Shahi Bala, Pune V. Income-tax Officer, Ward - 4(3), Pune

ITA 999/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1544 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 05-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: K SRINIVASAN
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO. 998/PUN/2018 / ASSESSMENT YEAR : 2013-14 VIJAYKUMAR PREMNATH BHATT, H.NO.05, ANAND WASTI, SHRI PRAYAG DHAM ROAD, KOREGAON MUL, TAL. HAVELI, DIST. PUNE 412 202 PAN : AJSPB8958P VS. ITO, WARD-4(3), PUNE (APPELLANT) (RESPONDENT) . / ITA NO. 999/PUN/2018 / ASSESSMENT YEAR : 2013-14 SHAHI BALA, H.NO.05, ANAND WASTI, SHRI PRAYAG DHAM ROAD, KOREGAON MUL, TAL. HAVELI, DIST. PUNE 412 202 PAN : ABUPB5719Q VS. ITO, WARD-4(3), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY DIFFERENT BUT RELATED ASSESSEES RE LATE TO THE COMMON ASSESSMENT YEAR 2013-14. SINCE MOST OF THE ISS UES RAISED IN THESE APPEALS ARE COMMON, WE ARE, THEREFORE, PROCEEDING APPELLANT BY SHRI K. SRINIVASAN RESPONDENT BY SHRI M.K. VERMA DATE OF HEARING 18-03-2019 DATE OF PRONOUNCEMENT 19-03-2019 ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 2 TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E, SH. VIJAYKUMAR PREMNATH BHATT ALONG WITH HIS WIFE, THE OTHER ASSESSEE, NAMELY, MS. SHAHI BALA, TRANSFERRED CERTAIN PIE CE OF LAND FOR A CONSIDERATION OF RS.2.12 CRORE ON 18-06-2012. T HE CASE WAS SELECTED FOR SCRUTINY UNDER COMPUTER ASSISTED SCRUTINY SELECTION (CASS). THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN OF RS.50,41,580/- AGAINST THE SALE CONSIDERATION OF RS.2.12 C RORE. AFTER CLAIMING CERTAIN EXPENDITURE OF SALE, I.E. DEVELOPMENT OF LAND, COMMISSION EXPENSES AND AFTER INDEXATION OF COST OF LAND AND FURTHER CLAIMING EXEMPTION U/S.54F ETC., THE ASSESSEES CLAIME D TOTAL LONG TERM CAPITAL GAIN AT NIL. THE ASSESSING OFFICER (AO) VERIF IED CERTAIN ASPECTS OF SUCH COMPUTATION OF CAPITAL GAIN. OUT OF TO TAL COMMISSION OF RS.22.00 LAKH CLAIMED TO HAVE BEEN PAID BY THE ASSESSEE TO SIX PERSONS, FOR WHICH DEDUCTION WAS CLAIMED IN THE COMPUTATION OF CAPITAL GAINS, THE AO CALLED FOR INFORMATION U/S.133(6) FROM SUCH PERSONS. FOUR PERSONS OUT OF SUCH SIX COMMISSION RECEIVERS, CONFIRMED THE RECEIPT OF COMMISSION AND THE OTHER TWO PERSONS, NAMELY, PUNAM R. DESAI AND RAMCH ANDRA ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 3 DESAI TO WHOM THE ASSESSEE HAD CLAIMED TO HAVE PAID COMMIS SION AT RS.4.00 LAKH EACH, DID NOT RESPOND. ACCORDINGLY, THE A O DID NOT ALLOW DEDUCTION FOR THE SAID SUM OF RS.8.00 LAKH. THE LD. CIT(A) CONFIRMED THE ADDITION BECAUSE THE ASSESSEE COULD N OT FILE ANY EVIDENCE IN SUPPORT OF SUCH PAYMENT BEFORE HIM AS W ELL. 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE LD. AR CONTENDED THAT THE ASSESSE E WAS NOT HAVING GOOD TERMS WITH THESE TWO PERSONS TO WHOM PAYM ENT OF RS.8.00 LAKH WAS MADE THROUGH BANKING CHANNEL. IT WAS EXPLAINED THAT THE AMOUNT WAS GENUINELY PAID TO THESE TWO PERSONS. IT IS SEEN AS AN ADMITTED POSITION THAT THE ASSESSEE COULD NOT PRODUCE THE SE TWO PERSONS BEFORE THE AO DESPITE REQUEST MADE BY HIM IN THIS REGARD. IN VIEW OF THE FACT THAT THE LD. AR HAS CLAIMED THA T THESE TWO PERSONS CAN BE NOW MADE AVAILABLE, WE ARE OF THE CO NSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS SCORE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO. WE ORDER ACCORDINGLY AND DIRECT HIM TO E XAMINE THE CLAIM OF THE ASSESSEE IN RESPECT OF COMMISSION PAID TO THESE TWO PERSONS AT RS.8.00 LAKH WHICH IS SHARED BY BOTH THE AS SESSEES IN QUESTION. ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 4 4. THE OTHER GROUND IS AGAINST THE DEVELOPMENT COST OF LAND CLAIMED BY THE ASSESSEE AT RS.28,93,620/-. 5. THE ASSESSEES CLAIMED THAT THEY PURCHASED A LAND IN THE MONTH OF JUNE, 2003 AT A TOTAL COST OF RS.4,84,700/-. T HEREAFTER, EXPENSES WERE INCURRED FOR THE DEVELOPMENT OF SUCH LAND IN THE FORM OF CONSTRUCTION OF BOUNDARY WALL, BOREWELL EXPENSES , EXCAVATION WORK, ELECTRICAL PUMP, WATER TANK AND LABOUR PAY MENT ETC. IT WAS ONLY SUCH DEVELOPED LAND WHICH WAS SOLD TO THE PURCHASER. THE ASSESSEE WAS CALLED UPON TO SUBMIT THE BILLS AND VOUCHERS IN RESPECT OF SUCH EXPENSES. THE ASSESSEE C LAIMED THAT ALL BILLS WERE NOT READILY AVAILABLE. COPIES OF CERTAIN BILLS WERE PRODUCED. THE AO DEPUTED INSPECTOR TO VERIFY THE ASSESS EES CLAIM OF DEVELOPMENT OF LAND. THE INSPECTOR SUBMITTED A REPORT TO THE AO, WHICH HAS BEEN REPRODUCED ON PAGE 6 OF THE ASSESS MENT ORDER. THE AO DISALLOWED 10% OF TOTAL EXPENSES INCURRED BY THE ASS ESSEE AND COMPUTED CAPITAL GAINS ACCORDINGLY. THE LD. CIT(A) AFF IRMED THE VIEW TAKEN BY THE AO ON THIS COUNT. 6. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE LODGED A CLAIM BEFORE THE AO THAT HE INCURRED LAND DEVELOPMENT EXPENSES A T ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 5 RS.28,93,620/-. THE INSPECTOR, ON PHYSICAL VERIFICATION, REPORTED THAT DEVELOPMENT OF LAND HAS BEEN MADE BY THE ASSESSEE, E.G. BOUNDARY WALL, LEVELING OF LAND, CONSTRUCTION OF BORE-WELLS (3 NOS.- 2 IN THE SOLD LAND, I.E. ADMEASURING 39R AND 1 IN THE RESID ENTIAL HOUSE PREMISES ADMEASURING APPROX. 6 R) ELECTRICAL PUMP SETS, ELECTRICAL CONNECTIONS, UNDERGROUND DRAINAGE CONNECTIONS, WATER PIPELINE CONNECTIONS, WATER TANK ETC. HAS BEEN MADE BY THE ASSESSEE. THUS, IT IS APPARENT FROM THE REPORT OF THE INSPECTOR THAT THE CLAIM OF THE ASSESSEE STOOD VERIFIED AND VOUCHED THAT HE CARRIED OUT DEVELOPMENT OF LAND BY CONSTRUCTING BOUNDARY WALL, BORE WELLS, INSTALLATION OF ELECTRICAL PUMP SETS ETC. WHEN THE REPORT OF THE INSPECTOR WAS GIVEN TO THE AO FORTIFYING THE CLAIM OF THE ASS ESSEE, THERE COULD HAVE BEEN NO REASON TO DISALLOW 10% OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN THIS REGARD. SUCH AN AD HOC ADDITION, IN OUR CONSIDERED OPINION, CANNOT BE SUSTAINED. WE, THEREFORE, ORDER TO DELETE THE ADDITION. 7. THE NEXT GROUND IS AGAINST THE EXEMPTION CLAIMED U/S.54F OF THE ACT. 8. THE ASSESSEE CLAIMED EXEMPTION U/S.54F BY CONTENDING TH AT HE INCURRED EXPENDITURE OF RS.24,36,997/- ON THE CONSTRU CTION OF ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 6 RESIDENTIAL HOUSE AT THE REMAINING PLOT OF THE UNSOLD LAND. O UT OF SUCH EXPENDITURE, THE ASSESSEE CLAIMED ONLY A SUM OF RS .20.00 LAKH WAS DEVOTED TO RESIDENTIAL HOUSE. THE INSPECTOR WHO CARRIED OUT VERIFICATION, REPORTED THAT THE UNSOLD LAND WAS DEVELOPED BY THE ASSESSEE AND HIS WIFE BY MEANS OF BOUNDARY WALL, LEVELING OF LAND, CONSTRUCTION OF BOREWELLS, ELECTRICAL PUMP SETS ETC., UNDERGR OUND DRAINAGE CONNECTIONS AND WATER PUMP CONNECTIONS ETC., PURC HASE OF WOODS FOR DOORS AND WINDOWS. THE AO DISALLOWED 10% OF THE EXPENDITURE CLAIMED AT RS.20.00 LAKH, AGAINST WHICH THE AS SESSEES HAVE COME UP IN APPEAL BEFORE THE TRIBUNAL. 9. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS SEEN THAT THE AO ONCE AGAIN RESORTED TO AD HOC DISALLOWANCE OF THE ASSESSEES CLAIM WHEN THE INSPECTOR, WHO VISITED THE SITE, ACCEPTED THE ASSESSEES CLAIM OF HAVING CAR RIED OUT CONSTRUCTION OF RESIDENTIAL HOUSE. UNDER THESE CIRCUMSTANCE S, SUCH AN AD HOC DISALLOWANCE CANNOT BE SUSTAINED. WE, THEREFORE, ORDER FOR DELETION OF THE ADDITION. 10. APART FROM THESE THREE ISSUES RAISED, WHICH ARE COMMO N IN BOTH THE APPEALS UNDER CONSIDERATION, THERE IS ANOTHER ISSUE RAISED ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 7 IN THE CASE OF SHAHI BALA ABOUT THE DENIAL OF EXEMPTION U/S.5 4F TO THE TUNE OF RS.6,66,000/-. 11. THE ASSESSEE CLAIMED EXEMPTION OF RS.20.00 LAKH U/S .54F OF THE ACT ON THE CONSTRUCTION OF RESIDENTIAL HOUSE AT AMRITSAR, PUNJAB. COST OF PLOT WAS SHOWN AT RS.13.44 LAKH AND THE REMAINING AMOUNT OF RS.6,66,000/- WAS SHOWN TOWARDS CONSTRUCTION. THE AO ALLOWED COST OF PLOT BUT DID NOT ALLOW EXEMPTION U/S.54F IN RESPECT OF COST OF CONSTRUCTION BY OBSE RVING THAT NO BILLS AND VOUCHERS ETC., EXCEPT CERTAIN SELF-MADE VOU CHERS, WERE PRODUCED. THE LD. CIT(A) SUSTAINED THE ACTION OF THE AO. 12. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RE LEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE AO, WHILE REJECTING THE ASSESSEES CLAIM, HAS OBSERVED THAT FURTHER CONSTRUCTION OF THE HOUSE IS GOING ON AT AMRITSAR, PUNJAB. PHYSICAL VERIFICATION OF THE SAME IS NOT POSSIBLE DUE TO PAUCITY OF TIME AND DISTANCE FROM PUNE . THE ASSESSEE ALSO COULD NOT PRODUCE ANY INVOICES OF THE CONSTRUCTION MATERIAL CLAIMED TO HAVE BEEN PURCHASED AND US ED IN RESPECT OF ITS PUNJAB PROPERTY. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD ME ET ADEQUATELY IF THE IMPUGNED ORDER ON THIS SCORE IS SET-ASIDE . WE ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 8 ORDER ACCORDINGLY AND DIRECT THE AO TO VERIFY THE ASSESSEE S CLAIM IN THIS REGARD WITH RELEVANT DOCUMENTS. THE ASSESSEE IS DIRE CTED TO PRODUCE DOCUMENTS IN SUPPORT OF THE CLAIM. NEEDLESS TO SA Y, THE ASSESSEE WILL BE ALLOWABLE REASONABLE OPPORTUNITY OF HEARING. 13. BEFORE PARTING WITH THESE TWO APPEALS, WE WOULD LIKE TO ADDRESS AN ADDITIONAL GROUND RAISED BY THE LD. AR IN BOTH T HE APPEALS TO THE EFFECT THAT THE AO EXCEEDED HIS JURISDICTION IN FINALIZING CASS SCRUTINY CASE BEYOND THE SCOPE OF CBDT CIRCU LAR AND WITHOUT FOLLOWING DUE PROCESS. THE LD. AR CONTENDED THA T THE AO INITIATED LIMITED SCRUTINY IN RESPECT OF EXEMPTION U/S.54F ETC. BY EXAMINING OTHER ISSUES, IT WAS CLAIMED, THAT THE AO TRANSGRESSED HIS JURISDICTION. THIS WAS COUNTERED BY THE LD. DR. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOING THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND FROM PARA 8 OF THE ASSESSMENT ORDER THAT THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS UNDER THE CATEGORY NON-CORPORATE ASSESSEES HAVING NO BUSINESS AND WHO HAVE CLAIMED MUCH DEDUCTION U/S.54B/54C/54D/54G/54GA OF THE ACT AND CAPITAL GAINS CONSIDERATION IN ITR IS LESS THAN SALE OF PROPERTY REPORTED IN AIR. IT IS EVIDENT FROM THE ABOVE EXTRACTED PORTION OF THE ASSESSM ENT ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 9 ORDER THAT THE LIMITED SCRUTINY WAS QUA EXEMPTION, INTER ALIA, U/S.54 ETC. AND CAPITAL GAIN CONSIDERATION. ALL THE ISSUES TAKEN NOTE BY THE AO IN THE CASE OF BOTH THE ASSESSES ARE QUA THE COMPUTATION OF THE ULTIMATE AMOUNT OF CAPITAL GAINS FROM THE TRANSFER OF THE SAME PROPERTY. IT IS NOT AS IF THE AO, AFTER INITIATING LIMITED SCRUTINY FOR EXAMINATION OF CAPITAL GAINS, PROCEEDED TO MAKE SOME OTHER ADDITION UNDER SOME OTHER HEADS ETC. AS SUCH, NO F AULT CAN BE FOUND IN THE ACTION OF THE AO IN EXAMINING DIFFERENT FACE TS OF THE COMPUTATION OF CAPITAL GAIN. WE, THEREFORE, DISMISS THE ADDITIONAL GROUND RAISED IN BOTH THE APPEALS. 15. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 19 TH MARCH, 2019 ITA NOS.998 & 999/PUN/2018 VIJAYKUMAR P. BHATT & SHAHI BALA 10 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-3, PUNE 4. 5. 6. THE PR. CIT-2, PUNE , , SMC / DR SMC, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 18-03-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18-03-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *