GAYATRI PRASOON PANDEY, MUMBAI V. ACIT 16(1) (FORMERLY ACIT CIR. 11(1)), MUMBAI

ITA 2940/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7414 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: N JAYANDRAN
• Keywords: Opportunity of being heard; Cost of acquisition
• Section: 54F; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 2940 /MUM./2016 ( ASSESSMENT YEAR : 20 11 12 ) GAYATRI PRASOON PANDEY 98, 9 TH FLOOR, LLOYDS GARDEN APPA SAHEB MARATHE MARG PRABHADEVI, MUMBAI 400 025 PAN AAHPM8819L . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 11(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI N. JAYANDRAN REVENUE BY : SHRI V. VIDHYADHAR DATE OF HEARING 09 . 04 .201 8 DATE OF ORDER 25.04.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 4 TH JANUARY 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 4 , MUMBAI, FOR THE ASSESSMENT YEAR 20 11 12 . 2 . GROUNDS NO.6 AND 7 BEING GENERAL IN NATURE DO NOT REQUIRE ADJUDICATION, HENCE, DISMISSED. 2 GAYATRI PRASOON PANDEY 3 . IN GROUNDS NO.1 AND 2, ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 54 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 4 . IN GROUNDS NO.3, 4 AND 5, ASSESSEE HA S RAISED ISSUES RELATING TO INACCURACIES /MISTAKES IN THE COMPUTATION OF LONG TERM CAPITAL GAIN ON ACCOUNT OF COST OF ACQUISITION AND INDEXATION BENEFIT. 5 . BRIEF FACTS ARE, THE ASSESSEE AN I NDIVIDUAL WAS A JOINT OWNER OF FLAT 1 AT FIRST FLOOR, B WING OF LLOYDS GAR DEN ALONG WITH HER HUSBAND. ASSESSE ES SHARE IN THE SAID FLAT WAS TO THE EXTENT OF 40%. IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE AND HER HUSBAND SOLD THE SAID FLAT VIDE AGREEMENT DATED 3 RD JULY 2010 FOR A TOTAL SALE CON SIDERATION OF ` 2,98,00,000. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE DECLARED TOTAL INCOME OF ` 81,65,345. IN THE COMPUTATION OF INCOME FILED ALONG WITH RETURN OF INCOME , THOUGH , THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF THE HOUSE PROPERTY AT ` 13,01,995, HOWEVER, SHE CLAIMED THE FULL AMOUNT OF THE CAPITAL GAIN AS DEDUCTION UNDER SECTION 54 OF THE ACT TOWARDS INVESTMENT IN A NEW HOUSE PROPERTY. IN COUR SE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE VERIFYING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT OBSERVED THAT THE NEW HOUSE PROPERTY WAS 3 GAYATRI PRASOON PANDEY PURCHASED BY THE ASSESSEE ON 21 ST APRIL 2005, AND SHE TOOK POSSESSION OF THE SAID PRO PERTY ON 31 ST DECEMBER 2007. REFERRING TO THE PROVISIONS OF SECTION 54F OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT INVESTED THE CAPITAL GAIN IN PURCHASE OF THE NEW HOUSE PROPERTY WITHIN THE PRESCRIBED TIME. THEREFORE, HE PROPOSED TO DISALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 F OF THE ACT (AS PER THE ASSESSEE, DEDUCTION WAS ACTUALLY CLAIMED UNDER SECTION 54 OF THE ACT). THOUGH, THE ASSESSEE VIDE HER SUBMISSION DATED 27 TH FEBRUARY 2013, JUSTIFIED THE CLAIM OF DEDUCTION UN DER SECTION 54 OF THE ACT , HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE DISALLOWED DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT. 6 . FURTHER, WHILE COMPUTING LONG TERM CAPITAL GAIN THE ASSESSING OFFICER TOOK THE COST OF ACQUISITIO N OF THE PROPERTY SOLD AT ` 36,66,667 FOR INDEXATION BENEFIT AND, ACCORDINGLY, DETERMINED THE LONG TERM CAPITAL GAIN AT THE HANDS OF THE ASSESSEE AT ` 88,80,874. BEING AGGRIEVED WITH THE DECISION OF THE ASSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE COMPUTATION OF LONG TERM CAPITAL GAIN BY THE ASSESSING OFFICER AS WELL AS DENIAL OF DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT. 4 GAYATRI PRASOON PANDEY 7 . THE LEARNED COMMISSIONER (APPEALS) WHILE DEALING WITH ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT REFERRED TO CERTAIN SPECIFIC PROVISION OF SECTION 54F OF THE ACT IMPOSING RESTRICTION ON THE NUMBER OF PROPERTY TO BE HELD BY T HE ASSESSEE FOR CLAIMING DEDUCTION UNDER THE SAID PROVISION. THE LEARNED COMMISSIONER (APPEALS) OBSERVED , SINCE ON THE DATE OF SALE OF THE ORIGINAL ASSET, THE ASSESSEE WAS HAVING MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET , SHE WAS NOT ELIGIBL E TO CLAIM DEDUCTION UNDER SECTION 54F OF THE ACT. AS REGARDS THE DISPUTE RELATING TO THE COST OF ACQUISITION OF PROPERTY SOLD, THE LEARNED COMMISSIONER (APPEALS) UPHELD THE DECISION OF THE ASSESSING OFFICER. 8 . THE LEARNED AUTHORISED REPRESENTATIVE NARRATIN G THE FACTUAL ASPECTS RELATING TO THE ISSUE IN DISPUTE SUBMITTED THAT THE ASSESSEE ALONG WITH HER HUSBAND HAD PURC HASED THE ORIGINAL ASSET I.E., FLAT NO.1, LLOYDS GARDEN, FROM THREE PERSONS WHO WERE THE JOINT OWNERS OF THE PROPERTY UNDER THREE SEPARATE A GREEMENT. HE SUBMITTED, THE TOTAL CONSIDERATION PAID FOR THE SAID PROPERTY TO THE THREE CO OWNERS IN TERMS WITH THE AGREEMENT S WAS ` 1,10,00,001 . IN THIS CONTEXT, LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO COPIES OF THE AGREEMENT S DATED 11 TH D ECEMBER 1997, WHICH ARE PLACED AT PAGE 51 TO 107 OF THE PAPER BOOK. THE LEARNED AUTHORISED REPRESENTATIVE 5 GAYATRI PRASOON PANDEY SUBMITTED , THOUGH , THE PROPERTY PURCHASED BY THE ASSESSEE ALONG WITH HER HUSBAND WAS A SINGLE PROPERTY, HOWEVER, THERE WERE THREE CO OWNERS, THEREFORE , THREE SEPARATE AGREEMENTS WERE ENTERED INTO WHILE PURCHASING THE PROPERTY. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, IGNORING THE FACTS AND MATERIALS BROUGHT ON RECORD, THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) REFERRED TO THE S ALE CONSIDERATION MENTIONED IN ONLY ONE AGREEMENT RELATING TO A SINGLE CO OWNER AND CONSIDERED THE COST OF ACQUISITION OF THE FLAT AT ` 36,66,667, FOR INDEXATION BENEFIT AS AGAINST ACTUAL PURCHASE PRICE OF ` 1,10,00,001. THE LEARNED AUTHORISED REPRESENTATI VE SUBMITTED, THERE IS ERROR ALSO IN THE DATE OF ACQUISITION AS MENTIONED BY THE DEPARTMENTAL AUTHORITIES. FURTHER, WITH REGARD TO THE ISSUE RELATING TO DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT , THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THOUGH , THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 54 OF THE ACT, HOWEVER, THE LEARNED COMMISSIONER (APPEALS) WRONGLY REFERRING TO THE PROVISIONS OF SECTION 54F OF THE ACT HAS REJECTED ASSESSEES CLAIM OF DEDUCTION BY HOLDING THAT SINCE THE ASSESSEE ON THE DATE OF PURCHASE OF NEW RESIDENTIAL HOUSE WAS THE OWNER OF MORE THAN ONE HOUSE SHE IS NOT ENTITLED TO DEDUCTION. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE AFORESAID REASONING OF THE LEARNED COMMISSIONER (APPEALS) IS TOTALLY IRRELEVANT AS THE RE IS NO SUCH CONDITION / RESTRICTION IMPOSED UNDER 6 GAYATRI PRASOON PANDEY SECTION 54 OF THE ACT UNDER WHICH ASSESSEE CLAIMED DEDUCTION . FURTHER, THE LEARNED COUNSEL SUBMITTED, ASSESSEE HAVING PURCHASED THE NEW RESIDENTIAL HOUSE WITHIN THE PRESCRIBED TIME LIMIT AS PROVIDED UNDER SECTION 54 OF THE ACT , CONSIDERING THE DATE WHEN THE ASSESSEE WAS HANDED OVER THE POSSESSION OF THE PROPERTY , ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 54 OF THE ACT. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN VIEW OF THE APPARENT MISTAKE S IN THE ORDER OF THE FIRST APPELLATE AUTHORITY , THOUGH , THE ASSESSEE HAS FILED AN APPLICATION FOR RECTIFICATION UNDER SECTION 154 OF THE ACT BEFORE THE LEARNED COMMISSIONER (APPEALS) ON 7 TH DECEMBER 2016, NO DECISION HAS BEEN TAKEN IN THE SAID APPLICATION . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE DEPARTMENTAL AUTHORITIES HAVING WRONGLY COMPUTED LONG TERM CAPITAL GAIN AND DENIED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT WITHOUT PROPERLY APPLYING THEIR MIND TO THE FACTS AND MATER IAL ON RECORD, THE ISSUES MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. FINALLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN CASE OF ASSESSEES HUSBAND, SIMILAR CLAIM MADE WITH REGARD TO COMPUTATION OF CAPITAL GA IN ARISING FROM THE SALE OF THE VERY SAME PROPERTY HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. 7 GAYATRI PRASOON PANDEY 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE FACTUAL ISSUES RAISED IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE THE MATTER MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. 10 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AT THE OUTSET, WE WILL DEAL WITH THE ISSUE RELATING TO THE COST OF ACQUISITION OF THE HOUSE PROPERTY SOLD BY THE ASSESSEE I.E., FLAT NO.1, LLOYDS GARDEN, MUMBAI. AS AGAINST ASSESSEES CLAIM OF COST OF ACQUISITION OF THE SAID PROPERTY AT ` 1,10,00,001, THE ASSESSING OFFICER HAS TAKEN THE COST OF ACQUISITION AT ` 36,66,667 FOR THE PURPOSE OF INDEXATION. IT IS THE CONTENTION OF THE ASSESSEE THAT FLAT NO.1, LLOYDS GARDEN, WAS OWNED BY THREE CO OWNERS AND THE ASSESSEE ALONG WITH HER HUSBAND HAD PURCHASED THE SAID PROPERTY FROM THE THREE CO OWNERS THROUGH THREE SEPARATE REGISTERED AGREEMENTS. ON A PERUSAL OF THE COPIES OF THE SALE DEEDS ENTERED WITH THREE CO OWNERS OF THE SAID PROPERTY, WE HAVE NOTED THAT FLAT NO.1, LLOYD GARDEN WAS PURCHASED BY THE ASSESSEE FROM THREE CO OWNERS UNDER THREE SEPARATE SALE AGREEMENTS. THE SALE CONSIDERATION MENTIONED IN EACH AGREEMENT IS SUM OF ` 36,66,667. A PERUSAL OF EACH OF THE SALE DEED MAKES IT CLEAR THAT EACH AGREEMENT IS FOR SALE OF 1/3 RD UNDIVIDED RIGHT, T ITLE AND INTEREST OVER FLAT NO.1, LLOYD S GARDEN. THUS, FROM THE READING OF THE 8 GAYATRI PRASOON PANDEY AFORESAID AGREEMENT S , THE CLAIM OF THE ASSESSEE THAT SHE ALONG WITH HER HUSBAND HAD PURCHASED THE PROPERTY FROM THREE CO OWNERS FOR TOTAL SALE CONSIDERATION OF ` 1,10,00,001, PR IMA FACIE, APPEARS TO BE CORRECT. THOUGH, THE AFORESAID DOCUMENTARY EVIDENCES WERE SUBMITTED BEFORE BOTH THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) , UNFORTUNATELY , WITHOUT PROPERL Y LOOKING INTO THEM THEY HAVE CONSIDERED THE SALE CONSIDERA TION MENTIONED IN RESPECT OF A SINGLE CO OWNER IN ONE AGREEMENT AT ` 36,36,000 FOR THE PURPOSE OF INDEXATION BENEFIT. IN OUR VIEW, THE AFORESAID APPROACH OF THE DEPARTMENTAL AUTHORITIES IS COMPLETELY UNTENABLE AND UNFAIR. WHEN THE ASSESSEE THROUGH PROPER D OCUMENTARY EVIDENCE IS MAKING A CLAIM , THE DEPARTMENTAL AUTHORITIES ARE DUTY BOUND TO EXAMINE THE CORRECTNESS OF ASSESSEES CLAIM. IN THE PRESENT CASE, IT IS MANIFEST THAT THE DEPARTMENTAL AUTHORITIES HAVE COMPLETELY IGNORED / OVER LOOKED DOCUMENTARY EVIDEN CES BROUGHT ON RECORD WHILE MAKING THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN. 11 . AS REGARDS ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT, WHILE THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF DEDUCTION ON THE REASONING THAT THE ASS ESSEE HAS NOT INVESTED THE CAPITAL GAIN IN NEW RESIDENTIAL HOUSE WITHIN THE PRESCRIBED TIME LIMIT, TH E LEARNED COMMISSIONER (APPEALS) COMPLETELY MISCONCEIVED THE FACTS 9 GAYATRI PRASOON PANDEY AND MISAPPLIED THE PROVISIONS OF LAW WHI LE COMING TO THE CONCLUSION THAT THE ASSESSEE BE ING THE OWNER OF MORE THAN ONE RESIDENTIAL HOUSE APART FROM THE NEW RESIDENTIAL HOUSE IS NOT ELIGIBLE TO CLAIM DEDUCTION 54F OF THE ACT. IN THE PROCESS, THE LEARNED COMMISSIONER (APPEALS) HAS COMPLETELY OVER LOOKED THE FACT THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT AND N OT UNDER SECTION 54F OF THE ACT. THUS , THE CONDITIONS AND RESTRICTIONS IMPOSED UNDER SECTION 54 F OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE. THEREFORE, ON OVER ALL CONSIDERATION OF FACTS AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT DUE TO TOTAL NON APPLICATION OF MIND BY THE DEPARTMENTAL AUTHORITIES TO THE FACTS AND MATERIAL ON RECORD, THERE I S NOT ONLY GROSS ERROR IN COMPUTATION OF LONG TERM CAPITAL GAIN BUT ALSO IN DENYING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. THEREFORE, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF THE LEARNED COMMISSIONER (APPEALS) AND RESTORE ALL THE ISSUES ARISING IN THE PRESENT APPEAL RELATING TO COMPUTATION OF LONG TERM CAPITAL GAIN AND DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER DUE AND REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. THE ASSESSING OFFICER MUST DECIDE THE ISSUES BY PROPER APPLICATION OF MIND TO THE FACTS AND MATERIAL BROUGHT ON RECORD AND WITH DUE REGARD TO THE SUBMISSIONS TO BE MADE BY THE ASSESSEE. WITH THE AFORESAID OBSERVATIONS, ALL THE ISSUES RAISED IN THE PRESENT 10 GAYATRI PRASOON PANDEY APPEAL ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER. GROUNDS RAISED ARE ALLOWED FOR STATISTICAL PURPOSES. 12 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25.04.2018 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.04.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR /SR.P.S ) ITAT, MUMBAI