HANUMAN PRASAD GUPTA, Jaipur V. ITO, Jaipur

ITA 807/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5667 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.A. VERMA
• Keywords: Additional evidence; Cost of acquisition
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 143(2); 13

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. 807/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI HANUMAN PRASAD GUPTA A-17, BARKAT NAGAR , TONK PHATAK, JAIPUR CUKE VS. THE ITO WARD 6(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ANXPG 5215 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI R.A. VERMA, ADDL.CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/12/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 5 /01/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-2 , JAIPUR DATED 25`-04-2016 FOR THE ASSES SMENT YEAR 2008-09 RAISING FOLLOWING GROUND OF APPEAL. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN N OT ACCEPTING THE CONTENTION OF THE ASSESSEE REGARDING CONSTRUCTION COST INCURRED BY HIM IN F.Y. 1993-94 A ND 1994-95 AND THUS UPHOLDING THE ACTION OF AO IN NOT ALLOWING THE INDEXED COST OF IMPROVEMENT AT RS. ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 2 9,59,734/- AND RS. 2,12,741/- RESPECTIVELY AND COMPUTING THE LONG TERM CAPITAL GAIN AT RS. 31,46,668/- IS AGAINST LONG TERM CAPITAL GAIN AT RS . 19,74,193/- COMPUTED BY THE ASSESSEE. 2.1 THE FACTS OF THE CASE AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLAN T. THE FACTS OF THE CASE ARE THAT, ON THE BASIS OF INFORMA TION AVAILABLE WITH THE ASSESSING OFFICER, THAT THE ASSE SSEE HAD SOLD A HOUSE FOR A CONSIDERATION OF RS. 35,00,000/- AS PER IKRARNAMA, NOTICE UNDER SECTION 148 OF THE I.T. ACT , 1961 WAS ISSUED AS NO RETURN OF INCOME HAD BEEN FILED. I N THE RETURN FILED IN RESPONSE TO THIS NOTICE, THE ASSESS EE BESIDES CLAIMING COST OF ACQUISITION AT RS. 1,43,000/- IN F INANCIAL YEAR 1992-93 ALSO CLAIMED COST OF CONSTRUCTION OF R S. 4,25,000/- IN F.Y. 1993-94 AND RS. 1,00,000/- IN F. Y. 1994- 95. THE EVIDENCES REGARDING THE COST OF IMPROVEMENT HAD BEEN FILED AND EVEN AFTER OPPORTUNITIES, THE ASSESS EE COULD NOT PRODUCE ANY DETAILS FOR THE SAME AND HENCE THE SAME WAS NOT ALLOWED BY THE ASSESSING OFFICER. IN THE PRESENT PROCEEDINGS, THE APPELLANT SUBMITTED THAT IT HAD PURCHASED A HOUSE PROPERTY WHICH HAD ON E ROOM AT THAT TIME. NOW CONSTRUCTION OF TWO ROOM, DRAWING -DINING KITCHEN, BATH WERE CONSTRUCTED. IT WAS FURTHER STAT ED THAT THE AGREEMENT FOR CONSTRUCTION COULD NOT BE TRACED DURI NG ASSESSMENT PROCEEDINGS AND THE SAME HAD BEEN TRACED AND MAY BE ADMITTED AS ADDITIONAL EVIDENCE. THE SAME WA S ADMITTED AND FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS. IN THE REMAND REPORT DATED 14-03-2016, THE ASSESSIN G OFFICER STATED THAT THE ASSESSEE HAD BEEN ASKED TO PRODUCE THE CONSTRUCTOR SHRI LAL CHAND. THE AUTHORIZED ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 3 REPRESENTATIVE HAD ADMITTED THAT CASE BEING VERY OL D, THE CONTRACTOR COULD NOT BE PRODUCED. THE ASSESSEE WAS ALSO ASKED THE MODE OF PAYMENT TO THE CONTRACTOR AND WHE THER RETURN OF INCOME FOR F.Y. 1993-94 AND 1994-95 HAD B EEN FILED BY THE ASSESSEE, IT WAS INFORMED THAT THE PAY MENT WAS MADE IN CASH AND THE ASSESSEE HAD NOT FILED HIS RET URN OF INCOMES FOR THOSE YEARS. THE ASSESSING OFFICER THUS SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS NOT AL LOWABLE. IN THE REJOINDER FILED TO THE REMAND REPORT, IT HAD BEEN STATED THAT SINCE THE MATTER IS VERY OLD, IT IS NOT POSSIBLE TO PRODUCE THE CONTRACTOR. FURTHER, IT IS STATED THAT THE AGREEMENT NOW FILED SHOULD BE ACCEPTED AND EXPENDIT URE INCURRED ALLOWED. AS ALREADY DISCUSSED EARLIER, THE FACT OF THE CONSTRUCTION HAVING GOT DONE THROUGH A CONTRACTOR O R THE NAME OF THE CONTRACTOR WAS NOT MENTIONED IN THE ORI GINAL PROCEEDINGS. IT WAS NOT THE CASE OF THE ASSESSEE TH AT THE FACT OF THE CONSTRUCTION THROUGH THE CONTRACT HAD BEEN M ENTIONED AND ONLY THE AGREEMENT COULD NOT BE PRODUCED. FURTH ER, THE RETURNS FOR THESE YEARS ARE ALSO NOT FILED, NO EVID ENCES FOR PAYMENTS MADE HAVE BEEN ADDUCED. ALL PAYMENTS ARE M ADE IN CASH. FURTHER, THE AGREEMENT ITSELF APPEARS TO BE AN AFTERTHOUGHT AS IT IS NOT CORROBORATED, SECONDLY TH E PERIOD OF CONSTRUCTION FOR JUST TWO ROOMS, AS PER THE AGREEME NT, IS SPREAD OVER 18 MONTHS I.E. FROM 1-4-1993 TO 31-10-1 994, THE TOTAL PAYMENT SHOWN BY THE ASSESSEE IS RS. 4,25,000 /- BUT IF THE AMOUNTS RECEIVED, SHOWN ON THE REVERSE OF THE A GREEMENT AND ADVANCE RECEIVED AT THE TIME OF SIGNING THE AGR EEMENT ARE TAKEN, IT COMES TO RS. 4,50,000/-. NO OTHER IDE NTIFICATION OF THE CONTRACTOR HAS BEEN PRODUCED. ALL THE FACTOR S CLEARLY POINT OUT THAT THE AGREEMENT NOW FILED CANNOT BE GI VEN ANY CREDENCE. THE COST OF CONSTRUCTION CLAIMED BY THE A PPELLANT CANNOT BE ALLOWED. THE GROUND OF APPEAL IS DISMISSE D. ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 4 2.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE B ENEFIT OF COST OF CONSTRUCTION CARRIED OUT BY THE ASSESSEE IN F.Y. 19 93-94 AND 1994-95. 2.3 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORDS T HAT THE ASSESSEE FILED THE RETURN DECLARING TOTAL INCOME OF RS. 1,40,700/- ON 31-07-2008. THE AO ON THE BASIS OF THE INFORMATION NOTICED THAT THE AS SESSEE HAD SOLD HOUSE NO. A-17, ADRASH BASTI, TONK PHATAK, JAIPUR FOR A C ONSIDERATION OF RS. 35.00 LACS TO SMT. ASHA GUPTA R/O 3-NA-4, JAWAHAR N AGAR JAIPUR AS PER IKRARNAMA DATED 15-02-2008 AND 15-06-2008 AND AFFID AVIT DATED 11-11- 2010. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD RECEIVED THE SALE CONSIDERATION OF RS. 25.00 LACS THROUGH CHEQUES AS PER DETAILS AS UNDER:- CHEQUE NO . DATE AMOUNT 614196 27-03-2008 5,00,000 614197 28-03-2008 7,00,000 614198 28-03-2008 5,00,000 614199 28-03-2008 8,00,000 TOTAL 25,00,000 BALANCE RS. 10.00 LACS WERE TAKEN IN CASH AND POST DATED CHEQUE. THE AO OBSERVED THAT THE POSSESSION WAS ALSO HANDED OVER T O THE BUYER IN FEB. 2008. THUS THE TRANSACTION RELATING TO SALE OF THE IMMOVABLE PROPERTY ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 5 STOOD COMPLETED IN F.Y. 2007-08 BUT THE ASSESSEE HA D NEITHER DISCLOSED THIS TRANSACTION IN HIS RETURN FILED FOR A.Y. 2008- 09 ON 31-07-2008 NOR THE CAPITAL GAIN ARISING ON SALE OF HOUSE HAD BEEN SHOW N IN THE RETURN. THE AO OBSERVED THAT SINCE THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF ASSESSEE'S FAILURE TO DIS CLOSE THE CAPITAL GAIN IN THE RETURN AND PAY DUE TAXES THEREON, THE PROCEEDIN GS U/S 147 WERE INITIATED BY ISSUANCE OF NOTICE 148 DATED 18-03-201 3 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO SAID NOTIC E, THE ASSESSEE FILED THE RETURN ELECTRONICALLY SHOWING TOTAL INCOME OF RS. 2 1,14,890/- AND SHOWING LONG TERM CAPITAL GAIN OF RS. 19,74,193/-. THE ASSESSEE ALSO PAID TAX OF RS. 7,16,490/-. AFTER RECEIPT OF RETURN IN R ESPONSE TO NOTICE U/S 148, NOTICES U/S 143(2) AND 142(1) WERE ISSUED TO THE AS SESSEE. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SOLD H IS HOUSE NO. A-17L, ADARSH BASTI, TONK PHATAK, JAIPUR TO SMT. ASHA GUPT A AS PER IKRARNAMA DATED 15-02-2008 AND 15-06-208 FOR RS. 35.00 LACS B UT THE CAPITAL GAIN WAS NOT SHOWN IN THE RETURN. IN THE COMPUTATION OF TOTAL INCOME FILED WITH THE RETURN, THE ASSESSEE HAD SHOWN LONG TERM CAPITA L GAIN AS UNDER:- ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 6 SALE CONSIDERATION RS. 35,00,000/- LESS: INDEXED COST F.Y. 1992-93 143000/223*551 RS. 353332 F.Y. 1993-94 425000/244*551 RS. 959734 F.Y. 1994-95 100000.259*551 RS. 212741 RS. 15,25,807/- RS. 19,74,193/- THE AO OBSERVED THAT THE ASSESSEE HAD FILED THE REG ISTERED SALE DEED DATED 23-05-1992 IN SUPPORT OF PURCHASE OF THE HOUS E FROM SMT. IMRATI AND HIS SONS FOR RS. 1,25,000/- ON WHICH STAMP DUTY OF RS. 14,780/- WAS PAID. HOWEVER, NO EVIDENCE OR DETAILS REGARDING THE COST OF IMPROVEMENT CLAIMED HAD BEEN FILED. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE AO REQUIRED THE ASSESSEE TO FURNISH COMPLETE DETAIL S AND EVIDENCE IN SUPPORT OF THE CLAIM OF INDEXED COST OF ACQUISITION / IMPROVEMENT AS CLAIMED IN THE RETURN FOR WHICH THE ASSESSEE FILED THE REPLY BEFORE THE AO. FROM THE REPLY FILED BY THE ASSESSEE BEFORE THE AO, THE AO NOTED THAT THE ASSESSEE HAD NO DETAILS OF EVIDENCE IN SUPPORT OF C ONSTRUCTION MADE ON THE SAID PLOT. THE ONLY DETAIL FURNISHED WAS COPIES OF SOME ELECTRICITY BILLS SHOWING CONSUMPTION OF ELECTRICITY IN THE MON THS OF APRIL 2001 (400 UNIT), OCT. 2002 (1000 UNIT), APRIL 2002 (400 UNIT) ETC. THE AO THUS OBSERVED THAT IN ABSENCE OF DETAILS OF EVIDENCE WHA TSOEVER TO SUPPORT THE CONSTRUCTION SUPPORTED TO HAVE BEEN MADE IN 1993-94 AND 1994-95, THE ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 7 CLAIM OF INDEXED COST OF IMPROVEMENT MADE BY THE AS SESSEE IS NOT SUBJECT TO VERIFICATION AND THEREFORE, CANNOT BE ALLOWED. T HE AO THUS OBSERVED THAT IN SUCH A SITUATION WHEN THERE IS NO IOTA OF E VIDENCE ON RECORD TO SUPPORT THE CLAIM OF INDEXED COST OF IMPROVEMENT, T HE LONG TERM CAPITAL GAIN WAS WORKED OUT AS UNDER:- SALE CONSIDERATION RS. 35,00,000/- LESS: INDEXED COST OF ACQ. F.Y. 1992-93 143000/223*551 RS. 3,53,332/- LTCG RS. 31,46,668/- IN FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE ACTIO N OF THE AO AS TO LONG TERM CAPITAL GAIN COMPUTED BY THE AO. IT IS NOTED FROM THE CONTENTIONS OF THE ASSESSEE THAT THERE IS NO DISPUTE AS TO THE FAC T WHEN THE ASSESSEE PURCHASED THE PROPERTY, ONLY ONE ROOM WAS CONSTRUC TED ON IT. HOWEVER, WHEN THE ASSESSEE SOLD THE PROPERTY, TWO ROOMS ALON GWITH LATRINE, BATHROOM, KITCHEN ETC WAS CONSTRUCTED AS STATED BY THE SMT. ASHA DEVI GUPTA, BUYER OF THE PROPERTY IN HER STATEMENT DATED 16-01-2012 BEFORE THE AO (ASSESSEE'S PAPER BOOK PAGE 50). IT IS ALSO NOTE D THAT SUCH CONSTRUCTION IS ALSO EVIDENT FROM THE COPY OF THE E LECTRICITY BILLS WHERE THE CONSUMPTION OF ELECTRICITY UNITS BETWEEN APRIL 2001 TO NOV. 2007 WAS RANGING FROM 400 UNITS TO 1000 (ASSESSEE'S PAPER BO OK PAGES 13 TO 20). HENCE IT SHOWS THAT THE CONSTRUCTION WAS MADE BY TH E ASSESSEE ON THIS ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 8 PLOT AFTER HE PURCHASED THE HOUSE. IT IS ALSO NOTED FROM THE CONTRACTORS AGREEMENT DATED 01-04-1993 EXECUTED BETWEEN THE ASS ESSEE AND CONTRACTOR SHRI LAL CHAND (ASSESSEE'S PAPER BOOK PA GE 5- STAMP PAPER OF RS. 5/- PURCHASED ON 31-03-1993) WHEREBY SHRI LAL C HAND THEKEDAR WAS TO DEMOLISH THE OLD ROOM AND CONSTRUCT 2 ROOMS, KIT CHEN, DRAWING, DINING AND LATRINE, BATHROOM HAVING AN AREA OF 1175 SQ.FT FOR RS. 5.25 LACS INCLUSIVE OF MATERIAL AND LABOUR. IT IS ALSO NOTED ON THE BACKSIDE OF THIS STAMP PAPER THAT DATEWISE DETAILS OF THE PAYMENT R ECEIVED BY SHRI LAL CHAND THEKEDAR IS MENTIONED. THIS AGREEMENT DATED 0 1-04-1993 WAS ALSO PRODUCED BEFORE THE LD. CIT(A) AS AN ADDITIONA L EVIDENCE AND THE SAME WAS ADMITTED BY HIM (ASSESSEE'S PAPER BOOK PAG E 4).IT ALSO APPEARS FROM THE ASSESSEE'S PAPER BOOK PAGE 7 WHEREBY THE A SSESSEE HAD SPECIFICALLY MENTIONED TO THE AO IN REMAND PROCEEDI NGS VIDE LETTER DATED 14-03-2016 THAT SHRI LAL CHAND CONTRACTOR WHO CARRI ED OUT THE CONSTRUCTION AT THAT TIME WAS LIVING IN TILA NO.5, JAWAHAR NAGAR, KASCHI BASTI JAIPUR BUT AFTER CONSTRUCTION HE WAS NOT IN C ONTACT WITH THE ASSESSEE AND THE CONTRACTOR WAS OF AROUND 65 YEARS OF AGE IN THE YEAR 1993. LOOKING INTO ALL THESE FACTS, CIRCUMSTANCES OF THE CASE AND ALSO THE EVIDENCES PRODUCED BEFORE THE BENCH, IT IS ESTABLIS HED THAT THE ITA NO. 807/JP/2016 SHRI HANUMAN PRASAD GUPTA VS. ITO, WARD- 6 (3), JAI PUR 9 CONSTRUCTION WAS MADE BY THE ASSESSEE AND THE LOWER AUTHORITIES ERRED IN NOT ALLOWING THE BENEFIT OF INDEXED COST OF CONSTRU CTION CARRIED OUT BY THE ASSESSEE IN F.Y. 1993-94 AND 1994-95. HENCE, THE AP PEAL OF THE ASSESSEE IS ALLOWED 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 /01/ 2017. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5/01/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HANUMAN PRASAD GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, 6(3), 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. 807/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR