Sh. Nitin Johari, New Delhi V. ACIT, New Delhi

ITA 2311/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97962 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 17-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 16-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SARABHJIT SINGH
• Keywords: Capital asset; Cost of acquisition
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT MEMBER ITA NO. 2311 /DEL/2014 : ASSTT. YEAR : 200 4 - 05 SHRI NITIN JOHARI, 2 ND FLOOR, 1 5, SADHANA ENCLAVE, NEW DELHI VS ACIT, CENTRAL CIRCLE - 13, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A JPJ4136 D ASSESSEE BY : SH. ASHWANI KUMAR , CA REVENUE BY : SH. SARABHJIT SINGH, DR DATE OF HEARING : 1 7.09 .2015 DATE OF PRONO UNCEMENT : 27 .11 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.01.2014 OF LD. CIT(A) - XXV , NEW DELHI . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE SUSTENANCE OF ADDITION OF RS. 1,07,000/ - MADE BY THE AO ON ACCOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE ON RENOVATION AND REPAIRS OF THE FLAT. 3. FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT) WAS CARRIED OUT IN M/S BHUSHAN STEEL GROUP OF CASES ON 03.03.2010 AND THE CASE OF THE ASSESSEE WAS ALSO COVERED IN THE SAID OPERATION. THE AO ITA NO . 2311 /DEL /2014 NITIN JOHARI 2 ASKED THE ASSESSEE TO FURNISH THE RETURN OF INCOME AND ISSUED THE NOTICE U/S 153A OF ACT. IN RES PONSE THE ASSESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF RS. 3,19,693/ - ON 02.02.2011. THE ORIGINAL RETURN IN THIS CASE WAS FILED ON 01.11.2004 WITH THE ITO, WARD - 46(1), NEW DELHI DECLARING TOTAL INCOME OF RS. 20,860/ - . DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED A PROPERTY (FLAT NO. B - 606 OF ANDHERI HEMAL CO - OPERATIVE HOUSING SOCIETY LTD., ANDHERI, MUMBAI) FOR A SUM OF RS. 12,98,000/ - , T HE SAID PROPERTY WAS SOLD FOR RS. 23,00,000/ - IN THE FINANCIAL YEAR 2003 - 04 AND HENCE, THE ASSESSEE EARNED THE LONG TERM CAPITAL GAIN OF RS. 10,02,000/ - WHICH WAS TO BE TREATED AS SHORT TERM CAPITAL GAIN. IN RESPONSE, T HE ASSESSEE SUBMITTED AS UNDER: REFERENCE DISCUSSION AT THE LAST DATE OF HEARING WHEREIN YOUR HON OUR HAS ASKED TO ASSESSEE TO SHOW CAUSE AS TO WHY THE PURCHASE COST/COST OF ACQUISITION OF THE PROPERTY CLAIMED TO BE SOLD DURING THE YEAR FOR RS. 23,00,000/ - AT MUMBAI TO EXPLAIN WHY NOT THE PURCHASE COST BE TAKEN AS RS. 12,98,000/ - AS GIVEN IN PAGE NO. 5 4, ANNEXURE A - 2/PARTY SR - 8, HENCE WHY NOT THE DIFFERENCE OF RS. 10,02,000/ - BE TREATED AS SHORT TERM CAPITAL GAINS AS SALE OF FLAT AT MUMBAI IN THE ABSENCE OF ANY DETAILS FILED TILL DATE AND ADDED TO HIS INCOME. IN THIS CONNECTION IT IS SUBMITTED THAT THE IMPUGNED PREMISES I.E. FLAT AT MUMBAI WAS PURCHASED BY THE ASSESSEE FOR A SUM OF RS. 12,98,000/ - AND A SUM OF RS. 1,07,000/ - WERE INCURRED BY WAY OF RENOVATION, FURNITURE, FITTING THEREON WHEREBY THE TOTAL COST OF THE SAID FLAT CLAIMED TO RS. 14,05,000/ - . THE SAID FLAT WAS SOLD FOR A SUM OF RS. 23,00,000/ - AND THE RESULTANT CAPITAL ITA NO . 2311 /DEL /2014 NITIN JOHARI 3 GAINS AT RS. 8,95,000/ - WAS DULY DISCLOSED AS SHORT TERM CAPITAL GAINS IN THE RETURN FILED FOR A.Y. 2004 - 05. AS SUCH THE SHORT TERM CAPITAL GAIN ARISING ON THE SALE OF THE SAID FLAT HAD BEEN DULY DISCLOSED IN THE RETURN OF INCOME AND ACCORDINGLY NO ADVERSE INFERENCE IS CALLED FOR. THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND MADE THE IMPUGNED ADDITION BY OBSERVING AS UNDER: HOWEVER, THE REPLY OF THE ASSESSE E HAS BEEN EXAMINED AND HAS NOT BEEN FOUND TENABLE SO FAR AS THE EXPENDITURE ON RENOVATION OF RS. 1,07,000/ - IS CLAIMED BY THE ASSESSEE WHILE COMPUTING THE SHORT TERM CAPITAL GAIN BECAUSE OF THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDE NCE TO PROVE HIS CLAIM OF SPENDING RS. 1,07,000/ - ON THE RENOVATION AND REPAIRS OF THE FLAT. HENCE, AN AMOUNT OF RS. 1,07,000/ - IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED SHORT TERM CAPITAL GAIN. 4. BEING AGGRIEVED THE ASSESSEE CA RRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: IN THIS CONNECTION, THE SUBMISSIONS MADE BEFORE THE LD. ASSESSING OFFICER ARE AGAIN REITERATED AND REINFORCED IN AS MUCH AS THE FLAT PURCHASED BY THE APPELLANT WAS IN A RAW AND SOMEWHAT DILAPIDAT ED CONDITION WHICH REQUIRED FURTHER IMPROVEMENT TO MAKE IT HABITABLE. TO THIS END, THE APPELLANT HAS SPENT A SUM OF RS. 1,07,000/ - ON REPAIR, RENOVATION, FURNISHING, FURNITURE AND FITTINGS ETC. IMMEDIATELY AFTER THE PURCHASE AND THE SAME WAS ADDED TO THE C OST OF THE FLAT AS EXPENDITURE INCURRED FOR MAKING ADDITION/IMPROVEMENT TO THE CAPITAL ASSETS. SINCE THE APPELLANT DID NOT ULTIMATELY USED THE SAID PROPERTY IT WAS SOLD AS SUCH AND WHEREBY HE WAS ALSO ABLE TO OBTAIN A HIGHER SALE CONSIDERATION IN VIEW OF T HE FACT ITA NO . 2311 /DEL /2014 NITIN JOHARI 4 THAT THE FLAT HAD BEEN DULY REPAIRED, RENOVATED AND FURNISHED. HOWEVER, KEEPING IN VIEW THE EFFLUX OF TIME NO DETAILS/DOCUMENTARY EVIDENCE IN RESPECT OF THE SAID EXPENDITURE WAS PRESERVED. THIS COUPLED WITH THE FACT THAT THE APPELLANT IS A SALARIED PERSON NOT CARRYING ON ANY REGULAR BUSINESS ACTIVITIES, DETAILED RECORDS WERE NOT MAINTAINED. AS SUCH THE FACT OF NON - PRODUCTION OF ANY DOCUMENTARY EVIDENCE WITH RESPECT TO THE SAID EXPENDITURE SHOULD NOT MITIGATE AGAINST THE APPELLANT SPECIALLY KEEPING I N VIEW OF THE EFFLUX OF TIME OF ABOUT 8 - 9 YEARS SINCE THE EXPENDITURE WAS INCURRED. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE DISALLOWANCE MADE BY THE AO BY OBSERVING THAT THE ASSESSEE WAS HONEST ENOUGH TO ADMIT I N THE COURSE OF APPELLATE PROCEEDINGS THAT THE EVIDENCE WAS NOT AVAILABLE BECAUSE OF LAPS OF CONSIDERABLE PERIOD OF TIME. 6 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE HAD SPENT RS. 1,07,000/ - ON ACCOUNT OF REPAIRS, RENOVATION, FURNISHING, FURNITURE AND FITTINGS ETC. IMMEDIATELY AFTER THE PURCHASE. THEREFORE, THE BENEFIT OF THE SAID ADDITION MADE TO THE FLAT PURCHASED, WAS TO BE GIVEN WHILE WORKING OUT THE SHORT TERM CAPITAL GAIN. 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO . 2311 /DEL /2014 NITIN JOHARI 5 8 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. I N THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE ALTHOUGH CLAIMED THAT THE EXPENSES AMOUNTING TO RS. 1,07,000/ - WERE INCURRED JUST AFTER THE PURCHASE OF THE FLAT ON ACCOUNT OF REPAIRS, RENOVATION, FURNISHING, FURNITURE AND FITTINGS ETC. HOWEVER , NO DOCUMENTARY EVIDENCE WAS FURNISHED EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A) IN SUPPORT OF THE ABOVE SAID CLAIM. IN THAT VIEW OF THE MATTER I DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 9 . IN THE RESULT, THE APPEAL FI LED BY THE ASSESSEE IS DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 27 /11 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 27 /11 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELL ANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. 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