Sri Ajay Kumar Agarwal, Ranchi V. ITO,Ward-1(1), Ranchi

ITA 244/RAN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8821 (ITAT-RANCHI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 03-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDAN DAS
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Set aside
• Section: 143(3); 50C; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI, BENCH, RANCHI BEFORE SHRI S.S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.244/RAN/2018 ( / ASSESSMENT YEAR: 2013-14) SHRI AJAY KUMAR AGARWAL C/O, KAILASH CHANDRA AGARWAL, JALAN ROAD, UPPER BAZAR, RANCHI-834001. VS. ITO, WARD-1(1), KOLKATA ./ ./PAN/GIR NO.: AFDPA 0481 M (ASSESSEE) .. (REVENUE) ASSESSEE BY : NONE RESPONDENT BY : SHRI CHANDAN DAS, JCIT / DATE OF HEARING : 11/01/2019 /DATE OF PRONOUNCEMENT : 05/04/2019 / O R D E R PER BENCH: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PER TAINING TO ASSESSMENT YEAR 2013-14, IS DIRECTED AGAINST THE ORDER PASSED B Y THE COMMISSIONER OF INCOME TAX (APPEAL)-RANCHI(JHARKHAND), WHICH IN TURN ARISE S OUT OF ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE IN SPITE OF ISSUANCE OF NOTICE FOR HEARING MORE THAN ONE OCCASION AND LD . DEPARTMENTAL REPRESENTATIVE(DR), WAS PRESENT FOR THE APPELLANT R EVENUE. IN THE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE, THE APPEAL IS BEING DIS POSED OF EX PARTE QUA THE SHRI AJAY KUMAR AGARWAL ITA NO.244/RAN/2018 ASSESSMENT YEAR: 2013-14 P PP PA AA AG GG GE EE E | || | 2 22 2 ASSESSEE, AFTER HEARING LD. DR FOR THE REVENUE ON M ERITS IN TERMS OF RULE 24 OF THE INCOME TAX APPELLATE, TRIBUNAL, RULES, 1963. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: I. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED FOR MAKING AN AD HOC DISALLOWANCE OF RS. 2,57,040/- OUT OF LABOUR AND WA GES. THE EXPENSE INCURRED WAS FULLY VERIFIABLE. THE PROFIT DISCLOSED AFTER CONSIDERING EXPENSES INCURRED WAS ACCEPTED, AS SUCH, THE LD. CI T(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE. II. FOR THAT APPELLANT HAD MAINTAINED VERIFIABLE BO OKS OF ACCOUNTS AND SAME WERE DULY AUDITED. EXPENSE INCURRED COMPARED W ELL WITH PAST RECORDS AND BUSINESS OF THE APPELLANT, AS SUCH, THE DISALLOWANCE MADE IS UNJUSTIFIED, EXCESSIVE, ARBITRARY AND WITHOUT AN Y BASIS. III. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED IN CONFI RMING AN ADDITION OF RS. 43,24,000/- AS SHORT TERM CAPITAL GAIN ACCRUED TO THE APPELLANT ON THE BASIS OF SECTION 50C OF THE INCOME TAX ACT. APP ELLANT PURCHASED A PIECE OF LAND AS PART OF HIS BUSINESS ON 18.02.2016 A PORTION OF THE PROPERTY PURCHASED WAS SOLD FOR A CONSIDERATION OF RS. 35 LAKHS. LD. A.O. CONSIDERED THE SALE VALUE AS PER STAMP DUTY VA LUATION AND ASSESSED THE DIFFERENCE BETWEEN THE PURCHASE PRICE AND THE SALE PRICE AS SHORT TERM CAPITAL GAIN. APPELLANT DEALS IN LAN D AND THE PROPERTY PURCHASED WAS PART OF STOCK IN TRADE PROVISION OF S ECTION 50C WAS NOT ATTRACTED, AS SUCH, ASSESSMENT OF CAPITAL GAIN AS M ADE BY LD. A.O. CONFIRMED BY LD. CIT(A) IS UNJUSTIFIED AND ILLEGAL. IV. FOR THAT WITHOUT PREJUDICE TO OUR CONTENTION TH AT PROVISION OF SECTION 50C WAS NOT ATTRACTED THE STAMP DUTY VALU ATION AS ON 19/04/2011 AND AS ON 12/11/2012 IS HAVING A DIFFERE NCE OF AROUND 60% APPRECIATION, AS SUCH, VALUATION BY THE REGISTE RED VALUATION WAS CALLED FOR. FURTHER, PURCHASED LAND HAD ROAD ON THR EE SIDES WHEREAS PLOT SOLD WAS A PORTION OF THE PLOT PURCHASED AND HAD ROAD ONLY ON ONE SIDE. THE APPELLANT SOLD THE PLOT AS PER MARKET VALUATION, AS SUCH, ESTIMATED ADDITION OF CAPITAL GAIN WAS UNJUSTIFIED AND ILLEGAL. V. FOR THAT INTEREST U/S 234A AND 234B SHOULD HAVE BEEN CHARGED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME FOLLOWING THE DECISION OF HONBLE JHARKHAND HIGH COURT. VI. FOR THAT OTHER GROUNDS IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. SHRI AJAY KUMAR AGARWAL ITA NO.244/RAN/2018 ASSESSMENT YEAR: 2013-14 P PP PA AA AG GG GE EE E | || | 3 33 3 4. GROUND NOS.1 AND 2 RELATE TO AD HOC DISALLOWANCE OF RS. 2,57,040/- OUT OF LABOUR AND WAGES. 5. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT PROCEEDINGS, LD. ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE DEBIT ED A SUM OF RS. 51,40,810/- IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD LABOUR AND WAGES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH THE DETAILS AND BILLS AND VOUCHERS PERTAINING TO THESE EXPENSES. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE REQUISITE DETAILS AND ALL THE BILLS AND VOUCHER S PERTAINING TO THESE EXPENSES WERE NOT PRODUCED FOR EXAMINATION AND THEREFORE, TH ESE EXPENSES REMAINED UNVERIFIABLE UNDER THE CIRCUMSTANCES, A SUM EQUAL T O 5% OF THE EXPENDITURE, I.E. RS. 2,57,040/- WAS DISALLOWED, ON ESTIMATE, AND ADD ED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER OBSERVING THE FOLLOWING: 6.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AS CONTAINED IN THE GROUNDS OF APPEAL AND HAVE PERUSED THE ASSESSMENT O RDER. THIS PROPOSITION OF THE APPELLANT THAT BOOKS OF ACCOUNTS WERE MAINTAINED AN D THEREFORE THE RESULTS CANNOT BE ACCEPTED. IF THAT IS SO IT WOULD LEAD TO AN ABSU RD SITUATION IN WHICH EACH ASSESSEE WOULD CLAIM THAT THE BOOKS OF ACCOUNTS NEE DS TO BE ACCEPTED SINCE THEY HAVE BEEN MAINTAINED AND SUBJECTED TO AUDIT. THIS W OULD DEFEAT THE PURPOSE OF SCRUTINY ASSESSMENT U/S 143(3). I HAVE PERUSED THE ASSESSMENT ORDER AND FIND THAT THE LD. ASSESSING OFFICER WAS COMPELLED TO MAKE AD HOC DISALLOWANCES SINCE THE APPELLANT DID NOT PRODUCE EVIDENCE IN SUPPORT OF TH E EXPENSE CLAIMED. THIS HAS BEEN CLEARLY BROUGHT OUT IN PARA 3.2 OF THE ORDER. THIS BRINGS ME TO THE PRESUMPTION UNDER THE INDIAN EVIDENCE ACT. SECTION 114(G) OF THAT ACT STATES: 114. COURT MAY PRESUME EXISTENCE OF CERTAIN FACTS. THE COURT MAY PRESUME THE EXISTENCE OF ANY FACT WHICH IT THINKS L IKELY TO HAVE HAPPENED, REGARD BEING HAD TO THE COMMON COURSE OF NATURAL EV ENTS, HUMAN CONDUCT AND PUBLIC AND PRIVATE BUSINESS, IN THEIR RELATION TO THE FACTS OF THE PARTICULAR CASE. (G) THAT EVIDENCE WHICH COULD BE AND IS NOT PRODUCE D WOULD, IF PRODUCED, BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT; 6.3. THIS CASE CLEARLY LEADS TO THAT PRESUMPTION. I T APPEARS THAT DESPITE BEING GIVEN SEVERAL OPPORTUNITIES THE APPELLANT DELIBERAT ELY DID NOT PRODUCE THE EVIDENCE AS IT WAS APPREHENDING MORE UNFAVOURABLE C OMMENTS. SHRI AJAY KUMAR AGARWAL ITA NO.244/RAN/2018 ASSESSMENT YEAR: 2013-14 P PP PA AA AG GG GE EE E | || | 4 44 4 6.4. COMING TO THE DISALLOWANCE MADE, I FIND THAT THE LD. ASSESSING OFFICER WAS COMPELLED TO MAKE AD HOC DISALLOWANCE. THIS HE DID IN THE ABSENCE OF EVIDENCE AS HAS BEEN NOTED IN THE ASSESSMENT ORDER. I FIND THAT THE DISALLOWANCE IS NOT EXCESSIVE. THE BEST JUDGMENT HAS TO MEET THE TWIN T ESTS OF NOT BEING VINDICTIVE AND NOT BEING CAPRICIOUS. AS HELD IN THE CASE OF DHAKES WARI COTTON MILLS LTD. VS. CIT 26 ITR 775 (SC) HAS RULED THAT ALTHOUGH ITO IS NO T FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW, BUT THER E THE AGREEMENT ENDS; BECAUSE IT IS EQUALLY CLEAR THAT IN MAKING THE ASSESSMENT U NDER SECTION 23(3) HE IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSME NT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL AND THERE MUST BE S OMETHING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT UNDER SECTION 2 3(3). I FIND THAT THE LD. ASSESSING OFFICER HAS BEEN REASONABLE IN MAKING THE DISALLOWANCE. 7. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WE NOTE THAT THE LD. CIT(A) WAS NOT JUSTIFIED FOR MAKI NG AN AD HOC DISALLOWANCE OF RS. 2,57,040/- OUT OF LABOUR AND WAGES EXPENSES. WE NOT E THE EXPENSES INCURRED FOR BUSINESS PURPOSES AND VERIFIABLE AND THE ASSESSING OFFICER COULD HAVE EXAMINED IT. THE PROFIT DISCLOSED AFTER CONSIDERING THE EXPE NSES INCURRED WAS ACCEPTED BY THE LD. CIT(A), THEREFORE THE AD HOC DISALLOWANCE MAD E BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) NEEDS TO BE DELETED. A CCORDINGLY, WE DELETE THE ADDITION OF RS. 2,57,040/-. 9. GROUND NOS. 3 AND 4 RELATE TO SHORT TERM CAPITAL GAIN OF RS. 43,24,000/- TOWARDS PURCHASE A PIECE OF LAND. 10. AT THE OUTSET ITSELF, THE LD. DR FOR THE REVENU E POINTED OUT THAT SO FAR GROUND NO.3 AND 4 RAISED BY THE ASSESSEE IS CONCERNED, IT IS NOT CLEAR WHETHER THE LAND WAS HOLDING BY THE ASSESSEE AS STOCK-IN-TRADE OR AS C APITAL ASSETS. WITHOUT BEING ASCERTAINED THIS PRIMARY FACT, IT IS NOT POSSIBLE TO DETERMINE THE TAX LIABILITY ON THE ASSESSEE. WE NOTE THAT THE LD. CIT(A) HAS ALSO OBSE RVED THAT THE SAME ISSUE WHICH IS BEING REPRODUCED BELOW FOR READY REFERENCE: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE PERUSED THE ASSESSMENT ORDER. THERE ARE TWO ISSUES WHICH NEED T O BE DECIDED. FIRST, WHETHER THE PURCHASE AND SALE OF LAND WAS BUSINESS? SECONDL Y, WHETHER THE PROVISION OF SECTION 50C WERE APPLICABLE? SHRI AJAY KUMAR AGARWAL ITA NO.244/RAN/2018 ASSESSMENT YEAR: 2013-14 P PP PA AA AG GG GE EE E | || | 5 55 5 11. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE NOTE THAT THIS ISSUE NEEDS TO BE VERIFIED BY THE AS SESSING OFFICER THAT WHETHER THE ASSESSEE WAS HOLDING LAND AS STOCK IN TRADE OR AS A CAPITAL ASSET, THEREFORE WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR THIS LIMITED PURPOSE TO ASCERTAIN WHETH ER ASSESSEE HOLDS THE LAND AS STOCK-IN-TRADE OR AS CAPITAL ASSET. AFTER BEING ASC ERTAINED THE SAID ISSUE, THE ASSESSING OFFICER SHOULD ADJUDICATE THE ISSUE IN AC CORDANCE WITH LAW. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 05. 04.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 05/04/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. SHRI AJAY KUMAR AGARWAL 2. ITO, WARD-1(1), RANCHI 3. C.I.T(A)- 4. C.I.T.- RANCHI 5. CIT(DR), RANCHI 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, RANCH I BENCH