ACIT(, Trivandrum V. Sri.G.Raju, Trivandrum

ITA 76/COCH/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7706 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 10-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2012
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: MATHEW JOSPEH
• Keywords: Source of fund; Cost of acquisition; Fair market value

Judgement Text

I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.76/COCH/2012 ( #$ % /ASSESSMENT YEAR : 2008-09 ) THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, THIRUVANANTHAPURAM. VS SHRI G.RAJU, KARTHIKA, TC 30/349(2), KORA-441, KALLUMMOODU, ANIYARA P.O., THIRUVANANTHAPUAM. . ( '( '( '( '( /REVENUE APPELLANT) ( ) )) ) * * * * '( '('( '( /ASSESSEE -RESPONDENT) C.O. NO. 11/COCH/2012 ' ' ' ' ./ I.TA NO.76/COCH/2012 ( #$ % /ASSESSMENT YEAR : 2008-09 ) SHRI G.RAJU, KARTHIKA, TC 30/349(2), KORA-441, KALLUMMOODU, ANIYARA P.O., THIRUVANANTHAPUAM. VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, THIRUVANANTHAPURAM. ( '( '( '( '( /ASSESSEE- APPELLANT) ( )* )* )* )* '( '('( '( /REVENUE -RESPONDENT) . ' ./PAN NO. AMGPR 1072F '( + , /REVENUE BY SHRI A. DHANARAJ, SR. DR ) * '( + , /ASSESSEE BY SHRI MATHEW JOSPEH, CA -. + /0 / DATE OF HEARING 10/08/2016 1 % + /0 /DATE OF PRONOUNCEMENT 17/08/2016 I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 2 2 2 2 2 /ORDER PER BENCH: THIS APPEAL BY THE DEPARTMENT ARISE FROM THE ORD ER OF THE LEARNED CIT(A) THIRUVANANTHAPURAM DATED 28/12/2011. THIS APPEAL I S DECIDED BY THIS BENCH CONFIRMING THE FINDINGS OF THE CIT(APPEALS), THIRUV ANANTHAPURAM VIDE ORDER DATED 31/07/2013 IN I.T.A. NO. 76/COCH/2012. 2. THE REVENUE HAS CHALLENGED THE ORDER OF THE TR IBUNAL BY FILING APPEAL BEFORE THE HONBLE HIGH COURT OF KERALA. THE HIGH COURT IN ITS ORDER DATED 20/07/2015 HAS CONFIRMED THE FINDINGS OF THE CIT(APPEALS) WITH RESPECT TO FAIR MARKET VALUE OF THE LAND AS ON 1.04.1981 AND HAS SET ASIDE THE I SSUE ON THE CLAIM OF THE ASSESSEE FOR INDEXED COST OF IMPROVEMENTS WITH A DI RECTION TO DECIDE THE ISSUE AFRESH WITH REFERENCE TO THE MATERIALS ON RECORD AN D AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE GIVEN BELOW: THE RESPONDENT HAS SOLD LAND INHERITED BY HIM THROU GH FAMILY PARTITION PRIOR TO 01/04/1981 AND CLAIMED INDEXED COST OF ACQUISITION AND IMPROVEMENTS. THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE FAI R MARKET VALUE AND INDEXED COST OF IMPROVEMENTS AND RECOMPUTED THE CAPITAL GAI N AND LEVIED TAX ON IT. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS ) WHO DISPOSED OFF THE I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 3 APPEAL BY FIXING THE FAIR MARKET VALUE AT RS.11,000 /- PER CENT. SO FAR AS INDEXED VALUE OF IMPROVEMENTS ARE CONSIDERED, REFERRING TO THE JUDGMENT OF THE MADRAS HIGH COURT IN SAROJINI RAMASWAMI VS. ASSISTANT COMM ISSIONER OF INCOME TAX (2007) 291 ITR 308 (MAD.), THE COMMISSIONER OF (APP EALS) ORDERED THAT 60% OF THE AMOUNT CLAIMED BE ALLOWED. THE REVENUE HAS CHAL LENGED THIS ORDER BEFORE THE TRIBUNAL AND THE APPEAL ALONG WITH THE CROSS OB JECTIONS WERE DISMISSED CONFIRMING THE FINDINGS OF THE CIT(APPEALS). AGGRIE VED BY THIS ORDER, THE REVENUE HAS FILED APPEAL BEFORE THE HIGH COURT. TH E HIGH COURT HAS CONFIRMED THE FINDINGS OF THE CIT(APPEALS) WITH RESPECT TO FA IR MARKET VALUE AS ON 01/04/1981 AND HAS SET ASIDE THE ISSUE ON THE CLAIM OF THE ASSESSEE FOR INDEXED COST OF IMPROVEMENTS WITH A DIRECTION TO DECIDE THE ISSUE AFRESH WITH REFERENCE TO THE MATERIALS ON RECORD AND AFTER AFFORDING AN O PPORTUNITY OF HEARING TO THE ASSESSEE. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPE ALS)-I, KOCHI IS OPPOSED TO LAW, WEIGHT OF EVIDENCE AND FACT OF THE CASE. 2. THE LEARNED CIT(APPEALS) OUGHT TO HAVE NOTED TH AT THE FAIR MARKET VALUE OF THE PROPERTY WAS ADOPTED AT RS.2,300/- PER CENT ON THE BASIS OF THE VALUE OF THE PROPERTY LYING ADJACENT TO THE ASSESSEES IN TH E SAME SURVEY NUMBER 1888. THE PROPERTY BELONGING TO CPN BROTHERS WAS ACQUIRED BY THE GOVERNMENT VIDE ITS NOTIFICATION DATED 02/02/1979. THE LAND ACQUIS ITION THAHASILDHAR FIXED THE MARKET VALUE @RS.2464/- PER ARE AS PER AWARD NUMBER 6/85 INLAC 31/84/B1/KIT DATED 30/03/1985 AS AGAINST A CLAIM OF RS.4,000/- P ER CENT MADE BY CPN BROTHERS, WHICH WAS APPROVED BY THE DISTRICT COLLEC TOR, TRIVANDRUM. ON A REFERENCE APPLICATION FILED BY CPN BROTHERS, THE AD DL. SUB JUDGE, TRIVANDRUM FIXED THE VALUE AT RS.5,000/- PER ARE, I.E., RS.202 4 PER CENT AS ON 01/04/1981 VIDE HIS ORDER IN LAR 111/87 DATED 22/01/1993. THE ASSE SSING OFFICER ADOPTED THE I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 4 FAIR MARKET VALUE AT RS.2,300/- AFTER APPLYING 5% I NCREASE FOR EVERY YEAR TO THE VALUE FIXED BY THE ADDL. SUB JUDGE. 3. THE LEARNED CIT(APPEALS) ERRED IN DECIDING TO GR ANT 60% OF THE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THE SAME. THE CIT(APPEALS) OUGHT TO HAVE NOTED THAT OUT OF THE NINE SOURCES OF INCOME CLAIMED TOWARDS MEETING THE COST OF IMPROVEMENTS, EVIDENCE WAS NOT FILED EVEN FOR A SINGLE SOURCE. EV EN COPIES OF BANK ACCOUNTS STATEMENTS EVIDENCING EXPENDITURE TOWARDS COST OF I MPROVEMENT, RUNNING INTO SEVERAL LAKHS FOR EACH YEAR, WERE NOT FILED. CASH FLOW STATEMENT ALSO WAS NOT BACKED BY EVIDENCE TO SUBSTANTIATE THE SAME. 4. THE LEARNED CIT(APPEALS) FAILED TO NOTE THAT THE SATELLITE IMAGES AND COMPUTERIZED TOPOGRAPHY IMAGES OBTAINED ALSO DO NOT EVIDENCE IMPROVEMENT TO THE PROPERTY HAVING BEEN MADE DURING THE PERIOD CLAIMED BY THE ASSESSEE. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER OF THE CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. OUT OF THE ABOVE FIVE GROUNDS ONLY GROUND NOS. 3 & 4 ARE SET ASIDE BY THE HONBLE HIGH COURT OF KERALA FOR DECIDING AFRESH BY THIS BENCH BASED ON THE MATERIALS ON RECORD. 5. THE ASSESSEE HAS CLAIMED A TOTAL OF RS.62,05,00 0/- TOWARDS IMPROVEMENTS OVER A PERIOD OF 26 YEARS FROM 1981 TO 2007 AGAINST WHIC H THE ASSESSING OFFICER HAS ALLOWED ONLY A SUM OF RS.21,000/- . THE CIT(APPEAL S) HAS DISALLOWED 40% OF THE CLAIM OF THE ASSESSEE AFTER CONSIDERING THE FACTS A ND MATERIALS ON RECORD AND ALLOWED RS.37,23,000/- TOWARDS COST OF IMPROVEMENT. 6. THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED VERY LARGE AMOUNT AS IMPROVEMENTS WITHOUT ADEQUATE DETAILS AND SUPPORTING DOCUMENTS. I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 5 THE OPENING CASH BALANCE SHOWN BY THE ASSESSEE IS A LSO NOT PROPERLY EXPLAINED. THE MAIN CONTENTION OF THE LEARNED DR WAS THAT THE ASSESSEE OR HIS FAMILY MEMBERS WERE NOT INCOME TAX ASSESSES AND THE EXPENS ES FOR IMPROVEMENTS WERE NOT MADE FROM BANK ACCOUNTS. HE ALSO REITERAT ED THAT THE LAND WAS SUBJECTED TO SATELLITE SURVEY AND THE IMAGES OBTAIN ED DURING THE SURVEY DOES NOT SHOW ANY IMPROVEMENTS IN THE PARTICULAR LAND. THE LEARNED DR DURING THE COURSE OF ARGUMENT ALSO SUBMITTED THAT THE 60% ALLO WANCE GIVEN FOR IMPROVEMENTS IS CORRECT AND HE OPPOSE THIS ALLOWANC E ONLY BECAUSE THE AMOUNT INVOLVED IS SUBSTANTIAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEE BELONGS TO A VERY LARGE HINDU FAMILY OF TRIVAND URM HAVING DIFFERENT SOURCE OF INCOME AND HAS RECEIVED FUNDS FROM DIFFERENT SOURCES AND ADVAN CES AND LOANS FROM RELATIVES WHICH ARE DETAILED IN THE YEAR WISE FAMIL Y CASH FLOW FILED WITH THE DEPARTMENT. INSTEAD OF VERIFYING THE CASH FLOW THE ASSESSING OFFICER WAS PAYING MORE EMPHASIS AND ATTENTION ON THE SATELLITE SURVEY CONDUCTED AFTER THE SALE AND HAS ARRIVED AT PRECONCEIVED NOTION THAT NO IMPR OVEMENTS WERE MADE. HE FURTHER SUBMITTED THAT THE SATELLITE SURVEY DOCUMEN TS ARE NOT ACCEPTABLE TO THE ASSESSEE AS NOTHING IS DISCERNABLE FROM IT. REGARD ING THE OPENING CASH THE LEARNED COUNSEL HAS SUBMITTED THAT THE OWNERSHIP OF THE PROPERTY HAS BEEN BESTOWED ON THE ASSESSEE BY FAMILY PARTITION PRIOR TO 1.4.1981 AND THE ACCUMULATED SAVINGS AS ON 1.4.1981 IS TAKEN AS THE OPENING CASH. EVEN IF THERE I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 6 IS SOME DEFECTS OR DISCREPANCY IT HAS BEEN TAKEN CA RE OF BY THE DISALLOWANCE OF 40% OF THE IMPROVEMENT EXPENSES CLAIMED. IT IS FUR THER SUBMITTED THAT BANK ACCOUNTS WERE NOT COMMON DURING THOSE DAYS AND SINC E MOST OF THE RECEIPTS ARE FROM AGRICULTURE AND ALLIED ACTIVITIES THE MONE Y IS USED TO BE KEPT WITH THEM ONLY. THE COUNSEL FOR THE ASSESSEE ALSO POINTED OU T THAT THE LEARNED DR DURING THE COURSE OF HEARING HAS ACCEPTED THE 60% ALLOWANC E AS CORRECT AND HIS ARGUMENT AGAINST THIS IS ONLY BECAUSE THE AMOUNT IN VOLVED IS HUGE. ONCE THE PERCENTAGE IS ACCEPTED IT IS UNFAIR ON THE PART OF THE LD. DR TO PLEA FOR MORE DISALLOWANCE FOR THE SIMPLE REASON THAT THE AMOUNT INVOLVED IS HIGH. THE COUNSEL ALSO POINTED OUT THAT WEALTH TAX ASSESSMENT WAS CARRIED OUT IN RESPECT OF THE SAID LAND BY TAKING THE SALE VALUE OF RS.3,7 5,00,000/- IN AY 2008-09 AND DEPLETING AT 2% EACH YEAR AND ARRIVING AT RS.3,45,8 8,806/- AS ON 31.03.2003 AND THIS ITSELF SHOWS THAT SUBSTANTIAL IMPROVEMENTS WER E MADE TO THE LAND IN QUESTION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS AND RECORDS OF THE CASE. IT IS A FACT THAT THE ASSESSEE HAS FILED A DETAILED CASH FLOW SHOWN DIFFERENT SOURCES FROM WHICH THE MONEY HAS BEEN BRO UGHT IN. THE ASSESSEE ALSO HAS EXPLAINED THAT DURING THOSE DAYS BANK ACCOUNTS WERE NOT SO COMMON AND LARGE FAMILIES USE TO KEEP CASH WITH THEMSELVES AS MOST OF THE RECEIPTS WERE FROM AGRICULTURE AND OTHER ALLIED SOURCES. THE FAC T THAT WITHOUT IMPROVEMENTS THE ASSESSEE WOULD NOT HAVE RECEIVED THIS AMOUNT IS ALSO POINTED OUT. THE I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 7 LEARNED DR HAS NOT RAISED ANY SPECIFIC OBJECTION TO THE CASH FLOW OTHER THAN THE OPENING BALANCE, THE NON BANKING OF CASH AND PRODUC TION OF RECORDS FOR THE PAST 26 YEARS FROM 1.4.1981 ONWARDS. THE LEARNED C OUNSEL HAS REQUESTED THE HON. BENCH TO HAVE A PRAGMATIC APPROACH IN RESPECT OF OLD RECORDS AS NORMALLY PEOPLE MISS OR MISPLACE RECORDS AFTER A REASONABLE PERIOD. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAS MADE SUBSTANTIAL IMPROVEMENTS TO THE LAND WHICH IS SUPPO RTED BY YEAR WISE CASH FLOW. THE ASSESSING OFFICER HAS SIMPLY IGNORED THE CASH F LOW STATING VARIOUS OTHER REASONS. THE LD. CIT(A) HAS CONSIDERED THE CASH FLO W AND IN ORDER TO COMPENSATE ANY PROBABLE DEFECTS AND OMISSIONS HAS M ADE AN ESTIMATED DISALLOWANCE OF 40% WHICH THE LEARNED DR DURING THE COURSE OF HEARING HAS ACCEPTED AS CORRECT EXCEPT FOR THE SIZE OF THE AMOU NT. HOWEVER, TO MEET THE INTEREST OF JUSTICE, THE DISALLOWANCE OF COST OF IM PROVEMENT IS DIRECTED TO BE FIXED AT 45% OF THE COST CLAIMED, I.E., THE ASSESSE E IS ELIGIBLE FOR 55% OF THE IMPROVEMENT COST CLAIMED. THIS WILL TAKE CARE OF D EFECTS POINTED OUT BY THE ASSESSING OFFICER AND LD. DR INCLUDING THE OPENING CASH IN HAND. 10. AS REGARDS CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, THE SAME IS SUPPORTIVE IN NATURE AND THEREFORE, IS INFRUCTUOUS AND IS DISMISSED. I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 8 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-0 8-2016. SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ' /PLACE: /COCHIN 3 /DATED: 17 TH AUGUST, 2016 GJ/ 2 + )/4 54%/ /COPY TO: 1. '( / SHRI G.RAJU, KARTHIKA, TC 30/349(2), KORA-441, KA LLUMMOODU, ANIYARA P.O., THIRUVANANTHAPUAM. 2. )* '( /THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, THIRUVANANTHAPURAM. 3. -6 / ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS),TRIVANDRU M 4. -6 / /THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. 478 )/ , /THE DR/ITAT, COCHIN BENCH. 6. 8: ;. /GUARD FILE. 2- /BY ORDER < /ASSISTANT REGISTRAR . . =0 . > . =0 ., /I.T.A.T., COCHIN I.T.A. NO. 76/COCH/2016 & C.O. NO. 11/COCH/2016 9