SHIVHARI AGARWAL, MUMBAI V. ACIT 12(2), MUMBAI

ITA 5637/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4134 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 27-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 5637/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) SHIVHARI AGARWAL, 93-B MAKER TOWER, CUFFE PARADE, COLABA , MUMBAI-400 005. / VS. ACIT 12(2) AAYKAR BHAWAN, CHURCHGATE, MUMBAI-400 020. ./ ./PAN/GIR NO. AABPA 1008P ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NARESH JAIN / RESPONDENT BY : SHRI J. SARAVANAN / DATE OF HEARING : 16/12/2015 !'# / DATE OF PRONOUNCEMENT : 08/02/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.06.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)-23, MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 2 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW, HAVE ERRED IN CALCULATING SHORT TERM CAPITAL GAIN ON SALE OF PROPERTY AT RS.53,39,298/- AS AGAINST RS.15,27,567/- IGNORIN G THE COST OF IMPROVEMENT INCURRED ON THE IMMOVABLE PROPERTY OF R S.38,11,731/- WHICH IS WRONG ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D PROVISIONS OF INCOME TAX ACT 1961 AND RULES MADE THERE UNDER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW, HAVE ERRED IN INITIATING THE PENALTY PROCEED INGS U/S 271(1)(C) OF THE INCOME TAX ACT,1961 FOR THE AFORESAID ADDITIONS. 2. THE ISSUE RAISED IN THE 1 ST GROUND OF APPEAL RELATES CONFIRMATION OF CAPITAL GAIN OF RS. 53,39,298 AS AGAINST RS. 15,27,567/- SH OWN BY THE ASSESSEE. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.09.2008 DECLARING AN INCOME OF RS. 16,09,415/- WHICH IS COMPRISED OF INC OME FROM SALE OF BUNGLOW IN GOA OF RS. 15,27,567/- BEING SHORT TERM CAPITAL GAI N. THE SAID BUNGLOW WAS PURCHASED ON17.02.2005 FOR RS. 25,01,102/- AND THER EAFTER RENOVATED BY SPENDING RS. 38,11,731/- AND ULTIMATELY SOLD DURING THE YEAR RESULTING INTO SHORT TERM CAPITAL GAIN OF RS. 15,27,567/- WHICH WAS OFFERED FOR TAXAT ION. 3. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY AND STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE ON THE POINT OF COST OF HOUSE PROPERTY CLAIMED AT RS. 63,12,833/- WHICH WAS ARRIV ED AT BY ADDING THE COST OF 3 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT PURCHASE OF RS. 25,01,102/- AND RENOVATION EXPENDIT URE OF RS. 38,11,731/-.THE AO FRAMED THE ASSESSMENT AT RS.54,21,146/- BY CALC ULATING THE GAIN FROM THE PROPERTY AT RS. 50,24,761/- BY TAKING THE COST OF T HE PROPERTY AT RS. 25,01,102/- BY REJECTING THE CONTENTION OF THE ASSESSEE QUA RENOVA TION EXPENDITURE OF RS. 38,11,731/-. 4. THE LD CIT(A) CONFIRMED THE ORDER OF AO BY DISMI SSING THE APPEAL OF THE ASSESSEE ON VARIOUS GROUNDS THAT THERE WAS NO PROOF OF CONSTRUCTIONS CARRIED OUT BY THE ASSESSEE WHEN THE PROPERTY WAS IN HIS POSSESSI ON, COST OF KITCHEN EQUIPMENTS NOT BEING PART OF IMPROVEMENT, ABSENCE OF PROOF OF DELIVERY OF EQUIPMENTS TO ASSESSEE, NON MENTIONING OF THE FACT OF SALE OF FU RNITURE IN THE SALE AGREEMENT , DATE OF CONSTRUCTION BILL BEING POST TO DATE OF FUR NITURE BILL WHICH ITSELF WAS DOUBTFUL AND THE ASSESSSEE NOT FURNISHING ANY CONFI RMATION OF PAYMENTS OF THE RESPECTIVE PARTIES. 5. THE LD. AR WHILE ARGUING THE CASE BEFORE US SUBM ITTED THAT ORDER OF CIT(A) UPHOLDING THE ORDER OF AO WAS WRONG AS HE DID NOT C ONSIDER THE FACTS IN CORRECT PERSPECTIVE. THE LD COUNSEL SUBMITTED THAT ALL THE BILLS OF RENOVATION , FURNITURE , KITCHEN EQUIPMENT, LABOUR CHARGES , LAND FILLING CH ARGES AND BILL OF AIR CONDITIONERS 4 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT WERE PRODUCED BEFORE THE AO AND ALSO BEFORE THE CI T(A).THE LD COUNSEL BROUGHT TO OUR NOTICE THE BILLS ATTACHED AT PAGE NO 4 TO 9 OF THE PAPER BOOK AND CLARIFIED THAT THE DATE OF FURNITURE BILL WAS DATED PRIOR TO THE DATE OF CONSTRUCTION BILL BECAUSE THE CONSTRUCTION BILL WAS FINAL BILL WHICH WAS ISSUED U PON COMPLETION OF THE RENOVATION WHEREAS THE PAYMENTS WERE MADE ON THE VARIOUS STAGE S OF RENOVATIONS AND THE FINDINGS OF AO AND CIT(A) WERE INCORRECT SO FAR AS THE DATING OF THESE BILL WERE CONCERNED. THE AO AND CIT(A) ALSO REASONED THE REJE CTION OF RENOVATION COST THAT RENOVATION AND AIR CONDITIONERS BILLS WERE ISSUED B Y DELHI BASED PARTIES WHICH IS WRONG AS ANY CONTRACTORS OR SUPPLIERS COULD PERFO RM THE CONTRACT ANYWHERE. HE ALSO EXPLAINED AS TO HOW THE CONTRACTOR FROM DELHI WAS ENGAGED IN GOA BY ADVANCING THE ARGUMENTS THAT THE SAID CONTRACTOR WA S RENDERING CONSTRUCTION SERVICES TO THE GROUP COMPANIES ON WHICH THE ASSESS EE WAS DIRECTOR. THE ASSESSEE HAD FURNISHED THE COPIES OF ALL BILLS AND VOUCHERS AND ALSO PAYMENT DETAILS BEFORE THE AO WHO INSTEAD OF DOING FURTHER VERIFICATION CH OSE TO REJECT THE RENOVATION COST GIVING FLIMSY REASONS FOR SAME. THE LD AR ALSO CITE D SOME DECISIONS NAMELY:- (I) ITO VS LATE SHRI HIRENDRA SINGH BACCHA SINGH IT A NO 4635 & 4636/M/2011 (II) DHAKESWARI COTTON MILLS LTD VS CIT 26 ITR 775 (III) CIT VS SPENCER & CO LTD 359 ITR 644(MAD) (IV)JCIT VS RAJ KUMAR AGGARWAL & SONS 95IIJ315 (DEL ITAT) 5 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT (V) ITO VS LALITABEN B. KAPADIA 115 IIJ 938 MUM ITA T. THE LD COUNSEL EVENTUALLY PRAYED FOR ALLOWING THE APPEAL OF THE ASSESSEE AS THE ACTION OF BOTH THE AUTHORITIES WERE JUST BASED ON S USPICION, CONJECTURES AND HYPOTHESIS. ON THE OTHER HAND THE LD. DR DEFENDED T HE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORDS. WE FIND FROM THE PAPER BOOK FILED BY THE A SSESSEE THAT THE RENOVATION COST WAS INCURRED OVER A COUPLE OF YEARS THE BALANCE SHE ETS OF WHICH WERE FILED WITH THE AO. WE ALSO NOTE THAT THE BILLS FOR RENOVATION, FUR NITURE, LABOUR CHARGES AND VARIOUS KITCHEN AND OTHER EQUIPMENTS WITH FULL ADDR ESSES OF THE RECIPIENT OF PAYMENTS WERE ALSO FILED WITH THE AO WHO DID NOT CA RRY OUT ANY FURTHER VERIFICATIONS BUT REJECTED THE PLEA OF THE ASSESSEE ON HYPOTHETICAL BASIS. IN OUR OPINION THE ASSESSEE HAD DISCHARGED HIS BURDEN BY F ILING THE VARIOUS PROOFS OF EXPENDITURE AND PAYMENTS THEREOF BY FILING BALANCE SHEETS AND BILLS AND IT THE REVENUE WHO FAILED IN ITS DUTY TO CARRY OUT FURTHER VERIFICATION. WE DO NOT AGREE WITH THE OBSERVATION OF THE AO AND CIT(A) THAT THER E WAS NO MENTION OF SALE FURNITURE IN AGREEMENT TO SELL WHEREAS IT WAS CL EARLY STATED ON PAGE NO 22 OF THE PAPER BOOK (RELEVANT PAGE OF SALE DEED) THAT ALL AM ENITIES AND FACILITIES WERE ALSO TRANSFERRED. THE ASSESSEE HAD ALSO FILED THE BALANC E SHEET FOR THREE YEARS ENDED 6 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT 31.03.2005, 31.32006 AND 31.3.2007 WHICH ARE PLACED AT PAGE 1 TO 3 OF THE PAPER BOOK WHICH DULY ACCOUNTED FOR THE EXPENDITURE INCUR RED ON RENOVATION. IN OUR OPINION THE ASSESSEE HAD PLACED ALL THE BILLS AND V OUCHERS QUA THE EXPENDITURE INCURRED BY THE ASSESSEE BEFORE THE AO AND CIT(A). IN VIEW OF THESE FACTS THE ORDER OF THE CIT(A) IS NOT CORRECT AND CANNOT BE S USTAINED AS NOT BASED ON FACTS BEFORE HIM. WE, THEREFORE, ALLOW THE APPEAL OF TH E ASSESSEE BY DIRECTING THE AO TO TAKE THE SHORT TERM CAPITAL GAIN FROM SALE OF THE P ROPERTY AT RS. 15,27,567/- BY ALLOWING THE RENOVATION EXPENSES AS CLAIMED BY THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH FEBRUARY, 2016 SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :08.02.2016 PS. ASHWINI 7 ITA NO.5637/MUM/2011 SHIVHARI AGARWAL, VS. ACIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI