Asstt.CIT, Cir.11(2), Pune, Pune V. Smt. Kalpana Abhay Mutha, Pune

ITA 511/PUN/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9131 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Opportunity of being heard; Principle of natural justice; Source of fund; Additional evidence; Cost of acquisition; Procedural lapse; Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.511/PUN/2012 / ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-11(2), PUNE . /APPELLANT VS. SMT. KALPANA ABHAY MUTHA, S.NO.692, PLOT NO. 4, RUTURAJ CO-OP. SOCIETY, NEAR CITY PRIDE, BIBWEWADI, PUNE 411 037 PAN : AFDPM3429B . / RESPONDENT / APPELLANT BY : SHRI AJAY MODI, JCIT / RESPONDENT BY : SHRI HARI KRISHAN / DATE OF HEARING : 19.03.2018 / DATE OF PRONOUNCEMENT: 21.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CI T(A)-I, PUNE, DATED 29-09-2011 FOR THE ASSESSMENT YEAR 2007-08. 2. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) ERRED IN RELYING UPON THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE OF VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 CERTIFI CATE OF RS.50 LAKHS TREATING THE SAME AS THE SOURCE FOR INVESTMENT IN P URCHASE OF LAND AT KARVE NAGAR EVEN THOUGH THE SAME WAS NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE TAX EFFECT OF THE SAME IS RS.11,70,559/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) ERRED IN RELYING UPON THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE OF BILLS AND VOUCHERS RELATING TO THE COST OF IMPROVEMENT OF THE LAND AT KARVE NAGAR EVEN THOUGH THE SAME WAS NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE TAX EFFECT OF THE SAME IS RS.14,9 1,680/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) GROSSLY ERRED IN NOT CALLING FOR REPORT FROM THE AO WHEN ADDITIONAL EVIDENCE WAS PRODUCED BEFORE THE CIT(A). 2 4. THE APPELLANT CRAVES TO LEAVE, ADD, AMEND OR ALT ER ANY GROUND(S) OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN GARMENTS, DRESS M ATERIAL ETC. ASSESSEE DERIVES INCOME FROM BUSINESS, INCOME FROM CAPITAL G AINS AND INCOME FROM OTHER SOURCES. ASSESSEE FILED THE RETURN OF IN COME ON 18-09-2008 DECLARING TOTAL INCOME OF RS.97,22,014/-. IN THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION, ASSESSEE DISCLOSE D THE LONG TERM CAPITAL GAINS ON SALE OF VACANT LAND SITUATED AT SR.NO.10/1 5, KARVE NAGAR, PUNE. ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT W ITH M/S. SHREE BALAJI DEVELOPERS AND MR. ABHAY BANSILAL MUTHA, MR. KAPIL ABHA Y MUTHA FOR A SALE CONSIDERATION OF RS.3.51 CRORES. THE SAID LAND WA S ORIGINALLY PURCHASED BY THE ASSESSEE ON 07-12-1998 FOR A CONSIDE RATION OF RS.37.88 LAKHS (WHICH INCLUDES STAMP DUTY, REGISTRATION AND OTHER LE GAL EXPENSES). IN THE RETURN, ASSESSEE COMPUTED THE LONG TERM CAPITAL GAIN AT RS.1,29,30,566/-. DETAILS MENTIONED AT PARA NO.3.2 OF THE ASSE SSMENT ORDER ARE RELEVANT AND THE SAME ARE EXTRACTED HERE AS UNDE R FOR THE SAKE OF COMPLETENESS : SALE CONSIDERATION 3,51,00,000 COST OF SELLING 3,51,000 NET SALE CONSIDERATION 3,47,49,000 INDEXED COST OF IMPROVEMENT FY 1998-99 20,85,335 FY 1999-00 19,10,690 FY 2000-01 10,81,850 FY 2001-02 27,412 FY 2002-03 1,45,134 FY 2003-04 28,77,444 FY 2004-05 17,08,921 FY 2005-06 5,16,053 FY 2006-07 5,20,361 TOTAL 1,08,73,206 BALANCE 2,38,75,794 LESS : INVESTMENT IN PURCHASE OF RESIDENTIAL PROPERTY U/S.54 (-)1,09,45,228 LONG TERM CAPITAL GAIN 1,29,30,566 3 THE TABLE GIVEN ABOVE SHOWS THAT THE ASSESSEE CLAIMED T HE INDEXED COST OF IMPROVEMENT OF RS.1,08,73,206/-. THERE IS NO CLAIM OF DEDUCTIO N ON ACCOUNT OF COST OF PURCHASE OF ASSET. FURTHER, ASSESSEE INVESTED THE PART OF THE CAPITAL GAINS IN A RESIDENTIAL PROPERTY AND CLAIMED THE DEDUCTION U/S.54 OF THE ACT TO THE EXTENT OF RS.1,09,45,228/-. 4. DURING THE ASSESSMENT PROCEEDINGS, AO DENIED THE BEN EFIT OF INDEXED COST OF IMPROVEMENT FOR WANT OF EVIDENCES AND ONLY ALLOWE D THE CLAIM OF DEDUCTION U/S.54 OF THE ACT. ACCORDING TO THE AO, THE T AXABLE LONG TERM CAPITAL GAINS WORK OUT TO RS.2,35,21,850/-. DETAILS OF COMP UTATION OF CAPITAL GAINS BY THE AO ARE GIVEN IN PARA 3.4 OF THE ASSES SMENT ORDER AND THE SAME ARE EXTRACTED AS UNDER : SALE CONSIDERATION 3,51,00,000 LESS : EXEMPTION U/S.54 (-)1,15,78,150 LONG TERM CAPITAL GAIN 2,35,21,850 5. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE MADE V ARIOUS WRITTEN SUBMISSIONS. THE SOURCE OF FUNDS FOR PURCHASE OF ASSET WA S ALSO THE ISSUE FOR SCRUTINY BY THE AO. IN THIS REGARD, THE ASSESSEE FUR NISHED THE EVIDENCES FOR COST OF ACQUISITION OF RS.37.88 LAKHS FOR THE SAID LAND. A SSESSEE FURNISHED THE DETAILS OF DISCLOSURE OF CASH OF RS.50 LAKHS UN DER VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 (IN SHORT VDIS) AND FIL ED A COPY OF THE VDIS CERTIFICATE NO.308/73, DATED 18-12-1997. THE SAID DETAILS WERE FURNISHED IN THE CONTEXT OF EVIDENCING THE SOURCE FOR PURC HASE OF THE SAID LANDS. AT THE END OF THE PROCEEDINGS, CIT(A) NOT ONLY GR ANTED THE DEDUCTION TOWARDS COST OF ACQUISITION BUT ALSO ALLOWED THE COST OF IMPROVEMENT W ITHOUT CALLING FOR REQUISITE REMAND REPORT FROM THE AO ON THE SAID ADDITIONAL EVIDENCES. EVENTUALLY, THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOW ED. 6. AGGRIEVED WITH THE SAID RELIEF GRANTED BY THE CIT(A) TO T HE ASSESSEE, THE REVENUE IS IN APPEAL BEFORE US WITH THE GROUNDS RAISED ABOVE. 4 7. FROM THE ABOVE GROUNDS RAISED BY THE REVENUE, THE C ORE ISSUE RAISED BY THE REVENUE RELATE TO ADMITTING THE ADDITIONAL EVIDENCE S AT THE BACK OF THE AO AND CIT(A)S FAILURE TO CALL FOR A REMAND REPORT FROM THE AO IN CONTRAVENTION TO THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. IT IS THE CASE OF THE REVENUE BEFORE US THAT THE CIT(A) ADMITTED THE ADDITIONAL EVIDENCES AT THE BACK OF THE AO AND NOT CALLED FOR ANY REMAND REPORT WHICH CONSTITUTES PROCEDURAL IRREGULARITY. REVENUE THEREFORE DESIRES THAT THE MATTER SHOULD BE REMANDED TO THE FILE OF AO FOR MEETING THE SET PRINCIPLES OF NATURAL JUSTICE. 8. PER CONTRA, LD. AR FOR THE ASSESSEE FAIRLY SUBMITTED T HAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO. IN THAT SENSE, THE ORDER OF CIT(A) AND THE PROCEDURE FOLLOWED BY HIM IS WELL WITHIN THE S COPE OF CIT(A). THEREFORE, THE ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 9. WE HEARD BOTH THE PARTIES ON THIS ISSUE RELATING TO TH E VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962. IT IS AN ADMITTED FACT THAT THE EVIDENCES FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) RELA TING TO COST OF ACQUISITION OF LAND, SOURCE FOR INVESTMENT IN THE SAID LAND, VD IS RELATED DOCUMENTS/CERTIFICATES (SUPRA), EVIDENCES FOR COST OF IMPRO VEMENT, ETC., WERE NOT FURNISHED TO THE AO DURING THE ASSESSMENT PROCEEDINGS. CONSIDERING THE SAME, WE ARE OF THE VIEW THAT THERE IS FA ILURE ON PART OF CIT(A) IN NOT GRANTING AN OPPORTUNITY TO THE AO BEFORE ADMITTING THE SAID ADDITIONAL EVIDENCES AND THE SAME CONSTITUTES CONTRAVENT ION TO RULE 46A OF THE INCOME TAX RULES, 1962. THEREFORE, WE DIRECT THE AO TO CONSIDER AND EXAMINE THE SAID EVIDENCES BEFORE MAKING FRESH ASSESSMEN T ON THIS ISSUE. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. THE REFORE, IN OUR OPINION, THE GROUNDS RAISED BY THE REVENUE ARE JUSTIFIED O N TECHNICALITIES. 5 ACCORDINGLY, THEY ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCED ON THIS 21 ST DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 21 ST MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-I, PUNE 4. / THE CIT-I, PUNE 5. , , A / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE