Smt. Rekha Vaya, UDAIPUR V. ITO, UDAIPUR

ITA 451/JODH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4893 (ITAT-JODHPUR)
• Duration Of Justice: 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Opportunity of being heard
• Section: 44AD; 54F

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 451/JODH/2013 (A.Y. 2009-10) SMT. REKHA VAYA VS ITO, WARD-2(2), C/O. A.L. MEHTA & CO., UDAIPUR. 6-B, BAPU BAZAR, UDAIPUR. PAN NO. ABUPV9306P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURENDRA CHOPRA. DEPARTMENT BY : SHRI N.A. JOSHI- DR. DATE OF HEARING : 26/09/2013. DATE OF PRONOUNCEMENT : 27/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10, IS D IRECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 17/07/2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE CARRIES ON BUSINESS OF SUPPLY OF CONSTRUCTION MATERIAL INCL UDING SAND AND STONE APART FROM RECEIVING COMMISSION ON SALE OF IMMOVABL E PROPERTIES ETC. 2 FOR A.Y. 2009-10, SHE FILED HER RETURN OF INCOME (R OI) ON 29/03/2010 DECLARING TOTAL INCOME OF RS. 3,40,000/-. SHE HAS D ISCLOSED INCOME FROM THE SUPPLY OF SAND AT RS. 1,75,000/- UNDER THE PROVISIONS OF SECTION 44AD OF THE I.T. ACT, 1961 (THE ACT FOR S HORT) ON TOTAL RECEIPT OF RS. 35 LACS. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE DID NOT FURNISH THE DETAILS AND BASIS OF T HIS RECEIPT, THEREFORE, THE AO HAS ESTIMATED THIS INCOME FROM SUPPLY OF SAN D AT RS. 2,25,000/- AS AGAINST RS. 1,75,000/- DECLARED BY THE ASSESSEE. 2.1 IN APPEAL BEFORE LD. CIT(A) IT WAS SUBMITTED TH AT THERE IS NO BASIS FOR MAKING ADDITION OF RS. 50,000/- IN THE DECLARED INCOME OF THIS ITEM AND SINCE THE PROFIT DECLARED IN THIS YEAR IS BETTE R THAN THE LAST YEAR AND THE PROPERLY MAINTAINED RECORD REGARDING SALE A ND SUPPLY OF THE BUILDING MATERIALS NO SUCH ADDITION IS WARRANTED. H OWEVER, LD. CIT(A) HAS ESTIMATED THIS INCOME AT RS. 1,90,000/-. 2.2 BEFORE US GROUND NO. (1) HAS BEEN RAISED BY THE APPELLANT IN THIS REGARD. BOTH PARTIES HAVE TAKEN THEIR ORIGINAL STAN D. AFTER HEARING BOTH SIDES, WE DONT APPROVE OF THE ACTION OF LD. CIT(A) . THE ASSESSEE HAS DISCLOSED SALES AT RS. 35 LAKHS AND U/S 44AD A N.P. RATE OF 8% IS APPLICABLE. HOWEVER, THIS SECTION ALLOWS DEDUCTION ON ACCOUNT OF SALARY AND INTEREST PAID TO PARTNERS BUT BENEFIT OF SECTIONS 30 TO 38 OF 3 THE ACT ARE DEEMED TO HAVE BEEN ALLOWED IN APPLYING THE MAGIC FIGURE OF 8% OF N.P. RATE. WE ARE NOT APPRISED OF ANY SALA RY OR INTEREST, IF ANY, HAS BEEN PAID. THE ASSESSEE IS THE PROPRIETOR OF M/S. R.K. BUILDERS AND SUPPLIERS, UDAIPUR. THEREFORE, THE INCOME U/S 4 4AD FOR A TURNOVER OF RS. 35 LAKHS SHALL BE RS. 1,80,000/-. THE ASSESS EE HAS ALREADY DECLARED INCOME U/S 44AD AT RS. 1,75,000/-. THEREFO RE, ONLY ADDITION OF RS. 5,000/- CAN AT BEST BE MADE. HOWEVER, THIS A DDITION IS SUBJECT TO PAYMENT OF INTEREST OR SALARY TO PARTNERS, WHICH DOES NOT SEEM TO BE THE CASE. WITH THE ABOVE OBSERVATION, WE PARTLY ALLOW GROUND NO. (1) OF THIS APPEAL. 3. THE FACTS APROPOS GROUND NO. 2 TO 5, WHICH ARE T AKEN IN RESPECT OF ONE ISSUE ONLY, ARE THAT DURING THE YEAR THE ASS ESSEE HAD SOLD AN IMMOVABLE PROPERTY SITUATED AT PLOT NO. 3, SHOBHAGP URA, UDAIPUR FOR A CONSIDERATION OF RS. 46,00,000/- ON 18/12/2008. AS PER THE SALE DEED DATED 18/12/2008, IT WAS NOTICED THAT THIS LAND WAS LEASED TO THE ASSESSEE BY THE UIT, UDAIPUR, ON 23/01/2008. NO CAP ITAL GAIN HAS BEEN DISCLOSED BY THE ASSESSEE QUA THE SALE CONSIDERATIO N OF THIS PROPERTY. THE ASSESSEES CASE IS THAT AFTER DERIVING THE BENE FIT OF SECTION 54F OF THE ACT NO CAPITAL GAINS REMAIN BEHIND FOR TAXATION PURPOSES. AS PER THE ASSESSEE SHE HAD PURCHASED THIS LAND JOINTLY WI TH HER HUSBAND SHRI NANA LAL VAYA. BEFORE LD. CIT(A) THE ASSESSEE VIA R ULE 46A SUBMITTED 4 THE PURCHASE AND SALE DEEDS OF A PLOT AND THAT THE LTCG EARNED ON THIS SALE HAS BEEN INVESTED IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE. THE ASSESSEE HAD SURRENDERED A SUM OF RS. 25,34,600 /- ON 28/04/2010 AND HAS PAID TAXES THEREON WHEN SURVEY WAS CONDUCTE D. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND AFTER THIS REMAND REPORT WAS GIVEN TO THE ASSESSEE, SHE MADE THE FOLLOWING S UBMISSIONS :- 'A) THAT ASSESSEE HAVE PURCHASED AN AGRICULTURAL LA ND (PAGE NO.904,906,909,910 & 958 ETC.) ON 18.03.2004 FROM SHRI DEVA S/O SHRI AMRA DEVI DANGI OF UDAIPUR (RAJ. ) FOR RS.3,35,000 PLUS REGISTRATION CHARGES. ASSESSEE HAS ALSO SPENT MONEY FOR THE PURPOSE OF BOUNDARY WALL AND OT HER LEVELING WORK IN THIS AGRICULTURAL LAND, THEREAFTER , THE ASSESSEE HAVE APPLIED FOR THE CONVERSION OF AGRICUL TURAL LAND INTO THE RESIDENTIAL PLOTS, THE SAID PROPERTY WAS C ONVERTED INTO THE LEASE HOLD RIGHT VIDE UIT ALLOTMENT NO.200 7-08/3434 DATED 30,.06.2007. ALLOTMENT & OTHER REGULARIZATION MADE BY THE UIT DATED30,08.2007 , ASSESSEE HAS ALSO DEPOSIT ED CONVERSION CHARGES IN THE UIT FOR ISSUE OF LEASE HO LD RIGHTS. B) THAT THE AFORESAID PROPERTY WAS SOLD FOR RS.46, 00,000 TO SMT. MAYA DEMBLA & PUSHPA DEMBLA AND RECEIVED CONSIDERATION BY CHEQUE ON 30.09.2008 AND SALE DEED WAS EXECUTED ON 18.12.2008. 5 C) THAT THIS IS A LONG TERM CAPITAL, IT IS NOT A SH ORT TERM CAPITAL GAIN. LEARNED INCOME-TAX OFFICER HAS WRONGL Y CALCULATED SHORT TERM CAPITAL GAIN FOR RS.47,33,698 WITHOUT ANY BASIS WHEREAS ASSESSEE HAS FURNISHED ALL THE DE TAILS OF THE PROPERTY ALONGWITH SALE DEED AND PAPER OF LEASE HOLD RIGHT RECEIVED FROM UIT, UDAIPUR. D) THAT THIS LONG TERM CAPITAL GAIN WAS UTILIZED F OR THE PURPOSE OF CONSTRUCTION OF RESIDENTIAL HOUSE IN 5-D BHUPALPURA, UDAIPUR (RAJ.). ASSESSEE HAVE PURCHASED THIS PLOT ON 14.07.2006 FROM SHRI SAMUEL HENRY FOR RS.11,62,000 AND ALSO PAID REGISTRATION CHARGES ON THE AFORESAID SALE FOR RS.75,000. E) THAT ASSESSEE HAS CONSTRUCTED THIS HOUSE IN THE YEAR 2007-08 , 2008-09 AND AFTERWARDS THE COST OF CONSTR UCTION WAS MORE THAN RS.60,00,000 . ASSESSEE HAS SUBMITTED BILLS FOR THE PURCHASE OF CEMENT, IRON BARS AND OTHERS. F) THAT COPY OF THE PERMISSION FROM NAGAR PARISHAD UDAIPUR FOR THE CONSTRUCTION OF RESIDENTIAL PLUS CO MMERCIAL HOUSE HAS ALREADY BEEN SUBMITTED AT THE TIME OF HEA RING BEFORE THE INCOME-TAX OFFICER. GROUND FLOOR WAS CONSTRUCTED FOR THE PURPOSE OF SHOPS AND FIRST FLOO R FOR THE PURPOSE OF RESIDENTIAL HOUSE. 6 G) THAT THE SAID RESIDENTIAL HOUSE WAS COMPLETED-, IN THE YEAR 2008 AND ASSESSEE HAVE UTILIZED THIS HOUSE FOR THE PURPOSE OF HIS RESIDENCE FOR MORE THAN -1 YEAR. H) THAT THIS FACTS HAS ALREADY BEEN MENTIONED IN MY LETTER SUBMITTED BEFORE THE ASSESSING AUTHORITY. BUT THE S AME HAS NOT BEEN CONSIDERED WHILE PASSING THE ORDER. 5. THAT YOUR HONOUR HAS SENT THE LETTER UNDER RULE 46A TO THE INCOME-TAX OFFICER WARD-2(2) AND HE HAS MENTION ED IN THE POINT NO,2 IN HIS REMAND REPORT THAT ASSESSEE H AVE* PURCHASED PROPERTY ON 14.07.2006 (PLOT NO.5-D, BHUPALPURA, UDAIPUR (RAJ.) IS VERY OLD HOUSE HAVIN G ONE ROOM, THEREAFTER ASSESSEE HAS APPLIED FOR THE PERMISSION TO CONSTRUCT THE RESIDENTIAL HOUSE IN THE YEAR 2007. T HE PERMISSION WAS GRANTED ON23.04.2007 BY NAGAR PARISH AD UDAIPUR, AFTER THAT ASSESSEE HAS STARTED CONSTRUCTI ON THE YEAR 2008. COPY OF THE BLUE PRINT HAS ALREADY BEEN SUBMITTED LEARNED INCOME-TAX OFFICER HAS WRONGLY MENTIONED IN HIS LETTER PARA 2(D) THAT ASSESSEE HAS DEPOSITED RS. 4, 20,915 ON ACCOUNT OF PERMISSION FOR RESIDENTIAL TO COMMERCIAL . IT IS NOT TRUE THAT ASSESSEE HAS PRESENTED THE PAPERS FOR THE PURPOSE OF A RESIDENTIAL CUM COMMERCIAL HOUSE. NOT ONLY FOR THE PURPOSE OF RESIDENTIAL TO COMMERCIAL CONVERSION CHA RGES. BUT THIS CHARGES ARE PAID FOR BOTH THE PURPOSE. 6. THAT LEARNED INCOME-TAX OFFICER HAS NOT MENTION ED ANY WHERE WHETHER IT IS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. BUT THE TRANSACTION SHOWED THAT THE A SSESSEE 7 HAS SOLD THE PROPERTY AFTER 36 MONTHS AND COMES UND ER THE LONG TERM CAPITAL GAIN, AND THIS LONG TERM CAPITAL GAIN WAS UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF RESIDEN TIAL HOUSE. 7. THAT ASSESSEE HAS ALREADY SUBMITTED THE WORKING OF THE LONG TERM CAPITAL GAIN, WHEREAS ASSESSING AUTHORITY IS SAYING THAT THIS IS SHORT TERM CAPITAL GAIN BUT HE HAS NOT MENTIONED THE REASON FOR SHORT TERM CAPITAL GAIN. 8. THAT ASSESSEE HAS FILED AN AFFIDAVIT FOR THE AF ORESAID PURPOSES. BUT THE SAME HAS NOT BEEN CONSIDERED WHIL E PASSING THE ORDER. 9. THAT LEARNED INCOME-TAX OFFICER HAS MENTIONED I N POINT NO. 3 IN HIS REMAND REPORT THAT 'IN THE ABSENCE OF ADEQUATE PROOF, ONLY TREATMENT WHICH COULD MEET WAS TO ASSES S THE GAIN AS SHORT-TERM CAPITAL GAIN.' IN THIS CONNECTION MY SUBMISSION IS THAT ASSESSEE H AS ALREADY FILED A REPLY ON 20.12.2011 THAT SHE HAS PU RCHASED AGRICULTURAL LAND AND CONVERTED INTO THE PLOTS, PAI D CONVERSION CHARGES TO NAGAR PARISHAD . THEREAFTER, THIS PROPERTY WAS SOLD TO SMT. MAYA DEMBLA, COPY OF SALE DEED & PURCHASE DEED OF AGRICULTURE LAND HAS ALREADY BEE N SUBMITTED BUT THE SAME HAS NOT BEEN CONSIDERED. NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE OR NO ENQUIRY WAS MADE BEFORE PASSING REMAND REPORT AND WRONGLY MENTI ONED THAT IT IS A SHORT TERM-CAPITAL GAIN. 8 10. THAT IN REMAND REPORT POINT NO.4 & 5 LEARNED I NCOME- TAX OFFICER, HAS MENTIONED ' IN THIS REPORT IT IS A LSO SUBMITTED HERE THAT IN THE RETURN OF INCOME FILED BY ASSESSEE, HAS NOT DISCLOSED THE FACTS OF THE SALE O F PLOT OR THE INVESTMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE , THE FACTS LEADING TO THE ASSESSMENT OF SHORT TERM CAPIT AL GAIN.' IN THIS CONNECTION MY SUBMISSION IS THAT, ASSESSEE HAS ALREADY SUBMITTED COPY OF SALE DEED. SHE HAS ALSO MENTIONED THAT THE SALE PRICE WAS UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF RESIDENTIAL HOUSE, THIS HOUSE WA S OCCUPIED FOR THE PURPOSE OF RESIDENCE FOR 2 YEARS. HENCE, IN THE REMAND REPORT POINT NO.3,4, & 5 MENTI ONED BY THE INCOME-TAX OFFICER HAS NOT GONE THROUGH THE PAPER SUBMITTED BY THE ASSESSEE. 11. THAT IN THE ALTERNATE GROUND ASSESSEE HAS SURR ENDERED A SUM OF RS.25,34,600 ON 28.04.2010 BEFORE THE FIXA TION AND FINALIZATION OF THIS HEARING. THE SURRENDER WAS MADE ONLY ON IN THIS GROUND THAT NO ENQUIRY IS TO BE DON E AND NO ADDITION WILL BE MADE IN THIS CONNECTION AND COPY OF THE STATEMENT U/S. 132(4) HAS ALREADY BEEN SUBMITTED BE FORE PASSING THE ORDER. 12. THAT WHILE PREPARING REMAND REPORT INCOME-TAX OFFICER HAS NOT ASKED TO THE ASSESSEE OR MADE ANY E NQUIRY REGARDING PURCHASE OF AGRICULTURAL LAND AND CONVERT ED INTO THE PLOT FROM UIT AND SALE WAS MADE AND THE SALE PR ICE FOR 9 THE PURPOSE OF CONSTRUCTION OF RESIDENTIAL HOUSE. N O PROPER OPPORTUNITY WAS GIVEN TO 'ASSESSEE BEFORE PASSING T HE REMAND REPORT.' BUT, THE LD. CIT(A) WAS NOT AGREEABLE. AFTER CONSID ERING BOTH SIDES ARGUMENTS WE ARE OF THE CONSIDERED OPINION THAT THI S ISSUE HAS NOT BEEN PROPERLY DECIDED BY THE AUTHORITIES BELOW. THE TRIBUNAL BEING THE FINAL FACT FINDING BODY, IT BECOMES IMPERATIVE TO RESTORE THIS ISSUE TO THE FILE OF THE AO SO THAT HE CAN ADJUDICATE UPO N THE SAME, AFRESH. AND CONSIDER THE ABOVE SUBMISSIONS IN THEIR CORRECT PERSPECTIVE. THE SUBMISSIONS OF THE ASSESSEE SEEM TO BE VALID AND JU STIFIED. ACCORDINGLY, WE RESTORE GROUND NO. 2 TO 5 TO THE FI LE OF THE AO WITH A DIRECTION THAT HE SHALL GIVE PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH SEPTEMBER, 2013. 10 VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR