GHEWARCHAND H. JAIN, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-17(1), MUMBAI

ITA 5236/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7343 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Cost of acquisition; Reasonable cause; Set aside
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI RAMIT KOCHA R , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO.5236 /MUM/201 7 ( / ASSESSMENT YEAR: 20 12 - 13 ) SHRI GHEWARCHAND H. JAIN 207, REGENT CHAMBERS, 208, NARIMA N POINT, MUMBAI - 400021 . / VS. ACIT 17(1) R. NO.117, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : ADNPJ1123B ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 23 / 0 7 / 201 9 / DATE OF PRONOUNCEMENT : 25 / 07 / 201 9 / O R D E R PER AMARJIT SING H, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 03 . 0 4 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 28 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 13 . 2 . THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS: - 1. THE LD. CIT(A) ERRED IN CONSIDERING THE COST OF ACQUISITION OF RESIDENTIAL FLAT AT RS.25,000,000/ - INSTEAD OF RS.27,555,000/ - WHILE COMPUTING LONG TERM CAPITAL GAIN. DIFFERENT AMOUNT OF COST OF ACQUISITION OF RS.2,555,000/ - SHALL ALSO BE ALLOWED AND ALSO ALLOWED INDEXATION ON THE WHOLE COST OF ACQUISITION WHICH COME TO RS.37,166,108/ - . ASSESSEE BY : SHRI ADITYA MAHESHWARI REVENUE BY: SHRI CHAUDHARY ARUN KUMAR SINGH (SR. AR) ITA NO. 5236 / M/201 7 A.Y.2012 - 13 2 2. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE COST OF IMPROVEMENT OF RS.2,233,205/ - OF WHICH INDEXED COST COMES TO RS.2,773,838/ - WHICH SHALL BE CO NSIDERED AS AN ALLOWED EXPENSE IN CALCULATION OF LONG TERM CAPITAL GAIN. 3. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER AND/OR ADD ANY OTHER GROUND OF APPEAL . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETU RN OF IN COME ON 31 . 0 3 .20 13 DECLARING TOTAL INCOME TO THE TUNE OF RS.9,42,18,420 / - . THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143( 2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS AN INDIVIDUAL STATED TO BE A PARTNER IN A FIRM . DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE RECEIVED THE RENTAL INCOME FROM HOUSE PROPERTY, SHARE OF PROFIT FROM PARTNERSHIP FIRM, LTCG ON SALE OF IMMOVABLE PROPERTY AND SALE ON UNLISTED EQUITY SHARES. THE ASSESSEE HAS RETURNED LONG TERM CAPITAL LOSS ON SALE OF FLAT A T SAGAR CO - OP. HOUSING SOCIETY. THE SOLD PROPERTY WAS JOINTLY OWNED BY THE ASSESSEE IN WHICH HE HAD 50% SHAREHOLDING . THE FOLLOWING COMPUTATION WAS USED BY THE ASSESSEE : SALE CONSIDERATION (DATE OF TRANSFER: - 03/09/2011) RS.3,01,50,000/ - LESS: - SELLING E XPENSES - RS.2,67,237/ - LESS ACQUISITION COST (2008 - 09) - 2,75,55,000/ - INDEXED COST - 3,71,66,108/ - TAXABLE CAPITAL GAINS/LOSS RS. - (1,00,57,183/ - ) 4. THE ASSESSEE WAS ASKED TO SUBMIT THE COPY OF PURCHASE/SALE AGREEMENT AND PROOF OF COST OF IMPROVEMENT VI DE LETTER DATED 25.02.2015. THE ASSESSEE VIDE LETTER DATED 05.03.2015 HAS FURNISHED COPIES OF SALE AND PURCHASE AGREEMENTS. THE AGREEMENT OF PURCHASE SPEAKS ABOUT THE PURCHASE VALUE OF RS.5 CRORES IN WHICH THE SHARE OF THE ASSESSEE WAS 2,50,00,000/ - . THE A SSESSEE WAS ASKED TO VERIFY DIFFERENCE IN THE COST OF ACQUISITION ITA NO. 5236 / M/201 7 A.Y.2012 - 13 3 CLAIMED AND THAT THE APPEARING IN THE PURCHASE AGREEMENT. THE ASSESSEE CLAIMED THAT THE AMOUNT WAS PAID TO THE SOCIETY FOR TRANSFER OF THE PROPERTY AS PAR CLAUSE - 5 OF THE AGREEMENT. THE TRAN SFER CHARGES PAYABLE TO THE SAID SOCIETY SHALL BE BORNE AND PAID BY THE TRANSFERORS AND THE TRANSFEREES IN EQUAL SHARE. THE ASSESSEE FAILED TO PR ODUCE THE DOCUMENTS I.E. PAYMENT RECEIPTS AND BANK STATEMENT SHOWING TRANSFER OF FUNDS TO THE SOCIETY . I N THE A BSENCE OF ANY SUPPORTING PROOFS, COST OF ACQUISITION IS TAKEN AS RS.2,50,00,000/ - . IN VIEW OF THE SAID REASONS, THE REVISED LONG TERM CAPITAL GAIN WAS WORKED OUT AS FOLLOWS: - SALES CONSIDERATION: RS.3,01,50,000/ - COST OF ACQUISITION: RS.2,50,00,000/ - TO TAL LONG TERM CAPITAL GAINS: RS.51,50,000/ - ACCORDINGLY, THE ADDITION WAS RAISED IN SUM OF RS. 1,52,07,183/ - AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.10,94,84,690/ - . FEE LING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A ) WHO CONFIRMED THE ADDITION , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 & 2 5 . BOTH THE ISSUES ARE INTER - CONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUE D THAT THE AO HAS WRONGLY ASSESSED THE COST OF ACQUISITION OF RESIDENTIAL FLAT IN SUM OF RS. 2,50,00,000/ - INSTEAD OF 2,75,55,000/ - WHILE COMPUTING THE LONG TERM CAPITAL GAIN. IT IS ARGUED THAT THE DIFFERENCE IS ON ACCOUNT OF AMOUNT PAID TO THE SOCIETY FOR TRANSFER OF PROPERTY. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE PAYMENT RECEIPT AND BANK STATEMENT AND OTHER PROOF IN SUPPORT OF HIS CLAIM BUT THESE PROOF WERE PRODUCED BEFORE CIT(A) WHO REJECTED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF THIS FACT THAT TH E SAME ITA NO. 5236 / M/201 7 A.Y.2012 - 13 4 SHOULD BE PRODUCE BEFORE THE AO. IT IS ALSO ARGUED THAT ACCORDINGLY, THE CLAIM OF THE COST OF IMPROVEMENT WAS ALSO DENIED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE ORDE R PASSED BY AO, WE NOTICED THAT THE ASSESSEE FAILED TO FILE THE PRO OF IN SUPPORT OF THE CLAIM BEFORE THE AO . HOWEVER, THE ASSESSEE PRODUCE D THE EVIDENCE BEFORE THE CIT(A) TO PROVE THE DIFFERENCE OF COST OF ACQUISITION OF RESIDENTIAL FLAT BY PAYMENT OF RECE IPT AND BANK STATEMENT IN SUPPORT OF THE CLAIM BUT THE CLAIM WAS NOT CONSIDERED BY CIT(A) BY SAYING THAT THE SAME SHOULD BE PRODUCED BEFORE THE AO. HOWEVER, THE CLAIM IN CONNECTION WITH THE COST OF IMPROVEMENT WAS ALSO NOT CONSIDERED BY THE CIT(A) ON SIMIL AR GROUND D ESPITE THIS FACT THAT THE RELEVANT DOCUMENT WERE PRODUCED BEFORE THE CIT(A). THE ASSESSEE HAS PRODUCED THE COPY OF LEDGER OF FLAT AT SAGAR MAHAL IN THE BOOKS OF RAJESH JAIN AND GHEWARCHAND JAIN FOR THE F.Y. 2008 - 09 WHICH LIES AT PAGE NO.11 TO 12 OF THE PAPER BOOK. THE ASSESSEE ALSO PRODUCED THE COPY OF BANK STATEMENT REFLECTING PAYMENT MADE TOWARDS TRANSFER FEES PAID TO SOCIETY AT THE TIME OF SALE OF FLAT WHICH LIES AT PAGE NO. 14 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO PRODUCED THE DETAILS OF E XPENSES INCURRED FOR OF IMPROVEMENT WHICH LIES AT PAGE NO.15 OF THE PAPER BOOK. COPY OF PURCHASE AGREEMENT DATED 02.04.2008 FOR FLAT NO. 38 AT SAGAR MAHAL CO - OPERATIVE HOUSING SOCIETY LTD. HAS ALSO PRODUCED WHICH LIES AT PAGE NO.16 TO 32 OF THE PAPER BOOK. COPY OF SALE AGREEMENT OF FLAT NO. 38 HAS ALSO PRODUCED WHICH LIES AT PAGE NO. 33 TO 46 OF THE PAPER BOOK . ALL THE DOCUMENTS WERE PRODUCED BEFORE THE CIT( A) WHICH WERE NOT CONSIDERED . SINCE THESE DOCUMENTS ARE RELEVANT FOR THE ADJUDICATION OF THE MATTER O F CONTROVERSY AND WERE NOT CONSIDERED BY THE CIT( A ) WITHOUT ANY REASONABLE CAUSES WHICH NOWHERE SEEMS JUSTIFIABLE IN THE INTEREST OF JUSTICE. ACCORDINGLY, THE FINDING ITA NO. 5236 / M/201 7 A.Y.2012 - 13 5 OF THE CIT(A) NOWHERE SEEMS JUSTIFIABLE, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A ) ON BOTH THE ISSUES AND RESTORED THE ISSUE BEFORE THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE EVIDENCE PRODUCED BEFORE THE CIT(A) IS REQUIRED TO BE CONSIDERED AND ACCORDINGLY, ISSUES ARE REQUIRED TO BE ADJUDICATED . ACCORDINGLY, BOTH THE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICA L PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 25 /07 /2019 . SD/ - SD/ - ( RAMIT KOCHA R ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 25 /07 /2019 V IJAY /SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI