Ved Parkash, Chandigarh V. ITO, Chandigarh

ITA 759/CHANDI/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9779 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: VED PARKASH
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Peak credit; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI. BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI. T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 759/CHD/2013 ASSESSMENT YEAR: 2009-10 SHRI VED PARKASH, VS. THE ITO, WARD 5(3), C/O JAGDAMBA TYRE SERVICE, CHANDIGARH CHANDIGARH PAN NO. AKMPP5965H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED PARKASH (ASSESSEE) RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 01.04.2015 DATE OF PRONOUNCEMENT : 10.04.2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01.03.2013 PASSED BY THE CIT(A), CHANDIGARH. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE ORDER DATED 01-03-2013 PASSED BY THE C1T ( APPEALS) CHANDIGARH AND THE ORDER DATED 12-12-2011 PASSED BY THE ITO, WARD 5(3), CHANDIGARH FOR THE ABOVE REFERRED YEAR ARE BOTH BA D IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. C1T (APPEALS) HAS GREATLY ERRED IN LAW AND AGAINST FACTS OF THE CASE IN :- A) IN SUSTAINING THE ADDITION OF RS. 11,04,167/- AS CA SH DEPOSIT IN HIS SAVING BANK ACCOUNT AND TAXING THE SAME AS 'BUSINES S INCOME'. APPEAL IS PARTLY ALLOWED WITHOUT APPRECIATING THE F ACTS OF THE CASE & NOT RELYING, UPON THE SUBMISSION MADE. B) IN SUSTAINING THE ADDITION OF RS.25,01,880/- AGAIN ST THE TOTAL DEMAND OF RS. 37,84,380/- WHICH WAS MADE BY THE ITO TREATI NG IT AS SHORT TERM CAPITAL GAIN ON ACCOUNT OF SALE OF HOUSE AGAIN ST UTTER DISREGARD OF ALL ACCOUNTING PRACTICES AND BOOK KEEP ING ENTRIES & NOT UNDERSTANDING THE LOGIC & THE ACCOUNTING TREA TMENT OF THIS 2 ENTRY AND DISMISSING THE SUBMISSIONS OF THE APPELL ANT ON FRIVOLOUS GROUNDS, WITHOUT APPRECIATING THE COMPLETE FACTS & LEGAL POSITION OF THE MATTER. 3. THAT THE ADDITION PARTLY UPHELD BY THE C1T (APPEALS ) IS BAD, UNJUST, ARBITRARY AND OUTSIDE THE SCOPE OF NATURAL JUSTICE AND ACCOUNTINGS PRACTICES AND HAS BEEN SUSTAINED WITHOUT APPRECIATING THE PRO PER PROVISIONS OF THE INCOME TAX ACT & ACCOUNTING PRACTICES. 3. GROUND NO.1 IS OF GENERAL NATURE AND DOES NOT REQUIRE SEPARATE ADJUDICATION. 4. GROUND NOS 2 (A): AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAD DEPOSITED SOME CASH AMOUNT TO RS. 11,04,167/- IN HI S BANK ACCOUNT WHEREAS THE GROSS TURNOVER WAS SHOWN ONLY AT RS. 4,21,855/-. IN RESPONSE TO THE QUERY IT WAS MAINLY STATED THAT AMOUNT HAVE CAME FROM BUSINESS T RANSACTIONS AND ASSESSEE WAS A ILLITERATE PERSON DOING BUSINESS OF KABARI. SOME OF HIS FRIENDS HAVE ALSO DONE CERTAIN TRANSACTIONS IN HIS NAME. THE ASSESSIN G OFFICER OBSERVED THAT SINCE TURNOVER WAS OF RS. 4,21,855/-, THEREFORE, THE CASH CANNOT BE RELATED TO BUSINESS TRANSACTIONS PARTICULARLY IN THE ABSENCE OF ANY SAL E/PURCHASE DEALS AND, THEREFORE, MADE ADDITION OF RS. 11,04,167/-. 5. ON APPEAL, WRITTEN SUBMISSIONS WERE MADE AND THE RELEVANT PORTION OF WRITTEN SUBMISSIONS HAS BEEN EXTRACTED BY LD. CIT(A ) AS UNDER:- II) IT IS POINTED OUT THAT THE ASSESSEE DIDN'T PRE SENTED THE BOOKS OF ACCOUNTS TO THE COUNSEL TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER BECAUSE OF A HEART ATTACK FEW MONTHS BEFORE THE ASS ESSMENT PROCEEDINGS. THE ASSESSES WAS ON COMPLETE BED REST AND WAS NOT A BLE TO LOOK AFTER HIS DAY TO DAY AFFAIRS OF THE BUSINESS AND INCOME T AX PROCEEDINGS. III) THE BOOKS OF ACCOUNTS ARE COMPLETE AND WERE MAINTAI NED BY THE ASSESSEE AT THE FIRST PLACE. THE CASH WAS WITHDRAWN AND DEPOSITED INTO THE SAME HANK IN THE SUBSEQUENT DATES FOR WHICH CAS H BOOK IS ENCLOSED FOR YOUR KIND REFERENCE. BY REVIEWING THE BOOKS OF ACCOUNTS IT IS UNDERSTOOD THAT THE, CASH WAS DEPOSITED PARTLY OUT OF THE CASH WITHDRAWALS FROM THE BANK AND PARTLY FROM THE SALE PROCEEDS OF THE BUSINESS. 3 IV) THE ACTION OF THE ID. AO IN ADDING ALL THE CASH DEPOSITS AS INCOME OF THE ASSESSEE WITHOUT CONSIDERING THE CASH WITHDRAWALS F ROM THE SAME BANK IS TOTALLY UNWARRANTED AND OUTSIDE THE SCOPE OF NAT URAL JUSTICE AND ACCOUNTING PRACTICES AND HAS BEEN MADE WITHOUT RESO RTING TO PROPER PROVISION, OF THE INCOME TAX ACT. THE ACTION OF THE AO IN THIS RESPECT MAY BE KINDLY REVERSED.' THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS PA RTLY AGREED AND DIRECTED ASSESSING OFFICER TO MAKE ADDITION ON PEAK CREDIT BASIS. 6. BEFORE US, THE ASSESSEE SHRI VED PARKASH APPEARE D IN PERSON AND HE HAS FIELD WRITTEN SUBMISSIONS. THE SUBMISSIONS IN RESP ECT OF THIS AMOUNT READS AS UNDER:- 1. THAT THE HON'BLE CIT(A) HAS STATED IN HIS ORDER DAT ED 01..3.2013 THAT HE HAS CONSIDERED THE SUBMISSIONS O F LD. COUNSEL REGARDING WRONGFUL ACTION OF THE ASSESSING OFFICER IN TREATING THE ENTIRE CASH DEPOSIT AS INCOME WITHOUT CONSIDERING THE CASH WITHDRAWAL FROM THE SAME BANK IS ACCEPTABLE. THE CIT(A) HASDIRECTED THE ASSESSING O FFICER TO MAKE ADDITION OF ONLY THE PEAK OF THE DEPOSITS IN T HE BANK ACCOUNT AFTER GETTING THE DETAILS FROM THE APPELLAN T / OTHERWISE AND ALLOWED THE APPEAL PARTIALLY. IN VIEW OF THE DIRECTION OF CIT(A) THE ASSESSING OF FICER REVISED THE ASSESSMENT ACCORDINGLY VIDE ORDER DATED 11.05.2013. COPY OF THE DEMAND IS ENCLOSED. WE HAVE NO ARGUMENT AGAINST THE ORDER OF HON'BLE CIT(A) ON THI S GROUND. 7. ON THE OTHER HAND LD. DR SUBMITTED THAT CIT(A) H AS ALREADY ALLOWED REASONABLE RELIEF BY DIRECTING THE ASSESSING OFFICE R TO MAKE ADDITION ON THE BASIS OF PEAK CREDIT AND, THEREFORE, NO FURTHER INT ERFERENCE IS REQUIRED. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE VIDE PARA 3.3, WHICH IS AS UNDER :- 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. C OUNSEL FOR THE APPELLANT. THE APPELLANT HAD SUBMITTED BEFORE T HE ASSESSING OFFICER THAT HE WAS NOT MAINTAINING ANY REGULAR BOO KS OF ACCOUNTS, BUT NOW IT HAS BEEN SUBMITTED THAT THE BOOKS OF ACC OUNTS ARE COMPLETE AND IN THE NAME OF THE BOOKS OF ACCOUNTS, A COMPUTERIZED 4 CASH BOOK HAS BEEN FILED WITHOUT ANY BILLS/VOUCHERS FOR PURCHASE OF SALES, WHICH ARE REQUIRED AS PER EXPLANATION-(I) BE LOW SECTION 139(9) OF THE ACT. HENCE, THE APPELLANT'S STORY THA T HE IS MAINTAINING SUCH ACCOUNTS IS NOT ACCEPTABLE, HOWEVE R, THE CONTENTION OF THE APPELLANT THAT THE ACTION OF THE ASSESSING OFFICER IN TREATING THE ENTIRE CASH DEPOSIT AS INCOME WITHOUT CONSIDERING THE CASH WITHDRAWALS FROM THE SAME BANK IS ACCEPTABLE, BUT THE APPELLANT HAS NOT SUBMITTED COMPLETE DETAILS IN THIS REGARD, THE ASSESSING OFFICER IS DIRECTED TO MAKE ADDITION OF ONLY THE PE AK OF THE DEPOSITS IN THE BANK ACCOUNT AFTER GETTING THE DETAILS FROM THE APPELLANT/ OTHERWISE. GROUNDS OF APPEAL NOS. 2(A) AND 2(B) ARE PARTLY ALLOWED. SINCE THE ASSESSEE HAS CLEARLY ADMITTED THAT HE HAS NOTHING TO SAY ABOUT THE ORDER OF LD. CIT(A) AS SHOWN IN THE HIGHLIGHTED POR TION ABOVE AND THE LD. CIT(A) HAS ALLOWED REASONABLE RELIEF, WE FIND NOTHI NG WRONG WITH THE ORDER OF LD. CIT(A). 9. GROUND NO.2(B) : AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS IT WAS FURTHER NOTICED THAT ASSESSEE HAD DEPOSITED A SUM OF RS. 12,30,500/- IN THE BANK ACCOUNT WITH RAJASTH AN BANK LIMITED. IN RESPONSE TO THE QUERY IT WAS SUBMITTED THAT THIS AMOUNT WAS DEPOSITED OUT OF THE SALE CONSIDERATION OF PLOT NO. 522, MILK COLONY, DHANAS (CHANDIGARH ) WHICH WAS SOLD FOR RS. 75,68,761/-. THE ASSESSEE HAD HALF SHA RE AND, THEREFORE, MONEY CAME FROM THAT SALE. IT WAS FURTHER STATED THAT THI S PLOT WAS PURCHASED EARLIER BY SELLING HIS OLD HOUSE IN BURAIL OF RS. 12 LAKHS. S INCE NO DETAILS WERE FILED REGARDING PURCHASE OF EARLIER HOUSE, THE ASSESSING OFFICER DID NOT ACCEPT THE FACT OF SALE OF OLD HOUSE AND SUBJECTED THE SALE CO NSIDERATION AMOUNTING TO RS. 37,84,380/- AS SHORT TERM CAPITAL GAIN. 10. ON APPEAL, AGAIN WRITTEN SUBMISSIONS WERE GIVEN THROUGH WHICH IT WAS STATED THAT PROPERTY WAS SOLD FOR RS. 24,30,000/- B Y TWO PERSONS BUT STAMP DUTY WAS PAID BY THE PURCHASER AT RS. 75,68,761/- BUT CO NVEYANCE DEED WAS MADE BY SHRI VED PARKASH WITH ISHWAR CHAND AS GENERAL POWER OF ATTORNEY HOLDER IN FAVOUR OF THE ORIGINAL ALLOTTEE AT RS. 24,30,000/-, THEREFORE, ONLY ACTUAL SALE 5 CONSIDERATION SHOULD BE CONSIDERED. SOME CASE LAWS WERE ALSO QUOTED THAT PROVISIONS OF SECTION 50C WERE NOT APPLICABLE IF LA ND WAS HELD AS STOCK IN TRADE. 11. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S, DIRECTED THE ASSESSING OFFICER TO ALLOW A SUM OF RS. 12,85,500/- ON ACCOUN T OF COST OF ACQUISITION AND THUS THIS GROUND WAS PARTLY ALLOWED. 12. BEFORE US, THE SUBMISSIONS AS MADE BEFORE LD. C IT(A) HAS BEEN REITERATED IN THE WRITTEN SUBMISSIONS AND IT HAS BEEN EMPHASIZ ED THAT PROPERTY WAS SOLD FOR RS. 24,30,000/- AND SINCE IT WAS AN ASSET IN STOCK IN TRADE, THEREFORE, SECTION 50C WAS NOT APPLICABLE. 13. ON THE OTHER HAND LD. DR STRONGLY RELIED ON THE ORDER OF CIT(A). 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY LD. CIT(A) VIDE PARAS 4.3 AND 4.4 WHICH ARE AS UNDER:- 4.3 1 HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL. THE CONTENTION OF THE APPELLANT THAT THE SALE OF TH E PROPERTY WAS A SINGLE TRANSACTION AND SO IT CONSTITUTES AN ADVEN TURE IN THE NATURE OF TRADE, IS NOT ACCEPTABLE ON THE FACTS A ND CIRCUMSTANCES OF THE CASE, SINCE THE APPELLANT HAD PURCHASED TH IS HOUSE AFTER SALE OF HIS OLD HOUSE IN JANUARY, 2007 AND SO IT MUST HAVE CERTAINLY BEE N PURCHASED FOR RESIDENTIAL PURPOSES. HENCE, INCOME FROM SALE OF THIS HOUSE IS TO BE TAXED AS SHORT TERM CAPITAL GAIN AND PROVISIONS OF SECTION 50C WILL BE APPLICABLE. 4.4 THE IMPUGNED PROPERTY WAS PURCHASED BY THE APPE LLANT ALONGWITH ONE MORE PERSON FOR RS. 24,30,000/- AS PER CONVEYANCE DEED DATED06.02.2008 AND COST OF STAMP DUTY WAS RS . 1,35,000/-. HENCE, THE TOTAL COST OF ACQUISITION COMES TO RS. 2 5,65,000/- {24,30,000 + 1,35,000). THE APPELLANT WAS THE OWN ER OF ONE HALF SHARE IN THIS PROPERTY, WHICH IS ALSO PROVED FROM THE FACT THAT HALF OF THE SALE PROCEEDS HAVE BEEN DEPOSITED IN HIS BANK ACCOUNT AND NO PAYMENT HAS BE EN SHOWN TO ANY OTHER CO-OWNER. THUS, THE COST OF ACQUISITION IN TH E HANDS OF THE APPELLANT IS FOR ONE HALF SHARE OF THE IMPUGNED PRO PERTY, WHICH IS 6 RS. 12,85,500/-. THIS COST OF ACQUISITION HAS TO B E REDUCED FROM HALF OF THE SALE PRICE TAXED BY THE ASSESSING OFFICER AS CAPITAL GAIN. THE SHORT TERM CAPITAL GAIN WILL THUS BE RS. 25,01,880/- (37,84,380 - 12,82,500 ). THE ASSESSING OFFICER IS DIRECTED TO TAX THIS AMOUNT OF RS. 25, 01,880/- AS SHORT TERM CAPITAL GAIN INSTEAD OF RS. 37,84,380/-. GROUND OF APPEAL NO. 2(C) IS PARTLY ALLOWED. 15. IN OUR OPINION THE LD. CIT(A) HAS CORRECTLY ADJ UDICATED THE ISSUE. NO EVIDENCE WAS FILED BEFORE CIT(A) OR EVEN BEFORE US TO SHOW THAT ASSESSEE WAS HOLDING THE PLOT AS STOCK IN TRADE AND, THEREFORE, HAS BEEN RIGHTLY ASSESSED AS SHORT TERM CAPITAL GAIN. THEREFORE, WE FIND NOTH ING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.04.2015. SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH APRIL, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR