THE YEAR 1984 FOR RS.40,000/-. SIMILARLY, FURTHER TILLING EXPENSES CL AIMED IN THE YEAR 1995 FOR RS.25,000/-. (III) THE LAND WAS NOT USED BY THE ASSESSEE AT ANY TIME SINCE ITS PURCHASE TO THE DATE OF ITS SALE, TO SAY DURING THE PERIOD OF 21 YEARS APPROXIMATELY. (IV) THE PURPOSE OF TILLING IS NOT UNDERSTANDABLE IF THE USE OF LAND IS NOT DONE BY THE ASSESSEE. (V) THE CLAIM OF THE TILLING EXPENSES APPEARS ONLY TO ENHANCE THE COST OF ACQUISITION TO AVOID THE CAPITAL GAIN'S TAX . 4 6. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND THE SUBMISSIONS MADE BEFORE HIM ARE REPRODUCED VERBATIM AS UNDER : THE ASSEESSEE IS ENCLOSING THE PHOTOCOPY OF THE R ECEIPTS FROM THE LABOUR WHO DEPORTED THE MUD FOR LEVELING OF THE GROUND. THAT THE RECEIPTS ARE HAND MADE AS THE LABOURS WHO DEPORTED MUD DO NOT MAINTAINED ANY ACCOUNT BOOKS NEITHER HAD ANY SERIAL NUMBERED RECEIPTS NEVERTHELESS THE ASSESSEE MAINTAINED THE R ECEIPTS AS AGAINST PAYMENTS MADE TO THEM FOR MUD AND LABOUR PAID FOR LEVELLING OF THE GROUND. THAT THE ASSESSEE COULD NOT GET THE BANK ST ATEMENT FROM THE STATE BANK OF INDIA FOR THE PERIOD OF 01.04.2005 TO 29.06.2006 AS REQUIRED BY YOU IN SPITE OF HIS BEST EFFORTS AS THE BANKS WERE SWITCHING FROM MANUAL TO COMPUTERIZED SYSTEM OF MAI NTAINING LEDGERS. THAT THE A.O. DID NOT TOOK ANY CONSIDERATION OF THE BILLS PRODUCED BEFORE THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS AS THEY WERE THE RECEIPTS TAKEN BY THE ASSESSEE FOR LO ADING, UNLOADING, TRANSPORTATION OF MUD AND FILLING OF LAND. THAT THE A.O. DURING THE ENTIRE ASSESSMENT PROCEED INGS MADE NO INVESTIGATION NEITHER CALLED UPON THE PERSONS WH O SHOULD HAVE BEEN INTERROGATED TO JUSTIFY THE GENUINENESS OF THE EXPENSES DONE. THAT THE AO MADE ADDITIONS ON THE POINT THAT THERE WAS NO MENTION IN THE PURCHASE DEED OF THE CONDITION OF TH E LAND, WHEREAS HE TOOK NO NOTICE THAT ITS NOT A DEFECT AS SUCH AS NO PURCHASE/SALE DEEDS DO NOT MENTION SUCH CONDITIONS. THAT THE A.O. DID NOT TOOK INTO CONSIDERATION THAT THE ASSESSEE HAS TO MAKE THE LAND USEABLE AS IT WAS NOT FIT FOR USAGE AND HAD SHRUBS AND BORROWS WITH MOST UNEVEN SURFACE AT THE TIME OF PURCHASE. THE ASSESSEE PURCHASED THE LAND FOR HIS OWN USE AND SO MADE THE LAND LEVEL IN THE SAME YEAR TO BRING TO USABLE CONDITION BUT AS THE LAND WAS AWAY FROM THE MAIN ROAD WITHIN A COLONY LATER DID N OT FOUND VIABLE FROM THE POINT OF VIEW OF BUSINESS OR CONSTRUCT ANY BUILDING OR ROOM. THAT THE ASSESSEE WHO THOUGHT THAT THE LAND HE PURC HASED WOULD BE OF USE TO HIM DID NOT FIND VIABLE FOR ANY USE LA TER ON, AND DID NOT FIND ANY SUITABLE PURCHASER ALL THIS WHILE AS THE S ITUATION OF LAND WAS 5 NOT FIT AND WAS MUCH AWAY FROM MAIN ROAD. ' 7. THE LD.CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE PURCHASED THE LAND IN 1984 AS PER THE PURCHASE DEED AND THERE WAS NO MENTION REGARDING THE POSIT ION OF THE LAND IN THE DEED. HE FURTHER OBSERVED THAT THE CLAIM OF THE ASS ESSEE THAT HE INCURRED EXPENDITURE OF RS.40,000 AS TILLING EXPENSES IN 198 4 AND FURTHER TILLING CHARGES OF RS.25,000 WERE PAID IN 1995 WAS NOT SUPP ORTED BY ANY COGENT EVIDENCE BEFORE THE AO. THE LD.CIT(A) POINTED OUT T HAT THE CONTENTION OF THE ASSESSEE WAS THAT THE EXPENDITURE WAS RELATED TO REMOVAL OF MUD AND FILLING OF LAND BY THE LABOURERS AND IN SUPPORT OF THE CLAIM, THE ASSESSEE FURNISHED TWO PIECES OF PLAIN WHITE PAPERS IN WRITT EN FORM WITH NAME OF SOME PERSONS. HOWEVER, THE LD.CIT(A) CONSIDERED TH E EVIDENCE PRODUCED BY THE ASSESSEE AS NOT CONVINCING AND CONFIRMED TH E ACTION OF THE AO. 8. NOW, THE ASSESSEE IS IN APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT ALL THE EVIDENCES REGARDING THE EXPENSES RELATING TO REMOVAL OF MUD, FILLING OF LAND BY THE LABOURERS AND FOR LEVELLING THE LAND WERE FURNISH ED BEFORE THE AO AS WELL AS THE LD.CIT(A). HOWEVER, THOSE WERE NOT CONSIDER ED AND REJECTED WITHOUT ANY BASIS. 10. IN HIS RIVAL SUBMISSIONS, THE LD.D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, AND THE MATERIAL AVAILABLE ON THE RECORD IT APPEARS THAT THE ASSESSE E PURCHASED THE LAND AND CLAIMED THAT THE SAME WAS NOT FIT FOR USES ON ACCO UNT OF SHRUBS AND BORROWS WITH MOST UNEVEN SURFACE. IT IS NATURAL THAT THE EX PENSES WERE TO BE INCURRED TO MAKE THE SURFACE SMOOTH AND TO BRING IT TO USABL E CONDITION. THE ASSESSEE PRODUCED THE BILLS AND THE RECEIPTS AGAINST THE PAY MENT MADE TO THE LABOURERS FOR REMOVAL OF MUD AND LEVELING OF THE GROUND. NO DEFECT HAS BEEN POINTED IN THE SAID RECEIPTS AND EVEN NO EFFORTS WERE MADE BY THE TAX AUTHORITIES TO VERIFY FROM THE CONCERNED PERSONS, WHO RECEIVED THE PAYMENTS FROM THE ASSESSEE. THEREFORE, IT APPEARS THAT THE EXPLANATI ON OF THE ASSESSEE WAS REJECTED WITHOUT ANY COGENT REASON. THEREFORE, CONS IDERING THE TOTALITY OF THE FACTS OF THE PRESENT CASE, I AM OF THE VIEW THAT T HE AO SHOULD HAVE ALLOWED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF EXPENSES IN CURRED TO MAKE THE LAND USABLE. I, THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) AND ALLOW THIS APPEAL. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 .2.2011. SD. (N.K.SAINI) ACCOUNTANT MEMBER FEBRUARY 23RD ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.