ACIT, New Delhi V. Sh. Chander Jeet Pathak, New Delhi

ITA 4713/DEL/2012

• Counselvise Citation: 471320114 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NAB
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Unexplained investment; Business income; Opportunity of being heard; Additional evidence; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .4713/DEL/2012 4713/DEL/2012 4713/DEL/2012 4713/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -36(1) 36(1) 36(1) 36(1), ,, , NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, B BB B- -- -55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, I.P. EXTENSION, I.P. EXTENSION, I.P. EXTENSION, I.P. EXTENSION, DELHI DELHI DELHI DELHI 110 092. 110 092. 110 092. 110 092. PAN : AAIPP6317M. PAN : AAIPP6317M. PAN : AAIPP6317M. PAN : AAIPP6317M. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO.3850/DEL/2012 .3850/DEL/2012 .3850/DEL/2012 .3850/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2008 2008 2008 2008- -- -09 0909 09 SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, B BB B- -- -55, KIRPAL APAR 55, KIRPAL APAR 55, KIRPAL APAR 55, KIRPAL APARTMENTS, TMENTS, TMENTS, TMENTS, I.P. EXTENSION, I.P. EXTENSION, I.P. EXTENSION, I.P. EXTENSION, DELHI DELHI DELHI DELHI 110 092. 110 092. 110 092. 110 092. PAN : AAIPP6317M. PAN : AAIPP6317M. PAN : AAIPP6317M. PAN : AAIPP6317M. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -36(1), 36(1), 36(1), 36(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : MS. ASHIMA NAB, SR.DR. ASSESSEE BY : SHRI ASHWANI TANEJA, ADVOCATE AND SHRI SOMIL AGARWAL, CA. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : : : : THESE APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIREC TED AGAINST THE ORDER OF LEARNED CIT(A)-XXX, NEW DELHI DATED 14 TH JUNE, 2012 FOR THE AY 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- ITA-4713 & 3850/D/2012 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAD ERRED IN DELETING ADDITION OF RS.1,34, 20,036/-, WHICH IS 75% COST OF IMPROVEMENT DISALLOWED BY THE ASSESSING OFFICER AS THE ASSESSEE FAILED TO FURNISH BILLS OF THE COST OF CONSTRUCTION DURING THE ASSESSMENT STAGE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAD ERRED IN ADMITTING TWO VALUATION REPO RTS FROM THE GOVT. APPROVED VALUER AS EVIDENCE OF COST OF CONSTRUCTION OF THE TWO PROPERTIES FURNISHED DURING TH E APPELLATE IGNORING THE SUBMISSION OF THE A.O. THAT NON E OF THE APPELLATE IGNORING THE SUBMISSION OF THE A.O. THAT NONE OF THE CONDITIONS SPECIFIED IN RULE 46A ARE FULFILLE D AND IT IS AN AFTER THOUGHT. THE ASSESSEE COULD NOT FURNISH BILLS O F COST OF CONSTRUCTION EVEN AT THE APPELLATE STAGE, WHIC H CLEARLY PROVES THAT THE ASSESSEE DID NOT HAVE EVIDENCE O F COST OF CONSTRUCTION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAD ERRED IN HOLDING THAT A.O. DID NOT CO NTROVERT OR DENY THE ADMISSION OF VALUATION REPORTS AT THE APP ELLATE STAGE AS IS CLEAR FROM A.O.S LETTER DATED 29.03.2012. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN HOLDING THAT RS.1.50 CRORE WAS WIT HDRAWN FROM THE BANK ACCOUNT ONLY FOR THE MEETING THE COST OF CONSTRUCTION OF THE TWO PROPERTIES WITHOUT VERIFYING THE FULL FACTS OF THE CASE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE ASSESSEE IN HIS APPEAL HAS RAISED THE FOLLOWING GRO UNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN M AKING ADDITION OF RS.35,00,000/- U/S 69B OF INCOME TAX ACT, 1961 ALLEGEDLY AS UNDISCLOSED INVESTMENT THAT TOO WITHOUT GI VING SHOW CAUSE NOTICE AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. 2. THAT THE ADDITION MADE BY LD.CIT(A) IS CONTRARY T O LAW AND FACTS BEYOND JURISDICTION AND THE SAME HAS BEEN MAD E ITA-4713 & 3850/D/2012 3 WITHOUT COMPLYING WITH THE PROVISIONS OF LAW AND WIT HOUT COMPLYING WITH THE PROVISIONS OF SECTION 251 OF THE INCOME TAX ACT, 1961. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER TH E ADDITION MADE BY THE CIT(A) IS FACTUALLY INCORRECT, ILLEGAL, WITHOUT JURISDICTION, VOID-AB-INITIO AND THE SAME HA S BEEN MADE AFTER RECORDING INCORRECT FACTS AND FINDINGS. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN H OLDING THAT INCOME OF THE ASSESSEE IS TAXABLE UNDER THE HEAD BUSINESS AND PROFESSION INSTEAD OF CAPITAL GAIN AS SHOWN BY THE ASSESSEE IN THE RETURN. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN IM POSING PENALTY OF RS.25,000/- U/S 271A OF THE INCOME TAX ACT , 1961 AND THE SAME IS BEYOND THE JURISDICTION, ILLEGAL AND CONTRARY TO LAW AND FACTS. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND , MODIFY, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE O R AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WI THOUT PREJUDICE TO EACH OTHER. 4. SINCE ALL THE GROUNDS OF BOTH THE APPEALS ARE INTE RRELATED, WE TAKE THEM TOGETHER. 5. THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN DECLARING INCOME OF ` 11,06,220/- ON 20 TH OCTOBER, 2008, WHICH INCLUDED SHORT TERM CAPITAL GAI NS OF ` 4,82,726/- ON THE SALE OF TWO PROPERTIES AT GK-1/GK-3. ON ONE PROPERTY, THE ASSESSEE HAS SHOWN THE CAPITAL GAIN OF ` 38,51,064/- WHILE ON ANOTHER PROPERTY, THE ASSESSEE HAS SHOWN THE CAPITAL LOSS OF ` 33,68,338/-. THE ABOVE CAPITAL GAIN/CAPITAL LOSS WAS WORKED OUT AFTER C LAIMING THE COST OF IMPROVEMENT ON THE TWO PROPERTIES AMOUNTING TO ` 1,22,98,550/- AND ` 61,48,700/- RESPECTIVELY. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURN ISH THE ITA-4713 & 3850/D/2012 4 COMPLETE DETAILS FOR COST OF IMPROVEMENT IN RESPECT OF THESE PROPERTIES. HOWEVER, IN RESPONSE TO WHICH, THE ASSESSEE C OULD PRODUCE ONLY THE RECEIPT OF COMPOUNDING FEE AND SOME VOUCHERS RELATING TO LEDGER PAYMENT. CONSIDERING THOSE DETAIL S, THE ASSESSING OFFICER ALLOWED 25% OF THE COST OF IMPROVEMENT CLAIM ED BY THE ASSESSEE AND HE DISALLOWED REMAINING 75% OF THE COST OF I MPROVEMENT AMOUNTING TO ` 1,34,20,036/-. HE MADE THE ADDITION OF ` 1,34,20,036/- TO THE RETURNED INCOME WITHOUT SPECIFYING THE HEAD OF INCOME UNDER WHICH THIS ADDITION IS MADE. BEFORE THE LEARNED CIT( A), THE ASSESSEE FILED THE ADDITIONAL EVIDENCE IN THE FORM OF VALUAT ION REPORT OF THE REGISTERED VALUER. THE ASSESSING OFFICER CALLED FOR THE REMAND REPORT OF THE ASSESSING OFFICER IN WHICH THE ASSESSING OFFICER OB JECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE. THE CIT(A) OVERRUL ED THE ASSESSING OFFICERS OBJECTIONS AND ADMITTED THE ADDITIONAL EVID ENCE. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION WITH REGARD TO INCUR RING OF ` 1,84,47,250/- FOR THE IMPROVEMENT IN RESPECT OF THESE TWO PROPERTIES. HE, HOWEVER, FOUND THAT THE ASSESSEE HAS SHOWN THE WITHDR AWAL FROM THE BANK OF ` 1,50,00,000/- ONLY. THEREFORE, HE MADE THE ADDITIO N OF ` 35,00,000/- AS UNEXPLAINED INVESTMENT BY THE ASSESSEE IN RESPECT OF IMPROVEMENT OF THESE TWO PROPERTIES. HE ALSO OBSERVED THAT THE INCOME IS TO BE ASSESSED UNDER THE HEAD PROFIT AND GAI NS OF BUSINESS AND NOT AS CAPITAL GAINS. HE FURTHER OBSERVED THAT SI NCE THE ASSESSEE IS CARRYING ON THE BUSINESS, HE WAS REQUIRED TO MAINTAI N THE BOOKS OF ACCOUNT. THEREFORE, HE LEVIED THE PENALTY UNDER SE CTION 271A AMOUNTING TO ` 25,000/-. BOTH THE PARTIES, AGGRIEVED WITH THE ORDE R OF LEARNED CIT(A), ARE IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTED B Y THE LEARNED DR THAT THE CIT(A) ADMITTED THE ADDITION EVIDENCE OBJECTING TO THE ADMISSION OF ADDITIONAL EVIDENCE BY THE ASSESSING OFFICER . THAT THE ASSESSING OFFICER HAS ALLOWED ADEQUATE OPPORTUNITY TO TH E ASSESSEE TO ITA-4713 & 3850/D/2012 5 PRODUCE THE EVIDENCE IN SUPPORT OF THE COST OF IMPROV EMENT. THE ASSESSEES COUNSEL FAIRLY ADMITTED THAT APART FROM FEW VO UCHERS IN RESPECT OF LEDGER PAYMENTS AND THE COMPOUNDING FEE, T HE ASSESSEE DOES NOT POSSESS ANY OTHER EVIDENCE. THEREFORE, THE CIT (A) WAS NOT JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE. SHE , ALTERNATIVELY, SUBMITTED THAT IF THE ADDITIONAL EVIDENCE HAS BEEN AD MITTED BY THE CIT(A) OVERRULING THE ASSESSING OFFICERS OBJECTION, HE SHOULD HAVE ALLOWED AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE THOSE ADDITIONAL EVIDENCE. SHE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED OR, ALTERNATIVELY, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 7. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STATED THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE EVID ENCE WITH REGARD TO COST OF IMPROVEMENT VIDE ORDER SHEET ENTRY DATED 15 TH DECEMBER, 2010 AND PASSED THE ASSESSMENT ORDER ON 30 TH DECEMBER, 2010. THUS, THE TOTAL TIME ALLOWED TO THE ASSESSEE WAS L ESS THAN 15 DAYS. CONSIDERING THESE FACTS, THE CIT(A) HAS RIGHTLY A DMITTED THE ADDITIONAL EVIDENCE. HE FURTHER SUBMITTED THAT THE CIT(A) HAS ALLOWED AN OPPORTUNITY TO THE ASSESSING OFFICER BEFORE ADMITTIN G THE ADDITIONAL EVIDENCE AND IF THE ASSESSING OFFICER HAS NOT GIVEN HIS C OMMENTS ON THE MERITS OF THE ADDITIONAL EVIDENCE, HE CANNOT BE ALLOWED A SECOND OPPORTUNITY. IN SUPPORT OF THIS CONTENTION, HE RELIE D UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VI RGIN SECURITIES AND CREDITS P.LTD. [2011] 332 ITR 396 (DELHI). ACCORD INGLY, HE SUPPORTED THE ORDER OF LEARNED CIT(A) SO FAR AS THE REVENUES AP PEAL IS CONCERNED. HOWEVER, WITH REGARD TO HIS APPEAL, HE ST ATED THAT THE ASSESSING OFFICER MADE THE ADDITION OF ` 35,00,000/- UNDER SECTION 69B WITHOUT ALLOWING ANY OPPORTUNITY TO THE ASSESSEE. HE ST ATED THAT NO ADDITION UNDER SECTION 69B WAS MADE BY THE ASSESSING OFF ICER AND ITA-4713 & 3850/D/2012 6 THEREFORE, THE ACTION OF THE CIT(A) AMOUNTS TO ENHAN CEMENT OF INCOME. HE WAS DUTY BOUND TO ALLOW SPECIFIC OPPORTUNITY BEFOR E MAKING ANY ENHANCEMENT. HE FURTHER SUBMITTED THAT THE CIT(A) DIRECTED THAT THE INCOME FROM SHORT TERM CAPITAL GAIN IS TO BE ASSESSED AS BUSINESS INCOME. AGAIN, THIS FINDING IS GIVEN WITHOUT ALLOWIN G ANY OPPORTUNITY TO THE ASSESSEE. SIMILARLY, PENALTY OF ` 25,000/- US/ 271A WAS LEVIED WITHOUT ANY SPECIFIC OPPORTUNITY TO THE ASSESSEE. HE, T HEREFORE, SUBMITTED THAT THE ASSESSEES APPEAL SHOULD BE ALLOWED AND REVENUES APPEAL SHOULD BE DISMISSED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AFTE R CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, I N OUR OPINION, THE ENTIRE MATTER NEEDS RE-EXAMINATION AT THE END OF THE ASSESSING OFFICER. THE ASSESSING OFFICER, FOR THE FIRST TIME, VI DE NOTE SHEET ENTRY DATED 15 TH DECEMBER, 2010, ASKED THE ASSESSEE TO FURNISH COMPLETE BILLS OF COST OF IMPROVEMENT. THE CASE WAS ADJOURNED T O 20 TH DECEMBER, 2010. THEREAFTER, ON THE REQUEST OF THE A SSESSEE, THE CASE WAS ADJOURNED TO 24 TH DECEMBER, 2010 AND THEN FINALLY, THE ASSESSMENT ORDER WAS PASSED ON 30 TH DECEMBER, 2010. THUS, AFTER 15 TH DECEMBER, 2010, THE OPPORTUNITY ALLOWED TO THE ASSESSE E WAS UP TO 24 TH DECEMBER, 2010 WHICH WAS LESS THAN TEN DAYS. THIS CAN NOT BE SAID TO BE ADEQUATE OPPORTUNITY. THEREFORE, WE AGRE E WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CIT(A) WAS JUSTIFIED I N ADMITTING THE ADDITIONAL EVIDENCE. WE ALSO FIND THAT THE CIT(A) A LLOWED OPPORTUNITY TO THE ASSESSING OFFICER BEFORE ADMITTING ADDITIONAL EV IDENCE. HOWEVER, IN THE REMAND REPORT, THE ASSESSING OFFICER ON LY OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AND HE HAS NOT GI VEN ANY COMMENT ON THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE. THE CIT(A) RIGHTLY OVERRULED THE ASSESSING OFFICERS OBJECTI ON AND ADMITTED THE ADDITIONAL EVIDENCE BUT, IN OUR OPINION, THEREA FTER, HE SHOULD HAVE ITA-4713 & 3850/D/2012 7 ALLOWED ANOTHER OPPORTUNITY TO THE ASSESSING OFFICER F OR SUBMITTING HIS COMMENTS ON THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE. ON THESE FACTS, THE DECISION OF HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. MANISH BUILD WELL (P.) LTD. [2012] 204 T AXMAN 106 WOULD BE APPLICABLE, WHEREIN THEIR LORDSHIPS HELD AS UNDER:- IT IS FOR THE AFORESAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE T HE COMMISSIONER (APPEALS) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTAR Y, OTHER THAN THE EVIDENCE ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STATEMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE COMMISSIONER (APPEALS) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST APP ELLATE STAGE ONLY WHEN CONDITIONS STIPULATED IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCI SED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETW EEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE COMMISSIONER (APPEALS) AND A CASE WHERE THE COMMISSIONER (APPEALS), WITHOUT BEING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER EN QUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTION (4) OF SECTION 250. IT IS ONLY WHEN HE EXERCISES HIS STATUTOR Y SUO MOTO POWER UNDER THE ABOVE SUB-SECTION, THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON TH E OTHER HAND, WHENEVER THE ASSESSEE, WHO IS IN APPEAL BEFORE HIM, INVOKES RULE 46A, IT IS INCUMBENT UPON T HE COMMISSIONER (APPEALS) TO COMPLY WITH THE REQUIREMENTS OF THE RULE STRICTLY. 9. LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE D ECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIRG IN SECURITIES AND CREDITS P.LTD. (SUPRA). HOWEVER, WE FIND THAT THE FA CTS IN THAT CASE ITA-4713 & 3850/D/2012 8 WERE ALTOGETHER DIFFERENT, WHICH IS CLEAR FROM THE F OLLOWING OBSERVATION OF HON'BLE JURISDICTIONAL HIGH COURT :- HELD, DISMISSING THE APPEAL, (I) THAT BEFORE ADMITTIN G THE ADDITIONAL EVIDENCE THE COMMISSIONER (APPEALS) HAD OBTAINED A REMAND REPORT FROM THE ASSESSING OFFICER. I N THE REMAND REPORT THE ASSESSING OFFICER HAD NOT OBJECTE D TO THE ADMISSION OF THE ADDITIONAL EVIDENCE. THE ADD ITIONAL EVIDENCE WAS CRUCIAL TO THE DISPOSAL OF THE APPEAL AN D HAD A DIRECT BEARING ON THE QUANTUM OF THE CLAIM MADE B Y THE ASSESSEE. RULE 46A OF THE INCOME-TAX RULES, 1962, PERMI TS THE COMMISSIONER (APPEALS) TO ADMIT ADDITIONAL EVIDENC E IF HE FINDS THAT THE SAME IS CRUCIAL FOR DISPOSAL OF THE AP PEAL. 10. FROM THE ABOVE, IT IS EVIDENT THAT IN THE ABOVE CASE, THE ASSESSING OFFICER HAD NOT OBJECTED TO THE ADMISSION OF AD DITIONAL EVIDENCE. WHILE IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER HAD OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCE. THERE FORE, ON THESE FACTS, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF MANISH BUILD WELL (P.) LTD. (SUPRA) WOULD BE APPLICAB LE. SO FAR AS ADDITION UNDER SECTION 69B MADE BY THE CIT(A) AND H IS OBSERVATION WITH REGARD TO THE HEAD OF INCOME AND LEVY OF PENAL TY UNDER SECTION 271A IS CONCERNED, WE FIND THAT ALL THESE ASPECTS WERE NOT CONSIDERED BY THE ASSESSING OFFICER. THE CIT(A) MADE THESE ADDITIO NS AND OBSERVATIONS WITHOUT ALLOWING ANY SPECIFIC OPPORTUNIT Y TO THE ASSESSEE WHICH CANNOT BE SAID TO BE JUSTIFIED. AT THE SAME TIM E, WE ARE OF THE OPINION THAT THE ISSUE WITH REGARD TO THE SOURCE OF CO ST OF IMPROVEMENT ALSO NEEDS EXAMINATION. THE ISSUE WHETHER THE INCOME F ROM SALE OF PROPERTY IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS O R BUSINESS INCOME ALSO NEEDS EXAMINATION BECAUSE FROM THE DETAIL S SUBMITTED BY THE ASSESSEE, WE FIND THAT ONE PROPERTY AT GK-1 WAS PURC HASED BY THE ASSESSEE ON 2.4.2006 FOR ` 43,00,386/- AND ASSESSEE CLAIMED TO HAVE INCURRED THE EXPENDITURE FOR IMPROVEMENT AMOUNTING TO ` 1,22,98,550/-. THE PROPERTY IS SOLD ON 31.3.2008. A NOTHER PROPERTY ITA-4713 & 3850/D/2012 9 WAS PURCHASED ON 10.1.2007 FOR ` 18,69,638/-, COST OF IMPROVEMENT IS CLAIMED AT ` 61,48,700/- AND THE PROPERTY IS SOLD ON 30.1.2008. O N THESE FACTS, IT CERTAINLY REQUIRES EXAMINATION WHETHER THE PROFIT/LOSS FROM THE SALE OF THOSE TWO PROPERTIES IS ASSESSABLE UNDER T HE HEAD CAPITAL GAINS OR BUSINESS INCOME. IN VIEW OF THE TOTA LITY OF THESE FACTS, WE DEEM IT PROPER TO SET ASIDE THE ISSUE RAISED BY THE R EVENUE AS WELL AS BY THE ASSESSEE IN THEIR APPEALS AND RESTORE THE MATTE R TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION OF THE WHOLE I SSUE AND PASSING OF A SPEAKING ORDER THEREON IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, BOTH THE APPEALS ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2014. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 22.08.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -36(1), NEW DELHI. 36(1), NEW DELHI. 36(1), NEW DELHI. 36(1), NEW DELHI. 2. RESPONDENT : SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, SHRI CHANDER JEET PATHAK, B B B B- -- -55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, 55, KIRPAL APARTMENTS, I.P. EXTENSION, DELHI I.P. EXTENSION, DELHI I.P. EXTENSION, DELHI I.P. EXTENSION, DELHI 110 092. 110 092. 110 092. 110 092. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR