DINESH CHANDULAL GOKHLANI, Nagpur V. ITO, WARD- 4(1), Nagpur

ITA 513/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1331 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: K B DAVE
• Keywords: Cost of acquisition; Corroborative evidences

Judgement Text

1 ITA NO. 513/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.513/NAG/2014. ASSESSMENT YEAR : 2011 - 12. DINESH CHANDULAL GOKHLANI, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 4(1), NAGPUR. PAN ADOPG4710C. APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.B. DAVE. RESPONDENT BY : SMT. AGNES P. THOMAS. DATE OF HEARING : 11 - 08 - 2016 DATE OF PRONOUNCEMENT : 12 TH AUGUST, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - NAGPUR DATED 2 2 - 09 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : 1. ASSESSING OFFICER AND COMMISSIONER OF INCOME - TAX (APPEALS) CONTRARY TO THE COGENT AND CONVINCING MATERIAL ON RECORDS AND CONTRARY TO THE FACT OF THE CASE AND THE PROVISIONS OF THE LAW APPLICABLE, ON MERE SURMISES AND WHIMS HELD THAT THE AMOUNT OF RS.25,10,000/ - INVESTED BY THE FAMILY MEMBERS OF THE ASSESSEE IN THE CONSTRUCTIO N OF HOUSE ON PLOT NO. 1372 OWNED BY THE ASSESSEE AS HIS RECEIPT AND TREATED LIABLE TO TAX AND HAS TAXED IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAINS. 2. THE ASSESSING OFFICER AND APPELLATE COMMISSIONER WITHOUT ASSIGNING AN Y REASON IN THE ASSESSMENT ORDER HAS NOT CONSIDERED THE DEDUCTION OF RS.60,000/ - CLAIMED BY THE ASSESSEE TOWARDS THE AMOUNT OF BROKERAGE PAID AGAINST THE INCOME FROM LONG TERM CAPITAL GAINS FOR SALE OF THE ABOVE SAID PROPERTY. 2 ITA NO. 513/NAG/2014 2. APROPOS GROUND NO. 1: BR IEF FACTS OF THE CASE ARE AS UNDER : AS PER THE AIR INFORMATION RECEIVED, THE AO FOUND THAT THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY ON 27 TH AUGUST, 2010 FOR RS. 60 LAKHS. THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE ON 30 - 09 - 2002 FOR RS.3,50,000/ - . THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE APPELLANT TO EXPLAIN AS TO WHY THE CAPITAL GAINS TAX HAS NOT BEEN PAID ON THE TRANSACTION OF SALE. THE AO ALSO CALLED FOR THE PURCHASE AND SALE DEED OF THE PROPERTY. THE COUNSEL OF THE ASSESSEE FILE D A STATEMENT OF CAPITAL GAINS AND COMPUTATION OF LONG TERM CAPITAL GAINS (LTCG), WHICH HAS BEEN REPRODUCED IN PARA 4 OF THE ASSESSMENT ORDER. AS PER THIS COMPUTATION FILED BY THE ASSESSEE, THE TOTAL LTCG COMES TO RS.20,46,225/ - . IN ITS COMPUTATION OF LTC G FILED, THE APPELLANT HAS CLAIMED A DEDUCTION OF RS.25,10,000/ - AGAINST THE SALE CONSIDERATION OF THE HOUSE PROPERTY, BEING THE INVESTMENT MADE BY THE FAMILY MEMBERS OF THE ASSESSEE IN THE CONSTRUCTION OF THE HOUSE PROPERTY IN QUESTION SOLD. THE APPELLANT HAS ALSO DEDUCTED THE TOTAL COST OF RS.5,90,000/ - (RS.3,10,000 + RS.2,80,000) CLAIMED TO HAVE BEEN INVESTED BY THE APPELLANT ON THE CONSTRUCTION OF THE HOUSE IN THE ACCOUNTING YEAR 2005 - 06 AND 2006 - 07 RESPECTIVELY FROM THE TOTAL SALE CONSIDERATION OF RS. 60 LAKHS. IN ADDITION TO THIS, THE APPELLANT ALSO CLAIMED THE COST OF ACQUISITION OF THE HOUSE A T RS.3,50,000/ - . THE APPELLANT THUS AF T ER CLAIMING COST OF ACQUISITION AND INVESTMENT IN THE RESIDENTIAL HOUSE HAS ARRIVED AT THE NET SALE CONSIDERATION OF RS. 34,90,000/ - AND AFTER CLAIMING INDEXATION, THE RESULTANT GAINS OF RS.20,46,225/ - WERE OFFERED FOR TAXATION IN THE RELEVANT ASSESSMENT PROCEEDINGS. 3. THE AO IN THIS REGARD, INTER ALIA, DISALLOWED THE CLAIM OF DEDUCTION OF RS.25,10,000/ - BY HOLDING AS UNDER : 3 ITA NO. 513/NAG/2014 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE COUNSEL FOR THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF SO CALLED INVESTMENTS MADE BY THE FAMILY MEMBERS ALONG - WITH THE EVIDEN CE SUCH AS WITHDRAWALS FROM BANK ACCOUNTS ETC. IT IS NOTICED THAT THE ASSESSEE FAILED TO PRODUCE ANY SUCH EVIDENCE. MOREOVER, THE FAMILY MEMBERS DO NOT HAVE ANY INDEPENDENT SOURCE OF INCOME. THE RETURNS FILED BY THE FAMILY MEMBERS APPEAR TO BE OF CAPITAL B UILDING CASES. THERE IS NO PROVISION OF ANY EXEMPTION / DEDUCTION IN THE NAME OF FAMILY MEMBERS IN THE ACT WHICH CAN BE ALLOWED FROM THE SALE CONSIDERATION FOR CALCULATING CAPITAL GAINS UNDER THE HEAD COST OF IMPROVEMENT. 4. UPON ASSESSEES APPEAL IN THIS REGARD, LEARNED CIT(APPEALS) AFFIRMED THE DISALLOWANCE HOLDING AS UNDER : THUS THE APPELLANT HAS FAILED TO GIVE ANY JUSTIFICATION FOR CLAIMING DEDUCTION FOR RS.25,10,000/ - AGAINST THE TOTAL SALE CONSIDERATION MAINLY FOR THE REASON, FIRSTLY; THAT THE APP ELLANT HAS NOT BEEN ABLE TO DEMONSTRATE THAT THE FAMILY HAS NOT B EEN ABLE TO DEMONSTRATE THAT THE FAMILY MEMBERS HAVE INVESTED ANY FUNDS IN THE PROPERTY TRANSFERRED. SECONDLY, THAT NO DETAILS OF SUCH FAMILY MEMBERS AND THEIR BANK ACCOUNTS HAVE BEEN FURNIS HED BY THE APPELLANT. THIRDLY, THAT AS PER THE RECORDS OF THE APPELLANT THERE ARE NO TRANSACTIONS BETWEEN THE APPELLANT AND THE FAMILY MEMBERS. FOURTHLY, THAT THERE IS NOTHING ON RECORD TO SHOW THE REASONS FOR SUCH INVESTMENT BY THE FAMILY MEMBERS AS THEY ARE NEITHER ANY CO - OWNERS IN THE PROPERTY TRANSFERRED NOR THE APPELLANT COULD ASSIGN ANY COGENT REASONS FOR SUCH INVESTMENT BY THE FAMILY MEMBERS WHEN THERE IS NO EXPRESS OR IMPLIED ARRANGEMENT BETWEEN THE APPELLANT AND SUCH FAMILY MEMBERS. FINALLY, NOWHER E THE APPELLANT HAS TAKEN ANY ARGUMENT AS REGARDS TO SHARE OF THE FAMILY MEMBERS IN THE TOTAL SALE CONSIDERATION OF RS. 60 LAKHS REALIZED BY THE APPELLANT OUT OF SALE OF THE PROPERTY IN QUESTION. IN OTHER WORDS, HAD THERE BEEN ANY INVESTMENT MADE IN THE PR OPERTY BY THE FAMILY ME4MBERS OF THE APPELLANT, THE QUESTION AS REGARDS TO THE SHARING OF SALE PROCEEDS PROPORTIONATE TO SUCH INVESTMENT OUGHT TO HAVE ARISEN. THUS, TAKING INTO CONSIDERATION ALL THESE CUMULATIVE FACTORS, I DECLINE TO INTERFERE WITH THE ORD ER OF THE AO AND HOLD THAT THE APPELLANT IS NOT ELIGIBLE TO CLAIM ANY DEDUCTION OF RS.25,10,000/ - ON ACCOUNT OF THE INVESTMENT CLAIMED TO HAVE BEEN MADE IN THE NAMES OF THE FAMILY MEMBERS, THEREFORE, THE ACTION OF THE AO IS UPHELD. 5. AGAINST THE ABOVE OR DER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE PLEADED THAT WHEN THE AREA OF CONSTRUCTION OF THE CONCERNED 4 ITA NO. 513/NAG/2014 PROPERTY IS EXAMINED AND THE ASSESSEES OWN INVESTMENT IS C ONSIDERED IT WILL BE CLEAR THAT THE SAID CONSTRUCTION COULD NOT HAVE BEEN MADE WITHOUT CONTRIBUTION OF RS.25,10,000/ - FROM THE FAMILY MEMBERS. HENCE LEARNED COUNSEL SUBMITTED THAT THE INVESTMENT BY THE FAMILY MEMBERS OF RS.25,10,000/ - SHOULD BE ALLOWED AS COST OF IMPROVEMENT. FURTHER LEARNED COUNSEL PLEADED THAT THE ASSESSEE HAS ONLY RECEIVED RS.34,90,000/ - AS RS.25,10,000/ - HAS BEEN GIVEN TO FAMILY MEMBERS FOR THE INVESTMENT IN CONSTRUCTION OF THE SAID HOUSE. 7. PER CONTRA LEARNED D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW. 8. UPON CAREFUL CONSIDERATION I FIND THAT IT IS THE ASSESSEES CLAIM THAT THE COST OF IMPROVEMENT OF THE PROPERTY INCLUDES INVESTMENT OF RS.25,10,000/ - MADE BY OTHER FAMILY MEMBERS OF THE ASSESSEE. IN THIS REGARD ONLY SUPPORTING EVIDENCE SUBMITTED IS A RECEIPT AND PAYMENT ACCOUNTS PREPARED BY THOSE FAMILY MEMBERS WHERE THE SO CALLED INVESTMENTS WERE SHOWN. I FIND THAT THERE IS NO SUPPORTING EVIDENCE WHATSOEVE R . MERELY CLAIMING THAT CERTAIN AMOUNTS WERE SPENT BY THE FAMILY MEMBERS CANNOT FRUCTIFY THE ASSESSEES PLEA. I AGREE WITH THE LEARNED CIT(APPEALS) THAT THE ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE THAT FAMILY MEMBERS HAVE INVESTED ANY FUNDS IN THE PROPER TY TRANSFERRED, NO DETAILS OF SUPPORTING AND BANK ACCOUNT ETC. THROUGH WHICH THE INVESTMENT HAS BEEN MADE HAVE BEEN FURNISHED BY THE ASSESSEE. THAT AS PER THE RECORDS OF THE ASSESSEE THERE IS NO TRANSACTION BETWEEN THE ASSESSEE AND THE FAMILY MEMBERS. THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE REASONS FOR SUCH INVESTMENT BY THE FAMILY MEMBERS AS THEY ARE NEITHER CO - OWNERS IN THE PROPERTY TRANSFERRED NOR THE ASSESSEE COULD ASSIGN ANY COGENT REASON FOR SUCH INVESTMENT BY THE FAMILY MEMBERS WHEN THERE IS NO EXPRESS OR IMPLIED ARRANGEMENT BETWEEN THE ASSESSEE AND SUCH FAMILY MEMBERS. LEARNED CIT(APPEALS) HAS FURTHER GIVEN A FINDING THAT NOWHERE THE ASSESSEE HAS TAKEN ANY ARGUMENT AS REGARDS TO SHARE OF FAMILY MEMBERS IN THE TOTAL SALE CONSIDERATION OF RS. 60 LAKHS REALIZED BY THE ASSESSEE OUT OF SALE CONSIDERATION OF THE PROPERTY IN QUESTION. THUS THE ABOVE 5 ITA NO. 513/NAG/2014 FACTORS CONSIDERED BY THE AUTHORITIES BELOW ARE QUITE COGENT AND SHOW THAT THE ASSESSEE CANNOT CLAIM DEDUCTION OF RS.25,10,000/ - . MERELY CLAIMING IN TH E GROUNDS OF APPEAL BEFORE THE ITAT THAT RS.25,10,000/ - HAS BEEN GIVEN TO OTHER FAMILY MEMBERS DEHORSE ANY SUCH CASE BEING MADE BEFORE THE AUTHORITIES BELOW AND WITHOUT ANY SUPPORTING EVIDENCE THE SAME CANNOT SUPPORT THE ASSESSEES PLEA. IN THESE CIRCUMST ANCES I DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW AND HENCE I AFFIRM THE SAME. 9. APROPOS GROUND NO. 2: ON THIS ISSUE THE AO HAD NOT CONSIDERED THE DEDUCTION OF RS.60,000/ - CLAIMED BY THE ASSESSEE TOWARDS THE AMOUNT OF BROKERAGE PAID AGAINST THE INCOME FROM LONG TERM CAPITAL GAIN FOR THE SALE OF THE SAID PROPERTY. 10. LEARNED CIT(APPEALS) HAS AFFIRMED THE A DDITION BY HOLDING AS UNDER : IN THIS GROUND, THE APPELLANT HAS OBJECTED TO THE ACTION OF THE AO IN DISALLOWING THE DEDUCTION OF RS.60,000/ - CLAIMED BY THE APPELLANT TOWARDS THE AMOUNT OF BROKERAGE PAID AGAINST INCOME FROM LONG TERM CAPITAL GAINS FOR TH E SALE OF THE ABOVE SAID PROPERTY. ON PERUSAL OF THE RECORDS, SIT IS SEEN THAT THE APPELLANT HAS NOT BEEN ABLE TO ADDUCE ANY SORT OF PROOF OF HAVING PAID RS. 60,000/ - AS BROKERAGE IN THE SAID TRANSACTION OF SALE. IN FACT, NO NAME AND ADDRESS OF THE RECIPIE NT OF THE COMMISSION HAS BEEN GIVEN BY THE APPELLANT. THE SERVICES RENDERED, IF ANY, BY THE PERSON TO WHOM COMMISSION IS CLAIMED TO HAVE BEEN PAID ARE NOT PROVED, COUPLED WITH THE FACT THAT THE MODE OF TRANSACTION HAS ALSO NOT BEEN EXPLAINED. THE APPELLANT , IN FACT, HAS NOT DECLARED THE TRANSACTION OF CAPITAL GAIN IN THE ORIGINAL RETURN FILED AND IT IS ONLY IN THE COURSE OF RE - ASSESSMENT PROCEEDINGS THAT SUCH CLAIM HAS BEEN MADE FOR WHICH NO PLAUSIBLE EXPLANATION COULD BE GIVEN BY THE APPELLANT. THEREFORE, THIS GROUND IS ALSO DISMISSED. 11. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 12. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED RELEVANT DETAILS OF EXPENDITURE BUT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE SAME. 6 ITA NO. 513/NAG/2014 13. UPON CAREFUL CONSIDERATION I FIND THAT THE LEARNED CIT(APPEALS) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS NOT SUBMITTED THE RELEVANT DETAILS BEFORE HIM AND THE AO AND HENC E THE SAME HAS NOT BEEN CONSIDERED. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS ALSO SUBMITTED IN THE PAPER BOOK CERTAIN RECEIPTS FROM RECIPIENTS OF THE SAID BROKERAGE. I FIND THAT THIS CLAIM OF THE ASSESSEE IS DRAMATICALLY OPPOSED TO THE FINDING GI VEN BY THE LEARNED CIT(APPEALS) THAT THE ASSESSEE HAS NOT BEEN ABLE TO ADDUCE ANY SORT OF PROOF OF HAVING PAID RS.60,000/ - AS BROKERAGE IN THE SAID TRANSACTION OF SALE. I FIND THAT THE LEARNED COUNSEL OF THE ASSESSEE HAS ALSO CERTIFIED THAT THE SAID RECEIP TS WERE BEFORE THE AUTHORITIES BELOW. HENCE I FIND THAT INTEREST OF JUSTICE DEMANDS THAT THIS ISSUE BE REMITTED TO THE FILE OF THE AO. THE AO SHOULD EXAMINE THE ISSUE AFRESH AND GIVE A FINDING WHETHER THE SAID RECEIPTS CLAIMED BY THE LEARNED COUNSEL OF THE ASSESSEE TO BE BEFORE THE AUTHORITIES BELOW WERE ACTUALLY FILED OR NOT AND DECIDE T HEREAFTER AS PER LAW. 14. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF AUGUST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 12 TH AUGUST, 2016. 7 ITA NO. 513/NAG/2014 COPY FORWARDED TO : 1. DINESH CHANDULAL GOKHLANI, SHOP NO. 21, TULSI APARTMENT, ITWARI TELEPHONE EXCHANGE SQUARE, LAKADGANJ, NAGPUR - 440008. 2. I.T.O., WARD - 4(1), NAGPUR. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.