Sh. Vikas Jain, New Delhi V. ITO, New Delhi

ITA 5689/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6912 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 25-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 21-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: VIVEK AGGARWAL
• Keywords: Additional evidence; Cost of acquisition; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SM C - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 5689/DEL/2014 : ASSTT. YEAR : 2011 - 12 SH. VIKAS JAIN VIVEK AARUSHI & ASSOCIATES, G - 40, NIZA MUDDIN WEST, NEW DELHI - 110013 VS INCOME TAX OFFICER, WARD - 36(4), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A LFPJ2482D ASSESSEE BY : SH. VIVEK AGGARWAL , CA REVENUE BY : MS. ANIMA BARNWAL , SR. DR DATE OF HEARING : 25.07 .201 6 DATE OF PRONOUNCEMENT : 27 .07 .201 6 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.07.2014 OF LD. CIT(A) - XXV II , NEW DELHI . 2 . THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF ADDITIO N OF RS.7,15,825/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME IN ITR SAHAJ ON 20.06.2012 DECLARING AN INCOME OF RS.1,89,610/ - . TH E AO OBSERVED THAT THE ASSESSEE DID NOT FILE THE RETURN U/S 139(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ITA NO . 5689 /DEL /201 4 VIKAS JAIN 2 ACT) BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR AS SUCH RENDERED HIMSELF FOR THE PENALTY TO BE IMPOSED U/S 271F OF THE ACT. T HE CASE WAS SELECTED FOR SCRUTINY FOR THE REASON THAT THE ASSESSEE ENTERED INTO CERTAIN HIGH VALUE TRANSACTION DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO OBSERV ED THAT THE ASSESSEE HAD SHOWN L ONG T ERM C APITAL G AIN OF RS. 1,60,051/ - IN THE COMPUTATION OF INCOME AS UNDER: SALE CONSIDERATION OF PLOT NO. K.C. 19, KAVI NAGAR, GHAZIABAD VIDE REGD. DEED DATED 03.02.2011 1,92,51,000/ - LESS SELLING EXPENSES 5,00,000/ - LESS INDEXED COST OF ACQUISITION VIDE REGD. DEED DATED 29.10.1985/17.03.1986 (3,00,000 + 34,500 STAMP DUTY) 49,90,949/ - LESS INVESTMENT IN PNB CAPITAL A/C U/S 54 1,36,00,000/ - CAPITAL GAIN 1,60,051/ - 4 . THE AO NOTICED THAT THE ASSESSEE HAD SHOWN IMPROVEMENT COST OF RS.7,15,825/ - WHICH WA S SPREAD OVER IN 3 YEARS. HE ASKED THE ASSESSEE TO FURNISH EVIDENCE OF SELLING EXPENSES CLAIMED AT RS.5,00,000/ - AND DOCUMENTARY EVIDENCE OF COST OF IMPROVEMENT OF RS.7,15,825/ - . THE AO OBSERVED THAT THE ASSESSEE FURNISHED THE DETAILS IN RESPECT OF SELLING EXPENSES OF RS. 5,00,000/ - BUT DID NOT FURNISH ANY EVIDENCE FOR THE CLAIM OF IMPROVEMENT IN THE PROPERTY. HE ALSO OBSERVED THAT THE CLAIM OF IMPROVEMENT IN THE PROPERTY TURNED TO BE FALSE IN VIEW OF NARRATION AT PAGE 2 OF THE PURCHASE DEED REGISTERED ON 17.03.1986, WHICH REVEALED ITA NO . 5689 /DEL /201 4 VIKAS JAIN 3 THAT ON THE SAID PLOT THERE ALREADY EXIS TED DRAWING CUM DINING ROOM, TWO BED ROOMS, TWO KITCHENS, TWO SERVANT ROOMS, THREE WC BOX ROOM AND VERANDAH TOTALING TO 2308 SQ. FT. HOWEVER, AT THE TIME OF SALE ON 03.02.2011, THE REGISTERED SALE DEED REVEA LED THAT THE RE WAS BOUNDARY WALL WITH AN IRON GATE ON TWO SIDES OF THE PLOT, THE SITE WAS TOTALLY VACANT AND IT HAD ALSO BEEN WRITTEN THAT THE SELLER , PRIOR TO SALE OF PROPERTY ON 03.02.2011 HAD COMPLETELY DEMOLISHED STRUCTURE WHICH WAS PRESENT AT THE TIME OF PURCHASE AND SOLD THE VACANT OF LAND. THE AO DID NOT ALLOW THE BENEFIT OF IMPROVEMENT TO THE ASSESSEE AND WORKED OUT THE LONG TERM CAPITAL GAIN AT RS.33,62,809/ - INSTEAD OF RS.1,60,051/ - CLAIMED BY THE ASSESSEE. 5 . BEING AGGRIEVED THE ASSESSEE CARRIE D THE MATTER TO THE LD. CIT(A) WHO OBSERVED THAT THE ASSESSEE FURNISHED AN AFFIDAVIT ON 21.01.2014 STATING THAT THE COST OF IMPROVEMENT WAS SPREAD OVER 4 YEARS AS PER FOLLOWING DETAILS: PARTICULARS YEAR AMOUNT INDEXED COST COST OF IMPROVEMENT 1985 - 86 60, 250.00 322,088.00 COST OF IMPROVEMENT 1986 - 87 150,820.00 765,950.00 COST OF IMPROVEMENT 1989 - 90 171,225.00 707,796.00 COST OF IMPROVEMENT 1991 - 92 393,780.00 1,406,923.00 6 . THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE IN THE COMPUTATION OF LONG T ERM CAPITAL GAINS FILED WITH THE RETURN OF INCOME HAD NOT INCLUDED COST OF IMPROVEMENT FOR ASSESSMENT YEAR 1985 - 86 ITA NO . 5689 /DEL /201 4 VIKAS JAIN 4 AMOUNTING TO RS.60,250/ - AND ITS INDEXED COST OF RS.3,22,088/ - BUT CLAIMED THIS COST ONLY DURING THE ASSESSMENT PROCEEDINGS. HE FURTHER OBSER VED THAT THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS, FILED AN AFFIDAVIT AND A LETTER FROM ONE SH. R. P. SINGH, CLAIMING THAT HIS FATHER CARRIED OUT THE IMPROVEMENT IN THE PROPERTY AS A CONTRACTOR AND THE APPROXIMATE COST OF IMPROVEMENTS FOR TH E YEARS 1986 - 87, 1989 - 90 AND 1991 - 92 WAS MENTIONED. THE LD. CIT(A) DID NOT ACCEPT THE AFFIDAVIT OF SH. R. P. SINGH FURNISHED FIRST TIME BEFORE HIM. HE ALSO OBSERVED THAT THE ASSESSEE WAS FURNISHING APPROXIMATE FIGURES BASED NOT ON AN Y EVIDENCE BUT ON AN AF FIDAVIT FROM A PERSON CLAIMING TO BE THE SON OF THE CONTRACTOR WHO CARRIED OUT THE WORK WHICH APPEARED AS DUBIOUS . HE FURTHER OBSERVED THAT AS THE ASSESSEE COMPLETELY DEMOLISHE D THE STRUCTURE BEFORE THE SALE, T HEREFORE, THE CLAIM REGARDING THE COST OF IMPR OVEMENT WAS NOT VERIFIABLE . THE LD. CIT(A), ACCORDINGLY, SUSTAINED THE ADDITION MADE BY THE AO BY OBSERVING THAT THE ASSESSEE FAILED TO PRODUCE ANY COMPLETE EVIDENCE TO SUBSTANTIATE HIS CLAIM FOR COST OF IMPROVEMENT OF RS.7,15,825/ - . 7 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT IN THE YEAR 1995 , THE PARENTS OF THE ASSESSEE WERE MURDERED ALONGWITH HIS TWO BROTHERS , THE ASSESSEE WAS ONLY THREE YEAR S OLD AT THAT TIME , HE WAS THE SOLE SURVIVOR OF UNFORTUNATE INCIDENT AND HAD TO BE HOSPITALIZED FOR A LONG TIME . IT WAS ALSO SUBMITTED THAT THE PARENTS ITA NO . 5689 /DEL /201 4 VIKAS JAIN 5 OF THE ASSESSEE DIED IN VERY UNFORTUNATE AND SUDDEN CIRCUMSTANCES WITHOUT HANDING OVER ANY RECORD TO ANY PERSON AND THAT T HE HOUSE WAS CONSTRUCTED HOUSE , AS THE FAMILY WAS LIVING IN THE SAID HOUSE SINCE 1986 . IT WAS STATED THAT THE ASSESSEE HAD TO FIGHT A LEGAL BATTLE WITH HIS PATERNAL GRANDPARENTS AND PATERNAL UNCLE AS THEY WERE TRYING TO GRAB HIS PROPERTIE S. HE FURTHER SUBMITTED THAT AS PER THE INFORMATION PROVIDED TO THE ASSESSEE BY HIS MATERNAL GRANDMOTHER , T HE SAID HOUSE WAS FURTHER CONSTRUCTED IN 1985 - 86, 1986 - 87, 1989 - 90 AND 1991 - 92 AND THAT HIS MOTHER HAD SPENT MONEY ON FURTHER EXPANSION OF THE SAID H OUSE. THEREFORE, THE ASSESSEE FILED AN AD DITIONAL EVIDENCE UNDER RULE 46A BEFORE THE LD. CIT(A), AS THE ASSESSEE WAS NOT GRANTED ADEQUATE OPPORTUNITY AT THE TIME OF ASSESSMENT PROCEEDINGS. HOWEVER, THE LD. CIT(A) REJECTED THE ADDITIONAL EVIDENCE S WITHOUT A NY BASIS WITH PRECONCEIVED MIND. IT WAS STATED THAT THE ASSESSEE HAD FURNISHED VALUATION REPORT OF THE SAID PROPERTY BY THE GOVERNMENT REGISTERED VALUER DATED 31.03.1992 SHOWING THAT THE VALUE OF THE SAID PROPERTY AS ON 31.0 3 .1992 WAS 15,00,000/ - AND THAT THE PROPERTY BELONGS TO SMT. BILAS JAIN (MOTHER OF ASSESSEE) WHICH THE LD. CIT(A) HAD NOT TAKEN ANY COGNIZANCE IN HIS ORDER AND TREATED THE SUBMISS I ONS OF THE ASSESSEE AS DUBIOUS, TH EREFORE, THE ORDER OF THE LD. CIT(A) WAS A NON - SPEAKING ORDER AND AS SUCH THE ADDITION SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. A RELIANCE WAS PLACED ON THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF ACIT VS SH. LAXMAN SINGH RAWAT IN ITA NO. 2256/DEL/2013 ORDER ITA NO . 5689 /DEL /201 4 VIKAS JAIN 6 DATED 22.08.2014. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED COPY OF THE FIR IN SUPPORT OF HIS SUBMISSION THAT THE PARENTS AND BROTHERS OF THE ASSESSEE WERE MURDERED. 8. IN HIS RIVAL SUBMISSIONS THE LD. SENIOR DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NO EVIDENC E WAS FURNISHED IN SUPP ORT OF THE CLAIM OF IMPROVEMENT, T HEREFORE, THE LD. CIT(A) RIGHTLY SUSTAINED THE ADDITION MADE BY THE AO. 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN T HE PRESENT CASE, IT APPEARS THAT THE ADDITIONAL EVIDENCE S WERE FURNISHED BY THE ASSESSEE F IRST TIME BEFORE THE LD. CIT(A), H OWEVER, THE SAME WERE NOT ADMITTED BY THE LD. CIT(A) WHO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AS DUBIOUS . THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE ASSESSEE FU RNISHED THE VALUATION REPORT FROM THE GOVERNMENT REGISTERED VALUER DATED 31.03.1992. HOWEVER, NO COGNIZANCE WAS TAKEN BY THE LD. CIT(A) TO THE SAID DOCUMENT. I, THEREFORE, CONSIDERING THE TOTALITY OF THE FA CTS AND THE SUBMISSIONS OF THE ASSESSEE THAT NO COGNIZANCE WAS TAKEN BY THE LD. CIT(A) TO THE ADDITIONAL EVIDENCES WHICH WERE NOT AVAILABLE TO THE AO, DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND REMAND THE ISSUE BACK TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HERE TO THE ASSESSEE. ITA NO . 5689 /DEL /201 4 VIKAS JAIN 7 10 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES . (O RD ER PRO NO UNCED IN THE COURT ON 27 /07 /2016 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 27 /07 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDEN T 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR