SHRI ASHOK KUMAR DUSAD, JAIPUR V. INCOME TAX OFFICER, WARD-7-2, JAIPUR

ITA 383/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9623 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 19-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Corroborative evidences; Valuation report; Reassessment proceedings
• Section: 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 383/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 SH. ASHOK KUMAR DUSAD 36, PRAHLAD COLONY, AIRPORT CIRCLE, TONK ROAD, JAIPUR CUKE VS. THE ITO, WARD 7(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAYPD6823G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 06/07/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 07/07/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 3, JAIPUR DATED 08.02.2019 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF INDEXED COST OF IMPROVEMENT OF RS. 4,18,500/- CLAIMED BY THE ASSESSEE ON SALE OF PLOT, THEREBY COMPUTING THE LONG TERM CAPITAL GAIN AT RS. 4,17,235/- AS AGAINST LONG TERM CAPITAL LOSS OF RS. 1,265/- COMPUTED BY THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT AGREEMENT WITH CONTRACTOR AND HIS AFFIDAVIT IN RESP ECT OF EXPENDITURE INCURRED ON COST OF IMPROVEMENT LOOKS AN AFTERTHOUG HT STORY WITHOUT ANY MATERIAL & BASIS. 2. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 09.07.2010 DECLARING TOTAL INCOME OF ITA NO. 383/JP/2019 SH. ASHOK KUMAR DUSAD, JAIPUR VS. THE ITO, WARD 7( 2), JAIPUR 2 RS.2,05,580/-. THEREAFTER, THE AO ISSUED NOTICE U/S 148 ON 27.03.2017 FOR THE REASON THAT ASSESSEE HAS SOLD A PLOT FOR RS.9 L ACS BUT THE SAME IS NOT DECLARED IN THE RETURN. IN RESPONSE TO NOTICE U/S 1 48, THE ASSESSEE AGAIN FILED THE RETURN DECLARING SAME INCOME OF RS.2,05,5 80/-. IN COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED TH AT HE HAS SOLD A PLOT SITUATED AT PLOT NO.10, BAJRANG NAGAR, VILLAGE- CHA GETOR, TEHSIL-SANGANER, DISTRICT JAIPUR MEASURING 133.33 SQ. YD. FOR CONSID ERATION OF RS.9 LACS TO SH. SHYAM SINGH TANWAR AND SHOBHA TANWAR VIDE SALE DEED DT. 18.01.2010. HE PURCHASED THIS PLOT MEASURING 200 SQ. YD. ON 21.05. 2004 FOR RS.5,50,000/-. THUS, THE CORRESPONDING COST OF PLOT SOLD IS RS.3,6 6,657/-. THEREAFTER, HE CONSTRUCTED A BASEMENT ON THE SAID PLOT BEFORE SALE ON WHICH EXPENDITURE OF RS.4,18,500/- WAS INCURRED. IN SUPPORT OF THE SAME, ASSESSEE FILED THE AGREEMENT DT. 30.04.2009 WITH THE CONTRACTOR SH. MA NGALRAM KUMAWAT AND HIS AFFIDAVIT DT. 23.10.2017 TO THE AO. THUS, ON SA LE OF PLOT AFTER CONSIDERING THE INDEXATION, THERE WAS LONG TERM CAPITAL LOSS OF RS.1,265/-. 3. IT WAS SUBMITTED THAT THE AO ALLOWED THE INDEXED COST OF ACQUISITION OF PLOT AT RS.4,82,765/- (3,66,657*632/480) BUT NOT AL LOWED THE CLAIM OF COST OF IMPROVEMENT OF RS.4,18,500/- FOR THE REASON THAT NO SUPPORTING BILLS/ VOUCHERS IN SUPPORT OF THE SAME WERE PRODUCED BY AS SESSEE. THE CONTRACT NOTE AND AFFIDAVIT PRODUCED BY ASSESSEE IS ALSO WIT HOUT ANY SUPPORTING EVIDENCES. IT IS AN AFTERTHOUGHT STORY MADE BY THE ASSESSEE TO AVOID PAYMENT OF TAXES. ACCORDINGLY, HE DISALLOWED COST O F IMPROVEMENT OF RS.4,18,500/- AND COMPUTED LONG TERM CAPITAL GAIN A T RS.4,17,235/-. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO AN D AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIB UNAL. 4. THE LD AR SUBMITTED THAT FROM THE FACTS STATED A BOVE, IT CAN BE NOTED THAT THE ONLY DISPUTE IN THE PRESENT CASE IS THE AL LOWABILITY OF EXPENDITURE OF ITA NO. 383/JP/2019 SH. ASHOK KUMAR DUSAD, JAIPUR VS. THE ITO, WARD 7( 2), JAIPUR 3 RS.4,18,500/- INCURRED ON CONSTRUCTION OF BASEMENT ON THE SAID PLOT. THE FACT THAT AT THE TIME OF SALE, THERE WAS CONSTRUCTION OF 900 SQ. FT. IS EVIDENT FROM THE SALE DEED AND THE SITE PLAN ATTACHED WITH THE S ALE DEED. AT THE TIME OF PURCHASE OF THIS PLOT, THERE WAS NO CONSTRUCTION AS IS EVIDENT FROM THE PURCHASE AGREEMENT. THUS, THE FACT OF CONSTRUCTION AT THE TIME OF SALE IS EVIDENT AGAINST WHICH NO CONTRARY MATERIAL IS BROUG HT ON RECORD BY THE LOWER AUTHORITIES. THE ISSUE THEREFORE REMAINS IS WHAT I S THE COST OF CONSTRUCTION. IN SUPPORT OF THE SAME, ASSESSEE HAS FILED AN AGREE MENT DT. 30.04.2009 WITH CONTRACTOR MANGALRAM KUMAWAT ALONG WITH HIS AFFIDAV IT DT. 23.10.2017 WHERE IT IS MENTIONED THAT ASSESSEE HAS GIVEN THE CONTRAC T TO SH. MANGALRAM KUMAWAT FOR CONSTRUCTION ON SAID PLOT @ RS.465/- PE R SQ. FT. THUS, COST INCURRED AT RS.4,18,500/- (900 SQ. FT. * RS.465 PER SQ. FT.) IS REASONABLE. THE LOWER AUTHORITIES HAVE NOT ACCEPTED THESE DOCUMENTS BY HOLDING THAT NO SUPPORTING BILLS/ VOUCHERS IN SUPPORT OF THE SAME W ERE PRODUCED BY ASSESSEE. HOWEVER, THE FACT OF CONSTRUCTION IS NOT DENIED. FURTHER, WHEN ASSESSEE HAS FILED THE AGREEMENT AND ALSO THE AFFID AVIT OF SH. MANGALRAM KUMAWAT, THE SAME CANNOT BE BRUSHED ASIDE WITHOUT B RINGING ANY CONTRARY MATERIAL ON RECORD. HONBLE SUPREME COURT IN CASE O F MEHTA PARIKH & CO. VS. CIT 30 ITR 181 HAS HELD THAT THE REJECTION OF AFFID AVIT FILED BY ASSESSEE IS NOT JUSTIFIED UNLESS THE DEPONENT HAS EITHER BEEN DISCR EDITED IN CROSS EXAMINATION OR HAS FAILED TO PRODUCE OTHER SUPPORTI NG EVIDENCE WHEN CALLED UPON TO DO SO. IN THE PRESENT CASE NEITHER SH. MANG ALRAM KUMAWAT WAS REQUIRED TO BE PRODUCED NOR THE FACT OF CONSTRUCTIO N WAS DENIED BY THE AO. THEREFORE, SIMPLY PRESUMING THAT THE DOCUMENT FILED BY THE ASSESSEE IS AN AFTERTHOUGHT STORY IS ON SURMISES & CONJECTURES. IN VIEW OF ABOVE, THE LD AO BE DIRECTED TO ALLOW THE CLAIM OF COST OF IMPROVEME NT AT RS.4,18,500/- AND CONSEQUENTLY DELETE THE ADDITION OF RS.4,17,235/- M ADE BY HIM IN COMPUTING THE LONG TERM CAPITAL GAIN. ITA NO. 383/JP/2019 SH. ASHOK KUMAR DUSAD, JAIPUR VS. THE ITO, WARD 7( 2), JAIPUR 4 5. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND SUBMITTED THAT THE DOCUMENTS SUBMITTED BY THE ASSES SEE IN SUPPORT OF COST OF IMPROVEMENT HAS RIGHTLY BEEN REJECTED BY THE LD. AO AND THE LD CIT(A). IT WAS SUBMITTED THAT THE CONTRACT NOTE SIGNED BY THE CONTRACTOR IS NOT A LEGAL DOCUMENT, THERE IS NO PROOF THAT THE CONSTRUCTION H AS BEEN ACTUALLY CARRIED OUT AND AT WHICH PART OF THE PLOT SINCE ONLY A PART OF THE PLOT HAS BEEN SOLD, THERE IS NO PROOF OF PAYMENT TO THE CONTRACTOR AND THERE IS NO VALUATION REPORT WHICH HAS BEEN SUBMITTED IN SUPPORT OF COST OF CONSTRUCTION/IMPROVEMENT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE OWNS A PLOT OF LA ND MEASURING 200 SQ YARDS AND A PART OF THE SAID PLOT MEASURING 133.33 SQ YARDS, HAS BEEN SOLD DURING THE YEAR. ON PERUSAL OF THE SALE DEED SO EX ECUTED BY THE ASSESSEE, THE DESCRIPTION OF THE PROPERTY SOLD IS SHOWN AS RE SIDENTIAL PLOT NO. 10 PLOT NO.10, BAJRANG NAGAR, VILLAGE- CHA GETOR, TEHSIL-SA NGANER, DISTRICT JAIPUR AND EVEN THE SITE PLAN ATTACHED WITH THE SALE DEED DEPICTS THE PLOT OF LAND AND DOESNT SHOW ANY CONSTRUCTED AREA THEREON. AT THE SAME TIME, THERE IS AVERMENT TOWARDS THE END OF THE SAID SALE DEED THAT IN THE PLOT SO SOLD, THERE IS CONSTRUCTED AREA OF 900 SQ FEET. WE THERE FORE FIND INCONSISTENCY IN THE SALE DEED SO EXECUTED SO FAR AS THE EXACT DESCR IPTION OF THE PROPERTY IS CONCERNED. SECONDLY, WHERE CONSTRUCTED AREA OF 900 SQ FEET CONSTITUTED 75% OF PLOT OF LAND MEASURING 133.33 SQ YARDS EQUIV ALENT TO 1200 SQ FEET SO SOLD, IT IS UNCLEAR WHY THE DESCRIPTION OF THE PROP ERTY HAS BEEN SHOWN IN THE SALE DEED AS PLOT OF LAND ONLY AND NOT AS A PLOT OF LAND WITH CONSTRUCTION THEREON. FURTHER, THERE IS NOTHING ON RECORD IN TER MS OF BUYERS CONFIRMATION/AFFIDAVIT OR PHOTOGRAPHS OF THE PROPER TY AT THE TIME OF SALE WHICH CAN CORROBORATE THAT WHAT HAS BEEN PURCHASED/ SOLD IS NOT JUST A PLOT OF LAND BUT A PLOT OF LAND ALONG WITH CONSTRUCTION THEREON. THEREFORE, THE ITA NO. 383/JP/2019 SH. ASHOK KUMAR DUSAD, JAIPUR VS. THE ITO, WARD 7( 2), JAIPUR 5 CLAIM OF THE ASSESSEE THAT OUT OF 1200 SQ FEET OF P LOT OF LAND, THERE IS CONSTRUCTION OF 900 SQ FEET AND WHAT HAS THEREFORE BEEN SOLD IS A PLOT OF LAND ALONG WITH CONSTRUCTION THEREON CANNOT BE ACCEPTED. THE AGREEMENT WITH THE CONTRACTOR DATED 30.04.2009 AND SUBSEQUENT AFFIDAVI T OF THE CONTRACTOR DATED 23.10.2017 THEREFORE DOESNT INSPIRE ANY CONFIDENCE AND CANNOT BE ACCEPTED. UNLESS THE ASSESSEE IS ABLE TO DEMONSTRATE WITH VER IFIABLE EVIDENCE THAT THERE WAS ACTUAL CONSTRUCTION ON THE PROPERTY SO SO LD, THESE AGREEMENT AND AFFIDAVIT CANNOT COME TO THE AID OF THE ASSESSEE. THE AGREEMENT IS ONLY AN UNDERSTANDING BETWEEN THE TWO PARTIES TO CARRY OUT CERTAIN WORK AND THEREFORE, MERELY REFLECT AN INTENTION AND UNDERSTA NDING BETWEEN THE TWO PARTIES AND CANNOT THEREFORE BE RELIED TO SUPPORT T HE ACTUAL CONSTRUCTION ON THE PART OF THE PLOT OF LAND SO SOLD BY THE ASSESSE E. THE SUBSEQUENT AFFIDAVIT TALKS ABOUT PERIOD STARTING 4.5.2009 AND ENDING ON 31.12.2009 DURING WHICH THE WORK WAS CARRIED ON AND WE FIND THAT THE SALE D EED HAS THEREAFTER BEEN EXECUTED IN LESS THAN A MONTH ON 18.01.2010. FIRST LY, WE FIND IT UNUSUAL THAT CONSTRUCTION OF 900 SQ FEET AS SO CLAIMED BY THE AS SESSEE HAS TAKEN AROUND EIGHT MONTHS TIME TO CONSTRUCT AND THEREAFTER, AS S OON AS CONSTRUCTION WAS COMPLETED, THE ASSESSEE HAS SOLD THE PROPERTY IN LE SS THAN A MONTH. IF THE INTENTION OF BOTH THE PARTIES WAS TO SELL AND PURCH ASE A CONSTRUCTED PROPERTY, IN SUCH A SCENARIO, THE DESCRIPTION OF THE PROPERTY SO STATED IN THE SALE DEED SHOULD HAVE BEEN A CONSTRUCTED PROPERTY INSTEAD OF A PLOT OF LAND. FURTHER, WHAT STOPS THE ASSESSEE IN SUBMITTING THE AFFIDAVIT OF BUYER AND THE PHOTOGRAPHS OF THE PROPERTY IN SUPPORT OF ITS CLAIM RATHER THAN MERELY RELYING ON A THIRD PARTY AVERMENTS. THEREFORE, THE THIRD P ARTY AVERMENTS CAN COME TO THE AID OF THE ASSESSEE ONCE IT IS PROVED THAT T HERE WAS ACTUAL CONSTRUCTION AND THEN, IN SUPPORT OF COST OF CONSTR UCTION, SUCH AVERMENTS MAY BE EXAMINED ALONG WITH PROOF OF ACTUAL PAYMENT WHICH AGAIN IS ABSENT IN THE INSTANT CASE. IN LIGHT OF AFORESAID DISCUSS IONS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FAILED TO DIS CHARGE THE NECESSARY ONUS ITA NO. 383/JP/2019 SH. ASHOK KUMAR DUSAD, JAIPUR VS. THE ITO, WARD 7( 2), JAIPUR 6 PLACED ON HIM IN SUPPORT OF HIS CLAIM OF CONSTRUCTI ON ON THE PROPERTY AT THE TIME OF SALE AND COST OF CONSTRUCTION AS SO CLAIMED HAS THEREFORE RIGHTLY BEEN REJECTED BY THE LOWER AUTHORITIES AND THE MATTER IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/07/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/07/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. ASHOK KUMAR DUSAD, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 7(2), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 383/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR