K.T.Rajam, Salem V. ITO, Salem

ITA 2962/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7937 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2014
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: G BASKAR
• Keywords: Cost of acquisition
• Section: 143(3); 133A; 148; 139

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A.NO. 2 962 AND 2963/MDS/2014 ASSESSMENT YEAR :20 09 - 10 & 2010 - 11 SMT. K.T. RAJAM, 10, PERIYATHAMBI STREET, SOUTH UDAYARPALAYAM, ATTUR 636 102 . [PAN: A GBPR0188B ] VS. THE INCOME TAX OFFICER , WARD I I ( 4 ) , 3, GANDHI ROAD, SALEM 636 007 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 0 9 . 1 1 .201 6 / DAT E OF P RONOUNCEMENT : 07 . 02 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) , SALEM BOTH DATED 31 . 1 0 .201 4 RELEV ANT TO THE ASSESSMENT YEAR S 2009 - 10 AND 2010 - 11 . THE CONCISE COMMON GROUND RAISED IN BOTH THE APPEALS OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE TOWARDS LONG TERM CAPITAL GAINS. I.T.A. NO . 2 962 & 2963 / M / 1 4 2 I.T.A. NO. 2962/MDS/2014 2. BRIEF FACT S OF THE CASE ARE THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, AN INDIVIDUAL FOR THE ASSESSMENT YEAR 2009 - 10 UNDER SECTION 139 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. IN THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT IN ANOTHER CASE, THE A SSESSING OFFICER HAS LEARNT THAT THE ASSESSEE HAS SOLD PROPERTIES AND CAPITAL GAINS AROSE FROM THE SALE. ACCORDINGLY, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 09.08.2011. IN RESPONSE THERETO, THE ASSESSEE FILED A RETURN OF INCOME ON 25.09.2012 ADM ITTING TOTAL INCOME AT .9,13,050/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 27.09.2012. BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ADMITTED LONG TERM CAPITAL GAINS FROM THE SALE OF PROPERTY [LAND AND BUILDING] IN ATTUR TOWN AS WELL AS INCOME FROM BUSINESS OF RUNNING A BAKERY. AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE AS WELL AS CONSIDERING THE FACTS OF THE CASE, THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT W AS COMPLETED BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .64,17,220/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND CONSIDERING THE FACTS OF THE CASE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. I.T.A. NO . 2 962 & 2963 / M / 1 4 3 4. ON B EING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS NOT FILED RETURN OF INCOME UNDER SECTIO N 139 OF THE ACT. IN THE COURSE OF SURVEY IN ANOTHER CASE, THE ASSESSING OFFICER HAS LEARNED THAT THE ASSESSEE HAS SOLD PROPERTIES AND CAPITAL GAINS AROSE FROM THAT SALE. 5.1 ON 22.01.2009, THE ASSESSEE SOLD A PROPERTY AT 22, RANIPET BAZAAR STREET TO SHR I P. MUTHU. THE CONSIDERATION MENTIONED IN THE DOCUMENT WAS .26,30,000/ - . HOWEVER, DURING THE COURSE OF SURVEY IN THE CASE OF M/S. SRI AMMAN JEWELLERS, THAMMAMPATTY, THE ASSESSING OFFICER FOUND THAT THE ACTUAL CONSIDERATION WAS, IN FACT, .90,09,000/ - . AD OPTING THE ACTUAL SALE CONSIDERATION RECEIVED, THE ASSESSEE HAS WORKED OUT THE LONG TERM CAPITAL GAINS ARISING FROM THIS SALE AS .6,39,366/ - IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. 5.2 WITH REGARD TO WORKING OF THE COST OF ACQUISITION OF LAND, THE ASSESSEE HAS ADOPTED A PURCHASE COST OF .23,50,000/ - , THE INDEXED VALUE OF WHICH WAS TAKEN AS .52,80,695/ - BEING MARKET VALUE OF THE PROPERTY AS ON THAT DATE AND THE ACTUAL AMOUNT PAID BY THE ASSESSEE. THE ASSESSE E WAS ASKED TO PRODUCE EVIDENCE, IF ANY. THE ASSESSEE HAS NOT FILED ANY RETURNS OF INCOME FOR THAT PERIOD AND HENCE THIS CLAIM WAS NOWHERE SUBSTANTIATED. THE I.T.A. NO . 2 962 & 2963 / M / 1 4 4 ASSESSEE ALSO ADMITTED THAT SHE DOES NOT HAVE ANY EVIDENCES. THEREFORE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE CLAIM OF THE ASSESSEE HAS BEEN HIGHLY EXAGGERATED AND TOTALLY WITHOUT ANY BASIS . THEREFORE, HE PROCEEDED TO WORK THE COST OF ACQUISITION OF LAND AS PER THE DETAILS AVAILABLE ON RECORD. 5.3 AS PER PURCHASE DOCUMENTS, THE ASSESSING O FFICER NOTICED THAT THE ASSESSEE HAD ACQUIRED THE TWO PROPERTIES VIDE DOCUMENT NOS. 1093/1993 & 1098/1993 SRO, ATTUR) ON 14 TH AND 15 TH JULY, 1993 FOR A TOTAL CONSIDERATION OF .3,80,000/ - [ .1,85,000 + .1,95,000/ - ]. TAKING INTO ACCOUNT THE STAMP DUTY AN D REGISTRATION CHARGES PAID, OTHER ADDITIONAL COST SUCH AS BROKERAGE AND DOCUMENT WRITING CHARGES, THE ASSESSING OFFICER PRESUMED THE FINAL COST AT .4,50,000/ - . 5.4 WITH REGARD TO THE CLAIM OF LAND DEVELOPMENT EXPENSES OF .1,60,000/ - IN 1994 - 95, THE ASS ESSEE HAS NOT PRODUCED ANY EVIDENCE. THE ASSESSING OFFICER HAS NOT BELIEVED THE EXPENSES CLAIMED OF .1,60,000/ - TOWARDS DEVELOPMENT ON LAND PURCHASED FOR .3,80,000/ - . ACCORDINGLY, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. 5.5 WITH REGAR D TO THE COST OF ACQUISITION OF BUILDING, THE ASSESSEE HAS ADOPTED A PURCHASE COST OF .5,75,000/ - , THE INDEXED VALUE OF WHICH WAS TAKEN AS .12,92,085/ - BY CLAIMING THAT THE ASSESSEE HAS PUT UP A BUILDING I.T.A. NO . 2 962 & 2963 / M / 1 4 5 ADDITIONALLY. CONSIDERING THE REASONABLENESS OF CO ST OF BUILDING AND THE FACT THAT THIS WAS CORROBORATED BY THE RECITALS IN THE SALE DEED, THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE. 5.6 THE ASSESSEE HAS ADOPTED A COST OF .4,95,000/ - AS FURNITURE COST. THE ASSESSEE HAS NOT PRODUCED A NY EVIDENCE TO SUBSTANTIATE HER CLAIM. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE WOULD HAVE PUT UP SOME WOODEN FURNITURE FOR THE BAKERY ETC. A SUM OF .1,00,000/ - WAS CONSIDERED MORE THAN ADEQUATE AND REASONABLE. ACCORDINGLY, THE ASSESSING OFFICER HA S WORKED OUT THE INDEXED COST OF FURNITURE ITEMS TO .2,25,000/ - . 5.7 THE ASSESSEE HAS CLAIMED A SUM OF .3,25,000/ - TOWARDS SELLING EXPENSES AND BROKERAGE. NO DETAILS OF SELLING EXPENSES WERE FILED BEFORE THE ASSESSING OFFICER. THEREFORE, IN THE INTERES T OF FAIRNESS AND JUSTICE, THE ASSESSING OFFICER HAS ALLOWED .2,75,000/ - AS SELLING EXPENSES. 6. ON APPEAL, THE LD. CIT(A) HAS OBSERVED AS UNDER: 5. BRIEF FACTS OF THE CASE ARE AS UNDER: 5.1. THE APPELLANT HAS SOLD A PROPERTY ON 22.1.2009. THE APPELL ANT HAS NOT FILED THE RETURN OF INCOME. THE DEPARTMENT CAME IN KNOWLEDGE OF THE SALE OF PROPERTY BY THE APPELLANT DURING THE COURSE OF A SURVEY IN CASE OF M/S. SRI AMMAN JEWELLERS, THE BUYER OF THE PROPERTY. THE APPELLANT HAS FILED THE RETURN OF INCOME ONL Y AFTER THE ISSUE OF NOTICE OFFERING AN INCOME OF RS.6,39,366/ - AS LONG TERM CAPITAL GAINS. 5.2. THE APPELLANT HAS TAKEN THE COST OF PURCHASE AS AT RS.23,50,000/ - AND HAS INDEXED THE SAME TO RS.52,80,695/ - . THE SALE CONSIDERATION HAS BEEN OFFERED AT RS.9 0,09,000/ - (AS ACCOUNTED FOR BY THE BUYER AND AS I.T.A. NO . 2 962 & 2963 / M / 1 4 6 UNEARTHED DURING THE SURVEY). THE ASSESSING OFFICER HAS ADOPTED THE COST OF ACQUISITION AS PER THE PURCHASE DOCUMENT VALUE. THE ASSESSING OFFICER HAS ALSO GIVEN ALLOWANCES FOR BROKERAGE, ETC AND HAS FIXED A COST OF RS.4,50,000/ - AS COST OF PURCHASE. 5.3. FROM THE ABOVE THE FOLLOWING FACTS ARE ARRIVED. I) THE APPELLANT HAS SHOWN THE CONSIDERATION OF SALE AT RS.90,09,000/ - IN HIS RETURN. THE VALUE AS PER DOCUMENT WAS ONLY RS.26,30,000/ - . THE BUYER OF THE PROPERTY HAS ALSO ACCOUNTED THE COST OF ACQUISITION AT RS. 90,09,000/ - . II) THE APPELLANT HAS ESTIMATED THE COST OF ACQUISITION OF THE PROPERTY AT RS.52,80,695/ - AFTER INDEXATION OF THE PURCHASE COST OF RS.23,50,000/ - . THE ASSESSING OFFICER HAS ADOPTED THE COST AS PER THE DOCUMENT AT RS.3,80,000/ - AND HAS FIXED THE TOTAL COST AT RS.4,50,000/ - AFTER GIVING AN ALLOWANCE FOR THE TRANSFER EXPENSES. 5.4. THE ASSESSING OFFICER HAS CALLED FOR THE DETAILS OF THE COST AS VALUED BY THE APPELLANT AT RS.52,80,695 / - . THE APPELLANT HAD NO EVIDENCE TO OFFER, EXCEPT SAYING THAT THIS WAS THE ACTUAL COST PAID BY HIM. APART FROM STATING THIS, THE APPELLANT HAD NO EVIDENCE TO BUYER, ETC. THE APPELLANT IN HIS SUBMISSION RELIES ON THE DECISION OF THE HON'BLE GUJARAT HIGH CO URT IN 253 ITR 454, THAT A DOCUMENT SHOULD BE READ AS A WHOLE AND IT IS NOT POSSIBLE TO IGNORE A PART OF THE DOCUMENT, AND ACCEPT ANOTHER PART. THE SAID CITATION IS NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE. THE APPELLANT HAS HIMSELF OFFERED THE COST OF SALE, IN HIS RETURN, AT RS.90,09,000/ - . THEREFORE, THE DOCUMENTED VALUE HAS NO RELEVANCE. THIS ALSO HAS BEEN ACCEPTED, AFTER A SURVEY IN THE CASE OF THE 'BUYER', WHEREIN THE BUYER HAS ACCEPTED THE ENTIRE AMOUNT AS CONSIDERATION. IN FACT, THE APPELLANT H AS NOT EVEN FILED THE RETURNS TILL THE SURVEY. IT IS ONLY AFTER THE SURVEY, THE APPELLANT HAS FILED THE RETURN. THE ENTIRE CONCEPT IS ONLY AN AFTERTHOUGHT AND NOT SUPPORTED BY ANY EVIDENCE, WHATSOEVER. AS REGARDS, THE COST OF ACQUISITION OF THE ASSET, THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE DOCUMENT VALUE IN ABSENCE OF ANY EVIDENCE THAT THE ACTUAL CONSIDERATION WAS HIGHER. THE APPELLANT'S ARGUMENT IS NOT ACCEPTED. THEREFORE, GROUND NO.2A, OF THE APPELLANT IS REJECTED. 5.5. THE APPELLANT HAS CLAIMED THAT HE HAD SPENT AN AMOUNT OF RS.L,60,000/ - FOR LAND DEVELOPMENT EXPENSES IN 1994 - 95 .. THE ASSESSING OFFICER HAS NOT ALLOWED THE SAME AS THE COST OF LAND DEVELOPMENT IS I.T.A. NO . 2 962 & 2963 / M / 1 4 7 ALMOST 50% OF THE COST OF PURCHASE ITSELF. THE ASSESSING OFFICER ALSO STATES THAT THE LAND IS LOCATED IN THE HEART OF THE CITY. THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE TOWARDS EXPENSES INCURRED TOWARDS THE SAID LAND DEVELOPMENT. I FIND THE CLAIM A CLEAR CASE OF AFTER THOUGHT TO INCREASE THE CUT OF ACQUISITION. THE ASSESS ING OFFICER HAS RIGHTLY REJECTED THE CLAIM. THE SAME IS UPHELD. THEREFORE, GROUND NO 2.5 IS REJECTED. 5.6. THE ASSESSING OFFICER HAS ALLOWED AN AMOUNT OF RS.1,00,000/ - FOR THE COST OF FURNITURE AS AGAINST THE CLAIM OF RS4,50,000/ - CLAIMED BY THE APPELLA NT. HERE ALSO, THE CLAIM HAS BEEN MADE WITHOUT ANY EVIDENCE BUT GENERAL STATEMENTS. IN ABSENCE OF ANY EVIDENCE, THE ASSESSING OFFICER'S DECISION IS SUSTAINED. GROUND NO. 2.6 IS NOT ALLOWED. 5.7. GROUND NO 2.1 PERTAINS TO A GENERAL STATEMENT THAT THE ASS ESSING OFFICER IS NOT JUSTIFIED IN LEVYING TAX U/S 143(3)/ RW 147 ON THE APPELLANT. THE GROUND IS SQUARELY REJECTED AS THE RETURN ITSELF HAS BEEN FILED AFTER THE SURVEY IN THE HANDS OF THE BUYER, AND DETECTION OF THE ACTUAL VALUE OF SALE CONSIDERATION. 5 .8 GROUND NO. 2.2 AND 2.3 ARE GENERAL IN NATURE AND ARE NOT ALLOWED. 6. IN RESULT, THE APPEAL IS DISMISSED. 7. ADMITTEDLY, THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 UNDER SECTION 139 OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT ADMITTING INCOME OF .9,13,050/ - BY WORKING OUT THE LONG TERM CAPITAL GAINS AT .6,39,366/ - ADOPTING THE ACTUAL SALE CONSIDERATION RECEIVED AT .90,09,000/ - AS WAS ADMITTED IN THE CASE OF M/S. SRI AMMAN JEWELLERS, THAMMAMPATTY, WHEN THERE WAS A SURVEY IN LATTER S CASE. HOWEVER, THE VALUE AS PER THE DOCUMENT WAS ONLY .26,30,000/ - . FOR INDEXATION OF VALUE WAS TAKEN BY THE ASSESSEE AT .52,80,695/ - BY ADOPTING THE PURCHASE COST AT .23,50,00 0/ - . I.T.A. NO . 2 962 & 2963 / M / 1 4 8 THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL FOR ADOPTING THE ABOVE PURCHASE COST. HOWEVER, AS PER PURCHASE DOCUMENTS, THE ASSESSEE HAS ACQUIRED THE PROPERTIES FOR A CONSIDERATION OF .3,80,000/ - ONLY + REGISTRATION CHARGES .50,860/ - AND FIXED THE COST OF ACQUISITION OF LAND AT .4,50,000/ - . WHEN THE ASSESSING OFFICER HAS ACCEPTED THE SALE CONSIDERATION AT .90,09,000/ - IGNORING THE CONSIDERATION MENTIONED IN THE DOCUMENT AT .26,30,000/ - , WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN BASICALLY TAKING THE PURCHASE DOCUMENT VALUE AT .3,80,000/ - ++, WHICH WAS PURCHASED IN 1993. NEITHER THE ASSESSEE HAS PRODUCED ANY VALUATION OF REGISTERED VALUER FOR ADOPTING THE PURCHASE COST AT .23,50,000/ - FOR ACQUISITION OF LAND NOR SIMILAR INSTANCE IN THE SURROUNDINGS OR EVEN THE ASSESSING OFFICER HAS OBTAINED THE OPINION OF THE DVO FOR ESTIMATING THE COST OF ACQUISITION OF LAND. THE ASSESSING OFFICER HAS OBSERVED THAT IT WOULD SOUND INCREDULOUS THAT THE MARKET VALUE OF THE PROPERTY WAS 6 TIMES OF THE GUIDELINE VALUE THAT TOO IN A SMALL TOWN SUCH AS ATTUR WAY BACK IN 1993. HOWEVER, THE ASSESSING OFFICER HAS NOT JUSTIFIED SAYING THAT THERE WAS NO APPRECIATION ON THE VALUE OF LAND ACQUIRED IN THE YEAR 1993 AND SOLD IN THE YEAR 2009. EI THER IN THE VILLAGE OR IN THE CITY, THERE WOULD BE SOME APPRECIATION ON THE VALUE OF THE PROPERTY OR ESPECIALLY FROM THE YEAR 2006 ONWARDS, THERE WAS APPRECIATION MORE THAN DOUBLE THE VALUE OF THE COST OF THE PROPERTY. FOR ASSESSING THE VALUE OF FURNITURE AS WELL AS OTHER EXPENSES SUCH AS BROKERAGE, ETC. ALSO THE ASSESSING OFFICER HAS I.T.A. NO . 2 962 & 2963 / M / 1 4 9 ESTIMATED THE VALUE WITHOUT ANY BASIS. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT TO ASSESS THE COST OF ACQUISITION OF LAND, THE ASSESSING OFFICER SHOULD REFER THE MATTE R TO THE VALUATION CELL TO ASSESS THE MARKET VALUE OF THE PROPERTY AND AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE, THE ISSUE MAY BE DECIDED IN ACCORDANCE WITH LAW. 8. SINCE FACTS ARE SIMILAR TO THAT OF ASSESSMENT YEAR 2009 - 10, WE ALSO SET AS IDE THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11 AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. 9 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 07 TH FEBRUARY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 07 . 0 2 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.