YOGESH DAS, Jaipur V. ITO, Jaipur

ITA 983/JPR/2016

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0713 (ITAT-JAIPUR)
• Duration Of Justice: 5 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES FROM
• Assessee Lawyers: GIVING FOLLOWING OBSERVATIONS
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Gift; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Additional evidence; Cost of acquisition; Fair market value; Difference of opinion; Third party statement; Valuation report; Block assessment; Revised return; Reason to believe; Change of opinion; Ignorance of law; Liquidation; Capital Gains
• Section: 147; 131; 68; 148; 132; 139; 143(3); 50C; 139(5); 208; 192; 139(1); 64; 43; 48; 73; 72; 13

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oaJh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 983/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2013-14 Shri Yogesh Das Legal Heir (Chela) Mahant Kailash Das 611, Mahant Ji Ki Haveli, Vidhyadhar Ji Ka Rasta, Tripolia Bazar, Jaipur cuke Vs. The ITO Ward 1(2) Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAHCM 5794 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri S.L. Poddar, Advocate jktLo dh vksj ls@Revenue by: Shri Avdhesh Kumar, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 15/06/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 31/08/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee is directed against the order of the learned Commissioner of Income of Tax-1, Jaipur [ here in after referred as ld. CIT(A)] dated 31-10-2016 for the assessment year 2013-14 which in turn arise from the order of the Income Tax Officer, Ward 1 (2), Jaipur dated 30.03.2016. 2 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR 2. The assessee has marched this appeal on the following revised grounds of appeal. `1. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the action of the AO in passing the order u/s 143(147 of the Income Tax Act, 1961. 2. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the action of the AO in computing the capital gain income for the property which was acquired at no cost and no capital gain tax is chargeable in the light of the Supreme Court decision in the case of Shriniwas Sethi 128 ITR 294. 3. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the action of the AO in referring the valuation of property to DVO when there was direct example of auction by the JDA in same area. 4. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the action of the AO /DVO in not considering the objections filed by the assessee for proposed valuation of the property. 5. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the action of the AO in applying the DVO’s rate for indexation by ignoring others similar rates available which are more reliable. 6. Under the facts and circumstances of the case, the ld. CIT(A) has erred in not giving benefit of cost of improvement / construction. 7. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming the addition of Rs.34,99,342/- u/s 50C of the Act for property sold on 25-03-2013. 8. Under the facts and circumstances of the case, the ld. CIT(A) has erred in disallowing transfer expense claim of Rs.48,30,000/-. 9. Under the facts and circumstances of the case, the ld. CIT(A) has erred in taking the cost of acquisition at Rs.22,22,500/- as against taken by the assessee at Rs.1,98,26,738/-. 10. Under the facts and circumstances of the case, the ld. CIT(A) has erred in taking the cost of acquisition at Rs.22,22,500/- as against taken by the assessee at Rs.1,98,26,738/-. 11. Under the facts and circumstances of the case, the ld. CIT(A) has erred in assessing the long-term capital gain income of Rs.65,46,034/- for the property sold on 23-03-2013. 12. Under the facts and circumstances of the case, the ld. CIT(A) has erred in assessing the long-term capital gain income of Rs.25,29,51,372/- for the property sold on 5-12-2012. 13. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing’’ 3 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR 3. Apropos Ground No. 1 to 12 of the assessee’s case, it is noted from the record that the AO while making assessment noticed that the assessee had electronically filed return of income on 29-03-2013 declaring total income of Rs.12,58,520/-. Later on case of the assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued on 9-03-2015 after recording reasons and obtaining permission from the competent authority. In response to notice, the assessee filed return of income on 25-03-2015 disclosing total income of Rs.56,94,260/- as against total income of Rs.12,58,520/-declared in return filed u/s 139 of the Act. In this case, it is noted that the AO has discussed the issue meticulously and thus disallowed the claim of deduction of Rs.9,12,70,543/- made on account of cost of construction. Further the AO has worked out the Long Term Capital Gain amounting to Rs.25,29,51,372/-. Hence, the properties as discussed by the AO in the assessment order, made total addition of Rs.25,50,61,673/- under the head of Long Term Capital gain giving the bifurcation as under:- Long Term Capital Gain (A) Rs. 65,46,034/- Long Term Capital Gain (B) Rs.25,29,51,372/- Less: Long Term Capital Gain declared by Rs. 44,35,733/- the assessee in the return filed u/s 148 Hence, it is noted that the AO after completion of the assessment made the addition in the hands of the Assessee amounting toRs.25,50,61,673/-Conclusively, the AO 4 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR determined the income of the assessee at Rs.26,07,55,930/- inter alia making addition on account of long term capital gain on sale of property. 4. In first appeal, the ld. CIT(A) has mostly taken all the grounds raised by the assessee and discussed the issues elaborately but dismissed the appeal of the assessee by giving following observations. 3.1.2 Determination i) The brief facts of the case are that the appellant filed its return of income on 29.03.2014 declaring total income at Rs. 12,58,520/-. In its computation of income, the appellant has shown 'income from house property' at Rs. 3,27,965/- and Income from other sources' at Rs. 10,40,557/- and it has also computed long term capital loss of Rs. 5,30,681/-on account of sale of two immovable properties (sold on 05.12.2012 and 25.03.2013) during the year under consideration. (ii) On the basis of the reasons as reproduced by the appellant. The AO has initiated proceedings u/s 147 of the Act and issued notice u/s 148 of the Act on 09.03.2015 in response to which the appellant filed its return of income declaring total income at Rs. 56,94,260/- on 25.03.2015. Now, in its computation of income filed with the return of income, the appellant has declared long term capital gains from the two immovable properties sold during the year under consideration at Rs. 44,35,733/-. (iii) During the assessment proceedings, the appellant sought reasons for issue of notice u/s 148 of the Act which were provided by the AO. Subsequently, the appellant filed objections to the issue of notice u/s 148 of the Act which were disposed off by the AO vide its order dated 28.01.2016 as reproduced also in the assessment order. (iv) During the appellate proceedings, the AR reiterated its objections for issue of notice u/s 148 of the Act which are summarized as under:- No capital gains tax is chargeable on the property sold vide sale deed dated 05.12.2012 as the cost of acquisition of the property was Nil as the said property 5 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR was received as a gift by the previous owners from Maharajadhiraj Sawai Jai Singh in the Samwat Year 1885. It was not aware of the correct legal position and it has wrongly disclosed capital gains on transfer of the immovable property in its return of income and ignorance of law of the appellant cannot be taken as an advantage by the AO and the AO has to complete the assessment on the basis of correct position of law. The AO has not provided the following documents, on the basis of which satisfaction for issuing notice u/s 148 of the Act was recorded by the AO: (a) Information received from DIT (I&C) (b) Statement of Shri Arun Kumar Ranka recorded on 02.03.2015. (c) Report of the ITI dated 03.03.2015 (v) It was submitted that it is settled principle of law that statement and reports which have not stood test of cross examination cannot be used as evidence and thus the proceedings u/s 148 stand vitiated. The AO has disposed the objection of the appellant by passing order on 28.01.2016 without providing the appellant copy of statement of Shri Ranka and also report of the inspector. Thus the assessee was precluded in submitting his defense. In the order passed on 28.01.2016 disposing the objections of the appellant against issuance of notice u/s 148 of the Act, the AO has not been able to controvert the decision of the Gujarat High Court in case of Manoharsinhji P. Jadeja (2005) 281 ITR 0019. The sum and substance of the submission is that when the capital gains are not taxable, the provisions of section 148 are not attracted. The AO has issued notice mechanically without application of mind simply on receipt of information from the investigation wing without causing any inquiry at his level. The AO was bereft of the position of law and this has resulted in issuance of notice u/s 148. The same deserves to be quashed. In support of its contention the AR relied upon a number of judicial pronouncements and the CBDT CIRCULAR NO. 014 (XL-35). (vi) I have duly considered the submissions of the appellant. assessment order and the material placed on record. It is noted that the appellant filed its return of income on 29.03.2014 declaring total income at Rs. 12,58,520/- whereas in 6 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR response to notice issued u/s 148 of the Act, it filed its return of income declaring total income at Rs 56,94,260/-. This fact itself prove that the income on account of sale of immovable property during the year under consideration had escaped assessment, a fact which has been admitted by the appellant itself by way of filing return of income in response to notice issued u/s 148 of the Act. The contention of the appellant that by mistake, it declared long term capital gains in the returns of income filed u/s 139 and 148 of the Act is devoid of any merit as it is noted that the returns of income were filed with the help of a professional and not by the appellant itself. Even otherwise, it a trite law that ignorance of law is no excuse. (vii) The contention of the appellant that it was not allowed to cross examine Shri Arun Kumar Ranka and not provided with the copy of report of IT and DI(I&CI) and the AO had mechanically issued notice u/s 148 of the Act without application of mind and these facts invalidate notice issued u/s 148 of the Act has no weight and deserves to be rejected. It is to be noted that before issue of notice u/s 148 of the Act, the AO got the spot enquiries conducted through the ITI, which clearly show that the AO applied its mind before initiating proceedings u/s 147 of the Act. Further, before issue of notice u/s 148 of the Act, there is no requirement of law to confront the appellant with the information relied upon by the AO for recording the satisfaction for initiating proceedings u/s 147 of the Act. The AO has duly recorded the reasons for initiating proceedings u/s 147 of the Act. issued and served valid notice u/s 148 of the Act, provided the reasons for initiating proceedings u/s 147 of the Act and disposed off the objections raised by the appellant by a separate speaking order dated 28.01.2016. do not find any infirmity at any stage of the assessment proceedings and it is found that the AO has duly complied with the law laid down by the Hon'ble Apex Court in the case of GKN Driveshaft. (viii) Further, the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. VS ITO [1999] 236 ITR 34 (SC). wherein it was held by their lordship that: "In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on 7 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR the basis of which the Department could reopen the case. The sufficiency of correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed." (ix) It may be mentioned that in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC), it was held by the Apex Court that if the AO, for whatever reason, has reason to believe that income has escaped assessment, it confers jurisdiction to re-open the assessment. It is a fact that no assessment was made earlier u/s 143(3)/144 of the Act in the case of the appellant, therefore, the ratio in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (Supra) applies squarely to the facts of the case. (x) It may be mentioned that in a very recent decision dated 05.08.2016, the Hon'ble High Court of Gujarat in the case of Peass Industrial Engineers (P.) Ltd. Vs DCIT [2016] 72 taxmann.com 302 (Gujarat) considered the similar issue and held as under: "Based upon the material/information received from the Competent Authority, Kolkata, the Assessing Officer has issued notice under section 148 for reopening of assessment, as from the material, the Assessing Officer found that there is a reasonable belief that income of the assessee has escaped assessment and therefore, it is justified to reopen the assessment. [Para 7]. It is also emerging from the order passed by the Assessing Officer rejecting the objections submitted by the assessee that each and every material submitted by the assessee has been extensively dealt with and a detailed order come to be passed and the said order is supported by cogent reasons. From the material available, the 8 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Assessing Officer prima facie found that the assessee is also the beneficiary of K. who is well known entry operator across the country and to the extent of sizable amount, the assessee has also been benefited and this part of the income appears to have been escaped assessment in the belief of the Assessing Officer, the said belief cannot be intercepted by exercising extraordinary jurisdiction under article 226 of the Constitution. [Para 8] In the background of aforesaid circumstance available and reflected on record, it appears that the Assessing Officer has applied his mind and has rightly relied upon the information available before him while exercising the power to reopen the assessment. At the initial stage what is required is reason to believe, but not established fact of escapement of income. Therefore, at this stage only question whether there was relevant material to form a reasonable belief is to be seen. In the background of facts, there is a specific information received about 'K' and it has been prima facie found that the assessee is also the beneficiary of the said 'K. At this stage of the proceeding. the factum of said aspect whether assessee is beneficiary or not is not to be finally adjudicated upon by the Assessing Officer. Therefore, the Court is not in a position to dwell into it, but only has to examine whether there is a reasonable belief arrived at or not. From the basis of aforesaid circumstance prevailing on record, it appears that the Assessing Officer is justified prima facie in arriving at conclusion to reopen the assessment. A liberty is always available to the assessee to justify or to deal with the same, but this is not the stage where the process of reopening based upon aforesaid material is to be intercepted. [Para 9]. In view of the aforesaid, the Assessing Officer was justified in issuing notice under section 148 and the reasons were sufficient enough to permit him to exercise jurisdiction to reopen the assessment. Even the order rejecting the objections also appears to the Court cogent enough as supported by valid reasons. [Para 11]. (xi) in the case of HVK International (P.) Ltd. Vs DCIT [2016] 72 taxmann.com 208 (Gujarat), the Hon'ble High Court of Gujarat upheld the reopening u/s 148 of the Act on the basis of the report of the investigation wing. The head notes are reproduced as under: 9 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR "Where even though Assessing Officer relied on report of investigation wing `that labour contractors were paid sizable amount of labour charges without such labour work having been done, he having applied his mind to materials on record and formed his own belief that income chargeable to tax had escaped assessment, notice for reopening assessment was justified" (xii) In the case of Bright Star Syntex (P.) Ltd. Vs ITO [2016] 71 taxmann.com 64 (Bombay), the Hon'ble High Court of Bombay upheld the reopening u/s 148 of the Act on the basis of the report of the investigation wing even in a case wherein earlier assessment was completed u/s 143(3) of the Act. The head notes are reproduced as under: "Where on basis of evidences collected and statement recorded during course of search of entry provider. Assessing Officer had reason to believe that unsecured loans received by assessee from certain persons escaped assessment, it could not be said that there was change of opinion (xiii) In view of the above discussion, it is held that the AO was justified in initiating proceedings u/s 147 of the Act, hence, these grounds of appeal are hereby rejected.’’ 3.2 Ground of appeal No. 3: Under the facts and circumstances of the case the AO has erred in computing the capital gain income for the property which was acquired at no cost and no capital gain tax is chargeable in the light of the Supreme Court decision in the case of Shriniwas Sethi 128 ITR 294. 3.2.2 Determination: (1) The brief facts of the case are that in its return of income for the year under consideration filed on 29.03.2014, the appellant has declared long term capital gain of Rs. 53.05,649/- on sale of property situated at Bardiya Colony, Near Albert Hall, Moti Doongari Road, Jaipur, received as a gift from Maharajadhiraj Sawai Jai Singh by Mahant Ramdasji in Samwat 1885 by declaring sale consideration at 10 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Rs. 27.29,00,000/- and by taking cost of acquisition as on 01.04.1981 at Rs. 1.98.26.738/- (indexed cost: Rs. 16,89,23,808/-) and further claiming indexed cost of improvement over a number of years at Rs. 9,12,70.543/-. In the return of income filed, in response to notice u/s 148 of the Act, the appellant has taken sale consideration at Rs. 27.66.87.072/- and the cost of acquisition as on 01.14.1981 and subsequent indexed cost of improvement at the same figures as claimed in the return of income filed on 25.03.2015 u/s 139 of the Act and has declared long term capital gain of Rs. 67.72,721/- on the sale of the said property. (ii) During the course of assessment proceedings, while objecting to reopening u/s 147 of the Act, for the first time, it was claimed that the earlier counsel has not taken correct cost of acquisition as on 01.14.1981 as the previous owner of the property has not incurred any cost in acquisition of the property under consideration and it should be treated as NIL and since there is no cost of acquisition, therefore, no capital gains could be charged on the sale of the property under consideration. In support of its contention, the AR relied heavily on the decisions of Hon'ble Gujarat High Court in the case of Manoharsinhji P. Jadera (Supra), the decision of Hon'ble Apex Court in the case of CIT VS B C Srinivas Shetty (Supra) and the decision of Hon'ble Madhya Pradesh High Court in the case of CIT vs. H.H. Maharaja Sahib Shri Lokendra Singh ji (Supra). It was also the contention of the AR that the AO should not take advantage of the ignorance of the appellant. The AR has also placed reliance upon a number of judicial pronouncements to support its contentions. (iii) I have duly considered the submissions of the appellant. assessment order and the material placed on record. It may be stated that if the earlier AR of the appellant was not aware of the correct legal position and has filed returns of income u/s 139 and 148 of the Act by taking the cost of acquisition as on 01.14.1981 at Rs. 1,98,26,738/- against Rs Nil claimed subsequently by the AR, the AR should have revised its return of income u/s 139(5) of the Act, which 11 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR was not done by the appellant for the reasons best known to it. It would be appropriate to reproduce here the provisions of section 139(5) of the Act as under: "If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end ofthe relevant assessment year or before the completion of the assessment, whichever is earlier.’’ (iv) It may be noted that a return of income can be revised only if there is some bonafide omission or wrong statement made in the return filed by the assessee. Since, there is only change of opinion of the counsel of the appellant, during the assessment proceedings. I fail to understand how the cost of acquisition as on 01.04.1981 taken by the earlier counsel could be treated as a wrong statement by the present AR. It is trite law that the ignorance of law is no excuse but it is also true that the only the correct income is to be taxed. The views taken by the earlier AR and the present AR may be the two possible views on the issue under consideration but that does not mean that the return of income filed u/s 139 and u/s 148 of the Act can be altogether ignored or superseded by the contention of the assessee. made during the assessment proceedings. (v) It may be mentioned that in the case of CIT v. Raja Malwinder Singh [2011] 334 ITR 48/206 Taxman 137/21 taxmann.com 75 (Punj. & Har.), the similar issue was before the FULL BENCH of Hon'ble Punjab and Haryana High Court wherein the Hon'ble full bench considered the judgements of Hon'ble Apex Court in the case of B C Srinivas Shetty (Supra) and Hon'ble Madhya Pradesh High Court in the case of CIT v. H.H. Maharaja Sahib Shri Lokendra Singhji, (Supra). It may further be mentioned that in the case of Thakur Dwara Shri Krishanji Maharaj Handlyaya Vs CIT [2014] 47 taxmann.com 86 (Punjab & Haryana), the Hon'ble Punjab & Haryana High Court followed full bench decision of the same court 12 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR in the case of CIT v. Raja Malwinder Singh (Supra) and also distinguished the decision of Hon'ble Gujarat High Court in Manoharsinhji P. Jadeja's case (supra) as it was based on the principles enunciated by the Hon'ble Madhya Pradesh High Court in the case of CIT v. H.H. Maharaja Sahib Shri Lokendra Singhji. [1986] 162 ITR 93/25 Taxman 66 (MP), which has already been distinguished in the full bench decision in the case of CIT v. Raja Malwinder Singh (Supra). (vi) It would be appropriate to reproduce here the relevant extracts of the decision of Hon'ble Punjab & Haryana High Court in the case of Thakur Dwara Shri Krishanji Maharaj Handiyaya Vs CIT (Supra) as under: "3. We have heard learned counsel for the appellant-assessee and perused the record. 4. Learned counsel for the assessee-appellant submitted that the cost of acquisition in the present case had to be taken as the cost to the previous owner under Section 49 of the Act. The explanation to Section 49 specifically provides that previous owner is one who has acquired the asset by a mode other than referred to in clauses 1, 2, 3 and 4 of this sub section. It was further argued that the previous owner under the Act is a person who has acquired the asset by payment of money i.e. the cost incurred for acquisition of the asset. In case the previous owner has not incurred any cost neither the provisions of Section 5512) (b) nor the provisions of Section 55 (3) of the Act would apply. Support was drawn from judgment of the Apex Court in CIT v. B.C. Srinivasa Setty [1981] 128 (TR 294/5 Taxman (SC) and judgment of Gujarat High Court in CIT v.Manohar Singh Ji P. Jadeja [2006] 281 ITR 19. 5. We are not impressed with the submissions of learned counsel for the appellant. The matter is go longer res integra. The Full Bench of this Court in Raja Malwinder Singh's case 13 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (supra) after considering the judgment of the Apex Court in B.C. Srinivasa Setty's case (supra) and the provisions of Sections 48, 49, 5512) and 55 (3) of the Act under similar circumstances observed as under:- ‘’5. It is painted out that judgment in CiT v. B.C. Srinivasa Setty. [19811.128 TR 294 (SC), is distinguishable. It was observed therein that in a newly started business the value of goodwill was not ascertainable, and on sale of goodwill capital gain was not attracted. It is submitted that in case of acquisition of land, the same is either acquired at some cost or without cost and under the scheme of the Act, there can be no situation when the cost is incapable of ascertainment. Section 55(2) provides for taking the cost either equal to the market value as on 1.1.1954 or at the option of the assessee equal to the cost of acquisition of the previous owner. Section 55/3) provides that where cost of acquisition of the previous owner cannot be ascertained, it has to be taken to be equal to the market value on the date the asset was acquired by the previous owner, Explanation to section 49 provides that previous owner is the person not covered by the clauses mentioned in section 49(2) i.e, who acquires property otherwise than by way of gift. will or by succession. 6. In the present case, the assessee acquired the property by succession from previous owner. According to the stand of the assessee, cost of acquisition by the previous owner could not be ascertained. However, he failed to exercise the option of going either by the date of market value on the date of acquisition or by the cost of the previous owner in which case only option available to the Assessing Officer was to proceed to compute capital gain by taking the cost of the asset to be fair market value on the specified date i.e. 1.1.1954 as per applicable provision for assessment year 1977-78 and as on 1.1.1964 for assessment year 1978-79. Even in a case where cost of acquisition cannot be ascertained, section 55(3) statutorily 14 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR prescribes the cost to be equal to the market value on the date of acquisition. This being the position, capital gain is not excluded even on the plea that value of the asset in respect of which capital gain is to be charged was incapable of being ascertained. The view taken in Amrik Singh's case [2008] 299 ITR 14 (P&H) based on the assumption that where market value cannot be ascertained, capital gain cannot be applied, is not correct being against the statutory scheme. Similarly, the view taken by the Madhya Pradesh High Court in CIT v. H.H. Maharaja Sahib Shri Lokendra Singhji [1986] 162 ITR 93 (MP) cannot be accepted. The said judgment also does not give effect to the mandate of section 55/3) which provides for a situation where value of the asset acquired could not be ascertained. If market value can be ascertained, it has to be taken to be equal thereto and if the value cannot be ascertained, it has to be equal to market value on a specified date at the option of the assessee. It is not the case of the assessee that land had no market value at all on the date of its acquisition. Contention that value was incapable of being ascertained, as already observed, the value in such case has to be taken as being equal to market value on a specified date." 6. Further, while concluding, it was held "Even where the cost of acquisition of capital asset cannot be ascertained but the asset has a market value, capital gain will be attracted by taking the cost of acquisition to be fair market value as on January 1, 1954, or on date statutorily specified or at the option by the assessee, the market value on the date of acquisition." 7. The Full Bench of this Court in Raja Malwinder Singh's case (supra) had dissented from judgment of the Madhya Pradesh High Court in CIT v. H.H. Maharaja Sahib Shri Lokendra Singhji. [1986] 162 ITR 93/25 Taxman 66 (MP) whereas, the Gujarat High Court in Manoharsinhji P. Jadeja's case (supra) 15 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR had applied the principles enunciated therein. We are unable to subscribe to the view expressed in Manoharsinh P Jadeja's case (supra). 8. As a result, no substantial question of law arises in this appeal and the same as hereby dismissed." (vii) As the facts of the instant case under consideration are fully covered by the Full Bench decision of Hon'ble Punjab and Haryana High court in the case of CIT v. Raja Malwinder Singh (Supra) and subsequent decision of the same court in the case of Thakur Dwara Shri Krishanji Maharaj Handiyaya Vs CIT (Supra), respectfully following the same, it is held that the AO was justified in charging tax on the capital gains on the sale of the property situated at Bardiya Colony, Near Albert Hall, Moti Doongari Road. Jaipur under consideration as in these cases, it has been held by the Hon'ble High Court that: "Even where the cost of acquisition of capital asset cannot be ascertained but the asset has a market value, capital gain will be attracted by taking the cost of acquisition to be fair market value as on January 1, 1954, or on date statutorily specified or at the option by the assessee, the market value on the date of acquisition." (viii) It may be mentioned that the remaining decisions relied upon by the AR are also of no help to the appellant as these are based either on the decision of Hon'ble Gujarat High Court in the case of Manoharsinhji P. Jadeja's case (supra) or on the case of Hon'ble MP High Court in the case of CIT v. H.H. Maharaja Sahib Shri Lokendra Singhji, which have been duly distinguished by the Hon'ble P & H High Court in the above judgements. Hence, this ground of appeal is hereby rejected. 3.3.2 Determination 16 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (1) The brief facts of the case are that the appellant in its return of income had disclosed the cost of acquisition of the property situated at Bardiya Colony. Near Albert Hall, Jaipur at Rs. 1,98,26,738/- as on 01.04.1981. During the assessment proceedings, the AO required the appellant to substantiate the cost of acquisition declared at Rs. 1,98,26,738/-, however, the appellant failed to substantiate the same as neither any sale instance nor the report of registered valuer was. furnished. Therefore, in order to determine the FMV of the property as on 01.04.1981, the AO referred the matter to the DVO, who valued the land as on 01.04.1981 at Rs. 22.22.500/- and no value was assigned to constructed area as no details were submitted thereof by the appellant on the pretext that all the construction was demolished during 2011-12. (1) During appellate proceedings, it was the contention of the appellant that before adopting the value determined by the DVO. the AO should have afforded opportunity for cross examining the DVO but this was not done. It was further submitted that it raised certain very valid objections to the valuation made by the DVO under letter dated 28.03.2016, which were simply brushed aside by the AO by stating that DVO is the technical person. The objections to the report of the DVO as raised before the AO are as under: - (f) The basis of sale instances selection by the DVO was not disclosed and these were not representative in the case. The selection of cases should have been of the same size and of the same area. (g) The sale instances selected by the DVO are in respect of small size of plots ranging from 111.48 square meter to $17.00 square meter. These are not at all comparable with the plot of the assessee of 12013.71 square meters. 17 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR [h] In the sale instances the price ranges from Rs. 68.79 per meter to 318.49 per meter which shows variance of 500% . So these instances are not comparable. (i) The DVO has adopted price of Rs. 185/- on average basis without any basis. (j) The sale instances selected by DVO is not of the locality of the land sold by the assessee. (iii) It was further submitted that the report of the DVO may be relevant but is never binding and it cannot be considered as a rule of thumb. The objections raised by the assessee are valid and the same having been not controverted. The cost of acquisition taken by the assessee at Rs. 1,98,26,738/- may kindly be accepted. The valuation report deserves to be ignored wherein the DVO has taken the cost of acquisition of Rs. 22,22,500/-. (iv) I have duly considered the submissions of the appellant, assessment order and the material placed on record. It is noted from the valuation report of the DVO that vide its letter dated 11.03.2016. The DVO intimated the proposed valuation of the property at Rs.22,22,500/- and invited the objections of the appellant for such valuation. In fact, the appellant raised objections against the proposed valuation by the DVO vide its letter dated nil which was received in the o/o the DVO on 17.03.2016, and which were duly considered by the DVO and which form part of the valuation report dated 22.03.2016 of the DVO. It would be appropriate to reproduce here the comments of the DVO on the objections of the appellant raised before the DVO as under: "The matter pertains to determination of fair market value of the property as on 01.04.1981. The assessee was requested to produce authenticated copy of Reliable, Contemporary sale instances around the date of 18 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR valuation for estimation of land and Valuation report of registered valuer as per CBDT instructions in the prescribed Performa. The assessee neither submitted sale instances nor Valuation report. The valuation proposes by this office is based on a no. of sale instances and to cater for different factors such as size, corner property, location and situation etc, suitable adjustment factors have been considered. Therefore assessee objections on these issues have already been taken care of. The sale instances considered for determining the FMV of the property have been obtained from state Government and are most reliable documents in the absence of any other relevant documents for determining the FMV of property. The valuation report referred by the assessee in his objections is not for contain any documentary evidence and therefore cannot be considered to be a relevant supporting document. Though the assessee in his letter has given reference of auctions but has not submitted an evide vidence in support of his submission. In the absence of any documentary evidence, his objections is not liable to be considered. The assessee has contested that old construction was there but due to absence of details ie. area, height, specification etc. cost of construction could not be estimated. This aspect was made clear in the notice dated 11.03.2016 has been indicated in para 5.2 of the report also. Thus, it is clear that the FMV estimated by this office has been proposed after careful consideration of 19 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR the relevant documents, facts & circumstances of the case." (v) It has already been stated earlier that the appellant has not brought on record any evidence to substantiate the cost declared at Rs. 1,98,26,738/-in its computation of income. It is noted from the valuation report of the DVO that the sale instance taken by the DVQ are very close in time to 01.04.1981 i.e. the date of valuation and very close to the locality wherein the property under consideration is situated. Further, the DVO has taken the average rates of the various sale instances, which in my opinion, has taken into account the size as well as location of the sale instances. It is further noted that suitable adjustment has already been provided by the DVO on account of location and situation, size, comer and time gap etc. in its valuation report. It was the contention of the appellant that the size of the property of the appellant was big and no comparable sale instance of such size was taken into account by the DVO. It may be mentioned that normally the rates of property decreases with the increase in size as there are few persons only who can buy large properties. Therefore, looking to the totality of facts and circumstances of the case, it is held that the DVO determined the valuation of the property by considering all the relevant factors. Further, since the appellant was not able to substantiate the value declared at Rs. 1,98,26,738/-in its return of income, it is held that the AO was justified in taking the value of the property as on 01.04.1981 at Rs. 22,22,500/- on the basis of the valuation report of the DVO. Additional Ground of appeal: 20 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR During the appellate proceedings, in its written submissions, the AR has taken the additional ground of appeal as under: UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER HAS ERRED IN APPLYING OF PROVISIONS OF SECTION 50C IN ADOPTING THE SALE OF RS. 27,66.87.0721- AS AGAINST APPARENT SALE CONSIDERATION OF RS. 27.29 CRORE. (vi) It was submitted that on account of lack of knowledge the then counsel of the assessee while filing the return of income u/s 148 has wrongly adopted the sale consideration at Rs. 27.66.87,072/- as against apparent consideration of Rs. 27.29.00.000/-. It was further submitted that the DLC rates are common for the area irrespective of the location, size and potentiality of the building. The AO was not justified in adopting the sale price at Rs. 27.66.87.072/- taken by the sub-registrar without bringing any material on record establishing that more consideration than Rs. 27.29.00.000/- was received by the assessee. No material on regard was brought by the AO which may establish more money exchanged hands than Rs. 27,29,00,000/ as shown in the sale deed. In view of these submissions, it was prayed that no advantage may be taken of the mistake of the assessee or the counsel in disclosing the sale consideration at Rs. 27.66.87.072./ The same may be taken at Rs. 27.29.00.000/-. The AR placed reliance upon a number of judicial pronouncements. (vii) I have duly considered the submissions of the appellant. assessment order and the material placed on record. It is noted that the appellant has filed an additional ground of appeal without making any request 21 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR for its admittance and stating why it was not taken in grounds of appeal filed with Form No. 35. However, in the interest of justice, the same is hereby admitted. It has already been stated in earlier ground of appeal that if the AR thought that the earlier AR has committed a mistake in filing return of income, then it could have revised its return of income u/s 139(5) of the Act, which was not done by the AR for the reasons best known to it. Further, it is trite law that ignorance of law is no excuse. The appellant filed its return of income u/s 148 of the Act with the help of a professional and thus, at the most, it can be the difference of opinion of the ARS and not the mistake as claimed by the appellant. It may be stated that as per the assessment order, nothing was stated before the AQ regarding invoking of provisions of section 50C of the Act and in fact. this was one of the ground for reopening the assessment u/s 147 of the Act. (viii) It was the contention of the appellant that AO has not brought on record any material which may establish that more money exchanged hangs than Rs. 27.29,00,000/- as shown in the sale deed and the AR placed reliance upon a number of judicial pronouncements. I have duly considered such judicial pronouncements and found them to be distinguishable on facts. It has already been stated earlier that the appellant itself has taken the sale consideration at Rs. 27.66.87.072/- in its return of income filed u/s 148 of the Act and the matter has not been even agitated before the AO, hence the facts of the instant case under consideration are distinguishable from the facts of the cases relied upon by the AR. It may be mentioned that the case of CIT VS. K.K. Enterprises (Supra) pertained to the AY 1997-98 when section 50C of the Act was not on the statute. The case of CIT Vs. Kishan Kumar & Ors. 22 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (Supra) was related to the block assessment wherein it was held that a look at section 1588B shows that the computation of the income is to be made on the basis of the evidence found as a result of search, or requisition of books of accounts, or other documents, and such other materials, or information, as are available with the Assessing Officer, and relatable to such evidence. Thus, the facts are entirely different from the facts of the instant case under consideration as in that case a search was conducted u/s 132 of the Act. (ix) Therefore, looking to the totality of facts and circumstances of the case, it is held that the AO was justified in taking the sale consideration at Rs. 27.66.87.072/- as shown by the appellant itself in its computation of income filed with its retum of income u/s 148 of the Act. Hence, this additional ground of appeali Thereby rejected.’’ 3.4.2 Determination: (i) The facts in brief are that in its computation of income, while computing capital gains, the appellant has claimed expenditure on account of construction on the aforesaid land situated at Bardiya Colony. Near Albert Hall, Moti Doongari Road, Jaipur to the tune of Rs. 1,56,87,343/- during the year 1982-83 to 2004-05, the indexed cost of which was claimed at Rs. 9.12.70.543/-. During the assessment proceedings, in support of the cost of construction, the appellant submitted copies of agreements regarding the work of additions/ renovations and alteration works carried out. It was also submitted before the AO that it could hardly trace out the copies as the work carried out was pretty old. It was the contention of the AR that the AO has disallowed the entire claim 23 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR of construction on the ground that the persons who carried out such construction were not produced and the AO has relied on the statement of Shri Arun Kumar Ranka to whom the property was sold. In the statement recorded on 02.03.2015, Shri Arun Kumar Ranka had stated that except boundary wall there was no construction. The AO has also referred to the report of the Income Tax Inspector. It was stated before the AO that the statement of Shri Arun Kumar Ranka, cannot be taken on record as evidence as the same was not recorded u/s 131. Further, it was also submitted that Shri Arun Kumar Ranka was not made available for cross-examination, hence the statement cannot be utilized. Further in the statement which has been quoted by the AO on page 5 of the assessment order, Shri Ranka stated that 2-3 rooms were there when he purchased the plot and there was no TRUE CO new construction texas submitted that it had never claimed that there was new construction. The statement of Shri Arun Kumar Ranka which has been relied by the AO is vague and unspecific and cannot be relied upon. Further, even Shri Arun Kumar Ranga has admitted construction of three rooms and boundary wall but the AO has not given benefit of any construction. It was further submitted that reliance on the report of the Inspector of Income Tax in the matter of old buildings is totally misplaced. The inspector of the department has no knowledge or training regarding the age of buildings. Thus the action and approach of the AO is arbitrary. It was submitted that the cost of construction of Rs. 1,56,87,343/-shown by the assessee of which indexation cost works out to Rs. 9,12,70,543/ deserves to be accepted. The untested and unexamined 24 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR statement of Shri Arun Kumar Ranka cannot be made basis for disallowing the claim of the assessee. In support of its contention, the AR relied upon a number of judicial pronouncements wherein it has been held that no addition can be made on the basis of a third party statement of which cross examination was not allowed. (i) I have duly considered the submissions of the appellant, assessment order and the material placed on record. It is noted from the assessment order that during the assessment proceedings except filing some illegible copies of the agreements for renovation/construction etc. the appellant has not filed any other documentary evidence which may substantiate its claim that it incurred substantial amount of money in the construction of the property. Further, the AO required the appellant to produce these persons with whom such agreements for renovation/construction were executed but of no avail. Further, the report of the IT and the statement of Shri Ranka recorded on oath u/s 131 of the Act, as is evident from the assessment order, are valid piece of evidence on which the AO has also relied. (iii) The contention of the appellant that no opportunity of cross examination of Shri Ranka was allowed to it by the AO and as such the statement of Shri Ranka cannot be used as an evidence has no weight and deserves to be rejected. It may be mentioned that a copy of the report of the ITI and the statement of Shri Ranka was provided to the appellant by the AO during the assessment proceedings itself and it appears that at no point of time, the appellant required the cross examination of 25 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Shri Ranka. Therefore, now it cannot take the plea that opportunity of cross examination of Shri Ranka was not provided to it. (iv) It is pertinent to mention here that as per provisions of section 48 of the Act, for computing capital gains, from the full value of consideration, as a result of the transfer of the capital asset, the following amounts are deducted: (i) expenditure incurred wholly and exclusively in connection with such transfer: (ii) The cost of acquisition of the asset and cost of any improvement thereof; (v) It is evident from the sale deed dated 05.12.2012 that the appellant sold 2013 sq. mtr. of land along with 3240 sq. ft. of constructed area which was more than 100 years old and in a dilapidated condition and there is no reference to the improvement made by the appellant or previous owners of the property from the FY 1982-83 till 2004-05 as claimed by the appellant in its return of income. It is to be noted that for claiming any cost of improvement in the capital asset by way of construction, such construction must be existing on the date of transfer of the capital asset and if it is not existing on such date, no deduction could be allowed on account of cost of improvement in the property. For example, if a person purchases a plot for a consideration of Rs. 1 Crore and spend Rs. 30 Lac on the construction of a building thereof and subsequently, demolished the said building and 26 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR sold only plot, no cost of improvement amounting to Rs. 30 Lac can be allowed while computing capital gain u/s 48 of the Act. (vi) In the instant case under consideration, the appellant has not been able to substantiate that it incurred huge expenditure of Rs.1,56,87,343/- over a period of time whose indexed cost of construction was claimed at Rs. 9,12,70,543/-in its return of income. Further, the sale deed dated 05.12.2012 also speaks about 3240 sq. ft. of more than 100 years old structure that too in a dilapidated condition. In fact, the DVO has also examined the issue while estimating the FMV of the property as on 01.04.1981 and did not include any amount on account of the construction made by the appellant or the previous owners as the appellant did not submit details regarding construction on site on the pretext that all the constructions were demolished in FY 2011-12. Therefore, when there is no construction except 3240 Sq. Ft., on the date of the transfer of the capital asset under consideration i.e. on 05.12.2012. no deduction could be allowed to the appellant on account of cost of improvement as claimed by it in its computation of income. It is. therefore, held that the AO was justified in not allowing cost of improvement claimed by the appellant for the period 1982-83 to 2004-05 at Rs. 1,56,87,343/-, the indexed cost of which was claimed at Rs. 9.12.70.543/- while computing capital gains for the property situated at Bardiya Colony, Near Albert Hall, Moti Doongari Road, Jaipur sold during the year 27 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR under consideration. Hence, this ground of appeal is hereby rejected.’’ 3.5.2 Determination: (i) The brief facts of the case are that in its computation of income while computing capital gains in respect of the property situated at Bardiya Colony, Near Albert Hall, Moti Doongari Road, Jaipur the appellant has claimed a sum of Rs. 97.20,000/- on account of transfer expenses in its return of income filed in response to notice issued u/s 148 of the Act whereas in its return of income filed earlier, it has claimed a sum of Rs. 74 Lac only on account of transfer expenses. During the assessment proceedings, out of the above amount of Rs. 97.20.000/-, a sum of Rs. 22.30,000/- claimed to be paid to Shri Ranjit Singh was not allowed by the AO as no conclusive evidence was filed by the appellant. The appellant has not produced Shri Ranjit Singh nor his identity was proved. The appellant has not filed a copy of income tax return of Shri Ranjit Singh and his bank statement. As the appellant failed to prove the genuineness of the amount of Rs. 22.30.000/- claimed to be paid to Shri Ranjit Singh. the AO has disallowed the same. As the appellant did not give any explanation regarding the remaining amount of Rs. 26 Lac also, the AO has also disallowed the same. Thus, in total, the AO has disallowed transfer expenses to the tune of Rs. 48,30,000/-. 28 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (ii) During the appellate proceedings, the AR has made submission only with respect to sum of Rs. 22.30,000/- as alleged to be paid to Shri Ranjit Singh and stated that the said sum consist of Rs. 6,82,250/ as brokerage and Rs. 15.47.750/- for removing his tea stall from the boundary of property under consideration. In support of its contentions, the appellant filed a undertaking cum compensation agreement dated 11.03.2015 and stated that the consideration was paid for removing the encumbrance of tea stall and the AO was not justified in disallowing the sum of Rs. 22.30,000/- only on the reason that Shri Ranjit Singh was not produced before the AO and ignoring the undertaking cum compensation agreement dated 11.03.2015. It was the contention of the appellant that the compensation paid by the assessee to Shri Ranjit Singh for vacating the land is amounted to cost of improvement and the AR placed upon a number of judicial pronouncements in support of its contention. (iii) I have duly considered the submissions of the appellant. assessment order and the material placed on record. It is noted from the sale deed dated 05.12.2012 that there is no mention of Shri Ranjit Singh and it was clearly stated that the said property is free from all encumbrances. It may also be mentioned that in the development agreement dated 09.06.2011 executed by the appellant with M/s Krishna Builders, again there is no mention of Shri Ranjit Singh. These facts clearly establish that 29 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR there was no adverse possession of Shri Ranjit Singh on the boundary wall of the property under consideration and thus there is no question of making alleged payment to Shri Ranjit Singh for vacating the land. The appellant has neither proved the identity of Shri Ranjit Singh nor proved the genuineness of the transaction. Regarding the brokerage amount, nothing has been brought on record which may establish that Shri Ranjit Singh has played some role in the sale of the property under consideration. It may be mentioned that the buyer of the property Shri Ajay Ranka in its statement recorded on oath was not aware of the broker of the appellant. It is pertinent to mention that a sum of Rs. 7 Lac and 5 Lac was stated to be received by Shri Ranjit Singh vide cheques dated 01.07.2013 and 02.12.2013 whereas the property under consideration was sold by sale deed dated 05.12.2012 Le. the payment were claimed to be made after sale of the property under consideration which in no way can be treated as expenditure incurred wholly and exclusively for the purposes of the transfer of the property under consideration. (iv) Therefore, in view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was justified in not allowing expenses of Rs. 48.30,000/- claimed by the appellant on account of transfer expenses of the property under consideration. 3.6.2 Determination: 30 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (1) During the year under consideration, the appellant has also sold an old Haveli situated at Namdev Colony, Sanganer, Jaipur for a consideration of Rs. 65 Lac and the five sale deeds were registered in name of five family members which were valued at Rs. 1.00.02.342/- by the Sub-Registrar for the purpose of charging stamp duty. It may be mentioned that in its return of income filed in response to notice u/s 148 of the Act on 25.03.2015, the appellant has shown sale consideration of the said property at Rs. 99,99,342/ and consequently, the AO made addition of Rs. 3.000/- (1.00.02,342 -99.99,342) thereof. It may be mentioned that in its return of income filed u/s 139 of the Act, the appellant has shown the sale consideration at Rs. 65 Lac only. (ii) The appellant, in its computation of income has taken the cost of acquisition of the property as on 01.08.1981 Rs. 13.15.686/- and the indexed cost of acquisition was claimed at Rs..12,09,645/-. The AO required the appellant to justify the cost of acquisition claimed in its computation of income and it was stated that the said property was having total area of 219281 sq. mtr. and was valued @ Rs. 600/ per sq mtr. which is very reasonable. The appellant has not filed any evidence to justify the value shown as on 01.04.1981. In fact, no documentary evidence was filed including the valuation report of any registered valuer in support of taking the cost of acquisition as on 01.04.1981 at Rs. 13.15,685/- 31 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (iii) It was noted by the AO that the DVO has valued the another property of the appellant situated at Bardiya Colony, Near Albert Hall, Moti Doongari Road, Jaipur which is in the heart of the city of Jaipur @ Rs. 185/- per sq. mtr, as on 01.04.1981 whereas the Haveli at Namdev Colony, at Sanganer, is located on the outskirts of the city of the Jaipur and consequently, the AO computed the cost of acquisition at Rs. 4,05,670/- by estimating the value of the property @ Rs. 185/- per sq. mtr. and computed the indexed cost of acquisition at Rs. 34,56,308/- against cost of acquisition and indexed cost of acquisition at Rs. 13.15.686/- and Rs. 1,12,09,645/- respectively taken by the appellant in its computation of income while computing capital gains on the sale of the said property. (iv) In its computation of capital gains for the sale of the said property, the appellant has also claimed cost of construction at Rs. 1,65,300/- in FY 1984-85. The AO required the AR to furnish the documentary evidence in support of its claim, however, no documentary evidence was furnished and it was submitted that the SOBY said expenditure was incurred in respect of boundary wall, toilets and construction of small rooms and some amount was also spent on alteration and renovation/repairs. It was noted by the AO that in the sale deed dated 25.03.2013, it was stated that the said building is approximately 150 years old and not usable. The AO came to the conclusion that the claim of the appellant that construction was made in the 32 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR year 1984-85 is not justified and hence the AO did not allow the cost of construction at Rs. 1,65,300/- claimed to be incurred in FY 1984-85. (v) During the appellate proceedings, it was submitted by the appellant that the AO was not justified in invoking provisions of section 50C of the Act in respect of the property sold on 25.03.2013. It was also submitted that the earlier counsel by mistake has shown the sale consideration at Rs. 99,99,342/- in the computation of income filed with the return of income in response to notice issued u/s 148 of the Act. In support of its contention, it reiterated similar contentions as raised by the appellant in its earlier ground of appeal and which were considered by me in the said ground of appeal while adjudicating the matter. As the issue being the same. it is held that the AO was justified in invoking the provisions of section 50C of the Act and thus taking the sale consideration at Rs. 1,00,02,342/- (vi) Regarding the cost of construction claimed at Rs. 1,65.300/ during FY 1984-85 nothing has been stated by the AR in its written submission and thus the AR did not controvert the findings of the AO as recorded in the assessment order on this issue. (vii) Regarding the cost of acquisition as on 01.04.1981 estimated by the AO, it was submitted by the appellant that there is no comparison between the property situated at Namdev Colony, Sanganer and the property situated at Bardiya Colony, Moti Doongari. 33 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Jaipur and thus the AO was not justified in allowing the cost of acquisition at Rs. 4,05,670/- as against Rs. 13.15.080/ declared by the appellant. (viii) I have duly considered the submissions of the appellant, assessment order and the material placed on record. I do not find any merit in the contention of the appellant that the AO was not justified in taking the cost of acquisition at Rs. 4,05,670/- as the AO has taken the value as on 01.04.1981 of the land situated af Sanganer @ Rs. 185/- per sq. mtr. whereas the DVO has valued the another property of the appellant which was situated in the heart of the city of the Jaipur at Bardiya Colony, Near Albert Hall, Moti Doongari Road, Jaipur. Further, the appellant has not brought on record any material which may even indicate that the land at Sanganer can be valued @ Rs 600/- per sq. mtr. as on 01.04.1981. It is very obvious that the land in the heart of the city must be having higher rates than the rates in Sanganer which in the outskirts of Jaipur. (ix) In view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was justified in taking the value of the property as on 01.04.1981 at Rs. 4,05,670/- and computing the capital gains on the sale of the property under consideration at Rs. 65,46,034/-.’’ 3.7 Ground of appeal No. 13: Under the facts and circumstances of the case the AO has erred assessing the long term capital gain income of 34 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Rs. 25,29,51,372/- for the property sold on 05.12.2012. 3.7.1 Submission made by the appellant as discussed in above paras 3.7.2 Determination: The AR has not stated anything specific in this ground of appeal and all the issues relating to computation of capital gains has already been adjudicated earlier in this order, hence this ground of appeal is hereby rejected. 4. In the result, the appeal is dismissed.’’ 5. During the course of hearing, the ld. AR of the assessee also filed following documents in support of the acquisition of property by the assessee and as to how the assessee became the owner of the property. 1. Copy of death Certificate of Mahant Kailash Das. 2. Copy of successor tree. 3. Copy of revenue records. Further, the ld. AR of the assessee filed an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1953 in the case of Shri Yogesh Das, Legal heir (Chela) mentioning therein that the AO had completed the assessment u/s 147/143(3) on 30-03-2016 and the ld. CIT(A) decided the case of the assessee on 31-10-2016. The ld. AR further submitted that the amount of sale consideration received through cheques mentioned in the sale deed dated 5-12-2012 were 35 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR dishonored and the buyer has refused to make the payment of remaining sale consideration and the assessee had served a legal notice to the buyer on 2-01-2017 and subsequently filed a civil suit against buyer on 25-03-2017 because the buyer is not willing to make the balance payment and he also sent an application to the banker for stopping the payment as he has disputed the title of the property too. Thus, a new event has occurred after the decision of ld. CIT(A). Further, the ld. AR submitted that the assessee wants to raise the additional ground in the light of new facts occurred after filing of appeal before the ITAT that no capital gain can be taxed in a sham transaction where full consideration has not been passed to the seller. The ld. AR of the assessee wants to file an additional ground being non- payment of sale consideration by the buyer. The assessee has filed additional paper book on 27-04-2018 containing 77 pages which includes copy of civil suit before District Court under the Negotiable Instrument Act, 1881 alongwith legal notice and replied made thereof, copy of dishonoured cheque and letter received from M/s. Ranka Buildcon to stop the payment to be made by post dated cheques. To this effect, the ld. AR of the assessee filed the following written submission ‘’Brief facts of the case are that the assessee is an individual (A Mahant) and derives income from house property and interest. Return was filed originally on 29.03.2014 declaring total income of Rs. 12,58,520/-. A copy of acknowledgement 36 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR of return and computation of income is available on paper book page number 1 to 5. Subsequently notice u/s 148 was issued in the case on 09.03.2015. In response to notice u/s 148 the assesse furnished return on 25.03.2015 declaring income at Rs. 56,94,260/-.A copy of acknowledgement of return and computation of income is available on paper book page number to 6 to 13.The Learned Assessing Officer completed assessment u/s 143(3) of the Income Tax Act, 1961 and determined income at Rs. 26,07,55,930/- inter-alia making addition on account of long term capital gain on sale of property. Aggrieved by the order of the Learned Assessing Officer, the assessee preferred appeal before the Learned CIT(A) who dismissed the same summarily without considering the submission made by the assessee in proper perspective. Aggrieved by the order of the Learned Learned CIT(A) the assessee is in appeal before your honour. With this background the individual grounds of appeal are discussed as under: - Ground No. 1 - Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in passing the order u/s 143(3)/147 of the Income Tax Act, 1961. In this case the Learned Assessing Officer had resorted to action u/s 148 of the Income Tax Act, 1961 after recording reasons which are reproduced below: - 37 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR 38 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR BLANK 39 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR 40 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR A copy of the reasons recorded is also available on paper book page number14 to 15. During the course of assessment proceedings the assesse objected to the issuance of notice u/s 148 on the following grounds: - a. Capital gain in the case of the assesse was not taxable. b. The assessee’s counsel had wrongly disclosed capital gains in the return filed originally on 29.03.2014 and also in the return filed in response to notice u/s 148 of the Income Tax Act, 1961 due to being ignorant of the latest position. This was in respect of sale of plot of land near Albert Hall Jaipur. The basis of issuance notice u/s 148 was invalidand incorrect. The details and facts regarding the above points were submitted before the Learned Assessing Officer vide letter dated 06.01.2015 (Copy of letter dated 06.01.2015 is available on paper book page no.16 to 23)andalso before the Learned CIT(A) which are reproduced below: - “1. Capital gains are not taxable – It is submitted that in the case of the assessee the property in question which has been sold vide registered sale deed dated 06.12.2012 to ShriArun Kumar Ranka devolved upon the assessee on the death of MahantMadho Das of whom the assessee was a Chela. The property in question was last received by MahantShriGovind Das Chela of Swami Shyoram Das Dadupanthi from MaharajadhirajSawai Jai Singh in samwat year 1885 for charitable purposes. This is so mentioned and narrated in para 3 of sale deed. A copy of the PattaVilekh issued on behalf of MaharajadhirajSawai Jai Singh available on paper book page no.24 to 27. Thus the land was got for no consideration and it has devolved upon the assessee accordingly. In view of this in the absence of ascertained cost of acquisition the charge under the head capital gains cannot be fastened to the full value of consideration. It has been held in the case of CIT vs. Mandharsinghji P. Jadeja (2005) 281 ITR 0019 by the Gujarat High Court that “where the asset has been acquired inheritance and no cost of acquisition was there in the 41 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR case of previous owner, the assessee being acquired by conquest no capital gain were chargeable”. While delivering the decision of Hon’ble High Court has followed the ratio of decision of the Apex Court in the case of SrinivasaSetty 128 ITR 294. A copy of decision of the Gujarat High Court in the case of Mandharsinghji P. Jadeja is available on paper book page no 27 to 39. There are various other decisions to the above effect wherein it has been held that in the case of transfer of land when the same was acquired for no cost, capital gains were not attracted. The same are quoted below: - i. H.H. Late Sir J.M. Scindiavs ACIT (2008) 305 ITR (AT) 231 (Mum) ii. CIT Vs. H.H. Lokendra Singh (1997_ 227 ITR 638 (MP) iii. CIT Vs. Raja RajgopalaThandaiman (2006) 282 ITR 126 (Mad) iv. ManoharLalPyareLal (2012) 80 DTR 186 (Pune) 2. Capital gain wrongly shown in the return filed: - It is further submitted that the assessee was not aware of the correct legal position as such while filing the return of income it has wrongly disclosed capital gains on transfer of the immovable property. It is settled position of law that that ignorance of law of the assessee cannot be taken as an advantage by the Learned Assessing Officer. The assessment has to be completed on the basis of correct position of law. In the case of the assessee the correct position of law is that capital gains are not attracted when the acquisition cost of immovable property was Nil. This being so the assessee humbly requests that the Learned Assessing Officer may not be guided by the fact of disclosure of capital gain in the return of income filed by the assessee. In this regard it is submitted that there are plethora of decisions holding that tax has to charged as per provisions of the Act and assessee has a right to claim all deduction as per law at any stage even 42 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR though no such claim was made in the return of income. The following decisions are quoted in support: - (i) COMMISSIONER OF INCOME TAX vs. RAJASTHAN FASTENERS (P) LTD. (2014) 363 ITR 271 (Raj) (ii) CIV Vs. Ramco International (2009) 221 CTR 491) (P&H) (iii) CIT Vs. Prithvi Brokers and Share Holders Pvt. Ltd. (2012) 252 CTR 151 (Bom) (iv) CIT vs. MithexImpex& Others (2014) 104 DTR 169 (Guj) 3. CBDT CIRCULAR NO. 014 (XL-35) :- The assessee also brings to the notice of the Learned Assessing Officer circular no. 014 (XL-35) issued by the Board as back as 11 th April 1955 wherein the Board has impressed upon the Officers of the Department that no advantage should be taken on assessee’s ignorance to collect more than out of him than is legitimately due from him. It has been specifically mentioned in the circular that the mandatory relief about exemption from tax must be granted whether claimed or not. A copy of the circular is available on paper book page no 40 to 41. Thus the circular makes it clear that if the assessee has not claimed any deduction or exemption which otherwise is allowable, the same should be allowed by the Learned Assessing Officer. Mere filing of an incorrect return cannot come in the way of allowing lawful deduction and exemptions. It is submitted that in the 43 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR case of the assessee capital gains are not attracted and as such the mistake in disclosing the same in the return of income should be disregarded. The relevantpara from the circular is quoted below: “Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should:— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 4. Public Relations Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. The following examples (which are by no means exhaustive) indicate the attitude which officers should adopt :— (a) Sec. 17(1) : While dealing with the assessment of a non-resident assessee the officer should bring to his notice that he may exercise the 44 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR option to pay tax on his Indian income with reference to his total world income if it is to his advantage. (b) Sec. 18(3), (3A), (3B) and (3D) : The officer should in every appropriate case bring to the assessee's notice the possibility of obtaining a certificate authorising deduction of income-tax at a rate less than the maximum or deduction of super tax at a rate lower than the flat rate, as the case may be. (c) Secs. 25(3) and 25(4) : The mandatory relief about exemption from tax must be granted whether claimed or not; the other relief about substitution, if not time barred, must be brought to the notice of a taxpayer. (d) Sec. 26A : The benefit to be obtained by registration should be explained in appropriate cases. Where an application for registration presented by a firm is found defective, the officer should point out the defect to it and give it an opportunity to present a proper application. (e) Sec. 33A : Cases in which the ITO or the Asstt. Commissioner thinks that an assessment should be revised, must be brought to the notice of the CIT. (f) Sec. 35 : Mistakes should be rectified as soon as they are discovered without waiting for an assessee to point them out. (g) Sec. 60(2) : Cases where relief can properly be given under this sub- section should be reported to the Board.” 5. Notice u/s 148 wrongly issued: - In the case of the assessee notice u/s 148 has been issued on 09.03.2015. Copy of reasons supplied disclose the following facts:- (a) That information was received from DIT(I&C) on the basis of which notice u/s 148 has been issued. (b) Reference has been made to the statement of ShriArun Kumar Ranka recorded on 02.03.2015. This has also been made the basis for issuing 45 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR notice u/s 148.Copy of statement of ShriArun Kumar Ranka is available on paper book page number 42 to 45. (c) Reference has also been made to the report dated 03.03.2015 of the inspector of the department which has also been made a basis for issuing notice u/s 148. As the assessee intends to challenge the issue of notice u/s 148, you are kindly requested to furnish the copies of the above three namely; (a) That information was received from DIT(I&C) on the basis of which notice u/s 148 has been issued. (b) Reference has been made to the statement of ShriArun Kumar Ranka recorded on 02.03.2015. This has also been made the basis for issuing notice u/s 148. (c) Reference has also been made to the report dated 03.03.2015 of the inspector of the department which has also been made a basis for issuing notice u/s 148. It is relevant to mention that it is settled position of law that 148 is not warranted with reference to section 50C that being only a technical section and a deeming provision. The following decisions of the Jaipur Bench and Jodhpur Bench of Hon'ble ITAT in this regard are relevant and quoted below: - i. Arun Kumar Choudhary ITA No. 268/JP/2015 dated 08.09.2016 Merely because the stamp valuation authority has adopted a certain valuation of payment of stamp duty on the property purchased by the assessee, the same cannot be the basis to conclude that assessee's income escaped. Assessment reopened on this basis is annulled. ii.Income Tax Officer vs. Shakti Buildhome Pvt Ltd. (2011) 61 DTR 37 (Jodhpur Trib) 46 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR No action u/s 148 should have been taken simply on the basis of the statement of ShriArun Kumar Ranka without affording an opportunity to the assessee for cross examining him and without furnishing a copy of his statement. The assessee further submits that the departmental inspector is not a technical expert for reporting regarding the immovable property. Further assessee was not provided a copy of the same before taking action u/s 148. Thus the notice issued u/s 148 is vitiated. CONCLUSION: - In the aforesaid letter the Learned Assessing Officer was requested that in the case of the assesse the property sold in question had devolved upon him on the death of earlier MahantMadho Das and the cost of acquisition was Nil. It was submitted that the properties in question was last received from MaharajadhirajSawai Jai Singh for no cost and the relevant papers were submitted for his kind perusal. It was also submitted before the Learned Assessing Officer that the assesse had wrongly disclosed the capital gain in the return of income filed originally on account of the fact that the counsel of the asessee was not aware of the legal position in the matter. However several case laws were brought to the notice of the Learned Assessing Officer holding that no advantage can be taken of a mistake of the assessee. Lastly it was also submitted that copy of statement of ShriArun Kumar Ranka and also copy of report of the inspector be furnished which formed part of the reasons recorded. But this was not done. It is settled principle of law that statement and reports which have not stood test of cross examination cannot be used as evidence. In view of this the proceedings u/s 148 stand vitiated. The Learned Assessing Officer disposed the objection of the assesssee by passing order on 28.01.2016 without providing the assessee copy of statement of ShriRanka and also report of the inspector. Thus the assesse was precluded in submitting his defense. In the order passed on 28.01.2016 disposing the objections of the assessee against issuance of notice u/s 148 the Learned Assessing Officer has not been able to controvert the decision of the Gujarat High Court in case of Mandharsinghji P. Jadera (2005) 281 ITR 0019. The Learned Assessing Officer has failed to appreciate the decision of the Gujarat High Court in 47 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR correct perspective. The sum and substance of the submission is that when the capital gains are not taxable the provisions of section 148 are not attracted. Therefore issuance of notice u/s 148 deserves to be knocked down. The learned A.O. issued notice us148mechanically without application of mind simply on receipt of information from the investigation wing without causing any inquiry at his level. The learned A.O. was bereft of the position of law and this has resulted in issuance of notice u/s 148. The same deserves to be quashed. Copy of PattaVilekh issued on behalf of MazharajdhirajSawai Jai Singh is available on paper book page number cited supra. Copy of decision of Gujarat High Court in the case of Mandharsinghji P. Jadera (2005) 281 ITR 0019 is available on paper book page number cited supra. It is further submitted that during the course of appellate proceedings the Learned CIT(A) has also failed to appreciate the submission of the assessee in proper perspective. The Learned CIT(A) has dealt more on the mistake committed by the former counsel of the assessee in disclosing capital gains erroneously while filing return of income originally as well as return u/s 148. The Learned CIT(A) has ignored the submissions of the assessee duly backed by various decisions and also by the circular of the board that no advantage should be taken of the ignorance/mistake of the assessee. The tax has to be charged in accordance with law. Thus the Learned CIT(A) erred in confirming the action of the Learned Assessing Officer in issuing notice u/s 148. Ground No. 2 - Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in computing the capital gain income for the property which was acquired at no cost and no capital gain tax is chargeable in the light of the Supreme Court decision in the case of Shriniwas Sethi 128 ITR 294. (A) CRUX OF THE MATTER: - THIS IS THE MAIN GROUND IN THE CASE INVOLVING THE SALE OF PLOT OF LAND BY THE ASSESSEE SITUATED NEAR ALBERT HALL JAIPUR AND TAXABILITY OF CAPITAL GAINS. THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE ASSESSEE THE LAND SOLD WAS ORIGINALLY (IN THE HANDS OF THE PREVIOUS OWNER MAHANT SHRI GOVIND DAS CHELA OF SWAMI 48 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR SHYORAM DAS DADUPANTHI)RECEIVED BY WAY OF ALLOTMENT FROM MAHARAJADHIRAJSAWAI JAI SINGH IN SAMWAT YEAR 1885. THE LAND WAS THUS GOT FOR NO CONSIDERATION AND IT HAS DEVOLVED UPON THE PRESENT OWNER ACCORDINGLY BEING CHELA IN THE LINE OF GURU-CHELA TRADITION. IT WAS WITH REGARD TO THESE FACTS THE ASSESSEE SUBMITTED THAT THERE BEING NO COST OF ACQUISITION, CAPITAL GAINS WERE NOT LEVIABLE. DECISIONS OF THE FOLLOWING COURTS WERE BROUGHT TO THE NOTICE OF THE LEARNED ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A): - i. COMMISSIONER OF INCOME TAX VS. B.C. SRINIVASA SETTY128 ITR 294 (SC) ii. CIT VS. H.H. LOKENDRA SINGH (1997) 227 ITR 638 (MP) iii. CIT VS. RAJA RAJGOPALA THANDAIMAN (2006) 282 ITR 126 (MAD) iv. CIT VS. MANOHAR SINGHJI P JADEJA[2006] 281 ITR 19 (GUJ.) v. CIT VS. PUSHPRAJ SINGH (1998) 232 ITR 0754 (MP) vi. CIT VS. MARKAPAKULA AGAMMA (1987) 165 ITR 386 (AP) BESIDES THE ABOVE DECISIONS OF THE VARIOUS HIGH COURTSIT WAS ALSO BROUGHT TO THE NOTICE THAT THESE DECISIONS WERE FURTHER FOLLOWED BY THE VARIOUS BENCHES OF THE ITAT IN THE DECISIONS NOTED BELOW: - i. H.H. LATE SIR J.M. SCINDIAVS ACIT (2008) 305 ITR (AT) 231 (MUM) ii. MANOHAR LAL PYARE LAL (2012) 80 DTR 186 (PUNE) THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE LEARNED ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A). COPIES OF THESE ARE AVAILABLE ON PAPER BOOK. THE HIGHLIGHTS OF THE SUBMISSION ARE SUMMARIZED AS UNDER: - (I) IN THE CASE OF MANDHARSINGHJI P. JADERA (2005) 281 ITR 0019 (GUJ) THE HON'BLE HIGH COURT HAS DISCUSSED AT LENGTH THE AMENDMENTS OF SECTION 55(2) OF THE INCOME TAX ACT, 1961 FROM TIME TO TIME I.E. FROM 1988 TO 2003. THE HIGH 49 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR COURT HAS SPECIFICALLY HELD THAT THE LEGISLATURE HAS NOT BROUGHT INTO TAX NET FOR CHARGING CAPITAL GAINSIN RESPECT OFTHE ASSETS WHICH DO NOT HAVE COST OF ACQUISITION. THEREFORE, EVEN IF THE AMENDMENT IS TAKEN INTO CONSIDERATION S. 55 CAN BE INVOKED IN CASES OF NIL COST OF ACQUISITION FOR THE PURPOSE OF BRINGING TO TAX ENTIRE SALE CONSIDERATION ONLY IN RELATION TO THE SPECIFIED ASSETS. THE LEGISLATURE HAVING AMENDED THE SAID SECTION FROM TIME-TO-TIME HAS ROPED IN ONLY SPECIFIED ASSETS AS NOTED HEREINBEFORE. IN THE CIRCUMSTANCES, THE AMENDMENT INSTEAD OF WORKING TO THE ADVANTAGE OF THE REVENUE GOES TO INDICATE THAT THE LEGISLATURE DOES NOT WANT TO BRING WITHIN THE PURVIEW OF TAX NET ALL THE ASSETS (EXCEPT THE SPECIFIED ASSETS) WHICH DO NOT HAVE COST OF ACQUISITION AND THE ENTIRE SALE CONSIDERATION CANNOT BE TREATED AS PROFITS AND GAINS CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS’ BY ADOPTING THE COST OF ACQUISITION AS NIL.IN VIEW OF THE SPECIFIC DISCUSSION ON THE PROVISIONS OF SECTION 55 BY THE COURT IT IS ABUNDANTLY CLEARLY THAT CAPITAL GAINS ARE NOT ATTRACTED IN THE CASE OF THE ASSESSEE. BY VARIOUS AMENDMENTS WHICH HAVE TAKEN PLACE BY FINANCE ACT, 1987 TO FINANCE ACT, 2002 THE IMMOVABLE PROPERTY HAS NOT BEEN ROPED IN FOR PURPOSES OF COST OF ACQUISITION TO BE TAKEN AT NIL. (II) THE GUJARAT HIGH COURT HAS FURTHER EXAMINED THAT IN CASES WHERE THE COST OF ASSETS IS NIL THE ENTIRE SALE CONSIDERATION CANNOT BE TAXED. THE CONTENTION THAT WHEN THE COST OF ASSET IS NIL THE ENTIRE SALE CONSIDERATION IS REQUIRED TO BE TAXED AS PROFITS AND GAINS UNDER THE HEAD ‘CAPITAL GAINS’ IS ALSO SOUGHT TO BE SUPPORTED BY THE AMENDMENT IN S. 55 OF THE ACT. ACCORDING TO THE LEARNED COUNSEL FOR THE REVENUE THE PRINCIPLE—THAT A CAPITAL ASSET WHICH DOES NOT HAVE COST OF ACQUISITION DOES NOT FALL WITHIN THE CHARGING SECTION—IS NOW SUPERSEDED BY AMENDED PROVISION OF S. 55 OF THE ACT. HOWEVER, IT REQUIRES TO BE NOTED THAT BY THE FINANCE ACT, 1987 W.E.F. 1ST APRIL, 1988 THE AMENDMENT TO S. 55 OF THE ACT ONLY ROPES IN TAXABILITY OF GOODWILL ON TRANSFER OF THE SAME EVEN IF THERE IS NO COST OF ACQUISITION. SIMILARLY, S. 55 HAS BEEN AMENDED FROM TIME- TO-TIME TO ENABLE THE TAXATION OF OTHER ASSETS WHEREIN NO COST OF ACQUISITION IS ENVISAGED : TENANCY RIGHTS, STAGE CARRIAGE PERMITS AND, LOOMS HOURS BY THE FINANCE ACT, 1994 W.E.F. 1ST APRIL, 1995; RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THING BY THE FINANCE ACT, 1997 W.E.F. 1ST APRIL, 1988; TRADEMARK OR BRAND NAME ASSOCIATED WITH BUSINESS BY THE FINANCE ACT, 2001 W.E.F. 1ST APRIL, 2002; AND RIGHT TO CARRY ON ANY BUSINESS BY THE FINANCE ACT, 2002 W.E.F. 1ST APRIL, 2003. 50 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR THEREFORE, EVEN IF THE AMENDMENT IS TAKEN INTO CONSIDERATION S. 55 CAN BE INVOKED IN CASES OF NIL COST OF ACQUISITION FOR THE PURPOSE OF BRINGING TO TAX ENTIRE SALE CONSIDERATION ONLY IN RELATION TO THE SPECIFIED ASSETS. THE LEGISLATURE HAVING AMENDED THE SAID SECTION FROM TIME-TO-TIME HAS ROPED IN ONLY SPECIFIED ASSETS AS NOTED HEREINBEFORE. IN THE CIRCUMSTANCES, THE AMENDMENT INSTEAD OF WORKING TO THE ADVANTAGE OF THE REVENUE GOES TO INDICATE THAT THE LEGISLATURE DOES NOT WANT TO BRING WITHIN THE PURVIEW OF TAX NET ALL THE ASSETS (EXCEPT THE SPECIFIED ASSETS) WHICH DO NOT HAVE COST OF ACQUISITION AND THE ENTIRE SALE CONSIDERATION CANNOT BE TREATED AS PROFITS AND GAINS CHARGEABLE UNDER THE HEAD ‘CAPITAL GAINS’ BY ADOPTING THE COST OF ACQUISITION AS NIL. (III) IT IS FURTHER SUBMITTED THAT IN THE CASE OF MANOHAR LAL PYARE LAL (2012) 80 DTR 186 (PUNE) THE ITAT PUNE BENCH HAS FURTHER HELD THAT IN CASES WHERE IMMOVABLE PROPERTIES IS ALLOTTED FREE OF COST NO QUESTION OF CAPITAL GAIN ARISES ON SALE OF SUCH PROPERTY. IN THE CASE OF THE ASSESSEE THE LAND WAS ALLOTTED IN THE HANDS OF THE PREVIOUS OWNER MAHANT SHRI GOVIND DAS CHELA OF SWAMI SHYORAM DAS DADUPANTHI WAS RECEIVED BY WAY OF ALLOTMENT FROM MAHARAJADHIRAJSAWAI JAI SINGH IN SAMWAT YEAR 1885. THE BENCH HAS HELD AS UNDER: - "IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE HOLD THAT THE LAND IN QUESTION WAS NOT HAVING COST BECAUSE THE SAME WAS ALLOTTED TO FATHER OF THE ASSESSEE BEING REFUGEE FROM PAKISTAN BY GOVERNMENT OF INDIA AT RELEVANT POINT OF TIME WHICH IS NOT IN DISPUTE. SO THE LAND IN QUESTION WAS ACQUIRED BY FATHER OF THE ASSESSEE FREE OF COST. THEREFORE, THERE IS NO QUESTION OF CAPITAL GAIN ON TRANSFER OF SUCH LAND. MORE SO BECAUSE IT DOES NOT FALL IN SPECIFIED ITEMS UNDER SECTION 49(1)(I TO IV) OF THE ACT. ACCORDINGLY, THE SAME IS NOT LIABLE FOR CAPITAL GAIN. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY" DESPITE THE POSITION OF LAW BEING SUCH THE LEARNED CIT(A) DISREGARDED ALL THE AFORESAID DECISIONS AND REJECTED THE CLAIM OF THE ASSESSEE IN VIEW OF THE DECISIONS OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJA MALWINDER SINGH (2011) 334 ITR 48 WHEREIN THE COURT HAS HELD AS UNDER: - 51 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR "WE, THUS, HOLD THAT EVEN WHERE COST OF ACQUISITION OF CAPITAL ASSET CANNOT BE ASCERTAINED BUT THE ASSET HAS MARKET VALUE, CAPITAL GAIN WILL BE ATTRACTED BY TAKING THE COST OF ACQUISITION TO BE FAIR MARKET VALUE AS ON 1ST JAN., 1954 OR ON DATE STATUTORILY SPECIFIED OR AT THE OPTION BY ASSESSEE, MARKET VALUE ON THE DATE OF ACQUISITION" (IV) SECTION 49(1) IS NOT APPLICABLE: - IT IS FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS SUCH WHERE THE ISSUE INVOLVED IS NOT ASCERTAINMENT OF COST OF ACQUISITION BUT IT IS A CASE WHERE LAND WAS ALLOTTED FREE OF COST. NO ASCERTAINMENT IS INVOLVED. PROVISIONS OF SECTION 49(1) ARE NOT APPLICABLE AS "ALLOTMENT" OF LAND IS NOT COVERED IN THESE PROVISIONS. THE SAME ARE QUOTED BELOW: - "COST WITH REFERENCE TO CERTAIN MODES OF ACQUISITION. 49. (1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE— (I) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR PARTIAL PARTITION OF A HINDU UNDIVIDED FAMILY; (II) UNDER A GIFT OR WILL; (III) (A) BY SUCCESSION, INHERITANCE OR DEVOLUTION, OR (B) ON ANY DISTRIBUTION OF ASSETS ON THE DISSOLUTION OF A FIRM, BODY OF INDIVIDUALS, OR OTHER ASSOCIATION OF PERSONS, WHERE SUCH DISSOLUTION HAD TAKEN PLACE AT ANY TIME BEFORE THE 1ST DAY OF APRIL, 1987, OR (C) ON ANY DISTRIBUTION OF ASSETS ON THE LIQUIDATION OF A COMPANY, OR (D) UNDER A TRANSFER TO A REVOCABLE OR AN IRREVOCABLE TRUST, OR (E) UNDER ANY SUCH TRANSFER AS IS REFERRED TO IN CLAUSE (IV) OR CLAUSE (V) OR CLAUSE (VI) OR CLAUSE (VIA) 33 [OR CLAUSE (VIAA) OR CLAUSE (VIAB) OR CLAUSE (VIB) OR CLAUSE (VICA) OR CLAUSE (VICB) OR CLAUSE (VICC)] OR CLAUSE (XIII) OR CLAUSE (XIIIB) OR CLAUSE (XIV) OF SECTION 47; (IV) SUCH ASSESSEE BEING A HINDU UNDIVIDED FAMILY, BY THE MODE REFERRED TO IN SUB-SECTION (2) OF SECTION 64 AT ANY TIME AFTER THE 31ST DAY OF DECEMBER, 1969, THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASSETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. 52 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR EXPLANATION.—IN THIS SUB-SECTION THE EXPRESSION "PREVIOUS OWNER OF THE PROPERTY" IN RELATION TO ANY CAPITAL ASSET OWNED BY AN ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) OR CLAUSE (IV) OF THIS SUB-SECTION." THE ABOVE PROVISIONS VERY CLEARLY SHOW THAT ACQUISITION OF IMMOVABLE PROPERTY IN THE HANDS OF THE PREVIOUS OWNER BY WAY OF ALLOTMENT IS NOT COVERED. THE SAME IS FURTHER SUPPORTED BY THE DECISION OF THE ITAT PUNE BENCH IN THE CASE OF MANOHAR LAL PYARE LAL (2012) 80 DTR 186 (PUNE) WHEREIN THE BENCH HELD AS UNDER: - "IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE HOLD THAT THE LAND IN QUESTION WAS NOT HAVING COST BECAUSE THE SAME WAS ALLOTTED TO FATHER OF THE ASSESSEE BEING REFUGEE FROM PAKISTAN BY GOVERNMENT OF INDIA AT RELEVANT POINT OF TIME WHICH IS NOT IN DISPUTE. SO THE LAND IN QUESTION WAS ACQUIRED BY FATHER OF THE ASSESSEE FREE OF COST. THEREFORE, THERE IS NO QUESTION OF CAPITAL GAIN ON TRANSFER OF SUCH LAND. MORE SO BECAUSE IT DOES NOT FALL IN SPECIFIED ITEMS UNDER SECTION 49(1)(I TO IV) OF THE ACT. ACCORDINGLY, THE SAME IS NOT LIABLE FOR CAPITAL GAIN. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY" (V) PROVISIONS OF SECTION 55(2) ARE ALSO NOT APPLICABLE: – PROVISIONS OF SECTION 55(2) ALSO LEAVE OUT THE IMMOVABLE PROPERTY FROM CHARGEABILITY OF CAPITAL GAINS WHERE THE COST OF ACQUISITION IS NIL. THE SECTION MENTIONS CERTAIN SPECIFIED ASSETS ONLY WHERE CAPITAL GAINS IS CHARGEABLE EVEN IF THE COST IS NIL. SUCH SPECIFIED ASSETS DO NOT INCLUDE IMMOVABLE PROPERTY. THUS THE INTENTION OF THE LEGISLATURE IS CLEAR NOT TO CHARGE CAPITAL GAINS IN CASES OF SALE OF IMMOVABLE PROPERTY WHEREIN THE COST OF ACQUISITION IS NIL.THIS HAS BEEN SO HELD BY THE GUJARAT HIGH COURT IN THE CASE OF MANDHARSINGHJI P. JADERA (2005) 281 ITR 0019 (GUJ). THE RELEVANT PORTION OF THE DECISION IS QUOTED BELOW: - "SSECTION 55 HAS BEEN AMENDED FROM TIME-TO-TIME TO ENABLE THE TAXATION OF OTHER ASSETS WHEREIN NO COST OF ACQUISITION IS ENVISAGED : TENANCY RIGHTS, STAGE CARRIAGE PERMITS AND, LOOMS HOURS BY THE FINANCE ACT, 1994 W.E.F. 1ST APRIL, 1995; RIGHT TO MANUFACTURE, PRODUCE OR 53 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR PROCESS ANY ARTICLE OR THING BY THE FINANCE ACT, 1997 W.E.F. 1ST APRIL, 1988; TRADEMARK OR BRAND NAME ASSOCIATED WITH BUSINESS BY THE FINANCE ACT, 2001 W.E.F. 1ST APRIL, 2002; AND RIGHT TO CARRY ON ANY BUSINESS BY THE FINANCE ACT, 2002 W.E.F. 1ST APRIL, 2003. THEREFORE, EVEN IF THE AMENDMENT IS TAKEN INTO CONSIDERATION S. 55 CAN BE INVOKED IN CASES OF NIL COST OF ACQUISITION FOR THE PURPOSE OF BRINGING TO TAX ENTIRE SALE CONSIDERATION ONLY IN RELATION TO THE SPECIFIED ASSETS. THE LEGISLATURE HAVING AMENDED THE SAID SECTION FROM TIME-TO-TIME HAS ROPED IN ONLY SPECIFIED ASSETS AS NOTED HEREINBEFORE. IN THE CIRCUMSTANCES, THE AMENDMENT INSTEAD OF WORKING TO THE ADVANTAGE OF THE REVENUE GOES TO INDICATE THAT THE LEGISLATURE DOES NOT WANT TO BRING WITHIN THE PURVIEW OF TAX NET ALL THE ASSETS (EXCEPT THE SPECIFIED ASSETS) WHICH DO NOT HAVE COST OF ACQUISITION AND THE ENTIRE SALE CONSIDERATION CANNOT BE TREATED AS PROFITS AND GAINS CHARGEABLE UNDER THE HEAD ‘CAPITAL GAINS’ BY ADOPTING THE COST OF ACQUISITION AS NIL. (VI) PROVISIONS OF SECTION 55(3) IS NOT APPLICABLE: - THE PROVISIONS OF SECTION 55(3) ARE QUOTED BELOW: - "Meaning of "adjusted", "cost of improvement" and "cost of acquisition". 55(3) Where the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner." IT IS SUBMITTED THAT THE ABOVE PROVISIONS ARE APPLICABLE WHERE THE COST IN THE HANDS OF THE PREVIOUS OWNER IS NOT ASCERTAINABLE. IT IS SUBMITTED THAT THE CASE OF THE ASSESSEE IS SUCH WHERE THE ISSUE INVOLVED IS NOT ASCERTAINMENT OF COST OF ACQUISITION BUT IT IS A CASE WHERE LAND WAS ALLOTTED FREE OF COST. NO ASCERTAINMENT IS INVOLVED. THEREFORE THE PROVISIONS IS NOT APPLICABLE. (VII) NO REVISION OF RETURN OF INCOME: – THE LEARNED CIT(A) HAS REJECTED THE CLAIM OF THE ASSESSEE ON THIS GROUND ALSO THAT THE ASSESSEE SHOULD HAVE MADE THE CLAIM OF NON-CHARGEABILITY 54 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR OF CAPITAL BEFORE THE ASSESSING OFFICER BY FILING THE REVISED RETURN. SINCE THIS WAS NOT DONE SO THE CLAIM WAS NOT ENTERTAINABLE. IN THIS REGARD IT IS SUBMITTED THAT ALTHOUGH THE ASSESSEE DID NOT FILE A REVISED RETURN TO MAKE THE CLAIM BUT MADE A DETAILED SUBMISSION BEFORE THE LEARNED A.O.COPY OF WHICH IS AVAILABLE ON PAPER BOOK CITED SUPRA. IT IS SUBMITTED THAT IT IS SETTLED POSITION OF LAW THAT FOR MAKING EACH CLAIM FILING OF REVISED RETURN IS NOT MANDATORY. THE FOLLOWING CASES ARE QUOTED: - I. WIPRO LTD VS. DCIT 282 CTR 346 (KARNATAKA HIGH COURT) AO WAS LEGALLY BOUND TO TAKE INTO CONSIDERATION LETTER IN QUESTION WHERE ASSESSEE WAS CLAIMING TAX CREDIT/RELIEF AND DECIDE IF ASSESSEE WAS ENTITLED TO RELIEF OUT OF TAX LIABILITY ON TOTAL INCOME IN RESPECT OF WHICH HE FILED THE RETURN U/S. 139(1)—AS TAX LIABILITY WAS FASTENED ON ASSESSEE ON BASIS OF STATUTORY PROVISIONS, IF ANY STATUTORY PROVISION GAVE ASSESSEE TAX BENEFIT, AO WAS LEGALLY BOUND TO CONSIDER SAME 'AND GRANT RELIEF—THUS, ONCE ASSESSEE FILED NECESSARY PARTICULARS AND CLAIMED RELIEF UNDER PROVISIONS OF DOUBLE TAXATION AVOIDANCE AGREEMENT, LIMITATION PLACED BY DOMESTIC LAW WOULD YIELD TO TAX RELIEF PROVIDED FOR UNDER DOUBLE TAXATION AVOIDANCE AGREEMENT—THEREFORE, AO WAS NOT JUSTIFIED IN REJECTING CLAIM ON GROUND THAT NO REVISED RETURN WAS FILED U/S. 139(5)—AO WAS CONSCIOUS THAT THERE WAS NOT VALID GROUND TO REJECT ASSESSEE’S CLAIM. II. CIT VS. RAMCO INTERNATIONAL 332 ITR 306 (P&H) CLAIM NOT MADE IN RETURN—ASSESSEE HAVING DULY FURNISHED THE DOCUMENTS AND SUBMITTED FORM NO. 10CCB DURING ASSESSMENT PROCEEDINGS, CLAIM FOR DEDUCTION UNDER S. 80-IB BY WAY OF AN APPLICATION WAS ADMISSIBLE—THERE WAS NO REQUIREMENT FOR FILING ANY REVISED RETURN—NO SUBSTANTIAL QUESTION OF LAW ARISES. (VIII) NO ADVANTAGE CAN BE TAKEN OF IGNORANCE/MISTAKE OF ASSESSEE: - 55 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR THE LEARNED CIT(A) IN PARA (III) AND (IV) OF THE APPELLATE ORDER HAS DISCUSSED THE FACT OF THE MISTAKE COMMITTED BY THE ASSESSEE IN NOT CLAIMING THE EXEMPTION OF CAPITAL GAIN IN THE CASE OF SALE OF IMMOVABLE PROPERTY LOCATED AT ALBERT HALL, JAIPUR IN THE RETURN FILED U/S 139(1)/148 OF THE INCOME TAX ACT, 1961. THE LEARNED CIT(A) HAS OBSERVED THAT IT IS TRITE LAW THAT THE IGNORANCE OF LAW IS NO EXCUSE AND HAS HELD THAT IT WAS NOT POSSIBLE TO IGNORE THE RETURNS FILED U/S 139(1) AND 148. THE LEARNED CIT(A) HAS THUS FAILED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE MADE AS UNDER IN PROPER PERSPECTIVE: - "It is submitted that the assessee counsel was not aware of the correct legal position as such while filing the return of income it wrongly disclosed capital gains on transfer of the immovable property. It is settled position of law that that ignorance of law of the assessee cannot be taken as an advantage by the Learned Assessing Officer. The assessment has to be completed on the basis of correct position of law. In the case of the assessee the correct position of law is that capital gains are not attracted when the acquisition cost of immovable property was Nil. This being so the assessee humbly requested that the Learned Assessing Officer may not be guided by the fact of disclosure of capital gain in the return of income filed by the assessee. In this regard it is submitted that there are plethora of decisions holding that tax has to charged as per provisions of the Act and assessee has a right to claim all deduction as per law at any stage even though no such claim was made in the return of income. The following decisions are quoted in support: - (i) COMMISSIONER OF INCOME TAX vs. RAJASTHAN FASTENERS (P) LTD. (2014) 363 ITR 271 (Raj) (ii) CIV Vs. Ramco International (2009) 221 CTR 491) (P&H) (iii) CIT Vs. Prithvi Brokers and Share Holders Pvt. Ltd. (2012) 252 CTR 151 (Bom) (iv) CIT vs. MithexImpex& Others (2014) 104 DTR 169 (Guj) CBDT CIRCULAR NO. 014 (XL-35) :- 56 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR The assessee also brought to the notice of the Learned Assessing Officer circular no. 014 (XL-35) issued by the Board as back as 11 th April 1955 wherein the Board has impressed upon the Officers of the Department that no advantage should be taken on assessee’s ignorance to collect more than out of him than is legitimately due from him. It has been specifically mentioned in the circular that the mandatory relief about exemption from tax must be granted whether claimed or not. Thus the circular makes it clear that if the assessee has not claimed any deduction or exemption which otherwise is allowable, the same should be allowed by the Learned Assessing Officer. Mere filing of an incorrect return cannot come in the way of allowing lawful deduction and exemptions. It is submitted that in the case of the assessee capital gains are not attracted and as such the mistake in disclosing the same in the return of income should have been disregarded by the learned A.O.. The relevant para from the circular is quoted below: “Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should:— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 57 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR 4. Public Relations Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. The following examples (which are by no means exhaustive) indicate the attitude which officers should adopt :— (a) Sec. 17(1) : While dealing with the assessment of a non-resident assessee the officer should bring to his notice that he may exercise the option to pay tax on his Indian income with reference to his total world income if it is to his advantage. (b) Sec. 18(3), (3A), (3B) and (3D) : The officer should in every appropriate case bring to the assessee's notice the possibility of obtaining a certificate authorising deduction of income-tax at a rate less than the maximum or deduction of super tax at a rate lower than the flat rate, as the case may be. (c) Secs. 25(3) and 25(4) : The mandatory relief about exemption from tax must be granted whether claimed or not; the other relief about substitution, if not time barred, must be brought to the notice of a taxpayer. (d) Sec. 26A : The benefit to be obtained by registration should be explained in appropriate cases. Where an application for registration presented by a firm is found defective, the officer should point out the defect to it and give it an opportunity to present a proper application. (e) Sec. 33A : Cases in which the ITO or the Asstt. Commissioner thinks that an assessment should be revised, must be brought to the notice of the CIT. (f) Sec. 35 : Mistakes should be rectified as soon as they are discovered without waiting for an assessee to point them out. 58 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (g) Sec. 60(2) : Cases where relief can properly be given under this sub-section should be reported to the Board.” Copy of CBDT circular is available on paper book page number cited supra. The assessee further seeks support from the following decisions wherein it has been held that the assessee can raise the issue of lawful claim before the appellate authorities if it had not done so while filing the return of income. It has also been held that regarding a mistake committed by him the assessee can seek remedy even by filing a letter and not necessarily revising the return. Wipro Vs. CIT 282 CTR 346; i. Anju Mittal v/s ACIT. (ITAT JP) - ITA 201/JP/2014 dt 30.04.15 ii. KeshavjiRamji v/s CIT (SC) 183 ITR 1 iii. J.P. Boder Co. v/s CBDT (SC) 223 ITR 271 iv. CIT v/s Hero Cycles (SC) 228 ITR 463 v. CIT v/s National Thermal Power Co. Ltd. (SC) 157 CTR 249 vi. C.I.T v/s BhaskarMitter (Cal) 73 TAXMAN 437 IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DECIDING THE ISSUE WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE IS PROPER PERSPECTIVE. THE LEARNED CIT(A) SHOULD HAVE DISREGARDED THE OMISSION ON THE PART OF THE ASSESSEE IN NOT CLAIMING THE RELIEF WHILE FILING THE RETURN OF INCOME WHICH OTHERWISE IS ADMISSIBLE UNDER LAW. (IX) WHERE THERE ARE DIVERGENT DECISIONS ONE FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED: - IT IS SUBMITTED THAT THE LEARNED CIT(A) WAS WRONG IN FOLLOWING THE DECISION OF P&H HIGH COURT IGNORING THE DECISION OF VARIOUS OTHER COURTS. IT IS SUBMITTED THAT THE FAVOURABLE DECISIONS ARE OF THE FOLLOWING COURTS - I. COMMISSIONER OF INCOME TAX VS. B.C. SRINIVASA SETTY128 ITR 294 (SC) 59 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR II. CIT VS. H.H. LOKENDRA SINGH (1997) 227 ITR 638 (MP) III. CIT VS. RAJA RAJGOPALA THANDAIMAN (2006) 282 ITR 126 (MAD) IV. CIT VS. MANOHAR SINGHJI P JADEJA [2006] 281 ITR 19 (GUJ.) V. CIT VS. PUSHPRAJ SINGH (1998) 232 ITR 0754 (MP) VI. CIT VS. MARKAPAKULA AGAMMA (1987) 165 ITR 386 (AP) IT IS THE SETTLED POSITION OF LAW THAT WHERE DIVERGENT OPINIONS ARE AVAILABLE ON AN ISSUE ONE THAT IS FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED. THIS IS SUPPORTED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- i. CIT Vs. Vegetable Products (SC) 88 ITR 192 2 ii. CIT vs. Strawboard Manufacturing Ltd. (SC) 177 ITR 431 iii. CIT vs. A.J. Abraham Anthrapar (2004) 268 ITR 417 (Kerla) IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE POSITION OF LAW IT IS SUBMITTED THAT THE DECISION OF THE LEARNED ASSESSING OFFICER AS WELL AS THAT OF THE LEARNED CIT(A) IN LEVYING CAPITAL GAIN ON SALE OF THE PROPERTY DESERVES TO BE QUASHED. (B) SUBMISSION MADE BEFORE THE LEARNED CIT(A) - IT IS FURTHER SUBMITTED THAT FOR THE SAKE CONVEYANCE THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) IN RESPECT OF THIS ISSUE ARE REPRODUCED HEREWITH: - "1. Facts of the case: - (Sale of property at Bardiya Colony, Near Albert Hall, Moti Doongri Road, Jaipur) During the year under consideration the assesse has shown sale of plot of land measuring 1213.7118 square meter on 05.12.2012. The property is situated atBardiya Colony, Near Albert Hall, MotiDoongri Road, Jaipur. The property has been sold for an apparent consideration of Rs. 27.29 Crores whereas for purposes of stamp duty the sub-registrar has valued the same 60 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR for Rs. 27,66,87,072/-. A copy of the sale deed is available on paper book page no 46 to 59. Thus there is difference is of Rs. 37,87,072/- between the apparent consideration and the value taken by the sub-registrar. It was on account of this that action u/s 148 was initiated by the Learned Assessing Officer treating the difference of Rs. 37,87,072/- u/s 50C of the Income Tax Act, 1961 as income escaped within the meaning of section 147. The same has already been challenged in ground no. 1 and 2 discussed above. 2. Capital gains are not taxable: - During the course of assessment proceedings it was submitted that the In the case of the assessee the property in question was last received by MahantShriGovind Das Chela of Swami Shyoram Das Dadupanthi from MaharajadhirajSawai Jai Singh in samwat year 1885 for charitable purposes. Thus the land was got for no consideration and it has devolved upon the assessee accordingly. Thus the land was got for no consideration and it has devolved upon the assessee accordingly. In view of this in the absence of ascertained cost of acquisition the charge under the head capital gains cannot be fastened to the full value of consideration. It has been held in the case of CIT vs. Mandharsinghji P. Jadeja (2005) 281 ITR 0019 by the Gujarat High Court that “where the asset has been acquired inheritance and no cost of acquisition was there in the case of previous owner, the assessee being acquired by conquest no capital gain were chargeable”. While delivering the decision of Hon’ble High Court has followed the ratio of decision of the Apex Court in the case of SrinivasaSetty 128 ITR 294. A copy of decision of the Gujarat High Court in the case of Mandharsinghji P. Jadeja is available on paper book page no cited supara. There are various other decisions to the above effect wherein it has been held that in the case of transfer of land when the same was acquired for no cost, capital gains were not attracted. The same are quoted below: - iii.H.H. Late Sir J.M. Scindiavs ACIT (2008) 305 ITR (AT) 231 (Mum) iv. CIT Vs. H.H. Lokendra Singh (1997_ 227 ITR 638 (MP) v. CIT Vs. Raja RajgopalaThandaiman (2006) 282 ITR 126 (Mad) 61 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR vi. ManoharLalPyareLal (2012) 80 DTR 186 (Pune) 3. Decision of the Gujarat High Court CIT vs. Mandharsinghji P. Jadeja (2005) 281 ITR 0019 is fully applicable in the case of the assesse: - It is submitted that under letter dated 19.02.2016 the assessee compared the facts of the case along with the case decided by the Gujarat High Court cited above. A copy of this letter is available on paper book page number60 to71. The Learned Assessing Officer has not been able to controvert the comparison of facts as well as the decision of the Gujarat High Court. The major facts submitted before the Learned Assessing Officer are reproduced below: - “1. Decision of the Gujarat High Court is fully applicable to the facts of the case: - It is again submitted that the ratio of the Gujarat High Court decision in the case of Mandharsinghji P. Jadeja 281 ITR 19 is fully applicable to the facts of the case. It appears that your honour has not undertaken the trouble to read this decision otherwise the matters would have been settled. There appears to be some confusion with regard to amendment by finance act 1994 in section 55(2) w.e.f. 01.04.1995 regarding the cost of goodwill to be taken Nil. This amendment in fact has absolutely no effect upon the facts of the case. Further the Gujrat High Court has discussed this amendment and all the other subsequent amendment up to 2004 in section 55(2) of the Income Tax Act, 1961. It is after considering all these amendments that the Gujarat High Court held that where the immovable property was acquired by inheritance and there was no cost of acquisition in the hands of the previous owner no capital gains were chargeable. The para 18 & 19 of the order of the Gujarat High Court are very relevant. A copy of the High Court decision is available for ready reference. These paras may kindly be perused before finalizing the assessment proceedings. After going through these paras your honour would agree that assessee has not taken any u- turn. The assessee has only corrected his position in tune with law. I 62 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR am drawing a comparison between the case of the assessee and the decision of Gujarat High Court as well as the brief of amendment carried out in section 55(2) of the Income Tax Act, 1961. Sr. No. Facts of the assessee’s case Facts in the case of Mandharsinghji P. Jadeja 281 ITR 19 Remarks (i) Asset has been acquired by inheritance Asset has been acquired by inheritance In both the cases assets have been acquired by inheritance. (ii) The last previous owner acquired the capital asset by conquest i.e. without paying any price for the acquisition. The last previous owner acquired the capital asset by conquest i.e. without paying any price for the acquisition. In the case of the assessee the property in question was last received by MahantShriGovind Das Chela of Swami Shyoram Das Dadupanthi from MaharajadhirajSawai Jai Singh in samwat year 1885 for charitable purposes. Thus the land was got for no consideration and it has devolved upon the assessee accordingly. Thus the facts of both the cases are ditto. (iii) Amendment of section 55 by the Finance Act, 1987 w.e.f. 01.04.1988 is not applicable. (para 18 of the order) It relates only to goodwill and not to immovable property. (iv) Amendment to section 55 by Finance Act 1997 w.e.f. 01.04.1998 is not applicable (para 18) It relates to a right to manufacture, produce of process any article of thing. The amendment does not pertain to immovable property. (v) Amendment to section 55 by It relates to a trademark or brand name associated with business. 63 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Finance Act 2001 w.e.f. 01.04.2002 is not applicable (para 18) (vi) Amendment to section 55 by Finance Act 2002 w.e.f. 01.04.2003 is not applicable (para 18) Right to carry on any business. It is submitted that the Hon’ble High Court of Gujarat has discussed all the amendments to section 55 which have taken place by Finance Act, 1987 onwards to Finance Act, 2002. The court has clearly observed as under:- “Therefore, even if the amendment is taken into consideration s. 55 can be invoked in cases of nil cost of acquisition for the purpose of bringing to tax entire sale consideration only in relation to the specified assets. The legislature having amended the said section from time-to-time has roped in only specified assets as noted hereinbefore. In the circumstances, the amendment instead of working to the advantage of the Revenue goes to indicate that the legislature does not want to bring within the purview of tax net all the assets (except the specified assets) which do not have cost of acquisition and the entire sale consideration cannot be treated as profits and gains chargeable under the head 'Capital gains’ by adopting the cost of acquisition as nil.” In view of the specific discussion on the provisions of section 55 by the court it is abundantly clearly that capital gains are not attracted in the case of the assessee. By various amendments which have taken place by Finance Act, 1987 to Finance Act, 2002 the immovable property has not been roped in for purposes of cost of acquisition to be taken at Nil. The provisions of section 55(2) are reproduced here: - For the purposes of sections 48 and 49, "cost of acquisition",— (a) in relation to a capital asset, being goodwill of a business or a trade mark or brand name associated with a business or a right to manufacture, 64 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours,— (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price ; and (ii) in any other case [not being a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil ; The provisions very specifically exclude cases falling under sub-clauses (i) to (iv) of sub-section(1) of 49 which mainly are :- (i) on any distribution of assets on the total or partial partition of a Hindu undivided family; (ii) under a gift or will; (iii) (a) by succession, inheritance or devolution, or (b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or (c) on any distribution of assets on the liquidation of a company, or (d) under a transfer to a revocable or an irrevocable trust, or (e) under any such transfer as is referred to in clause (iv) or clause (v) or clause (vi) or clause (via) 98 [or clause (viaa) or clause (vica) or clause (vicb)] or clause (xiii) or clause (xiiib) or clause (xiv) of section 47; (iv) suchassessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969, Thus the case of the assessee is not covered in any way. In the case of the assessee the cost of acquisition cannot be taken at Nil. The amendments carried out to section 55 w.e.f. 01.04.1988 onwards where the cost of acquisition or of improvement can be taken at nil are namely the following assets: - i. Goodwill of a business; ii. Trademark; iii. Brand name; iv. Right to manufacture, produce or process any article or thing; 65 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR v. Right to carry on any business; vi. Tenancy rights; vii. Stage carriage permits or loom hours The Gujarat High Court decision has well explained the position of law. As on date also there is no change to it, hence there is no reason why the ratio of Gujarat High Court decision is not applied to the facts of the case.” It was submitted before the Learned Assessing Officer that the Apex Court in the case of CIT vs. ShrinivasaSetty 21 CTR 138 has held that in a case where the cost of acquisition by the previous owner as well as the date of acquisition by the previous owner were not ascertainable the provisions of computation of income could not come into play and as such no capital gains are chargeable in such cases. Following the decision of the Apex Court the Madhya Pradesh High Court in the case of CIT vs. H.H. Maharaja Sahib ShriLokendraSinghji 51 CTR 146 held that “Liability for capital gains arises in respect of only those capital assets in the acquisition of which the element of cost is either actually presentor is capable of being reckoned and in respect of those assets in the acquisition of which the element of cost is altogether inconsolable. Further it was submitted before the Learned Assessing Officer that para 18 & 19 of the decision of the Gujarat High Court Mandharsinghji P. Jadera (2005) 281 ITR 0019 should be perusal before reaching to a decision. The relevant paras are quoted below which the Learned Assessing Officer did not consider at all - “18. The contention that when the cost of asset is nil the entire sale consideration is required to be taxed as profits and gains under the head ‘Capital gains’ is also sought to be supported by the amendment in s. 55 of the Act. According to the learned counsel for the Revenue the principle— that a capital asset which does not have cost of acquisition does not fall within the charging section—is now superseded by amended provision of s. 55 of the Act. However, it requires to be noted that by the Finance Act, 1987 w.e.f. 1st April, 1988 the amendment to s. 55 of the Act only ropes in taxability of goodwill on transfer of the same even if there is no cost of acquisition. Similarly, s. 55 has been amended from time-to-time to enable the taxation of other assets wherein no cost of acquisition is envisaged : 66 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR tenancy rights, stage carriage permits and, looms hours by the Finance Act, 1994 w.e.f. 1st April, 1995; right to manufacture, produce or process any article or thing by the Finance Act, 1997 w.e.f. 1st April, 1988; trademark or brand name associated with business by the Finance Act, 2001 w.e.f. 1st April, 2002; and right to carry on any business by the Finance Act, 2002 w.e.f. 1st April, 2003. 19. Therefore, even if the amendment is taken into consideration s. 55 can be invoked in cases of nil cost of acquisition for the purpose of bringing to tax entire sale consideration only in relation to the specified assets. The legislature having amended the said section from time-to-time has roped in only specified assets as noted hereinbefore. In the circumstances, the amendment instead of working to the advantage of the Revenue goes to indicate that the legislature does not want to bring within the purview of tax net all the assets (except the specified assets) which do not have cost of acquisition and the entire sale consideration cannot be treated as profits and gains chargeable under the head ‘Capital gains’ by adopting the cost of acquisition as nil.” The position of law being such the Learned Assessing Officer was requested not to charge any capital gains on the sale of this land. However the Learned Assessing Officer failed to appreciate the facts and has made the addition, the same deserve to be quashed. 4. Misgiving in the mind of the Learned Assessing Officer: - The Learned Assessing Officer on page 7 of theasstt order also has discussed the provisions of section 52(2). In the view of the Learned Assessing Officer if there is no cost of acquisition in the hands of the previous owner then the cost of acquisition of the asset would be market value as on 01.04.1981. The Learned Assessing Officer has not been able to appreciate the position of law correctly. The Gujarat High Court in the case of Mandharsinghji P. Jadera (2005) 281 ITR 0019 has discussed the position of law at length. The same was also brought to the notice of the Learned Assessing Officer vide letter dated 19.02.2016 copy of which is avaialble on paper book page number cited supra. The court has held as under: - 67 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR “Therefore, even if the amendment is taken into consideration s. 55 can be invoked in cases of nil cost of acquisition for the purpose of bringing to tax entire sale consideration only in relation to the specified assets. The legislature having amended the said section from time-to-time has roped in only specified assets as noted hereinbefore. In the circumstances, the amendment instead of working to the advantage of the Revenue goes to indicate that the legislature does not want to bring within the purview of tax net all the assets (except the specified assets) which do not have cost of acquisition and the entire sale consideration cannot be treated as profits and gains chargeable under the head 'Capital gains’ by adopting the cost of acquisition as nil.” In view of the specific discussion on the provisions of section 55 by the court it is abundantly clearly that capital gains are not attracted in the case of the assessee. By various amendments which have taken place by Finance Act, 1987 to Finance Act, 2002 the immovable has not been roped in for purposes of cost of acquisition to be taken at Nil. The provisions of section 55(2) are reproduced here: - For the purposes of sections 48 and 49, "cost of acquisition",— (a) in relation to a capital asset, being goodwill of a business or a trade mark or brand name associated with a business or a right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours,— (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price ; and (ii) in any other case [not being a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil ; The provisions very specifically exclude cases falling under sub-clauses (i) to (iv) of sub-section(1) of 49 which mainly are :- (i) on any distribution of assets on the total or partial partition of a Hindu undivided family; (ii) under a gift or will; (iii) (a) by succession, inheritance or devolution, or 68 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or (c) on any distribution of assets on the liquidation of a company, or (d) under a transfer to a revocable or an irrevocable trust, or (e) under any such transfer as is referred to in clause (iv) or clause (v) or clause (vi) or clause (via) 98 [or clause (viaa) or clause (vica) or clause (vicb)] or clause (xiii) or clause (xiiib) or clause (xiv) of section 47; (iv) suchassessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969, Thus the case of the assessee is not covered in any way. In the case of the assessee the cost of acquisition cannot be taken at Nil. The amendments carried out to section 55 w.e.f. 01.04.1988 onwards where the cost of acquisition or of improvement can be taken at nil are namely the following assets: - i. Goodwill of a business; ii. Trademark; iii. Brand name; iv. Right to manufacture, produce or process any article or thing; v. Right to carry on any business; vi. Tenancy rights; vii. Stage carriage permits or loom hours The Gujarat High Court decision has well explained the position of law. As on date also there is no change to it, hence there is no reason why the ratio of Gujarat High Court decision is not applied to the facts of the case. In view of this it is requested that the addition made by the Learned Assessing Officer may kindly be deleted. 5. Assessing Officer cannot take advantage of the mistake of the assessee: - 69 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR It is further submitted that the assessee counsel was not aware of the correct legal position as such while filing the return of income it wrongly disclosed capital gains on transfer of the immovable property. It is settled position of law that that ignorance of law of the assessee cannot be taken as an advantage by the Learned Assessing Officer. The assessment has to be completed on the basis of correct position of law. In the case of the assessee the correct position of law is that capital gains are not attracted when the acquisition cost of immovable property was Nil. This being so the assessee humbly requested that the Learned Assessing Officer may not be guided by the fact of disclosure of capital gain in the return of income filed by the assessee. In this regard it is submitted that there are plethora of decisions holding that tax has to charged as per provisions of the Act and assessee has a right to claim all deduction as per law at any stage even though no such claim was made in the return of income. The following decisions are quoted in support: - (i) COMMISSIONER OF INCOME TAX vs. RAJASTHAN FASTENERS (P) LTD. (2014) 363 ITR 271 (Raj) (ii) CIV Vs. Ramco International (2009) 221 CTR 491) (P&H) (iii) CIT Vs. Prithvi Brokers and Share Holders Pvt. Ltd. (2012) 252 CTR 151 (Bom) (iv) CIT vs. MithexImpex& Others (2014) 104 DTR 169 (Guj) CBDT CIRCULAR NO. 014 (XL-35) :- The assessee also brought to the notice of the Learned Assessing Officer circular no. 014 (XL-35) issued by the Board as back as 11 th April 1955 wherein the Board has impressed upon the Officers of the Department that no advantage should be taken on assessee’s ignorance to collect more than out of him than is legitimately due from him. It has been specifically mentioned in the circular that the mandatory relief about exemption from tax must be granted whether claimed or not. Thus the circular makes it clear that if the assessee has not claimed any deduction or 70 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR exemption which otherwise is allowable, the same should be allowed by the Learned Assessing Officer. Mere filing of an incorrect return cannot come in the way of allowing lawful deduction and exemptions. It is submitted that in the case of the assessee capital gains are not attracted and as such the mistake in disclosing the same in the return of income should have been disregarded by the learned A.O.. The relevant para from the circular is quoted below: “Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should:— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 4. Public Relations Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. The following examples (which are by no means exhaustive) indicate the attitude which officers should adopt :— (a) Sec. 17(1) : While dealing with the assessment of a non-resident assessee the officer should bring to his notice that he may exercise the option to pay tax on his Indian income with reference to his total world income if it is to his advantage. 71 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR (b) Sec. 18(3), (3A), (3B) and (3D) : The officer should in every appropriate case bring to the assessee's notice the possibility of obtaining a certificate authorising deduction of income-tax at a rate less than the maximum or deduction of super tax at a rate lower than the flat rate, as the case may be. (c) Secs. 25(3) and 25(4) : The mandatory relief about exemption from tax must be granted whether claimed or not; the other relief about substitution, if not time barred, must be brought to the notice of a taxpayer. (d) Sec. 26A : The benefit to be obtained by registration should be explained in appropriate cases. Where an application for registration presented by a firm is found defective, the officer should point out the defect to it and give it an opportunity to present a proper application. (e) Sec. 33A : Cases in which the ITO or the Asstt. Commissioner thinks that an assessment should be revised, must be brought to the notice of the CIT. (f) Sec. 35 : Mistakes should be rectified as soon as they are discovered without waiting for an assessee to point them out. (g) Sec. 60(2) : Cases where relief can properly be given under this sub- section should be reported to the Board.” Copy of CBDT circular is available on paper book page number cited supra. The assessee further seeks support from the following decisions wherein it has been held that the assessee can raise the issue of lawful claim before the appellate authorities if it had not done so while filing the return of income. It has also been held that regarding a mistake committed by him the assessee can seek remedy even by filing a letter and not necessarily revising the return. Wipro Vs. CIT 282 CTR 346; i. Anju Mittal v/s ACIT. (ITAT JP) - ITA 201/JP/2014 dt 30.04.15 ii. KeshavjiRamji v/s CIT (SC) 183 ITR 1 iii. J.P. Boder Co. v/s CBDT (SC) 223 ITR 271 iv. CIT v/s Hero Cycles (SC) 228 ITR 463 72 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR v. CIT v/s National Thermal Power Co. Ltd. (SC) 157 CTR 249 vi. C.I.T v/s BhaskarMitter (Cal) 73 TAXMAN 437 6. Conclusion: - In view of the aforesaid discussion and position of law it is prayed that the addition made by the Learned Assessing Officer by taxing capital gain may kindly be deleted." Ground No. 3 to 5, 9 & 10 - 3. Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in referring the valuation of property to DVO when there was direct example of auction by the JDA in same area. 4. Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer/DVO in not considering the objections filed by the assessee for proposed valuation of the property. 5. Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in applying the DVO's rate for indexation by ignoring other similar rates available which are more reliable. 9. Under the facts and Circumstances of the case the Learned CIT(A) has erred in taking the cost of acquisition at Rs. 22,22,500/- as against taken by the assessee at Rs. 1,98,26,738/-. 10. Under the facts and Circumstances of the case the Learned CIT(A) has erred in taking the cost of acquisition at Rs. 22,22,500/- as against taken by the assessee at Rs. 1,98,26,738/-. IN RESPECT OF THE ABOVE GROUND THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE LEARNED CIT(A). HOWEVER THE LEARNED CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE SUMMARILY WITHOUT CONSIDERING THE SAME IN RIGHT PERSPECTIVE. THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LEARNED CIT(A) ARE QUOTED BELOW: - 73 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR "The assessee had disclosed the cost of acquisition of the property sold at Bardiya Colony, Near Albert Hall, Jaipur at Rs. 1,98,26,738/- as on 01.04.1981. It is submitted that this cost of acquisition was mentioned erroneously in the return of income as the then counsel of the assessee was not aware of the legal position in the matter. Otherwise there was no cost of acquisition in the case of the assessee. However as a matter of abundant of caution the assessee has taken this ground to rebut the additions made by the Learned Assessing Officer on merits/facts. The Learned Assessing Officer referred the issue of valuation of cost of land to the DVO who valued the land as on 01.04.1981 at Rs. 22,22,500/-. It is submitted that before adopting the value determined by the DVO the Learned Assessing Officer should have afforded opportunity for cross examining the DVO but this was not done. Further the assessee raised certain very valid objections to the valuation made by the DVO under letter dated 28.03.2016. A copy of this letter is available on paper book page number 101 to 109. The assessee had raised the following objections to the report of the DVO: - a. The basis of sale instances selection by the DVO was not disclosed and these were not representative in the case.. The selection of cases should have been of the same size and of the same area.. b. The sale instances selected by the DVO are in respect of small size of plots ranging from 111.48 square meter to 517.00 square meter. These are not at all comparable with the plot of the assessee of 12013.71 square meters. c. In the sale instances the price ranges from Rs. 68.79 per meter to 318.49 per meter which shows variance of 500%. So these instances are not comparable. d. The DVO has adopted price of Rs. 185/- on average basis without any basis. e. The sale instances selected by DVO is not of the locality of the land sold by the assessee. The Learned Assessing Officer has not discussed any of these objections raised by the assessee in the aforesaid letters. He has not brought any material on record to controvert the objections raised by the assessee regarding the valuation made by the DVO. He has brushed aside the objections of the assessee simply stating that DVO is a technical person and his report has to be followed. It is submitted that 74 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR the report of the DVO may be relevant but is never binding and it cannot be considered as a rule of thumb. The objections raised by the assessee are valid and the same having been not controverted.The cost of acquisition taken by the assessee at Rs. 1,98,26,738/- may kindly be accepted. The valuation report deserves to be ignored wherein the DVO has taken the cost of acquisition of Rs. 22,22,500/-. A copy of the valuation report is available on paper book page no 72 to 80." ADDITIONAL GROUND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER HAS ERRED IN APPLYING OF PROVISIONS OF SECTION 50C IN ADOPTING THE SALE OF RS. 27,66,87,072/- AS AGAINST APPARENT SALE CONSIDERATION OF RS. 27.29 CRORE. It is further submitted that on account of lack of knowledge the then counsel of the assessee while filing the return of income u/s 148 has wrongly adopted the sale consideration at Rs. 27,66,87,072/- as against apparent consideration of Rs. 27,29,00,000/-. It is submitted that the DLC rates are common for the area irrespective of the location, size and potentiality of the building. The Learned Assessing Officer was not justified in adopting the sale price at Rs. 27,66,87,072/- taken by the sub-registrar without bringing any material on record establishing that more consideration then Rs. 27,29,00,000/- was received by the assessee. There is no material on record brought by the Learned Assessing Officer which may establish that more money exchanged hands than Rs. 27,29,00,000/- as shown in the sale deed. In view of this it is prayed that no advantage may be taken of the mistake of the assessee or the counsel in disclosing the sale consideration at Rs. 27,66,87,072,/-. The same may be taken at Rs. 27,29,00,000/-. The following case laws are quoted in support: - (i) CIT Vs. K.K. Enterprises 13 DTR 289 (Raj) In this case the Hon’ble High Court has held that in the absence of any evidence on record, it cannot be presumed that land has been sold by the assessee at a higher price than the consideration shown in the registered sale deeds, and the rates of property fixed by the Stamp Valuation Authority for registration purposes cannot be applied to arrive at the price for which the property might have been sold and no addition can be made on account of understatement of sale price. While delivering the decision 75 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR the Hon’ble Court has also placed reliance on the decision of the Supreme Court in the case of CIT Vs. Shivakami co. Pvt. Ltd. (1986) 159 ITR 71 wherein it was held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis of computation of capital gains. It was further held that capital gains tax is intended to tax the gains of assessee, not what an assessee might have gained, and what is not gained cannot be computed as gained. (ii) CIT Vs. Kishan Kumar &Ors. 315 ITR 204 (Raj) In this case the Hon’ble High Court while deciding the appeal of the assessee u/s 158BB also considered the provisions of section 50C and observed as under – "There may be cases, where the assets may have been purchased at the price higher than the DLC rates, and rather there may be cases, where the assets may be acquired at a price lesser than the DLC rates. The reasons for either of the situations are innumerable, and cannot be put into any straight jacket. Sec. 50C also does show, that the valuation put by the Stamp Valuation Authority is not required to be adopted as the valuation of the property, as a rule of thumb." (iii) Income Tax Officer Vs. Smt. Anshu Jain 36 SOT 362 (JP) In this case the Hon’ble ITAT Bench held that addition cannot be sustained with reference to provision of section 50C unless corroborative piece of direct evidence have been brought on record. The Hon’ble ITAT relied on the decision of the Hon’ble Supreme Court in the case of K.P. Varghese Vs. ITO (1981) 24 CTR 358. The Hon’ble Supreme Court has passed the decision with reference to section 50(2) but the same goes to the root of the matter. It was held by the Hon’ble Supreme Court that "where the consideration for the transfer has been understand by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the Revenue. This burden may be discharged by the Revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not 76 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. In view of the aforesaid favourable decisions and the fact that the Hon’ble Jurisdictional High Court has also held that provisions of section 50C cannot be applied as a rule of thumb, it is pray that the Learned Assessing Officer erred in making the additions." IT IS SUBMITTED THAT THE LEARNED CIT(A) WITHOUT CONSIDERING THE VARIOUS DECISIONS CITED ABOVE HAS REJECTED THE SUBMISSIONS OF THE ASSESSEE. THE LEARNED CIT(A) HAS HARPED AGAIN AND AGAIN ON THE MISTAKE COMMITTED BY THE ASSESSEE IN DISCLOSING CAPITAL GAINS/COST OF ACQUISITION AS ON 01.04.1981 WHILE FILING RETURN OF INCOME U/S 139(1) OF THE INCOME TAX ACT, 1961. THE ASSESSEE ALSO ERRED IN ADOPTING THE SALE PRICE OF LAND AS ADOPTED BY THE REGISTRAR. IN THE BACKGROUND OF THESE MISTAKES ASSESSEE BROUGHT TO THE NOTICE OF THE LEARNED CIT(A) A NUMBER OF DECISIONS AND ALSO CIRCULAR OF THE BOARD THAT NO ADVANTAGE SHOULD BE TAKEN OF THE IGNORANCE OF THE ASSESSEE OF THE MISTAKE COMMITTED BY HIM. BUT THE LEARNED CIT(A) HAS NOT PAID ANY HEED TO THE SUBMISSIONS MADE BY THE ASSESSEE. THE ACTION OF THE LEARNED CIT(A) IN REJECTING THE SUBMISSION OF THE ASSESSEE DESERVES TO BE ASSESSED. Ground No. 6 & 8- 6. Under the facts and Circumstances of the case the Learned CIT(A) has erred in not giving benefit of cost of improvement/ construction. IN RESPECT OF THE ABOVE GROUND THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE LEARNED CIT(A). HOWEVER THE LEARNED CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE SUMMARILY WITHOUT CONSIDERING THE SAME IN RIGHT PERSPECTIVE. THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LEARNED CIT(A) ARE QUOTED BELOW: - "The assessee also claimed expenditure on account of construction on the aforesaid land to the tune of Rs. 1,56,87,343/- during the year 1982-83 to 2004-05. The index cost of the same was worked out at Rs. 9,12,70,543/-. The details of these are available in the computation of income copy of which available on paper book cited supra.In support of the cost of construction the assesse submitted copies of agreements regarding the 77 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR work of additions/ renovations and alteration works carried out. Copies of these agreements are available on paper book page number 81 to 93. It was also submitted before the Learned Assessing Officer that the assessee could hardly trace out the copies as the work carried out was pretty old. The Learned Assessing Officer has disallowed the entire claim of construction on the ground that the persons who carried out were not produced. Secondly the Learned Assessing Officer has relied on the statement of ShriArun Kumar Ranka to whom the property was sold. In the statement recorded on 02.03.2015 ShriArun Kumar Ranka had stated that except boundary wall there was no construction. The Learned Assessing Officer has also referred to the report of the inspector. Regarding the statement of ShriArun Kumar Ranka the assessee objected that the statement cannot be taken on record as evidence as the same was not recorded u/s 131. Further it was also submitted that ShriArun Kumar Ranka was not made available for examination hence the statement cannot be utilized. Further in the statement which has been quoted by the Learned Assessing Officer on page 5 of the assessment order he has stated that 2-3 rooms were there when he purchased the plot and there was no new construction. It is submitted that assessee never claimed that there was new construction. The statement of ShriArun Kumar Ranka which has been relied by the Learned Assessing Officer Assessing Officer is vague and unspecific and cannot be relied upon. Further even ShriArun Kumar Ranga has admitted construction of three rooms and boundary wall but the Learned Assessing Officer has not given benefit of any construction. It is further submitted that reliance on the report of the inspector in the matter of old buildings is totally misplaced. The inspector of the department has no knowledge or training regarding the age of buildings. Thus the action and approach of the Learned Assessing Officeris arbitrary. It is submitted that the cost of construction of Rs. 1,56,87,343/- shown by the assessee of which indexation cost works out to Rs. 9,12,70,543/- deserves to be accepted. The untested and unexamined statement of ShriArun Kumar Ranka cannot be made basis for disallowing the claim of the assessee. The following case laws are quoted in support wherein it has been held that no addition can be made on the basis of a third party statement of which cross examination was not allowed. The following case laws are quoted in support: - 78 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR i. The Apex Court has observed that not allowing cross examination is a serious flaw and makes the order nullity. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). “not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity in as much as it amounted to violation of principle of natural justice because of which the assessee was adversely affected. ii.KERLA GLUE FACTORY. vs. SALES TAX TRIBUNAL & ORS. (SUPREME COURT OF INDIA) 167 ITR 0498 Statement which was not tested by cross examination is not good evidence. iii.COMMISSIONER OF INCOME TAX vs. BIJU PATNAIK HIGH COURT OF ORISSA 190 ITR 0396 Although answers can be recorded either in favour of the Department or against it, ultimately each answer would again become inconclusive on account of the final findings of fact of the Tribunal that ITO has not given reasonable opportunity to the assessee to rebut the statements recorded ex parte under s. 131 of the Act and to furnish explanation to some of the materials. It is true that Tribunal has not given due weight to the relevant and admissible evidence while recording the findings of fact. However, the findings of the Tribunal on such fact are also vulnerable as they may require reconsideration. If answers in respect of each of the questions are indicated in the absence of reasonable opportunity being afforded to the assessee, they would be of academic interest inasmuch as the answers against the assessee would become vulnerable on account of the need to undo the absence or reasonable opportunity. A clear and conclusive finding binding on the parties can be given only after reasonable opportunity is given to the assessee as found by the Tribunal. No answer should be given in advisory jurisdiction which would not finally decide the issue since final finding can be arrived at only after giving reasonable opportunity to the assessee and explanation given by the assessee would have material bearing on the finding. It is necessary that the Assessing Officer gives opportunity to the assessee. Tribunal has not considered the evidence 79 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR in its proper perspective while rendering the decision in appeal and accordingly, the findings of the Tribunal are vitiated in law. As the final fact-finding forum, the Tribunal has to consider the same again. Since Tribunal has recorded a finding that reasonable opportunity has not been given to the assessee to give rebuttal evidence and explanation, this can effectively be done by the Assessing Officer. The reference applications are disposed of as above leaving it to the Tribunal to pass consequential orders. iv.PRAKASH CHAND NAHTA vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF MADHYA PRADESH) (2008) 301 ITR 0134 : Assessment—Validity—Opportunity of being heard vis-a-vis statements of third party—Unaccounted silver ornaments and utensils were found and seized during the search at the assessee’s premises—Assessee explained that the said silver items were purchased from one R & Co.—AO made addition to the income of the assessee after recording the statement of M, proprietor of R & Co., behind the back of the assessee—Not justified—AO has heavily relied upon the statement of M and has ignored the subsequent affidavit filed by M which is in variance of his original statement—Since the statement of M was used against the assessee and an affidavit was filed controverting the same, it was obligatory on the part of the AO to allow the prayer of assessee for cross-examination of M—AO having not summoned M under s. 131 in spite of the request of the assessee, evidence of M could not have been used against the assessee—Therefore, the assessment order is vitiated HEIRS AND LRS OF LATE LAXMANBHAI S. PATEL vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF GUJARAT ) (2010) 327 ITR 0290 Opportunity of being heard—During search of one R, key of bank locker along with two packets containing six promissory notes were recovered—Out of those six promissory notes, one was in the sum of Rs. 8,78,358 executed by one K in the capacity of partner of firm DCI—In his statement recorded during search, R stated that the key of locker and the two envelopes were handed over to him by the 80 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR assessee—K also admitted in his statement recorded on the same day at 2.00 AM midnight that he had executed the pronote and signed it on behalf of DCI after obtaining a sum of Rs. 8,78,358— Later, K filed an affidavit that his statement was recorded at late hours in the night under coercion and pressure—Subsequently, K along with two other partners of DCI, made a voluntary disclosure of a sum of Rs. 11 lacs including the amount of Rs. 8,78,358 and same was assessed in the hands of the three partners—Relying on the statement of R and the retracted statement of K, AO made addition of Rs. 8,78,358 under s. 68 in the hands of assesseealso and the same was confirmed by CIT(A) and Tribunal—Not justified—Apparently, there was a violation of principles of natural justice as the statement of one of the important witnesses, namely, R on which heavy reliance was placed by the AO is neither referred to in the assessment order nor copy thereof was given to the assessee nor the assessee was given an opportunity of cross-examining the said R—Authorities could not be absolved from doing so on the ground that the facts stated by R were admitted by the assessee—K had not only retracted his earlier statement but also made a voluntary disclosure, along with two other partners of DCI, in the sum of Rs. 11 lacs which included the amount of pronote of Rs. 8,78,358—Legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, is that if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice—Orders of all the three authorities set aside and addition deleted. vi.COMMISSIONER OF INCOME TAX vs. EASTERN COMMERCIAL ENTERPRISES (HIGH COURT OF CALCUTTA) 210 ITR 0103 Assessee showing a gross profit rate of 5.2%—Revenue being of the opinion that assessee inflated purchases, called in evidence one S from whom assessee made purchases and applied G.P. rate of 30%— S denied having made any sales to assessee in the face of earlier affidavits confirming such sales—Statement of S not furnished to assessee nor opportunity to cross-examine him given—Cross 81 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR examination is sine qua non of the due process of taking evidence and no adverse inference can be drawn against a party unless that party is put on notice of the case made out against him—Matter remanded for cross-examination of S with opportunity to assessee to furnish evidence to rebut the evidence of S vii.PS. Venkateshan Vs. Assistant Commissioner of Income Tax 74 ITD 298 (Cal) Addition could not be made in the hands of the assessee on the basis of statement given by third person without giving opportunity for cross examination. viii.Sunil Agawral vs. Assistant Commissioner of Income Tax 83 ITD 1 (Del) It was held that addition to income could not have been made by the Assessing Officer without confronting the assessee with statement of third party which were adverse to assessee. (ix) CIT Vs. SMC Share Broker Ltd. 288 ITR 345 It was held that in absence of witness being made available for cross examination, his statement could not be relied upon to the detriment of the assessee. Tribunal was justified in setting aside block assessment. (x) CIT Vs. S M Aggarwa1 293 ITR 43 It was held that statement made by the assessee's daughter, cannot be said to be relevant or admissible evidence against the assessee, since the assessee was not given any opportunity to cross examine her and even from the statement, no conclusion can be drawn that the entries made on the relevant page belongs to the assessee and represents his undisclosed income." 8. Under the facts and Circumstances of the case the Learned CIT(A) has erred in disallowing transfer expense claim of Rs. 48,30,000/-. 82 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR IN RESPECT OF THE ABOVE GROUND THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE LEARNED CIT(A). HOWEVER THE LEARNED CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE SUMMARILY WITHOUT CONSIDERING THE SAME IN RIGHT PERSPECTIVE. THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LEARNED CIT(A) ARE QUOTED BELOW: - "The assessee has paid a sum of Rs. 22,30,000/- to ShriRanjeet Singh Chouhan S/o Shri Narayan Singh, B-21, Deepak Marg, Adarsrhnagar, Jaipur. The sum included Rs. 6,82,250/- as brokerage and Rs. 15,47,750/- for removing his tea stall. In support of the payment made to ShriRanjeet Singh Chouhan documentary evidence in the shape of undertaking and compensation agreement dated 11.03.2015 was furnished before the Learned Assessing Officer which was executed on stamp paper of Rs. 100/- and was duly notarized. Copy of agreement with ShriRanjeet Singh Chouhan dated 11.03.2015 is available on paper book page number 94 to 101. The document contains complete address of ShriRanjeet Singh Chouhan and also the details of payment thatwere made. It is submitted that the entire payment was made by cheque, hence the Learned Assessing Officer was not justifying in disbelieving the same and disallowing the same. It is also mentioned in the agreement that the tea stall which was being managed by him on the land would be removed. Thus the consideration was paid for removing the encumbrance of tea stall. The Learned Assessing Officer has disallowed the expenditure on the ground that statement of ShriRanjeeet Singh could not be recorded. The action of the Learned Assessing Officer is not justified in the fact of documentary evidence.The Learned Assessing Officer has not brought any material so as to disallow the claim of the assessee. The following case laws are quoted in support: - i. COMMISSIONER OF INCOME TAX vs. MISS PIROJA C. PATEL (HIGH COURT OF BOMBAY) 242 ITR 582 Compensation paid by the assessee to the hutment dwellers for vacating the land before its sale amounted to cost of improvement and was an allowable expenditure under s. 48 r/w s. 55. ii. COMMISSIONER OF INCOME TAX vs. A. VENKATARAMAN & ORS. (HIGH COURT OF MADRAS) 137 ITR 846 83 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Deduction of expenditure in connection with transfer under s. 48(i)— Amount paid by the seller of property to the tenants in occupation of the property in pursuance of stipulation by purchaser to render vacant possession—Vacant possession was agreed to be given to the purchasers as per the terms of the agreement of sale—Expenditure was incurred wholly and exclusively in connection with the agreement of sale, which preceded the transfer and in fulfilment of a condition of sale—Hence the Tribunal was quite right in holding that the expenditure was deductible under s. 48(i) while computing capital gains. iii. COMMISSIONER OF INCOME TAX vs. SPENCERS AND CO. LTD. (HIGH COURT OF MADRAS) 359 ITR 644 Compensation paid to tenants for delivering vacant possession constitutes "cost of improvement" and that the assessee would be entitled for the indexation benefit." Ground No. 7 & 11 – (Sale of property in Namdev Colony Sanganer Jaipur) 7. Under the facts and Circumstances of the case the Learned CIT(A) has erred in confirming the addition of Rs. 34,99,342/- u/s 50C of the Income Tax Act, 1961 for property sold on 25.03.2013. 11. Under the facts and Circumstances of the case the Learned CIT(A) has erred in assessing the long term capital gain income of Rs. 65,46,034/- for the property sold on 23.03.2013. IN RESPECT OF THE ABOVE GROUND THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE LEARNED CIT(A). HOWEVER THE LEARNED CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE SUMMARILY WITHOUT CONSIDERING THE SAME IN RIGHT PERSPECTIVE. THE LEARNED CIT(A) HAS REJECTED THE SUBMISSION OF THE ASSESSEE IN THE SAME FASHION AS DONE BY HIM IN RESPECT OF THE PROPERTY NEAR ALBERT HALL, JAIPUR. THE LEARNED CIT(A) HAS AGAIN HARPED ON THE FACT THAT WHEN THE ASSESSEE HIMSELF DISCLOSED THE SALE CONSIDERATION OF THE PROPERTY AT RS. 99,99,342/- IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148, HENCE THERE WAS NO QUESTION OF THE SALE CONSIDERATION TO BE ADOPTED AT RS. 65,00,000/-. THE LEARNED CIT(A) HAS DISREGARDED THE SUBMISSION OF THE ASSESSEE THAT ALL THIS HAPPENED 84 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR BECAUSE OF THE IGNORANCE OF THE THEN COUNSEL OF THE ASSESSEE. THE LEARNED CIT(A) HAS NOT COMMENTED UPON THE CASE LAWS AND THE BOARD CIRCULARS STIPULATING THAT NO BENEFIT SHOULD BE TAKEN OF THE IGNORANCE OF THE ASSESSEE. HENCE THE DECISION OF THE LEARNED CIT(A) ON THESE GROUNDS DESERVES TO BE REVERSED. THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LEARNED CIT(A) ARE QUOTED BELOW: - "During the year under consideration the assessee has sold another house property which consisted of an old building in Namdev Colony, Sanganer, Jaipur for Rs. 65,00,000/-. The valuation of the same was made at Rs. 1,00,02,342/- by the Sub-registrar for the purposes of stamp duty. The Learned Assessing Officer haswrongly taken the sale consideration at Rs. 1,00,02,341/- as taken by the sub- registrar. The assessee claimed cost of acquisition of the property at Rs. 13,15,686/- as on 01.04.1981 and indexation cost was claimed atRs. 1,12,09,645/-. The cost of it was worked out @ 600/- per meter. However the Learned Assessing Officer took the cost @ 185/- per meter and worked out the cost of acquisition at Rs. 4,05,650/- as against Rs. 13,15,686/- adopted by the assessee. The Learned Assessing Officer has given credit of indexation cost at Rs. 34,56,308/- as against Rs. 1,12,09,645/- by the assessee. The Learned Assessing Officer has applied rate of 185/- per meter on the basis of report of the DVO in the case of another property sold by the assessee and discussed in the forgoing paras. It is submitted that reference to the DVO was made by the learned A.O. in the case of the property situated at BardiyaColony, Albert Hall, MotiDoongri, Jaipur. In the report the DVO had considered some sale instances where the property in the area were sold for Rs. 68.79 per meter to Rs. 318.49. These rates were considered while valuing the property located at Bardiya Colony near Albert Hall, Jaipur. The property in question is in Sanganer. There is no comparison between these two properties. Further when there was a sale instance of Rs. 318.49 per meter the Learned Assessing Officer has not given any ground for valuing the property at the rate of 185/-. It is also submitted that no two properties are alike and even if these are located in the same area they do fetch different prices. The price factor depends upon the size, location, whether near the road. How far the civic facilities and aminities are and the potentiality of the land.Whether it is corner plot, whether it is facing east. All these things matter .therefore no two plots can fetch the same price but the D.L.C. rates are same for area. In view of this the Learned Assessing Officer was not justified in taking the 85 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR cost of acquisition of Rs. 4,05,670/- as against Rs. 13,15,686/- shown by the assessee. The cost taken by the assessee deserves to be accepted. It is further submitted that on account of lack of knowledge the then counsel of the assessee while filing the return of income has wrongly disclosed the sale consideration at Rs. 99,99,342/- as against apparent consideration of Rs. 65,00,000/-. It is submitted that the DLC rates are common for the area irrespective of the location, size and potentiality of the building. The Learned Assessing Officer was not justified in adopting the sale price at Rs. 1,00,02,342/- taken by the sub-registrar without bringing any material on record establishing that more consideration than Rs. 65,00,000/- was received by the assessee. There is no material on record brought by the Learned Assessing Officer which may establish that more money exchanged hands than Rs. 65,00,000/- as shown in the sale deed. In view of this it is prayed that no advantage may be taken of the mistake of the assessee or the counsel in disclosing the sale consideration at Rs. 99,99,342/-. The same may be taken at Rs. 65,00,000/-. The following case laws are quoted in support: - (i) CIT Vs. K.K. Enterprises 13 DTR 289 (Raj) In this case the Hon’ble High Court has held that in the absence of any evidence on record, it cannot be presumed that land has been sold by the assessee at a higher price than the consideration shown in the registered sale deeds, and the rates of property fixed by the Stamp Valuation Authority for registration purposes cannot be applied to arrive at the price for which the property might have been sold and no addition can be made on account of understatement of sale price. While delivering the decision the Hon’ble Court has also placed reliance on the decision of the Supreme Court in the case of CIT Vs. Shivakami co. Pvt. Ltd. (1986) 159 ITR 71 wherein it was held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis of computation of capital gains. It was further held that capital gains tax is intended to tax the gains of assessee, not what an assessee might have gained, and what is not gained cannot be computed as gained. (ii) CIT Vs. Kishan Kumar &Ors. 315 ITR 204 (Raj) 86 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR In this case the Hon’ble High Court while deciding the appeal of the assessee u/s 158BB also considered the provisions of section 50C and observed as under "There may be cases, where the assets may have been purchased at the price higher than the DLC rates, and rather there may be cases, where the assets may be acquired at a price lesser than the DLC rates. The reasons for either of the situations are innumerable, and cannot be put into any straight jacket. Sec. 50C also does show, that the valuation put by the Stamp Valuation Authority is not required to be adopted as the valuation of the property, as a rule of thumb." (iii) Income Tax Officer Vs. Smt. Anshu Jain 36 SOT 362 (JP) In this case the Hon’ble ITAT Bench held that addition cannot be sustained with reference to provision of section 50C unless corroborative piece of direct evidence have been brought on record. The Hon’ble ITAT relied on the decision of the Hon’ble Supreme Court in the case of K.P. Varghese Vs. ITO (1981) 24 CTR 358. The Hon’ble Supreme Court has passed the decision with reference to section 50(2) but the same goes to the root of the matter. It was held by the Hon’ble Supreme Court that "where the consideration for the transfer has been understand by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an understatement or concealment is on the Revenue. This burden may be discharged by the Revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. In view of the aforesaid favourable decisions and the fact that the Hon’ble Jurisdictional High Court has also held that provisions of section 50C cannot be applied as a rule of thumb, it is pray that the Learned Assessing Officer erred in making the additions 87 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR It is further submitted that vide letter dated 28.03.2016 it was submitted that in Financial Year 1984-85 a sum of Rs. 1,65,300/- was incurred in construction of boundary wall, toilets and renovation and repairs etc. The Learned Assessing Officer has disallowed the same without any ground. The indexation of the same claimed by the assessee works out to Rs. 11,26,685/-. The same may kindly be allowed. In view of the aforesaid facts capital gain as disclosed by the asssessee in the return filed originally on 29.03.2014 may kindly be accepted." CRUX OF THE APPEAL(CONCLUSION)- IN VIEW OF THE AFORESAID DISCUSSION, FACTS OF THE CASE AND THE LEGAL POSITION IT IS THE SUBMISSION OF THE ASSESSEE THAT NO CAPITAL GAINS ARE CHARGEABLE IN RESPECT OF SALE OF LAND SOLD ON 05.12.2012 LOCATED AT ALBERT HALL, MOTIDOONGRI, JAIPUR. THIS IS SO AS THERE WAS NO COST OF ACQUISITION IN THE CASE OF THIS PROPERTY. THIS IS FIRST DEFENSE OF THE ASSESSEE. ALTERNATELY AS A MATTER OF ABUNDANT CAUTION ASSESSEE HAS ARGUED ON THE FACTS OF THE CASE. PROVISIONS OF SECTION 50C ARE NOT ATTRACTED AS THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT MORE MONEY EXCHANGED HANDS THEN MENTIONED IN THE SALE DEED. THE ASSESSEE HAS ALSO SUBMITTED COGENT MATERIAL REGARDING THE COST ADOPTED AS ON 01.04.1981 AND ALSO COST OF IMPROVEMENT/CONSTRUCTION ON THE LAND. NECESSARY EVIDENCE HAS ALSO BEEN FURNISHED REGARDING PAYMENT MADE TO RANJEET SINGH CHOUHAN. AS REGARD THE SALE OF HOUSE PROPERTY AT SANGANER IT HAS BEEN SUBMITTED THAT PROVISIONS OF SECTION 50C ARE NOT ATTRACTED AS THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT MORE MONEY EXCHANGED HANDS THEN MENTIONED IN THE SALE DEED. IT HAS ALSO BEEN SUBMITTED THAT DUE TO LACK OF KNOWLEDGE OF THE THEN COUNSEL MISTAKE WAS COMMITTED IN DISCLOSING COST OF LAND AND HOUSE PROPERTY AS TAKEN BY THE SUB- REGISTRAR FOR PURPOSES OF STAMP DUTY. NO ADVANTAGE SHOULD BE TAKEN OF THE MISTAKE COMMITTED BY THE ASSESSEE. THE APPEAL MAY KINDLY BE DECIDED IN THE VIEW OF THE SUBMISSIONS MADE ABOVE. THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) DESERVE TO BE DELETED. Ground No. 12 - 88 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR Under the facts and Circumstances of the case the Assessing Officer has erred assessing the long term capital gain income of Rs. 25,29,51,372/- for the property sold on 05.12.2012. As discussed in above paras. Ground No. 13 - The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. Not pressed. Your Honor is requested to decide the appeal in favour of the assessee by considering the above submission and oblige.’’ 5. On the other hand, the ld. DR supported the orders of the lower authorities and filed the following decisions. 1.Jyotsna Suri vs ITAT (2003) 128 Taxman 33 (SC) 2. Ram Lal Sharma and another vs ITO, Ward 7(4), Jaipur (ITA No. 522, 523 and 524, 525, 526, 527 & 528/JP/2017 dated 31-10-2017 6. We have heard both the parties and perused the materials available on record. In this case the AO made the assessment vide his order dated 30-02-2016 u/s 143(3) r.w.s. 147 of the Income Tax Act and determined income at Rs.26,07,55,930/- inter alia making addition on account of long term capital gain on sale of property. In first appeal, the ld. CIT(A) has dismissed the appeal of the assessee confirming the action of the AO through various grounds as mentioned 89 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR hereinabove. The ld. AR of the assessee has filed the various documents as well as additional documents showing the case of the assessee is pending before the District Court under Negotiable Instrument Act, 1881 as the cheques issued by the buyer(M/s. Ranka Buildcon) has been dishonoured and the buyer has given direction to the banker to stop the payment and these cheques were returned unpaid as the assessee is not willing to make balance payment considering the title of the property not clear. The Bench taking into consideration the above facts and circumstances of the case find that the issues in question are zigzag. The notices given by the party shows the defect in the title of the property in question. The documents produced related to unpaid amount/ returned cheques does not synchronize the issue which needs proper verification by the AO that whether the consideration received so far would fall as capital gain or other receipt as the assessee has already executed the document by accepting the post dated cheques which were dishonoured by the written request of the purchaser and all these legal and factual development occurred at this stage and all these facts needs to be verified in accordance with the law and in the interest of justice and decided so as to whether the amounts to be considered of the sale consideration at full value of the sale deed, the amount realized by the assessee and considering the present stated set of fact even the capital gain is chargeable to tax or not? All these issues needs a thread bear analysis. Since both the parties have not objected to this 90 ITA NO. 983/JP/2016 SHRIN YOGESH DAS VS ITO, WARD 1(2), JAIPUR additional ground and additional set of facts the Bench feels it appropriate that this issues needs verification from the end of the AO in view of the documents/ additional evidences placed by the ld. AR with regard to the quantum of tax to be charged from the assessee. In this view of the matter, the appeal of the assessee is restored to the file of the AO to decide it a afresh after taking into consideration the written submission as well as additional evidences produced before us, by providing adequate opportunity of being heard to the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31/08/2022 Sd/- Sd/- ¼lanhi xkslkbZ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 31 /08/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Yogesh Das, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 1(2), Jaipur . 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 983/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar