Royal Bengal Industries Pvt. Ltd., Kolkata V. CIT, Kol-IV, Kolkata, Kolkata

ITA 374/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91899 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: V N DUTTA
• Section: 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN, AM ] I.T.A NO.374/KOL/2012 ASSESSMENT YEAR: 2007 - 08 ROYAL BENGAL INDUSTRIES PVT.LTD. VS. C.I.T. - IV, KOLKATA KOLKATA K OLKATA (APPELLANT) ( RESPONDENT) (PAN: AABCR 2484 D) FOR THE APPELLANT : SHRI V.N.DUTTA, ADVOCATE FOR THE RESPONDENT : SHRI RAVI JAIN, CIT (DR) DATE OF HEARING : 08.04 .2015. DATE OF PRONOUNCEMENT: 20.04.2015. ORDER PER SHRI B.P.JAIN, AM : THI S APPEAL OF THE ASSESSEE A RISES OUT OF THE ORDER OF LD.CIT - KOLKATA - IV , KOLKATA DATED 24.01.2012 FOR ASSESSMENT YEAR 2007 - 08 PASSED U/S 263 OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE NOTICE U/S 263 OF THE ACT IS WITHOUT JURISDICTION, OPPOSED TO REQUIREMENT OF LAW AND BAD IN LAW. 2. FOR THAT THE ORDER U/S 263 OF THE ACT IS AN ARBITRARY, OPPOSED TO REQUIREMENT OF LAW AND BAD IN LAW. 3. FOR THAT THE ORDER U/S 263 OF THE ACT IS NEITHER TENABLE IN LAW NOR IN FACTS. 4. FOR THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD, DELETE OR SUBSTITUTE ANY OTHER GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARISING FROM THE ORDER OF LD. COMMISSIONER OF INCOME TAX IV, KOLKATA REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : - THE BRI E F FACTS OF THE FIRST ISSUE THAT THE ASSESSEE WAS ALLOTTED TWO FLATS 2E & 2F AT SUNNY PA R K, KOLKATA - 700019 ON 06 - 10 - 2003 AND THE SAME WAS TRANSFERRED ON ' / 19 - 07 - 2006. T H E ASSESSEE THEREBY MADE A PROFIT OF RS. 10,40,000/ - . THIS RECEIPT WAS SHOWN IN T H E P&L A / C BUT WAS SUBSEQUENTLY REMOVED FROM THE COMPUTATION OF TAXABLE INCOM E . ON B EI NG CONFRONTED , T HE ASSESSEE SUBMITTED TO THE AO THAT THE DATE OF ALLOTN1 . EN T SH O ULD B E COUNTED FROM 22 - 0 4 - 2002 I . E. THE DATE ON WHICH POSSESSION OF TH E F L ATS WAS G I VE N TO THE ASSESSEE, THE AO AC C EPTED THIS SUBMISSION AND COMPUTED TH E INCOME AS A RI S ING FROM L T CG BUT DID NOT ALLOW INDEXATION . ON THIS ISSUE OF INDEXATION, ITA NO. 374/KOL/2012 ROYAL BENGAL INDUSTRIES PVT. LTD. A.YR. 2007 - 08 2 TH E A SS ESS EE IS IN APPEAL BEFORE TH E LD.CIT(A). IT WAS HOWEVER NOTICED ON INSPE CTI ON THA T ALL O TME NT OF THE FLATS BY T HE BUILDERS TO THE ASSESSEE WAS 06 - 10 - 2003 A N D NOT 22 - 0 4 - 2 002 AS CLAIMED BY THE ASSESSEE. THIS FACT WAS RECORDED (AT PAGE 2,A) IN THE MEMORA ND U M O F T HE PURCHASE AGREEMENT DAT ED 19 - 07 - 2006 WHEN THE ASSESSEE SOLD THE ALLOTME NT T O ONE MLS BILIENUM ADVISORY SERVICES PRIVATE LTD. _ 2.1 IT IS THE CASE OF THE ASSESSEE THAT IT HAD RECEIVED POSSESSION OF THE FLATS ON 22 - 04 - 2002 AND T HA T T HE TRANSFER OF THE PROPERTY SHOULD BE AFFE CTED FROM THE DATE OF POSSESSION AS P E R S ECT I ON 2(47 ) - OF THE I - T ACT . FOR THIS PURPOSE, IT PRODUCED A CONFIRMATION LE TT ER FR O M - T HE BUILDER M/ S TECHLEG DT. 20 - 02 - 2002 TO CONFIRM THAT THE PROPERTY WAS HANDED O V ER ON 22 - 04 - 2002. IT WAS ALSO STATED THAT AN ADVANCE OF RS. 11 LAKHS WAS P AID T O T HE BUILDER ON 20 - 04 - 2002 FOR THE SAID FLATS. AS ADVANCE OF RS. 11 LAKHS WAS P AID A ND AS THE PROPERTY WAS TAKEN OVER ON 22 - 04 - 2002, IT WAS SUBMITTED THA T PR O PE R T R ANSFER OF THE FLATS HAD TAKEN PLACE ON 22 - 04 - 2002 AND HE NCE THE RECEIPTS FR O M THE SAL E OF THE FLATS WAS A LTCG AND NOT STCG . IT WAS ACCORDINGLY SUBMITTED THA T THE P ROPOSED REVIEW OUGHT TO BE D R OPPED. 2.2. THE CONFIR M A T IO N O F M/S TECHLEG THE BUILDER IS DATED 20 - 04 - 2002 ON THIS DATE THE BUILDER STA TE S T H AT THE POSSESSION TO THE 2 FLATS WERE HANDED OVER TO THE ASSESSEE ON 2 2 - 04 - 20 02 I. E. A DATE IN THE FUTURE. THE ASSESSEE STATES THAT IT HAD PAID RS . 11 LAKHS TO THE BUI L D ER AS ADVANCE ON 20 - 02 - 2002 . HOWEVER, IN THE BALANCE SHEET AS ON 31 - .03 - 2003, TH E ADVANCE WAS RS. 9,00,371/ - AND ONLY RS. 6,00,000/ - WAS SHOWN TO BE AN ADVANCE TO THE BUILDER M/S TECHLEG . THE LETTER DATED 06 - 10 - 2003 ADDRESSED BY M/ S TEEHLEG TO THE ASSESSEE STATES THAT POSSESSION OF THE FLATS WERE HANDED OVER ON 22 - 04 - 2002 TO THE ASSESSEE AND THAT THE ASSESSEE HAD TO PAY THE STATUTORY OBLI G A TION O F PA YI NG CMC TAXES, MAINTENANCE CHARGES, ETC. THE ASSESSEE WAS THEREFORE ASKED TO PRODUCE PROOF OF SUCH PAYMENTS OF CMC TAXES, MAINTENANCE CHARGES, ETC. SO AS TO CONFIRM THE FAC T O F THE P OSSESSION OF THE FL ATS . THOUGH THE REQUIREMENT WAS SERVED O N . THE ASSESSEE T HE SAM E COULD NOT BE PRODUCED. F ROM THE ABOVE FACTS, THREE THINGS STANDS OUT. THE C ONFIR MA T ION LETTER OF THE BUILDER M J S TECHLEG CANNOT BE TAKEN AS GENUINE AND CO RRECT AS F LATS CANNOT BE CONFIR MED TO BE HANDED OVER ON 20 - 02 ~ 2002 IN A FUTURE DATE ON 22 - 04 - 2002. THE SUBMISSION THAT IT MAY BE A TYPING ERROR IS OVER SIMPLISTIC A N D TH EREFORE UNACCEPTABLE. SE C ONDLY, THE ADVANCE SHOWN IN THE BALANCE SHEET IS ONLY R S . 6 LAKHS AND NOT RS.11 LAKHS AS CL A IMED. THIS I NDICATES THAT THE FACTS ARE NO T FULLY C O RR E CT. L ASTLY, THE INAB I LI T Y OF THE ASSESSEE TO P RODUCE P ROOF OF PAYMENT O F CM C TAX ES, MA I N T ENANCE CH AR GES TO CMC/BUILDER/SOCIETY , OTHER OUT GOI N GS, ELEC TRICITY B IL LS, ETC. APPEARS T O CONFIRM THAT THE AS SESSEE HAD NOT TAKEN OVER POSSESSIO N OF TH E FL AT ON 22 - 04 - 20 0 2. THE ACTION OF T HE AO TAKING DECISIONS BAS ED ON WR O NG AND I NCORRECT FACTS, I S T HEREFORE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. B ASED ON FACTS ALONE , AL L T HE JUDICIAL RULINGS CITE D BY THE ASSESSEE WOULD NOT APP LY. A C C O R DING, THE ORDER OF T HE AO ON THIS ISSUE I S REVIEWED . THE AO SHOULD LOOK I NTO THE ISS UE AFRESH AND DECIDE THE SAME AS PER LAW. ITA NO. 374/KOL/2012 ROYAL BENGAL INDUSTRIES PVT. LTD. A.YR. 2007 - 08 3 4. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE POSSESSION WAS TAKEN ON 22.04.2 002 AND THEREFORE FOR CALCULATION OF CAPITAL GAINS THE DATE SHOULD BE TAKEN AS 22.04.2002 BEING THE DATE OF THE POSSESSION AS THE DATE OF PURCHASE. SINCE THE FLAT WAS TRANSFERRED ON 19.07.2006 THEREFORE THE LONG TERM CAPITAL GAIN ARISES AND THE AO HAS RIGH TLY WORKED OUT THE LONG TERM CAPITAL GAIN. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE CONFIRMATORY LETTER OF THE BUILDER M/S.TECHLEG PLACED IN THE PAPER BOOK AND PRAYED TO CANCEL THE ORDER OF LD.COMMISSIONER OF INCOME TAX PASSED U/S 263 OF THE ACT. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. C.I.T. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT ASSESSEE WAS ALLOTTED TWO FLATS 2E AND 2F AT SUNNY PARK, KOLKATA ON 06.10.2003 WHICH WAS TRANSFERRED ON 19.07.2006 THEREBY MAKING A PROFIT OF RS.10,40,000/ - . INITIALLY THE ASSESSEE DECLARED THE SAID PROFIT OF RS.10,40,000/ - IN THE PROFIT AND LOSS ACCOUNT BUT THE SAME WAS NOT TAKEN IN THE COMPUTATION OF TAXABLE I NCOME. THE ASSESSEE RELIED UPON THE CONFIRMATORY LETTER OF THE BUILDER M/S.TECHLEG WHICH IS DATED 20.02.2002 IN WHICH THE SAID BUILDER HAS STATED THAT THE POSSESSION OF THE SAID FLATS HAS BEEN HANDED OVER TO THE ASSESSEE ON 22.04.2002 I.E. THE DATE WHICH I S A FUTURE DATE. THEREFORE AT THE OUTSET THIS CONFIRMATORY LETTER PRODUCED BEFORE THE AO AND RELIED UPON BY THE AUTHORISED REPRESENTATIVE BEFORE US IS NOT AT ALL RELIABLE AND CANNOT BE GIVEN COGNIZANCE. SECONDLY THE ASSESSEE HAD STATED THAT IT HAD PAID RS. 11 LAKHS TO THE BUILDER ON 20.02.2002 WHE REAS IN THE BALANCE SHEET AS AT 31.03.2003 THE ADVANCE WAS RS.9,00,371/ - AND ONLY RS.6 LAKHS WERE SHOWN AS ADVANCE TO THE BUILDER M/S.TECHLEG. THE ASSESSEE WAS REQUIRED TO PAY CERTAIN STATUTORY OBLIGATIONS OF PAYIN G TAXES ETC AND NECESSARY PROOF FOR SUCH PAYMENTS OF TAXES ETC. WAS NOT PRODUCED BY THE ASSESSEE, WHO CONFIRMED THE FACT OF POSSESSION OF FLATS. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE THE LD. C.I.T. HAS RIGHTLY OBSERVED THAT ASSESSEE HAS NOT TAKEN THE POSSESSION OF THE F LAT ON 22.04.2002 AND THE ACTION OF THE AO TAKING THE DECISION IS BASED ON WRONG AND ITA NO. 374/KOL/2012 ROYAL BENGAL INDUSTRIES PVT. LTD. A.YR. 2007 - 08 4 INCORRECT FACTS WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT IN HOLDI NG THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH HAS RIGHTLY BEEN SENT TO THE AO TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT THE APPEA L OF THE ASSESSEE IS DISMISSED. O RDER PRONOUNCE D IN THE COURT ON 2 0.04.2015. SD/ - SD/ - [ MAHAVIR SINGH ] [ B.P.JAIN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . ROYAL BENGAL INDUSTRIES PVT.LTD., JUTHIKE APARTMENT, 11/1, SUNNY PARK , BALLYGUNJ PHARI, KOLKATA - 700019. 2 C.I.T. - KOLKATA - IV, KOLKATA. 3 . CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES