VEENA ADVANI, MUMBAI V. ITO (iT) 1(1), MUMBAI

ITA 2532/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5084 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 2532/MUM/2017 (ASSESSMENT YEAR 2011-12 ) MS VEENA ADVANI C/O KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI-400001. PAN: AIPPA9579F VS. ITO (IT)- 1(1) ROOM NO. 15, GROUND FLOOR, SCINDIA HOUSE, BALLARD PIER, MUMBAI-400038. APPELLANT RESPONDE NT APPELLANT BY : SHRI ANUJ KISNADWALA (AR) RESPONDENT BY : SHRI RAJEEV GUBGOTRA (DR) DATE OF HEARING : 10.10.2018 DATE OF PRONOUNCEMEN T : 15.10.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER (APPEALS)- 55, MUMBAI DATED 30 TH DECEMBER 2016, WHICH ARISES FROM ASSESSMENT ORDER PASSED BY ASSESS ING OFFICER UNDER SECTION 143(3) OF THE ACT DATED 28 TH OF MARCH 2014 FOR ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED FO LLOWING GROUND OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX [HEREINAFTER REFERRED TO AS 'LD. CIT(A)' ] HAD FAILED TO APPRECIATE THAT THE APPELLANT HAD SPENT RS 4,77,534 /- AS LAND IMPROVEMENT COST, HENCE RIGHTFULLY ALLOCATED THIS CAPITAL COST TO VILLA ALDEMAR. THE LD. CIT(A) THEREFORE ERRED IN NOT DIRECTING THE LD. ASS ESSING OFFICER (LAO) TO ITA NO. 2532/MUM/2017- MS VEENA ADVANI 2 ALLOW LAND IMPROVEMENT COST OF RS.3,18,536/- BEING 2/3RD OF RS 4,77,534/- FROM THE SALE CONSIDERATION. 2. ON THE FACTS' AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAD FAILED TO APPRECIATE THAT THE AMOUNT OF RS.17.4 5,000/- OUT OF THE AMOUNT PAID TO CONTRACTOR, WAS FOR CONSTRUCTION OF THE VIL LAS AND NON-COMPLETION AND SHORT DELIVERY OF THE WORK DONE BY CONTRACTOR A MOUNTS TO A CAPITAL LOSS TO THE APPELLANT AND THEREFORE THE LD. CIT(A) ERRED IN NOT ALLOWING THE SAME. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAD FAILED TO APPRECIATE THAT THE AMOUNT OF RS.10,6 0,447/- WAS SPENT BY THE APPELLANT ON THE CONSTRUCTION OF VILLA ALDEMAR AND OUGHT TO HAVE BEEN TREATED AS PART OF THE CONSTRUCTION COST THEREOF AN D THEREFORE THE LD. CIT(A) ERRED IN NOT ALLOWING THE SAME. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAD ERRED IN CONFIRMING THE NOMENCLATURE OF THE ASS ET FROM LAND TO BUILDING AND FURTHER FOILED TO APPRECIATE THAT CONS TRUCTION OF A VILLA ON LAND IS AN IMPROVEMENT OF ORIGINAL ASSET I.E. LAND AND THEREFORE LD. CIT(A) ERRED IN CONFIRMING THAT THE LONG TERM CAPITAL GAIN OF RS.87,96,361/- IN RESPECT OF THE LAND AS SHORT TERM CAPITAL GAIN. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD FAILED TO APPRECIATE THAT LAND AND BUILDING ARE TWO SEPARATE DISTINCT ASSETS AND THEREFORE PROFIT FROM SALE OF EACH OF THE INDEPENDE NT ASSETS IS TO BE COMPUTED SEPARATELY. THE LD. CIT(A) ALSO FAILED TO APPRECIATE THE PROVISIONS OF SECTION 2(29A) AND 2(42A) WHICH PROVI DE THAT THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN IN RESPECT OF ANY ASSET OUGHT TO BE DETERMINED BASED ON THE PERIOD OF HOLDING OF AN ASSETS AND THEREFORE LD. CIT(A) ERRED IN CONFIRMING THAT BOTH LAND AND BUILD ING OF ALDEMAR VILLA AS A SINGLE ASSET AND WRONGLY CONFIRMING THAT THE ENTI RE GAIN AS SHORT TERM CAPITAL GAIN. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A NON- RESIDENT INDIAN, DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2 011-12 THE ITA NO. 2532/MUM/2017- MS VEENA ADVANI 3 ASSESSEE SOLD A PROPERTY NAMELY ALDIMAR VILLA IN GOA AND CLAIMED INCOME FROM LONG TERM CAPITAL GAIN AND SHORT TERM C APITAL GAIN. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD PURCHASED LAND UNDERNEATH THE VILLAS ON 28 TH OF MARCH 2016 AND AFTER OBTAINING NECESSARY PERMISSION FROM LOCAL AUTHORITI ES, THE ASSESSEE COMPLETED CONSTRUCTION OF THREE BUNGALOWS /VILLAS. THE REMAINING TWO VILLAS WERE SOLD BY THE ASSESSEE IN EARLIER YEA RS. THE ASSESSEE HAS SHOWN TO HAVE SOLD ONE VILLA DURING THE PERIOD UNDE R CONSIDERATION, ON THE SALE OF WHICH THE ASSESSEE COMPUTED LONG TER M CAPITAL GAIN OF RS. 87,96,361/- AND SHORT TERM CAPITAL GAIN OF R S. 1,33,683/-. THE ASSESSEE CLAIMED COST OF IMPROVEMENT OF RS. 47, 77,534/-. IT WAS FURTHER NOTED BY ASSESSING OFFICER THAT AS PER THE COST ALLOCATION SCHEDULE PROVIDED BY ASSESSEE, THE COST OF IMPROVEM ENT IS NOT ALLOCATED AMONGST OTHER TWO VILLAS SOLD BY ASSESSEE IN EARLIER YEARS. THEREFORE, THE ASSESSING OFFICER ALLOWED ONLY ONE T HIRD OF COST OF IMPROVEMENT, THEREBY DISALLOWED TWO THIRD I.E. RS.3 ,18,356/-. THE ASSESSING OFFICER TREATED THE ENTIRE CAPITAL GAIN A S STCG AND ALSO DISALLOWED RS. 17,45,000/- PAID TO CONTRACTOR AND R S. 10,60,447/- ON ACCOUNT OF CONSTRUCTION COST. ON APPEAL BEFORE THE LD. COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFICER WAS CONFI RMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. COMMISSIONER (APPEALS), THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. ITA NO. 2532/MUM/2017- MS VEENA ADVANI 4 3. WE HAVE HEARD THE SUBMISSION OF LEARNED AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRE SENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED AR OF THE ASSESSEE SUBMITS THAT THE ASSESSE E IS NON-RESIDENT INDIAN. THE ASSESSEE WAS OUT OF INDIA DURING THE PE NDENCY OF APPEAL BEFORE FIRST APPELLATE AUTHORITY. THE LD. COMMISSIO NER (APPEALS) PASSED THE ORDER EX-PARTE. THE AUTHORISED REPRESENT ATIVE APPOINTED BY ASSESSEE NEITHER APPEARED BEFORE THE LD. COMMISS IONER (APPEALS) NOR INTIMATED THE ASSESSEE. DUE TO NON-REPRESENTATI ONAL OF FACTS BEFORE THE LD. COMMISSIONER (APPEALS) THE ASSESSEE SUFFERED ADVERSE FINDING AGAINST HER. THE LD. AR SUBMITS THAT THE AS SESSEE HAS FILED HER AFFIDAVIT THAT NOTICES ISSUED BY LD. COMMISSIONER ( APPEALS) DATED 15.02.2016, 04.07.2016, 31.08.2016 & 22.12.2016 WAS NOT RECEIVED BY HER. THE LEARNED AR OF THE ASSESSEE PRAYED THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE MAY BE RESTORED TO THE FI LE OF LD. COMMISSIONER (APPEALS) FOR FRESH ADJUDICATION AFTER GRANTING FAIR AND PROPER OPPORTUNITY TO THE ASSESSEE. THE LEARNED AR OF THE ASSESSEE FURTHER SUBMITS THAT HE UNDERTAKE ON BEHALF OF ASSE SSEE TO BE MORE VIGILANT AND CAREFUL IN REPRESENTING THE CASE BEFOR E LD. COMMISSIONER (APPEALS). THE LEARNED AR FURTHER SUBMITS THAT THE ASSESSEE WOULD PROVIDE HER LATEST ADDRESS TO THE FILE OF ASSESSING OFFICER AS WELL AS TO LD. COMMISSIONER (APPEALS) FOR SERVICE OF SUMMONS/N OTICES. ITA NO. 2532/MUM/2017- MS VEENA ADVANI 5 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE LD. COMMISSIONER (APPEALS) PASSED THE ORDER ON THE BASI S OF MATERIAL AVAILABLE ON RECORD. 5. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES A ND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT THE LD. COMMISSIONER (APPEALS) ISSUED NOTICE OF HEARING DAT ED 15.02.2016, 21.03.2016, 04.07.2016, 31.08.2016, & 22.12.2016, N ONE APPEARED OR RESPONDED IN RESPONSE TO SUCH NOTICES. THE LD. COMM ISSIONER (APPEALS) DECIDED THE APPEAL ON THE BASIS OF MATERI AL AVAILABLE ON RECORD. WE HAVE NOTED THAT THE ASSESSEE FILED AN AF FIDAVIT BEFORE US AND CONTENDED THAT SHE IS NON-RESIDENT INDIAN AND M AINLY LIVING IN USA. THE ASSESSEE FURTHER CONTENDED THAT SHE WAS DE PENDENT UPON HER CHARTERED ACCOUNTANT NAMELY ASHOK KUMAR MEHRA & CO. IN THE AFFIDAVIT, IT IS CONTENDED THAT A NOTICE WAS RECEIV ED FROM THE OFFICE OF LD. COMMISSIONER (APPEALS) TO APPEAR ON 13.08.2014, ON WHICH THE ASSESSEE SOUGHT ADJOURNMENT AND HANDED OVER THE REQ UIRED TO HER CHARTERED ACCOUNTANT. HOWEVER, DUE TO HER NON-AVAIL ABILITY IN INDIA COMPLETED DETAILS WERE NOT PROVIDED TO THEM. THE OT HER C.A. KARNAVAT & CO. WAS ALSO APPOINTED TO REPRESENT HER CASE. AS WE HAVE ALREADY MENTIONED THAT THE LD. AR OF THE ASSESSEE V EHEMENTLY SUBMITTED THAT IN ABSENCE OF ASSESSEE HER C.A DID N OT APPEAR BEFORE THE LD. COMMISSIONER (APPEALS) WHICH RESULTED IN PA SSING EX-PARTE ITA NO. 2532/MUM/2017- MS VEENA ADVANI 6 ORDER. CONSIDERING THE CONTENTS OF AFFIDAVIT AND KE EPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE, THE CONTENTION/SUBMIS SION RAISED BY LD. AR OF THE ASSESSEE THAT THE ORDER WAS PASSED EX-PAR TE AND THAT THE ASSESSEE SUFFERED ORDER AGAINST HER, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE RESTORED BACK TO THE FILE OF LD. COMMI SSIONER (APPEALS) FOR ADJUDICATING THE ISSUE AFRESH. THE ASSESSEE IS DIRECTED TO FULLY CO- OPERATE AND PROVIDE ALL NECESSARY DETAIL AND EVIDEN CE TO LD. COMMISSIONER (APPEALS). THE ASSESSEE IS ALSO DIRECT ED TO SUPPLY HER ADDRESS AND OTHER DETAILS FOR COMMUNICATION FOR DAT E OF HEARING. THE ASSESSEE IS FURTHER DIRECTED NOT TO SEEK ADJOURNMEN T WITHOUT ANY VALID REASON. NEEDLESS TO SAY THAT LD. COMMISSIONER (APPE ALS) SHALL GRANT REASONABLE OPPORTUNITY BEFORE PASSING THE ORDER IN ACCORDANCE WITH LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15/10/2018. SD/- S D/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 15.10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI