Sh. Ramesh Kumar, V. The Commissioner of Income Tax, Ludhiana

ITA 258/ASR/2013

• Counselvise Citation: 25820914 RSA 2013
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S R CHHABRA
• Keywords: Valuation report
• Section: 54F; 54; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 PAN: ACJPK7197B SH. RAMESH KUMAR, C/O- VS. COMMISSIONER OF I NCOME M/S RAMESH MEDICAL HALL, TAX-III, AAYAKAR BH AWAN, LAJPAT RAI ROAD, JAGRAON RISHI NAGAR, LUDH IANA (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. S.R. CHHABRA, ADVOCATE DEPARTMENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 03.01.2014 DATE OF PRONOUNCEMENT: 16.01.2014 ORDER PER BENCH THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINS T THE IMPUGNED ORDER DATED 26.03.2013 PASSED BY LEARNED CIT-III, L UDHIANA, FOR THE ASSESSMENT YEAR 2008-09 UNDER SECTION 263 OF THE IN COME-TAX ACT, 1961 (IN SHORT THE ACT). 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RELEVANT RECORD AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER AL ONG WITH THE SMALL PAPER 2 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 BOOK FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE WHICH INCLUDES SOME CASE LAWS AND OUR FINDINGS ARE AS UNDER: I. LEARNED CIT-III, LUDHIANA, FOUND THAT THE ASS ESSING OFFICER FAILED TO MAKE INQUIRIES IN RESPECT OF CERTAIN MATT ERS AND HE ISSUED NOTICE UNDER SECTION 263 OF THE ACT TO THE ASSESSEE ON 15. 03.2013. IN RESPONSE TO THE SAME, THE ASSESSEE FILED HIS REPLY DATED 22. 03.2013. IN THE NOTICE DATED 15.03.2013, LEARNED CIT-III, LUDHIANA, HAS ST ATED THAT THE ASSESSEE HAS SHOWN EXPENSES OF RS. 34,60,996/- AS EXPENSES S PENT ON CONSTRUCTION AND OUT OF THIS, THE ASSESSEE HAS WITHDRAWN THE CAS H AMOUNTING TO RS. 25,66,400/- UPTO THE DATE OF PURCHASE OF NEW ASSET I.E. UP TO 04.03.2008 WHICH ARE PRIOR TO THE PURCHASE OF PROPERTY AT PANC HKULA. MOREOVER, THERE IS NO OPENING BALANCE OF RS. 6,00,000/- FOR WHICH T HERE IS NO DETAIL. THERE IS NO EVIDENCE THAT THESE WITHDRAWALS HAVE BEEN USE D FOR THE CONSTRUCTION OF THE PROPERTY AT PANCHKULA AND HOW CAN EVEN MANY MONTHS BEFORE THE PURCHASE. THE ASSESSING OFFICER SHOULD NOT HAVE ALL OWED THIS SUM OF RS. 25,66,400/- AS PART OF DEDUCTION UNDER SECTION 54 O F THE ACT. THEREFORE, THERE IS GROSS NEGLECT AND OMISSION IN NOT MAKING A PPROPRIATE ENQUIRY AND IN ALLOWING EXCESS DEDUCTION WITHOUT ANY REASON ABLE BASIS. THE CONTENTS OF THE NOTICE DATED 15.03.2013, IS REPRODU CED AS UNDER: 3 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 THE PERUSAL OF RECORD SHOWS THAT THE ASSESSEE HAS SHOWN EXPENSES OF RS. 34,60,996/- AS EXPENSES SPENT ON CONSTRUCTION. IT IS NOTICED THAT SUM OF RS. 25,66,400/- OUT OF RS. 34,60,996/- HAVE BEEN THE CASH WITHDRAWALS UP TO THE DATE OF PURCHASE OF NEW ASSET I.E. UP TO 04.03.2008 WHICH INCLUDES MANY SMALL WITHDRAWALS FR OM ATM. THESE ARE WITHDRAWAL PRIOR TO THE PURCHASE OF THE P ROPERTY AT PANCHKULA. MOREOVER, THERE IS NO OPENING BALANCE O F RS. 6,00,000/- FOR WHICH THERE IS NO DETAIL. THERE IS NO EVIDENCE THAT THESE WITHDRAWALS HAVE BEEN USED FOR THE CONSTRUCTION OF THE PROPERTY AT PANCHKULA AND HOW COME EVEN MANY MONTHS BEFORE THE PURCHASE. THE A.O. SHOULD NOT HAVE ALLOWED THIS SUM OF RS. 25,66, 400/- AS PART OF DEDUCTION U/S 54. THERE IS GROSS NEGLECT AND OMISSI ON IN NOT MAKING APPROPRIATE ENQUIRY AND IS ALLOWING EXCESS DEDUCTIO N WITHOUT ANY REASONABLE BASIS. 2. SECTION 54 IS APPLICABLE ONLY IF THE PROPERTY W HICH IS SOLD IS A RESIDENTIAL HOUSE, THE INCOME OF THE INCOME OF WH ICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE PROP ERTY SOLD COMPRISE OF LARGE PIECE OF LAND HAVING A ROOM AS PE R SALE DEEDS. WHETHER IT COULD SAID BE A RESIDENTIAL HOUSE? THE RE DOES NOT APPEAR TO BE ANY INCOME SHOWN FROM THESE PROPERTIES UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THIS ASSESSMENT YEAR. MOREOVER, IT HAS TO SEEN WHETHER IN THE PAST ANY INCOME FROM HOUSE P ROPERTY IS SHOWN FROM THESE PROPERTIES. THE A.O. FAILED TO MAKE ANY ENQUIRY. 3. IN VIEW OF ABOVE, I AM OF THE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. YOU ARE GIVEN AN OPPORTUN ITY OF BEING HEARD AND SHOW CAUSE AS TO WHY THE IMPUGNED ORDER BE NOT ENHANCED/MODIFIED OR SET-ASIDE FOR FRESH ASSESSMENT U/S 263 OF THE I.T. ACT. 4. YOUR CASE IS FIXED FOR HEARING ON 21.03.2013 A T 11 AM AT AAYAKAR BHAWAN, RISHI NAGAR, LUDHIANA. YOU MAY ALSO ATTEND ON ANY WORKING DAY PRIOR TO 21.03.2013 AT 11:30 A.M.' 4 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 II. IN RESPONSE TO THE SAID NOTICE DATED 15.03.2 013, ASSESSEE FILED HIS REPLY DATED 22.03.2013, THE MAIN PARAS OF THE R EPLY DATED 22.03.2013 ARE REPRODUCED AS UNDER: I) IT IS FURTHER BROUGHT TO YOUR HONOURS CONSIDE RATION THAT AS PER PARA 3.1 OF THE ASSESSEE ORDER, THE LEARNED A.O. C ONSIDERED RS. 32,95,102/- TO HAVE BEEN SPENT OUT OF THE CASH WITH DRAWALS AND NOT RS. 34,60,996/- NOTED BY YOUR GOODSELF. IN CASE THE RE IS ANY MISTAKE IN THE FIGURE WORK OF THE DEDUCTION ALLOWED, THE SAME COULD BE RECTIFIED U/S 154 WITHOUT RESORTING TO THE RECOURSE OF SECTIO N 263. ACCORDINGLY THERE IS NO MISTAKE IN THE ASSESSMENT ORDER AND HEN CE THE PROCEEDINGS MAY KINDLY BE FILED. II) REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 54 VIS-- VIS INCOME FROM HOUSE PROPERTY, IF ANY SHOWN, IT IS BROUGHT TO YOUR KIND NOTICE THAT THE ASSESSEE HAS SHOWN INCOME OF R S. 16,800/- FROM HOUSE PROPERTY. THE A.O. HAS CONSIDERED THIS INCOME OF RS. 16,800/- IN THE ASSESSMENT ORDER TO COMPUTE THE TAXABLE INCO ME. III) HOWEVER WITHOUT PREJUDICE TO THE ABOVE SUBMI SSIONS, THE ASSESSEE CLAIMED DEDUCTION U/S 54F AND NOT U/S 54. IT MIGHT HAVE BEEN WRITTEN AS SECTION 54 INSTEAD OF SECTION 54F INADVE RTENTLY. THE LEARNED A.O. CONSIDERED THE CLAIM U/S 54F AND STILL , IF THERE IS ANY MISTAKE IN ALLOWING THE DEDUCTION U/S 54 INSTEAD OF U/S 54F, TO WHICH THE ASSESSEE IS ELIGIBLE THE SAME COULD BE RECTIFIE D WITHOUT SOURCE TO SECTION 263. III. AFTER CONSIDERING THE REPLY FILED BY THE ASS ESSEE, LEARNED CIT- III, LUDHIANA, HAS MAINLY HELD THAT THE ASSESSEE HA S NOT PRODUCED ANY EVIDENCE AS REQUIRED BY HIM, WHICH INCLUDES THE VOU CHERS FOR INCURRING OF EXPENSES AS WELL AS AN APPROVAL ORDER TAKEN FROM HU DA FOR 5 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 CONSTRUCTION. LEARNED CIT-III, LUDHIANA, FURTHER HE LD THAT THE ASSESSEE HAD SPENT THE AMOUNT OUT OF THE WITHDRAWALS FROM TH E BANK ACCOUNT AND THE WITHDRAWALS AFTER THE PURCHASE WAS RS. 22 LACS AND A SUM OF RS. 10 LACS WAS UTILIZED FROM THE EARLIER WITHDRAWALS I.E. PRIOR TO THE DATE OF PURCHASE. BUT THE PERUSAL OF BANK STATEMENT SHOWED THAT THERE ARE A NUMBER OF SMALL WITHDRAWALS BEFORE THE PURCHASE OF PROPERTY AS WELL AS AFTER THE PURCHASE OF THE PROPERTY. THE ONUS IS ON THE ASSESSEE TO SUBMIT SUFFICIENT EVIDENCE SO AS TO SHOW THAT THE EXPENSE HAS BEEN ACTUALLY INCURRED FOR THE CONSTRUCTION. THE ASSESSING OFFICE R FAILED TO CALL FOR SUCH DETAILS AND COME TO A LOGICAL CONCLUSION. THE ASSESSING OFFICER FAILED TO MAKE ANY INQUIRY IN REGARD TO THE CLAIM O F THE ASSESSEE OVER AND ABOVE THE PURCHASE VALUE OF THE NEW PROPERTY. IT AP PEARS THAT THE ASSESSEE HAS ADOPTED THIS METHOD JUST TO SQUARE OFF THE ENTI RE CAPITAL GAIN. THE ASSESSING OFFICER HAS GIVEN MANY OTHER BENEFITS TO THE ASSESSEE WITHOUT VERIFYING AND MAKING INQUIRY, MEANING THEREBY, THE ASSESSING OFFICER FAILED TO APPLY HIS MIND IN REGARD TO THE FACT THAT SUBMISSION OF A VALUATION REPORT IS NOT A SUFFICIENT EVIDENCE FOR I NCURRENCE OF EXPENDITURE, PARTICULARLY IN VIEW OF THE FACT THAT NO BILLS WERE SUBMITTED AND THERE WAS NO APPROVAL FROM THE HUDA AUTHORITIES. THEREFORE, T HE ASSESSING 6 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 WRONGLY ALLOWED THE ENTIRE EXPENDITURE IN THE ABSEN CE OF ANY SUFFICIENT EVIDENCE. NO DOUBT, LEARNED COUNSEL FOR THE ASSESSE E RELIED UPON VARIOUS CASE LAWS, WHICH HE HAS RELIED BEFORE LEARNED CIT-I II, LUDHIANA. IV. WE HAVE THOROUGHLY GONE THROUGH THE SAME AND WE ARE OF THE OPINION THAT THE CASE LAWS RELIED UPON BY THE ASSES SEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND EVEN NOT HELPFUL TO THE ASSESSEE BECAUSE IN THE PRESENT CASE THE ASSESSEE HAS NOT PRODUCED A NY EVIDENCE AS REQUIRED BY LEARNED CIT-III, LUDHIANA. THE EVIDENCE INCLUDES APPROVAL FOR CONSTRUCTION, BILLS AND VOUCHERS ESTABLISHING T HE EXPENSES INCURRED BY THE ASSESSEE. THE ASSESSEE HAS SUBMITTED A COPY OF VALUATION REPORT ONLY AND THIS IS NOT SUFFICIENT FOR CLAIMING THE DEDUCTI ON IN DISPUTE. ASSESSEE HAS NOT FILED ANY EVIDENCE TO SHOW THAT THESE WITHD RAWALS HAVE BEEN UTILIZED FOR THE PURPOSE OF CONSTRUCTION AND HE ATT EMPTED TO SET OFF THE ENTIRE CAPITAL GAIN BY PRODUCING ONLY VALUATION REP ORT THAT TOO WITHOUT ANY EVIDENCE OF BILLS ETC. THEREFORE, THE ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER IS WITHOUT INQUIRY AND INVESTIGAT ION, WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 3. KEEPING IN VIEW THE FOREGOING DISCUSSION, WE A RE OF THE VIEW THAT LEARNED CIT-III, LUDHIANA, HAS PASSED A WELL REASON ED ORDER UNDER THE LAW 7 I.T.A. NO. 258 (ASR)/2013 ASSESSMENT YEAR: 2008-09 AND ACCORDINGLY WE UPHOLD THE SAME BY DISMISSING TH E APPEAL FILED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH JANUARY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. RAMESH KUMAR, C/O- M/S RAMESH ME DICAL HALL, LAJPAT RAI ROAD, JAGRAON 2. COMMISSIONER OF INCOME TAX-III, AAYAKAR BHAWAN, RIS HI NAGAR, LUDHIANA 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.