Durgaprasad R. Chaurasia, Jalgaon V. Income-tax Officer,

ITA 603/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7464 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N KALBHANDE
• Keywords: Principle of natural justice; Cost of acquisition

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.603/PUN/2014 / ASSESSMENT YEAR : 2008-09 SHRI DURGAPRASAD R. CHAURASIA, NEAR KHAJAMIYA, OPP. REKHA GAS GODOWN, JALGAON 425 001 PAN : AAGHD4439N . /APPELLANT VS. ITO, WARD-1(1),JALGAON . / RESPONDENT / APPELLANT BY : SHRI S.N. KALBHANDE / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT DATE OF HEARING : 19.09.2017 / DATE OF PRONOUNCEMENT:20.09.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT(A)-II, NASHIK DATED 08-01-2014 FOR THE ASSESSMENT YEAR 2008-09. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. FROM THE FACTS AND IN THE CIRCUMSTANCES, ITO HA S WRONGLY REJECTED THE COST OF ACQUISITION AND ACCORDINGLY THE INDEXED COST AS ON 01-04-1981. 2. FROM THE FACTS AND IN THE CIRCUMSTANCES, ITO ERR ED IN REJECTING THE PAYMENTS MADE TO TENANTS OF PREMISES TO VACATE THE PREMISES. 3. FROM THE FACTS AND IN THE CIRCUMSTANCES, ITO ERR ED REJECTING THE PAYMENTS TO SISTERS WHO RELINQUISHED THEIR SHARES IN THE PRO PERTY. THEIR AFFIDAVITS WERE REJECTED ON FILTHY GROUNDS. WHEN THE AFFIDAVITS AR E MADE AND FILED, IT IS NECESSARY TO MAKE THE COUNTER AFFIDAVIT TO REJECT THEM, WHICH THE ITO HAS NOT DONE. 4. IN THE REMAND REPORT THE CONCERNED ITO HAS ALSO REPORTED THE SAME THING WHICH THE AO HAS NARRATED. IT DOES NOT MEAN THAT I T SUPPORTS THE REPORTING OF AO. ITA NO.603/PUN/2014 SHRI DURGAPRASAD R. CHAURASIA 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN HUF. ON 04-08-2007, ASSESSEE SOLD THE ANCESTRAL PLOT OF LAND BEARING S. NO.3138 AND 3139 SITUATED AT AATHAVADE BAZAR, BHUSAWAL FOR A CONSIDERATION OF RS .30,36,472/-. THE VALUATION OF THE PROPERTY AS ON 01-04-1981 WAS SHOWN BY THE ASSE SSEE AT RS.41,500/-. AFTER INDEXATION, THE COST OF ACQUISITION WORKED OUT TO R S.2,28,665/-. THE NET TAXABLE CAPITAL GAIN WAS CALCULATED AT RS.14,03,903/-, BEIN G HALF PERCENT SHARE OF THE ASSESSEE. IN HIS WRITTEN SUBMISSIONS FILED BEFORE THE AO, ASSESSEE STATED THAT THE PROPERTY IN QUESTION BELONGS TO ASSESSEES GRAND FA THER AND THE SAME WAS INHERITED BY 4 PERSONS. ASSESSEE AND HIS BROTHER, SHRI RAJEN DRAPRASAD CHAUSASIYA, BEING LEGAL HEIRS INHERITED THE PROPERTY. ASSESSEES SIS TER SMT. LEELABAI CHANDULAL CHAURASIYA HAD RELINQUISHED HER RIGHT OF SHARE IN T HE PROPERTY IN FAVOUR OF HIS BROTHER ON THE CONDITION OF PAYMENT OF RS.3 LAKHS. ON 28-09-2007, ASSESSEE PAID RS.3,00,000/- TO HIS SISTER AND CLAIMED EXPENDITURE OF RS.1,51,003/-. IN THE ABSENCE OF SUFFICIENT EVIDENCE, AO ALLOWED RS.50,00 0/- AS EXPENDITURE TOWARDS ADVOCATE FEES, COURT STAMP, OTHER FEES ETC., EVENT UALLY, AO WORKED OUT THE SELLING PRICE OF THE SAID PROPERTY AS ON 04-08-2007 AT RS.3 0,36,472/-. ASSESSEES CAPITAL GAIN WORKED OUT TO RS.11,53,398/- BEING SHARE IN THE PROPERTY AND RS.25,967/- TOWARDS INCOME FROM OTHER SOURCES. THUS, AGGREGATI NG THE TOTAL INCOME OF THE ASSESSEE AT RS.11,79,360/-. 4. FIRST APPELLATE AUTHORITY CONFIRMED THE ORDER OF THE AO HOLDING THE CAPITAL GAINS OF THE ASSESSEE AT RS.11,53,389. AGGRIEVED W ITH THE ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT AFTER THE DEMISE OF THE ASSESSEES FATHER, THE PROPERTY IN QUESTION WAS INHERITED BY THE ASSESSEE AND HIS BROTHER SHRI RAJENDRAPRASAD CHAUSASIYA, BEING 5 0% SHAREHOLDERS. THE AO DETERMINED THE CAPITAL GAINS OF THE ASSESSEE AT RS. 11,53,389/-. LD. COUNSEL SUBMITTED THAT IN THE CASE OF HIS BROTHER SHRI RAJE NDRAPRASAD CHAURASIYA, THE AO ITA NO.603/PUN/2014 SHRI DURGAPRASAD R. CHAURASIA 3 WORKED OUT THE CAPITAL GAINS OF THE SAME PROPERTY A T RS.6,92,632/-. THE PROPERTY IN LITIGATION IS THE SAME AS THAT OF HIS BROTHER. HOWEVER, THERE IS HUGE VARIATION IN THE ASSESSMENT OF CAPITAL GAINS CALCULATED IN THE C ASE OF THE ASSESSEE, I.E. DURGAPRASAD R. CHAURASIYA UNLIKE IN HIS BROTHERS C ASE. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR ADOPTING THE CALCULATIO N AS WAS DONE IN THE CASE OF HIS BROTHER TO MEET THE ENDS OF JUSTICE. 6. LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE CIT(A) DUTIFULLY. 7. WE HEARD BOTH THE SIDES. WE FIND THIS IS THE C ASE RELATING TO THE TAXATION OF SHARE (50% SHARE) OF THE CAPITAL GAINS OF THE ASS ESSEE ON SALE OF A PROPERTY. THE COST OF ACQUISITION OF THE SAID PROPERTY AS ON 01-04-1981 IS THE MAJOR ISSUE OF DISPUTE APART FROM GIVING DEDUCTIONS TO CERTAIN PAY MENTS INCURRED BY THE ASSESSEE FOR MAKING THE SAID SOLD PROPERTY FREE OF ANY ENCUM BRANCES. AS PER THE ASSESSEE, THE PROPERTY IS DEVOLVED ON THE ASSESSEE AND HIS BR OTHER FROM THE GRANDPARENTS. THEY HAVE INCURRED AN AMOUNT OF RS.3 LAKHS (PAYMENT TO SISTER) FOR VACATING HER RIGHTS IN THE PREMISES. THEY HAVE ALSO INCURRED CE RTAIN EXPENDITURE ON LITIGATION. AO COMPLETED THE ASSESSMENT IN AN EXPARTE MANNER AN D HELD THAT THE COST OF ACQUISITION AS ON 01-04-1981 AT RS.41,500/- AND THE CONSTRUCTION COST IS KEPT AT RS.75,687/-. EVENTUALLY, THE COST OF ACQUISITION O F THE SAID PROPERTY IS DETERMINED AT RS.6,28,691/-. THE SALE VALUE OF THE PROPERTY I S RS.30,36,472/-. AFTER ADJUSTING THE EXPENDITURE RELATABLE TO THE TRANSFER OF THE AS SET WHICH IS PEGGED AT RS.1,01,003/- INSTEAD OF RS.4.5 LAKHS CLAIMED BY TH E ASSESSEE. AO ARRIVED AT THE TOTAL CAPITAL GAINS ON SALE OF THE PROPERTY AT RS.2 3,06,778/-. ASSESSEES SHARE WORKED AT RS.11,53,390/-. 8. DEVIATING FROM THE CALCULATIONS ARRIVED AT BY TH E AO IN THE CASE OF HIS BROTHER SHRI RAJENDRAPRASAD CHAURASIYA (50% SHAREHO LDER) THE PRESENT AO ITA NO.603/PUN/2014 SHRI DURGAPRASAD R. CHAURASIA 4 DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1 1,79,360/- AS AGAINST THE RETURNED INCOME OF RS.25,967/-. 9. WE HAVE CONSIDERED THE FACT THAT THE AO DID NOT TAKE THE SIMILAR APPROACH IN THE CASE OF SHRI RAJENDRAPRASAD CHAURASIYA, (BROTHE R OF ASSESSEE). ON PERUSING THE ASSESSMENT ORDER DATED 24-12-2010 IN THE CASE O F HIS BROTHER, WHERE THE ISSUE OF TAXABILITY OF CAPITAL GAINS WAS DISCUSSED IN PAR A 6, IT IS HELD THAT 50% OF THE CAPITAL GAINS TAXABLE IN THE HANDS OF SHRI RAJENDRA PRASAD CHAURASIYA WORKS OUT TO RS.6,92,632/- AS AGAINST RS.11,79,360/- IN THE CASE OF THE PRESENT ASSESSEE. IN OUR CONSIDERED OPINION, WE FIND THE DIFFERENTIAL ASSESS MENTS OF THE CAPITAL GAINS RELATING TO THE SAME PROPERTY IS UNSUSTAINABLE IN LAW. TAXI NG THE CAPITAL GAINS DIFFERENTLY IN THE CASE OF THE ASSESSEE AND HIS BROTHER WHEN THE P ROPERTY IN QUESTION IS THE SAME AND THEIR SHAREHOLDING IS 50% IS NOT TENABLE AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THEREFORE, WE ARE OF THE CONSIDERED OPINI ON THAT THE AO SHOULD BE DIRECTED TO RESTRICT THE CAPITAL GAINS IN THE CASE OF THE AS SESSEE ON PAR WITH THAT OF SHRI RAJENDRAPRASAD CHAURASIYA WHEN THE MATTER REACHED T HE FINALITY. IN PRINCIPLE, WE APPROVE THE GROUNDS RAISED BY THE ASSESSEE BEFORE U S. HOWEVER, FOR WANT OF CALCULATIONS, WE REMIT THIS ISSUE TO THE FILE OF TH E AO FOR REVISING THE COMPUTATION OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE AFTER GR ANTING REASONABLE OPPORTUNITY TO THE ASSESSEE ON PAR WITH THAT OF SHRI RAJENDRAPRASA D CHAURASIYA. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED PRO TANTO. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 20 TH SEPTEMBER, 2017. ITA NO.603/PUN/2014 SHRI DURGAPRASAD R. CHAURASIA 5 / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - II, NASHIK CIT - II, NASHIK , , A BENCH PUNE; / GUARD FILE.