Nitten Shrikant Chougule, Kolhapur V. Deputy Commissioner of Income-tax, Kolhapur

ITA 647/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5341 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-02-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 143(3); 54F; 68

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.647/PUN/2015 / ASSESSMENT YEAR : 2010-11 NITTEN SHRIKANT CHOUGULE, C.S.NO.2137, 401, SHIVRATAN ENCLAVE, MAHALAXMI COLONY, OPP TO RTO OFFICE, TARABAI PARK, DIST. KOLHAPUR 416003, PAN : AECPC6287P. . / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX , CIRCLE 2, KOLHAPUR. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE. REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 1 & 2, KOLHAPUR DT.23.02.2015 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER : ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED AS ESTATE BROKER AND COMMISSION AGENT. ASSESSEE ELECTRONICALLY FILE D HIS / DATE OF HEARING : 02.07.2018 / DATE OF PRONOUNCEMENT: 17.07.2018 2 RETURN OF INCOME FOR A.Y. 2010-11 ON 09.09.2010 DECLARING T OTAL INCOME OF RS.19,19,260/-. THE CASE WAS SELECTED FOR SCRUTIN Y AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT V IDE ORDER DT.26.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,67,45,510/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.23.02.2015 (IN APPEAL NO.KOP/182/2013-14) GRANTED PARTIAL RELIEF TO THE AS SESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD.CIT(A) HAS ERRED IN LAW AND ON MERIT IN UPHOLDIN G ADDITIONS OF RS.36.00 LAKHS AS UNEXPLAINED CASH CRE DIT INSTEAD OF CAPITAL GAINS. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LD.CIT(A) HAS ERRED IN LAW AND ON MERIT IN APPRECIA TING THAT THE PROPERTY PURCHASED WAS OUT OF HIS BOOKS IN A.Y. 1988-89 AND WHEN THE PROPERTY WAS SOLD IT WAS CHARGEABLE TO TAX AS CAPITAL GAINS AND NOT AS UNEXPLAINED CASH CREDIT. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LD.CIT(A) HAS ERRED IN LAW AND ON MERIT IN NOT ALLO WING DEDUCTION 54F. 3. A LL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD SOLD HALF SHARE OF HIS PROPERTY AT C.S .NO.517-A/2 FOR RS.36 LAKHS. THE AFORESAID PROPERTY WAS PURCHASED BY THE ASSESSEE FOR RS1,85,340/- IN F.Y. 1988-89. THE SOURCE OF PURCHASE OF SAID PROPERTY WAS STATED TO BE OUT OF WITHDRAWALS FROM PARTNERSHIP FIRM AND ACCUMULATED SAVINGS. AO NOTED THAT ASSESSEE HAD NOT PRODUCED ANY PERSONAL BALANCE-SHEET WHICH SHOW S THE AFORESAID ASSET IN THE BALANCE-SHEET. HE FURTHER NOTED T HAT THE 3 LONG TERM CAPITAL GAINS ON SALE OF LAND WAS NOT DISCLOSED B Y THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME. HOWEVER, DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FILED REVISED COMPUTATION OF INCOME SHOWING LONG TERM CAPITAL GAINS OF RS.3,48,373/- AND OFFERED THE SAME FOR TAX. THE REASON FOR NON- INCLUSION OF THE LONG TERM CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME WAS STATED BY THE ASSESSEE TO BE ON ACCOUNT O F THE DEDUCTION CLAIMED U/S 54F OF THE ACT. AO DID NOT ACCEPT T HE SUBMISSIONS OF THE ASSESSEE. AO NOTED THAT THE PURCHAS E OF LAND IN F.Y. 1988-89 WAS MADE OUT OF THE BOOKS AND THEREFORE IT WAS NOT SHOWN IN THE PERSONAL BALANCE-SHEET. AO NOTED THAT THE CONSIDERATION OF RS.36 LAKHS ON SALE OF LAND WAS NOT RECEIV ED BY THE ASSESSEE IN HIS OWN NAME BUT WAS RECEIVED IN THE NAME O F AMAL M. MAHADIK. AO ALSO NOTED THAT ASSESSEE IN THE ASSESSMENT PROCEEDINGS OF AMAL M. MAHADIK FOR A.Y. 2010-11 HAD GIVEN A STATEMENT THAT A SUM OF RS.36 LACS WAS ADVANCED BY HIM TO AMAL M. MAHADIK IN F.Y. 2009-10 AND THE ADVANCE WAS OUTSTANDIN G AS ON 31.03.2010. AO NOTED THAT RS.36 LACS ADVANCED BY HIM TO AMAL M. MAHADIK WAS NOT SHOWN IN THE BALANCE-SHEET. HE HELD T HAT THE PURCHASE OF PROPERTY, SALE OF PROPERTY AND LONG TERM CAP ITAL GAINS ON SUCH PROPERTY CAME TO THE LIGHT ONLY BECAUSE OF TH E ASSESSMENT PROCEEDINGS. HE ACCORDINGLY TREATED THE ENTIRE AMOUNT OF RS.36 LAKHS, BEING THE SALE PROCEEDS OF LAND THAT WAS GIVEN DIREC TLY BY THE PURCHASER OF LAND TO MR. AMAL M. MAHADIK AS UNEXPLAINED CAS H CREDIT AND MADE ITS ADDITION U/S 68 OF THE ACT. AGGRIEVE D BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 4 10. GROUND NO. 3 RELATES TO A D DITION OF RS. 36.00 LAKHS ON ACCOUNT OF SALE OF PLOT WHICH WAS NOT REFLECTED IN ASSESSEE 'S RETURNS . FACTS ARE THAT ASSESSEE HAD SOLD ONE HALF SHARE OF HIS PR OPERTY AT C.S . NO. 517- A/2 FOR RS. 36.00 LAKHS . THE SAID PROPERTY WAS PURCHASED IN FINANCIAL YEAR 1988-89 FOR RS. 1,85,340/ - . ASSESSEE HAS NOT SHOWN ANY CAPITAL GAIN ON SALE OF THE PROPERTY. SINCE THE PLOT WAS PURCHASED IN FINANCIAL YEAR 1988-89 OUT OF BOOKS, T HEREFORE, IT WAS NOT SHOWN BY THE ASSESSEE AT THE TIME OF SALE ALSO . THEREFORE, THE AMOUNT OF RS. 36 . 00 LAKHS WAS ADDED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT . 11 . IN APPEAL IT WAS CONTENDED THAT ASSESSING OFFICER H AS ERRED IN MAKING ADDITION OF ENTIRE SALE CONSIDERATION. SINCE THERE WAS PURCHASE PRICE OF THE PLOT OF LAND AND EXPENDITURE WAS MADE IN REGISTRATION ETC. ONLY THE CAPITAL GAIN SHOULD BE A SSESSED TO TAX. 12. APPELLANT HAS NOT DENIED THAT THE PROPERTY WAS NOT SHOWN IN HIS TAX RETURNS . THEREFORE, INCOME OF SALE OF PROPERTY IS OUT OF BOO K INCOME . THEREFORE, PRINCIPALLY SPEAKING, ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE INCOME HAS TO BE ADDE D TO APPELLANT'S TAXABLE INCOME AND NO DEDUCTION UNDER SECTION 54F I S TO BE ALLOWED. HOWE V ER , ASSESSING OFFICER HAS ADDED TOTAL CONSIDERATION OF RS. 36 . 00 LAKHS AS UNEXPLAINED CREDIT . IN THE ASSESSMENT ORDER, ASSESSING OFFICER HAS SAID THAT ASSESSEE HAS CONCEA LED THE FACTS THAT THE PLOT WAS PURCHASED OUT OF HIS WITHDRAWALS AND SAVINGS AND HE DID NOT SHOW EITHER THE PLOT OF LAND OR THE LONG TERM CAPITAL GAIN IN THE RETURN. THEREFORE , THE AMOUNT OF RS.36.00 LAKHS ADDED AS UNEXPLAINED CREDIT IS HEREBY SUSTAINED AND THE GROU ND TAKEN BY THE APPELLANT IS REJECTED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAD P URCHASED THE PLOT OF LAND LOCATED AT C.S.517-A/2, KOLHAPUR ALONG WITH PANDURANG D. JADHAV IN 1988 FOR RS.1,70,000/- AND SPENT RS.13,600/- TOWARDS STAMP DUTY AND RS.1,740/- TOWARDS REGISTRATION FEE. THE AFORESAID PLOT WAS SOLD ON 02.03.2010 FOR RS.36 LAKHS. HE SUBMITTED THAT AFTER THE SALE OF PLOT ASSE SSEE HAD PURCHASED HOUSE PROPERTY AT KOLHAPUR FOR RS.36,63,390/ -. THE ASSESSEE WAS UNDER BONAFIDE IMPRESSION THAT THE CAPITAL G AINS ON SALE OF PLOT WAS NOT REQUIRED TO BE DISCLOSED IN THE RETUR N OF INCOME 5 SINCE THE ENTIRE CAPITAL GAIN WAS USED FOR PURCHASE OF TH E AFORESAID PROPERTY. HOWEVER, THE REVISED COMPUTATION OF LONG TERM CAPITAL GAINS SHOWING THE EXEMPTION U/S 54F OF THE ACT WAS FURN ISHED DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT THE AFORESAID LAND WAS IN THE PHYSICAL POSSESSION OF AMAL M. M AHADIK AND WHILE SELLING THE PLOT, AMAL M. MAHADIK WAS MADE AS A CONSENTING PARTY AND THE AMOUNT WAS ACCORDINGLY PAID T O AMAL M. MAHADIK. HE POINTED TO THE COPY OF THE AGREEMENT PLACE D IN THE PAPER BOOK. HE THEREFORE SUBMITTED THAT THE ADDITION HA S BEEN MADE BY THE AO ON THE BASIS OF PRESUMPTION WITHOUT ANY SUPPORTING EVIDENCE. HE THEREFORE SUBMITTED THAT THE AD DITION BE DELETED. LD.D.R. ON THE OTHER HAND, POINTED OUT TO THE FINDINGS OF AO AND SUBMITTED THAT THE AFORESAID PROPERTY WAS NEVER DISCLOSED BY THE ASSESSEE IN HIS PERSONAL BALANCE-SHEET AND THE CLAIM OF DEDUCTION OF CAPITAL GAINS WAS ALSO NOT MADE IN THE ORIGINA L RETURN OF INCOME BUT MADE DURING THE COURSE OF ASSESSMENT PROC EEDINGS. HE FURTHER POINTING TO THE DEED FOR THE PURCHASE OF AFORE SAID PROPERTY BY THE ASSESSEE WHICH IS PLACED IN THE PAPER B OOK TO THE FACT THAT ASSESSEE HAD PAID ONLY RS.51,000/- IN CASH AND A BALANCE OF RS.1,19,000/- WAS TO BE PAID BY THE ASSESSEE ON OR B EFORE 31.05.1989. HE SUBMITTED THAT THERE IS NO EVIDENCE OF THE AMOUNT OF RS.1,19,000/- PAID BY THE ASSESSEE. HE FURTHER SUBMITT ED THAT THE CLAIM OF DEDUCTION OF CAPITAL GAINS U/S 54F OF THE ACT HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES. HE THEREFORE SUB MITTED THAT THE MATTER WITH RESPECT TO THE CAPITAL GAINS BE SE NT BACK TO THE AO FOR VERIFICATION. LD.A.R. IN THE REJOINDER SUBMITTED THAT H E DOES NOT HAVE ANY OBJECTION IF THE ISSUE OF CAPITAL GAINS IS REMIT TED BACK TO AO. 6 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE ADDITION OF RS.36 LAKHS. WE FIND THAT THE ADDITION OF RS.3 6 LAKHS WHICH IS STATED TO BE THE SALE CONSIDERATION HAS BE EN GIVEN BY THE PURCHASER TO AMAL M. MAHADIK ON BEHALF OF ASSESSEE AN D THIS AMOUNT HAS BEEN CONSIDERED BY THE AO TO BE AS UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT. THE SUBMISSION OF THE ASSESSEE THAT HE WAS NOT MAINTAINING PERSONAL BALANCE-SHEET AND THEREFORE THE PLOT WAS NOT REFLECTED IN THE BALANCE-SHEET HAS NOT BEEN CO NTROVERTED BY THE REVENUE. WE FIND THAT THE ADDITION OF RS.36 LAKHS H AS BEEN ADDED TO THE INCOME BY THE AO ON THE BASIS OF CONCLUSIO N THAT THE AMOUNT OF RS.36 LACS ADVANCED BY ASSESSEE TO AMAL M. MA HADIK AS ADMITTED BY ASSESSEE HAS ALSO NOT BEEN REFLECTED IN ASSE SSEES BALANCE-SHEET. WE FIND THAT THE AO HAS PROCEEDED TO TA X THE ADDITION U/S 68 OF THE ACT ON THE BASIS OF PRESUMPTION. THE SALE OF PROPERTY BY THE ASSESSEE HAS NOT BEEN DISPUTED BY TH E AO. WE FURTHER FIND THAT THE ISSUE OF CAPITAL GAINS HAS NOT BEEN EXAMINED BY THE AO OR BY LD.CIT(A) AND THERE IS NO MENTION OF IT IN THEIR ORDERS. WE ARE THEREFORE OF THE VIEW THAT THE MATTER OF COMPUTATION OF CAPITAL GAINS NEEDS EXAMINATION AT THE END OF THE AO. W E THEREFORE SET ASIDE THE ISSUE OF TAXING OF CAPITAL GAINS BAC K TO THE FILE OF AO FOR EXAMINATION OF THE CLAIM OF ASSESSEE AND THER EAFTER DECIDE THE SAME IN ACCORDANCE WITH THE LAW. NEEDLESS TO STATE THAT AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE AS SESSEE. ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH ALL THE REQ UIRED DETAILS CALLED FOR BY AO. WITH THESE DIRECTIONS, T HE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH DAY OF JULY, 2018. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 17 TH JULY, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. THE CIT-(APPEALS) 1&2, KOLHAPUR. CIT(CENTRAL), PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER , T// ///TRUE TRUE COPY // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.