Shri Vijay Bhargava, Rewari V. ACIT, Rewari

ITA 4410/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86767 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 4 410/ DEL/201 1 (ASSESSMENT YEAR - 2008 - 0 9 ) SHRI VIJAY BHARGAVA VS. ACIT PARTNER OF EVEREST METALS CIRCLE REWARI, JHAJJAR ROAD, REWARI. HARYANA. PAN:A EMPB9025J (APPELLANT) (RESPONDENT) ASSESSEE BY: - SH. ASHWANI TANEJA , A DV . REVENUE BY: - S H . J.P. CHANDRAKAR , SR. DR ORDER PER C. M. GARG, JM. THIS APPEAL HAS BEEN HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT (APPEALS) - ROHTAK, VIDE DATED 25 .0 7 .201 1 IN APPEAL NO. 2 3 9 / RWR/2010 - 11 FOR ASSESSMENT YEAR 2008 - 09. 2. THE MAIN GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LOWER AUTHORITIES HAD ERRED IN DISALLOWING THE EXPENDITURE OF RS.50,000 WHICH THE APPELLANT HAD INCURRED IN LEVELLING THE PLOT NO. 17, SECTOR 3, PART I, NEW MANDI TOWNSHIP, REWARI IN THE FINANCIAL YEAR 1994 - 95 WITH THE HELP OF THE DRAWINGS WHICH THE APPELLANT HAD MADE AS A PARTNER FROM THE BOOKS OF M/S EVEREST METALS, REWARI. 2. (I) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE APPELLANT COULD NOT P RODUCE THE ACCOUNT BOOKS IN SUPPORT OF THE SAID EXPENDITURE IN THE FINANCIAL Y EAR 1994 - 95 AFTER THE PERIOD OF ABOUT SIXTEEN YEARS WHEN THE ASSESSMENT FOR 2008 - 2009 HAD BEEN TAKEN UP IN THE MONTH OF MAY, 2010. (II) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE APPELLANT R EQUIRED TO RETAIN THE ACCOUNT BOOKS F OR THE PERIOD OF SIX YEARS PRECEDING THE RELEVANT A SSESSMENT YEAR. 2 3. (I) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE APPELLANT H AD SOLD P LOT NO. 1 7, SECTOR - 3 , PART - I, NEW MANDI TOWNSHIP, REWARI FOR RS. 29,50,000 VIDE SALE DEED DATED 9 .8.2007 AS AGAINST THE STAMP VALUE OF RS. 30 LAKHS WHICH WAS AN E STIMATE. (II) THE LOWER AUTHORITIES HAD ERRED IN NOT CONSIDERING THE INSTRUCTIONS OF THE C ENTRAL BOARD OF DIRECT TAXES CONTAINED IN CIRCULAR NO. 8 / 2002 DATED 27.8.2002 TO THE EFFECT THAT THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE RELEVANT ASSET TO THE VALUATION OFFICER AND IF THE FAIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER IS LESS THAN THE VALUE ADOPTED FOR STAMP DUTY PURPOSE, THE ASSESSING OFFICER MAY TAKE SUCH FAIR MARKET VALUE TO BE THE FULL VALUE OF THE CONSIDERATION (III) THE ASSESSING OFFICER HAD IGNORED THE SAID INSTRUCTIONS OF THE BOARD NOR DID HE MAKE REFERENCE TO THE VALUATION OFFICER AND AS SUCH HE ERRED IN ESTIMATING THE VALUE OF THE SALE VALUE OF THE PLOT AT RS.30 LAKHS AND FURTHER ERRED IN MAKING THE ADDITION OF RS.50,000/ - IN THE SALE VALUE OF THE PLOT OF RS.29,50,000/ - . (IV) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THE JUDGMENT OF THE SUPREME C OURT O F INDIA IN THE CASE OF GAUTAM (C.B.) VS UNION OF INDIA (1993) 199 ITR 530 (SC) WHEREIN THE APEX COURT HAD RECOGNIZED A TOLERANCE LIMIT FOR PRE - EMPTIVE PURCHASE OF PROPERTY UNDER CHAPTER XXC AT 15% FOR VARIATION, THOUGH THE LAW ITSELF DID NOT MAKE ANY SUCH PROVISION. (V) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE VARIATION IN THE VALUE OF THE PLOT FOR THE PURPOSE OF STAMP DUTY WAS 1.6%, WHICH WAS A FRACTION AND WAS MUCH LESS AS AGAINST THE TOLERANCE LIMIT HELD BY THE SUPREME COURT. 4. (I) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE APPELLANT H AD C ONSTRUCTED ONE - ROOMED SET AND BOUNDARY WALL BY 31ST JULY, 2008 AT THE COST OF RS. 19,83,000 (COST OF. THE PLOT RS. 16,83,000 + COST OF THE CONSTRUCTION OF ONE ROOMED SET AND B OUNDARY WALL AT RS. 3,00,000) (II) THE LOWER AUTHORITIES HAD ERRED IN NOT APPRECIATING THAT THE APPELLANT WAS ELIGIBLE FOR E XEMPTION OF RS. 17,21,723 IN RESPECT OF LONG TERM CAPITAL GAIN ON ACCOUNT OF THE CONSTRUCTION OF THE ONE ROOMED SET AND THE BOUNDARY WALL IN TIME UNDER SECTION 54 - F OF THE ACT. 5. (I) THE LOWER AUTHORITIES HAD ERRED IN RELYING WHOLLY ON THE REPORT OF THE INSPECTOR DATED 18 .11.2010, WHICH WAS APPARENTLY WRONG AND HAD CONTRADICTIONS THEREIN. (II) THE LOWER AUTHORIT IES HAD ERRED IN NOT APPRECIATING THAT THE REPORT OF THE I NSPECTOR HAVING BEEN PREPARED AT THE BACK OF THE APPELLANT, THE SAME WAS REQUIRED TO BE PROVIDED TO THE APPELLANT UNDER SECTION (3) OF SECTION 142 OF THE ACT FOR HIS EXPLANATION. 3 (III) THE LO WER AUTHORITIES HAD ERRED IN ENTIRELY RELYING ON THE SAID REPORT IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. ASSESSEE S GROUND NOS. 1, 2, (I) AND (II) 4. APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORIT IES HA D ERRED IN DISALLOWING THE EXPENDITURE OF RS.50,000/ - WHICH THE ASSESSEE HA D INCURRED IN LEVELLING PLOT NO. 17, SECTOR - 3, PART - 1, NEW MANDI TOWNSHIP, REWARI IN THE FINANCIAL YEAR 1994 - 95 WITH THE HELP OF THE DRAWINGS WHICH THE APP ELLANT HAD MADE AS A PARTNER FROM THE B OOK S OF M/S EVEREST METALS, REWARI. 5. THE LD. COUNSEL FURTHER CONTENDED THAT THE LOWER AUTHORITY HAS GROSSLY ERRED IN IGNORING AND NOT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNTS, IN SUPPORT OF THE SAID EXPENDITURE IN THE FINANCIAL YEAR 1994 - 95. AFTER THE PERIOD ABOUT 16 YEARS WHEN THE ASSESSMENT FOR A.Y. 2008 - 09 HAD BEEN TAKEN UP IN THE MONTH OF MAY, 2010 AND THE A SSESSEE WAS REQUIRED TO RETAIN THE BOOKS OF ACCOUNTS ONLY FOR THE PERIOD OF SIX YEARS PRECEDING THE RELEVANT ASSESSMENT YEAR AS PER PROVISIONS OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT). 6. REPLYING TO THE ABOVE THE LD. DR SUPPORTING THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED OR DER SUBMITTED THAT WHEN NO DOCUMENTARY EVIDENCE WAS SU BMITTED BEFORE THE AUTHORITIES BELOW IN REGARD TO THE COST ON IMPROVEMENT O F 4 RS.50,000/ - THEN THERE WAS NO ALTERNATE FOR THE AO BUT TO REJECT THE CLAIM OF THE ASSESSEE WHICH COULD NOT BE SUBSTANTIATING BY PLAUSIBLE EXPLANATION AND ACCEPTABLE EVIDENCE. 7. CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS FROM THE ASSESSMENT ORDER WE OBSERVE THAT THE AO IN PARA 3.1.1 HAS NOTED THAT NO DOCUMENT IN RESPONSE THE EXPENSES WERE PRODUCED BEING VERY OLD AND THE ASSESSE E HAS PURCHASED THE SAID PROPERTY IN 1994 - 95 FOR A CONSIDERATION OF RS.63,500/ - AS PER CONVEYANCE DEED AND THE SAME YEAR INVESTED RS. 50,000/ - ON ITS LEVELLING ETC. , A BOUT 80% OF THE COST OF ACQUISITION OF THE PLOT. THE AO FURTHER HELD THAT THE CLAIMED EXP ENDITURE ON LEVELLING OF PLOT SEEMS TO BE UNREALISTIC AND THEREFORE, HE HELD THAT THE ONLY INTENTION OF THE ASSESSEE TO REDUCE THE LIABILITY OF LONG TERM CAPITAL GAIN AND THE CLAIM WAS DISALLOWED WITH THESE OBSERVATIONS. 8. THE FIRST APPELLATE AUTHORITY I N PARA 4.4 OF THE IMPUGNED ORDER UPHELD THE DISALLOWANCE BY OBSERVING THAT NO DOCUMENTARY EVIDENCE IS AVAILABLE AS THE RECORDS ARE QUITE OLD. 9. THE LD. DR SUPPORTING THE ORDER OF THE AUTHORITIES BELOW HAS CONTENDED THAT IN ABSENCE OF DOCUMENTARY EVIDENCE SUPPORTING THE EXPENDITURE ON LEVELLING OF PLOT WHICH IS MORE THAN 80% OF THE COST OF ACQUISITION OF THE PLOT IMMEDIATELY AFTER THE ACQUISITION OF SAID PLOT IS NOT ACCEPTABLE. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS ALSO NOT SUBMITTED ANY COPY OF ITS I NCOME TAX 5 RETURN, CAPITAL AND DRAWING ACCOUNT RELATED TO FINANCIAL YEAR 1994 - 95 TO SHOW THAT THE ASSESSEE HAD ACTUALLY MADE SUBSTANTIAL DRAWINGS TO MEET HIS HOUSE HOLD DEMANDS AS WELL AS TO SPARE RS .50,000/ - FOR LEVELLING OF PLOT . HOWEVER THE LD. DR FAIRLY ACCEPTED THAT THE DETAILED DOCUMENTARY EVIDENCE TO SUPPORT THE CLAIM OF EXPENDITURE WHICH INCURRED MUCH BEFORE 15 - 16 YEARS ACCEPTED TO PROCURE BUT HE VEHEMENTLY CONTENDED THAT THE ITR, CAPITAL ACCOUNT AND DRAWING ACCOUNT ARE SOME VITAL EXTRACTS PERTAINING TO THE FINANCIAL ACTIVITIES WHICH WERE NOT SUBMITTED NEITHER DURING THE ASSESSMENT PROCEEDINGS NOR DURING THE FIRST APPELLATE PROCEEDINGS. 10. IN VIEW OF ABOVE SUBMISSION OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT T HE CLAIM OF THE ASSESSEE FOR EXPENDITURE OF RS.50,000/ - TOWARDS LEVELLING OF PLOT CANNOT BE REJECTED THRESHOLD AND AT THE SAME TIME THE SAME CANNOT BE ACCEPTED IN ABSENCE OF SATISFACTORY EXPLANATION AND DOCUMENTARY EVIDENCE. AT THE BEST THE ASSESSEE COULD HAVE PRODUCED COPIES OF CAPITAL AND DRAWING ACCOUNT TO SHOW THAT HE HAD SUFFICIENT WITHDRAWALS TO MEET HIS HOUSE HOLD COST AS WELL AS TO SPARE RS.50,000/ - FOR INCURRING EXPENDITURE ON LEVELLING OF PLOT FROM THE FINANCIAL YEAR 1994 - 95. THE ITR OF A.Y. 1995 - 96 IS ALSO RELEVANT TO PROPERLY ADJUDICATE TO THIS ISSUE. 11. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE OF ALLOWABILITY OF EXPENDITURE OF RS.50,000/ - ON LEVELLING OF PLOT REQUIRES VERIFICATION AND 6 EXAMINATION OF THE END OF THE AO THEREFOR E, WE RESTORED THE SAME TO THE FILE OF THE AO WITH A DIRECTION THAT THE AO SH ALL ADJUDICATE THE ISSUE AFRESH A FTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WITHOUT BEING INFLUENCE BY THE EARLIER ORDERS. ACCORDINGLY GROUND NO. 1, 2(I) & (II) OF THE ASSESSEE ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 (I) TO (V) 1 2 . APROPOS ABOVE GROUND OF APPEAL, WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE AUTHORITY WAS NOT JUSTIFIED IN NOT APPRECIATING THAT THE ASSESSEE HAD SOLD PLOT FOR CONSIDERATION OF RS. 29,50,000/ - VIDE SALE DEED DATED 9.8.2007 AS AGAINST STAMP VALUE OF RS. 30 LAC WHICH WAS ESTIMATED BY THE REGIS TRATION AUTHORITY. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE LOWER AUTHORITIES ALSO ERRED NOT CONSIDERATION THE INSTRUCTION OF THE CBDT CONTAINED IN CIRCULAR NO. 8/2002 DATED 27.8.2002 WHEREIN IT IS PROVIDED THAT WHERE THE ASSESSEE CLAIMS THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSE EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, AND HE HAS NOT DISPUTED THE VALUE SO ADOPTED OR ASSESSED IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY AUTHORITY OR COURT, T HE ASSESSING OFFICER MAY REFER THE VALUATION OF RETURNED ASSET TO THE DVO IN ACCORDANCE WITH SECTION 55A OF THE ACT. IF THE FAIR MARKET VALUE DETERMINED BY 7 THE VALUATION OFFICER IS LESS THAN THE VALUE ADOPTED FOR STAMP DUTY PURPOSE, THE AO MAY TAKE SUCH FA IR MARKET VALUE TO BE THE FULL OF THE CONSIDERATION. 1 3 . THE LD. COUNSEL VEHEMENTLY CONTENDED THAT THE AO HAD IGNORED THE SAID INSTRUCTION OF THE BOARD AND NOR DID MAKE ANY REFERENCE TO THE VALUATION OFFICER AND AS SUCH THE AO ERRED IN ESTIMATING THE SALE VALUE OF THE PLOT AT RS.30 LAC AND MAKE ADDITION OF RS.50,000/ - . 1 4 . THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF GAUTAM (CB) VS. UNION OF INDIA (1993) 199 ITR 530 (SC) WHEREIN THE APEX COURT HAD RE COGNIZED A TOLERANCE LIMIT FOR PREMPT PURCHASE OF PROPERTY UNDER CHAPTER (XXC) AT 15% FOR VERIFICATION THOUGH THE LAW ITSELF DID NOT MAKE ANY SUCH PROVISION. THE LD. COUNSEL POINTED OUT THAT THE REVENUE AUTHORITY HAS ALSO IGNORED THESE FACTS THAT THE VERIF ICATION IN THE VALUE OF THE PLOT FOR THE PURPOSE OF STAMP DUTY WAS 1.6% ONLY AND WAS MUCH LESS AS AGAINST THE TOLERANCE LIMIT HELD BY THE HON BLE SUPREME COURT IN THE CASE OF GAUTAM (SUPRA). 1 5 . REPLYING TO THE ABOVE SUPPORTING THE IMPUGNED ORDER, THE LD. DR POINTED OUT THAT THE ASSESSEE HAD NOT INVOKED THE PROVISIONS OF SECTION 50C AND IN THE REPLY FILED BEFORE THE AO THE ASSESSEE SIMPLY STATED THAT THE AMOUNT OF DIFFERENCE BEING NEGLIGIBLE MAY BE ALLOWED. THE LD. DR, THEREFORE, SUBMITTED THAT WHEN THE AS SESSEE IS NOT INVOKING THE PROVISIONS OF SECTION 50C THEN THE 8 AO WAS RIGHT IN ADOPTING THE SALE CONSIDERATION AT RS.30 LAC WITHOUT MAKING ANY REFERENCE TO THE VALUATION OFFICER. 1 6 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE ARE OF THE CONSIDERED O PINION THAT THE DECISION OF HON BLE APEX COURT IN THE CASE OF GAUTAM (SUPRA) WAS RENDERED ON 27.11.1992 AND SUBSEQUENT TO THAT BY FINANCE ACT 2002 SPECIAL PROVISIONS FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES WAS INSERTED AS SECTION 50C OF THE ACT W. E.F. 1.4.2003 WHICH IS APPLICABLE TO THE PRESENT CASE PERTAINING TO A.Y. 2008 - 09. 1 7 . ALTHOUGH THE ASSESSEE HAS NOT SPECIFICALLY INVOKED PROVISIONS OF SECTION 50C OF THE ACT BUT THE ASSESSEE IN ITS REPLY BEFORE THE AO, DISPUTED THE ADOPTION OF RS.30LAC AS SALE CONSIDERATION OF THE PLOT FOR THE PURPOSE OF CALCULATION OF LONG TERM CAPITAL GAI N THEREFORE, IT IS IMPLIED THAT THE ASSESSEE HAS NOT ACCEPTED THE VALUE ADOPTED BY THE ESTATE AUTHORITIES FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THEREFORE, WHEN THE ASSESSEE IS DISPUTING THE VALUE OF CONSIDERATION THEN THE A O S DUTY BOUND TO REFER THE MATTER TO THE VALUATION OFFICER UNDER PROVISIONS OF SECTION 50C (2) OF THE ACT. 18 . THEREFORE, WE ARE OF THE CONSIDERATION OPINION THAT THIS ISSUE ALSO REQUIRED TO ADJUDICATION AT THE END OF THE AO AFTER CALLING REPORT FROM THE VALUATION OFFICER AND AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY , GROUND NO. 3 (I) TO (V) ARE DEEMED TO BE ALLOWED FOR STATISTICAL 9 PURPOSES WITH A DIRECTION TO THE AO THAT THE AO SHALL FOLLOW THE PROVISIONS OF SECTION 50C OF THE ACT AND , AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE , SHALL ADJUDICATE THE ISUE AFRESH WITHOUT BEING INFLUENCE D FROM THE EARLIER ORDERS ON THI S GROUND OF THE ASSESSEE . GROUND NO. 4(I), (II) AND 5 (I) TO (III) 19 . APROPOS ABOVE GROUNDS, WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD . T HE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE REVENUE AUTHO RI TIES HAS GROSSLY ERRED AND WERE NOT JUSTIFIED IN NOT APPRECIATING THAT AFTER PURCHASE OF PLOT THE ASSESSEE HAS CONSTRUCTED ONE ROOM SET AND BOUNDARY WALL BY 31 ST JULY , 2008 BY INCURRING RS.3 LAC AND TOTAL COST OF SAID PROPERTY REACHED TO RS.1 9,83,000/ - I.E. COST OF PLOT RS.16,83,000/ - AND COST OF CONSTRUCTION RS.3 LAC. THE LD. COUNSEL ALSO CONTENDED THAT THE AUTHORITIES HAD GROSSLY ERRED IN NOT APPRECIATING THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION OF RS.17,21,723/ - IN RESPECT OF LONG TERM CAPITAL GAIN ON ACCOUNT OF THE CONSTRUCTION OF THE ONE ROOM SET AND THE BOUNDARY WALL WELL WITHIN PRESCRIBED TIME U/S 54F OF THE ACT. 2 0 . THE LD. COUNSEL FURTHER DRAWN OUR ATTENTION AND SUBMITTED THAT THE AO AS WELL AS THE LD. CIT(A) HAD GROSSLY ERRED IN RELYING AND ACCEPT ING THE REPORT OF THE INCOME TAX INSPECTOR DATED 18.11.2010 WHICH WAS APPARENTLY WRONG AND HAD FATAL CONTRADICTIONS THEREIN. THE LD. COUNSEL FURTHER POINTED OUT THAT THE 10 INSPECTOR HAVING BEEN PREPARED THE REPORT AT THE BACK OF THE ASSESS EE AND THE SAME WAS REQUIRED TO BE PROVIDED TO THE ASSESSEE U/S 142(3) OF THE ACT FOR HIS COMMENTS AND EXPLANATION AND THEREFORE, THE ACTION OF THE AUTHORITIES BELOW RELYING ON THE SAID EXPARTE REPORT AND ACCEPTING THE SAME IN TOTO WITHOUT CONFRONTING THE SAME TO THE ASSESSEE WAS CLEAR VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 2 1 . REPLYING TO THE ABOVE , THE LD. DR , SUPPORTING THE ACTION OF THE AO AND IMPUGNED ORDER SUBMITTED THAT AS PER INSPECTOR S REPORT DATED 18.11.2010 IT WAS FOUND THAT NO BOUNDARY WALL HAD BEEN CONSTRUCTED ON THE SAID PLOT EXCEPT ONE SIDE WALL WHICH APPEARED TO BE CONSTRUCTED IMMEDIATELY BEFORE THE INSPECTION. THE LD. DR FURTHER DRAWN OUR ATTENTION TOWARDS REPORT OF THE INSPECTOR AND SUBMITTED THAT HALF OF THE PLOT I.E. FRONT PORTION WAS UNDER CONSTRUCTION AND HALF PORTION OF BACK SIDE OF THE PLOT WAS LYING VACANT AT THE TIME OF INSPECTION AND NO ROOM WAS FOUND CONSTRUCTED AT ANY OF THE CORNER OF THE SAID PLOT AS SHOWN IN THE COPY OF THE VALUATION REPORT SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 2 2 . THE LD. DR STRONGLY CONTENDED THAT WHILE THE ASSESSEE IS NOT FURNISHING ACCEPTA BLE EXPLANATION AND FACTS DURING THE ASSESSMENT PROCEEDINGS THEN THE AO WAS QUITE JUSTIFIED IN CALLING THE REPORT FROM THE INSPECTOR AND THE REGISTRAR REWARI. THE LD. DR ALSO CONTENDED THAT THE ASSESSEE WRONGLY CLAIMED TO HAVE 11 PURCHASED THIS PLOT FOR AN AM OUNT OF RS. 1,25,000/ - AND AS PER CONVEYANCE DEED REGISTERED ON 13.11.1997 THE CONSTRUCTION WAS OF RS.63 ,500/ - WHICH SHOWN THEREFORE, THE AO WAS RIGHT IN ALLOWING THE INDUCTION AT RS.63,500/ - FROM FINANCIAL YEAR 1994 - 95. 2 3 . THE LD. DR ALTERNATIVELY CONTE NDED THAT IF IT IS FOUND JUST AND PROPER THEN THE REVENUE HAS NO OBJECTION IF THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 54F IS RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN THE LINE OF THE OUTCOME OF ADJUDICATION OF THE EARLIER TWO ISSUES VIZ., ALLOWABILITY OF THE CLAIM OF LEVELLING EXPENSES AND ADOPTABLE VALUE OF SALE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF SAID PLOT. 2 4 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE ARE OF THE CONSIDERED VIEW THAT THAT SINCE BY THE EARLIER PART OF THIS ORDER WE HAVE RESTORED ISSUE OF ALLOWABILITY OF CLAIM OF 50C AND EXPENDITURE SAID TO BE INCURRED TOWARDS LEVELLING OF THE PLOT IMMEDIATELY AFTER ACQUISITION IN F.Y. 1994 - 95 AND ADOPTABLE VALUE OF SALE CONSIDERATION FOR THE PURPOSE OF CALCULATION OF LONG TERM CAPITAL GAIN AND THERE IS CONTRADICTION ABOUT THE STATEMENT OF THE ASSESSEE AS WELL AS REPORT OF THE INSPECTOR VIDE DATED 18.11.2010 AND THEREFORE, WE DEEM IT PROPER THAT ASSESSEE SHOULD BE ALLOWED AN OPPORTUNITY TO EXPLAIN THIS CONTRADICTION AND TO SUPPORT HIS CLAIM OF EXEMPTION U/S 54F OF THE ACT. HENCE, WE FIND IT APPROPRIATE TO ALSO RESTORE TO THIS ISSUE TO THE FILE OF AO FOR FRESH AN 12 ADJUDICATION AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TAKING INTO CONSIDERATION THE OUTCOME OF THE EARLIER TWO ISSUES WHICH HAS ALREADY BEEN RESTORED TO THE FILE OF THE AO . THE AO SHALL RE - ADJUDICATE AFRESH THE ISSUE OF ALLOWABILITY OF EXEMPTION U/S 54F OF THE ACT WITHOUT BEING INFLUENCE D BY THE EARLIER ORDERS AND OUR OBSERVATIONS IN THIS ORDER. ACCORDINGLY, GROUND NOS. 4 & 5 OF THE ASSESSEE ARE ALSO ALLOWED IN THE TERMS AS INDICATED ABOVE , FOR THE STATISTICAL PURPOSES. 2 5 . IN THE RESULT, APPEAL OF THE ASSESSEE ON ALL THREE COUNTS /GROUNDS IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 /02/2015. SD/ - SD/ - (J. S. REDDY ) (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18TH /02 /201 5 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR