Rakesh Kumar Chauhan, Haldwani V. ITO- 3, Haldwani

ITA 3533/DEL/2011

• Counselvise Citation: 353320114 RSA 2011
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMARDR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Cost of acquisition; Reassessment proceedings
• Section: 50C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM ITA NO.3533/DEL/2011 ASSESSMENT YEAR:2007-08 RAKESH KUMAR CHAUHAN, 48/11, TAGORE COLONY, POLYSHEET, HALDWANI V/S . INCOME TAX OFFICER-3, HALDWANI [PAN : AGKPC 2523 L] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI K. SAMPATH, AR REVENUE BY SHRI B.R.R. KUMAR,DR DATE OF HEARING 23-01-2012 DATE OF PRONOUNCEMENT 17-02-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 13 TH JULY, 2011 BY THE ASSESSEE AGAINST AN ORDER DATED 31 ST MAY, 2011 OF THE LD. CIT(A)-II, DEHRADUN, RAISES T HE FOLLOWING GROUND:- I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ), ERRED IN CONFIRMING THE ADDITION OF ` ` 4,27,780/- AS SHORT TERM CAPITAL GAINS. II. THE APPELLANT SUBMITS AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS[CIT(A)] HAS WITHOUT GOING IN TO THE FACTS H AS SUSTAINED ADDITION UNDER THE HEAD SHORT TERM CAPITA L GAINS ` 4,27,780.00. 2. THE LD. CIT(A) HAS SUSTAINED THE ADDITION IN TE RMS OF SECTION 50C OF THE ACT, WHICH IS NOT APPLICABLE IN THE CASE. ITA N O.3533 /DEL./2011 2 3. THE LD. CIT(A) HAS SUSTAINED THE ADDITION BY NOT GOING IN TO THE FACTS OF THE CASE AND RELYING ON TH E VALUATION OF THE STAMP VALUATION OFFICER. 4. THAT THE ORDER IS BAD IN LAW, NOT IN AGREEMENT W ITH FACTS AND IS AGAINST THE PRINCIPLES OF NATURAL JUST ICE. III. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND, AND/OR TO MODIFY ANY GROUNDS OF APPEAL, IF NECESSAR Y. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE TH AT RETURN DECLARING INCOME OF ` ` 2,01,270/- FILED ON 31.10.2007 BY THE ASSESSEE, CAR RYING ON THE BUSINESS OF PESTICIDES, WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). SUBSEQUENTLY , AFTER RECORDING THE REASONS IN WRITING, THE ASSESSING OFFICER (A.O. IN SHORT) REOP ENED THE ASSESSMENT U/S 147 OF THE ACT WITH THE SERVICE OF THE NOTICE U/S 148 OF T HE ACT, ISSUED ON 01.08.2009. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE REFLECTED SHORT TERM CAPITAL GAINS OF 1,33 ,598/-ON SALE OF HOUSE AND LAND . THE SAID LAND ADMEASURING 371.74 SQ. MTS., W AS PURCHASED ON 4.3.2006 FOR A CONSIDERATION OF ` 6,82,000/- JOINTLY WITH HIS WIFE SMT. GEETA CHAUHA N. THE HOUSE CONSTRUCTED ON 182.85 SQ. MTS. WAS SOLD FOR A CONSIDERATION OF ` 20,00,000/ ON 5.9.2006 WHILE LAND ADMEASURING 188.85 SQ MTS. WAS SOLD FOR 4,16,000/-. WHILE DETERMINING SHORT TERM CAPITAL GAINS, TOTAL C OST OF ACQUISITION OF LAND AND HOUSE WAS TAKENBY THE ASSESSEE AT ` 21,48,804/- AND THE ASSESSEES 50% SHARE THEREIN WAS ADOPTED AT ` 10,74,402/-.HOWEVER, ON EXAMINATION OF DOCUMENTS ANNEXED WITH THE RETURN OF INCOME, THE AO FOUND THA T COST OF ACQUISITION AS ADOPTED BY THE ASSESSEE WAS INCORRECT. THE COPY OF SALE DEED REVEALED COST OF ACQUISITION AS DETAILED HEREUNDER:- COST OF ACQUISITION OF LAND AREA 371.74 SQ. MT. AS PER PURCHASE DEED INCLUDING STAMP DUTY & AVAS VIKAS SHULK: (600000+65640+16360): ` 6,82,000 COST OF CONSTRUCTION AS DETERMINED BY THE STAMP VALUATION OFFICER (AS PER SALE DEED): ` `5,24,000 TOTAL COST OF ACQUISITION OF THE PROPERTY: ` `12,06,000 ITA N O.3533 /DEL./2011 3 2.1 IN THE LIGHT AFORESAID FACTS, THE ACTUAL CO ST OF ACQUISITION (BEING 50% SHARE OF THE ASSESSEE IN THE CAPITAL ASSET) ACCORDING TO THE AO, WORKED OUT AT ` `6,03,000/- AS AGAINST ` `10,74,402/- CLAIMED BY THE ASSESSEE AND CONSEQUENT LY, SHORT TERM CAPITAL GAIN AMOUNTED TO ` ` 6,05,000/- AS AGAINST ` ` 1,33,598/- DECLARED BY THE ASSESSEE. AFTER EXAMINING THE DETAI LS OF WITHDRAWALS FROM THE BANK ACCOUNT, THE AO FURTHER FOUND THAT OUT OF WI THDRAWALS OF ` `8,66,245/- DURING THE PERIOD OF CONSTRUCTION, THE AMOUNT OF ` `2 LAC WAS UTILIZED TOWARDS PAYMENT OF UNSECURED LOAN TO SHRI SANJAY ON 7.7.200 6 AND ` `55,000/- WAS EXPENDED FOR REGISTRATION FEE RECEIVED FROM THE PUR CHASER ON 7 TH JUNE, 2006. ACCORDINGLY, THE AO CONCLUDED THAT TOTAL AMOUNT INV ESTED IN CONSTRUCTION OF BUILDING WORKED OUT TO ` ` 611,243/- [866245- (2,00,000+55,000)] AND THEREFORE , SHORT TERM CAPITAL GAIN ON SALE OF LAND AND HOUSE ,AMOUNTED TO ` 11,22,757(24,16,000-12,93,243). THE ASSESSEEES SHA RE THEREIN AMOUNTED TO ` 5,61,378,RESULTING IN ADDITION OF ` 4,27,780/-. 3. ON APPEAL, LEARNED CIT(A) UPHELD THE FINDINGS O F THE AO IN THE FOLLOWING TERMS: 4.2 IT IS SEEN THAT THE CAPITAL GAINS WORKED OUT BY THE ASSESSING OFFICER IS AS PER LAW, IN AS MUCH AS THE ASSESSING OFFICER HAS TAKEN THE VALUE AS DISCLOSED BEFORE THE STAMP VALUATION OFFICER. SINCE SEC. 50C OF THE ACT IS SP ECIFICALLY ON THIS ISSUE, IT IS HELD THAT THE ACTION OF LEARNED ASSESS ING OFFICER WAS JUSTIFIED AND THE SHORT TERM CAPITAL GAINS WORKED O UT ARE WITHIN THE FOUR CORNERS OF LAW. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LEARNED CIT(A). THE AR ON BEHALF OF THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD CORRECTLY REFLECTED SHORT TERM CAPITAL GAIN WHILE ADOPTING TOTAL COST OF CONSTRUCTION AT ` 21,48,804/- `. AS REGARDS INVOCATION OF PROVISIONS OF SECTION 50C OF THE ACT, THE LD. AR RELIED UPON THE DECISION IN ITO VS. VENU PROTEINS INDUSTRIES,4 ITR (TRIB.) 602 (AHD.) .ON THE OTHER H AND, LEARNED DR SUPPORTED THE FINDINGS OF LEARNED CIT(A) AND CONTENDED THAT COST OF ACQUISITION OF HOUSE WAS ADOPTED BY THE AO AT ` 6,11,243/- ON THE BASIS OF AMOUNT WITHDRAWN FROM T HE ITA N O.3533 /DEL./2011 4 BANK TOWARDS CONSTRUCTION AND THE LD. CIT(A) IN ORD ER TO SUPPORT THE SAID COST OF ACQUISITION, MERELY REFERRED TO THE PROVISIONS OF S ECTION 50C OF THE ACT AND THE COST OF CONSTRUCTION MENTIONED IN THE SALE DEED. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION RELIED UPON BY THE LD. AR. THE ONLY DISPUTE BEFORE US RELATES TO COST CONSTRUCTION OF HOUSE, SO LD BY THE ASSESSEE AND HIS WIFE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD REFLECTED 50% SHARE THEREIN. THERE IS NO DISPUTE EITHER OF SALE CONSIDE RATION OR COST OF ACQUISITION OF LAND.. ACCORDING TO THE ASSESSEE, TOTAL COST OF CON STRUCTION OF THE HOUSE AND COST OF LAND WAS ` 21,48,804/-.ON THE OTHER HAND, THE AO WHILE REFERR ING TO COST OF HOUSE AND LAND MENTIONED IN SALE DEED, DETERMINED THE COST OF CONSTRUCTION OF HOUSE AND COST OF LAND AT ` 12,93,243/- [6,82,000+6,11,243] ON THE BASIS OF WITHDRAWALS MADE BY THE ASSESSEE FROM HIS FROM THE BANK. THOUGH THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE ASSESSMEN T ORDER WAS NOT CLEAR AS REGARDS WHICH ENTRIES IN THE BANK ACCOUNT AGGREGATE D TO ` `6,11,243/- AND INVITED THE ATTENTION OF THE LD. CIT(A) TO THE CASH FLOW C HART AND THE DETAILS OF INVESTMENT IN THE SAID HOUSE AND THE DETAILS OF FURNISHINGS, SUBMITTED BEFORE THE AO, THE LD. CIT(A) WITHOUT RECORDING ANY FINDINGS ON THE SU BMISSIONS MADE BY THE ASSESSEE, UPHELD THE CONCLUSION OF THE AO WHILE REF ERRING TO PROVISIONS OF SEC. 50C OF THE ACT AND COST OF CONSTRUCTION OF ` 5,24,000/- MENTIONED IN THE SALE DEED EXECUTED ON 6.9.2006. THE LD. CIT(A) DID NOT RECOR D ANY FINDINGS ON THE SUBMISSIONS OF THE ASSESSEE THAT THE PROPERTY SOL D WAS A FURNISHED HOUSE EVEN WHEN DETAILS OF SUCH FURNISHINGS AND AMOUNT IN VESTED THEREIN, DO NOT FIND A MENTION IN THE SALE DEED NOR THE LD. CIT(A) ANALYS ED THE DETAILS OF WITHDRAWALS FROM THE BANK UTILIZED TOWARDS CONSTRUCTION OF THE HOUSE. A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FAC ETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI- JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOU LD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO T HE ISSUES/POINTS ITA N O.3533 /DEL./2011 5 RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MA TERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHIL E DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POIN TS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS A ND COMMUNICATION THEREOF BY THE QUASI-JUDICIAL AUTHORI TIES HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PRO CEDURE AND IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTR ANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. HONBLE JURISDICTIONAL HIG H COURT IN THEIR DECISION IN VODAFONE ESSAR LTD. VS. DRP,196 TAXMAN423(DELHI) HELD THAT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH A LIS, IT IS OBLIGATORY ON IT S PART TO ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS THE HEART AND SOUL O F THE MATTER AND FURTHER, THE SAME ALSO FACILITATES APPRECIATION WHEN THE ORDER I S CALLED IN QUESTION BEFORE THE SUPERIOR FORUM. WE MAY POINT OUT THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB,(1995)1SCC 760(SC)].AS ALREADY OBSERVED, THE IMPUGNED ORDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. C IT(A) HAVE NOT PASSED A SPEAKING ORDER ON VARIOUS ISSUES RAISED I N THE APPEAL BEFORE HIM, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FIL E FOR DECIDING THE ISSUE, AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWIN G SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY TH AT WHILE REDECIDING THE APPEAL, THE LD. CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISI ONS OF SEC. 250(6) OF THE ACT. WITH THESE OBSERVATIONS, GROUND NOS. I TO II(1 TO 4) IN THE APPEAL ARE DISPOSED OF. ITA N O.3533 /DEL./2011 6 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF RESIDUARY GROUND NO.III IN THE APPEAL, ACCORDINGLY, THIS GROU ND IS DISMISSED. 7. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEFO RE US. 8. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATIS TICAL PURPOSES. SD/- SD/- ( DIVA SINGH ) ( A.N. PAHUJA ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1. SHRI RAKESH KUMAR CHAUHAN,48/11, TAGORE COLONY, POLYSHEET, HALDWANI. 2. INCOME TAX OFFICER-3, HALDWANI. 3. CIT CONCERNED. 4. DR, ITAT,F BENCH, NEW DELHI 5. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT