SMT. KRISHNA, JAIPUR V. PCIT, JAIPUR-2, JAIPUR

ITA 24/JPR/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8764 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUPTA CIT A
• Keywords: Capital asset; Gift; Audit objection; Cost of acquisition; Set aside; Capital Gains
• Section: 143(3); 142(1); 148; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 24/JP/2021 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 SMT. KRISHNA 27, SUNDER VIHAR, DURGAPURA, JAIPUR. CUKE VS. THE PR. CIT, JAIPUR-2. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: EBBPK5238Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B. K. GUPTA (CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/07/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT :29/07/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF LD. PCIT, JAIPUR DATED 31.03.2021 FOR THE ASSESSMENT YE AR 2011-12 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER PASSED BY THE LD. PCIT U/S 263 IS ILLEGAL & BAD IN LAW. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT THE ORDER PASSED BY THE AO U/S 143(3) DT. 15.12.2018 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE S AID ORDER HAS BEEN PASSED IN ROUTINE AND PERFUNCTORY MANNER WITHO UT ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 2 VERIFICATION OF THE INVESTMENT MADE IN THE PROPERTY BROUGHT BY THE ASSESSEE FOR RS.14 LACS IGNORING THE FACT THAT THIS ISSUE WAS EXAMINED BY THE AO IN DETAIL VIDE NOTICE ISSUED U/S 142(1) DT. 20.11.2018 WHICH WAS REPLIED VIDE LETTER DT.26.11.2 018. 2. DURING THE COURSE OF HEARING, THE LD AR THAT BR IEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IN RESPONSE TO NOTIC E U/S 148 FILED HER RETURN OF INCOME ON 27.04.2018 DECLARING TOTAL INCO ME OF RS.35,760/-. DURING THE YEAR UNDER CONSIDERATION, SHE SOLD A LAN D FOR RS.14,50,000/- AND AFTER CLAIMING DEDUCTION OF TRANSFER EXPENSES O F RS.29,000/- AND COST OF ACQUISITION OF RS.15,54,000/-, DECLARED CAP ITAL LOSS AT RS.1,33,000/-. 3. IT WAS SUBMITTED THAT DURING THE COURSE OF REAS SESSMENT PROCEEDINGS, AO VIDE NOTICE U/S 142(1) DT. 31.10.20 18 REQUIRED THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT IN PUR CHASE OF IMMOVABLE PROPERTY, DETAILS OF PROPERTY SOLD, CAPITAL GAIN EA RNED AND TAXES PAID. IN RESPONSE TO SAME, THE ASSESSEE VIDE REPLY DT. 06.11 .2018 & 16.11.2018 SUBMITTED THAT THE LAND WAS PURCHASED FOR RS.14 LAC S AND AFTER INCLUDING REGISTRY EXPENSES, BROKERAGE EXPENSES, ET C., TOTAL COST OF LAND CAME TO RS.15,54,000/-. THE SOURCE OF PURCHASE OF L AND IS OUT OF SALE OF GOLD AND SILVER ORNAMENTS FOR RS.4,55,800/-, SALE O F CATTLE FOR RS.1 LACS, GIFT FROM BROTHER SH. RAMAWATAR SHARMA OF RS.2 LACS AND EARLIER SAVINGS OF RS.7,72,000/- FOR WHICH NECESSARY DOCUMENTS WERE FILED. THEREAFTER, THE AO AGAIN VIDE NOTICE U/S 142(1) DT. 20.11.2018 REQUIRED THE ASSESSEE TO FURNISH THE COMPLETE POSTAL ADDRESS OF PERSON TO WHOM GOLD AND SILVER ORNAMENTS WERE SOLD, COMPLETE ADDRESS OF SH. RAMAWATAR SHARMA AND HIS GENUINENESS & CREDITWORTHINESS, DETA ILS OF SAVINGS AND ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 3 DOCUMENTARY EVIDENCE OF SALE OF CATTLE. THE SAME WA S REPLIED BY THE ASSESSEE VIDE LETTER DT. 26.11.2018. THE AO AFTER C ONSIDERING THE SAME ACCEPTED THE SOURCE OF LAND PURCHASED BY THE ASSESS EE. HOWEVER, THE AO AFTER TAKING THE DLC VALUE OF LAND OF RS.24,99,7 50/- AS FULL VALUE OF CONSIDERATION, COMPUTED THE SHORT TERM CAPITAL GAIN AT RS.9,16,750/-. 4. IT WAS SUBMITTED THAT AFTER COMPLETION OF ASSESS MENT PROCEEDINGS, AN AUDIT OBJECTION WAS RAISED ON 13.12 .2019 BY ITO, IAP- II, JAIPUR ON THE GROUND THAT SAVINGS SHOWN AT RS.7 ,72,000/- IS NOT VERIFIABLE AS NO RETURN OF INCOME WAS FILED BY THE ASSESSEE AND NO EVIDENCE REGARDING CASH BALANCE AS ON THE DATE OF P URCHASE WAS FURNISHED. BASED ON THIS OBJECTION, THE LD. PCIT IN ITIATED PROCEEDINGS U/S 263 VIDE SHOW CAUSE NOTICE DT.19.02.2021 STATIN G THAT RS.7,72,000/- HAVE REMAINED UNVERIFIED AS IT IS JUST MENTIONED AS EARLIER SAVINGS IN THE SUBMISSION AND THE AO HAS ALSO ACCEPTED IT WITHOUT ESTABLISHING THE GENUINENESS OF THE FACTS. AGAINST THIS NOTICE, THE ASSESSEE FILED DETAILED REPLY VIDE LETTER DT. 02.03.2021. IT WAS SUBMITTED THAT THE LD. PCIT AT PG 4 OF HIS ORDER ACCEPTED THAT AO HAS RAISED SPECI FIC QUERY ON 20.11.2018 AS TO THE SOURCE OF PURCHASE OF THE PROP ERTY BUT RECORDS REVEAL THAT QUERY HAS NOT BEEN ANSWERED SATISFACTOR ILY BY THE ASSESSEE AND THUS, ONLY BECAUSE QUERY HAS BEEN RAISED BY AO WOULD NOT MEAN THAT HE HAS MADE NECESSARY VERIFICATION. THE AO ACC EPTED THE CLAIM OF ASSESSEE ON FACE VALUE WITHOUT APPLICATION OF MIND AND THUS NOT VERIFIED THE INVESTMENT OF RS.14 LACS MADE IN THE PURCHASE O F THE PROPERTY ON 29.09.2010. ACCORDINGLY, IN VIEW OF CLAUSE (A) & (B ) OF EXPLANATION 2 TO SECTION 263, THE ORDER PASSED BY AO WAS HELD TO BE ERRONEOUS IN SO FAR ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 4 AS PREJUDICIAL TO THE INTEREST OF REVENUE FOR DE-NO VO ASSESSMENT. AGAINST THE SAID ORDER, THE ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL. 5. IN THE AFORESAID FACTUAL BACKGROUND, IT WAS SUBM ITTED BY THE LD AR THAT IN RESPECT OF THE SOURCE OF COST OF ACQUISI TION OF THE PROPERTY FOR RS.15,54,000/- (COST OF PROPERTY RS.14,00,000+ REGI STRY & OTHER EXPENSES RS.1,54,000), THE ASSESSEE HAS FILED A DET AILED REPLY DT. 16.11.2018 ALONG WITH DOCUMENTARY EVIDENCE OF SALE OF ORNAMENTS FOR RS. 4,55,800/- AND GIFT FROM BROTHER SH. RAMAWATAR SHARMA OF RS. 2 LACS. THEREAFTER, VIDE REPLY DT. 26.11.2018 THE EXP LANATION REGARDING SOURCE OF SAVINGS OF RS.7.72 LACS AND SALE OF CATTL E OF RS.1 LACS WAS SUBMITTED. THE AO AFTER CONSIDERING THE SAME ACCEPT ED THE SOURCE OF COST OF ACQUISITION OF THE PROPERTY. THEREFORE, NEI THER CLAUSE (A) NOR CLAUSE (B) OF EXPLANATION 2 TO SECTION 263 IS APPLI CABLE IN AS MUCH AS AO HAS PASSED THE ORDER AFTER MAKING THE ENQUIRIES WHICH SHOULD HAVE BEEN MADE. 6. IT WAS SUBMITTED THAT THE IN RESPECT OF SALE OF JEWELLERY OF RS.4,55,800/- AND GIFT OF RS. 2 LACS RECEIVED FROM BROTHER SH. RAMAWATAR SHARMA ALL THE NECESSARY DOCUMENTS IN SUP PORT OF THE SAME WAS FILED. IN RESPECT OF SALE OF CATTLE AND PAST SA VINGS, IT HAS BEEN EXPLAINED THAT ASSESSEE IS 52 YEARS OLD LADY AND HA VE REGULAR INCOME FROM SALE OF MILK AND CATTLES. THE INCOME FROM SALE OF MILK IS ALSO ACCEPTED BY AO. HER HUSBAND SH. JAGDISH NARAIN SHAR MA IS REGULAR INCOME TAX ASSESSEE HAVING MORE THAN 100 BIGHA OF A GRICULTURAL LAND. CONSIDERING THESE FACTS, THE AO HAS TAKEN A JUDICIO US VIEW IN ACCEPTING THE AMOUNT AVAILABLE FROM SALE OF CATTLE AND PAST S AVINGS FROM DAIRY AS ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 5 SOURCE FOR MAKING THE INVESTMENT IN PROPERTY. HENCE , THE VIEW TAKEN BY HIM CANNOT BE SAID TO BE WITHOUT MAKING ENQUIRY OR VERIFICATION WHICH AS A QUASI-JUDICIAL OFFICER HE OUGHT TO HAVE MADE. 7. IT WAS SUBMITTED THAT AS PER CLAUSE (A) TO EXPLA NATION 2 TO SECTION 263, ORDER OF THE AO SHALL BE DEEMED TO BE ERRONEOU S IF IT IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOU LD HAVE BEEN MADE. THE SCOPE OF THE TERM ENQUIRIES OR VERIFICATION H AS BEEN BEAUTIFULLY EXPLAINED BY HONBLE ITAT, MUMBAI BENCH IN CASE OF SIR DORABJI TATA TRUST VS. DCIT(E) 188 ITD 38 AND IN TERMS OF WHICH, THE FORMATION OF VIEW BY COMMISSIONER SHOULD BE IN A REASONABLE MANN ER AND IF THE AO HAS TAKEN A PRUDENT, JUDICIOUS AND REASONABLE VIEW, THEN HIS ORDER CANNOT BE TERMED AS ERRONEOUS IN SO FAR AS PREJUDIC IAL TO THE INTEREST OF REVENUE. IN THE PRESENT CASE, THE AO HAS TAKEN A PR UDENT, JUDICIOUS AND REASONABLE VIEW AFTER CONSIDERING THE ENTIRE MATERI AL AVAILABLE ON RECORD AND THEREFORE, ONLY BECAUSE THE LD. CIT HAS A SUBJE CTIVE SATISFACTION THAT AO HAS PASSED THE ORDER IN A ROUTINE AND PERFU NCTORY MANNER WITHOUT VERIFICATION, WHICH IS AGAINST THE MATERIAL AVAILABLE ON RECORD, HIS ORDER CANNOT BE HELD TO BE ERRONEOUS. 8. PER CONTRA, THE LD. PCIT/DR SUBMITTED THAT THOUG H QUERY REGARDING SOURCE OF INVESTMENT HAS BEEN RAISED BY T HE AO, HOWEVER, RECORDS REVEAL THAT THE QUERY HAS NOT BEEN ANSWERED SATISFACTORILY BY THE ASSESSEE. THEREFORE, THE FACT THAT QUERY HAD BE EN RAISED BY THE AO DOES NOT MEAN THAT HE HAD MADE NECESSARY VERIFICATI ON. THERE IS NOTHING ON RECORD TO SHOW THAT THE QUERY WAS SATISF ACTORILY REPLIED BY THE ASSESSEE. THE CLAIM REGARDING SALE OF JEWELLERY , CATTLE OR RECEIPT OF ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 6 GIFTS BY ASSESSEE WAS NOT PROPERLY EXAMINED. SIMILA RLY THE CLAIM OF PAST SAVINGS, PARTICULARLY WHEN NO RETURN OF INCOME HAD BEEN FILED, REQUIRED DEEPER AND PROPER VERIFICATION AND EXAMINATION. THE AO ACCEPTED THE CLAIM OF ASSESSEE ON FACE VALUE. THUS, IT IS EVIDEN T THAT THE AO HAS NOT APPLIED HIS MIND TO THE ISSUE IN ANY MANNER. IT WAS ACCORDINGLY SUBMITTED THAT THE AO HAS NOT VERIFIED THE INVESTME NT MADE IN THE PROPERTY BOUGHT BY THE ASSESSEE FOR RS. 14,00,000/- ON 29.09.2010. THIS IN TURN HAS RESULTED IN PASSING OF AN ERRONEOU S ORDER BY THE ASSESSING OFFICER IN THE CASE DUE TO NON-APPLICATIO N OF MIND TO RELEVANT MATERIAL, REFLECTING NON-APPLICATION OF FACTS AND A N INCORRECT APPLICATION OF MIND TO LAW WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, THE ORDER PASSED U/S 143(3) ON 15.12.2018 HAS BEEN RIGHTLY HELD BY THE PCIT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE AS THE SAID ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER IN A ROUTINE AND PERFUNCTORY MANNER WITHOUT VERIFICATION OF THE INVE STMENT MADE IN THE PROPERTY BOUGHT BY THE ASSESSEE FOR RS. 14,00,000/- AND SET ASIDE WITH DIRECTION TO THE ASSESSING OFFICER TO VERIFY AND EX AMINE THE INVESTMENT MADE IN THE PROPERTY AND FINALIZE THE ASSESSMENT IN ACCORDANCE WITH THE PREVAILING LAW TO QUALIFY THE CORRECT INCOME OF THE ASSESSEE LIABLE TO TAX FOR AY 2011-12 AFTER ACCORDING REASONABLE OPPOR TUNITY TO THE ASSESSEE. IN SUPPORT, RELIANCE WAS PLACED ON THE DE CISIONS IN CASE OF CIT VS AMITABH BACHCHAN [2016] TAXMANN.COM 170 (SC) AND DANIAL MERCHANTS P LTD AND OTHERS (SLP NO. 23976/2017 DATE D 29.11.2017). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE WAS R EOPENED BASIS RECEIPT OF INFORMATION THAT THE ASSESSEE HAS SOLD A PIECE OF LAND AND ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 7 RESULTANT CAPITAL GAINS HAVE ESCAPED TAXATION DUE T O NON-FILING OF RETURN OF INCOME. THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 FILED HER RETURN OF INCOME DECLARING SHORT TERM CAPITAL LOSS ON SUCH SALE OF LAND. THE MATTER WAS EXAMINED BY THE AO AND AS AGAINST SHORT TERM CAPITAL LOSS, SHORT TERM CAPITAL GAINS WAS DETERMINED AT RS 916,7 50/- SUBSTITUTING THE SALE CONSIDERATION WITH DLC VALUE OF LAND AND A CCEPTING THE COST OF ACQUISITION AND OTHER TRANSFER EXPENSES. ONCE THE TRANSFER OF LAND IS BROUGHT TO TAX, THE FACTUM OF PURCHASE AND OWNERSHI P OF LAND IN THE HANDS OF THE ASSESSEE IS ACCEPTED AND IN SUCH A SCE NARIO, THE COST OF ACQUISITION IN THE HANDS OF THE ASSESSEE HAS TO BE ALLOWED AS IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS ACTUALLY PURCHASED AN D SUBSEQUENTLY SOLD THE PIECE OF LAND DURING THE YEAR. THE ASSESSEE HAS DEMONSTRATED THAT SHE HAS DISCHARGED THE PURCHASE CONSIDERATION OF RS 14 LACS AND WHERE THE AO AFTER DUE VERIFICATION HAS ALLOWED THE SAID PURCHASE CONSIDERATION WHILE WORKING OUT THE CAPITAL GAINS I N THE HANDS OF THE ASSESSEE, WE FAILED TO UNDERSTAND HOW THE ORDER SO PASSED BY THE AO IS HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE. WE FURTHER FIND THAT THE AO HAS GONE AHEAD, ENQUIRED A ND CARRIED OUT NECESSARY VERIFICATION REGARDING SOURCE OF SUCH INV ESTMENT BY WAY OF PURCHASE OF LAND AND THE ASSESSEE IN TURN HAS EXPLA INED AND DEMONSTRATED THE SAME TO THE SATISFACTION OF THE AO . EVEN WHERE THE LD PCIT HOLDS THE VIEW THAT THE LEVEL OF ENQUIRY TH AT SHOULD HAVE BEEN MADE HAS NOT BEEN MADE BY THE AO AND WE ACCEPT THE SAME FOR THE MOMENT, THE ORDER SO PASSED BY THE AO CANNOT BE HEL D AS ERRONEOUS AS THE AO WHILE BRINGING TO TAX THE SALE CONSIDERATION HAS TO ALLOW THE COST OF ACQUISITION IN THE HANDS OF THE ASSESSEE AND NOT ALLOWING THE SAME WOULD BE AGAINST THE MANDATE OF LAW IN BRINGING TO TAX THE RIGHT AMOUNT ITA NO. 24/JP/2021 SMT. KRISHNA VS. PCIT 8 OF INCOME BY WAY OF CAPITAL GAINS. IT IS NOT A CAS E THAT THERE IS NO PURCHASE CONSIDERATION OR THE PURCHASE CONSIDERATIO N CANNOT BE COMPUTED. THEREFORE, WHERE THE SALE CONSIDERATION HAS BEEN BROUGHT TO TAX, THE AO IS DUTY BOUND TO ALLOW THE COST OF A CQUISITION IN THE HANDS OF THE ASSESSEE. IN THE RESULT, WE ARE OF THE CONSIDERED VIEW THAT THE LD PCIT IS NOT CORRECT IN LAW AND FACTS IN INVO KING HIS JURISDICTION U/S 263 AND THE ORDER SO PASSED IS HEREBY SET-ASIDE AND THE ORDER OF THE AO IS CONFIRMED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/07/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/07/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. KRISHNA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- PCIT, JAIPUR-2. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 24/JP/2021} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR