Shri Ram Mohan Khandelwal C/o- Khandelwal Sharma & Co. CA , S-2, 2nd floor, Annapurna Chamber, Opp. Railway Station Post Office, Jaipur, Jaipur V. ITO Ward-1(4), Jaipur, Ward-1(4), Jaipur

ITA 800/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7963 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JHA CIT DHK
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Reason to believe; Capital Gains
• Section: 50C; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 800/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 SHRI RAM MOHAN KHANDELWAL, 203, TIKKAR MAL KA RASTA, KISHANPOLE BAZAR, JAIPUR-302001. C UKE VS. I.T.O., WARD 1(4), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AEEPK 5399 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MUKESH KHANDELWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/08/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/08/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-I, JAIPUR DATED 26/03/2019 FOR THE A.Y. 2009-10 IN THE MATTER OF ORDER PASSED U/S /147/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT AND ALSO MERIT OF ADDITION MADE ON ACCOUNT OF SHORT TERM CAPITAL GAIN AND CONSTRUCTION COST INCURRED IN BOUNDARY WALL. ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FILED HIS REGULAR RETURN U/S 139 ON 30/06/2009 DECLARING INCOME OF RS. 7,86,870/- (AFTER DEDUCTIONS UNDER CHAPTER VIA). THE A.O. HAS REOPENED THE ASSESSMENT AFTER PROPERLY RECORDING THE REASONS FOR REOPENING OF THE CASE. 4. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE ASSESSMENT WAS NOT VALIDLY REOPENED IN SO FAR AS THE A.O. HAD RECORDED THE FOLLOWING REASONS: I. THE ASSESSEE FILED RETURN DECLARING INCOME OF RS. 7,52,060/- ON 30.06.2009 WHICH IS INCORRECT. THE ASSESSEE HAD FILED RETURN DECLARING AN INCOME OF RS. 7,86.870/- (APB 4-5) II NO CAPITAL GAIN INCOME WAS SHOWN BY THE APPELLANT. THIS IS INCORRECT AS THE APPELLANT HAD DEFINITELY DECLARED INCOME FROM CAPITAL GAINS IN THE ORIGINAL RETURN AS PER COPY OF ITR AND COMPUTATION (APB 4-5) BOTH THE ABOVE MAIN GROUNDS OF REASONS TO BELIEVE WHOSE THAT THE AO HAS RECORDED WRONG FACTS AND IT SEEMS THAT HE HAD PICKED UP SOME OTHER RETURN FOR FORMING THE OPINION ABOUT CONCEALMENT. FROM THESE BARE FACTS IT IS CLEAR THAT THE AO HAS NOT ASSUMED PROPER JURISDICTION FOR REOPENING OF THE CASE AND HENCE HIS ALL SUBSEQUENT ACTIONS ARE ILLEGAL AND LIABLE TO BE QUASHED. THE LD. CIT (A) HAS DISMISSED THIS ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 3 GROUND OF THE ASSESSEE BY STATING THAT THE AO HAD REOPENED THE CASE AS NO CORRECT CAPITAL GAIN WAS OFFERED BY THE ASSESSEE IN HIS RETURN. THIS IS A WRONG STATEMENT BY THE LD. CIT(A) AS THE BASIC REASON FOR REOPENING OF THE ASSESSMENT WAS NON-DECLARATION OF TRANSACTION OF SALE OF PROPERTY BY THE ASSESSEE AND NOT THE VARIATION BETWEEN THE APPARENT SALE CONSIDERATION AND 50C VALUATION. THEREFORE, THE DECISION OF THE LD. CIT (A) ON THIS ISSUE IS UNJUSTIFIED AND DESERVES TO BE QUASHED. IN SUPPORT OF THE SAME, RELIANCE WAS PLACED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF NARAIN DUTT SHARMA VS ITO IN ITA NO. 203/JP/2017 ORDER DATED 07/02/2018 AND SMT. KANTA CHAUDHARY VS ITO IN ITA NO. 878/JP/2018 ORDER DATED 06/12/2018. 5. I HAVE HEARD THE RIVAL CONTENTIONS WITH REGARD TO VALIDITY OF REOPENING AND FOUND THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 30/06/2009 AT INCOME OF RS. 7,52,060/- BUT NO CAPITAL GAIN INCOME HAS BEEN SHOWN. LATER ON, IT WAS NOTICED THAT THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY ON 19/06/2008 FOR RS. 10,00,000/- TO SMT. TAHIRA BANO, W/O SHRI ABDUL MUKIT WHICH WAS ASSESSED BY THE SUB-REGISTRAR, JAIPUR FOR STAMP DUTY PURPOSES AT RS. 11,40,000/- WHICH CAN ALSO BE TERMED AS VALUE U/S 50C OF THE ACT. HOWEVER, LATER ON IT WAS NOTICED THAT THE ASSESSEE HAS NOT DISCLOSED ANY SUCH TRANSCTION AND NO CAPITAL GAIN ON THIS SALE HAS BEEN SHOWN. I HAVE GONE THROUGH THE REASONS RECORDED AND ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 4 FOUND THAT AFTER RECORDING DUE AND JUSTIFIABLE REASONS, THE A.O. HAS SUFFICIENT REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME, ACCORDINGLY, REOPENING WAS JUSTIFIED. 6. WITH REGARD TO ADDITION MADE ON ACCOUNT OF SHORT-TERM CAPITAL GAIN, IT WAS CONTENTION OF THE LD AR THAT THE ASSESSEE HAD PURCHASED THIS PIECE OF LAND BY PAYING A SUM OF RS. 2,00,000 TO THE OWNER VIDE CHEQUE NO. 476266 DATED 09.06.2003 DRAWN ON SBBJ, GOPINATH MARG, JAIPUR (AS MENTIONED ON PAGE 4 OF THE PURCHASE DEED APB 16). IT IS PERTINENT TO STATE THAT FINAL SALE DEED WAS ALSO EXECUTED FOR RS. 2,00,000 MEANING THEREBY THAT THE ASSESSEE HAD PURCHASED THE LAND DURING PREVIOUS YEAR 2003-04 AND DUE TO SOME PROBLEMS, THE SALE DEED COULD NOT BE EXECUTED. IN THE REGISTERED SALE DEED, IT WAS MENTIONED THE POSSESSION OF THE LAND WAS TAKEN ON THE DATE OF EXECUTION OF THE DEED IN ORDER TO AVOID PROBLEMS WITH THE REGISTERING AUTHORITY WHO MIGHT HAVE CHARGED HEAVY PENALTIES FOR REGISTRATION OF DOCUMENT AFTER LAPSE OF AROUND 3 YEARS. UNDER THESE CIRCUMSTANCES THE ACQUISITION OF THE PROPERTY IS TO BE TAKEN DURING THE PREVIOUS YEAR 2003-04 AND NOT 2006-07 AS TAKEN BY THE AO. 7. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE AO DISALLOWED THE CLAIM OF COST OF CONSTRUCTION OF BOUNDARY WALL BY STATING THIS CLAIM TO ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 5 BE AN AFTERTHOUGHT. THIS WAS THE AMOUNT CLAIMED BY THE ASSESSEE TOWARDS SPENDING FOR CONSTRUCTION OF BOUNDARY WALL. THIS CLAIM WAS MADE BY THE ASSESSEE IN ORIGINAL RETURN ALSO, HENCE THE CONTENTION THAT IT WAS AN AFTERTHOUGHT IS MISPLACED. FURTHER THE AO AND THE LD. CIT (A) DID NOT APPRECIATE THE VITAL EVIDENCE SUBMITTED TO THEM IN THE FORM OF A BILL/RECEIPT ISSUED BY ONE SHRI AZIZ RESIDENT OF JAIPUR. NO COMMENTS ARE FORTHCOMING BY THE AO OR THE LD. CIT (A) ON THIS PARTICULAR PIECE OF PAPER. THEREFORE, THE BASIS OF DISALLOWANCE OF THIS CLAIM BY THE AO AND SUSTAINED BY THE LD. CIT (A) ARE MISCONCEIVED AND DESERVES TO BE QUASHED AND THE SAME MAY BE ALLOWED AS A GENUINE EXPENDITURE. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS WITH REGARD TO TREATMENT OF CAPITAL GAIN ON SALE OF LAND. FROM THE RECORD I FOUND THAT THE ASSESSEE HAD PAID RS. 2.00 LACS BY CHEQUE FOR ACQUISITION OF LAND ON 09/06/2003. HOWEVER, NEITHER ANY SALE DEED WAS EXECUTED NOR REGISTERED IN THE NAME OF ASSESSEE. WHEN THE ASSESSEE SOLD THIS LAND DURING THE YEAR UNDER CONSIDERATION, THE REGISTERED SALE DEED SO EXECUTED ALSO INDICATE THAT THE ASSESSEE HAD TAKEN POSSESSION OF THE SAID LAND ONLY ON THE VERY SAME DATE OF ACQUISITION OF SALE DEED. THUS, I FOUND THAT THE ASSESSEE BECAME OWNER OF THE LAND ONLY DURING THE YEAR UNDER CONSIDERATION BY TAKING POSSESSION. SINCE THE LAND WAS SOLD IMMEDIATELY, THE A.O. HAS CORRECTLY ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 6 TREATED THE CAPITAL GAIN AROSE ON SALE OF LAND AS SHORT TERM CAPITAL GAIN. HOWEVER, I FOUND SUBSTANCE IN THE CONTENTION OF THE LD AR WITH REGARD TO COST INCURRED ON CONSTRUCTION OF BOUNDARY WALL AMOUNTING TO RS. 50,000/-, ACCORDINGLY, I DIRECT THE A.O. TO REDUCE SHORT TERM CAPITAL GAIN AMOUNT BY THE AMOUNT OF RS. 50,000/- INCURRED UPON CONSTRUCTION OF BOUNDARY WALL. I DIRECT ACCORDINGLY. 9. WITH REGARD TO ASSESSEES CONTENTION FOR SUBSTITUTION OF SALE CONSIDERATION BY THE AMOUNT AS PER DLC RATE, NEITHER BEFORE THE A.O. NOR BEFORE THE LD. CIT(A), THE ASSESSEE HAS RAISED ANY CONTENTION FOR REFERRING THE MATTER TO THE DVO, ACCORDINGLY, THE A.O. WAS JUSTIFIED IN SUBSTITUTING THE DLC VALUE UNDER THE PROVISIONS OF SECTION 50C OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH AUGUST, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAM MOHAN KHANDELWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 1(4), JAIPUR. ITA 800/JP/2019 RAM MOHAN KHANDELWAL VS ITO 7 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 800/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR