DHANSUKH B.GOHIL, MUMBAI V. ITO 14(2)(1), MUMBAI

ITA 4774/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7416 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: HETAL D GOHIL
• Keywords: Depreciation; Retraction
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D: MUMBAI BEFORE SHRI S.V. MEHROTRA (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 4774/MUM/2008 (ASSTT. YEAR : 2004-05) SHRI DHANSUKH B. GOHIL APPELLANT SHANTI BHAVAN, 47, OLD HANUMAN LANE, KALBADEVI ROAD, MUMBAI- 400 002 PAN : AAFPG5831J V/S. INCOME TAX OFFICER 14(2)(1), RESPONDENT AAYAKAR BHAVAN, MAHARSHI KARVE ROAD MUMBAI 400 020 APPELLANT BY :MS. HETAL D. GOHIL RESPONDENT BY :MR. T.T. JACOB : O R D E R : PER R.S. PADVEKAR, J.M THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE IMPUGNED ORDER OF THE LD CIT(A)- XIV, MUMBAI DATED 14.5.2008 FOR T HE A.Y. 2004-05. 2. THE FIRST ISSUE IS IN RESPECT OF THE ADDITION OF RS.5,10,500/- TOWARDS LONG TERM CAPITAL GAIN. 3. THE ASSESSEE IS AN INDIVIDUAL. THE A.O RECEIV ED THE INFORMATION FROM THE ADDL. DIT (INVESTIGATION), UNIT I, MUMBAI THAT THE ASSESSEE HAS SOLD HIS RESIDENTIAL PREMISES AT HIRA MAREK, KALBADEVI IN 20 03 TO ONE SHRI GANESHYAM RAMNARESH TIWARI FOR SUM OF RS. 18,21,000/-, OUT OF WHICH A SUM OF RS. 10,21,007/- WAS ALLEGEDLY RECEIVED IN CASH OR IN OT HER WORDS THAT WAS IN THE BLACK MONEY. THE A.O. ASKED THE EXPLANATION OF THE ASSESSEE WHY THE SALE CONSIDERATION OF THE FLAT SHOULD NOT BE TAKEN AT RS . 18,21,000/- AS HE HAS ADMITTED THE SAID FACT IN HIS STATEMENT RECORDED U/ S. 131 DT. 16.3.2004 BY THE DDI (INVESTIGATION), MUMBAI. THE ASSESSEE REQUESTE D TO PROVIDE THE COPY OF ITA NO. 4774/MUM/2008 2 THE STATEMENT RECORDED BY THE DDI (INVESTIGATION), MUMBAI, AND A.O PROVIDED THE COPY TO THE ASSESSEE. THE ASSESSEE RETRACTED T HE STATEMENT GIVEN BEFORE THE DDI BY TAKING THE STAND THAT THE SAID STATEMENT WAS NOT IN HIS HANDWRITING AND HE HAS NO KNOWLEDGE OR HE CANNOT READ AND WRITE IN HINDI OR ENGLISH. THE A.O REJECTED RETRACTION MADE BY THE ASSESSEE AND M ADE THE ADDITION OF RS.5,10,500/-, TO THE EXTENT OF 50% OF HIS SHARE IN THE SAID FLAT. IT WAS ALSO NOTICED BY THE A.O THAT THOUGH THE SALE CONSIDERATI ON WAS SHOWN AT RS. 8,00,000/-, BUT THE MARKET VALUE ADOPTED BY THE STA MP VALUATION AUTHORITY WAS RS. 15,36,444/-. THE A.O, THEREFORE, AGAIN SOU GHT THE EXPLANATION OF THE ASSESSEE WHY THE SALES CONSIDERATION SHOULD NOT B E SUBSTITUTED WITH THE MARKET VALUE ADOPTED FOR THE PURPOSE OF THE STAMP D UTY VALUATION WHICH WAS AT RS. 15,36,444/- AS PER PROVISIONS OF SECTION 50 -C OF THE I.T. ACT. THOUGHT, THE A.O NOTED THAT RS. 3,68,222/- SHOULD B E ADDED TO THE LONG TERM CAPITAL GAIN IN ADDITION TO THE LTCG DECLARED BY TH E ASSESSEE AND APPLYING THE PROVISIONS OF SECTION 50-C, BUT AS THE HIGHER S ALE CONSIDERATION WAS ACCEPTED IN THE STATEMENT RECORDED U/S. 131 OF THE I.T. ACT, THE A.O PREFERRED TO MAKE THE ADDITION OF RS.5,10,500/- TREATING THE SAME AS LONG TERM CAPITAL GAIN. 4. THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE A.O BEFORE THE LD CIT(A). BEFORE THE LD CIT(A), THE ASSESSEE CONTEND ED THAT THE A.O WAS NOT JUSTIFIED IN REJECTING THE RETRACTION OF STATEMENT MADE BY HIM AS THE ASSESSEE WAS TOTALLY IGNORANT IN RESPECT OF THE LANGUAGE USE D BY THE TAX OFFICIALS, ON WHICH HIS SIGNATURE WAS TAKEN. THE ASSESSEE ALSO C ONTENDED THAT THE ASSESSEE HAS AGREED AND HE IS WILLING TO ACCEPT THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY AND THEREFORE, THE ADDITI ON OF RS.8,68,222/-, AT THE BEST, COULD BE MADE. THE ASSESSEE TOOK THE ALTERNA TE PLEA THAT ROOM NO.22 IN HIRA MANEK BUILDING AT KALBADEVI, MUMBAI WAS BEI NG USED BY THE ASSESSEE FOR HIS BUSINESS AS A TAILOR AND THEREFORE, IT WAS A COMMERCIAL PREMISES. IT WAS FURTHER CONTENDED THAT THE ASSESSEE SOLD SAID C OMMERCIAL PREMISES AND PURCHASED ANOTHER COMMERCIAL PREMISES BEING SHOP NO. 3 IN SUSHILA CO- OPERATIVE SOCIETY, BORIVALI (WEST), MUMBAI AND AS B OTH THESE BUSINESS PREMISES ARE FALLING IN THE SAME BLOCK OF ASSETS O N WHICH DEPRECIATION WAS ALLOWABLE AT THE SAME RATE, NO CAPITAL GAIN IS LIAB LE TO TAX AS CONSIDERATION WAS UTILIZED FOR ACQUIRING ANOTHER ASSET FALLING INTO T HE SAME BLOCK OF ASSET. IT ITA NO. 4774/MUM/2008 3 WAS, THEREFORE, PLEADED THAT THE ADDITION OF RS. 5, 10,500/- DESERVES TO BE DELETED. THE ASSESSEE DID NOT FIND THE FAVOUR BEFOR E THE LD CIT(A). THE LD CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O ON T HE BASIS OF STATEMENT GIVEN U/S. 131 OF THE I.T. ACT. IN RESPECT OF ALT ERNATE PLEA OF THE ASSESSEE THAT IT FORMS THE PART OF THE BLOCK OF ASSET AND HE NCE, THERE IS NO QUESTION OF TAXING THE CAPITAL GAIN, THE LD CIT(A) HELD THAT T HE ASSESSEE HAS NOT RAISED THIS PLEA BEFORE THE A.O NOR THE PROPERTY SOLD WAS SHOWN AS ASSET USED FOR THE PURPOSE OF BUSINESS. NOW THE ASSESSEE IS IN APPEA L BEFORE US. 5. WE HAVE HEARD THE PARTIES. THE ASSESSEE HAS FIL ED THE WRITTEN SUBMISSION. THE FIRST CONTENTION OF THE ASSESSEE I S THAT THE ASSESSEE WAS NOT AWARE ABOUT THE HINDI IN WHICH THE STATEMENT WAS R ECORDED BY THE DDI ON 16.3.2004. IT IS ALSO CONTENDED THAT THE COPY OF T HE STATEMENT RECORDED WAS FURNISHED TO THE ASSESSEE BY THE A.O FOR THE FIRST TIME ON 23.8.2006 AND THEREAFTER, IMMEDIATELY VIDE HIS LETTER DT. 11.9.20 06 HE RETRACTED THE STATEMENT AND IT WAS THE FIRST AVAILABLE OPPORTUNI TY TO THE ASSESSEE AND EXCEPT THE ORAL STATEMENT , THERE IS NOTHING ON REC ORD TO SUPPORT THE CASE OF THE A.O. IT IS, THEREFORE, PLEADED THAT THE ADDIT ION MADE OF RS. 5,10,500/- TREATING THE SAME AS LONG TERM CAPITAL GAIN, IN ADD ITION TO THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN HIS RETURN , MAY BE DELETED. ALTERNATIVELY, IT IS PLEADED THAT THE PREMISES WHI CH WAS SOLD WAS A PART OF HIS BUSINESS ASSET AND AFTER SELLING THE SAID PREMISES, THE ASSESSEE ACQUIRED ANOTHER PREMISES FOR HIS BUSINESS BEING SHOP NO. 3 IN SUSHILA CO-OP. SOCIETY, BORIVALI (W), MUMBAI AND HENCE, THE GROSS CONSIDERA TION IS TO BE DEDUCTED FROM THE BLOCK OF ASSET AND THEREAFTER, ONLY THE TA XABLE CAPITAL GAIN IS TO BE WORKED OUT. IT IS ALSO PLEADED THAT THE LD CIT(A) SHOULD HAVE ADOPTED THIS ISSUE AND SHOULD NOT HAVE BRUSHED ASIDE THE CONTENT ION OF THE ASSESSEE ON THE TECHNICAL REASON THAT THE SAID PLEA WAS NOT TAKEN B EFORE THE A.O. IN THE WRITTEN SUBMISSION, THE ASSESSEE HAS RELIED ON THE FOLLOWING PRECEDENTS : I) DCIT V/S. S.L. THEATRES (P) LTD., (2009), 312 IT R (AT) 95 (COCHIN). II) CIT V/S. TREHAN ENTERPRISES (2001), 148 ITR 33 3 (ALL) III) ITO V/S. WORLD WIDE STONES RIICO INDL. AREA ( 2008), 172 TAXMAN 83 (JP) (MAG). ITA NO. 4774/MUM/2008 4 IV) DCIT V/S. MAX INDIA LTD., (2007), 122 TTJ (ASR ) 726 6. PER CONTRA, THE LD. D.R. SUBMITTED THAT THE ASSE SSEE ADMITTED IN THE STATEMENT U/S. 131 OF THE ACT AND AFTER TWO YEARS , ON AFTER-THOUGHT, HE RETRACTED THE STATEMENT BY TAKING THE STAND THAT HE WAS NOT KNOWING HINDI. IT IS ALSO ARGUED THAT THE THING IS ON RECORD TO SHOW THAT THE ASSET WHICH WAS SOLD WAS PART OF THE BLOCK OF ASSET. HE, THEREFORE , PLEADED THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE A.O. 7. ON RIVAL SUBMISSIONS, WE FIND THAT THE A.O. MAD E THE ADDITION TO THE CAPITAL GAIN TO THE EXTENT OF RS. 5,10,500/- WHICH IS MERELY BASED ON THE STATEMENT GIVEN BY THE ASSESSEE BEFORE THE DDI, MUM BAI. IT IS ALSO SEEN THAT THE STATEMENT IS RECORDED IN HINDI. IT APPEARS TH AT THE COPY OF THE STATEMENT WAS NOT GIVEN TO THE ASSESSEE AND IT WAS FOR THE F IRST TIME GIVEN TO THE ASSESSEE ON 23 RD AUGUST 2006 AND SAID FACT HAS NOT BEEN CONTROVERTE D BY THE REVENUE. THE ONLY BASE FOR THE ADDITION IS THE ORA L STATEMENT OF THE ASSESSEE RECORDED UNDER SEC. 131 OF THE ACT WHICH WAS SUBSEQ UENTLY RETRACTED. IT APPEARS THAT THE ASSESSEE IS NOT HAVING THE KNOWLED GE OF HINDI AND THAT IS CLEAR FROM THE COPY OF THE AGREEMENT TO SALE FILED ON RECORD ON WHICH ASSESSEE HAS SIGNED IN GUJARATI. NOTHING HAS BEEN THERE ON RECORD TO CORROBORATE THE RETRACTED STATEMENT OF THE ASSESSEE GIVEN U/S. 131 OF THE ACT. MERE ORAL ADMISSION IS NOT SUFFICIENT TO SUSTAIN ADDITION AS IN OUR OPINION, AT THE FIRST AVAILABLE OPPORTUNITY, THE ASSESSEE RETRACTED THE S TATEMENT, THEN THE ONUS IS ON THE REVENUE TO PROVE THAT IN FACT, THE PREMISES WERE SOLD FOR RS. 18,21,000/-. IN OUR OPINION, THERE IS NO JUSTIFICA TION TO SUSTAIN THE ADDITION MADE BY THE A.O WHICH IS MERELY BASED ON THE STATEM ENT RECORDED U/S. 131 WHICH WAS SUBSEQUENTLY RETRACTED. COMING TO THE AL TERNATE PLEA OF THE ASSESSEE, IN OUR OPINION, IT NEED NOT TO BE ADJUDIC ATED AS THE A.O HAS MADE THE ADDITION WHICH IS BASED ON THE STATEMENT GIVEN UNDER SEC. 131 OF THE ACT. THOUGH THE A.O HAS NOT SPECIFICALLY MENTIONED THE S ECTION UNDER WHICH THE ADDITION IS MADE, BUT IT IS CLEAR THAT THE ADDITION IS MADE U/S. 69. AS WE HAVE DELETED THE ADDITION ITSELF, WE NEED NOT GO INTO TH E LEGALITY AND APPLICABILITY OF SECTION 50-C, UNDER WHICH NO ADDITION IS MADE. WE ACCORDINGLY ALLOW THE MAIN PLEA OF THE ASSESSEE AND DELETE THE ADDITION M ADE BY THE A.O. ITA NO. 4774/MUM/2008 5 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. OR DERED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY OF MARCH , 2010. SD/- SD/- (S.V. MEHROTRA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEM BER MUMBAI, ON THIS 31ST DAY OF MARCH, 2010. :US COPY TO: 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)- XIV, MUMBAI 4.THE CIT -14, MUMBAI 5.THE DR, D BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO. 4774/MUM/2008 6 US DATE INITIALS 1. DRAFT DICTATED ON 27/3/10 --------------- SR.P.S . 2. DRAFT PLACED BEFORE AUTHORITY 30/3/10 -------- ------ SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----