MANOJ B. MANDAVIA, MUMBAI V. ITO 26(1)(3), MUMBAI

ITA 4414/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9771 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Additional evidence; Cost of acquisition; Reasonable cause
• Section: 142(1); 68; 54; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4414 / MUM/20 15 ASSESSMENT YEAR: 2010 - 11 MR. MANOJ B. MANDAVIA VS. ITO 26(1)(3) BLDG. NO. 32, ROOM NO. 802 INCOME TAX OFFICE, C - 12 PRAKASH GHAD, D.N. NAGAR BANDRA KURLA COMPLEX, ANDHERI WEST BANDRA MUMBAI 400058 MUMBAI - 400051 PAN NO. AFYPM2474B (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. JITENDRA SINGH , AR REVENUE BY: MS. BHARTI SINGH , DR DATE OF HEARING : 01/05 /2017 DATE OF PRONOUNCEMENT: 28/07/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) - 46 , MUMBAI AN D ARISES OUT OF ORDER U/S 144 OF THE INCOME TAX ACT, 1961 ( THE ACT ). 2. THERE HAS BEEN A DELAY OF 65 DAYS IN FILING THE APPEAL. HAVING GONE THROUGH THE AFFIDAVIT FILED, WE FIND THAT THERE WAS REASONABLE CAUSE IN DELAY IN FILING THE APPEAL. THE DELAY IN FILING THE APPEAL IS THEREFORE CONDONED. 3 . THE GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE SUMMARIZED BELOW : ITA NO. 4414 /MUM/201 5 2 (I) THAT THE LD. CIT(A) HAS SAID THAT NO EVIDENCE WAS FILED, WHEREAS THE APPELLANT HAD SUBMITTED ALL THE DOCUMENTS. THE LD. CIT(A) HAS NOT STUDIED DOCUMENT AND PASS ED THE ORDER AS PER THE ASSESSMENT ORDER PASSED BY THE AO. (II) THE CAPITAL MONEY WAS NOT UTILIZED BY THE APPELLANT FOR PERSONAL USE BUT WAS PAID FOR THE PURCHASE OF FLAT AT ULHASNAGAR. THE AGREEMENT WAS MADE OF RS.2,00,000/ - . THE OTHER RS.18,00,000/ - WAS PAID TO THE LEGAL HEIRS AS PER THE SEPARATE AGREEMENT. THE LD. CIT(A) HAS NOT CONSIDERED ANY AMOUNT AND DISALLOWED THE COMPLETE TRANSACTION. THE APPELLANT HAD PAID THE AMOUNT BY CASH BECAUSE THE LEGAL HEIRS DID NOT ACCEPT CHEQUES. (III) THE APPELLANT DEPOSITED THE SALE PROCEEDS IN THE ACCOUNT OF HIS WIFE HAS SHE HANDLED THE DEAL. (IV) THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD ASKED FOR A TRANSLATED COPY OF THE NEW ASSET PURCHASE AGREEMENT DATED 11.02.2015. THE APPELLANT COULD NOT FILE THE SAME BEFORE THE AO BECAUSE OF SHORT PERIOD OF TIME. THE AO DI D NOT GIVE THE APPELLANT FURTHER TIME THOUGH REQUESTED FOR. (V) THE AO LISTENED TO THE APPELLANT AND SUBMITTED THE REPORT WITHOU T ACCEPTING THE DOCUMENTS FILED. 4 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2010 - 11 ON 30.07.2010 SHOWING TOTAL INCOME OF RS.5,54,540/ - . THE ASSESSING OFFICER (AO) HAS OBSERVED THAT THE ASSESSEE HAD PURCHASED PROPERTY WORTH RS.68,00,000/ - AS PER AIR INFORMATION. HE ISSUED NOTICE U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAI RE TO THE ASSESSEE. THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE ABOVE STATUTORY NOTICES ISSUED BY THE AO. THEREFORE, ITA NO. 4414 /MUM/201 5 3 THE AO ESTIMATED 20% OF RS.68,00,000/ - AS INVESTMENT OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IT COMES TO RS.13,60,000/ - . THE AO THUS M ADE AN ADDITION OF RS.13,60,000/ - TO THE TOTAL INCOME SHOWN BY THE ASSESSEE. AS THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE STATUTORY NOTICES, THE AO MADE THE ASSESSMENT U/S 144 OF THE ACT. 5 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APP EAL BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT HE HAD SOLD A FLAT FOR RS.68,00,000/ - RATHER THAN PURCHASE A FLAT AS ASSUMED BY THE AO. SINCE THE ASSESSEE HAD SOLD HIS FLAT AND MOVED TO A NEW LOCATION, THE NOTICES ISSUED BY THE AO WERE NOT RECEIVED BY HIM, LEADING TO NON - COMPLIANCE AND PASSING OF ASSESSMENT U/S 144. IT WAS, THEREFORE, CLAIMED THAT THE EVIDENCE REGARDING SALE OF FLAT AND PURCHASE OF A NEW FLAT BE ADMITTED AS ADDITIONAL EVIDENCE UNDER RULE 46A. AFTER EXAMINING THE SAME, THE LD. CIT(A) REFERRED THE MATTER TO THE AO FOR VERIFICATION AND REPORT. THE LD. CIT(A) THEN CONSIDERED THE SUBMISSION OF THE ASSESSEE, THE ORDER OF THE AO AS WELL AS THE REMAND REPORT . SINCE THE ASSESSE E HAD SOLD HIS IMMOVABLE PROPERTY FOR RS.68,00,000/ - AND SUBSEQUENTLY INVESTED THE SALE PROCEEDS IN PURCHASE OF A NEW PROPERTY CLAIMING DEDUCTION U/S 54 OF THE ACT, THE LD. CIT(A) DIRECTED THE AO TO DELETE THE ADDITION OF RS.13,60,000/ - . 5 .1 COMING TO THE COMPUTATION OF LONG TERM CAPITAL GAIN (LTCG) ON SALE OF IMMOVABLE PROPERTY CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AND THE AMOUNT OF DEDUCTION U/S 54, THE ASSESSEE HAD GIVEN THE FOLLOWING COMPUTATION BEFORE THE LD. CIT(A). SALE COST OF FLAT NO. 401, BLDG. NO. B AREA 995 SQ.FT ON 28.07.2009 RS68,00,000/ - ITA NO. 4414 /MUM/201 5 4 LESS: 1) COST ACQUISITION ON 19.05.2006 ADD: A) STAM DUTY 1,64,000 B) REGISTRATION CHARGE 32,080 C) BROKERAGE PAID 72,000 35,97,050 2,68,080 38,65,130 INDEXED COST OF ACQUISITION (VIDE 2 ND PROVISO TO SECTION 48) RS.38,65,130/ - * 632 (BEING COST OF INFLATION INDEX OF THE FINANCIAL YEAR OF THE SALE I.E. 2009 - 10) / 519 (BEING COST INFLATION INDEX OF THE FINANCIAL YEAR I.E. 2006 - 07) RS.47,06,670 RS.20,93,330 2) EXPENDITURE IN CONNECTION WITH THE SALE RS.1,36,000 LONG TERM CAPITAL GAIN RS.19,57,330 LESS: DEDUCTION U/S 54 OF THE I.T. ACT, 1961 FOR PURCHASE A RESIDENTIAL HOUSE TO BE USE BY SELF OCCUPIED. THE COST OF HOUSE RS.20,14,300 BALANCE AMOUNT OF LONG TERM CAPITAL GAIN ( - ) RS.56,970/ - 5 .2 THE LD. CIT(A) HAS NOTED THAT THE AO AFTER VERIFICATION HAS MENTIONED THAT THE BROKERAGE OF RS.72,000/ - CLAIMED TO BE PAID FOR PURCHASE OF THE OLD PROPERTY WA S NOT SUPPORTED BY ANY EVIDENCE AND HENCE WAS NOT ALLOWABLE. THE LD. CIT(A) HAS ALSO NOTED THAT DURING THE PROCEEDINGS BEFORE HIM THE ASSESSEE ACCEPTED THAT THERE WAS NO BILL OR EVIDENCE FOR PAYMENT OF BROKERAGE OF RS.72,000/ - . SIMILARLY, THE BROKERAGE OF RS.1, 36,000/ - CLAIMED TO BE PAID BY THE ASSESSEE ON SALE OF THE PROPERTY WAS ALSO FOUND TO BE NOT SUPPORTED BY ANY BILL OR ANY EVIDENCE AS REPORTED BY THE AO IN THE REMAND REPORT. THE AO HAS ALSO MENTIONED IN HIS REMAND REPORT THAT THE PAYMENT WAS CLAIMED TO HA VE BEEN MADE IN CASH AND HENCE NOT VERIFIABLE. ALSO THE ASSESSEE ACCEPTED BEFORE THE LD. CIT( A) THAT THERE WAS NEITHER ANY BILL NOR ANY EVIDENCE OF PAYMENT OF THE ABOVE BROKERAGE CHARGE OF RS.1,36,000/ - . ITA NO. 4414 /MUM/201 5 5 HENCE, AS PER THE LD. CIT( A) THE EXPENDITURE CLAIM ED AS A DEDUCTION IN THE COMPUTATION OF LTCG CANNOT BE ALLOWED. 5 .3 IN RESPECT OF DEDUCTION U/S 54, THE AO HAS MENTIONED IN THE REMAND REPORT THAT THE COST OF NEW ASSETS PURCHASED BY THE ASSESSEE, AS PER DOCUMENT SUBMITTED WAS ONLY RS.2,00,000/ - . THE ASSE SSEE CLAIMED BEFORE THE LD. CIT(A) THAT THE DIFFERENCE OF THE COST CLAIMED WAS THE PAYMENTS MADE TO THE LEGAL HEIRS OF M RS. MANGALA MANDAVIA, THE ASSESSEES AUNT. HOWEVER, THE NAMES OF THOSE LEGAL HEIRS DID NOT APPEAR ON THE PROPERTY PAPERS AND THERE WAS NOTHING TO ESTABLISH THEIR RIGHTS IN THE PROPERTY. IT WAS ALSO ADMITTED BY THE ASSESSEE THAT THE SAID PAYMENT TO THE LEGAL HEIRS WAS MADE IN CASH AND THERE WAS NO EVIDENCE TO SUPPORT SUCH PAYMENT. IN VIE W OF THE ABOVE FACTS, THE DEDUCTION TOWARDS NEW PROPERTY PURCHASED HAS TO BE LIMITED TO RS.2,00,000/ - AS PER THE EVIDENCE SUBMITTED BY THE ASSESSEE. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE LTCG CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AFTER DED UCTION U/S 54 COMES TO RS.19,81,005/ - AS HAS BEEN POINTED OUT BY THE AO IN THE REMAND REPORT. THE LD. CIT(A), VIDE ORDER SHEET ENTRY DATED 17.03.2015 ASKED THE ASSESSEE IN THE PRESENCE OF HIS COUNSEL SHRI BHARAT PATEL, CA TO EXPLAIN WHY THE ASSESSED INCO ME BE NOT ENHANCED TO THAT EXTENT, AS NO EXPLANATION WAS FURNISHED. IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT A LENIENT VIEW BE TAKEN IN THE MATTER. AS THE FACTS DO NOT SUPPORT THE CLAIM OF THE ASSESSEE, THE LD. CIT(A) DIRECTED THE A O TO ENHANCE THE ASSESSED INCOME BY RS.19,81,005/ - BEING THE LTCG CHARGEABLE TO TAX ON SALE OF IMMOVABLE PROPERTY AFTER ALLOWING DEDUCTION U/S 54. 6 . BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILE S A PAPER BOOK (P/B) CONTAINING (I) COPY OF ACKNOWLEDGMENT FOR FILING RETURN OF ITA NO. 4414 /MUM/201 5 6 INCOME ALONG WITH C OMPUTATION OF INCOME FOR AY 2010 - 11, (II) COPY OF STATEMENT SHOWING AMOUNT RECEIVED ON SALE OF FLAT, (III) COPY OF STATEMENT SHOWING EXTRACTS OF BANK PASS BOOK MAINTAINED WITH PUNJAB & MAHARASHTRA CO - OP BANK LTD., (I V) COPY OF STATEMENT SHOWING EXTRACTS OF BANK PASS BOOK MAINTAINED WITH STATE BANK OF INDIA, (V) COPY OF BANK PASS BOOK OF STATE BANK OF INDIA & PUNJAB & MAHARASHTRA CO - OP BANK LTD., (VI) COPY OF CERTIFIED COPY OF PURCHASE AGREEMENT ALONG WITH E NGLISH TRAN SLATION, (VII) COPY OF PROMISSORY NOTE DATED 22.06.2012, (VIII) COPY OF BILL RECEIVED FROM VIKRAM JOSHI , E STATE AGENT AND (VIIII) COPY OF REMAND REPORT DATED 18.02.2015. ALSO A PETITION UNDER RULE 29 OF THE INCOME TAX APPELLATE RULE WAS FILED BY THE ASSES SEE T O ADMIT THE ADDITIONAL EVIDENCE IN THE FORM OF A COPY OF SUIT FOR DECLARATION AND PERPETUAL INJUNCTION FILED BY MR. DEEPAK J MANDVIYA AGAINST THE ASSESSEE AND THE OTHERS. IT IS STATED THAT THE COPY OF THE SAID SUIT IS BEING FILED TO SUBSTANTIATE THE C LAIM OF MAKING PAYMENT OF RS.16,00,000/ - TO MR. DEEPAK J. MANDVIYA AND OTHERS. IT IS THUS SUBMITTED THAT THE SAID DOCUMENT HAS GOT DIRECT BEARING ON THE PRESENT APPEAL. 6 .1 THE LD. COUNSEL OF THE ASSESSEE ALSO SUBMITS THAT (I) IN THE REMAND REPORT IT IS MENTIONED THAT THE ASSESSEE HAS SHOWN COST OF NEW ASSET PURCHASED AT RS.20,14,300/ - IN HIS CAPITAL GAINS STATEMENT AND (II) THE ASSESSEE HAS BEEN ABLE TO FURNISH EVIDENCE FOR MAKING INVESTMENT IN THE NEW HOUSE AT RS.2,00,000/ - ONLY. IT IS SUBMITTED BY THE LD. COUNSEL THAT THE ASSESSEE HAD FURNISHED THE PROMISSORY NOTE DATED 22.06.2012 BEFORE THE AO IN REMAND PROCEEDINGS AS WELL AS LD. CIT(A) AND THE AO HAS NOT MADE ANY COMMENT IN RESPECT OF THE SAME IN THE REMAND REPORT DATED 18.02.2015. ITA NO. 4414 /MUM/201 5 7 7 . PER CONTRA , THE LD. DR SUPPORTS THE ORDER OF THE LD. CIT(A) AND SUBMITS THAT (I) THE ASSESSEE HAS ACCEPTED BEFORE THE LD. CIT(A) THAT THERE WAS NO BILL OR EVIDENCE OF PAYMENT OF BROKERAGE OF RS.72,000/ - , (II) THE BROKERAGE OF RS.1,36,000/ - CLAIMED TO HAVE BEEN PAID BY TH E ASSESSEE ON SALE OF THE PROPERTY IS NOT SUPPORTED BY ANY BILL OR EVIDENCE. THE LD. DR THUS SUBMITS THAT THE LD. CIT(A) HAS RIGHTLY ENHANCED THE INCOME OF THE ASSESSEE BY RS.19,81,005/ - BEING THE LTCG CHARGEABLE TO TAX IN HIS HANDS ON SALE OF THE IMMOVA BLE PROPERTY, AFTER ALLOWING DEDUCTION U/S 54 OF THE ACT. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL S ON RECORD. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.13,60,000/ - MADE BY THE AO AS THE ASSESSEE HA D SOLD HIS IMMOVABLE PROPERTY FOR RS.68,00,000/ - AND SUBSEQUENTLY, INVESTED THE SALE PROCEEDS IN PURCHASE OF A NEW PROPERTY CLAIMING DEDUCTION U/S 54. 8.1 WE FIND THAT THE ASSESSEE HAS FILED A PETITION FOR ADMITTING THE COPY OF SUIT FOR DECLARATION AND PERPETUAL INJUNCTION FILED BY SHRI DEEPAK J. MANDVIYA AGAINST THE ASSESSEE AND OTHERS. IT IS FOUND THAT THE SAID SUIT WAS FILED IN THE COURT ON 16.01.2012. THE AO HAD ISSUED NOTICE U/S 142(1) TO THE ASSESSEE ON 16.01.2013 AND IT WAS SERVED ON 28.01.2013. THERE WAS NO COMPLIANCE BY THE ASSESSEE. THE AO COMPLETED THE ASSESSMENT ON 28.03.2013. WE FIND THAT THE ASSESSEE APPEARED BEFORE THE LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS. WE ALSO FIND THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY BY THE LD. CIT(A) TO EXPLAIN HIS CASE. THE APPELLATE ORDER WAS PASSED BY THE LD. CIT(A) ON 19.03.2015. THE ASSESSEE COULD HAVE ITA NO. 4414 /MUM/201 5 8 PRODUCED THE ABOVE SUIT BEFORE THE AO OR THE LD. CIT(A). HE FAILED TO DO SO. THE MERE FACT THAT THE EVIDENCE SOUGHT TO BE PRODUCED IS VITAL AND IMPORTANT DOES NOT PROVIDE A SUBSTANTIAL CAUSE TO ALLOW ITS ADMISSION AT THE APPELLATE STAGE ESPECIALLY WHEN THE EVIDENCE WAS AVAILABLE TO THE PARTY AT THE INITIAL STAGE AND WAS NOT PRODUCED BY HIM AS HELD IN VELJI DEORAJ & CO. V S. CIT (1968) 68 ITR 708 713 - 14 (BOM) CF. DESHAV MILLS LTD. V S. CIT (1965) 56 ITR 365, 381 (SC); UNION OF INDIA V S. ANGRUP THAKAR, AIR 1969 DEL 279; SWASTIK OIL MILLS LTD. V S. H.B. MUNSHI (1968) 21 STC 383 (SC); STATE OF ANDHRA PRADESH V S. HYDERABAD ASBESTOS CEMENT PROD UCTION LTD. (1994) 94 STC 410, 417 - 18 (SC). IN VIEW OF THE ABOVE THE PETITION OF THE ASSESSEE FOR ADMISSION FOR THE ADDITIONAL GROUND IS REJECTED. 8.2 WE FIND THAT THE ASSESSEE ACCEPTED BEFORE THE LD. CIT(A) THAT THERE WAS NO BILL OR EVIDENCE OF PAYMENT OF BROKERAGE OF RS.72,000/ - . ALSO THE ASSESSEE ACCEPTED BEFORE THE LD. CIT(A) THAT THERE WAS NEITHER ANY BILL NOR ANY EVIDENCE OF PAYMENT OF BROKERAGE CHARGE OF RS.1,36,000/ - . THE ASSESSEE ALSO ADMITTED BEFORE THE LD. CIT(A) THAT THE PAYMENT TO LEGAL HEIR S WAS MADE IN CASH. I N THE GROUNDS OF APPEAL THE ASSESSEE HAS STATED THAT RS.18,00,000/ - WAS PAID TO THE LEGAL HEIRS BY CASH. A FORTIORI , THERE WAS NO EVIDENCE TO SUPPORT SUCH PAYMENT. 8.3 IN VIEW OF THE ABOVE FACTS, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY ENHANCED THE ASSESSED INCOME OF THE ASSESSEE BY RS.19,81,005/ - BEING THE LTCG AFTER ALLOWING DEDUCTION U/S 54 OF THE ACT. WE UPHOLD THE SAME. ITA NO. 4414 /MUM/201 5 9 9. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOU NCED IN THE OPEN C OURT ON 28/07/2017. SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 28/07/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI