Smt. Saudamini Chandravadan Parikh, Ahmedabad V. The ACIT, (OSD), Circle-10, Ahmedabad

ITA 719/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6324 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA SHUKLA
• Assessee Lawyers: S N DIVATIA
• Keywords: Cost of acquisition; Fair market value; Wrong claim; Corroborative evidences; Valuation report

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM AND SHRI PRADIP KUMAR KEDIA, AM ./ITA.NO. 719/AHD/2015 ( / ASSTT YEAR :2008-09) SMT SAUDAMINI CHANDRAVADAN PARIKH, 401, SWAPNA GOKUL APPTT., 58/B SWASTIK SOCIETY, NAVRANGPURA, AHMEDABAD- 380009 PAN: ABOPP6553G VS. THE ACIT (OSD)-CIR-10, 1 ST FLOOR, NARAYAN CHAMBERS, ASHRAM ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI S.N. DIVATIA, A.R. / RESPONDENT BY: SHRI ADITYA SHUKLA, SR. D.R / DATE OF HEARING 21/12/2017 /DATE OF PRONOUNCEMENT 10/01/2018 / O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-5 DATED 02.02.2015 ARISING IN THE PENALTY ORDER DATED 07.0 3.2013 PASSED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ASSESSEE IN THE INSTANT CASE CLAIMS TO HAVE INHERITED A HOUSE PROPERTY AT AHMEDABAD FROM HER FATHER-IN LAW WHO IS STATED TO HAVE PURCHASED IT IN 1966. THE ASSESSEE SOLD THE SAID RE SIDENTIAL HOUSE PROPERTY ITA.NO. 719/AHD/2015 ASSESSMENT YEAR 2008-09 - 2 VIDE SALE DEED DATED 03.04.2007. WHILE DETERMINING THE CAPITAL GAIN ON SALE OF THE AFORESAID RESIDENTIAL PROPERTY, THE FAIR MARKET VALUE (FMV) AS ON 01.04.1981 WAS TAKEN AT RS. 35,94,252/-. THE ASSESS EE ALSO INTER ALIA ALSO CLAIMED COST OF IMPROVEMENT OF RS. 6,11,149/- DURIN G ASSESSMENT YEAR 1998- 99 & 1999-2000 (ITS INDEXED COST WORK OUT AT RS. 9 ,55,999/-). RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE REGISTERED VALUER HAD INSPECTED THE SAID PROPERTY ON 20.06.200 6. BASED ON SEARCH REPORT, THE ASSESSING OFFICER TOOK A VIEW THAT COST OF IMPR OVEMENT CLAIMED SEPARATELY BY THE ASSESSEE HAS ALREADY BEEN INCLUDE D IN THE VALUATION REPORT AND THEREFORE CANNOT BE ALLOWED SEPARATELY. HENCE T HE COST OF IMPROVEMENT OF RS. 9,55,999/- CLAIMED BY THE ASSESSEE WAS REJECTED WHILE COMPUTING THE ASSESSED INCOME U/S. 143(3). THE DISALLOWANCE OF CO ST OF IMPROVEMENT WAS UPHELD BY THE LD. CIT(A) IN THE QUANTUM PROCEEDINGS . THE FINDINGS OF THE LD. CIT(A) WERE NOT CHALLENGED BEFORE THE ITAT. 3. AS A SEQUEL TO THE QUANTUM PROCEEDINGS, THE ASS ESSING OFFICER ALSO IMPOSED PENALTY OF RS. 3,24,950/- U/S. 271(1)(C) OF THE ACT FOR WRONG CLAIM OF COST OF IMPROVEMENT. THE LD. CIT(A) IN FIRST APPEAL ALSO CONFIRMED THE AFORESAID ACTION OF THE ASSESSING OFFICER IN IMPOSI NG PENALTY. 4. AGGRIEVED BY THE IMPOSITION OF PENALTY AND CONFI RMATION THEREOF BY THE LD. CIT(A), THE ASSESSEE HAS PREFERRED APPEAL BEFOR E THE TRIBUNAL. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE MR. S.N. DIVATIA SUBMITTED THAT THE REVENUE HAS MISDIRECTED ITSELF I N LAW AND ON FACTS IN INVOKING PENALTY PROCEEDINGS U/S. 271(1)(C) ON A ME RE REJECTION OF CLAIM OF COST OF IMPROVEMENT WHEN THE SAID CLAIM WAS GENUINE AND SUPPORTED BY ITA.NO. 719/AHD/2015 ASSESSMENT YEAR 2008-09 - 3 EVIDENCE. THE LD. A.R. SUBMITTED THAT THE CLAIM OF COST OF IMPROVEMENT WAS REJECTED BY THE ASSESSING OFFICER ON TECHNICAL REAS ONS OF VALUATION ADOPTED BY THE VALUER WHICH THE ASSESSEE DID NOT KNOW. THE LD. A.R. FURTHER SUBMITTED THAT IN ANY VIEW OF THE MATTER, THE PERUSAL OF VALU ERS REPORT SHOWS THAT THE LAND RATE WAS ADOPTED OF 1981 AND COST OF CONSTRUCT ION IN THE YEAR 1981 WAS AT RS. 1500/-. THE LEARNED A.R. CONTENDED THAT ALL THE RELEVANT MATERIALS WERE DULY DISCLOSED TO THE ASSESSING OFFICER. THE LEARNE D A.R. ACCORDINGLY PLEADED THAT THE FACT SITUATION DOES NOT CALL FOR A NY IMPOSITION OF ONEROUS PENALTY. 6. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(A). IN T HIS REGARD THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTRADICTED THE CLAIM OF THE ASSESSEE THAT ALL THE RELEVANT SUPPORTING EVIDENCES REGARDING INCURRING O F EXPENDITURE WAS FURNISHED BEFORE THE ASSESSING OFFICER TO SUPPORT T HE COST OF IMPROVEMENT TO PROPERTY AS CLAIMED. THE LD. D.R. THUS HARPED ON LA CK OF CORROBORATION. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITY BELOW. THE LIMITED CONTROVE RSY IS MAINTAINABILITY OF IMPOSITION OF PENALTY ON ACCOUNT OF LOWER INCIDENCE OF TAX CLAIMED BASED ON INCORRECT CLAIM OF COST OF IMPROVEMENT ON THE PROPE RTY. IT IS THE CASE OF THE REVENUE THAT THE COST OF IMPROVEMENT CLAIMED IS NOT SUPPORTABLE BY INDEPENDENT EVIDENCE AND THE VALUERS REPORT FOR DE TERMINING THE FARE MARKET VALUE INCLUDES THE COST OF IMPROVEMENT AND THEREFOR E THE ASSESSEE OUGHT NOT TO HAVE CLAIMED COST OF IMPROVEMENT WHILE DETERMINI NG COST OF ACQUISITION FOR THE PURPOSES OF CAPITAL GAINS. IN THIS REGARD W E FIND THAT THE ASSESSEE HAS GIVEN LIST OF NAMES OF PARTIES TO WHOM PAYMENTS HAV E BEEN MADE WHO ARE MAINLY STEEL TRADERS AND MASON WORKERS, PAINTERS AN D SANITARY FITTING COST ETC. ITA.NO. 719/AHD/2015 ASSESSMENT YEAR 2008-09 - 4 THE COST OF IMPROVEMENT RELATES TO ASSESSMENT YEAR 1998-1999 & 1999-2000 WHICH ARE NEARLY 10 YEARS OLD. THE PROPERTY HAS BEE N BROUGHT IN 1966. SOME IMPROVEMENT OF THIS NATURE IN THE INTERVENING PERIO D CANNOT BE ENTIRELY RULED OUT THEREFORE THE BENEFIT OF DOUBT MUST GO TO THE A SSESSEE WHILE 10 YEARS OLD BILLS COULD NOT BE PRODUCED BY A SENIOR CITIZEN ASS ESSEE PARTICULARLY HAVING REGARD TO THE STRICTIER NATURE OF PENALTY PROCEEDIN GS. AN AVERMENT BY THE REGISTERED VALUER FOR EXCLUSION OF COST OF IMPROVEM ENT MAY HELP IN FRAMING THE QUANTUM ASSESSMENT BUT CANNOT BE SEEN AS A CONC LUSIVE FORCE FOR ESTABLISHING CONCEALMENT OF INCOME PER SE . THUS WE DO NOT SEE ANY FALSITY PER SE IN THE CLAIM OF THE ASSESSEE BEYOND DOUBT UNDER TH E CIRCUMSTANCES. WE ARE OF THE VIEW THAT DISCRETION VESTED WITH THE ASSESSI NG OFFICER WHILE IMPOSING THE PENALTY OUGHT TO HAVE BEEN EXERCISED IN FAVOUR OF THE ASSESSEE. THEREFORE THE PENALTY IMPOSED U/S. 271(1)(C) REQUIRES TO BE C ANCELLED. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10/01/ 2018 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER MUKUL (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER DATED, 10 /01/2018 ! '!/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. !-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD