Mehar Singh Sehrawar, New Delhi V. ITO, New Delhi

ITA 905/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3874 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY SENIOR
• Keywords: Business income; Charitable institution; Opportunity of being heard; Bonafide belief; Additional evidence; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 142(1); 250; 274; 191; 207; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) SHRI I.P. BANSAL, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.905/DEL./2010 (ASSESSMENT YEAR : 2005-06) SHRI MEHAR SINGH SEHRAWAT, VS. ITO, WARD 25 (4), RZ-G-111, MAHAVIR ENCLAVE, NEW DELHI. PALAM DABRI ROAD, NEW DELHI 110 045. (PAN : BRAPS5551A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.V.S. GUPTA, CA REVENUE BY : SMT. MONA MOHANTY, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT (A)-XXIV, NEW DELHI DATED 15.01.2010 FOR THE ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. THE LEARNED CIT APPEALS XXIV HAS ERRED BOTH ON FACTS AND ON LAW IN CONFIRMING THE EX-PARTE ORDER OF THE I.T.O. WARD 25 (4) IN TREATING THE CASH DEPOSITED IN SAVING ACC OUNT OF THE ASSESSEE AMOUNTED TO RS.26,95,000/- AS INCOME FOR T HE YEAR AND THEREBY RAISED A TAX DEMAND OF RS.14,19,768.00. 2. THE LEARNED CIT APPEALS XXIV HAS ERRED BOTH ON F ACTS AND ON LAW IN NOT ACCEPTING THE WRITTEN SUBMISSIONS AND DOCUMENTS PRODUCED BY THE ASSESSEE AT THE TIME OF H EARING BEFORE CIT. ITA NO.905/DEL./2010 2 3. THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND, MODIFY OR DELETE ANY OTHER GROUND OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE INH ERITED TWO HOUSES OF PROPERTIES FROM HIS FATHER, LATE SHRI JAI LAL WHO D IED ON 20.08.1985. THESE TWO PROPERTIES MEASURING 370 SQ.YDS. AND 250 SQ.YDS . WERE SITUATED AT RZ-G- III, PART OF KHASRA NO.79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI- 110045. DURING THE RELEVANT FINANCIAL YEAR, THERE WAS A CASH DEPOSIT OF MORE THAN RS.26 LACS IN THE BANK ACCOUNT OF THE ASSESSEE HELD WITH CORPORATION BANK. THE ASSESSEE IS AN ILLITERATE AND RESIDES IN ONE OF THE INHERITED PROPERTIES ALONG WITH HIS FAMILY. DURING THE RELEV ANT PERIOD, THE ASSESSEE HAD SOLD ONE OF THE INHERITED PROPERTY OF 250 SQ.YDS. THE ASSESSING OFFICER ISSUED THE NOTICE U/S 142(1) ON THE BASIS OF AIR IN FORMATION RECEIVED FROM CIT (CIB) DELHI IN RESPECT OF CASH DEPOSIT IN BANK ACCOUNT. THE ASSESSMENT WAS FINALIZED U/S 144 OF THE INCOME-TAX ACT AT RS.2 6,95,000/-. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). HE HAS MADE TH E SUBMISSIONS BEFORE THE CIT (A) WHICH READ AS UNDER : 3. DURING THE APPELLATE PROCEEDINGS, THE AUTHORIZE D REPRESENTATIVES ATTENDED, DISCUSSED AND FILED DETAILED SUBMISSIONS. THE RELEV ANT PORTION OF SUBMISSIONS IS AS UNDER : 1. THE ASSESSEE SH MEHAR SINGH INHERITED TWO HOUS E PROPERTIES FROM HIS FATHER LT SH JAI LAL, WHO DIED ON 20.08.1985. T HESE PROPERTIES WERE MEASURING 370 SQ YD AND 250 SQ YD RESPECTIVELY AND BOTH WERE SITUATED AT RZ- G-III, PART OF KHASRA NO 79/4, VILLAGE PALAM, MAHAV IR ENCLAVE, NEW OELHI- L10045. COPY OF KHASRA GIRDAWARI AS PROOF OF OWNERS HIP IS APPENDED. ASSESSEE STAYED IN ONE OF THE PROPERTY MEASURING 370 SQ YD A LONG WITH HIS FAMILY AND THE OTHER PROPERTY WAS LET OUT FOR PART OF THE YEAR. ITA NO.905/DEL./2010 3 2. COPY OF BANK STATEMENT OF SB A/C NO 01/001079 WI TH CORPORATION BANK IS APPENDED AT PAGE 2 TO 3. ANOTHER STATEMENT WITH COMPLETE NARRATION OF BANK TRANSACTIONS I.E. DEPOSIT AND PAYMENT ENTRIES IS APPENDED AT PAGE 4 TO 5. 3. LIKEWISE COPY OF CASH TRANSACTION OF THE ASSESSE E FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO A.Y 2005-06 ALONG WITH COM PLETE NARRATION OF ALL TRANSACTIONS IS APPENDED AT PAGE 6 TO 7. AS MENTION ED ABOVE THAT THE LD. ASSESSING OFFICER ASSESSED THE INCOME OF ASSESSEE S H. MEHAR SINGH AT RS. 26,95,000/-, BASED ON TOTAL AMOUNT OF CASH DEPOSITE D IN SB ACCOUNT 01/001079 WITH CORPORATION BANK, IN NAME OF ASSESSEE DURING T HE FINANCIAL YEAR 2004-05. PLEASE NOTE THAT CORRECT SUM OF ALL CASH DEPOSIT EN TRIES IN ABOVE MENTIONED SB A/C IS RS. 26,65,000/- AND NOT RS. 26,95,000/- AS M ENTIONED ON AO ORDER. 4. THE MAIN SOURCE OF CASH RECEIPTS ARE RENTAL INCO ME AND SALE PROCEEDS OF ONE OF THE ANCESTRAL RESIDENTIAL HOUSE PROPERTY MEASURING 250SQ YD AT RZ-G-III, PART OF KHASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW OELHI-/1 0045. THIS PROPERTY WAS SOLD ON 03.01.2005 FOR A TOTAL SALES CONSIDERATION OF RS. 25,00,000/-(RS. TWENTY FIVE LA KH ONLY). PART OF THIS SALE CONSIDERATION I.E. RS. 2,00,000/- (TWO LAKH ONLY) W AS RECEIVED VIDE DO NO 269041 DT. 27.12.2004 DRAWN ON ORIENTAL BANK OF COM MERCE AND BALANCE RS 23,00,000/(RS. TWENTY THREE LAKH ONLY) WAS RECEIVE D IN CASH. THE ASSESSEE IS AN ILLITERATE PERSON AND DID NOT UNDERSTAND IMPLICA TION OF CASH TRANSACTION. ALTHOUGH SALE DEED WAS EXECUTED FOR RS. TWO LAKH ON LY BUT ACCORDING TO HIM HE SOLD THE PROPERTY IN QUESTION FOR A TOTAL CONSIDERA TION OF RS. TWENTY.FIVE LAKH AND RECEIVED FULL PAYMENT. ASSESSEE NOW OFFERS FULL VALUE OF CONSIDERATION I. E. RS. TWENTY FIVE LAKH RECEIVED ON SALE OF ABOVE HOUS E PROPERTY FOR ASSESSMENT. COPY OF REGISTERED SALE DEED OF ABOVE MENTIONED PRO PERTY IS APPENDED AT PAGE 8 TO 15. 5. THE ASSESSEE WAS UNDER BONA FINE BELIEF THAT CON SIDERATION RECEIVED ON SALE OF ANCESTRAL HOUSE PROPERTY IS NOT SUBJECT TO TAX. HE HAD NO INTENTION TO EVADE TAX. IT IS BECAUSE OF THIS REASON THAT HE DEPOSITED PART OF CONSIDERATION WHICH WAS RECEIVED IN CASH, IN HIS SAVING ACCOUNT WITH CORPOR ATION BANK. 6. OUT OF TOTAL SALES CONSIDERATION RECEIVED ON SAL E OF HOUSE PROPERTY MEASURING 250 SQ YD AT RZ-G-III, PART OF KHASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW OELHI-110045, ASSESSEE UTILIZE D ALMOST RS. TWENTY FOUR LAKH FOR CONSTRUCTION OF FIRST AND SECOND FLOORS ON HIS ANOTHER EXISTING RESIDENTIAL HOUSE PROPERTY MEASURING 370 SQ YD AT RZ-G-II/L, PA RT OF KHASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI-110045. THE AMOUNT ON CONSTRUCTION. OF RESIDENTIAL HOUSE PROPERTY WAS SPE NT DURING THE PERIOD JANUARY, 05 TO MAY 2006. AN AFFIDAVIT OF ASSESSEE TO THIS A FFECT IS APPENDED AT PAGE 16 TO 17. HENCE AS PER PROVISION OF SECTION 54 THE ASSES SEE IS ENTITLED FOR EXEMPTION OUT OF LONG TERM CAPITAL GAIN DERIVED ON SALE OF FI RST HOUSE PROPERTY MEASURING 250 SQ YD. 7. FOR THIS PURPOSE, WE SUBMIT TWO VALUATION REPOR TS FROM A REGISTERED VALUER. ITA NO.905/DEL./2010 4 A) ONE FOR FAIR MARKET VALUE OF PROPERTY MEASURING 250 SQ YD SITUATED AT RZ-G-III, PART OF KHASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI-110045 AS ON 01 APRIL, 1981. (REFER PAGE 18 T O 26). B) COST OF CONSTRUCTION OF FIRST AND SECOND FLOORS AT PROPERTY MEASURING 370 SQ YD SITUATED AT RZ-G-III, PART OF KHASRA NO 7 9/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI-110045. (REFER PAGE 27 TO 32. 8. LONG TERM CAPITAL GAIN DERIVED ON SALE OF OLD RE SIDENTIAL HOUSE PROPERTY MEASURING 250 SQ YD AT RZ-G-III, PART OF K HASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI-110045 CAN BE COM PUTED AS FOLLOWS: PARTICULARS AMOUNT GROSS SALES CONSIDERATION 25,00,000 LESS: VALUE OF PROPERTY AS ON APRIL 1, 1981 RS.5,04 ,176/- INDEXED COST RS.5,04,176 X, 480/100 24,20,0 45.00 LESS: EXEMPTION D/S 54: AMOUNT SPEND ON CONSTRUCTIO N OF HOUSE PROPERTY RS.24,00,000/- EXEMPTION ALLOWED SUBJECT TO MAXIMUM AMOUNT OF LONG TERM GAIN 79,955.00 NET TAXABLE LONG TERM CAPIJTAL GAIN NIL 9. AS STATED ABOVE THAT ASSESSEE LET OUT ONE OF HIS HOUSE PROPERTY MEASURING 250SQ YD SITUATED AT RZ-G-III, PART OF KH ASRA NO 79/4, VILLAGE PALAM, MAHAVIR ENCLAVE, NEW DELHI-110045 FOR THE PE RIOD APRIL 2004 TO DECEMBER 2004. THIS UNIT COMPRISED OF AROUND 17 ROO MS ON GROUND AND FIRST FLOORS. SET OF ONE/TWO ROOMS WERE LET OUT TO DIFFER ENT TENANTS. ASSESSEE RECEIVED MONTHLY RENT OF RS.22,000/ FROM DIFFERENT TENANTS F OR THE PERIOD APRIL 04 TO DECEMBER 2004. SO ASSESSEE HAS TOTAL RENTAL INCOME OF RS1,98,000/ DURING A. Y. 2005-06, WHICH HE OFFERED FOR ASSESSMENT. 10. BASED ON FACTS STATED ABOVE THE NET TAXABLE INC OME MAY BE ASSESSED AT RS.1,45,310.00. A TAX COMPUTATION STATEMENT OF T HE ASSESSEE FOR F. Y. 2004-05 RELEVANT TO A.Y. 2005-06 IS APPENDED AT PAGE 33-34. 11. ASSESSEE HAS TWO MAJOR SONS VIZ RANBHIR SINGH A ND LAXMAN SINGH. BOTH OF THEM WERE WORKING AND HAD THEIR INDEPENDENT SOURCE OF INCOME. RANBHIR SINGH WAS WORKING WITH A TRANSPORT AGENCY AND LAXMA N SINGH HAS A SMALL BUSINESS OF KIRANA MERCHANT. ALL OF THEM WERE STAYI NG TOGETHER IN JOINT FAMILY WITH MEHAR SINGH. THESE TWO SONS WERE USED TO CONTR IBUTE SOME MONEY TO THEIR FATHER FOR HOUSEHOLD EXPENSES. AFFIDAVITS FROM THES E TWO SONS REGARDING THEIR CONTRIBUTION TOWARDS HOUSE HOLD EXPENSES ARE APPEND ED AT PAGE 3S- T 12. AN APPLICATION UNDER RULE 46A (I)(C) & (D) FOR ACCEPTA NCE OF ADDITIONAL EVIDENCE IS ALSO SUBMITTED SEPARATELY. ITA NO.905/DEL./2010 5 12. VIDE PARA 8 OF OUR LETTER DT. NOVEMBER 09, 2009 WE SUBMITTED THAT OUT OF LONG TERM CAPITAL GAIN ARISES ON SALE OF RES IDENTIAL HOUSE PROPERTY ASSESSEE INVESTED RS.24,00,00/- FOR CONSTRUCTION OF FIRST AN D SECOND FLOOR AT RZ-G-III PART OF KHASRA NO.79/4, VILLAGE PALAM MAHAVIR ENCLAVE, N EW DELHI MEASURING 370 SQ. YD. MOST OF THE PAYMENTS WERE MADE THROUGH MR. NAVEEN, CONTRACTOR AND MR. LAXMAN SINGH SON OF THE ASSESSEE. PARTICULARS OF AMOUNT PAID TO NAVEEN AND LAXMAN SIN GH ARE AS FOLLOWS: NAVEEN RS.15,12,000.00 LAXMAN SINGH RS. 4,00,000.00 RS.19,12,000,00 DATE WISE DETAILS OF PAYMENT MADE ARE APPENDED AT P AGE 1 & 2 RESPECTIVELY. THESE PARTIES IN TURN MADE PAYMENTS F OR PURCHASE OF BUILDING MATERIAL AND TO LABOUR FOR CONSTRUCTION WORK. MR. N AVEEN CONTRACTOR AND MR. LAXMAN SINGH MADE PAYMENT FOR PURCHASE OF BUILDING MATERIAL AND LABOUR CHARGES VIDE DETAILS AS FOLLOWS: NAME OF PARTY NATURE OF PAYMENT AMOUNT(RS.) R.K STEEL IRON 57,240.00 SAINI SNITARY & HARDWARE TANK AND PIPES 41,950.0 0 R.K STEEL IRON 42,930.00 GERMAN BUILDING BRICKS AND CEMENT 1,21,000.00 GARIMA BUILDING SAND 17,000.00 GARIMA BUILDING BRICKS AND CEMENT 2,32,000.00 JAGDAMBA WELDING WORKS IRON GRILL 1,10,000.00 BRIJESH STONE CO. MARBLE & TILES 31,210.00 GARIMA BUILDING MATERIAL SUPPLIES CEMENT AND BRICKS 1,09,000.00 SHAN MARBLE & TILES MARBLE & STONE 32,000.00 SHAN MARBLE & TILES TILES & MARBLE 38,700.00 TILES 4,960.00 NEW BIMAL HARDWARE STORE HARDWARE & LOCKS 45,200. 00 RAVI GLASS HOUSE GLASS 11,050.00 NEW BIMAL HARDWAR STORE PAINT ETC. 60,600.00 NEW BIMAL HARDWARE STORE HARDWARE 20,720.00 NAVEEN ALUMINUM & GLASS HOUSE ALUMINUM WORK 12,350 .00 NEW BIMAL HARDWARE STONE FAVICOL,WHITE WORKETC.7,5 10.00 LAXMI NARAIN CARPENTOR 1,55,000.00 RAM CHARAN RAJ MISTRI 2,40,000.00 TILAK RAJ GABA ELECTRICIAN 25,500.00 JITENDER PLUMBER 37,500.00 EQBAL KL1AN PAINTER 40,500.00 HAZARI LALA STONE & PAINTING 12,500.00 ARUN RCC WORK 22,000.00 TOTAL 15,28,720.00 ITA NO.905/DEL./2010 6 COPIES OF THESE BILLS AND CONFIRMATION CERTIFICATE FOR LABOUR CHARGES PAYMENTS ARE APPENDED AT PAGE 3 TO 28. BESIDES THESE PAYMENTS, A SSESSEE SPENT AROUND RS.9,00,000/- FOR THE OTHER MISCELLANEOUS BUILDING MATERIAL AND LABOUR CHARGES. AFTER CONSTRUCTION OF THESE TWO ADDITIONAL FLOOR AS SESSEE GOT THE ELECTRICAL LOAD ENHANCED FROM 0.25 KW TO 5.00 KW FOR WHICH RS.2,400 /- WAS PAID TO BSES RAJDHANI POWER LTD. COPY OF SANCTION LETTER AND PAY MENT RECEIPT IS APPENDED AT PAGE 29. ' 3. THE CIT (A) HAS DECIDED THE ISSUE BY HOLDING AS UNDER :- 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE COUNSEL OF THE APPELLANT. THE AO HAS NOT COM MENTED ANY THING ON ADMISSION OF THE ADDITIONAL EVIDENCE T ILL NOW, THOUGH THE LETTER CALLING REPORT WAS RECEIVED IN HI S OFFICE ON 10.11.2009. THE COUNSEL OF THE APPELLANT HAS CONTEN DED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE OWIN G TO HIS ILLNESS AND FURTHER SUFFICIENT OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED. FURTHERMORE, IT MAY BE SEEN FROM THE DETAIL THAT ADDITIONAL EVIDENCES FILED BEFORE UNDERSIGNED ARE PRODUCED FOR PURPOSE OF DECIDING THE ISSUE. THESE E VIDENCES ONLY ENABLE THE UNDERSIGNED TO PASS AN ORDER ON THI S ISSUE ONE WAY OR OTHER. FOR AN APPELLATE AUTHORITY, IT IS IMP LICIT IN COMING TO A PROPER CONCLUSION. IT IS FOR THIS REASO N THAT THOUGH THE RULES REQUIRE NEW EVIDENCE TO BE ADMITTE D ONLY WHERE THERE NO REASON FOR THE ASSESSEE FOR NOT BEIN G ABLE TO PRESENT SUCH EVIDENCE BEFORE THE AO, IT IS CONSIDER ED NOT ONLY FAIR BUT JUSTIFIED, WHERE THE APPELLATE AUTHOR ITY ITSELF CONSIDERS SUCH EVIDENCE NECESSARY. WHERE THERE IS O MISSION TO SUBMIT PART OF DOCUMENTS AS REQUIRED BY THE AO, THE APPELLATE AUTHORITY MAY NOT BE JUSTIFIED MERELY BY DRAWING AN ADVERSE INFERENCE AGAINST THE ASSESSEE FAILING TO F URNISH CERTAIN DOCUMENTARY EVIDENCES AS IT WOULD AMOUNT A PUNITIVE MEASURE. THE APPELLATE AUTHORITY MAY WELL UNDERTAKE TO MAKE GOOD SUCH OMISSION. THEREFORE, IN THE INTEREST OF N ATURAL JUSTICE AND IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE IS AD MITTED. 4.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND MATERIAL ON THE RECORDS. I HAVE ALSO PERUSED THE CASE RECORDS. THE ASSESSEE HAS NEVER BEEN ASSESSED TO TAX IN THE PAST THOUGH HE HAS INCOME, MAINLY FROM THE HOUS E PROPERTY, MORE THAN THE LIMIT CHARGEABLE TO TAX. KE EPING IN ITA NO.905/DEL./2010 7 VIEW, THE APPELLANTS SUBMISSION IN POINT 09 OF PAR A 3, ABOVE, THE ANNUAL VALUE OF THE PROPERTY FOR THE RELEVANT P ERIOD WORKS OUT TO RS.2,64,000/- (1,98,000/- X 4/3). THIS PROPE RTY EXISTING SINCE QUITE LONG TIME WAS LET OUT PRIOR TO THE RELE VANT YEAR, BUT THE APPELLANT HAS NOT FILED HIS RETURN OF INCOM E OF EARLIER YEARS EVEN THOUGH HE WAS HAVING TAXABLE INCOME. THI S PROPERTY THEREAFTER WAS UNDER HEAVY RENOVATION AS A DMITTED BY THE APPELLANT AND THAT IS WHY IT WAS NOT LET OUT AFTER DEE. 2004. 4.2 THE DETAILS FURNISHED BEFORE ME INCLUDE THE SA LE DEED DATED 03.01.2005. AS PER THIS SALE DEED, THE A PPELLANT HAS SOLD ONE OF HIS RESIDENTIAL PROPERTY AT RZ-G-11 1, FOR RS 2,00,000/-. BUT NOW HE HAS ADMITTED BEFORE ME THAT THE TOTAL SALE CONSIDERATION IN RESPECT OF THE ABOVE MENTIONE D PROPERTY IS RS. 25,00,000/-. OUT OF WHICH RS. 23,00,000/- HA S BEER RECEIVED IN CASH. THIS IS SIMPLY AN ADMISSION OF TH E APPELLANT AS IT SUITES HIM, WHICH IS EVIDENT FROM THE CAPITAL GAINS WORKINGS FILED BY HIM IN POINT 8 OF HIS SUBMISSION. BUT THE APPELLANT HAS FAILED TO PRODUCE THE CONFIRMATION OF PAYMENT OF RS. 25,00,000/- MADE BY MS KANTA SHARMA D/O SHRI B. R. GAUTAM, R/O G-109, MANDIR MARG, MAHAVIR ENCLAVE, NE W DELHI THE BUYER OF THE PROPERTY. THUS, THIS UNILATE RAL ADMISSION IS NOT GOING TO HELP THE APPELLANT AS IT APPEARS THAT HE HAS TRIED TO TAKE THE BENEFITS OF CIRCUMSTANCES BECAUSE SHOWING THESE RECEIPTS AS SALE CONSIDERATION IN LIE U OF THE TRANSFER OF THE ABOVE MENTIONED PROPERTY AND CLAIMI NG DEDUCTION U/S 54 RESULTS NO TAX LIABILITY ON HIM. T HE CLAIM OF THE APPELLANT THAT THE SUM OF RS.23,00,000/- LAKHS OVER AND ABOVE THE SALE CONSIDERATION AS PER SALE DEED HAVE BEEN RECEIVED IN LIEU OF THE TRANSFER OF THE ABOVE MENTI ONED PROPERTY CAN NOT BE ADMITTED KEEPING IN VIEW THE FA CTS AND CIRCUMSTANCES IN TOTALITY AS THERE IS NO CORROBORAT ORY EVIDENCE IN THIS REGARD AND ACCORDINGLY, TILE CLAIM FOR DEDUCTION U/S 54 OF THE I. T. ACT CAN NOT BE ALLOWE D. NO FINDING ON MERIT OF ALLOWABILITY OF DEDUCTION U/S 5 4 OF THE I. T. ACT IS THUS REQUIRED TO BE ADJUDICATED HERE. 4.3 I HAVE VERIFIED THE BANK ACCOUNT AND FOUND THA T THE ACTUAL CASH DEPOSIT IS RS.26,65,000/- AS AGAINS T RS.26,95,000/- MENTIONED IN THE ASSESSMENT ORDER. T HE DEPOSIT OF RS.1,98,000/- IN THE BANK ACCOUNT HAS BE EN ITA NO.905/DEL./2010 8 CLAIMED TO HAVE BEEN DEPOSITED OUT OF RENT RECEIPTS . FURTHER, THE APPELLANT HAS CLAIMED DEDUCTION OF RS.59,400/- (30% OF ANNUAL VALUE U/S 24). KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT THE INCOME OF RS. 1,38,600/- THEREFORE, MAY BE ASSESSED UNDER THE HEAD HOUSE PROPERTY. THE AO THEREFORE, IS DIRECTED ACCOR DINGLY TO ASSESS THIS INCOME OF RS. 1,38,600/- UNDER THE HEAD HOUSE PROPERTY, THIS SAVING BANK ACCOUNT SHOWS INTEREST C REDIT OF RS. 18,712/-. THIS SHOULD BE ASSESSED AS INCOME FRO M OTHER SOURCES. HOWEVER, THE DEDUCTION OF RS.12,000/- THER EFORE, MAY BE ALLOWED. THE AO THEREFORE, IS DIRECTED ACCOR DINGLY TO ASSESS THIS INCOME. THUS THE ACTUAL RELIEF AFTER 80 L WORKS OUT TO RS.23,282/- (RS. 30,000/- MINUS 6,718/-). 4.3.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT IN RESPECT OF HOUS E HOLD EXPENSES. THE APPELLANT'S FAMILY CONSISTS OF WIFE A ND TWO MARRIED SONS, HOUSE IN WHICH THE APPELLANT LIVES AL ONG WITH HIS FAMILY IS OWNED BY HIM. THE WITHDRAWALS IN TOTA LITY BY ALL EARNING MEMBERS, RS.86,500/- AS PER AFFIDAVITS OF TWO SONS ARE CONSIDERED IN THE CASE OF THE APPELLANT. T HE HOUSE HOLD EXPENSES HAVE TO BE SUBDIVIDED INTO FOLLOWING SUB- HEADS FOR PROPER ESTIMATION OF THE HOUSE HOLD EXPEN SES PER ANNUM IN THE CASE OF THE APPELLANT: ELECTRICITY- RS 15,000/-, TELEPHONE INCLUDING MOBILES- RS 5,000/-, DOMESTIC H ELP-RS 5,000/-, EDUCATION INCLUDING DRESS, BOOKS AND STATI ONERIES, ETC- RS 10,000/-, FOOD- RS 1,00,000/-, MILK- RS 5,0 00/-, WASHING AND WASHER MAN- RS 3,000/-, CLOTHES- RS 10, 000/-, MEDICAL- RS 2,000/- (AS THE APPELLANT AND HIS SPOUS E ARE QUITE OLD), FUNCTIONS INCLUDING BIRTHDAYS- RS 1,000/-, CH ARITY- RS 500/-, LOCAL CONVEYANCE- RS 2,000/-, ENTERTAINMENT INCLUDING CABLE CHARGES- RS 2,000/-, NEWS PAPERS AND MAGAZINE S- RS 500/-, MISCELLANEOUS NOT GROUPED ABOVE- RS 5,000/-, ETC, ETC, AFTER ANALYZING THE HOUSE HOLD EXPENSES IN ENTIRETY I AM OF THE CONSIDERED VIEW THAT THE APPELLANT WOULD HAVE CONTRIBUTED AT LEAST RS. 60,000/- FOR HOUSE HOLD EX PENSES OUT OF HIS INCOME. HENCE THE DEPOSIT CLAIMED TO HAVE BE EN MADE OUT OF HOUSE PROPERTY INCOME REMAINS UNEXPLAINED. B UT NO SEPARATE ADDITION IS REQUIRED TO BE MADE AS IT WILL GET SET OFF BY THE DEDUCTION ACTION OF RS.59,400/- (30% OF ANNU AL VALUE U/S 24). THUS THE AO IS JUSTIFIED AND LOGICAL IN T REATING THE CASH DEPOSIT TO THIS EXTENT UNEXPLAINED. ITA NO.905/DEL./2010 9 4.4 SUBJECT TO FINDINGS IN PRECEDING PARAS, THE FI NDING OF THE ASSESSING OFFICER TREATING DEPOSITS OF RS.26 ,71,718/- AS INCOME IS UPHELD. HOWEVER, OUT OF WHICH RS.1,38, 600 SHOULD BE ASSESSED AS INCOME FROM HOUSE PROPERTY. T HE APPELLANT GETS RELIEF OF RS.23,282/-. ACCORDINGLY, ALL THE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 4. LEARNED AR SUBMITTED THAT THE ASSESSEE IS AN IND IVIDUAL AND ILLITERATE AND LIVE IN AN INHERITED PROPERTY. DURING THE RELE VANT PERIOD, THE ASSESSEE HAD SOLD ONE OF THE PROPERTIES FOR RS.25 LACS ALTHOUGH THE SALE CONSIDERATION DECLARED IN THE SALE DEED WAS ONLY OF RS.2 LACS WHI CH WAS RECEIVED BY BANK DRAFT DRAWN AT ORIENTAL BANK OF COMMERCE. HE SUBMI TTED THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT SALE CONSIDERATI ON RECEIVED AGAINST THE SALE OF ANCESTRAL HOUSE PROPERTY IS NOT SUBJECT TO TAX. HE WAS NOT HAVING ANY TAX ADVISER FOR HIS HELP. THE CASH RECEIVED ON THE SAL E CONSIDERATION WAS DEPOSITED IN THE BANK AND ON THE BASIS OF AIR INFOR MATION, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSEE COULD NOT CO MPLY WITH THE NOTICES ISSUED. THE DETAILS WERE SUBMITTED BEFORE THE CIT (A) WHICH WERE FORWARDED BY THE CIT (A) TO THE ASSESSING OFFICER BUT ASSESSI NG OFFICER HAS NOT SUBMITTED THE REPORT TILL THE FINALIZATION OF THE A PPEAL WHICH IS EVIDENT FROM PARA 4 OF THE CIT (A)S ORDER WHERE THE CIT (A) HAS RECORDED THAT ASSESSING OFFICER HAS NOT COMMENTED ON THE ADDITIONAL EVIDENC E TILL NOW THOUGH THE LETTER CALLING REPORT WAS RECEIVED IN HIS OFFICE ON 10.11.2009. HE SUBMITTED THAT THE CIT (A) ALTHOUGH HAD ADMITTED THE ADDITION AL EVIDENCE BY RECORDING ITA NO.905/DEL./2010 10 THAT IT WAS IN THE INTEREST OF JUSTICE BUT HE HAS N OT PROPERLY APPRECIATED THE EVIDENCES SUBMITTED BEFORE HIM. HE SUBMITTED THAT THE SALE DEED BY WHICH THE PROPERTY WAS SOLD IS DATED 3.1.2005. THE PART OF THE CASH PORTION RECEIVED FROM THE PURCHASER WAS DEPOSITED IN THE BANK ON 4.1 .2005. PRIOR TO THAT THE CASH DEPOSITED IN THE BANK WAS ONLY THE RENTAL INCO ME RECEIVED FROM VARIOUS TENANTS. HE FURTHER SUBMITTED THAT THE CIT (A)S O BSERVATION THAT HEAVY RENOVATION WAS CARRIED OUT AND BECAUSE OF THAT PROP ERTY WAS NOT LET OUT AFTER DECEMBER, 2004 IS ALSO FACTUALLY INCORRECT BECAUSE THE PROPERTY WAS SOLD OUT ON 3.1.2005. HENCE, THERE WAS NO RENTAL INCOME FR OM THIS PROPERTY. THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT REGARDING THE S ALE CONSIDERATION OF PROPERTY OF RS.25 LACS. THE AFFIDAVIT OF THE ASSES SEE SHOULD NOT BE TREATED AS A SELF SERVING DOCUMENT AND UNILATERAL ADMISSION. TH E SURROUNDING CIRCUMSTANCES CLEARLY ESTABLISH THAT THE SALE VALUE OF THE PROPERTY WAS MUCH MORE THEN SHOWN IN SALE DEED AND BALANCE WAS RECEIV ED IN CASH. THE CONFIRMATION FROM THE PURCHASER SHOULD NOT BE INSIS TED UPON AS IT SHALL BE DIFFICULT FOR THE ASSESSEE TO OBTAIN SUCH DECLARATI ON OR CONFIRMATION WHICH MAY GO AGAINST THE PURCHASER. FURTHER THE ASSESSEE HAS GIVEN THE NAME AND ADDRESS OF THE PURCHASER BUT NO ENQUIRIES WERE MADE FROM THE PURCHASER IN THIS REGARD. THE SALE DEED OF THE ASSESSEE ALSO CO NTAINS THE DETAILS REGARDING THE WITNESSES TO SALE. IF REVENUE WANTS TO DISBELI EF THE AFFIDAVIT THEN THEY SHOULD HAVE BEEN EXAMINED FOR THE VERIFICATION OF T HE SALE CONSIDERATION. HE ITA NO.905/DEL./2010 11 FURTHER SUBMITTED THAT THE ASSESSEE SUBMITTED A VAL UATION REPORT IN WHICH THE VALUE OF THE PLOT ON THE BASIS OF L&DO RATES AS ON 1.4.1981 COMES TO RS.1,67,216/- AND THE TOTAL VALUE INCLUDING THE CON STRUCTION ON THE PROPERTY COMES TO RS.5,04,176/-. THE SALE WAS MADE IN JANUA RY, 2005. THE COST INDEX FOR THE PURPOSE OF CALCULATION OF INDEXED COST WAS 480. THUS, ON THAT BASIS ALSO, THE VALUE COMES AROUND RS.20 LACS. THIS VALU ATION REPORT FURTHER SUPPORTS THE CLAIM OF THE ASSESSEE THAT THE REAL TR ANSACTION OF THE SALE OF THE PROPERTY WAS OF RS.25 LACS AS STATED IN AFFIDAVIT F ILED. THE ASSESSEE HAS INVESTED THE AMOUNT IN THE EXTENSION OF OTHER RESID ENTIAL PROPERTY OWNED BY THE ASSESSEE FOR WHICH ALSO THE ASSESSEE SUBMITTED A VALUATION REPORT WHICH HAS NOT BEEN CONSIDERED BY THE CIT (A). CIT (A) HA S ALL THE POWERS WHICH THE ASSESSING OFFICER HAS. THEREFORE, THE EVIDENCE S SUBMITTED BEFORE THE CIT (A) HAS NOT BEEN CONSIDERED AND HE HAD FAILED TO AP PRECIATE THE SAME IN THE RIGHT PERSPECTIVE. HE SUBMITTED THAT THE ASSESSEE HAS ALSO RAISED THE ADDITIONAL GROUND IN WHICH THE ASSESSEE HAS OBJECTE D THE ACTION OF ASSESSING OFFICER FOR NOT ALLOWING PROPER/REASONABLE OPPORTUN ITY AND THE ACTION OF THE CIT (A) IN NOT ALLOWING EXEMPTION U/S 54 OF THE INC OME-TAX ACT ON ACCOUNT OF REINVESTMENT OF THE SALE PROCEEDINGS RECEIVED AN D FOR THE ADMISSION OF THESE ADDITIONAL GROUNDS, HE RELIED ON VARIOUS CASE LAWS. FOR THE PROPOSITION, HE SUBMITTED AS UNDER :- IT HAS BEEN HELD IN THE FOLLOWING CASES THAT THE HON'BLE TRIBUNAL IS UNDER STATUTORY OBLIGATION TO ENTERTAIN THE PLEA AND ITA NO.905/DEL./2010 12 DECIDE THE SAME, NO MATTER AT WHAT STAGE IT WAS TAK EN PROVIDED BOTH THE PARTIES ARE DULY HEARD. CIT V LALLUBHAI GO RDHANDAS MEHTA CHARITABLE TRUST (1994) 207 ITR 104 (GUJ). CI T V GOVINDRAM BROS (P) LTD (1983) 141 ITR 626 (BOM); CI T V BELAPUR SUGAR & ALLIED INDUSTRIES LTD. (1983) 141 I TR 404 (BOM); NILAMANI GHOSH & PARTNERS V. CIT (1977) 108 ITR 101 (ORI): J K OIL MILLS CO LTD V CIT (1976) 105 ITR 53 (ALL); PARKAR' (.JS) V PALEKAR (VB) (1974) 94 ITR 616 (BOM ): SHAIK IBRAHIM V CIT (1968) 69 ITR 117 (AP): AHMEDABAD ELE CTRICITY CO LTD V CIT (1993) 199 ITR 351 (BOM) (FB): TAPATI PAL (SMT.) V CIT (2000) 241 ITR 468 (CAL): NATIONAL THE RMAL POWER CO. LTD V CIT (1998) 229 ITR 383 (SC). SEE AL SO ORISSA CEMENT LTD. V CIT (2001) 250 ITR 856 (DEL): CIT V I NDIAN OVERSEAS BANK (1999) 239 ITR 335 (MAD): CIT V EVELI NE INTERNATIONAL (2000) 243 ITR 493 (P&H): MARUTI UDYO G LTD V ITAT (2001) 252 ITR 482 (DEL): CIT V MAYUR FOUNDATI ON (2005) 274 ITR 562 (GUJ): MADAD ALI ANSARI & CO V D CIT (2005) 272 ITR 560 (RAJ). CONTRA CEO V BIPINCHANDR A PATEL (1990) 186 ITR 29 (BOM). SEE GODAVARI SUGAR MILLS L TD. (NO.1) V CIT (1991) 191 ITR 311 (BOM) AND AHMEDABAD ELECTR ICITY CO LTD V CIT (1991) 190 ITR 413 (BOM) WHERE THE QUE STION WHETHER THE TRIBUNAL COULD ALLOW ADDITIONAL GROUNDS OF APPEAL TO BE RAISED WAS REFERRED TO A LARGER BENCH. CF KRISHN A GOPAL BHADRA V ITO (1980) 124 ITR 580 (CAL). IN THE FOLLOWING CASES, THE CASE LAW ON THIS POINT HAS BEEN REVIEWED AND IT HAS BEEN EXPLAINED THAT WHERE A QUE STION CONCERNS THE SUBJECT-MATTER OF THE APPEAL BEFORE TH E APPELLATE AUTHORITY IT MAY BE RAISED BEFORE THE TRIBUNAL THOU GH NOT RAISED IN THAT FORM BEFORE THE APPELLATE AUTHORITY. CIT V CELLULOSE PRODUCTS OF INDIA LTD. (1985) 151 I TR 499 (GUJ) (FB) OVERRULING CIT V INDUSTRIAL MACHINERY MR G (P) LTD (1985) 151 ITR 533 (GUJ) APPROVING BEHARILAL RAMCHA ARAN COTTON MILLS LTD. V CIT (1966) 62 ITR 212 (BOM): CI T V CELLULOSE PRODUCTS OR INDIA LTD. (1985) 151 ITR 532 (GUJ) DISSENTING FROM CIT V GANGAPPA CABLE LTD (1979) 116 ITR 778 (AP): CIT V SRI RAJAGOPAL TRANSPORTS (P) LTD (1983) 144 ITR S73 (MAD): CIT V INDIAN EXPRESS (MADURAI) (P) LTD. (1983) 140 ITR 705 (MAD): ATLAS CYCLE INDUSTRIES LTD. V CIT (1 982) 133 ITR 231 (P&II): CIT V MADRAS INDUSTRIAL INVESTMENT CORPN LTD. (1980) 124 ITR 454 (MAD): CIT V STEEL CAST CORPN (1 977) 107 ITA NO.905/DEL./2010 13 ITR 683 (GUJ): CIT V KARAMCHAND PREMCHAND (P) LTD ( 1969) 74 ITR 254 (GUJ): SHRI AMBICA MILLS LTD. V CIT (199 2) 198 ITR 99 (GUJ): AHMEDABAD ELECTRICITY CO LTD V CIT (1993) 199 ITR 351 (BOM)(FB): CIT V BEGUM NOOR BANU ALLADIN (LATE) (1993) 204 ITR 166 (AI))(FB); NATIONAL THERMAL POWER CO LT D V CIT (1998) 229 ITR 383 (SC): CIT V, CELLULOSE PRODUCTS OF INDIA LTD. (1985) 151 ITR 499 (GUJ)(FB): OSWAL SPINNING A ND WEAVING MILLS LTD. V CIT (1988) 174 ITR 354 (P&H); SEDCO FOREX INTERNATIONAL DRILLING INC. V DICT (2000) 72 ITD 415 (DEL-TRIB). 5. LEARNED DR RELIED ON THE ORDER OF CIT (A). 6. AFTER HEARING BOTH THE SIDES, WE HOLD AS UNDER : THE ASSESSEE IS A VILLAGER, ILLITERATE AND ALSO NO T ASSESSED TO TAX IN THE PAST. HE WAS LIVING IN HIS ANCESTRAL PROPERTY ALON G WITH HIS FAMILY. HE WAS HAVING ONE BANK ACCOUNT AND THE RENTAL INCOME WAS B EING DEPOSITED IN THE SAME. THE SALE OF ONE OF THE PROPERTIES WAS EFFECT ED BY SALE DEED DATED 3.1.2005. SALE CONSIDERATION DECLARED IN SALE DEED WAS OF ONLY RS.2 LACS. THERE WAS A CASH DEPOSIT IN HIS BANK ACCOUNT OF RS. 17 LACS ON THE NEXT DATE, I.E. 4.1.2005. THE VALUATION REPORT OF PROPERTY AS ON 1.4.1981 ALSO SUGGESTS THAT THE REAL VALUE OF PROPERTY WAS MUCH MORE THAN DECLARED IN SALE DEED. THE CIRCUMSTANCES ALSO SHOW THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE SALE CONSIDERATION RECEIVED ON THE SALE OF ANCE STRAL PROPERTY SHALL NOT BE SUBJECT TO TAX. ASSESSEE BEING A VILLAGER WAS NOT HAVING ANY TAX HELP AT HIS SIDE. THE DOCUMENTS LIKE VALUATION REPORT OF THE P ROPERTY AS ON 1.4.1981 WHEREIN THE VALUATION HAS BEEN MADE AT RS.5,04,176/ - WERE SUBMITTED BEFORE THE CIT (A). NORMALLY, IN APPEALS, WE SEE THAT THE REVENUE CLAIMS THAT SALE ITA NO.905/DEL./2010 14 CONSIDERATION WAS HIGHER AND THE ASSESSEE CLAIMS TH AT THE SALE CONSIDERATION IS ON LOWER SIDE. IN THE CASE UNDER CONSIDERATION, TH E SITUATION IS REVERSED. HERE THE ASSESSEE IS CLAIMING THAT THE SALE CONSIDERATIO N IS MUCH HIGHER THAN THE SALE CONSIDERATION SHOWN IN THE SALE DEED. CIT (A) ADMITTED THE EVIDENCE FILED BEFORE HIM BUT HE HAS NOT CONSIDERED ALL THE RELEVANT DOCUMENTS/ASPECTS WHILE REJECTING THE AFFIDAVIT FILED BY ASSESSEE IN RESPECT OF SALE CONSIDERATION. THE AFFIDAVIT OF THE ASSESSEE CANNOT BE REJECTED OU TRIGHTLY ONLY BY TREATING THAT IT WAS A SIMPLE STATEMENT OF THE APPELLANT AS IT SUITS HIM. IN OUR CONSIDERED VIEW, IN VIEW OF THE FACTUAL MATRIX OF T HE CASE, THE CIT (A) SHOULD HAVE CONSIDERED THE AFFIDAVIT FILED BY THE ASSESSEE IN THE LIGHT OF SURROUNDING CIRCUMSTANCES. THE SALE DEED WAS EXECUTED ON 3.1.2 005. THE CASH WAS DEPOSITED ON 4.1.2005. THE ASSESSEE IS AN ILLITERA TE AND WAS NEVER ASSESSED TO TAX. HE WAS STAYING IN THE INHERITED PROPERTY ALON G WITH THE FAMILY. OBTAINING OF THE CONFIRMATION FROM THE PURCHASER SH ALL BE DIFFICULT AND ABSENCE OF THE SAME SHALL NOT BE SUFFICIENT TO DISR EGARD THE AFFIDAVIT FILED BY THE ASSESSEE. THE AFFIDAVIT FILED ON OATH IS A PI ECE OF ORAL EVIDENCE LIKE STATEMENT OF ANY OTHER WITNESS. THERE IS NO RULE O F LAW THAT SUCH A STATEMENT SHOULD NOT BE ACCEPTED MERELY BECAUSE IT IS MADE BY A PERSON WHO IS INTERESTED IN THE PROCEEDINGS AND IT IS ALSO NOT A NECESSARY REQUIREMENT THAT SUCH AFFIDAVIT ON OATH MUST ALWAYS CORROBORATED BY ANY INDEPENDENT EVIDENCE BEFORE IT COULD BE ACCEPTED BY A COURT OF LAW. IN THE ASSESSEES CASE, THE ITA NO.905/DEL./2010 15 ASSESSEE HAS SUBMITTED VARIOUS DETAILS AND DOCUMENT S BEFORE THE CIT (A) WHICH HAS BEEN ADMITTED BY HIM. THE ASSESSING OFF ICER HAS NOT SENT THE REMAND REPORT ON THESE DOCUMENTS. THE EVIDENCES SU BMITTED ALSO INCLUDE THE VALUATION REPORT WHEREIN THE VALUATION OF THE PROPE RTY AS ON 1.4.1981 HAS BEEN WORKED OUT AT RS.5,04,176/- AND THE SALE CONSIDERAT ION AS DECLARED IN SALE DEED DATED 5 TH JANUARY, 2005 IS ONLY RS.2 LACS. THESE FACTS ESTA BLISH THAT THE AFFIDAVIT OF ASSESSEE REGARDING SALE CONSIDERATION APPEARS TO BE TRUE. WE ALSO NOTE THAT ASSESSEES CLAIM MADE U/S 54 IS ALSO TO B E CONSIDERED IN THE LIGHT OF EVIDENCES FILED. THEREFORE, IN THE INTEREST OF JUS TICE AND EQUITY, WE SET ASIDE THE ORDER OF LOWER AUTHORITIES TO DECIDE DE NOVO AF TER PROVIDING THE NECESSARY OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. WE RES TORE THE ASSESSMENT TO THE FILE OF ASSESSING OFFICER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF MAY, 2011. SD/- SD/- (I.P. BANSAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 27 TH DAY OF MAY, 2011/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XXIV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.