Premji Jivaraj Patel, Visakhapatnam V. The Income Tax Officer, Ward-5(3), Visakhapatnam

ITA 52/VIZ/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4640 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Corroborative evidences; Revised return; Set aside; Capital Gains
• Section: 50C; 54F; 142(1); 195; 201; 143(2); 13; 22; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 5 2 /VIZ/201 9 ( / A SSESSMENT Y EAR : 20 07 - 08 ) SRI PREMJI JIVRAJ PATEL D.NO.24 - 84 - 1/1 KANTHI ROAD GAJUWAKA VISAKHAPATNAM [ PAN : A AOPP1330Q ] VS. INCOME TAX OFFICER WARD - 5(3) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : S HRI B.RAMA KRISHNA , DR / DATE OF HEARING : 13 . 1 1 . 201 9 / DATE OF PRONOUNCEMENT : 22 . 1 1 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] - 9, HYDERABAD IN I.T.A. NO. 10253/CIT(A) - 9/HYD/2017 - 18 DATED 31 . 12 .201 8 FOR THE ASSESSMENT YEAR (A.Y.) 20 07 - 08. 2 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM 2. ALL THE GROUNDS OF APPEAL ARE RE LATED TO THE ADDITION OF RS.11,34,875/ - SUSTAINED BY THE LD.CIT(A) DENYING THE DEDUCTION CLAIMED U/S 54 OF THE INCOME TAX ACT (IN SHORT ACT). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL SOLD 195 SQ.YDS OF MADRAS TERRACED ROOM WIT H PLINTH AREA OF 100 SFT BEARING D.NO.32 - 37 - 20 IN SY.NO.129 PART, BLOCK NO.4, PLOT NO.21 & 22, MARKET WARD WITHIN GREATER VISAKHAPATNAM MUNICIPAL CORPORATION FOR A CONSIDERATION OF RS.9,00,000/ - VIDE DOCUMENT NO.4937/2006 DATED 16.10.2006 AND THE MARKET VA LUE OF WHICH WAS RS.13,29,500/ - AS PER SRO, VISAKHAPATNAM. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED BY THE AO ADMITTING TOTAL INCOME OF RS.50,000/ - FROM OTHER SOURCE AND RS.1,00,000/ - AS AGRICULTURAL INCOME ON 21.04.2014. T HE ASSESSEE CLAIMED DEDUCTION U/S 54F OF THE ACT TO THE EXTENT OF RS.13,65,550/ - AGAINST THE SALE PROCEEDS OF RS.26,89,000/ - WHICH INCLUDES SALE CONSIDERATION OF HIS WIFE AND INDEXED COST OF ACQUISITION. THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICES WERE ISSUED U/S 143(2) AND 142(1) AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED THE REVISED RETURN OF INCOME ON 24.02.2015 ADOPTING THE MARKET VALUE AS ON 30.09.2006 AS PER SECTION 50C OF THE ACT AT RS.13,44,500/ - AND ARRIVED AT THE CAPIT AL GAIN OF RS.6,82,775/ - . THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 54 OF THE ACT STATING THAT THE 3 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM ASSESSEE ALONG WITH HIS WIFE HAS JOINTLY CONSTRUCTED A HOUSE AT KOTADA, JADODAR, BHUJ IN GUJARAT STATE . THE AO ASKED THE ASSESSEE TO PRODUCE THE LAND DOC UMENT, BUILDING PLAN APPROVAL, BILLS AND VOUCHERS AND THE EXPENDITURE INCURRED FOR CONSTRUCTION AND OTHER SUPPORTING EVIDENCES. THE ASSESSEE SUBMITTED CERTIFICATE ISSUED BY GRAM PANCHAYAT OF KOTADA JADODAR CERTIFYING THAT THE ASSESSEE HAD CONSTRUCTED THE HOUSE ON THE SITE OWNED BY THE ASSESSEE ALONG WITH HIS WIFE . THE AO OBSERVED THAT THE SITE ON WHICH THE CERTIFICATE WAS ISSUED BY GRAM PANCHAYAT , TH E ASSESSEE ALONG WITH HIS WIFE WE RE STAYING SINCE 1993 - 94 AS PER RECORDS OF GRAM PANCHAYAT AT KOTADA JADOD AR, THEREFORE, THE AO SUSPECTED THE CONSTRUCTION OF NEW HOUSE ON THE SAME PLACE. SINCE THE ASSESSEE FAILED TO FURNISH EVIDENCES WITH REGARD CONSTRUCTION OF HOUSE WITH THE BILLS, APPROVED PLAN , ACCOUNTS AND THE CERTIFICATE OF PERMISSION GIVEN BY THE GRAM PA NCHAYAT, KOTADA FOR CONSTRUCTION OF HOUSE, THE AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54 AND TAXED THE LONG TERM CAPITAL GAINS AT RS.11,34,875/ - . 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE. THE LD.CIT(A) DID NOT BELIEVE THE CONTENTION OF THE ASSESSEE THAT THE WITHDRAWALS MADE IN THE BANK ACCOUNT WERE USED FOR CONSTRUCTION AND 4 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DIL IP KUMAR AND COMPANY & ORS VIDE ORDER DATED 30.07.2018 IN CIVIL APPEAL NO.3327 OF 2007 AND HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION, ACCORDINGLY UPHELD THE ORDER OF THE AO. 5. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. DURI NG THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED THE RESIDENTIAL HOUSE IN KOTADA FROM THE SALE PROCEEDS OF SITE SOLD AT VISAKHAPATNAM JOINTLY WITH HIS WIFE. THE ASSESSEE ALSO FILED SAVINGS BANK ACCOUNT COPY BEARING NO.5031 IN J OINT NAME OF SRI PREMJI JIVRAJ PATEL AND SMT. DEVKI BEN PREMJI PATEL. ON PERUSAL OF THE BANK PASS BOOK, IT IS OBSERVED BY THE LD.CIT(A) THAT THE SUM OF RS.18,00,000/ - WAS CREDITED IN THE BANK ACCOUNT WHICH WAS SUBSEQUENTLY WITHDRAWN RANGING FROM RS.25,000 TO RS.2,00,000/ - ON DIFFERENT DATES FROM 05.03.2007 TO 25.09.2007. A CERTIFICATE WAS ALSO ISSUED BY SHRI KUTCH KADVA PATIDAR SAMAJ, REGISTERED NO.31 DATED 01.02.1985 AT VISAKHAPATNAM STATING THAT PREMJI JIVRAJ PATEL AND SMT. DEVKI PATEL HOLDS HOUSE IN KO TADA BEARNING NO.1/92 WHICH WAS CONSTRUCTED IN 2007 - 08 VIDE GRAM PANACHAYAT RECEIPT NO.90 DATED 17.04.2007 AND IT WAS STATED IN THE LETTER THAT THERE WAS NO NECESSITY FOR APPROVAL OF BUILDING PLAN IN GRAM PANCHAYAT AND THE SAID LETTER WAS HANDWRITTEN IN GU JARATI AND SIGNED BY SARPANCH AND TALATI CUM 5 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM SECRETARY. THE LD.AR SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED A SMALL HOUSE IN THE SITE OWNED BY THEM IN A VILLAGE AND T HE ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNTS AND THE SALE PROCEEDS WERE CREDITED I N THE BANK ACCOUNT WHICH WAS USED FOR CONSTRUCTION IN PIECEMEAL AS AND WHEN THE AMOUNTS WERE WITHDRAWN. THE ASSESSEE SUBMITTED THE CERTIFICATE FROM GRAM PANCHAYAT EVIDENCING THE CONSTRUCTION OF HOUSE AND THERE IS NO REASON TO DISBELIEVE CONSTRUCTION OF H OUSE WITHOUT HAVING ANY EVIDENCE TO DISPROVE THE SAME.. HENCE, REQUESTED TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ASSESSEE FAILED TO FURNISH THE PROOF FOR CONSTRUCTION OF HOUSE, THUS, REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS SOLD THE PROPERTY CONSISTING OF SITE AND MADRAS TERRACED BUILDING LOCATED AT SY.NO.129, BLOCK NO.4, PLOT NO.21 & 22 WITH D.NO.32 - 37 - 20 WITHIN THE GREATER VISAKHAPATNAM MUNICIPAL CORPORATION LIMITS, VISAKHAPATNAM FOR A CONSIDERATION OF RS.9,00,000/ - ALONG HIS WIFE. THE TOTAL SALE CONSIDERATION OF THE ASSESSEE 6 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM AND HIS WIFE WAS RS.18,00,000/ - WHICH WAS RECEIVED JOINTLY BY THEM AND CREDITED IN TH E BANK ACCOUNTS AS EVIDENCED FROM THE ASSESSMENT ORDER. THE ASSESSEE SUBMITTED THAT THE SUM OF RS.18 LAKHS WAS USED FOR CONSTRUCTION AND ACCORDINGLY THE SAID AMOUNTS WERE WITHDRAWN FROM THE BANK ACCOUNT ON VARIOUS DATES. THE ASSESSEE SUBMITTED A CERTIFIC ATE FROM GRAM PANCHAYAT CONFIRMING THE CONSTRUCTION OF HOUSE PROPERTY ON THE SITE OWNED BY THEM EARLIER. THE AO WITHOUT MAKING ANY ENQUIRIES DISBELIEVED THE CLAIM OF THE ASSESSEE AND DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH IS UNJUSTIFIED AC CORDING TO OUR VIEW. AS PER THE CERTIFICATE, THE HOUSE WAS CONSTRUCTED DURING THE PERIOD 2007 - 08 AND NO APPROVAL WAS NECESSARY IN THE VILLAGE. THE SARPANCH HAS SIGNED THE LETTER DULY SIGNED AND STAMPED THE CERTIFICATE. IF THE AO DID NOT BELIEVE THE CERT IFICATE OR CONSIDERED THE SAME AS BOGUS, THE AO OUGHT TO HAVE MADE THE ENQUIRIES AND DISPROVED THE GENUINENESS OF THE CERTIFICATE ISSUED BY THE GRAM PANCHAYAT. SINCE THE ASSESSEE HAS FURNISHED THE REQUIRED DETAILS AND CONSTRUCTED THE SMALL HOUSE AT THE VI LLAGE, WHERE NO APPROVALS OR PERMISSIONS ARE NECESSARY, WE DO NOT FIND ANY REASON TO DISALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54F OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. 8. IN TH E RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 7 I.T.A. NO . 5 2 /VIZ/201 9 , A.Y.20 07 - 08 PREMJI JIVRAJ PATEL , VISAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 22 .11.2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE SRI PREMJI JIVRAJ PATEL, D.NO.24 - 84 - 1/1, KANTHI ROAD, GAJUWAKA, VISAKHAPATNAM 2 . / THE REVENUE - INCOME TAX OFFICER, WARD - 5(3), VISAKHAPATNAM 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM