CHARANJEET SINGH, GHAZIABAD V. ITO, WARD- 1(2), GHAZIABAD

ITA 6186/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3234 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Keywords: Opportunity of being heard; Additional evidence; Cost of acquisition
• Section: 54F; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. R.K.PANDA, ACCOUNTANT MEMBER ITA NO. 61 86 /DEL/2017 ASSESSMENT YEAR: 2009 - 10 SHRI CHARANJEET SINGH C/O RAJEEV SHARMA, 564, KIRTAN WALI GALI, CHOTI BAJARIA, GHAZIABAD PAN: A UZPS2192Q VS INCOME TAX OFFICER , WARD 1(2) GHAZIABAD (APPELLANT) (RESPONDENT) APPELLANT BY SH. HARDEEP SINGH, FCA SH. ARUN SHARMA, FCA RESPONDENT BY S H. B. R. MISHRA, SR. DR DATE OF HEARING: 12 /0 2 /2018 DATE OF PRONOUNCEMENT: 26 / 0 2 /2018 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3 1 .0 8 .2017 OF THE CIT (A) , GHAZIABAD RELATING TO A.Y. 2009 - 10. 2. F ACTS OF THE CASE , IN BRIEF , ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE CA SE WAS REOPENED U/S. 148 OF THE IT ACT ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY AT KE - 70, KAVI NAGAR, GHAZIABAD FOR A SUM OF RS. 35,00,000/ - ON 27.10.2008 . ITA NO. 61 86 /DE L/20 1 7 2 H OWEVER THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE NOTICE I SSUED U/S 148 OF THE IT ACT. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 142 (1) OF THE IT ACT AND AGAIN THERE WAS NO COMPLIANCE. FINALLY THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE FOR COMPLIANCE ON 22.06.2016. HOWEVER, AGAIN THE SAME RE MAINED UNCOMPLIED. THE ASSESSING OFFICER ACCORDINGLY DETERMINED THE INCOME OF THE ASSESSEE AT RS. 35,00,000/ - ON ACCOUNT OF SHORT TERMS CAPITAL GAIN BY PASSING ORDER U/S 144 OF THE IT ACT . 3. B EFORE CIT (A) THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCE S FOR CLAIMING DEDUCTION U/S 54F OF THE IT ACT F ROM LONG TERM CAPITAL GAIN THAT AROSE ON ACCOUNT OF SALE OF THE PROPERTY . A LTHOUGH THE LD. CIT (A) REJECTED THE ADDITIONAL EVIDENCE S AND UPHELD THE ACTION OF THE ASSESSING OFFICER , H E , HOWEVER , GAVE PARTIAL REL IEF TO THE EXTENT OF RS. 14,30,000/ - BEING THE COST OF ACQUISITION OF THE PROPERTY BUT REJECTED THE CLAIM OF COST OF CONSTRUCTION OF RS. 16, 1 5 ,555/ - ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF COST OF IMPROVEMENT. ACCORDING TO HIM TH E COPIES OF THE BILLS PRODUCED REVEALED THAT THE EXPENSES INCURRED WERE NOT OF CAPITAL NATURE. THE RELEVANT OBSERVATION OF CIT (A) AT PARA 7.2.1 READS AS UNDER : - 7.2.1 EXAMINATION OF FACTS FURTHER REVEAL THAT APPELLANT HAD PURCHASED ITA NO. 61 86 /DE L/20 1 7 3 THE ABOVE SAID PROPER TY FOR A SUM OF RS. 14,30,000/ - AND SAME WAS FUNDED THROUGH A LOAN OF RS. 14,50,000/ - . HOWEVER APPELLANT HAS CONTENDED THAT HE HAS SPENT A SUM OF RS. 16,15,555/ - CLAIMED TO HAVE BEEN CARRIED OUT THROUGH M/S DURGA BUILDERS. AFTER CONDUCTING THE ENQUIRY APPE LLANT FAILED TO PROVE GENUINENESS OF COST OF IMPROVEMENT. THE COPIES OF BILLS PRODUCED ALSO REVEALED THAT THE EXPENSES INCURRED WERE NOT OF CAPITAL NATURE FOR EXAMPLE PAINT MATERIAL OF RS. 1,03,165/ - HAS BEEN CLAIMED BY THE APPELLANT. CONSIDERING THESE FAC TS IT IS HELD THAT APPELLANT SHOULD BE GIVEN BENEFIT OF COST OF ACQUISITION, AGAINST THE SALE CONSIDERATION RECEIVED AND BENEFIT ON INDEXING SHOULD ALSO BE GIVEN TO THE APPELLANT. THE LTCG BE COMPUTED ACCORDINGLY WITH COST OF ACQUISITION IN APRIL 2005 TO BE CONSIDERED AS RS.14,30,000/ - . NO BENEFIT OF COST OF IMPROVEMENT CAN BE GIVEN TO THE APPELLANT AS DISCUSSED ABOVE. ACCORDINGLY THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 3. AGGRIEVED WITH SUCH ORDER OF THE CIT (A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : - 1 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ERRED AND IGNORED MANY POINTS OF UTMOST CONSIDERATION AND IMPORTANCE WHILE PASSING THE APPELLATE ORDER. ITA NO. 61 86 /DE L/20 1 7 4 2 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS IGN ORED THE FOREMOST POINT IN HER ORDER THAT THE SUPPLIER OF GOODS AND SERVICES FOR IMPROVEMENT OF THE PROPERTY HAS CONFIRMED THE SUPPLIES MADE TO THE APPELLANT. 3 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ERRED BY TERMING THE COST OF IMPROVEMENT AS IN GENUI NE EVEN IN THE LIGHT OF FULLEST POSSIBLE DETAILS AND CONFIRMATIONS PLACED BEFORE HER. THE ADDITION SO SUSTAINED SEEMS TO BE IMPOSED UPON THE APPELLANT. 4 . THAT THE MOST SURPRISING OMISSION HAS BEEN MADE BOTH BY ID. A.O. IN HIS REMAND REPORT AND HON'BLE CIT - A PPEALS, GHAZIABAD IN HER ORDER IS IN RESPECT OF THE CONFIRMATION IN WRITING FILED BY THE SUPPLIER OF THE MATERIAL AND SERVICES FOR IMPROVEMENT IN THE HOUSE, M/S. DURGA BUILDERS. THE FACT THAT THE INFORMATION WAS CALLED FROM HIM AND THAT HIS CONFIRMATION WA S RECEIVED HAS BEEN OMITTED TO BE MENTIONED ANYWHERE IN THE APPELLATE ORDER. THE SAME IS SURPRISING AND MUST BE VIEWED WITH DUE CARE. THE SAME SHOWS THE IGNORANCE OF MOST IMPORTANT FACT, AND HAD IT BEEN TAKEN CARE OF, THE APPEAL OF THE APPELLANT WOULD, PRO BABLY BEEN ALLOWED. 5 . THAT THE APPELLANT WAS REQUIRED TO PLACE THE LOAN STATEMENT ITA NO. 61 86 /DE L/20 1 7 5 ALONGWITH THE SANCTION LETTER/CERTIFICATE OF THE BANKERS, M/S. SYNDICATE BANK, MALIWARA, GHAZIABAD IN ORDER TO CHECK THE PURPOSE OF THE LOAN. THE SAME WAS DULY PLACED BEFORE H ER DURING THE PROCEEDINGS WHICH CLEARLY MENTIONED THAT THE LOAN OF RS. 1450000/ - WAS EXTENDED TO THE APPELLANT FOR PURCHASE AND COST OF IMPROVEMENT OF THE PROPERTY. THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ERRED IN IGNORING THIS. THE AMOUNT OF RS. 14.50 LACS WAS DISBURSED BY THE SAID BANKERS IN FOLLOWING MANNER: - DATE AMOUNT PURPOSE DOCUMENTARY EVIDENCE 5.4.2005 975000 COST PAGE NO.25 OF SALE DEED DATED 5.4.2005 15.4.2005 475000 IMPROVEMENT MENTIONED IN THE ST ATEMENT OF ACCOUNT OF DURGA BUILDERS THE HON'BLE CIT APPEALS, GHAZIABAD HAS ERRED BY FAILING TO NOTE THAT THE PROCESS OF IMPROVING THE PROPERTY WAS INITIATED ON 15.4.2005 BY SYNDICATE BANK ITSELF THROUGH THE DISBURSEMENT OF PART OF THE LOAN DIRECTLY TO SAID M/S. DURGA BUILDERS TOWARDS THE COST OF IMPROVEMENT. THE SAME HAS TOTALLY BEEN IGNORED WHICH IS A UNJUST AND HAS RESULTED IN HARDSHIP TO THE APPELLANT. 6 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS WRONGFULLY FOR THE ITA NO. 61 86 /DE L/20 1 7 6 REASONS BEST KNOWN TO HER ONLY, CIT ED THE EXAMPLE OF ONE OF THE ITEMS USED IN THE IMPROVEMENT OF THE PROPERTY, I.E. PAINTS. HOWEVER SHE HAS ALSO IGNORED DETAILS AND BILLS OF ALL OTHER ITEMS WHICH ARE ESSENTIAL PART OF IMPROVEMENT IN THE PROPERTY. 7 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS IGNORED THE FACT THAT AFTER SUBSTANTIAL WORK OF IMPROVEMENT IN PROPERTY (BREAKAGE, PLASTERING, PLUMBING, CIVIL WORK, FIXING OF MARBLE STONES IN DRAWING/DINNING/KITCHEN/ALL BEDROOMS/BALCONIES, FIXING OF FLOORING & WALL TILES IN BATHROOMS/KITCHEN, POP, ELEC TRICAL WORK, ETC), PAINT HAS TO BE DONE AND AS SUCH FORMS THE ESSENTIAL MATERIAL FOR THE COMPLETION OF JOB. 8 . THAT THE COMPONENTS OF SUPPLIED MATERIAL ARE ANNEXED IN DETAILS VIDE ANNEXURE TO THE GROUNDS OF APPEAL WHICH INCLUDE CEMENT, STONES, TOILET SEATS, WASH BASINS, DOORS, WINDOWS, LOCKS HANDLES, SANITARY FITTINGS ETC. IT IS WRONG ON THE PART OF THE CIT - APPEALS, GHAZIABAD THAT THE APPELLANT FAILED TO PROVE THE GENUINENESS OF THE COST OF IMPROVEMENT. ALTHOUGH THE BILLS FOR SUPPLIES ARE SELF EXPLANATORY, YE T THE DATE & BILL WISE DETAILS ALONG WITH THE USAGE OF THE SAME ARE ENCLOSED HEREWITH THE GROUNDS OF APPEAL WHICH MAY PLEASE BE VIEWED IN CONJUNCTION OF OTHER FACTS RELATING TO THE ISSUE. ALSO ENCLOSED IS THE ITA NO. 61 86 /DE L/20 1 7 7 DETAILS OF PAYMENTS MADE TO M/S. DURGA BUILDERS , GHAZIABAD TOWARDS COST OF IMPROVEMENT (ALL THROUGH PROPER BANKING CHANNELS INCLUDING ADVANCE PAYMENT OF RS. 475000 DIRECTLY MADE BY LENDER, SYNDICATE BANK, GHAZIABAD) PAYMENTS WHICH THROWS EVEN MORE LIGHT UPON THE TRANSACTION BETWEEN THE APPELLANT AND TH EM. AS SUCH IT IS MOST RESPECTFULLY SUBMITTED THAT THE STAND OF THE HON'BLE CIT - APPEALS, GHAZIABAD IS TOTALLY AWAY FROM FACTS AND WITHOUT ANY BASIS, NEEDS TO BE VIEWED ACCORDINGLY. 9 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ALSO IGNORED THE AREA AND SIZ E OF THE FLAT WHICH MEASURED ABOUT 114.57 SQ. METERS AND THAT IT CONSISTED OF ONE DRAWING, ONE DINING, ONE KITCHEN, FOUR BEDROOM, THREE BATHROOMS & THREE BALCONIES AND THAT IF IT IS IMPROVED, THE COST OF 1615555/ - IS A VERY REASONABLE AMOUNT. 10 . THAT THE HON' BLE CIT - APPEALS, GHAZIABAD ERRED IN TOTALLY IGNORING THE SUBMISSION MADE BEFORE HER VIDE LETTER DATED 10/08/2017 THAT THE PROPERTY WAS JUST RAW AND WAS BEING SOLD ON 'AS IS WHERE IS BASIS' AND THAT SUCH PROPERTY IF SOLD IN GOOD CONDITION WOULD BE SOLD ON A MUCH HIGHER PRICE, NOT FOR RS. 13.00 LACS. ITA NO. 61 86 /DE L/20 1 7 8 11 . THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ERRED IN TREATING THE ITEMS USED IN IMPROVEMENT AS ITEMS NOT OF THE CAPITAL NATURE AND HAS IGNORED THE NATURE AND USE OF THE SAME AS WELL. AFTER THE CIVIL WORKS ARE CA RRIED ON EXTENSIVELY AS DONE TO THE SAID PROPERTY, PAINT HAS TO BE DONE BEING THE LAST PART OF THE PROCESS. AND THAT THE HON'BLE CIT - APPEALS, GHAZIABAD HAS ERRED IN TREATING THE SAME AS NON - CAPITAL EXPENSE, IGNORING ALL OTHER FACTS AVAILABLE ON RECORDS. TH E SAME IS UNJUST. 12 . TO SUM UP, THE SUPPLIES OF THE MATERIALS AND SERVICES, THEIR DETAILS OF SUPPLIES FOR IMPROVEMENT OF THE PROPERTY, CONFIRMATION BY SUPPLIER, BANKERS CERTIFICATE MENTIONING THE PURPOSE AND MANNER OF DISBURSEMENT OF THE LOAN, EVEN BANK STATE MENTS OF THE APPELLANT CORROBORATING THE GENUINENESS OF THE TRANSACTIONS, SEEMS TO BE KEPT ASIDE BY THE HON'BLE CIT - APPEALS, GHAZIABAD WHICH IS UNJUST AND HARDSHIP UPON THE APPELLANT AND CONTRARY TO LAW. AS SUCH IT IS MOST HUMBLY IN THE INTEREST OF JUSTICE PRAYED THAT THE ADDITION BY WAY OF DISALLOWING THE COST OF IMPROVEMENT, BE DELETED. 13. THE APPELLANT CRAVES TO ADD, ALTAR, AMEND OR DELETE ANY OR ENTIRE ITA NO. 61 86 /DE L/20 1 7 9 OF THE GROUNDS OF APPEAL . 4. I HAVE CONSIDERED THE RIVAL ARG U MENTS MADE BY BOTH THE SIDES, PERUS ED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I FIND IN ABSENCE OF ANY RESPONSE TO NOTICE U/S. 148 OR 142 (1) OR U/S 144 , T HE ASSESSING OFFICER COMPLETED THE ASSESSMENT DETERMINING THE CAPITAL GAIN OF THE ASSESSEE AT RS. 35,00,000/ - . I FIND IN APPEAL THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCES BEFORE CIT (A) WHICH WERE FORWARD ED TO THE ASSESSING OFFICER FOR SUBMITTING A REPO R T. ON THE BASIS OF A RGUMENTS ADVANCED BY THE ASSESSEE , THE LD. CI T (A) GRANTED RELIEF OF RS. 14,30 ,000/ - BEING THE COST OF ACQUISITION OF THE PROPERTY. HE , HOWEVER , REJECTED THE ARGUMENTS OF THE ASSESSEE , REGARDING COST OF IMPROVEMENT OF RS. 16,55,555/ - ON THE GROUND THAT ASSESSEE FAILED TO PROVE THE GENUINESS OF COST O F IMPROVEMENT. I FIND FROM THE REMAND REPORT OF THE ASSESSING OFFICER, WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN THE BODY OF THE ASSESSMENT ORDER , THAT ONE OF THE RE ASON FOR REJECTING THE CLAIM IS DUE TO THE ABSENCE OF THE ORIGINAL BILLS TO PROVE THE GEN IUNESS OF SUCH COST OF CONSTRUCTION ALTHOUGH THE PAYMENTS WERE MADE TO M/S. DURGA BUILDERS WHICH ARE VERIFIABLE FROM THE COPIES OF THE BANK STATEMENTS. THE ASSESSING OFFICER HAD REPORTED THAT SUCH EXTENSIVE ITA NO. 61 86 /DE L/20 1 7 10 RENOVATION/IMPROVEMENTS / CONSTRUCTIONS ON THE S AI D FLAT IS FARFETCHED AND UN BELIEVABLE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT HE HAD PURCHASED A FOUR BED ROOM FLAT AND HE HAD SPEND THE MONEY FOR MAKING THE HOUSE HABITABLE. ACCORDING TO HIM GIVEN AN OPPORTUNITY HE IS IN A POSITIO N TO SUBSTANTIATE BEFORE THE ASSESSING OFFICER OR THE CIT(A) AS THE CASE MAY BE THAT SUCH E XPENSES ARE CAPITAL IN NATURE AND HE INCURRED THE EXPENDITURE TO MAKE THE HOUSE HABITABLE. 5. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE , I DEEM IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBS TANTIA TE HIS CASE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE COST OF IMPROVEMENT OF THE HOUSE SO AS TO BE ELIGIBLE FOR THE DE D U C TION U/S 54F. NEEDLESS TO SAY THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 61 86 /DE L/20 1 7 11 7 . PRONOUNCED IN THE OPEN COURT ON 26 /02/2018. SD/ - ( R. K. PANDA ) ACCOUNTANT MEMBER *NEHA * DATE: - 26 . 02 .201 8 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 61 86 /DE L/20 1 7 12 DATE 1. DRAFT DICTATED ON 12 .02.2018 PS 2. DRAFT PLACED BEFORE AUTHOR 1 3 .02.2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/P S 6. KEPT FOR PRONOUNCEMENT ON 26 .02.2018 PS 7. FILE SENT TO THE BENCH CLERK 26 .02.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. ITA NO. 61 86 /DE L/20 1 7 13