Mr. Maninder Singh Bedi, New Delhi V. ACIT, New Delhi

ITA 5118/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97470 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R L MEENA
• Assessee Lawyers: DR ANTHWAL
• Keywords: Capital asset; Gift; Opportunity of being heard; Cost of acquisition; Valuation report
• Section: 153A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH E NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER & SHRI L.P. SAHU , ACCOUNTANT MEMBER ITA NO. 5118/DEL./2012 ASSTT. YEAR : 2005 - 06 MR. MANINDER SINGH BEDI, VS. A.C.I.T., CENTRAL CIRCLE - 11, K - 46, GROUND FLOOR, KAILASH COLONY, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.R. ANTHWAL, ADVOCATE RESPONDENT BY : SHRI R.L. MEENA, CIT/DR DATE OF HEARING : 20.08.2015 DA TE OF PRONOUNCEMENT : 05.10 .2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03.08.2012 PASSED BY THE LEARNED CIT(A) - XXXI, NEW DELHI FOR THE ASSESSMENT YEAR 2005 - 06 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEAL) WAS WRONG IN ISSUING NOTICE U/S. 251(2) OF THE IT ACT, 1961 FOR ENHANCING THE SELLING COST OF BASEMENT OF PROPERTY, A - 140, DEFENCE COLONY, NEW DELHI TO RS.1,58,25,000/ - AS AGAINST ACTUAL SALE OF RS.11,00,000/ - . THUS, AN ADDITION OF RS.1,20,82,920/ - HAS BEEN MADE AS AGAINST LOSS OF RS.15,58,784/ - . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEAL) HAS ERRED IN CONFIRMING AN ADDITION OF RS.3,10,000/ - MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF CASH DEPOSITS IN THE BANK AND IGNORING THE CASH WITHDRAWAL FROM THE SAME BANK. ITA NO. 5118/DEL./2012 2 2. THE FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS CENTRALIZED WITH CENTRAL CIRCLE - 11, NEW DELHI CONSEQUENT UPON A SEARCH & SEIZURE OPERATION ON TULIP GROUP CARRIED OUT ON 24 TH & 25 TH SEPTEMBER, 2009. A NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE AND SERVED ON THE ASSESSEE ON 29.04.2010. IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED RETURN DECLARING INCOME AT RS.1,70,826/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAD BEEN GATHERED THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 AND FILED ITS RETURN OF INCOME ONLY IN RESPONSE TO NOTICE U/S. 153A OF THE ACT. IN THE RETURN OF INCOME, THE ASS ESSEE HAD CLAIMED LONG TERM CAPITAL LOSS ON PROPERTY SALE OF RS.15,58,484/ - . FOR LEGITIMATE CLAIM OF LOSS, THE ASSESSEE WAS REQUIRED TO SUBMIT THE RETURN OF INCOME ON OR BEFORE THE DUE DATE. THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEA R 2005 - 06 WAS 31.07.2005, BUT NO RETURN WAS FILED. THEREFORE, THE CLAIM OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL LOSS WAS NOT FOUND ALLOWABLE . DURING THE COURSE OF SEARCH OF TULIP GROUP, THE DOCUMENTS WERE FOUND REGARDING SALE OF BASEMENT OF THE PRO PERTY FOR RS.11,00,000/ - LOCATED AT A - 140, DEFENSE COLONY, NEW DELHI. THE PROPERTY WAS RECEIVED BY THE ASSESSEE AS GIFT AND FAMILY SETTLEMENT AND AS PER THE DEED EXECUTED, THE VALUE OF THE PROPERTY WAS DETERMINED AT RS.1,97,050/ - FOR THE PURPOSE OF CHARGIN G STAMP DUTY. THE TOTAL VALUE OF THE PROPERTY INCLUDING STAMP DUTY WAS WORKED OUT TO RS.2,13,050/ - . THE ASSESSEE ENTERED INTO AN AGREEMENT FOR RE - CONSTRUCTION OF THIS PROPERTY ON WHICH ITA NO. 5118/DEL./2012 3 ENHANCEMENT WAS TO BE MADE BY THE BUILDER. THEREFORE, THE COST OF ACQUI SITION IN THE HANDS OF THE ASSESSEE WAS THE SAME AS HE RECEIVED AT THE TIME OF TRANSFER IN HIS NAME. THE APPELLANT RECEIVED A CONSIDERATION OF RS.11,00,000/ - FOR SALE OF BASEMENT OF THIS PROPERTY AND WHILE COMPUTING CAPITAL GAIN ARISING OUT OF THIS PROPERT Y, THE COST OF ACQUISITION WAS COMPUTED ON THE HIGHER SIDE AND ACCORDINGLY THE ASSESSEE COMPUTED A LOSS ON ACCOUNT OF SALE OF PROPERTY AT RS.15,33,480/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE COST OF ACQUISITION HAD BEEN WORKED OUT BY APPLYING THE V ALUE AS ON THE DATE OF TRANSFER OF PROPERTY IN THE NAME OF ASSESSEE AND WORKED OUT TO RS.90,280/ - (2,13,050/4X480/281). AS THE APPELLANT HAD NOT INVESTED ANY FUNDS ON THE COST OF CONSTRUCTION, THE COST OF ACQUISITION OF THIS PROPERTY WAS TAKEN AT RS.90,280 / - AND AN AMOUNT OF RS.10,09,720/ - WAS COMPUTED AS LONG - TERM CAPITAL GAIN AND THE SAME WAS ASSESSED IN HIS HANDS AS INCOME FROM LONG - TERM CAPITAL GAINS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED (I) COPY OF GIFT DEED (II) COPY OF COL LABORATION AGREEMENT (III) COPY OF SALE DEED (IV) VALUATION REPORT MADE BY THE REGISTERED VALUER AS ON 01.04.1981 AND COST OF CONSTRUCTION FOR 2003 - 04. THE AO HAD MADE ASSESSMENT ACCORDINGLY. 3. AGAINST THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LEARNED CIT(A). AFTER CONSIDERING THE FACTS OF THE CASE, THE LEARNED CIT(A) ISSUED NOTICE U/S. 251(2) . THE LEARNED CIT(A) FOUND THAT IN RESPONSE TO ENHANCEMENT NOTICE, THE APPELLANT HAD ADMITTED THAT HE ENTERED INTO A COLLABORATION AGREEMENT ITA NO. 5118/DEL./2012 4 WITH A BUILDER. HE HAD GIVEN THE FIRST FLOOR TO THE BUILDER IN LIEU OF CONSTRUCTION COST OF PROPERTY IN THE YEAR 2003 - 04. THE APPELLANT DID NOT FURNISH COLLABORATION AGREEMENT BEFORE THE CIT(A). THE BUILDER HAS BORN THE COST OF CONSTRUCTION OF ENTIRE BUILD ING UNDER CONSIDERATION. THE DIMENSION OF THE PROPERTY IS 2 74 SQ. YARDS . IT MEANS BASEMENT, GROUND FLOOR, FIRST FLOOR AND SECOND FLOOR IS OF 1644 SQ. FT. EACH. THE SECOND FLOOR OF THE PROPERTY WITH ENTIRE TERRACE RIGHT HAD BEEN SOLD TO ONE MR. NAVEEN GOEL S/O LATE SHRI S.R. GOEL AND MRS. VICKY GO EL W/O SH. NAV EE N GO EL, RESIDENT OF 152, MADHUVAN, NEW DELHI - 110 092 FOR RS.1.20 CRORES AND REGISTERED ACCORDINGLY. IN SEARCH OPERATION, ANOTHER AGREEMENT WAS FOUND DATED 09.10.2006 FOR SALE OF THE SAME PROPERTY TO THE SAME PERSON SHRI NAVEEN GOEL, D - 386, DEFENSE COLONY FOR A SUM OF RS.2.11 CRORES FOR THE SECOND FLOOR. THE LD. CIT(A) ASSUMED VALUATION OF BASEMENT FOR RS.2.11 CRORES AND REDUCED BY 25% TO ARRIVE AT REASONABLE VALUE OF SALE CONSIDERATION BY STATING THAT REBATE IS CONSIDERED JUDICIOUS ALSO IN VIEW OF THE FACT THAT UTILITY OF SECOND FLOOR IS SLIGHTLY BETTER AND COMMAND BETTER PRICE THAN THE BASEMENT FLOOR. THUS AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, HE MADE ASSESSMENT BY MAKING ADDITION O F RS.1,20,82,920/ - IN THE CAPITAL GAIN COMPUTED BY THE ASSESSING OFFICER. 4. DURING THE ASSESSMENT PROCEEDINGS, THE AO ALSO FOUND CASH DEPOSIT IN BANK ACCOUNT FOR RS.3,10,000/ - . ACCORDING TO THE AO, THE ASSESSEE COULD NOT GIVE PROPER EXPLANATION. HE, THER EFORE, ADDED THE ABOVE UNEXPLAINED DEPOSIT IN THE BANK ITA NO. 5118/DEL./2012 5 ACCOUNT TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) ALSO CONFIRMED THE ABOVE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT. 5. THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE VALUE OF THE SAID PROPERTY WAS DETERMINED ON THE BASIS OF CIRCLE RATE PREVAILING AT THAT TIME AFTER CONSTRUCTING AND COMPLETING THE PROPERTY, WHICH WAS DONE DURING THE YEAR 2003 - 04 . THE BASEMENT WAS FLOODED WITH RAIN WATER WITH THE RESULT, THE VALUE OF BASEMENT WAS NEGLIGIBLE. WHILE ASSESSING THE VALUE, THE AO HAS ACCEPTED THE VALUE OF BASEMENT AT RS.11,00,000/ - , WHICH MEANS THAT THE SELLING COST OF THE BASEMENT. DURING THE COURSE OF SEARCH, HE SUBMITTED NECESSARY DOCUMENTS OF SA LE PROCEEDS OF PROPERTY BEFORE THE SEARCH TEAM AND OFFERED THE SAME FOR TAXATION, AS WHILE FILING HIS RETURN OF INCOME, HE HAD NOT DECLARED THE CAPITAL GAIN ON THE SALE PROCEEDS OF PROPERTY AS IT WAS LOSS FROM THE SALE OF BASEMENT. HE ALSO CONTENDED THAT N EITHER THE ASSESSING OFFICER NOR THE APPELLATE AUTHORITY HAS A TECHNICAL KNOWHOW EXCEPT VALUATION BY THE VALUER ON WHICH IT MAY BE DETERMINED THAT THE VALUE OF BASEMENT WAS NOT MORE THAN RS.11 LACS, FOR WHICH IT WAS ACTUALLY SOLD. HE SUBMITTED THAT THE VAL UE OF BASEMENT MAY NOT BE ENHANCED AND THE COST OF ACQUISITION BE DETERMINED ON THE BASIS OF COST OF ORIGINAL OWNER AND NOT THE COST ON THE DATE THE PROPERTY WAS GIFTED TO THE ASSESSEE. THE PROPERTY WAS CONSTRUCTED AFTER THE GIFT MADE BY COL. RAVI BEDI AND COL. H.S. BEDI TO THE ASSESSEE IN 2003 - 04. THUS, THE NOTICE ISSUED BY THE ITA NO. 5118/DEL./2012 6 CIT(A) U/S. 251(2) ENHANCING THE COST OF THE SELLING PRICE IS UNREASONABLE AND UNJUSTIFIED ESPECIALLY WHEN THE APPEAL IS MADE BY THE ASSESSEE BEFORE THE CIT(A). THUS, THE ACQUISITIO N COST TAKEN BY THE ASSESSING OFFICER AS RS.92,280/ - IS NOT CORRECT WHEREAS THE COST OF CONSTRUCTION OF THE BASEMENT IS RS.11,84,000/ - AS VALUED BY THE REGISTERED GOVERNMENT VALUER. 6. SIMILARLY WITH RESPECT TO CASH DEPOSIT IN THE BANK ACCOUNT, IT WAS SUB MITTED THAT THE ASSESSEE HAS WITHDRAWN CASH FROM BANK AND DEPOSITED IT INTO THE BANK ACCOUNT FREQUENTLY AND ALSO SUBMITTED THE CASH FLOW STATEMENT BEFORE THE AUTHORITIES BELOW. THEREFORE, THE ADDITION ON THIS ACCOUNT IS LIABLE TO BE DELETED. 7. THE LEARNE D DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND HAVING PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE SAID PROPERTY WAS RECEIVED AS GIFT AND FAMILY SETTLEMENT AS PER DEED EXECUTED. THER EFORE, THE COST OF ACQUISITION SHALL BE DETERMINED AS PER SECTION 49(1) CLAUSE (2) , WHICH IS AS UNDER : 49. (1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE ( I ) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR PARTIAL PARTITION OF A HINDU UNDIVIDED FAMILY; ( II ) UNDER A GIFT OR WILL; ITA NO. 5118/DEL./2012 7 ( III ) ( A ) BY SUCCESSION, INHERITANCE OR DEVOLUTION, OR ( B ) ON ANY DISTRIBUTION OF ASSETS ON THE DISSOLUTION OF A FIRM, BODY OF INDIVIDUALS, OR OTHER ASSOCIATION OF PERSONS, WHERE SUCH DISSOLUTION HAD TAKEN PLACE AT ANY TIME BEFORE THE 1ST DAY OF APRIL, 1987, OR ( C ) ON ANY DISTRIBUTION OF ASSETS ON THE LIQUIDATION OF A COMPANY, OR ( D ) UNDER A TRANSFER TO A REVOCABLE OR AN IRREVOCABLE TRUST, OR ( E ) UNDER ANY SUCH TRANSFER AS IS REFERRED TO IN CLAUSE ( IV ) OR CLAUSE ( V ) OR CLAUSE ( VI ) OR CLAUSE ( VIA ) [ OR CLAUSE ( VIAA ) OR CLAUSE ( VICA ) OR CLAUSE ( VICB ) ] OR CLAUSE ( XIII ) OR CLAUSE ( XIIIB ) OR CLAUSE ( XIV ) OF SECTION 47 ; ( IV ) SUCH ASSESSEE BEING A HINDU UNDIVIDED FAMILY, BY THE MODE REFERRED TO IN SUB - SECTION (2) OF SECTION 64 AT ANY TIME AFTER THE 31ST DAY OF DECEMBER, 1969, THE COST OF ACQUIS ITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASSETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. EXPLANATION . IN THIS SUB - SECTION THE EXPRESSION 'PREVIOUS OWNER OF THE PROPERTY' IN RELATION TO ANY CAPITAL ASSET OWNED BY AN ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE ( I ) OR CLAUSE ( II ) OR CLAUSE ( III ) OR CLAUSE ( IV ) OF THIS SUB - SECTION. 9. THE LEARNED CIT(A) ISSUED NOTICE U/S. 251(2) REGARDING ENHANCEMENT IN THE SALE CONSIDERATION FOR THE COMPUTATION OF CAPITAL GAIN IS BASED ON THE SALE OF ANOTHER FLOOR OF THE SAME PROPERTY, I.E., SECOND FLOOR. THE ASSESSEE HAS PLACED NO MATERIAL ON RECORD T O SUBSTANTIATE THE SALE PROCEEDS OF BASEMENT DECLARED BY IT AND CONSEQUENTIAL CAPITAL LOSS. THE VALUE OF PROPERTY DECLARED BY THE ASSESSEE IS BASED ON CIRCLE RATE. THE ASSESSEE ALSO FAILED TO SUBSTANTIATE ITS STAND BY ANY COGENT EVIDENCE ON RECORD THAT THE AREA IN WHICH THE PROPERTY WAS LOCATED, WAS A FLOODED AREA. NO CERTIFICATE OR EVIDENCE FROM M UNICIPAL CORPORATION IS AVAILABLE ON RECORD ITA NO. 5118/DEL./2012 8 TO JUSTIFY STAND OF THE ASSESSEE AND THE VALUE DECLARED BY HIM . ON THE OTHER HAND, THE LD. CIT(A) KEEPING IN VIEW THE SALE VALUE OF SECOND FLOOR OF SAME PROPERTY AND RATIO OF UTILITY BETWEEN BASEMENT AND SECOND FLOOR OF THE PROPERTY, APPEARS TO HAVE GIVEN REASONABLE REBATE WHILE DETERMINING THE SALE VALUE OF BASEMENT AT RS.1,58,25,000/ - AND AFTER DEDUCTING INDEXED COST OF PROPERTY OF RS.27,32,360/ - WORKED OUT THE CAPITAL GAINS AT RS.1,30,92,640/ - AS AGAINST RS. 19,09,720/ - COMPUTED BY THE ASSESSING OFFICER. ACCORDINGLY, WE FIND NO JUSTIFICATION TO DISTURB THE ENHANCEMENT MADE BY THE LD. CIT(A) OF RS.1,20,82,920/ - TO THE TO TAL INCOME OF THE ASSESSEE. THE ISSUE IS, THEREFORE, DECIDED AGAINST THE ASSESSEE. 10. REGARDING THE ADDITION OF RS.3,10,000/ - ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS SUBMITTED CASH DEPOSIT AND WITHDR AWALS STATEMENT AT PAGE 41 OF THE PAPER BOOK, WHICH SHOWS THAT THE ASSESSEE HAS SHOWN TO HAVE WITHDRAWN THE CASH BY ISSUING CHEQUES, BUT IT IS NOT CLEAR FROM THE STATEMENTS THAT THE AMOUNTS DEPOSITED BY THE ASSESSEE ON VARIOUS DATES WAS THE SAME AS WITHDRA WN. THE ASSESSEE ALSO COULD NOT UNVEIL THE PURPOSE FOR WHICH THE CASH WAS WITHDRAWN AND THEN THE SAME WAS DEPOSITED WITH THE SAME BANK. WE, THEREFORE, FIND NO JUSTIFICATION TO INTERFERE WITH THE FINDING OF THE LD. CIT(A) THAT IT IS ABSURD TO BELIEVE THAT S OMEBODY WILL WITHDRAW CASH FROM THE BANK, KEEP IT IDLE WITH HIM AND THEN DEPOSIT THE SAME IN THE BANK, PARTICULARLY ITA NO. 5118/DEL./2012 9 WHEN NO PURPOSE FOR WITHDRAWAL WAS DECLARED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. ACCORDINGLY, THIS ISSUE IS ALSO DECIDED AGAINST TH E ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2015 . SD/ - SD/ - ( I.C. SUDHIR ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05.10.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES , NEW DELHI