ITO, Jaipur V. SHRI KALYA, Jaipur

ITA 430/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54269 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Assessee Lawyers: R N GOYAL
• Keywords: Capital asset; Principle of natural justice; Additional evidence; Question of law; Cost of acquisition; Valuation report
• Section: 54B; 54F; 2(14); 142(1); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.430/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: BNFPK 4074 H THE ITO VS. SHRI KALYA S/O SHRI RAM NATH WARD- 7(2) GRAM BALMUKANDPURA, POST. THIKRIYA JAIPUR TEHSIL. SANGANER, JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.457/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: BNFPK 4074 H SHRI KALYA S/O SHRI RAM NATH VS. THE ITO GRAM BALMUKANDPURA, POST. THIKRIYA WARD- 7 (4) TEHSIL. SANGANER, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI VINOD JOHRI ASSESSEE BY : SHRI R,N.GOYAL DATE OF HEARING: 04-11-2011 DATE OF PRONOUNCEMENT: 22-11-2011 ORDER PER N.L. KALRA, AM:- THE REVENUE AS WELL ASSESSEE HAS FILED THE APPEALS AGAINST THE ORDER OF THE LD. CIT(A)-III JAIPUR DATED 28-02-2011 FOR THE ASSESS MENT YEAR 2007-08. 2.0 FIRST OF ALL, WE WILL TAKE UP THE APPEAL OF THE ASSESSEE. 2.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN SUSTAINING THE ORDER PASSED BY THE AO U/S 144 OF THE ACT. 2.2 THE AO IN HIS ORDER HAS MENTIONED THAT AN INFOR MATION WAS GATHERED FROM WHICH IT WAS NOTICED THAT THE ASSESSEE HAS SOLD THE LAND TO M/S. VATIKA LTD. ON 12-10-2006 FOR A 2 SALE CONSIDERATION OF RS. 1,61,09,100/-. ON THE BAS IS OF THIS INFORMATION, THE AO ISSUED NOTICE U/S 142(1) ON 16-08-2007 AND AS PER THE NOTI CE, THE ASSESSEE WAS REQUIRED TO FILE THE RETURN OF INCOME BY 20-09-2007. NO COMPLIANCE W AS MADE TO THE FIVE NOTICES ISSUED AND THE DETAILS ARE AVAILABLE AT PAGE 1 OF THE ASSE SSMENT ORDER. FOR MAKING ASSESSMENT, THE AO VIDE NOTICE DATED 30-11-2009 REQUIRED THE AS SESSEE TO FURNISH CERTAIN DETAILS BUT NO COMPLIANCE WAS MADE TO THIS NOTICE. THE AO IN OR DER TO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE ISSUED A LETTER IN HINDI SO THAT TH E ASSESSEE MAY KNOW ABOUT THE PROPOSED ACTION IN HIS CASE. THE COPY OF THIS LETTER HAS BEE N REPRODUCED AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER. IN ABSENCE OF ANY COMPLIANCE MADE BY THE ASSESSEE , THE AO HELD THAT THE LAND UNDER REFERENCE WAS SITUATED WITHIN THE MU NICIPAL LIMIT OF JAIPUR NAGAR NIGAM AND DETERMINED THE LONG TERM CAPITAL GAIN. 2.3 BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT THE LAND UNDER REFERENCE IS NOT A CAPITAL ASSET BECAUSE THE SAME IS NOT SITUATED WI THIN 8 KM FROM MUNICIPAL LIMIT. HOWEVER, NO ARGUMENTS OR FACTS HAVE BEEN GIVEN BEFO RE THE LD. CIT(A) IN SUPPORT OF THEIR CONTENTION THAT THE AO WAS NOT LEGALLY VALID TO MA KE ASSESSMENT U/S 144 OF THE ACT. THE LD. CIT(A) IN PARA 2.3 OF HIS ORDER HELD THAT THE A O WAS JUSTIFIED IN MAKING ASSESSMENT U/S 144 OF THE ACT. 2.4 BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUB MISSION. ACCORDING TO THE LD. AR, THE ASSESSEE WAS ILLITERATE AND THEREFORE, ANY NOTI CE ISSUED AND DEEMED TO HAVE BEEN SERVED HAS NOT MET THE PRINCIPLE OF NATURAL JUSTICE . THE BANK PASS BOOK DETAILS CONTAINED THE NAME OF SON OF THE ASSESSEE AS JOINT ACCOUNT HO LDER. THE AO HAS NOT ISSUED NOTICE TO THE SON OF THE ASSESSEE. IT WAS FURTHER SUBMITTED T HAT THE AO HAS NOT TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED. THE AO SHO ULD HAVE DEPUTED THE INSPECTOR FOR 3 INQUIRY OR ISSUED THE COMMISSION TO EXAMINE THE SON OF THE ASSESSEE OR TO THE BANK MANAGER OR TO THE BUYER. THE AO COULD HAVE ASCERTAI NED THE AMOUNT WITHDRAWN FOR THE UTILIZATION OF THE AGRICULTURAL LAND / CONSTRUCTION OF HOUSE FROM THE BANK ACCOUNT OF THE ASSESSEE OR SON OF THE ASSESSEE. 2.5 WE HAVE HEARD BOTH THE PARTIES. THE AO HAS ISSU ED 06 NOTICES U/S 142(1) AND ALSO ISSUED A NOTICE IN HINDI. THE ASSESSEE HAS OPENED T HE BANK ACCOUNT AND HAS ALSO MADE THE TRANSACTION WITH M/S. VATIKA LTD. HENCE, IT CANNOT BE ACCEPTED THAT THE ASSESSEE COULD NOT HAVE UNDERSTOOD THE IMPLICATION OF THE NOTICES BEIN G ISSUED. THE AO HAS TO PASS THE ORDER U/S 144 OF THE ACT ON THE BASIS OF MATERIAL GATHERE D. IT IS NOWHERE MENTIONED THAT THE AO SHOULD COLLECT MATERIAL ON THE ISSUES ON WHICH THE ASSESSEE HAS TO PROVIDE THE EVIDENCE. FROM THE BANK ACCOUNT, THE AO COULD NOT HAVE INFERR ED THE PURCHASE OF THE AGRICULTURAL LAND AND CONSTRUCTION OF THE HOUSE. WE THEREFORE, F EEL THAT THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE AO WAS RIGHT IN PASSING THE ORDER U/S 144 OF THE ACT. 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE AGRICULTURAL LAND TRANSFERRED BY THE ASSESSEE WAS CAPITAL ASSET. 3.2 BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT TH E AO HAS HELD AGRICULTURAL LAND AS CAPITAL ASSET BY CONSIDERING THAT THE AGRICULTURAL LAND IS SITUATED WITHIN 8 KM FROM THE LIMIT OF JDA. ACCORDING TO THE LD. AR, THE LIMIT O F 8KM SHOULD HAVE BEEN TAKEN FROM THE LIMIT OF JAIPUR NAGAR NIGAM. ACCORDING TO THE ASSE SSEE, THE LAND WAS SITUATED BEYOND 8 KM FROM THE LIMIT OF JAIPUR NAGAR NIGAM. 3.3 THE LD. CIT(A) IN HIS ORDER HAS MENTIONED THAT AS PER SCALE MAP OF JAIPUR NAGAR NIGAM, THE AGRICULTURAL LAND IS SITUATED WITHIN 8 K M FROM THE LIMIT OF JAIPUR NAGAR NIGAM. THE LD. CIT(A) HAS FURTHER MENTIONED THAT TH E LAND IS SITUATED BEYOND 8 KM FROM 4 BAGRU TOWN AND POPULATION OF THIS TOWN IS MORE THAN 10,000 IN NOS. AS PER 2001 CENSUS. SUCH FACTS WERE INTIMATED TO THE ASSESSEE VIDE LET TER DATED 11 TH DEC. 2009. HOWEVER, THE ASSESSEE HAS NOT FILED AN EVIDENCE TO SHOW THAT LAN D IS NOT WITHIN 8 KM FROM THE LIMIT OF BAGRU TOWN. THE LD. CIT(A) THEREFORE, HELD THAT LAN D IS A CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT. 3.4 DURING THE COURSE OF PROCEEDING BEFORE US, THE LD. CIT(A) HAS NOT CONSIDERED DETAILED SUBMISSION DATED 13 TH DEC. 2010. AS PER THIS LETTER, IT WAS SUBMITTED TH AT BHAKROTA VILLAGE WAS ADMINISTERED BY THE PANCHAYAT WHEREFROM VILLAGE BALMUKANDPURA WAS MORE THAN 8 KM. THE FINDINGS OF THE AO AND THE LD. CIT(A) ARE NOT BASED ON ANY AUTHENTIC CERTIFICATE REGARDING MUNICIPAL LIMIT AND MERGER OF VILLAGE IN MUNICIPALITIES AS PER RAJASTHAN MUNICIPAL CORPORATION ACT, 1959. 3.5 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 3.6 WE HAVE HEARD BOTH THE PARTIES. WHILE DECIDING THE APPEAL IN THE CASE OF SHRI SARDAR RAM MEENA VS. ITO (ITA NO. 1233/ JP/2011 DAT ED 30-09-2011), WE HAVE DECIDED THAT URBAN IMPROVEMENT TRUST CANNOT BE CONS IDERED AS INCLUDED IN SECTION 2(14) BECAUSE URBAN DEVELOPMENT AUTHORITY IS NOT CONSTITU TED BY THE ELECTED REPRESENTATIVES. THE WORD MENTIONED IS MUNICIPALITY. THE MUNICIPAL CORPORATION NOTIFIED AREA COMMITTEE ETC AS MENTIONED IN SECTION 2(14) ARE THO SE AUTHORITIES IN WHICH THE ELECTED REPRESENTATIVES ARE THE MEMBERS. HENCE, THE LIMIT O F 8 KM IS TO BE CONSIDERED FROM THE LIMIT OF JAIPUR NAGAR NIGAM. THE LD. CIT(A) HAS ALS O MENTIONED THAT THE LAND IS SITUATED WITHIN 8 KM FROM BAGRU TOWN. NOW THE ASSESSEE IS CO NSCIOUS OF FACTS WHICH ARE AGAINST HIM AND ONUS IS NOW UPON HIM TO SHOW THAT THE LAND IS NOT SITUATED WITHIN 8 KM OF THE LIMIT OF JAIPUR NAGAR NIGAM OR BAGRU TOWN . WE FEEL THAT OPPORTUNITY IS TO BE GIVEN TO 5 THE ASSESSEE TO PLACE NECESSARY EVIDENCE AND IN CAS E THE ASSESSEE FAILS TO GIVE SUCH EVIDENCE THEN FINDINGS AS GIVEN BY THE LD. CIT(A) W ILL PREVAIL. HENCE, THIS ISSUE IS RESTORED BACK ON THE FILE OF THE AO. 4.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE DEDUCTION U/S 54B OF THE ACT AND HAS N OT ALLOWED THE COST OF IMPROVEMENT IN THE AGRICULTURAL LAND. THE ASSESSEE IS ALSO AGGRIEV ED AGAINST WORKING OUT OF THE COST OF ACQUISITION. 4.2 THE LD. CIT(A) HAS HELD THAT THE DEDUCTION U/S 54B IS NOT AVAILABLE TO THE ASSESSEE BECAUSE THE ASSESSEE PURCHASED THE LAND IN THE NAME OF HIS SON. 4.3 BEFORE US, THE LD. AR HAS REFERRED TO THE DECIS ION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GURNAM S INGH, 218 CTR 674. 4.4 WE HAVE HEARD BOTH THE PARTIES. THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF PRAKASH VS. ITO, 312 ITR 40 HAS HELD THAT DEDUCTION 54 OR 54F WILL NOT BE AVAILABLE IN CASE THE INVESTMENT IN THE RESIDENTIAL HOUSE IS NOT MADE IN THE NAME OF THE ASSESSEE. THE ASSESSEE HAD NO DOMAIN OR RIGHT WHATSOEVER IN THE P ROPERTY PURCHASED AND THEREFORE, EXEMPTION WILL NOT BE AVAILABLE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF VIPIN MALIK (HUF) VS. CIT, 330 ITR 309 HAS HELD THAT RESI DENTIAL HOUSE WHICH WAS PURCHASED OR CONSTRUCTED HAD TO BE OF THE SAME ASSESSEE WHOSE AGRICULTURAL LAND WAS SOLD. IN THE CASE BEFORE HON'BLE DELHI HIGH COURT, THE RESIDENTI AL HOUSE WAS IN THE INDIVIDUAL NAME OF THE ASSESSEE AND HIS MOTHER WHILE THE LAND BELONGED TO HUF. THE DEDUCTION U/S 54F WAS NOT ALLOWED IN THE CASE OF JAI NARAIN VS. ITO, 306 ITR 335 IN WHICH IT WAS HELD THAT TERM ASSESSEE MENTIONED IN SECTION 54B IS QUANTI FIED BY THE EXPRESSION PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURP OSES WHICH NECESSARILY MEANS THAT THE 6 NEW ASSET SHOULD BE IN THE NAME OF THE ASSESSEE HIM SELF. IN THE CASE OF GURNAM SINGH (SUPRA), IT WAS NOTICED BY THE TRIBUNAL THAT THE AS SESSEE'S SON WAS SHOWN IN THE SALE DEED AS CO-OWNER. THE HON'BLE PUNJAB & HARYANA HIGH COU RT HELD THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED BECAUSE IT IS NOT THE C ASE OF THE REVENUE THAT THE LAND IN QUESTION WAS EXCLUSIVELY USED BY THE SON OF THE ASS ESSEE. WE THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT(A) THAT NO DEDUCTION U/S 54 B WILL BE AVAILABLE ON THE ISSUE OF PURCHASE OF LAND IN THE NAME OF HIS SON AND WIFE. 4.5 THE LD. CIT(A) HAS NOT GIVEN ANY DEDUCTION FROM THE CAPITAL GAIN IN RESPECT OF THE EXPENSES INCURRED FOR IMPROVEMENT OF THE LAND. NO EVIDENCES WERE FILED BEFORE THE LD. CIT(A) AND THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT NO DEDUCTION IS ALLOWABLE IN RESPECT OF COST OF IMPROVEMENT. THE A O HAS TAKEN THE COST OF ACQUISITION AS ON 1-4-1981 AT RS. 24,150/-. WE THEREFORE, FEEL TH AT THE ISSUE OF COST OF ACQUISITION IS REQUIRED TO BE RECONSIDERED BY THE AO AND THE ASSES SEE SHOULD PROVIDE NECESSARY EVIDENCE TO ASCERTAIN THE COST OF ACQUISITION. 5.0 NOW WE TAKE UP THE APPEAL OF THE REVENUE. 5.1 THE SOLITARY ISSUE OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE UNDER RULE 46A AND ALLOWING DED UCTION U/S 54F OF RS. 41,07,779/- WITHOUT CONFRONTING THE ADDITIONAL EVIDENCE TO THE AO FOR HIS CONSIDERATION AND REBUTTAL. 5.2 BEFORE THE LD. CIT(A), THE ASSESSEE CLAIMED DED UCTION FOR A SUM OF RS. 41,07,779/-. THE ASSESSEE FILED THE VALUATION REPOR T FROM THE APPROVED VALUER. ON THIS BASIS, THE LD. CIT(A) DIRECTED THE AO TO ALLOW DEDU CTION U/S 54F OF THE ACT. 5.3 WE HAVE HEARD BOTH THE PARTIES. THE AO IN HIS R EPORT TO THE LD. CIT(A) MENTIONED THAT THE ASSESSEE HAS NOT FILED NECESSARY EVIDENCE IN RESPECT OF CLAIM OF DEDUCTION U/S 7 54F. THE VALUATION REPORT IS DATED 9 TH DEC. 2010. IN THIS VALUATION REPORT, IT IS MENTION ED THAT THE CONSTRUCTION HAS BEEN DONE BETWEEN 1-1-206 TO 31-03-07 AND THEREAFTER FROM 01- 04-07 TO 31-03-08. THE DATE OF VALUATION IS 9 TH DEC. 2010. IN ANNEXURE A OF THE VALUATION REPORT, THE VALUER HAS ADDED FOR RISE IN COST INDEX OF MAY 2006 TO PRESENT DAY. IT MEANS THAT THE VALUATION HAS BEEN DETERMINED AS ON 9 TH DEC. 2010. THE DEDUCTION IS ADMISSIBLE IN RESPECT OF COST OF CONSTRUCTION IN THE HOUSE OR IN THE PURCHASE OF HOUSE. THE VALUE AS DETERMINED ON 9 TH DEC. 2010 CANNOT BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S 54F OF THE ACT. HENCE, WE FEEL THAT THE ISSUE OF DEDUCTION U/S 54F IS TO BE RESTORED BACK ON THE FILE OF THE AO. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED WHILE THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22-11 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 22/11/2011 *MISHRA COPY FORWARDED TO :- 1. THE ITO, WARD- 7 (2), JAIPUR 2. SHRI KALYA S/O SHRI RAM NATH, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.430 & 457/JP /11) A.R, ITAT, JAIPUR 8 9