ITO, UDAIPUR V. Shri Basantilal Mehta, UDAIPUR

ITA 380/JODH/2013

• Counselvise Citation: 38023314 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition; Valuation report; Bonafide mistake
• Section: 50C; 54F; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 380 / JU/ 20 1 3 ASSESSMENT YEAR: 200 7 - 0 8 THE INCOME - TAX OFFICER VS. SHRI BASANTI LAL M EHTA WARD - 1(2) 44 - 45, AMRITH NAGAR UDAIPUR BEDLA ROAD, UDAIPUR PAN NO. A CYPM3423 D (APPELLANT) (RESPONDENT) A SSESSEE B Y : NONE DEPARTMENT B Y : SHRI N.A. JOSHI , DR DATE OF H EARING : 1 5 . 0 7 .201 4 DATE OF PRONOUNCEMENT : 18 . 0 7 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH IS APPEAL BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT (A) , UDAIPUR DATED 2 8 . 0 3 .20 1 3 PERTAINING TO A.Y 200 7 - 20 0 8 . 2 2. DESPITE BEING SOUGHT TO BE SERVED THROUGH THE DEPARTME NT MANY A TIMES, NO ONE CAME TO REPRESENT THE CASE OF THE ASSESSEE - RESPONDENT. THEREFORE, TO CURTAIL DELAY AND IN THE INTEREST OF JUSTICE, THIS APPEAL WAS HEARD EXPARTE QUA THE ASSESSEE. 3. THE SOLE GROUND RAISED IN THIS APPEAL BY THE REVENUE IS AGAINST THE DELETI O N OF ADDITION OF RS. 1 3 , 9 0, 5 4 0/ - MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN [LTCG] . 4 . THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AS INDIVIDUAL, DERIVED INCOME FROM PENSION AND OTHER SOURCES. HE FILED HIS RETURN OF INCOME [ROI] FOR A.Y. 2007 - 08 ON 31.07.2007 DECLARING TOTAL INCOME OF RS. 1,72,753/ - . DURING ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD SOLD RESIDENTIAL HOUSE SITUATED AT 6 - A, ALKAPURI, UDAIPUR FOR A TOTAL CONSIDERATION OF RS. 4 LAKHS. THE LTCG ARISING HAS BEEN C LAIMED AS EXEMPT FROM CAPITAL GAIN TAX U/S 54F OF THE INCOME - TAX ACT, 1961 ['THE ACT', FOR SHORT]. AS PER THE COMPUTATION OF CAPITAL GAIN GIVEN BY THE ASSESSEE, LTCG HAS WORKED OUT AT RS. 36,04,350/ - WHICH HAS BEEN CLAIMED TO HAVE BEEN INVESTED IN PURCHAS E OF A NEW HOUSE FOR RS. 40,90,000/ - . THE A.O. INITIATED VERIFICATION OF THE CORRECTNESS OF 3 THE SALE CONSIDERATION AND COST OF ACQUISITION AS DECLARED BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 50C R.W.S 48 OF THE ACT. AFTER GOING THROUGH THE PURCH ASE DEED/SALE DEED OF THE OLD AND NEW PROPERTY AT 44 - 45, AMRITH NAGAR, UDAIPUR ALONGWITH PROOF OF PAYMENT OF BROKERAGE, ETC., THE A.O., BEING NOT SATISFIED, OBTAINED A CERTIFIED COPY OF THE SALE DEED OF THE PROPERTY FROM THE SUB - REGISTRARS OFFICE U/S 133( 6) OF THE ACT. HE FOUND THAT THE PROPERTY HAD BEEN VALUED AT RS. 59,43,355/ - . THEREFORE, THE A.O. PROCEEDED TO ADOPT THE SALE CONSIDERATION OF THE PROPERTY AT RS. 59,43,355/ - AS AGAINST RS. 45 LAKHS SHOWN BY THE ASSESSEE. HE ALSO PROPOSED TO DISALLOW TH E COST OF IMPROVEMENT IN THE NEW HOUSE CLAIMED AT RS. 6 LAKHS. THE ASSESSEE WAS ALSO REQUIRED TO PROVE THE RENOVATION OF THE HOUSE AND ALSO PRODUCE THE BROKER TO WHOM BROKERAGE OF RS. 32,000/ - WAS PAID FOR PURCH A SE OF NEW HOUSE. IN COMPLIANCE, THE ASSESS EE SUBMITTED THAT DUE TO BONAFIDE MISTAKE, HE DID NOT TAKE THE VALUE OF THE PROPERTY AS ASSESSED BY THE REGISTERING AUTHORITY AS SALE CONSIDERATION AND HENCE RECALCULATED THE CAPITAL GAIN BY ADOPTING THE SALE CONSIDERATION AT RS. 59,43,355/ - ARRIVING AT NI L TAXABLE CAPITAL GAIN. HE FOUND THAT THE ASSESSEE HAS CLAIMED THE COST OF ACQUISITION OF THE PROPERTY AT RS. 18,86,522/ - AS AGAINST COST OF ACQUISITION OF THE PROPERTY BEING AT RS. 8,50,649/ - . THE ABOVE EXERCISE RESULTED IN AN ADDITION OF RS. 4 13,90,540/ - [RS. 54,80,540 MINUS RS. 40,90,000/ - ]. HENCE BEING AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CIT(A) HAS FOUND FAVOUR WITH THE ASSESSEE BY DELETING THE ENTIRE ADDITION. 5. THE LD. CIT(A) HAS DIRECTED THE A.O. TO TAKE THE COST OF ACQUISITION AT RS . 18,86,522/ - AND RECALCULATE THE LTCG AS PER LAW. AGAINST THIS ACTION OF THE LD. CIT(A), THE REVENUE IS IN APPEAL. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. D.R. AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. THE LD. D.R. HAS MAINTAINED SA ME AND SIMILAR ARGUMENTS WHICH ARE IN FACT, THE REASONS GIVEN BY THE A.O. FOR MAKING ADDITION. FOR READY REFERENCE, WE INCORPORATE PARA 2.3 ONWARDS OF THE LD. CIT(A)S ORDER WHICH WILL GIVE A BIRDS EYE VIEW OF RELEVANT FACTS AND REASONS FOR MAKING THE IM PUGNED DELETION: 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, FINDINGS OF THE ID. A.O. GIVEN IN THE ASSESSMENT ORDER UNDER APPEAL, REMAND REPORT OF THE ID. A.O. ON ADDITIONAL EVIDENCE AND REPLY ON THE REMAND REPORT F ILED BY THE APPELLANT. FROM THE REMAND REPORT OF THE ID. A.O. IT IS SEEN THAT HE HAS NOT OBJECTED THE ADMISSION OF THE ADDITIONAL EVIDENCE 5 FILED DURING THE APPELLATE PROCEEDINGS. BUT HE POINTED OUT SOME TECHNICAL DEFECTS IN THE ADDITIONAL EVIDENCE FILED. AS THE ADDITION AL EVIDENCE FILED IN THE FORM OF VALUER'S REPORT IS RELEVANT FOR A JUDICIAL DECISION OF THE APPEAL, THE ADDITIONAL EVIDENCES FILED ARE ADMITTED AND THE ISSUES ARE DECIDED ON MERIT AND AS PER THE PROVISIONS OF THE ACT. AS PER THE ASSESSMENT ORDER, THERE IS NO DISPUTE ABOUT THE ADOPTION OF SALE CONSIDERATION OF THE PROPERTY AT RS.59,43,355 / - AS ADOPTED BY TH E SUB - REGISTRAR. THE ONLY DISPUTE IS REGARDING THE INDEXATION OF THE SOLD PROPERTY FOR DETERMINATION OF LTCG. AS PER THE ASSESSMENT ORDER, THE APPELLANT PURCHASED THE PLOT SOLD IN 1973 FOR RS.8,000 AND MADE CONSTRUCTION AT 2100 SQ FT AREA IN THE SAID PLOT IN THE YEAR 1975. WHILE FILING THE RETURN, THE APPELLANT CALCULATED THE LTCG AFTER INDEXING THE VALUE OF THE PLOT AS PURCHASED AND TAKING THE INVESTMENT IN THE CONSTRUCTION MADE IN THE YEAR 1973. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BEFORE THE ID. A.O. THAT THE PREVIOUS COUNSEL OF THE APPELLANT HAS COMMITTED A MISTAKE IN NOT INDEXING THE COST OF ACQUISITION OF THE PROPERTY FOR CALC ULATION OF LTCG AFTER TAKING THE VALUE OF THE PROPERTY AS ON 1.4.1981. THIS OPTION IS AVAILABLE TO THE APPELLANT AS P ER THE PROVISIONS OF SECTION 55(2) OF THE ACT. S INCE IT WAS A MISTAKE OCCURRED UNINTENTIONALLY, THE APPELLANT MAY BE ALLOWED TO INDEX COST OF ACQUISITION AS ON 1.4.1981 AS PROVIDED UNDER THE 6 LAW. FURTHER, THE COST OF CONSTRUCTION MADE IN THE YEAR 1980 WAS ALSO NOT TAKEN INTO CONSIDERATION WHILE CALCULATING THE COST OF ACQUISITION FILED AT THE TIME OF FILING THE RETURN. THE APPELLANT FILED VALUATION REPORT OF THE SAID PROPERTY ACCORDING TO WHICH THE VALUE OF THE PROPERTY CONSTRUCTED HAS BEEN ESTIMATED AT RS.2,40,090/ - AS ON 1.4.1981. SIMILARLY, THE APPELLANT HAS ALSO TAKEN THE VALUE OF THE PLOT AT RS.40,000/ - AS ON 1.4.1981 . IN SUPPORT OF T HIS, THE APPELLANT HAS FILED A SALE DEED OF THE ADJACENT PLOT OF THE APPELLANT HAVING SAME MEASUREMENT WHICH HAS BEEN SOLD IN THE YEAR 1981 FOR RS.40,000/ - . FURTHER, THE APPELLANT HAS ALSO CLAIMED AN INVESTMENT OF RS.2,03,500/ - MADE ON ACCOUNT OF IMPROVEME NT IN 1994 IN SUPPORT OF WHICH THE APPELLANT HAS FILED COPY OF VALUATION REPORT DATED 28.11.2009 ACCORDING TO WHICH THE TOTAL COST OF IMPROVEMENT WORK HAS BEEN ESTIMATED AT RS.2,05,833/ - . FROM ABOVE, IT MAY BE SEEN THAT THE APPELLANT HAS TAKEN THE COST OF ACQUISITION OF THE PROPERTY SOLD BY TAKING THE VALUE OF INVESTMENT AS ON 1.4.1981 AS PER THE PROVISIONS OF SECTION 55(2) OF THE ACT. AS PER THIS PROVISION, THE APPELLANT HAS AN OPTION TO ADOPT THE VALUE OF THE PROPERTY AS ON 1.4.1981 IN RESPECT OF THE PRO PERTY ACQUIRED BEFORE 1.4.1981. ON THIS BASIS, THE APPELLANT HAS TAKEN THE COST OF ACQUISITION OF THE PROPERTY SOLD FOR THE PURPOSE OF CALCULATION OF LTCG AS UNDER: 7 COST OF ACQU I SITION A) LAND PURCHASE ON 1973 FOR RS.8000 VALUE TAKEN AS ON 1.4.1981 IN VI EW OF SECTION 55(2) OF THE ACT. RS.40,000 (SUPPORTED BY SALE DEED OF ADJACENT PLOT SOLD IN 1981) INDEX COST 40,000/100X519 RS.02,07,600 B) CONSTRUCTION ON PLOT ON PLOT IN 1975 & IN 1980 VALUE TAKEN AS ON 1.4.1981 IN VIEW OF SECTION 55(2) OF THE ACT. RS.240090 INDEX COST 240090/100X510 RS.12,46,067 C) COST OF IMPROVEMENT IN 1994 - 95 RS.203,500 SUPPORTED BY VALUER'S REPORT DATED 28.11.2009. INDEX COST RS.203500/244/519 RS.04,32,855 COST OF ACQUISITION RS.18,86,522 HOWEVER, THE ID. A.O. DID NOT ALLOW THE CLAIM OF THE APPELLANT FOR TAKING THE VALUE OF THE PROPERTY AS ON 1.4.1981 MERELY FOR THE REASON THAT THE APPEL LANT DID NOT CLAIM SUCH INDEXATION WHILE RILING THE RETURN AND THE REVISION CAN BE MADE ONLY FOR THE REASONS GIVEN IN THE PROVISION OF SECTION 139(5) AND ALSO ONLY THOSE CASE WHERE THE RETURN HAS BEEN FILED IN TIME. THIS CAN ONLY BE DONE WITHIN ONE YEAR OF FILING THE ORIGINAL RETURN. IN MY VIEW, THE PLEA OF THE A. O FOR NOT ALLOWING THE APPELLANT FOR INDEXATION BY TAKING THE OPTION PROVIDED U /S 55(2) IS NOT 8 TENABLE BECAUSE APPARENTLY, THERE IS A MISTAKE IN CALCULATING THE COST OF ACQUISITION AS POINTED ABOVE . THE APPELLANT HAS GIVEN AN ACCEPTABLE EXPLANATION FOR NOT AVAILING THE OPTION AS PROVIDED UNDER SECTION 55(2) OF THE ACT AT THE TIME OF CALCULATING THE CAPITAL GAIN ON SALE OF THE PROPERTY WHILE FILING THE RETURN, THE APPELLANT CANNOT BE DENIED THE BENEF IT PROVIDED UNDER THE LAW MERELY ON THE GROUND SUCH OPTION HAS NOT BEEN EXERCISED AT THE TIME OF FILING THE RETURN. FURTHER, THE A.O. HAS NOT CONTROVERTED THE VALUATION REPORT FILED BY THE APPELLANT FOR COST OF CONSTRUCTION OF THE PROPERTY AND RENOVATION O F THE PROPERTY IN THE YEAR 1994 - 95 EXCEPT SOME TECHNICAL DEFECTS LIKE, THE VALUER HAS NOT VISITED THE PROPERTY ETC. IT IS ALSO NOT A CASE OF THE ID. A.O. THAT THERE IS SOME EVIDENCE ON RECORD TO SUGGEST THAT THE VALUE ESTIMATED BY THE VALUER OF THE APPELLA NT IS ON THE HIGHER SIDE. IT IS ALSO NOT A CASE OF THE ID. A.O. THAT THE APPELLANT HAS NOT CARRIED OUT ANY IMPROVEMENT WORK ON THE PROPERTY M THE YEAR 1994 - 95 AT THE TIME OF THE MARRIAGE OF FIRST SON OF THE APPELLANT. I N VIEW OF ABOVE DISCUSSIONS, THE A.O . IS DIRECTED TO TAKE THE COST OF ACQUISITION AT RS. 18,86,522 AND RE CALCULATE THE LONG TERM CAPITAL GAIN AS PER THE LAW. THUS ALL THE GROUNDS OF APPEAL ARE ALLOWED. 9 7. AFTER CONSIDERING THE ABOVE REASONS VIS A VIS THE REASONS GIVEN BY THE A.O. IN THE ASSESSMENT ORDER, WE ARE IN AGREEMENT WITH THE FINDING OF THE LD. CIT(A) WHO HAS GIVEN DETAILED REASONING FOR ARISING AT HIS CONCL U SION. WE ARE ALSO OF THE CONSIDERED VIEW THAT MERELY BECAUSE THE OPTION OF SECTION 55(2) OF THE ACT HAVING NOT BEEN AVAILED OF BY THE ASSESSEE AT THE TIME OF FILING OF THE RETURN, PARTICULARLY WHEN THE IMPUGNED BENEFIT IS AVAILABLE TO THE ASSESSEE. THE DEPARTMENT HAS NOT CONTROVERTED OR DENIED THE VALUATION REPORT FILED BY THE ASSESSEE DETAILING THE COST OF CONSTRUCTION OF THE PROPERTY AND RENOVATION DURING A.Y. 1994 - 95 EXCEPT FOR SOME TECHNICAL DEFECTS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE FINDING GIVEN BY THE LD. CIT(A) AND CONFIRM THE SAME. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED . ORDER PR ON OUNCED IN THE COURT ON 18 TH JULY , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 18 TH JULY , 201 4 10 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR