Virendra Prakash Mittal, Firozabad V. I.T.O.-5(2), Firozabad

ITA 231/AGR/2011

• Counselvise Citation: 23120314 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 20-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: K C AGARWAL
• Keywords: Business income; Opportunity of being heard; Cost of acquisition; Tax effect
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 231/AGRA/2011 ASSTT. YEAR : 2003-04 SHRI VIRENDRA PRAKASH MITTAL, VS. INCOME-TAX OFFI CER, NEAR SHYAM KA BAGH, 5(2), FIROZABAD. CIRCULAR ROAD, FIROZABAD. (PAN: ADOPM 2436 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. AGARWAL, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 05.08.2013 DATE OF PRONOUNCEMENT OF ORDER : 08.08.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-II, AGRA DATED 16.03.2011 FOR THE ASSESSMENT YEAR 2003- 04. 2. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NO. 1 & 2 OF APPEAL OF THE ASSESSEE REGARDING INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S. 148 OF THE IT ACT. THESE GROUNDS ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 3. THE REMAINING GROUNDS NOS. 3 TO 7 READ AS UNDER : ITA NO. 231/AGRA/2011 2 3. BECAUSE THE ASSESSMENT IN THIS CASE WAS REOPENED U/S. 148 ON THE BASIS OF INFORMATION RECEIVED FROM THE FILE OF ASSE SSEES BROTHER, SHRI CHANDRA PRAKASH MITTAL. SHRI CHANDRA PRAKASH MITTAL AND THE ASSESSEE JOINTLY DEVELOPED A LAND INTO PLOTS AND GO T IT APPROVED FROM THE FIROZABAD DEVELOPMENT AUTHORITY AND SOLD THE PL OTS JOINTLY DURING THE YEAR. SHRI CHANDRA PRAKASH MITTAL AND THE ASSES SEE JOINTLY SPENT SUBSTANTIAL EXPENSES FOR THE DEVELOPMENT OF LAND IN TO PLOTS I.E., IN LEVELING, ROAD MAKING, BOUNDARY WALL MAKING, WATER FACILITY AND OTHER DRAINAGE FACILITIES ETC. THE ASSESSMENT OF SHRI CHA NDRA PRAKASH MITTAL WAS SUBJECT MATTER OF APPEAL BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS) IN WHICH SUBSTANTIAL INCOME WA S REDUCED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA AGAIN ST WHICH NO APPEAL WAS FILED BY THE DEPARTMENT. THE SIMILAR POS ITION WAS IN THE ASSESSEE CASE AND THE SIMILAR EXPENSES ARE ALLOWABL E TO THE ASSESSEE AGAINST THE SALE PROCEEDS OF HALF SHARE OF LAND AS IN THE CASE OF CHANDRA PRAKASH MITTAL. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN NOT ALLOWING THE DEV ELOPMENT AND OTHER EXPENDITURE AGAINST THE SALE OF PLOTS AS ALLOWED IN CHANDRA PRAKASH CASE AND HAS ERRED ARBITRARILY IN IGNORING THE DECI SION OF CIT(APPEALS) IN THE CASE OF SHRI CHANDRA PRAKASH MI TTAL ON THE SIMILAR FACTS. 4. BECAUSE THE ORDER OF LEARNED CIT(APPEALS) CONVER TING THE INCOME FROM CAPITAL GAIN INTO INCOME FROM BUSINESS IS ILLE GAL AND BAD IN LAW. 5. BECAUSE THERE CAN NOT BE ANY SALE OF DEVELOPED P LOTS WITHOUT INCURRING EXPENDITURE ON DEVELOPMENT AND OTHER FACI LITIES AND APPROVAL OF THE SAME FROM THE PRESCRIBED AUTHORITY. THE ORDER OF THE CIT(APPEALS) IN NOT ALLOWING EXPENDITURE AND NOT AL LOWING ANY EXPENDITURE AGAINST SALE IS ILLEGAL AND UNJUSTIFIED . 6. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-II, AGRA FOR CONFIRMING THE ORDER OF THE ASSESSING OFFICER WITHO UT APPRECIATING THE FACTS OF THE CASE IS ILLEGAL AND BAD IN LAW. 7. BECAUSE THE CHARGE OF INTEREST U/S. 234A, 234B & 234C IS ILLEGAL AND BAD IN LAW. ITA NO. 231/AGRA/2011 3 4. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFO RE THE LD. CIT(A) REGARDING LONG TERM CAPITAL GAINS OF RS.4,92,798/-. THE ASSES SEE HAD SOLD PLOTS OF LAND FOR A CONSIDERATION OF RS.10,55,000/- AND HALF SHARE OF T HE ASSESSEE WAS RS.4,92,798/-. DURING THE ASSESSMENT PROCEEDINGS, THERE WERE NO CO MPLIANCE TO THE STATUTORY NOTICES, THEREFORE, THE AO FRAMED EXPARTE ASSESSMEN T ORDER U/S. 148/144 OF THE IT ACT. THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN OF RS.49,000/- BY SHOWING VALUE OF HALF PORTION OF THE LAND SOLD AT RS.2,00,0 00/- AND REDUCED BROKERAGE OF RS.6,000/- AND COST OF ACQUISITION OF RS.1,45,000/- (TOTAL 1,51,000/-) AND THE NET SHORT TERM CAPITAL GAIN WAS SHOWN AT RS.49,000/-. H OWEVER, AS PER AO, THE SAID LAND WAS SOLD FOR RS.10,55,000/-, OUT OF 6064 SQ. M ETER LAND PURCHASED FOR RS.40,000/- ON 15.02.2080. THE AO ALSO OBSERVED THA T AS PER PURCHASE DEED, THE VALUE OF THE LAND AS PER PREVAILING CIRCLE RATE WAS RS.67,000/- AT THAT TIME. THIS VALUE OF LAND HAS ALSO BEEN ADOPTED BY THE ITO 5(1) , FIROZABAD IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL, BROTHER OF THE ASSESSEE. AS THE ASSESSEE COULD NOT PRODUCE EVIDENCE IN SUPPORT OF THE VALUE ADOPTED, THE AO CO MPUTED LONG TERM CAPITAL GAIN AS UNDER : SALE CONSIDERATION RS.5,27,500/- LESS: COST OF ACQUISITION RS. 34,702/- TAXABLE CAPITAL GAIN RS.4,92,798/- THESE FIGURES HAVE BEEN TAKEN AS PER THE ASSESSMENT PASSED IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL, BROTHER OF THE ASSESSEE, WH O HAS SOLD THE PLOTS OF LAND ITA NO. 231/AGRA/2011 4 JOINTLY WITH THE ASSESSEE. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSION OF THE ASSESSEE IS RE PRODUCED IN THE APPELLATE ORDER, IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE LA ND IN QUESTION WAS PURCHASED JOINTLY BY THE ASSESSEE ON 15.02.1980 FOR RS.40,000 /- OUT OF WHICH PART OF THE LAND HAS BEEN SOLD JOINTLY BY THE ASSESSEE AND HIS BROTH ER, CHANDRA PRAKASH MITTAL AT RS.10,55,000/- AND ASSESSEES HALF SHARE COMES TO R S.5,27,500/-. ACCORDING TO THE AO, COST OF ACQUISITION OF THE ASSET WAS CALCULATED AT RS.34,702/- BY THE ITO WARD 5(1), FIROZABAD IN THE CASE OF BROTHER OF ASSESSEE SHRI CHANDRA PRAKASH MITTAL. FOLLOWING THAT ORDER, THE AO REDUCED RS.34,702/- BE ING THE COST OF LAND FROM SALE CONSIDERATION OF RS.5,27,500/- AND ADDED RS.4,92,79 8/- AS LONG TERM CAPITAL GAIN. THE BROTHER OF ASSESSEE SHRI CHANDRA PRAKASH MITTAL FILED APPEAL BEFORE THE LD. CIT(A), WHO HAS DECIDED THE APPEAL ON 17.07.2009 AN D ALLOWED THE APPEAL OF THE BROTHER OF ASSESSEE AND IT WAS DIRECTED IN PARA 1.7 THAT THE AO IS UNJUSTIFIED IN NOT ALLOWING BROKERAGE CHARGES, EXPENSES INCURRED IN SE LLING THE PLOT AND RS.4,05,900/- ALSO FOR DEVELOPMENT CHARGES INCLUDING RS.1,18,192/ - DEPOSITED WITH THE FIROZABAD AND SHIKOHABAD DEVELOPMENT AUTHORITY. THE ASSESSEE WAS ENTITLED FOR DEDUCTION OF RS.26,375/- IN RESPECT OF BROKERAGE AND RS.4,05, 900/- FOR DEVELOPMENT CHARGES WHILE COMPUTING INCOME UNDER THE HEAD LONG TERM CAP ITAL GAINS. IT WAS, THEREFORE, SUBMITTED THAT IN THE CASE OF CHANDRA PRAKASH MITTA L, THE DEDUCTIONS HAVE BEEN ALLOWED WHILE COMPUTING LONG TERM CAPITAL GAINS. TH E DEPARTMENT ACCEPTED THE ORDER OF THE LD. CIT(A) IN THE CASE OF CHANDRA PRAK ASH MITTAL AND NO APPEAL HAS ITA NO. 231/AGRA/2011 5 BEEN FILED BEFORE THE TRIBUNAL. THEREFORE, ONLY ADD ITION OF RS.60,523/- MAY BE MAINTAINED ACCORDINGLY AND BALANCE ADDITION OF RS.4 ,32,275/- MAY BE DELETED. ALL THE EXPENSES HAVE BEEN SUBJECTED TO VOUCHERS AND AR E VERIFIABLE. THE REMAND REPORT FROM THE AO WAS CALLED FOR IN WHICH THE AO D ENIED THE ASSESSEE INCURRING OF ANY EXPENDITURE FOR SELLING OF THE PLOT. THE LD. CIT(A) CONSIDERING THE MATERIAL ON RECORD ASKED THE ASSESSEE AT THE APPELLATE STAGE AS TO WHY THE INCOME SHOWN UNDER THE HEAD CAPITAL GAIN SHOULD NOT BE ASSESSE D UNDER THE HEAD BUSINESS. THE LD. CIT(A) IN CONCLUDING PARA HELD THAT THE RECEIPT S FROM SALE OF LAND HAS TO BE ASSESSED UNDER THE HEAD BUSINESS AND NOT CAPITAL GAINS. CLAIM OF ASSESSEE REGARDING BROKERAGE OF RS.6000/- AND COST OF ACQUIS ITION OF RS.1,45,000/- WERE DENIED BEING UN-SUBSTANTIATED AND ACCORDINGLY, THE APPEAL OF THE ASSESSEE WAS DISMISSED. THE ASSESSEE IS IN APPEAL ON THE ABOVE G ROUNDS OF APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT DEPARTMENT ACCEPTED T HE SIMILAR CLAIM IN THE CASE OF HIS BROTHER, SHRI CHANDRA PRAKASH MITTAL AND NO APP EAL AGAINST THE ORDER OF THE LD. CIT(A) HAS BEEN FILED. THEREFORE, ON THE SAME BASIS , THE CLAIM OF THE ASSESSEE SHOULD BE ACCEPTED. ON THE OTHER HAND, THE LD. DR R ELIED UPON THE ORDER OF THE LD. CIT(A). HOWEVER, HE HAS FILED REPORT OF ITO 5(1), F IROZABAD DATED 19.02.2013 IN WHICH IT WAS EXPLAINED THAT THE ORDER OF THE LD. CI T(A) IN THE CASE OF CHANDRA ITA NO. 231/AGRA/2011 6 PRAKASH MITTAL HAS BEEN ACCEPTED BY THE DEPARTMENT HAVING THE LOW TAX EFFECT. THEREFORE, NO APPEAL HAS BEEN FILED BEFORE THE LD. CIT(A). 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LD. CI T(A)-II, AGRA. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS PURCHASED THE PLOTS IN QUESTI ON JOINTLY WITH HIS BROTHER SHRI CHANDRA PRAKASH MITTAL. SOME OF THE PLOTS WERE ALSO SOLD JOINTLY BY THE ASSESSEE AND HIS BROTHER. THE AO HAS TAKEN THE COST OF ACQUI SITION AS PER ORDER PASSED IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL AS WELL AS SALE CONSIDERATION. THEREFORE, THE CASE OF THE ASSESSEE SHOULD HAVE BEEN CONSIDERED AT PAR WITH THE CASE OF HIS BROTHER SHRI CHANDRA PRAKASH MITTAL. FIGURES ADOPTED BY THE AO ARE ALSO SAME AS HAVE BEEN ADOPTED IN THE CASE OF CHANDRA PRAKASH MITTAL, HOLDING THE TAXABLE CAPITAL GAINS AT RS.4,92,798/-. IN THE CASE OF CHANDRA PRAK ASH MITTAL, THE LD. CIT(A)-II, AGRA DECIDED THE APPEAL FOR THE SAME ASSESSMENT YEA R 2003-04 VIDE HIS ORDER DATED 17.07.2009, COPY OF WHICH IS FILED AT PAGE 5 OF THE PAPER BOOK. THE LD. CIT(A) IN THAT CASE ALSO CALLED FOR THE REMAND REPORT FROM TH E AO AND CONFIRMED THE COST OF THE LAND AT RS.34,702/-. HOWEVER, AS REGARDS THE BR OKERAGE AND DEVELOPMENT CHARGES, THE LD. CIT(A) FOUND THAT THE BILLS AND VO UCHERS OF DEVELOPMENT CHARGES ARE PLACED ON RECORD. DEVELOPMENT CHARGES HAVE ALSO BEEN PAID TO THE PARTY BY SHRI VIRENDRA PRAKASH MITTAL (ASSESSEE). THEREFORE, BOTH THE BROTHERS ARE WORKING JOINTLY, HENCE, ANY OF THE CO-OWNERS MAY DEPOSIT TH E SAME. THE LD. CIT(A) ALSO ITA NO. 231/AGRA/2011 7 VERIFIED THE FACT FROM THE INSPECTORS REPORT REGAR DING CONSTRUCTION OF THE BOUNDARY WALL AND ACCORDINGLY GRANTED RELIEF IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL OF DEDUCTION OF RS.26,375/- IN RESPECT OF BROKERAGE AN D RS.4,05,900/- FOR DEVELOPMENT CHARGES FROM THE INCOME COMPUTED UNDER THE HEAD LONG TERM CAPITAL GAIN. THE ORDER OF THE LD. CIT(A) DATED 17.07.2009 IN THE CASE OF CHANDRA PRAKASH MITTAL WAS ACCEPTED BY THE REVENUE DEPARTMENT AS PE R REPORT OF THE LD. DR/AO BECAUSE NO APPEAL HAS BEEN PREFERRED BEFORE THE TRI BUNAL. THUS, FINDING OF FACT ARRIVED IN THE CASE OF CHANDRA PRAKASH MITTAL WHO I S JOINT OWNER OF THE PROPERTY IN QUESTION, HAVE BECOME FINAL. THEREFORE, THE LD. CIT (A) WAS NOT JUSTIFIED IN HOLDING THE INCOME FROM SALE OF LAND TO BE ASSESSED UNDER T HE HEAD BUSINESS AND NOT AS CAPITAL GAIN. THE CHARACTER OF INCOME WOULD NOT BE DIFFERENT IN THE CASE OF JOINT OWNERS WHO HAVE PURCHASED AND SOLD THE PROPERTY JOI NTLY. IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL, INCOME ON THE IDENTICAL FAC TS WAS COMPUTED UNDER THE HEAD LONG TERM CAPITAL GAINS. THEREFORE, THE LD. CI T(A) SHOULD NOT HAVE TAKEN A DIFFERENT VIEW IN THE CASE OF CO-OWNER. FURTHER DED UCTIONS CLAIMED BY THE ASSESSEE OF EXPENDITURE ARE ALSO AT PAR AS IN THE CASE OF SH RI CHANDRA PRAKASH MITTAL. WE MAY ALSO NOTE HERE THAT THE ORDER IN THE CASE OF SH RI CHANDRA PRAKASH MITTAL WAS PASSED BY THE LD. CIT(A)-II ON 17.07.2009 AND HAS R EACHED FINALITY IN THE SAME YEAR. NO FURTHER APPEAL HAS BEEN PREFERRED BEFORE T HE TRIBUNAL. HOWEVER, IN THE CASE OF PRESENT ASSESSEE, THE ORDER IS PASSED BY TH E SAME CIT(A)-II, AGRA ON 16.03.2011. THEREFORE, UNLESS DIFFERENT FACTS HAVE BEEN BROUGHT ON RECORD, THE ITA NO. 231/AGRA/2011 8 SAME LD. CIT(A) SHOULD NOT HAVE TAKEN A TOTALLY CON TRARY VIEW IN THE MATTER HOLDING IT TO BE A BUSINESS INCOME IN RESPECT OF LO NG TERM CAPITAL GAINS. THESE FACTS, THEREFORE, WOULD CLEARLY PROVE THAT THE MATT ER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LD. CIT(A)-II, AGRA. WE ACCORDINGLY SE T ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER IN ISSUE TO HIS FILE WITH THE DIRECTION TO RE-DECIDE THE APPEAL OF THE ASSESSEE ON THIS ISSUE AND SHALL TAKE THE INCOME FROM LONG TERM CAPITAL GAINS ONLY AS HAVE BEEN TAKEN IN THE CASE O F JOINT OWNER OF THE PROPERTY SHRI CHANDRA PRAKASH MITTAL AND SHALL RECONSIDER THE DED UCTION OF EXPENDITURE CLAIMED BY THE ASSESSEE, WHICH IS CONSIDERED IN THE CASE OF CHANDRA PRAKASH MITTAL ALSO AFTER VERIFYING THE DETAILS FROM THE RECORD AVAILAB LE IN THE CASE OF SHRI CHANDRA PRAKASH MITTAL. THE LD. CIT(A) SHALL GIVE REASONABL E SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE APPE LLATE ORDER AND SHALL TAKE INTO CONSIDERATION THE FINDING OF FACT RECORDED IN THE O RDER DATED 17.07.2009 OF THE JOINT OWNER SHRI CHANDRA PRAKASH MITTAL FOR THE ASSESSMEN T YEAR 2003-04. GROUNDS NOS. 3, 4, 5 AND 6 OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 7 REGARDING CHARGING OF INTEREST IS MANDATORY A ND CONSEQUENTIAL AND IS ACCORDINGLY REJECTED. THE ASSESSEE ALSO RAISED ADDI TIONAL GROUND OF APPEAL CLAIMING THAT INCOME OF RS.49,000/- SHOWN BY THE ASSESSEE AS CAPITAL GAIN AS PER RETURN HAS BEEN TAXED TWICE, AS THE AO HAS SEPARATELY ADDED LO NG TERM CAPITAL GAIN OF RS.4,92,798/- WITHOUT DEDUCTING RS.49,000/- ALREADY SHOWN IN THE RETURN. THE REPORT FROM THE AO WAS CALLED FOR IN WHICH NO OBJEC TION WAS RAISED FOR ADMISSION ITA NO. 231/AGRA/2011 9 OF THE ABOVE ADDITIONAL GROUND OF APPEAL. THE ADDIT IONAL GROUND WAS ADMITTED VIDE ORDER DATED 08.07.2013. IN VIEW OF THE ABOVE FINDIN GS AND CONSIDERING THE NATURE OF ADDITIONAL GROUND NOW RAISED, WE RESTORE THIS GR OUND ALSO TO THE FILE OF LD. CIT(A) WITH DIRECTION TO VERIFY FROM THE RECORD THE FACTS STATED IN THE ADDITIONAL GROUND AND DIRECT THE LD. CIT(A) TO GRANT APPROPRIA TE RELIEF TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY