RASHMI S. PRADHAN, MUMBAI V. ITO 15(1)(3), MUMBAI

ITA 4665/MUM/2014

• Counselvise Citation: 466519914 RSA 2014
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G N MAKAWANA
• Assessee Lawyers: PRAKASH G JHUNJHUNWALLA
• Keywords: Cost of acquisition
• Section: 147; 6; 2; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER ITA NO . 4665 / MUM./ 2014 ( ASSESSMENT YEAR : 2008 09 ) SMT. RASHMI S. PRADHAN C/O MR . PRAKASH JHUNJHUNWALA CHARTERED ACCOUNTANT 5, JOLLY BHAWAN NO.2 7, NEW MARI NE LINES CHURCHGATE, MUMBAI 400 020 P AN ALVPP1330N .. APPELLANT V/S INCOME TAX OFFICER WARD 15(1)(3), MUMBAI .... RESPONDENT ASSESSEE BY : SHRI PRAKASH G. JHUNJHUNWALLA REVENUE BY : SHRI G.N. MAKAWANA DATE OF HEAR ING 1 4 .0 7 .2015 DATE OF ORDER 24.07.2015 O R D E R PER G.S. PANNU, ACCOUNTANT MEMBER TH E PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED APPEAL ORDER DATED 19 TH MARCH 2014 , PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 26 , MUMB AI, FOR THE ASSESSMENT YEAR 2008 09 , WITH REFERENCE TO THE ASSESSMENT ORDER DATED 31 ST OCTOBER 2012 , PASSED IN TERMS OF SECTION 143(3) R/W SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) . THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE , ARE AS F OLLOWS : SMT. RASHMI S. PRADHAN 2 ' THE APPELLANT PREFERS AN APPEAL AGAINST AN ORDER DATED 19/03/2014 PASSED BY LD. COMMISSIONER OF INCOME TAX(A) 26, MUMBAI ON FOLLOWING AMONGST OTHER GROUNDS EACH OF WHICH ARE WITHOUT PREJUDICE TO ANY OTHER: - 1.0 A HUMBLE PRAYER IS MADE TO CON DONE THE DELAY OF 24 DAYS IN FILING OF THE APPEAL BEING CAUSED UNDER BONAFIDE REASONS AND COMPELLING CIRCUMSTANCES BEYOND CONTROL OF THE APPELLANT; 2.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF LON G TERM CAPITAL GAIN OF RS.5,00,000/ - IN RESPECT OF A SHOP BELONGING TO HUSBAND MR. SANJIB PRADHAN; 2.1 THE CIT(A), BEFORE CONFIRMING THE ADDITION OF CAPITAL GAIN, FAILED TO APPRECIATE THAT THE PROFIT ON SALE OF THE SHOP HAD ALREADY BEEN BROUGHT TO TAX I N HANDS OF HER HUSBAND AS SHORT TERM CAPITAL GAIN; 3.0 WITHOUT PREJUDICE, LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE ENTIRE SALE CONSIDERATION AND OUGHT TO HAVE ALLOWED THE DEDUCTION OF THE COST OF ACQUISITION OF THE SHOP; ADDITIONAL GROUND RA ISED FOR THE FIRST TIME 4.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN MAKING THE DISALLOWANCE OF EXPENSES, ON ADHOC BASIS, OF RS. 1 ,50,000/ - . 2. DURING THE COURSE OF HEARING, IT IS BROUGHT TO MY NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PRESENT APPEAL IS BARRED BY LIMITATION AND HAS BEEN FILED BELATEDLY BY 25 DAYS. THE LEARNED COUNSEL HAS ALSO FILED AN AFFIDAVIT DULY SWORN BY THE ASSESSEE HERSELF, VIDE WHICH SHE STATED ON OATH THAT THE DELAY IN FILING THE PRESENT APPEAL WAS BONAFIDE AND COMPELLING CIRCUMSTANCES BEYOND HER CONTROL DUE TO SERIOUS MEDICAL ILLNESS OF HER MOTHER IN LAW WHO WAS RESIDING AT ODISSA. THE ASSESSEE ALONG WITH HER HUSBAND LEFT MUMBAI FOR ODISSA AND BEFORE LEAVING MUMBAI, SHE HANDED OVER THE F IRST APPELLATE ORDER SMT. RASHMI S. PRADHAN 3 ALONG WITH RELATED PAPERS TO HER PART TIME ACCOUNTANT AND INSTRUCTED HIM TO CO ORDINATE WITH THE CONCERNED CHARTERED ACCOUNTANT FOR FILING THE APPEAL BEFORE THE TRIBUNAL. HOWEVER, THE SAID PART TIME ACCOUNTANT MISPLACED THE FIRST APPEL LATE ORDER AND SOME CONNECTED PAPERS DUE TO WHICH THE APPEAL BEFORE THE TRIBUNAL COULD NOT BE FILED ON TIME. SHE WAS MADE AWARE ONLY AFTER HER ARRIVAL IN MUMBAI ON 4 TH JULY 2014, THAT THE APPEAL COULD NOT BE FILED ON TIME BEFORE THE TRIBUNAL. THEREAFTER, S HE IMMEDIATELY APPROACHED SHRI PRAKASH JHUNJHUNWALA, CHARTERED ACCOUNTANT, AND COULD FILE THE APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO THE CONTENTS OF THE AFFIDAVIT FILED BY THE LEARNED COUNSEL FOR THE ASSESSE E FOR CONDONATION OF DELAY. 4. ON A PERUSAL OF THE CONTENTS OF AFFIDAVIT SWORN BY THE ASSESSEE HERSELF, WHOSE BONAFIDES HAVE NOT BEEN ASSAILED BY THE REVENUE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE WA S PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEAL I N TIME BEFORE THE TRIBUNAL , AND IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY INDEED DESERVES TO BE CONDONED . CONSEQUENTLY, I HEREBY CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEAL ON MERIT S . 5. THE ASSESSING OFFICER, DURING THE AS SESSMENT PROCEEDINGS, NOTICED THAT AN INFORMATION WAS RECEIVED FROM THE ITO 15(1)(1), MUMBAI, HOLDING JURISDICTION IN THE CASE OF SANJ IB PRADHAN, HUSBAND OF SMT. RASHMI S. PRADHAN 4 THE ASSESSEE THAT HE HAS SOLD THE SHOP NO.17 IN THE BUILDING SHREE DHANVANTI CO. OPERATIVE SOCIETY LTD., MUMBAI, FOR A CONSIDERATION OF ` 10 LAKH AND THE ASSESSEE IS THE JOINT OWNER OF THE PROPERTY. THE PROCEEDINGS UNDER SECTION 143(3) R/W 147 / 148 OF THE ACT WAS INSTITUTED AGAINST THE ASSESSEE AND THE LONG TERM CAPITAL GAIN ON SALE OF PROPERTY OF ` 5 LAKH WAS BROUGHT TO TAX BEING THE SALE CONSIDERATION. 6. THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 7. B EFORE ME , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES HUSBAND SHRI SANJIB PRADHAN, WAS THE OWNER OF THE SAID P ROPERTY AND HAS DECLARED THE ENTIRE COST OF THE PROPERTY IN HIS TAX RETURN AND THE ENTIRE LONG TERM CAPITAL GAIN OF 100% SHARE OF THE PROPERTY WAS CHARGED TO TAX IN THE HANDS OF THE HUSBAND OF THE ASSESSEE. THE ASSESSEE WAS MERELY ADDED AS A JOINT OWNER BE ING WIFE OF SHRI SANJIB PRADHAN, FOR SOCIAL SECURITY PURPOSES AND THAT SHE HAD NOT PAID ANY AMOUNT TOWARDS THE COST OF ACQUISITION OF THE SAID PROPERTY NOR ANY SALE PROCEEDS WERE RECEIVED BY HER. HE STATED BEFORE ME THAT THE ENTIRE SHORT TERM CAPITAL GAIN HAS BEEN BROUGHT TO TAX IN THE CASE OF HUSBAND OF THE ASSESSEE AND HE PRODUCED INCOME TAX ASSESSMENT ORDER UNDER SECTION 143(3) R/W 147 OF THE ACT FOR THE ASSESSMENT YEAR 2008 09 PASSED BY THE ITO 15(1)(1), MUMBAI ON 28 TH MARCH 2014. HE FURTHER MADE A STAT EMENT AT BAR THAT THE SAID ORDER IN THE CASE OF HUSBAND OF THE ASSESSEE HAS ATTAINED FINALITY AND SMT. RASHMI S. PRADHAN 5 HA S NOT BEING CHALLENGED BEFORE THE APPELLATE AUTHORITY. HE ALSO PRODUCED BALANCE SHEET OF ASSESSEES HUSBAND AND OTHER DOCUMENTS RELATING TO SALE OF PROPERTY TO SUBSTANTIATE HIS SUBMISSIONS. 8. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IF THE STATEMENT OF THE ASSESSEES COUNSEL IS CORRECT, THEN THE ENTIRE AMOUNT OF IMPUGNED CAPITAL GAIN HAS BEEN BROUGHT TO TAX, HE WILL HAVE NO OBJECTION TO DELETE THE ADDITION OF ` 5 LAKH , SUBJECT TO VERIFICATION. 9. AFTER HEARING BOTH THE PARTIES AND ON A PERUSAL OF THE MATERIAL ON RECORD, I FIND THAT THE SHORT TERM CAPITAL GAIN HAS BEEN FULLY BROUGHT TO TAX IN THE HANDS OF THE HUSBAND OF THE ASSESSEE , WHO CLAIMED 100% OWNERSHIP OF THE PROPERTY , HAVING MADE PAYMENT OF THE COST OF ACQUISITION AND HAVING RECEIVED CONSIDERATION FOR SALE OF PROPERTY AND THE ASSESSEE BEING MERELY ADDED AS CO OWNER FOR THE PU RPOSE OF SOCIAL SECURITY. UNDER THESE CIRCUMSTANCES, THE IMPUGNED ADDITION DESERVES TO BE DELETED. I HOLD SO. THUS, THE G ROUND RAISED BY THE ASSESSEE IS ALLOWED. 8. INSOFAR AS THE ISSUE WHICH RELATES TO ` 1.50 LAKH IS CONCERNED, THE ASSESSING OFFICER DISALLO WED THE EXPENDITURE ON AD HOC BASIS . IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE APPELLANT WAS NOT MAINTAINING BOOKS OF ACCOUNT ALTHOUGH SHE HAD DECLARED INCOME FROM BUSINESS AND PROFESSION. THE ASSESSEE HAD DECLARED A TURNOVER OF ` 19.91 LAKHS AND SMT. RASHMI S. PRADHAN 6 NE T PROFIT OF ` 1.95 LAKHS AFTER CLAIMING EXPENSES OF ` 15,29,643 . IN THE ABSENCE OF BOOKS OF ACCOUNT , THE ASSESSING OFFICER DISALLOWED AN AD HOC AMOUNT OF ` 1,50,000, AND ADDED IT BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE DID NOT AGITATE THIS A DDITION BEFORE THE CIT(A) BUT HAS RAISED THIS GROUND OF APPEAL BEF ORE THE TRIBUNAL FOR THE FIRST TIME. THE FACTS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER INDICATES THAT NO BOOKS OF ACCOUNTS A RE MAINTAINED BY HER AND HENCE THE ASSESSING OFFICER DIS ALLOWED THE EXPENSES TO THE TUNE OF RS 1,50,000 AS DISCUSSED ABOVE. THE APPELLANT STATED BEFORE ME THAT SHE CHOSE TO BE GOVERNED BY PRESUMPTIVE SCHEME OF TAXATION U/S 44AF OF THE ACT BUT THE FACTS EMANATING FROM ORDERS OF ASSESSING OFFICER AND THE MATERIAL ON RECORD DOES NOT REFLECT SO. THE ASSESSEE ALSO STATED BEFORE ME THAT THE NET PROFIT RATIO IN THE IMPUGNED YEAR IS 9.80% WHICH IS BETTER THAN THE PREVIOUS YEAR WHICH WAS 8.34% AND THAT THE DECLARED PROFIT RATIO OF 9.80% IS HIGHER THAN THE RATIO OF 5% AS STIPULATED U/S 44AF OF THE ACT. IN MY VIEW, IN THE ABSENCE OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAS RIGHTLY HELD THAT THE INCOME DECLARED IS UNVERIFIABLE. SO, HOWEVER, IN MY VIEW, THE DISALLOWANCE OF ` 1,50,000, IS ON THE HIGHER SIDE, CONSIDERING THE PAST HISTORY AND THAT IT WOULD MEET THE ENDS OF JUSTICE, IF THE SAME BE REDUCED TO ` 50,000, TO PLUG LEAKAGE OF REVENUE, IF ANY. THUS, ON THIS ASSESSEE PARTLY SUCCEEDS. SMT. RASHMI S. PRADHAN 7 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 24.07.2015 SD/ - G.S. PANNU ACCOUNTANT MEMBER MUMBAI, DATED : 24.07.20156 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI