Sh. Sanjiv Garg, Ludhiana V. DCIT, Central Circle - II, Ludhiana

ITA 521/CHANDI/2022

AI Insights

The case revolves around an appeal by Shri Sanjiv Garg against the order of the CIT(A)-5, Ludhiana, which upheld the adjustment made by the Centralized Processing Centre, Bengaluru. The adjustment pertained to the non-reduction of Rs. 17,83,441/- from the profits of business or profession, which represented the sale proceeds of immovable property. The assessee argued that this amount was correctly considered under capital gains in his return, and the CIT(A)'s decision resulted in a double addition of the same amount. The Tribunal, referencing a similar case involving the assessee's brother, found merit in the assessee's arguments and allowed the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127758 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-02-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 16-06-2022
• Other Referred Cases: Rajiv Garg vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Cost of acquisition; Capital Gains
• Section: 154; 143(1)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी $व%म 'संह यादव, लेखा सद,य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 521/Chd/ 2022 Assessment Year : 2020-21 Shri Sanjiv Garg 61-A, Sant Nagar, Civil Lines Ludhiana The DCIT Centralized Processing Centre Bengaluru PAN NO: AAZPG5581D Appellant Respondent ! " Assessee by : Shri Ashwani Kumar, C.A # ! " Revenue by : Shri Akashdeep, JCIT, Sr. DR $ % ! & Date of Hearing : 15/02/2023 '()* ! & Date of Pronouncement : 16/02/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the assessee against the order of the Ld. CIT(A)-5, Ludhiana dt. 01/06/2022 pertaining to A.Y. 2020-21, wherein the assessee has taken the following grounds of appeal: “1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-5, Ludhiana is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer/Centralized Processing Centre, Bengaluru in not reducing a sum of Rs. 17,83,441/- from working of the profits of business or profession as the said sum represented sale proceeds of immovable property which had been credited to the Profit and Loss Account and while filing the return, the same had been duly considered under the head income from capital gains. 2. That action of the Learned CIT(A) in upholding the addition made by the Learned Assessing Officer/Centralized Processing Centre, Bengaluru has resulted in double addition of the same amount. 3. That the Learned CIT(A) was not justified in holding that the action of the Learned Assessing Officer/Centralized Processing Centre, Bengaluru in making the adjustment of Rs. 17,83,441/- was not a mistake apparent from record.” 2 2. Briefly the facts of the case are that the assessee, an individual, filed his return of income declaring income of Rs. 38,01,750/-. Thereafter the return of income so filed by the assessee was processed and intimation dt. 06/04/2021 was issued by CPC, Bengaluru wherein the income was computed at Rs. 55,85,190/- as against declared income of Rs. 38,01,750/- by making an adjustment of Rs. 17,83,441/- under the head “Profit & Loss from the Business and Profession”. The assessee subsequently filed a rectification application under section 154 of the Act dt. 05/05/2021 which was rejected by CPC, Bengaluru by order dt. 29/09/2021. 3. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has sustained the order of the CPC, Bengaluru. 4. Against the said findings of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 5. During the course of hearing, the Ld. AR submitted that during the year under consideration the appellant had declared long-term capital gain on sale of property at Rs. 5,79,703/-, long-term capital loss on sale of listed securities u/s 112A at Rs. 23,31,450/- and short-term capital gain on sale of listed securities amounting to Rs. 19,917/-. While filing the return of income, the assessee had reduced sale consideration of sale of property amounting to Rs. 19,90,000/- from business income (as evident from Row 3c of Schedule BP at page 6 of paper book) to be accounted for separately under the head capital gains. The said amount was taken into consideration while computing capital gains as is evident from Row 10(l)(a)(i) of Schedule CG at page 9 of paper book. However, Centralized Processing Centre, Bengaluru while framing the assessment had reduced a sum of Rs. 2,06,559/- from business income instead of Rs. 19,90,000/-. The difference thereof amounting to Rs. 17,83,441/- (Rs. 19,90,0000 - Rs. 2,06,559) has been added to the income while making such prima facie adjustment u/s 143(1) of the Act. 3 5.1 It was submitted that as a matter of fact, it was only the sale consideration on account of sale of immovable property which was credited to the Income and Expenditure Account as evident from Income & Expenditure account enclosed at Page 16 of the Paperbook. Thus, the same was required to be reduced from business income while computing overall taxable income and was duly accounted for under the head capital gains separately as submitted above. 5.2 It was submitted that as regards sales consideration on sale of securities of Rs. 2,06,559/-, effect of which stands taken into consideration by Centralized Processing Centre, Bengaluru, while processing return of income was not credited to the Income and Expenditure Account and directly offered to tax under the schedule capital gain as is evident from row 3(1 )(a) of Schedule CG at page 7 of paper book. Since the amount as reduced from business income has been rightly added under the head capital gains, no adjustment thereof was required u/s 143(1) of the Act. 5.3 Aggrieved by the said intimation, the assessee filed a petition for rectification u/s 154 before Centralized Processing Centre, Bengaluru on 05.05.2021 which was rejected by Centralized Processing Centre, Bengaluru vide order dated 29.09.2021. 5.4 Against the said order dated 29.09.2021, the assessee preferred an appeal before the ld CIT(Appeals)-5, Ludhiana and the same was dismissed vide order dated 01.06.2022 on the reason that the assessee failed to act timely against intimation u/s 143(1) and that the right course of action was to file the appeal before the Commissioner of Income Tax (Appeals) and not rectification u/s 154. Hence, the appeal was dismissed stating that the adjustment made by Centralized Processing Centre, Bengaluru was not under the ambit of Section 154. Against the said order, the assessee is now in appeal before the Tribunal. 5.5 It was submitted that the contention of the Learned Commissioner of Income Tax (Appeals)-5, Ludhiana is bad in as much as in stating that the 4 assessee failed to act timely in filing the appeal before Commissioner of Income Tax (Appeals) whereas a request for rectification was filed on 05.05.2021 against the intimation u/s 143(1) dated 06.04.2021 which is well within 30 days being the prescribed time limit of filing of an appeal before the Commissioner of Income Tax (Appeals) as provided u/s 249 of the Act. It was further submitted the intimation issued u/s 143(1) is rectifiable in accordance with Section 154( l)(b) of the Act which is reproduced as under: - "Rectification of mistake. 154. ( I ) With a view to rectifying any mistake apparent from the record an income- tax authority referred to in section 116 may,— (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation or deemed intimation under sub-section ( 1 ) of section 143; (c) amend any intimation under sub-section ( I ) o f section 200A; (d) amend any intimation under sub-section ( J J o f section 206CB. ( 1 A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.] ................” 5.6 In support, reliance was placed by the assessee on an order of the Chandigarh Bench in the case of Rajiv Garg (brother of the assessee) who was co-owner/ seller of the impugned property against which capital gain was declared by the assessee and similar adjustment was made by Centralized Processing Centre, Bengaluru and the appeal stands allowed by an order of Single Member Bench dated 01.12.2022 in ITA No. 568/Chandi/2022. It was submitted that since the matter is squarely covered by the order of the Coordinate Bench in the case of the assessee's brother, the appeal filed by the assessee may kindly be allowed. 5 6. Per contra the Ld. Sr. DR submitted that the Ld. Counsel for the assessee has submitted that in the case of Sh. Rajiv Garg, the ITAT, Chandigarh Bench has allowed the appeal of the assessee vide order dated 01.12.2022 in Appeal No. ITA No. 568/Chd/2022. It has been submitted that Shri Rajiv Garg is the brother of Shri Sanjeev Garg (assessee) and both were aggrieved due to non- reduction of a sum of Rs. 19.9 lakhs from working of profits of business or profession as the said sum represents sale proceeds of immovable property, which was credited to Profit & Loss account but while filing return, the same was considered under the head Capital Gains. In this regard, it was submitted that in the case of Shri Sanjeev Garg, Long Term Capital Loss u/s 112A of Rs. 23,31,449/- has been claimed to be set off against the Long Term Capital Gain of Rs. 5,79,703/- from sale of immovable property. Such set-off of losses has not been done in the case of Shri Rajiv Garg. Therefore, in the interest of justice, the Bench may kindly direct the Assessee to produce documentary evidence in support of the claim of Long Term Capital Loss u/s 112A of Rs. 23,31,449/-. Further, he relied on the order of the lower authorities. 7. In rejoinder, the ld AR submitted that the aforesaid issue is not in dispute before the Bench and no such prima facie adjustment has been carried out by Centralized Processing Centre, Bengaluru while processing the return of income. The adjustment is only restricted to Rs. 17,83,441/- and no other adjustment has been made by Centralized Processing Centre, Bengaluru while processing the return of income u/s 143(1) of the Act. 8. We have considered the submissions of both the parties and perused the material available on record. In the present case, it is noticed that an identical issue having similar facts has already been adjudicated by Coordinate Chandigarh Bench in case of Shri Rajiv Garg Vs. DCIT (ITA No. 568/Chd/2022 dated 01/12/2022), wherein one of us was author of the order, and the relevant findings therein read as under: 6 “8. I have heard the rival contentions and pursued the material available on available. On perusal of the assessee’s return of income, computation of income, balance sheet, income and expenditure account as well as intimation issued by the CPC, I find merit in the contention advanced by the ld AR. The assessee had reduced the amount of sale consideration of Rs 19,90,000/- which is credited to the profit/loss account and to be considered under the head of capital gains” as evident from the return of income, Schedule BP 3(b) and in Schedule CG: Capital Gains 10(B), full value of consideration has been declared at Rs 19,90,000/- and after reducing cost of acquisition of Rs 14,10,297/-, net capital gains of Rs 579703/- has been reflected and offered to tax. In the intimation u/s 143(1), there is an acknowledgment by CPC that the assessee has carried out said adjustment to the profit/loss account to the tune of Rs 19,90,000/-, however, while processing the return of income, adjustment has been reflected by CPC to an extent of Rs 5,79,703/- which has resulted in differential of Rs 14,10,297/- which has been retained as part of the profit/loss account and consequent net adjustment of Rs 14,10,297/-. At the same time, there is an acknowledgement by CPC that the assessee has offered net long term capital gains of Rs 5,79,703/-. I therefore find that it is clearly a case where the sale consideration of Rs 19,90,000/- as credited in the profit/loss account has been reduced while computing the income under the head “Profit/gains of business/profession” and income under the head “Capital gains” has been computed separately taking into consideration the sale consideration of Rs 19,90,000/- and cost of acquisition of Rs 14,10,297/- offering net capital gains of Rs 579,703/-. The CPC has however processed the return of income holding that the separate treatment towards capital gains is to the tune of Rs 579,703/- rather than of Rs 19,90,000/- effectively ignoring the cost of acquisition of Rs 14,10,297/- and thus making the adjustment to the tune of Rs 14,10,297/-. I find that the same is clearly a mistake emerging from the record as no two views are possible for allowing the cost of acquisition while computing the capital gains and that too, while processing the return of income in absence of any material to the contrary available on record. In the facts and circumstances of the present case, I find that no useful purpose would be solved in remanding the matter and the adjustment so made by the CPC is hereby directed to be deleted.” 9. In the instant case as well, we find that there is an adjustment to gross total income to the tune of Rs 17,83,441/- as per the intimation issued by the CPC. The said adjustment has arisen on account of capital gains which has to be segregated from profit/loss and considered under the head “capital gains”. In the return of income, the assessee has reduced the sale consideration of Rs 7 19,90,000/- from profit /loss account and offered the same under the head long term capital gains. The CPC however has adjusted and reduced only a figure of Rs 2,06,559/- which has resulted in higher income by Rs 17,83,441/-under the head “profit/loss from business/profession”. It is an admitted fact that the assessee has offered the long term capital on sale of the plot of land and which has been considered along with long term capital loss of Rs 23,31,449-/ and after setting off, long term capital loss has been allowed by CPC to the extent of Rs 17,51,746/-. In light of aforesaid, it is clearly a mistake apparent from record and the same is hereby directed to be deleted. 10. In the result, the appeal of the assessee is allowed. (Order pronounced in the open Court on 16/02/2023 ) Sd/- Sd/- आकाश द प जैन $व%म 'संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद,य/ ACCOUNTANT MEMBER AG Date: 16/02/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar