Pankaj Kumar Jain, Delhi V. ITO, New Delhi

ITA 5086/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6944 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Assessee Lawyers: DINESH BANSAL
• Keywords: Opportunity of being heard; Cost of acquisition
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.5086/DEL/2015 ASSESSMENT YEAR : 2011-12 PANKAJ KUMAR JAIN, 106, DARYA GANJ, DELHI. VS. ITO, WARD- 38(3), NEW DELHI. PAN : AAHPJ4554D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH BANSAL, ADV. DEPARTMENT BY : SHRI VIJAY KR. JIWANI, SR.DR DATE OF HEARING : 23-07-2018 DATE OF PRONOUNCEMENT : 26-07-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 19.05.2015 OF THE CIT(A)- 20, NEW DELHI RELATING TO ASSESSMENT YEAR 2011-12. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PROPERTY, CONTRACT RECEIP TS AND INCOME FROM OTHER SOURCES. HE FILED HIS RETURN OF INCOME ON 30.07.20 11 DECLARING TOTAL INCOME OF RS.3,32,754/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE, IN HIS COMPUTAT ION OF INCOME FOR THE YEAR UNDER CONSIDERATION, HAS DECLARED NIL INCOME UNDER THE HEAD CAPITAL GAINS. AS PER THE AIR INFORMATION, THE ASSESSEE WAS REPORT ED TO HAVE SOLD IMMOVABLE PROPERTY FOR A CONSIDERATION OF RS.60 LAKHS. THE A SSESSING OFFICER ASKED THE 2 ITA NO.5086/DEL/2015 ASSESSEE TO FURNISH THE DETAILS OF THE PROPERTY SOL D. THE ASSESSEE EXPLAINED THAT HE HAD SOLD AN IMMOVABLE PROPERTY AT 132, CHITRA VI HAR, DELHI FOR A CONSIDERATION OF RS.60 LAKHS ON 30.04.2010 AND HAS PURCHASED A RESIDENTIAL PROPERTY SUBSEQUENTLY VALUED AT RS.23.40 LAKHS. AF TER CLAIMING INDEXED COST OF ACQUISITION AT RS.36,75,412/- FROM THE SALE CONSIDE RATION OF RS.60 LAKHS, LONG TERM CAPITAL GAIN OF RS.23,24,588/- WAS EARNED ON W HICH DEDUCTION U/S 54 WAS CLAIMED ON ACCOUNT OF COST OF NEW RESIDENTIAL PROPE RTY PURCHASED AT RS.23,40,000/-. ACCORDINGLY, THE CAPITAL GAIN WAS DECLARED TO BE NIL. 3. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE , FOR COMPUTING THE INDEXED COST OF ACQUISITION, HAD CLAIMED EXPENSES O F RS.70,000/- ON ACCOUNT OF COMMISSION AND STAMP CHARGES AND RS.7,30,000/- TOWA RDS COST OF IMPROVEMENT. SO FAR AS EXPENSES OF RS.70,000/- IS CONCERNED, THE ASSESSEE EXPLAINED THAT HE HAD INCURRED THESE EXPENSES ON ACCOUNT OF COMMISSIO N PAID FOR PURCHASE OF THE PROPERTY IN ADDITION TO THE OTHER COURT EXPENSES. SO FAR AS THE SUM OF RS.7,30,000/- CLAIMED TO HAVE SPENT TOWARDS COSTS O F IMPROVEMENT IS CONCERNED, IT WAS EXPLAINED THAT THE TERMITES HAD DESTROYED TH E ENTIRE BUILDING AND IT HAD TO BE RENOVATED. FROM THE DETAILS FURNISHED BY THE AS SESSEE TOWARDS THE COST OF IMPROVEMENT OF RS.7,30,000/-, THE ASSESSING OFFICER OBSERVED FROM THE BILLS AND VOUCHERS THAT THESE WERE IN RESPECT OF EXPENSES ON WHITE WASHING, LAYING OF TILES, ELECTRICAL FITTINGS, CEMENT, BRICKS, BADARPU R, TILES, WOOD WORK ETC. INCURRED IN THE YEAR 2007. LABOUR EXPENSES WERE ALSO CLAIME D TO BE PAID. HOWEVER, THE 3 ITA NO.5086/DEL/2015 PAPER CONTAINING SOME NAMES OF WORKERS WITH NUMBER OF DAYS, WAGE RATE AND PAYMENT ACKNOWLEDGED BY SOME THUMB IMPRINTS/ SIGNAT URES ON REVENUE STAMPS WAS FURNISHED. THE ASSESSING OFFICER WAS NOT SATIS FIED REGARDING THE CLAIM OF ABOVE TWO EXPENSES IN ABSENCE OF SATISFACTORY EXPLA NATION. HE, THEREFORE, REJECTED THE ABOVE TWO EXPENDITURE WHICH WERE CLAIM ED BY THE ASSESSEE TOWARDS COST OF IMPROVEMENT OR OTHER EXPENSES. THE ASSESSI NG OFFICER SIMILARLY OBSERVED THAT THE ASSESSEE HAD MADE CASH DEPOSIT OF RS.7,37,000/- IN THE SAVINGS BANK ACCOUNT MAINTAINED BY HIM. ON BEING Q UESTIONED BY THE ASSESSING OFFICER, THE ASSESSEE FILED CASH FLOW STA TEMENT ALONG WITH BANK STATEMENTS. IT WAS EXPLAINED THAT THE DEPOSITS MAD E IN THE BANK ACCOUNT ARE OUT OF WITHDRAWALS FROM VARIOUS BANK ACCOUNTS ON DIFFER ENT DATES. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SAME A ND ACCORDINGLY MADE ADDITION OF RS.7,37,000/- TO THE TOTAL INCOME OF TH E ASSESSEE. 4. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1) THE COMMISSIONER (APPEAL) FAILED IN LAW & ON FA CTS WHILE UPHOLDING THE ORDER OF THE ASSESSING OFFICER. 2) THE COMMISSIONER (APPEAL) IS NOT JUSTIFIED IN UP HOLDING THE DISALLOWANCES OF APPELLANTS CLAIM OF DEDUCTION OF RS.730000/- IN AS SESSMENT YEAR 2007-08, TOWARDS EXPENDITURE INCURRED IN IMPROVEMENT MADE TO THE PRO PERTY TRANSFERRED BY HIM. 3) THE COMMISSIONER (APPEAL) ERRED IN UPHOLDING THE DISALLOWANCES OF APPELLANTS CLAIM OF DEDUCTION OF RS.70000/- INCURRED ON SALE O F PROPERTY WITHOUT ANY JUSTIFICATION. 4) THE COMMISSIONER (APPEAL) ERRED IN UPHOLDING THE ACTION OF ASSESSING OFFICER, IN REJECTION OF CASH DEPOSIT IN BANK OF RS.737000/- OUT OF CASH IN HAND, OF RS.924000/- ON 1 ST APRIL, 2010, WITHOUT ANY JUSTIFICATION. 4 ITA NO.5086/DEL/2015 5) THE COMMISSIONER APPEAL, AS WELL AS ASSESSING OF FICER COULD NOT UNDERSTAND, THE SAID CASH DEPOSIT IN BANK OF RS.737000/- WAS TH E CLOSING BALANCE OF 31 ST MARCH, 2010 & NOT TO THE FINANCIAL YEAR 2010-2011 & THUS T HE SAME IS LIABLE TO BE ALLOWED. 6) THE ASSESSMENT ORDER IS AGAINST FACTS AND LAW ON THE ABOVE POINTS. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR A S DISALLOWANCE OF RS.7,30,000/- ON ACCOUNT OF EXPENDITURE INCURRED TO WARDS IMPROVEMENT MADE TO THE PROPERTY IS CONCERNED, IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DURING THE ASSESSMENT YEAR 2007-08, THE ASSESS EE HAD INCURRED THE SAID EXPENDITURE. IT WAS THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE THAT THE ASSESSEE, IN THE CAPITAL ACCOUNT AS ON 31 ST MARCH, 2007, COPY OF WHICH IS PLACED AT PAGE 34 OF THE PAPER BOOK, HAS DECLARED DRAWINGS OF RS.13,40,292/- WHICH INCLUDES THE COST OF IMPROVEMENT OF RS.7,30,000/-. IT IS ALSO HIS SUBMISSION THAT IN THE PRECEDING YEAR, THERE WAS NO SUCH HUGE WITHD RAWAL SHOWN AND SINCE THE ASSET WAS A PERSONAL ASSET, THEREFORE, THE ASSESSEE HAS NOT SEPARATELY SHOWN THE COST OF IMPROVEMENT BY INCREASING THE VALUE OF THE ASSET. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERE ST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFI CER WITH A DIRECTION TO VERIFY THE PERSONAL BALANCE SHEET/CAPITAL ACCOUNT OF THE ASSES SEE FOR THE PRECEDING AND SUBSEQUENT ASSESSMENT YEARS AND FIND OUT AS TO WHET HER THERE IS ANY SUBSTANTIAL VARIATION IN THE DRAWINGS DECLARED BY THE ASSESSEE. IN CASE THE PERSONAL WITHDRAWALS IN THE ASSESSMENT YEAR 2007-08 IS SUBST ANTIAL AND THE ASSESSEE CAN PROVE THAT THERE IS NO EXPENDITURE OTHER THAN THE E XPENDITURE INCURRED FOR 5 ITA NO.5086/DEL/2015 IMPROVEMENT OF THE HOUSE, THE ASSESSING OFFICER SUB JECT TO VERIFICATION OF OTHER DETAILS AND CIRCUMSTANTIAL EVIDENCES, MAY CONSIDER THE ALLOWABILITY OF SUCH CLAIM OF THE ASSESSEE TOWARDS COST OF IMPROVEMENT. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER FACTS AND LAW. THE FIRST I SSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL IS ACCORDINGLY ALLOWED FOR ST ATISTICAL PURPOSES. 7. SO FAR AS CLAIM OF RS.70,000/- TOWARDS EXPENSES INCURRED ON COMMISSION OR OTHER COURT EXPENSES IS CONCERNED, THE LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT GIVEN AN OPPORTUNITY HE IS IN A POSITION TO PR ODUCE THE BROKER BEFORE THE ASSESSING OFFICER FOR HIS EXAMINATION AND THE RELEV ANT DETAILS TOWARDS COURT EXPENSES. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ABOVE ISS UE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNI TY TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM BY PRODUCING THE BROKER TO W HOM SUCH COMMISSION HAS BEEN PAID FOR THE EXAMINATION OF THE ASSESSING OFFI CER. SIMILARLY, THE ASSESSEE IS ALSO HEREBY DIRECTED TO PRODUCE THE RELEVANT DET AILS SUBSTANTIATING THE COURT EXPENSES INCURRED BY HIM. THE SECOND ISSUE RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. SO FAR AS ADDITION OF RS.7,37,000/- IS CONCERNED , IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE CASH F LOW STATEMENT IS PROPERLY APPRECIATED THEN THERE WAS NO JUSTIFICATION IN MAKI NG THE ADDITION ON ACCOUNT OF 6 ITA NO.5086/DEL/2015 DEPOSIT IN THE BANK ACCOUNT. CONSIDERING THE TOTAL ITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RE STORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPOR TUNITY TO THE ASSESSEE TO SUBSTANTIATE THAT VARIOUS DEPOSITS MADE IN THE BANK ACCOUNT IS OUT OF WITHDRAWALS MADE BY THE ASSESSEE FROM OTHER BANK AC COUNTS AND THE CASH AVAILABLE WITH THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH JULY, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26-07-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI