SHRI GHANSHYAM DAS THAKAWANI, AJMER V. INCOME TAX OFFICER, AJMER

ITA 876/JPR/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1601 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Cost of acquisition; Corroborative evidences; Valuation report
• Section: 244A; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE SA, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 876/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 GHANSHYAM DAS THAKAWANI, BIJLANI DISTRIBUTORS, SHOP NO. 32-33, MAYUR MARKET, CINEMA ROAD, AJMER. CUKE VS. ITO, WARD 1(2), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADXPT 0725 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/11/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/11/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25/09/2017 OF LD. CIT(A), AJMER FOR THE A.Y. 2009-1 0. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. RS. 37,97,637/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE TAXING OF THE LONG TE RM CAPITAL GAIN (LTCG). THE LTCG SO TAXED BEING CONTRARY TO THE PRO VISIONS OF LAW AND FACTS, THE SAME KINDLY BE DELETED AND THE LTCG OF RS. 77,420/- AS DECLARED BY THE ASSESSEE, KINDLY HE DIRECTED TO BE ACCEPTED. 2. RS. 37,97,637/-: THE LD. CIT(A) FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF THE INDEXED ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 2 COST OF ACQUISITION RS. 37,97,637/- (IN RELATION TO THE ACTUAL COST OF CONSTRUCTION OF RS. 16,90,015/- INCURRED IN F.Y. 19 94-95 (A.Y. 1995- 96). THE DISALLOWANCE SO MADE AND CONFIRMED BY THE LD. CIT(A), KINDLY BE DELETED AND DIRECTED TO BE ALLOWED IN FUL LY, AS CLAIMED. 3. THE LD. A.O. FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B, 234C AND 234D OF THE ACT AND AS ALSO IN WITHDRAWING INTEREST U/S 244A OF THE ACT . THE APPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING AND WITHDR AWAL OF ANY SUCH INTEREST. THE INTEREST SO CHARGED/WITHDRAWN, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN F ULL. 4. THE APPELLANT PRAYS YOU HONOUR INDULGENCES TO AD D, AMEND, OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APP EAL IS REGARDING THE INDEXED COST OF CONSTRUCTION/IMPROVEMENT WHILE COMPUTING THE CAPITAL GAIN ON SALE OF RESIDENTIAL PROPERTY. THE AS SESSEE FILED HIS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL INCOME OF R S. 1,98,050/-. SINCE THE ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAIN FRO M SALE OF THE IMMOVABLE PROPERTY IN QUESTION VIDE SALE DEED DATED 13/10/2008, THEREFORE, THE ASSESSING OFFICER HAS REOPENED THE A SSESSMENT BY ISSUING A NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (IN SHO RT THE ACT) ON 16/2/2016. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 03/6/2016 DECLARING TOTAL INCOME OF RS. 2,97,150/- WHICH INCLUDES LONG TERM CAPITAL GAIN OF RS. 77,420/- ON SALE OF RESIDENTIAL PROPERTY. THE ASSESSEE CLAIMED BENEFI T OF INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT TOTAL A MOUNTING TO RS. ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 3 58,45,580/-. THE DISPUTE IS ONLY REGARDING THE COST OF CONSTRUCTION AS CLAIMED BY THE ASSESSEE OF RS. 16,90,015/- INCURRED IN THE F.Y. 1994-95 AND THE INDEXED COST OF THE SAME WAS CLAIMED AT RS. 37,97,640/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESS EE ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THAT THE CONSTRUC TION WAS DONE AT SECOND FLOOR AND THIRD FLOOR OF THE PROPERTY. THE AS SESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THA T SOME CONSTRUCTION WAS DONE ON SECOND FLOOR AND THIRD FLOOR IN THE YEAR 1994-95 AND CONSEQUENTLY THE ASSESSING OFFICER COMPUTED THE LON G TERM CAPITAL GAIN OF RS. 38,75,057/- BY DISALLOWING THE CLAIM OF INDEX ED COST OF CONSTRUCTION OF RS. 37,97,637/-. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND CONTENDED THAT THE OLD STR UCTURE WAS IMPROVED BY THE ASSESSEE AND PROPERTY WAS RECONSTRUCTED IN TH E YEAR 1994-95 AFTER GETTING THE SANCTION FROM U.P. AVAS AVAM VIKA S PARISHAD, BAREILY. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE VALUATI ON REPORT DATED 20 TH SEPTEMBER, 2008. THE LD. CIT(A) CALLED FOR A REMAND R EPORT AND THEREBY CONFIRMED THE DISALLOWANCE OF CLAIM AND CONSEQUENTIA L ADDITION MADE BY THE ASSESSING OFFICER. ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 4 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE PURCHASED A HOUSE IN BAREILY IN THE YEAR 1 984. INITIALLY, THE ASSESSEE SPENT RS. 3.00 LACS ON REPAIR AND RENOVATI ON ON THE GROUND FLOOR OF THE HOUSE, HOWEVER, SUBSEQUENTLY IN THE F.Y . 1994-95, THE ASSESSEE FURTHER CONSTRUCTED THE FIRST FLOOR AND TH EREAFTER SMALL MUMTI AND DAM DAMA AT SECOND FLOOR. THUS, THE LD AR HAS SU BMITTED THAT THE ASSESSEE HAS INCURRED RS. 16,90,015/- ON CONSTRUCTI ON OF FIRST FLOOR AND A MUMTI AT SECOND FLOOR. THE LD AR HAS REFERRED TO THE VALUATION REPORT DATED 20 TH SEPTEMBER, 2008 AT PAGES 85 AND 90 OF THE PAPER BO OK AND SUBMITTED THAT THE VALUER HAS ESTIMATED THE COST OF CONSTRUCTION OF THE FIRST FLOOR AND A MUMTI AT SECOND FLOOR OF RS. 17,3 9,084/- AND AFTER ALLOWING A DEDUCTION ON ACCOUNT OF SELF SUPERVISION, THE COST OF CONSTRUCTION WAS ARRIVED AT RS. 16,08,652/-. SINCE, NO CONSTRUCTION WAS DONE AT SECOND FLOOR AND THIRD FLOOR OF THE HOUSE, THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GR OUND THAT THE CLAIM OF THE ASSESSEE IS REGARDING CONSTRUCTION OF SECOND FLOOR AND THIRD FLOOR IS WITHOUT ANY BASIS. THE LD AR HAS SUBMITTED THAT TH E ASSESSEE WAS AN NRI BETWEEN THE PERIOD 1 ST APRIL 1982 TO YEAR 2001 AND HENCE THE SOURCE OF INVESTMENT WAS DULY EXPLAINED AS PRECEDENC E OF INCOME EARNED BY THE ASSESSEE FROM ABROAD TO HIS BANK ACCO UNT WITH OBC BANK, AJMER AND WITHDRAWAL FROM THE SAID ACCOUNT. THE LD A R HAS REFERRED TO ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 5 THE REMAND REPORT OF THE ASSESSING OFFICER AND SUBM ITTED THAT THE ASSESSING OFFICER HAS ADMITTED THE FACT OF CONSTRUC TION OF FIRST FLOOR AND MUMTI AT SECOND FLOOR WHICH INITIALLY CONSIDERED AT SECOND FLOOR AND THIRD FLOOR. THE ASSESSING OFFICER HAS ALSO ACCEPTED THE Y EAR OF CONSTRUCTION TO BE 1994-95 AND THEREFORE, ONCE THE ASSESSEE HAS ESTABLISHED THE FACT THAT THE CONSTRUCTION WAS CARRIED OUT IN THE YEAR 19 94-95 THEN THE INDEXED COST OF CONSTRUCTION IS AN ALLOWABLE CLAIM O F THE ASSESSEE. THE LD AR HAS ALSO REFERRED TO THE SAID PLAN DULY APPRO VED BY THE U.P. AVAS AVAM VIKAS PARISHAD, BAREILY DATED 25/2/1993 AND SU BMITTED THAT THIS SHOWS THAT THE CONSTRUCTION WAS CARRIED OUT BY THE AS SESSEE IN THE 1994-95. IN SUPPORT OF HIS CONTENTION, HE HAS RELIE D UPON THE VARIOUS DECISIONS ON THE POINT THAT ONCE THE ASSESSEE HAS P RODUCED VALUATION REPORT IN SUPPORT OF HIS CLAIM THEN THE ASSESSING O FFICER CANNOT IGNORE OR BRUSHED ASIDE THE VALUATION REPORT PRODUCED BY THE ASSESSEE. 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE ARE TWO VA LUATIONS REPORTS PRODUCED BY THE ASSESSEE. FIRST VALUATION BY THE SA ME VALUER WAS DONE ON 20/6/2006 IN WHICH THERE IS NO MENTION OF CONSTRU CTION OF FIRST FLOOR AND MUMTI AT SECOND FLOOR. THE SECOND VALUATION REPO RT IS AFTER MORE THAN TWO YEARS AND IT IS ONLY FOR THE FIRST FLOOR AN D A MUMTI AT SECOND ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 6 FLOOR WHICH SHOWS THAT IT IS AN AFTERTHOUGHT MANIPULA TED DOCUMENT TO CLAIM THE DEDUCTION ON ACCOUNT OF ALLEGED CONSTRUCT ION. THUS, THE LD DR HAS SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODU CE THE EVIDENCE IN SUPPORT OF THE CONSTRUCTION EXCEPT THE VALUATION RE PORT DATED 20/09/2008. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF PROCEEDING BEFORE THE LD. CIT(A), THE ASSESSEE SUPPORTED ITS CLAIM BY VALUATIO N REPORT DATED 20/09/2008 AS WELL AS SALE DEED DATED 13/10/2008. THE ASSESSEE HAS ALSO SUPPORTED HIS CLAIM WITH THE SITE PLAN SANCTION ED BY THE U.P. AVAS AVAM VIKAS PARISHAD, BAREILY DATED 25/02/1993. THE LD. CIT(A) CALLED FOR A REMAND REPORT, WE FIND THAT IN THE REMAND REPO RT, THE ASSESSING OFFICER ACCEPTED THE FACT OF CONSTRUCTION CARRIED O UT BY THE ASSESSEE AT THE FIRST FLOOR IN THE YEAR 1994-95, HOWEVER IN ABSE NCE OF DOCUMENTARY EVIDENCE OF EXPENDITURE, THE CLAIM WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE LD. CIT(A) ALSO CONFIRMED THE REJECTION OF THE CLAIM ON THE SIMILAR REASONING. ONCE THE FACTUM OF CONSTRUCTION OF FIRST FLOOR AND A MUMTI AT SECOND FLOOR IS ACCEPTED THEN THE CLAIM OF COST OF CONSTRUCTION CANNOT BE REJECTED OUT RIGHTLY WITHOUT EXAMINING THE CORRECTNESS OF THE AMOUNT OF THE CLAIM. THE DISPUTE IS ONLY REGARDING THE COST OF ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 7 CONSTRUCTION AS THE CONSTRUCTION ITSELF IS ACCEPTED . WE ALSO FIND THAT THE YEAR OF CONSTRUCTION IS SUPPORTED BY THE SANCTION O F PLAN WHICH APPLIED IN THE YEAR 1993 AND WAS SANCTIONED ON 25/2/1993 BY THE EXECUTIVE ENGINEER, U.P. AVAS AVAM VIKAS PARISHAD, BAREILY. S INCE THE ASSESSEE HAS NOT GIVEN THE SUPPORTING EVIDENCE AND ALSO NOT MAINTAINED ANY ACCOUNT OF COST OF CONSTRUCTION, THEREFORE, THE SAM E CAN BE CONSIDERED ONLY ON ESTIMATION BASIS. THE VALUATION REPORT HAS D ETERMINED THE COST OF CONSTRUCTION ON ESTIMATION BASIS AT RS. 16,08,65 0/- BY CONSIDERING THE TOTAL CONSTRUCTED AREA OF 299 SQ.MTRS.. HOWEVER, AS PER THE SANCTIONED PLAN DATED 25/2/1993, THE PROPOSED AREA TO BE CONST RUCTED AT GROUND FLOOR, FIRST FLOOR AND MUMTI IS NOT MATCHING WITH TH E AREA SHOWN IN THE VALUATION REPORT. THEREFORE, INSTEAD OF REJECTING TH E CLAIM IN TOTO, THE CORRECT AMOUNT OF COST OF CONSTRUCTION WAS REQUIRED TO BE EXAMINED ON PROPER VERIFICATION OF RECORD. NEITHER THE ASSESSIN G OFFICER NOR THE LD. CIT(A) HAS EXAMINED AND VERIFIED THE CORRECTNESS OF COST OF CONSTRUCTION CLAIMED BY THE ASSESSEE BUT REJECTED THE CLAIM FOR WANT OF EVIDENCE OF EXPENDITURE. SINCE THE CONSTRUCTION OF THE PROPERTY IS ACCEPTED, THEREFORE, THE CLAIM OF THE ASSESSEE CANNOT BE REJE CTED OUT RIGHTLY. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ISSUE OF COST OF CONSTRUCTION AND INDEXED COST TO T HE RECORD OF THE ASSESSING OFFICER FOR PROPER VERIFICATION AND EXAMI NATION OF CLAIM AND ITA 876/JP/2017_ GHANSHYAM DAS THAKAWANI VS ITO 8 THEN DECIDE THE SAME AFTER GIVING ADEQUATE OPPORTUN ITY OF HEARING TO THE ASSESSEE. SINCE THE PROPERTY IS SITUATED IN THE STATE PWD JURISDICTION, THEREFORE, FOR ESTIMATION OF COST OF CONSTRUCTION, PWD RATES ARE APPLICABLE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 TH NOVEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI GHANSHYAM DAS THAKAWANI, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 1(2), AJMER . 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. 876/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR