Dy. CIT, Circle-1, Jalgaon V. Shri Jethanand Mehrumal Jagwani, Jalgaon

ITA 557/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6772 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Fair market value
• Section: 143(3); 50C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.557/PN/2013 (ASSESSMENT YEAR : 2009-10) DY. COMMISSIONER OF INCOME TAX, CIRCLE- 1, JALGAON. . APPELLANT VS. SHRI JETHANAND MEHRUMAL JAGWANI, 19B, JAI NAGAR, ONKARESHWAR ROAD, JALGAON 425 001. PAN : ACXPJ0671P . RESPONDENT DEPARTMENT BY : MR. S. P. WALIMBE ASSESSEE BY : MR. PRAMOD SHINGTE DATE OF HEARING : 03-07-2014 DATE OF PRONOUNCEMENT : 25-07-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 26.12.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 26.1 2.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-II, NASHIK ERRED IN DELETING THE ADDITION OF RS.10,20,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT FOR WHICH NO EVIDENCE FI LED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A)-II, NASHIK ERRED IN DIRECTING TO CAL CULATE THE CAPITAL GAIN TAKING INTO CONSIDERATION THE FMV AS PER DVO AT RS. 14,28,000/- AS AGAINST THE SALE CONSIDERATION OF RS.19,98,000/- ADOPTED BY THE A.O. AS PER STAMP DUTY VALUATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ORDER OF THE CIT(A) BE CANCELLED AND THAT OF THE A.O. BE RES TORED. ITA NO.557/PN/2013 A.Y. : 2009-10 3. IN THIS APPEAL, THE FIRST ISSUE RAISED BY THE RE VENUE IS WITH REGARD TO AN ADDITION OF RS.10,20,000/- MADE BY THE ASSESSING OF FICER BY INVOKING SECTION 68 OF THE ACT WHICH HAS SINCE BEEN DELETED BY THE C IT(A). 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER FOUND THAT ASSESSEE HAD RECEIVED UNSECURED LOANS FROM FIV E PERSONS TOTALING TO RS.10,20,000/- AS DETAILED IN PARA 5 OF THE ASSESSM ENT ORDER. ON BEING ASKED TO FILE CONFIRMATION LETTERS TO SUBSTANTIATE THE AF ORESAID CREDITS APPEARING IN THE ACCOUNT BOOKS, ASSESSEE FURNISHED COPIES OF ACCOUNT EXTRACTS APPEARING IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER WAS NO T SATISFIED WITH THE EVIDENCE FURNISHED AND HE, THEREFORE, TREATED THE C REDITS AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT. IN AP PEAL, ASSESSEE ASSERTED THAT THE CREDITS WERE FULLY EXPLAINED AND IN SUPPORT FUR NISHED THE REQUISITE CONFIRMATIONS AS ALSO THE COPIES OF INCOME-TAX RETU RN, PAN NUMBERS, BANK STATEMENTS, ETC. OF THE RESPECTIVE CREDITORS. THE CIT(A) CONSIDERED THE MATERIAL FURNISHED BY THE ASSESSEE AND FOUND THAT T HE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENE SS OF THE TRANSACTIONS STOOD ESTABLISHED WITHIN THE MEANING OF SECTION 68 OF THE ACT. ACCORDINGLY, HE DELETED THE ADDITION OF RS.10,20,000/-. THE FOLLOW ING DISCUSSION IN THE ORDER OF THE CIT(A) IS RELEVANT :- 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, SUBMISSION OF THE APPELLANT AND THE MATERIAL AVAILA BLE ON RECORD. AS REGARDS ADDITIONS OF RS.10,20,000/- U/S 68 OF THE IT ACT, I FIND THAT THE APPELLANT HAS FURNISHED CONFIRMATIONS, BANK STATEMENTS, PAN, INCO ME TAX DETAILS OF THE CREDITORS NAMELY SHRI. JAWAHARAL P. DESHLAHARA (RS. 5 LAC); SHRI. RAJESH GOPAL CHAWALA (RS.2 LAC); MRS. LILAWATI B. HOTWANI (RS.1 LAC) AND SMT. PUSHPA VISHNUDAS CHUG (RS.1 LAC). THE APPELLANT HAS FILED STATEMENT OF ACCOUNT OF M/S. LINK MARK WHERE THERE WAS A DEBIT BALANCE OF R S.1 LAC AND SUBSEQUENTLY RS.1,20,000/- WAS RECEIVED BY CHEQUE IN AY 2009-10. BY FILING THE ABOVE REFERRED DOCUMENTS THE APPELLANT HAS DISCHARGED HIS ONUS BY PROVING IDENTITY OF THE CREDITORS, THE GENUINENESS OF THE TRANSACTIO N AND ALSO CREDITWORTHINESS OF THE CREDITORS. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT ADDITION OF RS.10,20,000/- U/S 68 OF THE ACT WAS NO T JUSTIFIED. THE SAME IS DELETED. ITA NO.557/PN/2013 A.Y. : 2009-10 5. AGAINST THE AFORESAID, REVENUE IS IN APPEAL BEFO RE US. APART FROM RELYING UPON THE GROUNDS OF APPEAL RAISED, THE LEAR NED DEPARTMENTAL REPRESENTATIVE HAS NOT POINTED OUT ANY INFIRMITY IN THE FINDINGS OF THE CIT(A), WHICH WE HAVE EXTRACTED ABOVE. IT IS QUITE CLEAR F ROM THE ORDER OF THE CIT(A) THAT THE ASSESSEE HAD FURNISHED THE CONFIRMATIONS, BANK STATEMENT, PAN NUMBERS AND OTHER INCOME DETAILS OF THE CREDITORS W HICH PROVED THEIR IDENTITY AND CREDITWORTHINESS, AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. SINCE THE NECESSARY INGREDIENTS OF SECTION 68 HAVE BEEN F OUND BY THE CIT(A) TO BE COMPLIED WITH, WE FIND NO REASONS TO INTERFERE WITH HIS CONCLUSION IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY. AS A RESU LT, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND THE REVENUE FAILS ON THIS GROUN D. 6. THE SECOND GROUND RAISED BY THE REVENUE IS WITH REGARD TO ADOPTION OF SALE CONSIDERATION FOR THE PURPOSES OF COMPUTING CA PITAL GAINS. IN THIS CONNECTION, THE RELEVANT FACTS ARE THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD SOLD A PLOT OF LAND AT MEHRUN FOR A ST ATED CONSIDERATION OF RS.13,00,000/-. THE ASSESSING OFFICER NOTICED THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY OF THE SAID PROPERTY FOR THE P URPOSES OF STAMP DUTY WAS RS.19,98,000/- AND THEREFORE HE ADOPTED AN AMOUNT O F RS.19,98,000/- AS THE VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTIN G THE CAPITAL GAINS BY INVOKING SECTION 50C OF THE ACT. ACCORDINGLY, AN A DDITION OF RS.6,98,000/- WAS MADE TO THE DECLARED CAPITAL GAIN OF RS.7,37,334/-. BEFORE THE CIT(A), ASSESSEE POINTED OUT THAT IN THE COURSE OF ASSESSME NT PROCEEDINGS, ASSESSEE HAD DISPUTED THE VALUE ADOPTED BY THE STAMP DUTY AU THORITY AND THEREFORE THE MATTER WAS REFERRED TO THE DEPARTMENTAL VALUATION O FFICER (DVO) BY THE ASSESSING OFFICER IN TERMS OF SECTION 50C(2) OF THE ACT. THE VALUE OF THE PROPERTY DETERMINED BY THE DVO WAS AT RS.14,28,000/ -. AS A CONSEQUENCE, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RE-COM PUTE THE CAPITAL GAINS BY ADOPTING THE FULL VALUE OF THE SALE CONSIDERATION A T RS.14,28,000/- AS AGAINST ITA NO.557/PN/2013 A.Y. : 2009-10 RS.19,98,000/- CONSIDERED AT THE TIME OF ASSESSMENT PROCEEDINGS. AGAINST THE AFORESAID DIRECTION OF THE CIT(A), REVENUE IS I N APPEAL BEFORE US. 7. IN THIS CASE, THE STATED VALUE OF CONSIDERATION IS RS.13,00,000/- WHEREAS THE VALUE ADOPTED FOR THE PURPOSES OF PAYME NT OF STAMP DUTY WAS FOUND TO BE RS.19,98,000/-. THEREFORE, IN TERMS OF SECTION 50C OF THE ACT, CAPITAL GAIN WAS REQUIRED TO BE COMPUTED BY ADOPTIN G SUCH VALUE AS THE FULL VALUE OF CONSIDERATION. HOWEVER, IN CASE WHERE VAL UATION OF SUCH PROPERTY IS REFERRED BY THE ASSESSING OFFICER TO DVO FOR ITS VA LUATION THEN THE VALUE SO DETERMINED BY THE DVO IS TO BE ADOPTED FOR THE PURP OSES OF COMPUTING CAPITAL GAIN SO LONG AS IT IS NOT MORE THAN THE VALUE ADOPT ED BY THE STAMP VALUATION AUTHORITY. THE AFORESAID PROVISION IS CONTAINED IN SUB-SECTION (3) OF SECTION 50C OF THE ACT. FOLLOWING THE SAID PROVISION, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO TREAT THE VALUE DETERMINED BY THE DVO AT RS.14,28,000/- TO BE THE FULL VALUE OF CONSIDERATION IN ORDER TO C OMPUTE CAPITAL GAINS. WE FIND NO REASONS TO INTERFERE WITH THE AFORESAID DIRECTIO N OF THE CIT(A) WHICH IS IN ACCORDANCE WITH THE EXPLICIT PROVISIONS OF THE ACT. NO INFIRMITY EITHER ON FACTS OR IN LAW HAS BEEN POINTED OUT BY THE LEARNED DEPAR TMENTAL REPRESENTATIVE BEFORE US. AS A RESULT, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND THE REVENUE FAILS ON THIS GROUND ALSO. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JULY, 2014. SUJEET ITA NO.557/PN/2013 A.Y. : 2009-10 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE