Bhavnaben Bharatbhai Chauhan, Bharuch V. Income Tax Officer, Ward-1(1), Bharuch

ITA 270/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1777 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-05-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 10-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Capital asset; Additional evidence; Cost of acquisition; Valuation report; Validity of assessment; Reassessment proceedings; Capital Gains
• Section: 147; 148; 271(1)(c); 144; 139; 143(3); 142(1); 133(6); 250; 139(1); 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JIDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.270/SRT/2024 Assessment Year: (2012-13) (Physical Court Hearing) Bhavnaben Bharatbhai Chauhan 3087, Ali Takara Faliya, B/h Telephone Exchange, Near Dungri, Bharuch-392001 Vs. Income Tax Officer, Ward-1(1), Bharuch, Income Tax Office, Hari Kunj, Station Road, Bharuch- 356069 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ATNPC 3872 G (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Rajesh M. Upadhyay, AR िनधाŊįरती की ओर से /Respondent by Shri J.K.Chandnani, Sr. DR अपील पंजीकरण/Appeal instituted on 11.03.2024 सुनवाई की तारीख /Date of Hearing 13.05.2024 घोषणा की तारीख /Date of Pronouncement 05.06.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order of the Learned Commissioner of Income-tax(Appeals): Addl. / JCIT(A)-2, Mumbai [in short, “CIT(A)]” u/s 250 of the Income-tax Act, 1961 (in short, “the Act”) dated 05.02.2024 for assessment year 2012-13. Grounds of appeal raised by the assessee are as under:- “1. Ld. Addl./Joint-CIT(A)-2 has erred in law and on fact to uphold AO’s reopening of assessment u/s 147 and issue of notice u/s 148 of the IT Act. 2 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan 2. Ld.Addl/JCIT(A)-2, Mumbai has erred in law and on fact to uphold action of the AO to treat her agricultural land at surveyNo.864, paiki 2-3, village Ichhapore, Tal. Choryasi as capital asset ignoring the fact that the said land is a rural agricultural land. 3. Ld.Addl/JCIT(A)-2, Mumbai has erred in law and on fact to confirm AO’s addition of Rs.6,00,000/- under the head capital gain for sale of agricultural land located at village Ichhapore, Surat and that two without allowing cost of acquisition as per RVO report along with its indexation. He further erred to accept appellant’s prayer to admit RVO report as provided u/s 46A of the Income Tax Rules. 4. Ld. Addl/JCIT(A)-2, Mumbai has erred in law and on fact to confirm action of the AO to pass assessment order u/s 144 instead of section 143(3) of the IT Act ignoring the fact that the appellant has made many submissions in response to notice of the AO issued during the course of assessment proceedings.” 2. Facts in brief are that assessee has not filed her return of income for AY 2012-13 u/s 139(1) of the Act. On verification of NMS data and ITS details, it was revealed that assessee along with 4 other co-owners has sold an immovable property for a consideration of Rs.80,00,000/- during the previous year relevant to AY 2012-13. The AO issued notice u/s 148 of the Act. In response, the assessee filed ROI but AO treated as invalid because the return was not verified. Thereafter, notice u/s 142(1) was issued on 29.06.2019. In response thereto, assessee furnished certain details and contended that the property sold during the year under consideration was an agricultural land and was not a capital asset. The AO issued a show-cause notice on 23.10.2019 as to why the assessment should not be completed to the best of judgment based on the materials available on record and 3 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan undisclosed long-term capital gain be not computed at Rs.16,00,000/-. In response, the assessee submitted a certificate from Shreeji Surveyor Pvt. Ltd. that distance of the property in question from outer limits of Surat Municipal Corporation was 9.2 kms. However, from the portal of Surat Municipal Corporation i.e., https://suratmunicipal.gov.in, it is seen that the distance of the property in question from limits of Surat Municipal Corporation is less than 8 kms. Therefore, said property situated at 864, Paiki 3-2, at Ichchhapore, Taluka Choryasi, Dist. Surat was treated as a capital assets within the meaning of Section 2(14)(iii) of the Act. The AO issued notice 133(6) to the Sub-Registrar office to gather details. It is seen that the share of the assesse in sale consideration of the property in question is Rs.6,00,000/-. Since assessee has not disclosed particulars of her income with regard to transactions made during FY 2011-12, the capital gain/correct escapement of income could not be ascertained and therefore, the AO treated Rs.6,00,000/- as undisclosed income and added it to the total income of assessee. He also initiated penalty proceedings u/s 271(1)(c) and 271F of the Act. 3. Aggrieved by this order of AO, assessee filed appeal before Ld.CIT(A). Before the Ld.CIT(A) assessee filed submission as stated 4 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan above. The assessee stated that notice u/s 148 was issued on 28.03.2019 and assessee filed ROI on 29.04.2019. The appellant filed objection against reopening of assessment on 17.06.2019. The AO started reassessment proceedings by issuing notice u/s 142(1) dated 29.06.2019. The AO has not passed any speaking order against the objection of the assessee. The assessee relied on the decision of ITAT Delhi in the case of Nimitaya Hotel & Resorts Ltd. vs. ACIT [ITA No.s.1830-1832/Del/2014 dated 01.04.2019], wherein the Tribunal quashed the reopening of the assessment. Regarding capital asset u/s 2(14)(iii), the findings of AO is incorrect because no such details are available on site of the Surat Municipal Corporation and, hence, no capital gains can be levied. The assessee submitted valuation report of Shri Ramesh Jain, a Registered Valuer and argued that the long-term capital gain would be Rs.63,884/-instead of Rs.6,00,000/-. The assessee had requested to admit valuation report under Rule-46A of the IT Rules, 1962. The assessee also challenged the ex parte order u/s 144 of the Act on the ground that almost all details had been given to the AO. The Ld.CIT(A) was not satisfied with the reply of the assessee, questioning the validity of assessment u/s 147 of the Act. The Ld.CIT(A) found that assessee has not filed any return for the year under consideration. Since no return has been filed either u/s 139 or in 5 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan response to notice u/s 142(1) of the Act, the AO could not have disposed of the objection raised by the appellant. He can deal with the objection if a proper return was filed. In absence of such return, the AO could not have disposed of the objection of appellant. Hence, the ground was devoid of merit and was accordingly dismissed. As regards capital assets u/s 2(14)(iii) of the Act, and working of the long-term capital gain, the Ld.CIT(A) has held that the impugned land was capital asset because population of village Ichhapore was 12,097 as per the Census data of 2011. Further, the distance was less than 8 k.m. as per the portal of Surat Municipal Corporation. The Ld. CIT(A) observed that the conditions specified in Rule-46A are not satisfied and therefore, the First Appellate Authority (Ld.CIT(A) cannot consider the additional evidence filed before him. However, he directed the AO to work out the approximate indexed value of cost of acquisition from the Municipal record and purchased documents to compute the long-term capital gains of the appellant. Aggrieved, assessee has filed present appeal before the Tribunal. 4. The Ld. AR for the assessee has reiterated the submissions made before the Ld. CIT(A). He has also contested non-admission of the additional evidence by the Ld.CIT(A). He stated that cost of land per 6 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan square meter was Rs.200/- as per valuation report of Shri Ramesh Jain, registered valuer. He has filed paper book containing 87 pages. The Ld. AR submitted that assessee along with her 4 co-owners owned an agriculture land located in village Ichhapore, Dist. Surat. Hence, no capital gain provisions are attracted. 5. On the other hand, Learned Senior-DR for the Revenue supported the orders of lower authorities. 6. We have heard both the parties and perused the materials on record. We have also gone through the decisions relied upon by the parties. The Ld. AR has argued both on jurisdiction as well as merit of the case. He also contested non admission of the additional evidence submitted by him before Ld.CIT(A). In this case, appellant has received Rs.6,00,000/- on account of her share in the immovable property, reportedly a piece of agricultural land, bearing Survey No.864 P/32 located in village Ichhapore, Dist. Surat. The AO has assessed the entire gross sale consideration of Rs.6,00,000/- as taxable capital gains at pages 4 and 5 of the assessment order. The Ld. CIT(A) has directed to AO to allow cost of acquisition as on 01.04.1981, on the basis of Municipal records and purchase documents. The Ld. AR argued that 7 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan the land is located at village Ichhapore. The Surat Municipal Corporation does not have any such record for the land located in nearby villagers. Even otherwise, the Municipal Corporation is not keeping record of cost of property, which is not located in the territorial area of their jurisdiction. Further, purchase document is not relevant because property sold was hereditary and acquired by five joint holders including the appellant, prior to 01.04.1981. The appellant has filed valuation report of registered valuer, Shri Ramesh Jain which is at pages 42 to 56 of the paper book. As per the report of the registered valuer, cost of acquisition was estimated at Rs.200/- per square meter. The valuer has considered as many as 16 sale instances at pages 54 and 55 of the paper book. The Ld.AR brought to our notice the decision of ITAT Surat in case of Shri Arunbhai Dahyabhai Patel vs. ITO in ITA No.499/SRT/2018 dated 26.10.2021, where the Bench has allowed cost of acquisition @ Rs.230 per square meter. Copy of said order is at pages 57 to 67 of the paper book. 6.1 We have perused all the documents and duly considered the submission of Ld.AR. The Ld. CIT(A) has directed AO to work out the indexed value of the cost of acquisition. For the purpose of computation of capital gains cost of acquisition of the asset and cost of 8 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan improvement are to be deducted as per clause-(ii) of Section 48 of the Act. The appellant has submitted valuation report of a registered valuer, which could not be submitted before AO because the report was received on 17.12.2019 but order was passed on 06.12.2019. However, it was submitted before the Ld.CIT(A). The Ld.CIT()A) did not admit the additional evidence under Rule-46A of IT Rules, 1962, for the reasons given at para-6.3 of the order. It is not a case where assessee did not want to submit evidence on point relevant for computation of capital gains. The assessee received the report from the registered valuer 3 days after order u/s 144 of the Act was passed by AO. The case of the assessee is covered under clause-(i) of Rule-46A(i) of the IT Rules, 1962. Considering all the facts, in the interest of justice, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to re-compute the capital gains as per law. The AO may consider the valuation report submitted by the assessee and if he has not satisfied, the same may be referred to DVO. The assessee is directed to furnish all details and explanation as needed by AO. With this direction, the grounds of appeal raised by the assessee is treated as allowed for statistical purposes. 9 ITA No.270/SRT/2024 AY.12-13 Bhavnaben B Chauhan 6.2 Since we have remitted the file back to AO for de novo assessment; after hearing the assessee, the other grounds are not adjudicated, being academic in nature. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 05/06/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत/Surat Ǒदनांक/ Date: 05/06/2024 DKP Outsourcing Sr.P.S Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat