Smt. Kutty Padmini, CHENNAI V. ITO, CHENNAI

ITA 463/CHNY/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51984 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 06-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: S SRIDHAR SHRI N DEVANATHAN
• Keywords: Business income; Depreciation; Wrong claim; Revised return
• Section: 143(3); 54F; 133A; 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NOS. 463 AND 1218/MDS/2009 ASSESSMENT YEAR: 2001-02 SMT. KUTTI PADMINI, SWATHI APARTMENTS, VIJAYARAGHAVA ROAD, T. NAGAR, CHENNAI 17. [PAN: AHXPK5575C] VS. THE INCOME TAX OFFICER, MEDIA WARD II, CHENNAI - 34 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE FOR SHRI N. DEVANATHAN, ADVOCATE REVENUE BY : DR. I. VIJAYAKUMAR, CIT - DR DATE OF HEARING : 07.09.2011 DATE OF PRONOUNCEMENT 10.10.2011 ORDER PER HARI OM MARATHA, J.M. THE ABOVE CAPTIONED TWO APPEALS PERTAINING TO ASSES SMENT YEAR 2001-02, WERE HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND WE ARE PROCEEDING TO DECIDE THEM BY A COMMON ORDER FOR THE SAKE OF BREVITY. ITA NO. 463/MDS/2009 A.Y. 2001-02: 2. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) VI, CHENNAI DATED 19.12.208. THE ONLY FACTUAL ISSUE RAISED IN THIS APPEAL IS IN RELATION TO DETERMINATION OF LONG TERM CAPITAL GAIN S (LTCG) AND CLAIM OF EXEMPTION UNDER SECTION 54 OF THE ACT. 3. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSES SEE FILED HER RETURN OF INCOME ON 28.08.2001 SHOWING TOTAL LOSS OF ` .9,41,252/-, WHICH INCLUDES CAPITAL GAIN I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .463 & 1218 463 & 1218 463 & 1218 463 & 1218/MDS/ /MDS/ /MDS/ /MDS/09 0909 09 2 AMOUNTING TO ` .1,11,128/-. THE ASSESSMENT WAS COMPLETED UNDER SEC TION 143(1) OF THE ACT ON 21.12.2001. A SURVEY UNDER SECTION 133A WAS CONDUCTED BY THE DCIT, MEDIA RANGE ON 20.02.2002, IN THIS CASE, TO VERIFY THE GENUINENESS OF THE CAPITAL GAIN ON ACCOUNT OF SALE OF PROPERTIES TO THE TUNE O F ` .15,38,600/-. SHE TOLD DURING THE SURVEY THAT SHE HAD MADE A WRONG CLAIM OF LONG TERM CAPITAL GAINS EXEMPTION, WHEREIN IT WAS ADMITTED THAT ` .14,27,472/- WAS INVESTED IN THE PROPERTY SITUATED AT KAMDHAR NAGAR, NUNGAMBAKKAM, CHENNAI 34. AFTER SU RVEY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 23.09.2002 SHOWING TOTA L INCOME OF ` .82,820/- INCLUDING CAPITAL GAIN OF ` .11,35,200/- AS PER THE INDEXED COST. THE ASSESSMEN T WAS COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 26.03.2004, WHEREIN THE FOLLOWING INFLATION OF EXPENDITURE WERE DISALLOWED AND ADDED BACK: ` . 1. BUILDING MAINTENANCE DEBITED IN PROFIT AND LOSS ACC OUNT OF M/S. RIDDHIKA WHICH WAS ACTUALLY PAID TO THE ASSESSEES RESIDENCE : 95,000 2. CERTIFICATE FEES IN THE NATURE OF PERSONAL EXPENDIT URE : 15,000 3. SALARY INCLUDED PAYMENTS OF SERVANT MAIDS, COOK AND BABY SITTER : 97,900 4. DEPRECIATION LOSS CLAIMED WHERE THERE WERE NO BUSIN ESS ACTIVITY : 87,659 2,95,559 TOTAL ADDITIONS ON BUSINESS INCOME : ` 2,95,560 4. THE LD. CIT(A) HAS CHOSEN TO NOT RELY ON THE ST ATEMENT/ADMISSION MADE DURING THE SURVEY WITH REFERENCE TO CBDT CIRCULAR A ND OTHER DECISIONS RENDERED IN THIS REGARD AND HAS FINALLY CONFIRMED THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS OF ` .11,56,200/- ( ` .11,35,200 + 21,000), BY THE ASSESSING OFFICER. THIS ISSUE HAS BEEN FURTHER RAKED UP BEFORE US. IT WAS ARGUED THAT DURING THE SURVEY ITSELF, THE ASSESSEE HAD SHOWN PLAN OF THE B UILDING BEING CONSTRUCTED AND I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .463 & 1218 463 & 1218 463 & 1218 463 & 1218/MDS/ /MDS/ /MDS/ /MDS/09 0909 09 3 HAD ALSO SHOWN THE CONSTRUCTED PORTION UPTO SECOND FLOOR, WHICH HAD A KITCHEN, HALL, BATH AND TOILET, EB CARD, ETC. ALLEGEDLY INVE STED OUT OF THE SALE PROCEEDS OF THE PROPERTY IN QUESTION, THEREFORE, SHE IS ENTITLED TO A RELIEF UNDER SECTION 54/54F OF THE ACT. ON THE OTHER HAND, THE LD. DR HAS PLACED H EAVY RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE EXAMINED THE RECORDS AND HAVE GONE THRO UGH THE APPELLATE ORDER. THE PERUSAL OF THE APPELLATE ORDER VIS-A-VIS ASSESS MENT IN QUESTION, IT IS FOUND THAT THE APPELLATE ORDER IS VERY SKETCHY AND FULL OF CON TRADICTIONS. MOREOVER, IT IS TRITE LAW THAT ANY STATEMENT RECORDED DURING THE SURVEY, AS P ER THE DECISION OF THE HONBLE MADRAS HIGH COURT, CANNOT BE USED AGAINST THE DEPON ENT. THE QUESTION BEFORE US NOW IS AS TO WHETHER THE ASSESSEE IS ENTITLED TO (A ) RELIEF UNDER SECTION 54F OR NOT. THE LD. CIT(A) HAS, IN FACT, NOT DECIDED THIS ISSUE IN ITS CORRECT PERSPECTIVE. WE ARE OF THE CONSIDERED OPINION THAT LET ALONE THE STATEM ENT, THE ASSESSEE IS ENTITLED TO A RELIEF UNDER SECTION 54F OF THE ACT. BUT, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING AS TO HOW MUCH OUT OF CAPITAL GAINS ARISING OUT OF SALE OF HOUSE WAS UTILIZED IN THE CONSTRUCTION OF T HE NEW HOUSE. WITH THE ABOVE OBSERVATION, WE ALLOW THE APPEAL OF THE ASSESSEE. ITA NO. 1218/MDS/2009 A.Y. 2001-02: 6. THIS APPEAL OF THE ASSESSEE, FOR THE ASSESSMENT YEAR 2001-02, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) VI, CHENNAI DAT ED 05.02.2009 AND EMANATES FROM THE PENALTY ORDER DATED 30.09.2004 PASSED UNDE R SECTION 271(1)(C) OF THE ACT. THIS PENALTY WAS LEVIED MAINLY BECAUSE CLAIM OF THE ASSESSEE MADE UNDER SECTION 54F WAS DECLINED BY THE ASSESSING OFFICER. SINCE, N OW WE HAVE DECIDED THIS ISSUE I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NOS SS S. .. .463 & 1218 463 & 1218 463 & 1218 463 & 1218/MDS/ /MDS/ /MDS/ /MDS/09 0909 09 4 IN FAVOUR OF THE ASSESSEE, THE PENALTY UNDER SECTIO N 271(1)(C) WILL NOT SURVIVE. ACCORDINGLY, WE ORDER TO DELETE THE IMPUGNED PENALT Y AND ALLOW THIS APPEAL OF THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2011. SD/- SD/- (O.K. NARAYANAN) VICE PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER CHENNAI, DATED, THE 10.10.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.