Vinod Anand, Faridabad V. DCIT, Circle-II, Faridabad

ITA 639/DEL/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4532 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 02-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M BARANWAL
• Keywords: Cost of acquisition; Valuation report; Assessment record; Set aside
• Section: 143(3); 54B; 54F; 133(6); 250; 139(1); 55A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’ : NEW DELHI BEFORE DR. B.R.R.KUMAR, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.639/Del/2020 (Assessment Year : 2014-15) Sh. Vinod Anand House No. 2288, Sector-9, Faridabad, Haryana Vs. DCIT, Circle-II, Faridabad (APPELLANT) (RESPONDENT) Assessee by None Revenue by Sh. M Baranwal, SR. DR Date of hearing: 18.07.2022 Date of Pronouncement: .07.2022 ORDER PER ANUBHAV SHARMA, JM: The appeal has been filed by the Assessee against order dated 28.06.2019 in assessment year 2014-15 passed by Commissioner of Income Tax (Appeals)-Faridabad (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 25.11.2016 u/s 143(3) of the Income Tax Act, 1961 passed by DCIT, Faridabad (hereinafter referred to as the Assessing Officer ‘AO’). ITA-639Del.2020 2 2. The facts in brief are that the return of income was filed by the assessee under section 139(1) of the Income Tax Act, 1961 (in short, “the Act”, henceforth) on 30.06.2015 declaring total income of Rs. 70,72,580/-. Subsequently, the case was selected for limited scrutiny under ‘CASS’ and the same was assessed at an income of Rs. 98,61,560/- making an addition of Rs. 27,88,975/- as Long Term Capital Gain. Allegedly the assessee derived income from Business & Profession, Capital Gain and other Sources. During the period relevant to the Assessment Year 2014-15, the assessee sold immovable (75. Block-H, Sector 10. DLF Model Town, Faridabad, Tehsil Ballabgarh, Distt. Faridabad) at Rs. 1,65,00,000/-. Details and document| with regard to income shown and expenses claimed were obtained and placed on assessment record. The Ld. AO noticed after examination of computation of taxable income, the assessed has sold immovable property (75. Block- H. Sector 10, DLF Model Town. Faridabad. Tehsil Ballabgarh. Distt. Faridabad) on 22.05.2013 at Rs. 1,65,00,000/- which was purchased on 30.03.2000 at Rs. 4,62.805/- [4,00,650+ 62,155(Stamp duty)]. The assessee has also Purchased immovable property (H. No. 1576, Sector 9, Urban Estate. Ballabgarh) on 04.07.2013 at Rs. 60.18.750/- [56,25,000/- +3,93,750/-(Stamp duty)]. In the computation sheet, the assessee has claimed the Cost of Acquisition of Property) (75/H. Sector 10, DLF Model Town, Faridabad) as Rs. 39, 05,723/-while the Cost of Acquisition comes to Rs. 11,16,748/-. The assessee was asked to justify the same and a show cause notice vide No. 8675 dated 15.11.2016 was issued 18.11.2016. Vide the said Show cause the assessee was asked to explain the cost acquisition as Rs.39,05,723/- against Rs. 11,16,748/- the same is reproduced hereunder : ITA-639Del.2020 3 "Sub: Show cause notice in the case of Sh. Vinod Anand, H. No. 2288, Sector-9, Faridabad for the A. Y. 2014-15 - Regarding- PIease refer to your reply submitted to this office. In this regard you have purchased a property bearing No. 75. Block-H, Situated at Sector-10. DLF. Model Town. Faridabad. tehsil Ballabgarh, Faridabad for Rs.4,00,650/- Stamp duty of which was Rs.62155/- on 30.03.2000 and you have sold the same on 22.05.2013for Rs. 1,65,00,000/-. In your computation sheet you have claimed the cost of acquisition Rs. 39,05,723 - while the cost of acquisition will be Rs. 11,16,748/-. Please show cause, why same should not be treated adversely in absence of justification with corroborative evidence.. " 2.1. The assessee vide his reply dated 23.11.2015 submitted as follows which was duly considered and made part of the assessment order : “1. Cost of Land Rs. 400650/- plus cost of stamp duty Rs. 62155/- total cost comes to Rs. 462805/-. 2. Index cost of Acquisition for Land comes to Rs. 1117156/- (i.e. 462805*939/389). 3. I had constructed the building on above land the building was completed on 07/08/2006. The cost of construction was taken at 1541284/-. Copy of valuation Report by Valuation Report issued by Sushil Bajaj & Associates. Architects is enclosed for your ready reference. 4. Index cost of Acquisition of Building comes to Rs. 2788566/;- (1541284*939/519) 5. Total cost of Land & building comes to Rs. 3905722/- (1117156 + 2788566).” 2.2 Ld. AO observed that assessee failed to furnish any evidence for aforementioned expenses for construction of building, therefore, restricting the cost of acquisition of property at Rs. 11,16,748/- made addition of Rs. 27,88,975/-. 3. The Ld. CIT(A) admitted additional evidence upon which remand report was called and there upon observed “Ground Nos. 3,4,5 and 6 : The appellant during the year had sold an immovable property situated in Sector-10, ITA-639Del.2020 4 Faridabad on 22.05.2013 for Rs.1,65,00,000/-. The said property had been purchased on 30.03.2000 for Rs.4,62,805/- while computing the long term capital gain it was noted that the appellant has claimed the cost of construction of the same for Rs. 15,41,284/- as on 07.08.2006. However, no documentary evidence could be furnished in this respect. The AO accordingly has disallowed indexed cost of construction for Rs.27,88,975/-. During the appellate proceedings, the appellant has furnished additional evidence under Rule 46A in which it was stated that the appellant had constructed a house on the plot in 2006 and sold the same. Through additional evidences the appellant had furnished loan documents from LIC Housing Finance Ltd. as the proof for the construction of the building of the plot, withdrawals made from post office passbook, various bills from different parties for construction material and brokerage paid. The additional evidences were made available to the AO. The AO had furnished the remand report vide letter No. 59 dated 16.05.2019. In the remand report it has been stated that the enquiries were conducted u/s 133(6) of the Act from the vendors from whom the appellant had claimed to have made purchase of the building material. However, the purchase bills from the building material could not be found as verifiable. It could not be established before the AO how the loan taken from LIC was utilized for the construction of the house property. The Ld. AR through the rejoinder had stated that in the purchase deed it has been mentioned that the appellant has purchased the vacant plot whereas in the sale deed it has been mentioned that the appellant has sold land with building. It was stated that a valuation report has been furnished before the AO in the support of construction cost. The remand report of the AO, rejoinder of the appellant has been reproduced as above for reference. 12. From the facts of the case and material available on record has been gone through. It is noted that the appellant had purchased a vacant plot on 23.03.2000 measuring 534 sq. yards whereas in the sale deed dated 22.05.2013 it is mentioned that the appellant has sold a residential partly built of property along with old partly constructed two room set thereupon having covered area of 365 sq. feet. As per the appellant the said property has been constructed on 07.08.2006. The appellant could not furnish documentary ITA-639Del.2020 5 evidence in respect of cost of construction incurred for the same inspite of giving opportunity during the assessment proceedings as well as appellate proceedings. The appellant has claimed cost of construction in respect of the said partly constructed structure at Rs. 15,41,284/- for 365 square feet i.e. @ Rs.4,222/- per square feet. Such claim of cost of construction in the year 2006 has been found highly excessive and without the support of any documentary evidence. Ongoing through the valuation report dated 2.06.2013 of the registered valuer, it is noted that registered valuer has taken the covered area at 2402 square feet, which is contrary to the description given in the sale deed as discussed above. In the circumstances the said valuation report has not been found to be credible as the facts has been mentioned incorrectly. However, to be fair and reasonable, and keeping in view the description of the property sold as given in the sale deed the cost of construction in respect of partly constructed property is estimated @ of Rs.400/- per square feet. The above estimation has been made on the basis of CPWD rates for F.Y. 2006-07 in respect of cost of construction for fully constructed residential building. The registered valuer has applied the rate of Rs.640/- in the valuation report (supra). On these bases the cost of construction in this case is estimated for Rs.1,46,000/-. The AO is accordingly directed to recompute the capital gain by giving the appellant benefit of cost of construction for Rs.1,46,000/- as on 07.08.2006 . Ground Nos. 3,4,6 and 6 of the appellant are Partly Allowed.” 4. The assessee has come in appeal raising following grounds :- “1) That the impugned order passed u/s 250 of the Income Tax Act, 1961 is bad in law and needs to be set-aside. 2) That the order passed u/s 143(3) is bad in law and needs to be set aside. 3) That the claim of deductions u/s 54, 54B and 54D were rejected illegally and against the provisions of ‘The Act’. 4) That the claim of deductions u/s 54F was rejected illegally and against the provisions of ‘The Act’. 5) The the re-computation of the income by the AO and CIT(A) without considering the evidences available on records is illegal. ITA-639Del.2020 6 6) That the estimation of valuation of building without applying the sections 55A and / or 142A of ‘The Act’ in the impugned order was erroneous and needs to be set-aside. 7) That the assessment order and impugned order were further illegal due to the mis-representation of the facts in the order. If necessary additional / revised / modified grounds of Appeal shall be filed at the time of hearing of instant Appeal.” 5. As the case was called for hearing on 18.07.2022, none appeared for the assessee. The notices issued through acknowledgement have been received back un-served. The acknowledgement receipt is made part of the record. It appears that the assessee is not interested to prosecute the matter. Arguments of Ld. Sr. DR were heard who supported the orders of ld. Tax Authorities Below. 6. After giving thoughtful consideration to the matter on record, the Bench is of considered opinion, the Ld. CIT(A) has taken into consideration all the relevant evidences produced by the assessee while admitting it under Rule 46A of the Income Tax Rules. Remand report was also called from the Ld. AO. Especially with regard to the loan availed from LICHFL the Ld. AO has submitted in remand report that the loan record established that the loan was in regard to a property owned by Vinod Anand- Karuna Anand, while the present property is in the sole name of Vinod Anand. 7. It can be also appreciated that the sale deed dated 22.05.2013 was shown to have been executed in regard to residential house with only ‘two constructed rooms’ and covered area of 365 sq. ft. The valuation report on record shows that the valuer had mentioned the covered area of ground floor to be 223.15 square meter = 2402 square feet. A perusal of the valuation report however, shows that except from giving ITA-639Del.2020 7 approximate covered area, no details are given as to how many rooms, toilets or other identifiable or measurable construction existed. 8. In the light of same, Ld. CIT(A) has rightly discarded, the report of registered valuer. Considering the admitted age of construction the cost of construction reached by the Ld. CIT(A) cannot be interfered, in the absence of any substantive matter on record to controvert the same. The grounds raised have no substance. The Appeal is dismissed ex parte. Order pronounced in the open court on 22 nd July, 2022. Sd/- Sd/- (DR. B.R.R.KUMAR) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated :22 nd /07/2022 *Binita* Copy forwarded to: - 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT By Order Assistant Registrar, ITAT, Delhi