ITO WD 21(1)(1), MUMBAI V. DARSHANA M MEHTA, MUMBAI

ITA 3519/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1942 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Valuation report
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAJESH KUMAR, AM ITA NO. 3519 /MUM/201 3 (A.Y: 2007 - 08 ) ITO WD. 21 (1) (1), ROOM NO. 603, 6 TH FLOOR, C - 10, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), M UMBAI VS. SMT. DARSHANA. M. MEHTA C/O R.R. BANDEKAR & ASSOCIATES, B - 8, SAARTHAK, AAREY ROAD, GOREGAON (E), MUMBAI - 400063 PAN NO. AFYPM4260K APPELLANT .. RESPONDENT CO NO . 157 /MUM/201 4 ( IN ITA NO. 3519/MUM/2013 A.Y:2007 - 08) SMT. DARSHANA. M. MEHTA C/O R.R. BANDEKAR & ASSOCIATES, B - 8, SAARTHAK, AAREY ROAD, GOREGAON (E), MUMBAI - 400063 PAN NO. AFYPM4260K VS. ITO WD. 21 (1) (1), ROOM NO. 603, 6 TH FLOOR, C - 10, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI APPELLANT .. RESPONDENT REVENUE B Y .. SIVAJI GODE, SR. DR ASSESSEE BY .. M SUBRAMANIAN, AR DATE OF HEARING .. 08 - 11 - 2016 DATE OF PRONOUNCEMENT .. 08 - 1 1 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE REVENUE IS ARISING OU T OF THE ORDER OF CIT (A) - 32 , MUMBAI IN APPEAL NO . CIT (A) - 32/ITO 21(1)(1)/IT - 423/2011 - 12 DATED 25 - 02 - 13 . THE ASSESSMENT WAS FRAMED BY THE ITO - WARD 2 1 (1)( 1 ), MUMBAI FOR THE AY 20 07 - 08 VIDE ORDER DATED 2 9 - 12 - 201 1 UNDER SECTION 143(3) R. W. S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. THE F IRST ISSUE IN THIS APPEAL OF REVENUE IS AS REGARDS TO THE ORDER OF CIT (A) IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE LONG TERM CAPITAL GAIN/ LOSS AFTER TAKING MARKET VALUE OF FLAT AT THE RATE OF RS. 6,000 / - PER SQ. FT. . F OR THIS , R EVENUE HA S RAISED FOLLOWING GROUND NO. 1 : - ITA NO. 3519 / MUM/201 3 CO NO.157/MUM/2014 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING TO ASSESSEE LONG - TERM CAPITAL LOSS AT RS. 10,12,781/ AFTER ALLOWING COST OF ACQUISITION THEREBY ADMITTING ADDITIONAL EVIDENC E IN THE FORM OF VALUATION REPORT, IN CONTRAVENTION WITH RULE46 A OF THE I.T. RULES. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE WAS RESIDING IN ONE BUILDING, WHOSE OWNER ENTERED I NTO A DEVELOPMENT AGREEMENT WITH M/S ANKUR ENTERPRISES ON 30 - 08 - 2013. AS PER DEVELOPMENT AGREEMENT THE ASSESSEE GOT TWO FLATS BEARING NOS. 301 & 801 ADMEASURING 1336.25 SQ. FT. AND 18 83.75 SQ. FT RESPECTIVELY I N LIEU OF TENANCY RIGHT S OF THE TENANT ED PORTI ON OF ASSESSEE. A CCORDING TO ASSESSING OFFICER THE ASSESSEE HAS NOT OFFERED ANY CAPITAL GAIN ON SALE OF TENANCY RIGHT AND IN EXCHANGE GOT TWO FLATS F REE OF COST FROM THE DEVELOPER. A CCORDINGLY , HE ASSESSED THE SAME CONSIDERING THE FLAT NO. 301 /A AT RS. 1,0 0,00,000/ - AND TAKING THE COST OF ACQUISITION IN FY 2003 - 04 AT NIL AND COMPUTED THE LONG - TERM CAPITAL GAIN AT 1,00,00,000/. A GGRIEVED , THE ASSESSEE PREFERRED APPEAL BEFORE CIT (A). CIT (A) AFTER GOING THROUGH THE MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN T HE TENANT / DEVELOPER AND THE OWNER DATED 28 - 08 - 2003 AN D VALUATION REPORT DATED 26 - 12 - 2011 ESTIMATED THE C OST OF ACQUISITION OF TENANCY RIGHTS AT T HE RATE OF RS. 6,000 PER SQ. FT. F OR THIS HE OBSERVED IN PARA 3.7 AS UNDER : - 3.7 THE AC HAS NOT MADE ANY CO MMENTS ON THE VALUATION REPORT OF REGISTERED VALUER WHICH WAS SUBMITTED BY ASSESSEE BEFORE HIM ALSO BECAUSE HE ADOPTED THE COST OF ACQUISITION AS NIL AS PER THE VALUATION REPORT DATED 26/ 12/2011 .REGD. VALUER WHICH WAS SUBMITTED BEFORE THE AO ALSO THE MAR KET VALUE OF FLAT OF 1336. 25 SQ FT. AS ON AUG 2003 WAS VALUED AT RS. 80,17,500 @ 6000/SQ FT. IN ABSENCE OF ANYTHING CONTRARY IN THE ASSTT ORDER TO REBUT THE CORRECTNESS OF VALUATION REPORT, THE SAME APPEARS TO BE REASONABLE AND HENCE THE SAME ACCEPTED. TH E COST OF ACQUISITION IN FY 2003 - 04 FOR FLATS NO 301 OF 1336. 25 SQ. FT THEREFORE SHALL BE TAKEN AT RS 80,17, 500 AND ITS INDEXED COST WOULD COME TO RS. 89,87,219 (80 17, 500 X 519/463) WHICH IS REQUIRED TO BE DEDUCTED WHILE COMPUTING THE LONG TERM CAPITAL GAINS ON SALE OF THE SAID FLAT. ACCORDINGLY, THE LTCG WOULD COME TO RS. 10,12,78/ - (1,00,00,000 89,87,219). THE ASSESSING OFFICER IS THEREFORE DIRECTED TO ASSESSEE LTCG AT RS. 10,12,781 / - ONLY AFTER ALLOWING THE COST OF ACQUISITION AS DISCUSSED ABOVE. I N RESULT THIS GROUND IS PARTLY ALLOWED. ITA NO. 3519 / MUM/201 3 CO NO.157/MUM/2014 3 4. WHEN THE ABOVE FINDINGS WAS CONFRONTED TO LEARNED SENIOR DR HE COULD NOT POINT OUT AS TO WHY THE VALUE OF FLAT SURRENDER ED IN AUGUST 2003 BE NOT TAKEN AT THE RATE OF RS. 6,000 / - PER SQ. FT AS TAKEN BY CIT (A). IN VIE W OF THESE FACTS WE ARE OF THE VIEW THAT THE CIT (A) HAS RIGHTLY DIRECT ED ASSESSING OFFICER TO ASSESS THE LONG - TERM CAPITAL GAIN/LOSS. W E FIND NO INFIRMITY IN THE ORDER OF CIT (A) AND HENCE THE SAME IS CONFIRMED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT (A) DELETING THE ADDITION OF CASH DEPOSITS AMOUNTING TO RS. 5 , 24,694 / - MADE BY ASSESSING OFFICER U/S 68 OF THE ACT. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO.2 AS UNDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF R S. 5 , 24,694 / - U/S. 68 IGNORING THAT THE ASSESSEE OUGHT TO HAVE DECLARED CASH IN HAND IN THE RETURN O F INCOME IN FORM ITR 4 AS PER COLUMN 6(D) OF PART A - BS VIZ. THE AMOUNT OF CASH BALANCE IN CASE THE ASSESSEE IS NOT MAINTAIN REGULAR BOOKS OF ACCOUNTS. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT DURING THE SCRUTINY PROCEEDINGS FOR AY 2008 - 09 THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SO URCE OF CASH DEPOSIT IN TH E BANK ACCOUNT AND IN REPLY THERE TO , THE ASSESSEE EXPLAINED THAT THE SAME WAS OUT OF OPENING CASH BALANCE OF RS. 5,24,694/ - . ACCORDINGLY, THE CASE WAS REOPEN ED FOR AY 2007 - 08. THE ASSESSEE EXPLAINED THAT SHE HAS DECLARED COMMISSIO N INCOME TO THE EXTENT OF RS. 5 , 25,000 / - AND INCOME FROM OTHER SOURCE AT RS. 30,510/ - AND THE TOTAL INCOME OFFERED IS AT RS. 5 , 55,510 / - . IT WAS CLAIMED THAT THE OPENING BALANCE IS PART OF THE INCOME DECLARED IN THE AY 2007 - 08 AND THAT IS THE NET CLO SING CASH - IN - HAND AVAILABLE AT R S. 5,24,694/ - . THE CIT (A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING IN PARA 4.3 AS UNDER : - 4.3 . I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR AND PERUSED ASSESSMENT ORDER. THE ASSESSEE HAD GIVEN THE CASH SUMMARY SH OWING CASH IN HAND OF RS. 5,24,694/ - AS ON 31 - 03 - 2007. IN THE CASH SUMMARY THE RECEIPT OF CASH FROM TEACHING AND OTHER ACTIVITIES HAS BEEN SHOWN. ACCORDINGLY AFTER CONSIDERING THE OPENING BALANCE, RECEIPTS OF THE YEAR AND EXPENDITURE IN CASH, THE NET CLOSI NG CASH BALANCE OF RS. 5,24,694/ - HAS BEEN SHOWN. IN THE COMPUTATION OF INCOME THE ASSESSEE HAS SHOWN NET INCOME ITA NO. 3519 / MUM/201 3 CO NO.157/MUM/2014 4 FROM COMMISSION / TEACHING TO THE EXTENT OF RS. 5,25,000/ - AND INCOME FROM OTHER SOURCE AT RS. 30,510/ - . THUS THE TOTAL INCOME OFFERED BY THE ASSESSEE IS RS. 5,55,510/ - WHICH HAS BEEN STATED TO BE EARNED IN CASH ONLY. SINCE THIS CASH INCOME OFFERED BY THE ASSESSEE IN COMPUTATION OF INCOME IS MUCH MORE THAN THE CASH RECEIPTS CONSIDERED IN THE CASH SUMMARY, HENCE THE CASH BALANCE OF RS 5,24,694 AR RIVED AT THE END OF YEAR CANNOT BE DOUBTED OR SAID TO BE UNEXPLAINED MERELY I, DUE FACT THAT THE SAID CASH BALANCE WAS NOT MENTIONED IN RETURN THE GLOSS RECEIPTS OF THE ASSESSEE ARE LESS THAN 10 LACS AND HENCE SHE IS NOT COMPELLED UNDER LAW TO MAINTAIN TH E REGULAR BOOKS, OF ACCOUNTS, DRAW BALANCE SHEET ETC, SINCE THE ASSESSEE IS NOT MAKING THE BALANCE SHEET THE AO FAILED 'TO APPRECIATE THAT THERE IS NO SPECIFIED PLACE IN RETURN WHERE SUCH CASH IN HAND COULD BE MENTIONED BY THE ASSESSEE IN THE RETURN WITHOU T FILING THE BALANCE SHEET FROM THE EXPLANATIONS AND THE DETAILS FILED BY THE APPELLANT IT IS CLEAR THAT THE CASH IN HAND OF RS. 5,24,694/WAS AVAILABLE WITH THE ASSESSEE AS ON 31.3.2007 AND - THE ADDITION MADE BY AO REJECTING THE CASH SUMMARY IS WITHOUT ANY REASONABLE BASIS. ACCORDINGLY, THE ADDITION OF RS 5, 24,694 / - MADE BY AO IS DIRECTED TO BE DELETED. 7. WE FIND FROM THE ABOVE FINDINGS OF CIT (A) THAT THE ASSESSEE IS ABLE TO EXPLAIN THE OPENING CASH - IN - HAND BY WAY OF COMMISSION INCOME DECLARE D AND INCOME F ROM OTHER SOURCES WHICH ARE MORE THAN THE AVAILABILITY OF CASH WITH HIM. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE IS ABLE TO EXPLAIN THE OPENING CA SH. WE FIND NO INFIRMITY OF THE ORDER OF CIT (A) AND HENCE THE SAME IS CONFORMED. THIS ISSUE OF REVE NUES APPEAL IS DISMISSED. 8. COMING TO CO NO. 157 OF 2014 OF THE ASSESSEE, SINCE R EVENUE S APPEAL IS DISMISSED ON MERITS, THE CO RAISED BY THE ASSESSEE WHICH IS ON JURISDICTION NEED NO ADJUDICATION FOR THE REASON THAT THE ASSESSEES COUNSEL STATED THAT HE IS NOT INTERESTED IN PROSECUTING THE CO. H ENCE , THE SAME IS DISMISSED AS NOT PRESSED . ACCORDINGLY, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE AND THE CROSS OBJECTION OF THE ASSE SSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 - 1 1 - 2016 . SD/ SD/ (RAJESH KUMAR) (MAHAVIR SINGH) ACCONTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 08 - 11 - 2016 SUDIP SARKAR/SR.PS ITA NO. 3519 / MUM/201 3 CO NO.157/MUM/2014 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELL ANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//