Veena Gupta, Delhi V. ITO, New Delhi

ITA 965/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6668 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: S S GUPTA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition
• Section: 143(3); 50C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NOS.4608 & 965/DEL/2016 ASSESSMENT YEAR : 2011-12 VEENA GUPTA, 5015, BAZAR SIRKIWALAN, DELHI. PAN: AGWPG5994K VS. ITO, WARD-46(5), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.S. GUPTA, CA DEPARTMENT BY : SHRI F.R. MEENA, SR. DR DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT : 27.02.2017 ORDER THESE TWO APPEALS BY THE ASSESSEE RELATE TO THE ASS ESSMENT YEAR 2011-12. ONE APPEAL IS AGAINST THE ORDER OF T HE CIT(A) PURSUANT TO ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT, 1061 (HEREINAFTER ALSO CALLED `THE ACT) DATED 2.12.2015 AND THE OTHER APPEAL IS AGAINST THE ORDER OF THE CIT(A) PUR SUANT TO AN APPLICATION FILED BY THE ASSESSEE U/S 154 FOR NON-D ISPOSAL OF ITA NO.4608 & 965/DEL/2016 2 CERTAIN GROUNDS IN THE ORIGINAL ORDER. AS SUCH, BO TH THE APPEALS ARE TAKEN UP FOR CONSIDERATION BY THIS CONS OLIDATED ORDER. 2. FIRST ISSUE RAISED IN THESE APPEALS IS AGAINST T HE CONFIRMATION OF ADDITION OF RS.36 LAC. THE FACTS A PROPOS THIS ISSUE ARE THAT THE ASSESSEE DEPOSITED A SUM OF RS.4 0 LAC IN HER SAVINGS BANK ACCOUNT VIDE FOUR TRANSACTIONS ONE I N NOVEMBER, 2010 AND THE OTHER THREE IN MARCH, 2011. ON BEING CALLED UPON TO EXPLAIN THE SOURCE OF SUCH BANK DEPO SITS, THE ASSESSEE FURNISHED DETAILS OF WITHDRAWALS FROM HER SAVINGS BANK ACCOUNT FROM 14.07.2010 TO 16.12.2010 TOTALING RS.74 LAC. IT WAS EXPLAINED THAT THE CASH WAS WITHDRAWN FOR THE PURPOSE OF PURCHASE OF PROPERTY WHICH DEAL DID NOT MATERIALIZE AND, HENCE, THE CASH WAS RE-DEPOSITED IN THE BANK A CCOUNT. THE ASSESSEE ALSO PRODUCED STAMP PAPERS WHICH WERE PURCHASED, BUT, AFTERWARDS CANCELLED BECAUSE OF THE CANCELLATION OF TRANSACTION. THE AO MADE AN ADDITI ON OF RS.36 ITA NO.4608 & 965/DEL/2016 3 LAC, BEING BANK DEPOSIT ENTRIES OF MARCH, 2011 ON T HE PREMISE THAT THE ASSESSEE DID NOT PROVIDE PARTICULARS OF TH E PROPERTY, AREA OF THE PROPERTY, ETC., WHICH SHE WANTED TO PUR CHASE AND ALSO NAME AND PARTICULARS OF THE PERSON FROM WHOM S HE WANTED TO PURCHASE THE PROPERTY ETC. THE LD. CIT(A) SUSTA INED THE ADDITION. THE ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. IT IS NOTICED FROM TH E ASSESSMENT ORDER ITSELF THAT THE ASSESSEE WITHDREW A SUM OF RS .74 LAC FROM HER SAVINGS BANK ACCOUNT IN THE SECOND HALF OF THE CALENDAR YEAR 2010. A SUM OF RS.36 LAC WAS RE-DEPOSITED IN T HE MONTH OF MARCH, 2011 AND THE ASSESSEES CLAIM IS THAT THE REMAINING AMOUNT WAS RE-DEPOSITED IN THE NEXT FINANCIAL YEAR. THE AO HAS MADE AN ADDITION OF RS.36 LAC BY TREATING THE A MOUNT OF DEPOSITS IN THE BANK AS UNEXPLAINED. IT IS STRANGE THAT WHEN THE ASSESSEE CATEGORICALLY SUBMITTED DETAILS OF CAS H WITHDRAWALS FROM THE SAME BANK ACCOUNT WHICH WAS RE - ITA NO.4608 & 965/DEL/2016 4 DEPOSITED, THE AO DID NOT GET CONVINCED AND MADE AD DITION ON EXTRANEOUS ISSUES, BEING, THE NON-SUBMISSION OF DET AILS OF PROPERTY WHICH WAS SOUGHT TO BE PURCHASED, BUT, FIN ALLY NOT PURCHASED. THE ASSESSEE HAS SPECIFICALLY CONTENDED THAT THE AMOUNT WAS WITHDRAWN FROM THE BANK FOR THE PURPOSE OF PURCHASE OF SOME PROPERTY, WHICH TRANSACTION DID NO T MATERIALIZE. THE AO HAS NOT SHOWN THAT THE CASH SO WITHDRAWN WAS USED ELSEWHERE AND WAS NOT AVAILABLE FOR RE-DEP OSIT. IN SUCH CIRCUMSTANCES, THE PRESUMPTION HAS TO BE THAT THE AMOUNT WITHDRAWN A FEW MONTHS BEFORE ITS RE-DEPOSIT IS OUT OF EARLIER WITHDRAWALS, WHICH DOES NOT CALL FOR ANY ADDITION. I, THEREFORE, ORDER TO DELETE THE ADDITION OF RS.36 LA C. THIS GROUND IS ALLOWED. 4. THE NEXT ISSUE IS AGAINST COMPUTATION OF CAPITAL GAIN. THE ASSESSEE SOLD ON 25.2.2011 A PROPERTY BEARING NO. 2 856/1, KUCHA GHASHI RAM BAZAR, SIRKIWALAN, HAUZ QAZI, DELH I, FOR RS.1,75,000/- AND DECLARED LONG-TERM CAPITAL GAIN O F ITA NO.4608 & 965/DEL/2016 5 RS.41,505/-. THE AO, MADE CERTAIN ALTERATIONS IN T HE COMPUTATION OF CAPITAL GAINS AND MADE AN ADDITION O F RS.1,49,060, WHICH CAME TO BE SUSTAINED IN THE FIRS T APPEAL. 5. THIS PROPERTY WAS PURCHASED BY THE ASSESSEE O N 7.2.2002 FOR A SUM OF RS.40,000/- AND STAMP CHARGES AMOUNTIN G TO RS.5,200/- WERE PAID, THEREBY GIVING COST OF ACQUIS ITION AT RS.45,200/-. THE ASSESSEE, WHILE CALCULATING CAPIT AL GAIN ON THE TRANSFER OF THIS PROPERTY, ADOPTED COST OF ACQU ISITION AT RS.50,000/-, THEREBY, INCLUDING A SUM OF RS.4,800/- TOWARDS BROKERAGE AND REGISTRATION EXPENSES AT THE TIME OF PURCHASE. SINCE THE ASSESSEE HAD NO EVIDENCE OF SPENDING RS.4 ,800/-, THE AO DID NOT CONSIDER THIS AMOUNT AS PART OF COST OF ACQUISITION WHICH ACTION WAS UPHELD IN THE FIRST APPEAL. 6. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS SEEN THAT THE ASSESSEE CL AIMED TO HAVE SPENT A SUM OF RS.4,800/- AS PART OF COST OF ACQUIS ITION OF THE PROPERTY IN 2002. DESPITE THE FAILURE OF THE ASSES SEE TO ITA NO.4608 & 965/DEL/2016 6 PRODUCE ANY EVIDENCE IN SUPPORT OF SUCH PAYMENT BEF ORE THE AUTHORITIES BELOW, THE POSITION CONTINUES TO REMAIN THE SAME BEFORE ME AS WELL. UNDER THESE CIRCUMSTANCES, I AM NOT INCLINED TO ACCEPT THE ASSESSEES REQUEST FOR INCLU SION OF RS.4,800/- IN COST OF ACQUISITION. 7. THE SECOND COMPONENT OF THE CALCULATION OF CAPIT AL GAINS IS THE CLAIM OF THE ASSESSEE FOR SPENDING RS.50,000 /- AS COST OF IMPROVEMENT, DETAILED AS UNDER:- NATURE OF WORK WORK DONE BY DATE OF WORK AMOUNT 1 WC FITTING WITH BADARUR, CEMENT, LABOUR CHARGES SURESH KUMAR 15.03.2010 14500/- 2. POP CEILING 150 FEET WALL 360 NITESH KUMAR 12.03.2010 19320/- 3. WOODEN DOOR AND WINDOW VIJAY SHARMA 16.03.2010 19400/- 8. THE AO DID NOT ACCEPT THE ASSESSEES CLAIM AS, I N HIS OPINION, THIS AMOUNT WAS IN THE NATURE OF REPAIRS A ND MAINTENANCE, FOR WHICH THE ASSESSEE WAS AVAILING ST ATUTORY DEDUCTION IN THE COMPUTATION OF INCOME UNDER THE HE AD ITA NO.4608 & 965/DEL/2016 7 `INCOME FROM HOUSE PROPERTY. HE, THEREFORE, REFUS ED TO INCLUDE RS.50,000/- AS COST OF IMPROVEMENT. NO REL IEF WAS ALLOWED IN THE FIRST APPEAL. 9. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS NOTICED THAT THE FIRST IT EM IN THE ABOVE LIST IS A SUM OF RS.14,500/- INCURRED FOR SANITARY FITTINGS ETC., DONE BY THE ASSESSEE AS A FRESH EXERCISE TO RENOVAT E THE PREMISES. THE SECOND ITEM IS POP CEILING ON WHICH A SUM OF RS.19,320/- WAS INCURRED. THIS IS, AGAIN, NOT IN T HE NATURE OF REPAIRS AND MAINTENANCE AND HAS TO BE TREATED AS CO ST OF IMPROVEMENT. THE LAST ITEM IS EXPENDITURE OF RS.19, 400/- ON DOOR AND WINDOW. THIS IS ALSO A CASE OF REPLACEMEN T OF THE EARLIER WINDOW AND DOOR AND NOT ITS REPAIR. AS THE ASSESSEE WAS INTENDING TO SELL THE PROPERTY, SHE CONSIDERED IT EXPEDIENT TO IMPROVE THE PROPERTY BEFORE SALE, SO THAT A HAND SOME PRICE COULD BE RECEIVED. SINCE THESE THREE AMOUNTS ARE I N THE NATURE OF COST OF IMPROVEMENT AND DO NOT FALL IN THE REALM OF REPAIR ITA NO.4608 & 965/DEL/2016 8 AND MAINTENANCE, I HOLD THAT THE COMPUTATION OF CAP ITAL GAIN SHOULD BE DONE TREATING THESE THREE AMOUNTS AS `COS T OF IMPROVEMENT. 10. THE LAST ASPECT OF THE COMPUTATION OF CAPITAL G AIN IS DETERMINATION OF `FULL VALUE OF CONSIDERATION. TH E ASSESSEE SOLD THIS PROPERTY FOR A SUM OF RS.1,75,000/-, WHIC H WAS TAKEN AS A FULL VALUE OF CONSIDERATION. CIRCLE RATE FOR S TAMP DUTY PURPOSE WAS MENTIONED AT RS.2,66,049/- IN THE SALE DEED ITSELF. THE AO ADOPTED THIS FIGURE FOR COMPUTING CAPITAL GA IN, WHICH CAME TO BE AFFIRMED IN THE FIRST APPEAL. THE ASSESS EE IS AGGRIEVED AGAINST ADOPTION OF SUCH AMOUNT AS FULL V ALUE OF CONSIDERATION. 11. I DO NOT FIND ANY REASON TO DISTURB THE ADOPTIO N OF THIS AMOUNT AS FULL VALUE OF CONSIDERATION IN TERMS OF S ECTION 50C OF THE ACT. THIS ACTION IS APPROVED. THE AO IS DI RECTED TO RECOMPUTE THE AMOUNT OF CAPITAL GAIN ON TRANSFER OF THIS PROPERTY IN THE TERMS INDICATED ABOVE. ITA NO.4608 & 965/DEL/2016 9 12. THE LAST ISSUE RAISED IN THIS APPEAL IS AGAINST AN ADDITION OF RS.83,436/- MADE BY THE AO UNDER THE HEAD INCOM E FROM HOUSE PROPERTY. THE ASSESSEE DECLARED INCOME FROM HOUSE PROPERTY AT RS.75,223/-, AS UNDER:- RENTAL INCOME FROM 2663, GALI ARYA SAMAJ SITA RAM BAZAR, DELHI. 1,08,000/- 2856/1, GALI GHASHI RAM, BAZAR SIRKIWALAN, DELHI 8,140/- TOTAL 1,16,140/- LESS: HOUSE TAX 8,678/- 1,07,462/- LESS 30% REPAIR 32,239/- INCOME FROM HOUSE PROPERTY 75,223/- 13. THE AO REQUIRED THE ASSESSEE TO PRODUCE A COPY OF RENT AGREEMENT FOR DEMONSTRATING THE RENTAL INCOME AT RS.1,08,000/-. NOTHING OF THIS SORT WAS PLACED ON RECORD. THE AO DETERMINED ANNUAL RATABLE VALUE OF THIS PROPERTY AT RS.2,25,996/- BY MULTIPLYING RATABLE VALUE AS RESID ENTIAL AT RS.73,332/- WITH 3 TO CONVERT INTO COMMERCIAL PROPE RTY LET OUT VALUE. THIS LED TO THE ADDITION OF RS.83,436/-. ITA NO.4608 & 965/DEL/2016 10 14. I HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. THE CONTENTION OF THE ASSESSEE ABOUT THE RECEIPT OF HOUSE RENT OF RS.1,08,000/- IS UNSUBSTAN TIATED INASMUCH AS NEITHER ANY RENT AGREEMENT WAS PLACED O N RECORD NOR THE RENT PAYMENT WAS RECEIVED THROUGH CHEQUE. I T IS SEEN THAT THE AO HAS ADOPTED ANNUAL VALUE OF THE PROPERT Y AT RS.2,25,996/- WHICH HAS BEEN DISPUTED BY THE ASSESS EE AS NOT IN ACCORDANCE WITH THE RULES OF HOUSE TAX DEPARTMEN T. UNDER THESE CIRCUMSTANCES, I SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR DECIDING THIS ISSUE AFRESH AS PER LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. IN THE RESULT, BOTH THE APPEALS ARE PARTLY A LLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.201 7. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, FEBRUARY, 2017. DK ITA NO.4608 & 965/DEL/2016 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.