Shri Mahendrakumar Nagindas Shah, Ahmedabad V. The Income Tax Officer, Ward - 3(4), Ahmedabad

ITA 2819/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9363 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.2441/AHD/2013 & 2819AHD/2015 (ASSESSMENT YEAR:2008-09) MAHENDRAKUMAR NAGINDAS SHAH, 880/2, MIRZAPUR ROAD, NR. GPO, AHMEDABAD APPELLANT VS. ITO, WARD 3(4), AHMEDABAD RESPONDENT PAN: ADZPS9098L /BY ASSESSEE : SHRI D. K. PARIKH, A.R. /BY REVENUE : SHRI P. S. CHAUDHARY, SR. D.R. /DATE OF HEARING : 18.01.2017 /DATE OF PRONOUNCEMENT : 20.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEAR 20 08-09 ARISE AGAINST CIT(A)-III AND 10, AHMEDABADS SEPARATE ORDERS DATE D 29.08.2013 AND 03.08.2015 IN APPEAL NOS. CIT(A)-III/248/ITO WD-3(4 )/12-13 & CIT(A)- 10/ITO WD-3(4)/472/14-15, UPHOLDING ASSESSING OFFIC ERS ACTION MAKING LONG TERM CAPITAL GAIN ADDITION OF RS.15,61,250/- I N ASSESSMENT ORDER DATED 03.12.2010 AND CONSEQUENTIAL PENALTY THEREUPON OF R S.3,21,617/- THEREUPON ITA NOS. 2441/AHD/2013 & 2819/AHD/2015 (MAHENDRAKUM AR N. SHAH VS. ITO) A.Y. 2008-09 - 2 - LEVIED IN ORDER DATED 19.03.2014, IN PROCEEDINGS UN DER SECTION 143(3) & 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT TH E ACT RESPECTIVELY. 2. WE COME TO RELEVANT FACTS FIRST. THE ASSESSEE C O-OWNED THE CAPITAL ASSET IN QUESTION I.E. APARTMENT NO. B/4, FIRST FLO OR, ARCHITA APARTMENTS, MOUJE SHEKHPUR-KHANPUR VILLAGE, MEMNAGAR, AHMEDABAD . THE SAID CAPITAL ASSET HAD BEEN ACQUIRED WELL BEFORE 01.04.1981. AL L ITS CO-OWNERS EXECUTED A SINGLE SALE DEED IN THE RELEVANT PREVIOUS YEAR FOR RS.8.10 CRORES. THE ASSESSEES SHARE CAME TO BE RS.22.50LACS. HE WOULD TAKE COST OF ACQUISITION AS ON 01.04.1981 TO BE RS.1,25,000/- FOLLOWED BY A FURTHER CLAIM OF COST OF EXPANSION/IMPROVEMENT STATED TO BE OF 250SQ.FT. THE REBY FINALIZING LONG TERM CAPITAL GAIN COMPUTATION OF RS.3762/-. THE ASSESSI NG OFFICER REJECTED ITS LATTER CLAIM OF COST OF EXPANSION OF THE CAPITAL AS SET IN QUESTION IN ASSESSMENT ORDER DATED 03.12.2010 INTER ALIA QUOTING HIS FAILU RE IN PLACING ON RECORD THE NECESSARY EVIDENCE IN THE NATURE OF EXPANSION WORK DETAILS, PAYEES NAMES FOLLOWED BY THEIR CONFIRMATION. HE ACCORDINGLY ARR IVED AT THE IMPUGNED LONG TERM CAPITAL GAINS ADDITION IN QUESTION OF RS.15,61 ,250/-. THE CIT(A) UPHOLDS THE SAME. 3. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS. LEARNED COUNSEL REPRESENTING ASSESSEE FILES BEFORE US COPY OF A MORTGAGE DEED DATED 18.07.2007 PERTAINING TO THE CAPITAL ASS ET IN QUESTION. HE INVITES OUR ATTENTION TO PAGE 3 OF THE PAPER BOOK INDICATIN G THE FLAT IN QUESTION TO BE INVOLVING SUPER BUILT UP AREA OF 110 SQ. YARDS AS A GAINST THE ADJOINING FLAT NO. B/3 OWNED BY HIS SON. HE VEHEMENTLY CONTENDS THAT THE SAME SUFFICIENTLY PINPOINTS ASSESSEES COST OF EXPANSION WORK IN THE NATURE OF INDIRECT EVIDENCE. WE ARE NOT IMPRESSED WITH THIS CONTENTIO N IN ABSENCE OF ANY FURTHER COGENT SUPPORTIVE EVIDENCE IN THE NATURE OF APPROVED EXPANSION PLAN FOLLOWED BY THE CONCERNED SOCIETIES ORIGINAL CONSTR UCTION DETAILS. WE WISH TO ITA NOS. 2441/AHD/2013 & 2819/AHD/2015 (MAHENDRAKUM AR N. SHAH VS. ITO) A.Y. 2008-09 - 3 - CLARIFY THAT THE ASSESSING OFFICER HIMSELF OBSERVES THAT THERE ARE TOTAL 45 CO- OWNERS OF THE SAID APARTMENT. IT IS THUS NOT CLEAR AS TO WHO HAS GOT ALL THE EXPANSION WORK DONE ALONG WITH PAYMENT OF EXPENSES. BE THAT AS IT MAY, THE ABOVE SO CALLED INDIRECT EVIDENCE FAILS TO SUPPORT THE ASSESSEES CASE OF HAVING CARRIED OUT EXPANSION WORK IN THE APARTMENT IN QUESTION. IT HAS FURTHER COME ON RECORD THAT HE HAS ALSO NOT PLACED ALL THE RELEVANT DETAILS OF PAYEES NAMES/ADDRESSES AS WELL. WE THUS FIND NO R EASON TO INTERFERE WITH BOTH THE LOWER AUTHORITIES ACTION ADDING LONG TERM CAPITAL GAINS OF RS.15,61,250/- IN QUESTION. ASSESSEES FORMER APPE AL ITA NO.2441/AHD/2013 IS DISMISSED. 4. WE NOW PROCEED TO DEAL WITH ASSESSEES PENALTY A PPEAL ITA NO.2819/AHD/2015. BOTH THE LOWER AUTHORITIES HOLD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS SO AS TO CLAIM THE IMPUGNED COST OF ACTION OF THE ABOVE FLAT SOLD. THEY ACCORDINGLY LEVY SECTION 271(1)(C) PENALTY OF RS.321617/- QUA THE ABOVE LONG TERM CAPITAL GAINS A DDITION. 5. WE HAVE HEARD RIVAL SUBMISSIONS. RELEVANT FINDI NGS PERUSED. THERE CAN BE HARDLY ANY DISPUTE THAT QUANTUM AND PENALTY ARE TWO SEPARATE INDEPENDENT PROCEEDING WHEREIN EACH AND EVERY DISAL LOWANCE/ADDITION IN THE FORMER DOES NOT NECESSARILY RESULTING IN LEVY OF PE NALTY IN LATTER PROCEEDINGS. IT IS EVIDENT THAT THE IMPUGNED PENAL ACTION FLOWS FROM ASSESSEES FAILURE IN PROVING COST OF EXPANSION OF THE CAPITAL ASSET IN Q UESTION. ALTHOUGH WE HAVE CONFIRMED QUANTUM LONG TERM CAPITAL ADDITION BY REJ ECTING ASSESSEES MORTGAGE DEED (SUPRA) RELIED UPON AS INDIRECT EVIDE NCE IN ORDER TO PROVE EXPANSION WORK UNDERTAKEN, WE KEEP IN MIND THE ABOV E THIN LINE BETWEEN QUANTUM AND PENALTY PROCEEDING TO OBSERVE THAT HE H AS PROVED HIS BONAFIDES IN CLAIMING EXPANSION WORK BEING CARRIED OUT IN THE CAPITAL ASSET IN QUESTION. WE ACCORDINGLY TREAT THE ABOVE MORTGAGE DEED AS A V ALID JUSTIFICATION FOR ITA NOS. 2441/AHD/2013 & 2819/AHD/2015 (MAHENDRAKUM AR N. SHAH VS. ITO) A.Y. 2008-09 - 4 - RAISING AT LEAST THE IMPUGNED CLAIM OF COST OF EXPA NSION. WE THUS ACCEPT ASSESSEES ARGUMENT TO DELETE THE IMPUGNED PENALTY OF RS.3,21,617/- IN QUESTION IMPOSED BY BOTH THE LOWER AUTHORITIES BY I NVOKING SECTION 271(1)(C) OF THE ACT. HIS PENALTY APPEAL ITA NO.2819/AHD/201 5 IS ACCEPTED. 6. THE ASSESSEES FORMER APPEAL ITA NO.2441/AHD/201 3 FAILS AND LATTER APPEAL ITA NO.2819/AHD/2015 IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF JANUARY, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 20/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0