DCIT (Exemptions), Bhubaneswar V. Krupajal Trust, Bhubaneswar

ITA 277/CTK/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9525 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 10-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P K MISHRA
• Keywords: Additional evidence; Revised return; Set aside; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 277 /CTK/201 8 ( / ASSESSMENT YEAR : 2014 - 2015 ) DCIT(EXEMPTIONS), BHUBANESWAR VS . M/S KRUPAJAL TRUST, PLOT NO.717, BJB NAGAR, BHUBANESWAR ./ PANNO. : A A BTK 1988 L ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SUB H ENDU DUTTA, DR /ASSESSEE BY : SHRI P.K.M ISHRA, ADVOCATE / DATE OF HEARING : 19 / 1 2 /2019 / DATE OF PRONOUNCEMENT : 02 / 01 /20 20 / O R D E R PER L.P.SAHU , A M : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX ( APPE ALS ) - 1 , BHUBANESWAR , DATED 11.04.2018 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE. 3. THE CIT(A) - 1 ERRED IN ALLOWING THE PAYMENT OF INTER EST ON BORROWED CAPITAL FOR ACQUISITION OF ASSETS.. 4. THE CIT(A) - 1 ERRED IN ALLOWING THE PAYMENT OF INTEREST ON BORROWED CAPITAL FOR ACQUISITION OF ASSETS IGNORING THE FACT THAT INTEREST SHOULD HAVE BEEN CAPITALIZED. , 5. HON'BLE CIT(A) HAS GIVEN FINDING THAT THERE HAS BEEN IMPROPER ENTRIES IN THE BOOKS. IN THIS SCENARIO, ENTIRE ASSESSMENT NEEDS TO BE SET - ASIDE. 6. CIT(A) ERRED IN DECIDING THAT THERE IS NO QUESTION OF TAXING ANY CAPITAL GAIN AS THE LAND WAS NEVER SOLD AS CAPITAL GAIN ARISED O N THE DATE THE ASSESSEE ENTERED INTO AGREEMENT. 7. THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF COPIES OF THE SALE AGREEMENT, SALE CANCELLATION ITA NO. 277 /CTK/201 8 2 AGREEMENT, COPIES OF AUDITED ACCOUNTS FOR THE F.Y 2014 - 15 WITHOUT GIVING OPPORTUNITY TO ASSESSING OFFICER AND THUS VIOLATED 46A. 8. ANY OTHER GROUNDS(S) THAT MAY BE URGED AT THE TIME OF HEARING. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A TRUST FORMED FOR RUNNING EDUCATIONAL INSTITUTION AND FILED ITS RETURN OF INCOME SHOWING NIL INCOME. THE REAFTER THE ASSESSEE FILED REVISED RETURN OF INCOME ON 01.10.2014 SHOWING SAME NIL INCOME. THEREAFTER THE AO ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.1,35,80,550/ - AND MADE ADDITIONS OF RS.97,42,874/ - ON ACCOUNT OF INCOME FROM FIXED DEPOSIT INTEREST AND SAVING BANK INTEREST AND RS.38,86,500/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN. 3. FEELING AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE AO, DELETED BOTH THE ADDITIONS MADE BY THE AO . 4. FURTHER FEELING AGGRIEVED FROM THE ORDER OF THE CIT(A) , THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. LD. DR BEFORE US SUBMITTED THAT THE AO HAS RIGHTLY MADE ADDITION ON ACCO UNT OF INTEREST INCOME AS THE SAME HAS NOT BEEN PHYSICALLY PAID DURING THE YEAR UNDER CONSIDERATION BUT THE SAME IS SHOWN AS INTEREST PAYABLE IN THE LIABILITY SIDE OF THE BALANCE SHEET. FURTHER, LD. DR CONTENDED THAT THERE IS NOTHING CONTAINED EITHER IN TH E AUDIT REPORT REGARDING ARRIVAL OF CAPITAL GAIN ON SALE OF SUCH LAND AND DEDUCTION ITA NO. 277 /CTK/201 8 3 THEREON IF ANY OR TAXATION ON SUCH CAPITAL GAIN IN ANY RETURN OF THE INCOME FILED FOR THE YEAR UNDER CONSIDERATION. IT WAS ALSO SUBMITTED BY LD. DR THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE NOR ANY CALCULATION SHEET REGARDING ARRIVAL OF CAPITAL GAIN ON SALE OF SUCH LAND, THEREFORE, THE AO HAS RIGHTLY ADDED THE AMOUNT RECEIVED ON SALE OF SUCH LAND TREATING AS LONG TERM CAPITAL GAIN. HOWEVER, THE CIT(A) WITHOUT CONSIDER ING THE FACTUAL ASPECT HAS DELETED BOTH THE ADDITIONS. THE CIT(A) HAS ALSO VIOLATED THE RULE 46A OF THE I.T.RULES, 1962 ACCEPTING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IN THE FORM OF COPIES OF SALE AGREEMENT, SALE CANCELLATION AGREEMENT AND COPIES OF AUDITED ACCOUNTS FOR A.Y.2014 - 2015 ETC. ACCORDINGLY, LD. DR SUBMITTED THAT WITHOUT PROVIDING ANY OPPORTUNITY TO AO TO VERIFY THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDING, THE IMPUGNED ORDER PASSED BY THE CIT(A) FAILS AND DESERVES TO BE DISMISSED. 6. ON THE OTHER HAND, LD. AR REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE CIT(A) IS JUST AND PROPER AFTER VERIFICATION OF THE REQUIRED DOCUMENT S SUBMITTED BY THE ASSESSEE, WHICH DOES NOT CALL FOR ANY INTERFERENCE. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD , WE FIND THAT THE AO DURING THE COURSE OF ITA NO. 277 /CTK/201 8 4 ASSESSMENT FOUND THAT THE ASSESSEE HAD SHOWN THE VALUE O F LAND AND LAND DEVELOPMENT AT RS.3,28,07,333/ - IN THE BALANCE SHEET AFTER DEDUCTING THE VALUE OF LAND OF RS. 14,64,000/ - SHOWN AS SOLD DURING THE YEAR. THE AO ALSO FOUND THAT THE ASSESSEE HAD ADDED AN AMOUNT OF RS.38,86,500/ - TOWARDS INCOME ON SALE OF LAND DIRECTLY IN CAPITAL FUND SHOWN AT THE LIABILITY SIDE OF THE BALANCE SHEET. THE ASSESSEE WAS ALSO FOUND TO HAVE DISCLOSED AN AMOUNT OF RS.53,50,500/ - AS RECEIVABLE TOWARDS SALE OF LAND IN THE ASSETS SIDE OF THE BALANCE SHEET. IN THE ABSENCE OF ANY EXPLANAT ION FROM THE ASSESSEE AND DETAILS OF CALCULATION OF CAPITAL GAINS, THE AO PRESUMED THAT THE ASSESSEE HAD SOLD LAND AT RS.53,50,500/ - , THE COST OF WHICH WAS RS.14,64,000/ - AND, THEREFORE, COMPUTED THE LONG TERM CAPITAL GAINS AT RS.38,86,500/ - . DURING THE CO URSE OF APPELLATE PROCEEDINGS THE ASSESSEE FILED SALE AGREEMENT , SALE CANCELLATION AGREEMENT AND COPIES OF AUDITED ACCOUNTS AND ON CONSIDERING THE SAME, THE CIT(A) DELETED THE ADDITION. BEFORE US, LD. DR VEHEMENTLY SUBMITTED THAT THE CIT(A) WHILE ACCEPTED THE ABOVE DOCUMENTS, WHICH ARE ADDITIONAL EVIDENCE IN NATURE, HAS NOT PROVIDED ANY OPPORTUNITY TO AO TO VERIFY THE SAME AS THOSE DOCUMENTS HAVE NOT BEEN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON PERUSAL OF THE OBSERVATIONS MADE BY THE CIT(A) AL SO , WE FIND THAT THE CIT(A) MENTIONED THAT THE ASSESSEE HAS CLAIMED THAT THOSE DOCUMENT WERE FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. IN THE ITA NO. 277 /CTK/201 8 5 ASSESSMENT ORDER, THERE IS NO MENTION BY THE AO THAT THE ASSESSEE HAS PRODUCED ABOVE DOCUMENTS FOR CO NSIDERATION. IN OUR OPINION, WE ARE IN AGREEMENT WITH THE CONTENTION OF LD. DR AS DEFINITELY THE AO HAS DEPRIVED OF ANY OPPORTUNITY TO VERIFY AND EXAMINE THE DOCUMENTS BEING ADDITIONAL EVIDENCE ON WHICH BASIS THE CIT(A) HAS DELETED THE ADDITION , WHICH AMOU NTS TO VIOLATION OF RULES 46A OF THE I.T.RULES, 1962. THEREFORE, CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE CIT(A) TO PASS A FRESH ORDER AFTER GIVING DUE OPPORTUNITY TO THE AO WITH REGARD TO SALE AGREEMENT , SALE CANCELLATION AGREEMENT AND COPIES OF AUDITED ACCOUNTS FOR A.Y.2014 - 2015. ACCORDINGLY, WE ALLOW THE GROUNDS OF APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES AND CONSEQUENTLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE R ESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02 / 01 /20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 02 / 01 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 277 /CTK/201 8 6 / COPY OF THE ORDER FORWARDED TO : / BY ORDER , ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - DCIT(EXEMPTIONS),BHUBANESWAR 2. / THE RESPONDENT - M/S KRUPAJAL TRUST, PLOT NO.717, BJB NAGAR, BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//