DAMODAR LAL SONI, Jaipur V. ITO, Jaipur

ITA 805/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5672 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Assessee Lawyers: TANUJ AGARWAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Cost of acquisition; Wrong claim; Revised return
• Section: 80C; 50C; 147; 148

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 HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 805/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SHRI DAMODAR LAL SONI D-232/233, VIDHDYADHAR NAGAR, JAIPUR CUKE VS. THE ITO WARD- 4(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AGXPS 0891 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI TANUJ AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL. CIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/12/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 3/01/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-5, JAIPUR DATED 22-06-2016 FOR THE ASSESSM ENT YEAR 2007-08 RAISING THEREIN FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) GROSSLY ERRED IN NOT QUA SHING THE REOPENING OF ASSESSMENT U/S 147 OF THE I.T. ACT, 19 61 AND ALSO ERRED IN NOT TREATING THE REASSESSMENT ORDER P ASSED AS ILLEGAL AND UNJUSTIFIED AND VOID AB INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) GROSSLY ERRED IN SUSTAIN ING AN ADDITION OF RS. 3,39,450/- AS LONG TERM CAPITAL GAI N FROM ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 2 SALE OF HOUSE PROPERTY THEREBY WRONGLY CONSIDERING THE COST OF IMPROVEMENT OF RS. 2,40,000/- INCURRED ON THAT P ROPERTY AS NIL. 2.1 APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE, THE FACTS OF THE CASE AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS U NDER:- 2.3 I HAVE CONSIDERED THE FATS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. THE APPELLANT HAS STATED THAT HE HAD APPLIED FOR COPY O F REASONS RECORDED U/S 148. THIS APPLICATION PURPORTEDLY SUBM ITTED ON 25-11- 2011, A COPY OF WHICH WAS FILED IN THE SUBMISSIONS. THE SAME WAS FORWARDED TO THE AO FOR HIS COMMENTS, WHO VIDE REMA ND REPORT DATED 10-02-2016 HAS STATED THAT THERE IS NO SUCH L ETTER ON RECORD REQUESTING FOR REASONS. IT IS FURTHER OBSERVED THAT THE LETTER DATED 25-11-2011 REQUESTING FOR REASONS FOR REOPENING CON TAINS THE FOLLOWING REMARK: KINDLY PROVIDE THE REASONS RECO RDED U/S 147, SO THAT I MAY BE ABLE TO FILE THE RETURN IN THE PRE SCRIBED FORM. HOWEVER, THE RETURN IN RESPONSE TO NOTICE U/S 148 H AD ALREADY BEEN FILED VIDE LETTER DATED 23-1-2011 AND SUBMITTED ON 25-11-2011, WHICH CASTS FURTHER DOUBT ON AUTHENTICITY OF THE S AID LETTER SINCE THE LETTER IS FILED AFTER THE FILING OF RETURN IN RESPO NSE TO NOTICE U/S 148. MOREOVER, THIS LETTER IS STAMPED BUT NOT SIGNED BY THE RECEIVER AND ALSO THERE IS NO INWARD SERIAL NUMBER MENTIONED THE REON. IN ANY CASE, SINCE THE LETTER HAS NOT BEEN SUBMITTED TO TH E AO, HE COULD NOT HAVE TAKEN COGNIZANCE OF THE SAME. ALSO THERE IS NO FURTHER REQUEST LETTER FILED BY THE ASSESSEE REQUESTING FOR REASONS. MOREOVER, THE ASSESSEE WAS FULLY AWARE OF A COMPLAI NT FILED AGAINST HIM BY HIS RELATIVES WITH JDA, POLICE AND IT DEPART MENT REGARDING CERTAIN FALSE CLAIMS MADE BY THE ASSESSEE IN THE RE TURN. HE WAS THUS AWARE OF THE REASONS BEHIND REOPENING , WHICH IS PRESUMABLY WHY HE DID NOT ASK FOR THE SAID REASONS. CONSIDERIN G THE ENTIRE SET OF FACTS, THE AO HAS RIGHTLY PROCEEDED WITH THE REA SSESSMENT PROCEEDINGS AND DID NOT COMMIT ANY BLUNDER IN NOT S UPPLYING THE REASONS AS THEY WERE NEVER ASKED FOR FROM HIM. ACCO RDINGLY GROUND NOS. 1 AND 2 ARE DISMISSED. ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 3 2.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT THE LOWER AUTHORITIES HAVE ERRED IN NOT QUASHING TH E REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT WHICH SHOULD BE QUASH ED. 2.3 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE AVAILABLE RECORDS THAT REOPENING OF THE ASSESSMENT MADE U/S 147 OF THE ACT BY THE AO HAD BEEN REJECTED BY THE LD. CIT(A). IT IS FURTHER NOTED THAT THE LD. AR OF THE ASSESSEE HAD NOT ADVANCED ANY NEW ARGUMENTS DURING THE COURSE OF HEARING FOR REBUTTING THE ACTION OF THE LOWER AUTHORITIES ON TH E ISSUE OF REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT. THEREFORE, TAKIN G INTO CONSIDERATION ALL THE FACTS, CIRCUMSTANCES INCLUDING THE WRITTEN SUBM ISSION OF THE ASSESSEES CASE, I FIND NO MERIT IN THE ARGUMENTS ADVANCED BY THE LD. AR OF THE ASSESSEE AT THE TIME OF HEARING BEFORE THE B ENCH. HENCE, THE ORDER OF THE LD. CIT(A) IS SUSTAINED AND GROUND NO. 1 AND 2 OF THE ASSESSEE ARE DISMISSED. 3.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE FACTS OF THE CASE AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDE R:- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD S HOWN SALE OF RESIDENTIAL HOUSE ATD-186, VIDHYADHAR NAGAR FOR RS. ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 4 4,00,000/- SHOWING LONG TERM CAPITAL GAIN OF RS. 13 ,222/- THEREON IN THE ORIGINAL RETURN OF INCOME. THE YEAR OF ACQUISITION OF THE SAID PROPERTY WAS SHOWN AS F.Y. 1993-94 AND THE YEAR OF IMPROVEMENT WAS SHOWN AS F.Y. 1993- 94 AND THE YEAR OF IMPROVEMENT WAS SHOWN AS F.Y. 1998- 99, THE COST OF IMPROVING BEING RS. 2,40,000/-. HOWEVER , IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148, THE YEA R OF ACQUISITION WAS SHOWN AS F.Y. 1987-88, AND THE YEAR OF IMPROVEMENT WAS PREPONED TO F.Y. 1992-93, THE COST OF IMPROVEMENT BEING THE SAME. THIS RESULTED IN INCREA SE IN INDEXED COST OF ACQUISITION AS WELL AS INDEXED COST OF IMPROVEMENT, DUE TO WHICH LONG TERM CAPITAL LOSS OF RS. 2,29,115/- WAS COMPUTED. IN THE ASSESSMENT U/S 143( 3) R.W.S. 147, THE AO ADOPTED THE SALE CONSIDERATION OF RS. 5 ,23,284/- TAKING THE DLC RATE OF THE SAID PROPERTY AS PER SEC TION 50C. HE FURTHER ADOPTED YEAR OF ACQUISITION AS 1987-88 A ND COST OF ACQUISITION AT RS. 17,500/- ON THE BASIS OF DOCUMEN TS SUBMITTED BY THE ASSESSEE. THE AO DENIED GIVING ANY BENEFIT OF COST OF IMPROVEMENT IN THE ABSENCE OF ANY SUPPOR TING EVIDENCE AND WORKED LONG TERM CAPITAL GAIN AT RS. 4,62,734/-. THE FIRST CONTENTION OF THE ASSESSEE IS THAT PROVISIONS OF SECTION 50C ARE INAPPLICABLE IN HIS C ASE SINCE THE PROPERTY IN QUESTION IS ALLOTTED AS LEASEHOLD P ROPERTY BY JDA FOR 99 YEARS. HON'BLE ITAT JAIPUR BEMCH HAS CONSIDERED THE QUESTION OF APPLICABILITY OF SECTION 50C ON LEASEHOLD PROPERTIES IN THE CASE OF M/S. JAIPUR TIM ES INDUSTRIES VS. ITO IN ITA NO. 429/JP/2012 DATED 26- 02-2014 WHEREIN IT WAS HELD THAT THE DEEMING FICTION OF SEC TION 50C DOES NOT APPLY TO IMMOVABLE PROPERTIES ALLOTTED ON LEASE SINCE IT IS LEASEHOLD RIGHTS IN THE LAND OR BUILDIN G THAT ARE TRANSFERRED AND NOT LAND OR BUILDING PER SE. SIN CE THE IMPUGNED PROPERTY IS HELD UNDER LEASE OF 99 YEARS A S PER CLAUSE 5 OF THE ALLOTMENT LETTER OF JDA, IT IS HELD THAT PROVISIONS OF SECTION 50C WILL NOT APPLY THERETO. ACCORDINGLY, THE AO IS DIRECTED TO ADOPT THE FULL V ALUE OF CONSIDERATION AS RS. 4,00,000/- AS PER THE SALE DEE D. 3.4 THE ASSESSEE HAS FURTHER CONTENDED THAT IN TH E RETURN FILED IN RESPONSE TO NOTICE U/S 148, HE HAD CORRECTED THE YEAR OF IMPROVEMENT FROM F.Y. 1998-99 AS STATED IN THE ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 5 ORIGINAL RETURN TO F.Y. 1992-93 IN THE RETURN IN RE SPONSE TO NOTICE U/S 148, DUE TO THE FACT THAT SUCH IMPROVEME NT WAS CARRIED OUT BY HIS FATHER, WHO WAS ALIVE TILL 11-03 -1994. THE COST OF IMPROVEMENT HAS BEEN STATED AS RS. 2,40,000 /- IN BOTH THE RETURNS. THE PREPONEMENT OF YEAR OF IMPROV EMENT HAS RESULTED IN COMPUTATION OF CAPITAL LOSS OF RS. 2,29,115/- IN THE RETURN IN RESPONSE TO NOTICE U/S 148. IT IS NOTEWORTHY THAT THE ASSESSEE NEVER FILED A REVISED RETURN WITH IN THE PERMISSIBLE TIME LIMIT TO CLAIM THE SAID LOSS, EVEN THOUGH THE FACTS WERE ALWAYS IN HIS KNOWLEDGE. THUS, THE SHIFT ING OF THE YEAR OF IMPROVEMENT TO F.Y. 1992-93 NOW, CASTS A DO UBT ABOUT THE AUTHENTICITY OF THE CLAIM WHICH APPEARS T O HAVE BEEN MADE TO FRUSTRATE THE ENTIRE EXERCISE OF RE-AS SESSMENT. IN THIS REGARD, IT IS NOTEWORTHY THAT THE ASSESSEE DOES NOT POSSESS ANY EVIDENCE REGARDING SUCH COST OF IMPROVE MENT HAVING BEEN INCURRED IN F.Y. 1992-93. MORE PARTICUL ARLY THERE IS NO EVIDENCE TO PROVE THE MAGNITUDE OF SUCH COST. THE ASSESSEE HAS FURNISHED CERTAIN VAGUE AFFIDAVITS FRO M SEVERAL PERSONS CLAIMING TO HAVE DONE THE SAID WORK OR TO H AVE WITNESSED THE SAID WORK. HOWEVER, NO DETAILS OF THE COST INCURRED OR PAYMENT DETAILS THEREOF HAVE BEEN SUBMI TTED. THE ASSESSEE HAS ALSO FURNISHED AN AFFIDAVIT CLAIMI NG THE COST AS RS. 2,40,000/- BUT DEVOID OF ANY SUPPORTING EVID ENCE, THE SAME CAN AT BEST BE SAID TO BE A SELF SERVING DOCUM ENT WITHOUT ANY CREDENTIALS. THE AO HAS CORRECTLY NOTE D THAT THE SAID PROPERTY ALONGWITH ITS COST HAS NOT BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESSEE AS ON31-03-2006 AND 3 1-03- 2007, PLACED ON RECORD, WHEREAS HIS FATHER HAD PASS ED AWAY IN MARCH 1994. IN THIS WAY, THERE IS NO EVIDENCE, WHATSOEVER, REGARDING THE MAGNITUDE AS WELL AS YEAR OF INCURRING THE CLAIMED COST OF IMPROVEMENT. ACCORDIN GLY, THE AOS ACTION IN DISALLOWING THE COST OF IMPROVEMENTS IS HEREBY UPHELD. THE ASSESSABLE LONG TERM CAPITAL GA IN ON SALE OF THE IMPUGNED PROPERTY ACCORDINGLY WORKS OUT TO RS. 3,39,450/- (4,00,000 60,550) AFTER GIVING DEDUCTI ON FOR INDEXED COST OF ACQUISITION OF RS. 60,550/-. 3.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING AN ADDITION OF RS. 3,39,450/- AS ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 6 LONG TERM CAPITAL GAIN FOR SALE OF HOUSE PROPERTY A ND WRONGLY CONSIDERING THE COST OF IMPROVEMENT OF RS. 2,40,000 /- INCURRED ON THE PROPERTY AT NIL. 3.3 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES 3.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE ISSUE OF DISPUTE RAISED BY THE ASSESSEE IN HIS APPEAL IS REGARDING SUSTAINING AN ADDITION OF RS. 3,39,450/- AS LONG TERM CAPITAL GAIN FROM SALE OF P ROPERTY AND THEREBY WRONGLY CONSIDERING THE COST OF IMPROVEMENT OF RS. 2,40,000/- INCURRED ON THAT PROPERTY AS NIL. IT IS NOTED FROM THE RECOR DS THAT THE ASSESSEE HAD SOLD A PROPERTY SITUATED AT D-186, VIDHYADHAR NAGAR , JAIPUR ON 16-11- 2006 TO SMT. SARLA DEVI FOR A CONSIDERATION OF RS. 4.00 LACS. THE EVALUATED VALUE TAKEN BY THE SUB-REGISTRAR II, JAI PUR FOR STAMP DUTY PURPOSE WAS OF RS. 5,23,284/-. THE ASSESSEE HAD SHO WN SALE CONSIDERATION AT RS. 4.00 LACS FOR CAPITAL GAIN PURPOSES WHICH AC CORDING TO AO WAS VIOLATION OF PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961. THE AO ALSO OBSERVED THAT THE ASSESSEE WAS NOT HAVING ANY BASIS FOR ADOPTING COST OF RS. 2,40,000/- IN 1992-93 AS THE ASSESSEE WAS NOT H AVING PURCHASE BILL OR DOCUMENTARY EVIDENCE IN SUPPORT OF CONSTRUCTION EXP ENSES OF HOUSE. HOWEVER, THE AO DID NOT ALLOW THE BENEFIT OF COST O F IMPROVEMENT OF RS. ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 7 2,40,000/- OBSERVING THAT THE PROPERTY UNDER CONSID ERATION WAS PURCHASED BY HIS LATE FATHER SHRI RAMDEEN SONI FOR CONSIDERAT ION OF RS. 17,500/- ON 8-10-1987 AND BENEFIT OF COST OF IMPROVEMENT IS NOT GIVEN AS THERE IS NO EVIDENCE TO HAVE INCURRED EXPENDITURE ON ACCOUNT OF CONSTRUCTION/ REPAIR / RENOVATION OF THE PROPERTY EITHER BY HIS LATE FAT HER OR THE ASSESSEE HIMSELF. THUS THE AO COMPUTED THE TOTAL INCOME OF T HE ASSESSEE IN THE ASSESSMENT ORDER AS UNDER:- 1. INCOME FORM HOUSE PROPERTY AS SHOWN (-) 70016/ - INCOME FROM BUSINESS AS SHOWN 279410/- INCOME FROM OTHER SOURCES AS SHOWN 284/- ADD: ADDITION AS DISCUSSED IN PARA 3 (LTCG) 4627 34/- 2. GROSS TOTAL INCOME 672412/- 3. DEDUCTION U/S 80C 63524/- 4. TOTAL INCOME 608888/- IN FIRST APPEAL, THE LD. CIT(A) SUSTAINED THE ADDIT ION OF RS. 3,39,450/- AS LONG TERM CAPITAL GAIN FROM SALE OF HOUSE PROPERTY AND ALSO DID NOT ALLOW THE COST OF IMPROVEMENT OF RS. 2,40,000/- INCURRED ON THE AFORESAID PROPERTY AS NIL. IT IS NOTED FROM THE AVAILABLE REC ORDS THAT THERE WAS ONLY CONSTRUCTION OF GROUND FLOOR IN THE PROPERTY IN QUE STION WHICH IS EVIDENT FROM PAGE 101 & 102 OF THE PAPER BOOK WHILE IN THE SALE DEED THE DESCRIPTION OF THE AREA OF THE PROPERTY IN QUESTION WHICH HAS BEEN SOLD, CONTAIN GROUND AND FIRST FLOOR. IT EVIDENT FROM PAG E 24 OF THE PAPER BOOK. ITA NO. 805/JP/2016 SHRI DAMODAR LAL SONI V S. ITO, WARD- 4 (2), JAIPUR . 8 THUS IT APPEARS FROM THE RECORDS THAT THERE WAS DEF INITE SOME EXPENDITURE INCURRED ON ADDITIONAL CONSTRUCTION OF THE PROPERTY . THE DISPUTE OF EXPENDITURE INCURRED REMAINS WHETHER IT WAS IN THE ASSESSMENT YEAR 1998- 99 AS CLAIMED IN THE ORIGINAL RETURN IN A.Y. 1992-9 3 OR IT WAS CLAIMED ON RECEIPT OF THE NOTICE U/S 148 OF THE ACT. SINCE NO EVIDENCE IS AVAILABLE ON RECORD, THEREFORE, THE ASSESSEE'S ORIGINAL CLAIM IN THE ASSESSMENT YEAR 1998-99 IS BEING ACCEPTED AS THE ASSESSEE FAILED TO ESTABLISH THAT THE EXPENDITURE WAS INCURRED IN THE F.Y. 1992-93. THUS GROUND NO. 3 OF THE ASSESSEE IS PARTLY ALLOWED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 /01/ 2017 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 3 /01/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI DAMODAR LAL SONI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 4 (2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 805/JP/2016 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR