Jai Prakash Bhartia, Kolkata V. DCIT, CC-2(2), Kolkata

ITSSA 33/KOL/2022

AI Insights

The case involves Jai Prakash Bhartia, the appellant, who contested the rectification of a capital gain computation by the Assessing Officer (AO) following a search and seizure operation under section 132 of the Income Tax Act. The AO issued a notice under section 154, claiming an apparent mistake in the original assessment regarding the indexation of the cost of silver utensils sold, which the assessee had valued based on their fair market value as of 01.04.1981, instead of the acquisition cost in 1968. The CIT(Appeals) upheld the AO's decision, leading to the appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302883 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-12-2022
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TAKING COST OF
• Keywords: Cost of acquisition; Fair market value; Set aside
• Section: 132; 143(3); 153A

Judgement Text

IT(SS)A No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Rajesh Kumar, Accountant Member I.T.(SS)A. No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia,.............................Appellant 20, Mandevilla Gardens, Flat-3D, Kolkata-700019 [PAN: AEAPB3267J] -Vs.- Deputy Commissioner of Income Tax,.....Respondent Central Circle-2(2), Kolkata, 110, Shantipally, 4 th Floor, Kolkata-700107 Appearances by: Shri Debesh Poddar, A.R., appeared on behalf of the assessee Shri Vijay Kumar, Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing : February 22, 2023 Date of pronouncing the order : February 23, 2023 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), Kolkata-20 dated 11.10.2021 passed for A.Y. 2006-07. IT(SS)A No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia 2 2. This appeal was presented before the Tribunal on 17.05.2022 and according to the registry, it is time- barred by 158 days. It is pertinent to note that these days already stood excluded by the general directions issued by the Hon’ble Supreme Court. This period falls in the COVID period therefore, the appeal is not to be treated as time-barred. 3. The assessee has taken five grounds of appeal, but in brief his grievance is that the ld. CIT(Appeals) has erred in confirming the 154 order passed by the ld. Assessing Officer vide which the computation of long- term capital gain has been disturbed by the ld. Assessing Officer. 4. Brief facts of the case are that a search and seizure operation under section 132 of the Income Tax Act was conducted on the residential premises of the assessee and accordingly a notice under section 153A was issued and served upon the assessee. The ld. Assessing Office r has ultimately passed the asse ssment order unde r section 153A read with 143(3) on 21.03.2013. The ld. Assessing Officer thereafter issue d a notice under section 154 on 16.03.2017 vide which he sought to rectify an apparent mistake crept in the assessment order, the reasons of which ld. Assessing Officer sought to exercise such powers under section 154/155 are – Particulars of mistake proposed to be rectified IT(SS)A No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia 3 Wrong calculation of indexation while calculating capital gain arising from sale of silver utensils. 5. Brief facts of the case are that the assessee had declared a capital loss of Rs.2,27,059/- on sale of silve r utensils. According to the assessee, silver utensils were purchased before 31.03.1968. They were disclosed unde r Voluntary Disclosure of Income Scheme, 1997 at a value of Rs.64,153/-. For the purpose of capital gain/loss computable in A.Y. 2006-07 or any other assessment year i.e. 2004-05, 2005-06, the value of such silver utensils for the purpose of determining acquisition cost it is to be equivalent to the fair market value as on 01.04.1981. The ld. Assessing Officer has harboured belief that capital loss declared by the assessee by taking cost of acquisition value of the silver utensils as on 01.04.1981 instead of 1968 value and thereafter indexation is an apparent error cre pt in the order, which re quired rectification. In other words, the ld. Assessing Officer was of the view that valuation of the silver utensils for the purpose of acquisition cost ought to be taken from the date of acquisition, i.e. 1968, whereas the assessee was of the view that such valuation is to be taken from 01.04.1981 as provided in the Act and accordingly the acquisition cost of prior years when actually asset was acquired is not be taken into consideration. IT(SS)A No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia 4 6. With the assistance of ld. Representative, we have gone through the record carefully. The powers unde r section 154 can be exercised only when the mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record, and not a mistake, which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. It is a disputable aspect whether the cost of acquisition, for the purpose of indexation is to be taken from 1968 when these utensils were acquired or from 01.04.1981. Such an issue is required to be determined on the basis of long drawn process of reasoning as well as construction of the meaning of the provision. It is not a simply apparent error. The ld. Assessing Officer has wrongly taken it as an issue, which can be rectified and the ld. 1 st Appellate Authority amplified that error by concurring with the ld. Assessing Officer. This aspect cannot be rectified by exercising the powers under section 154. Accordingly we set aside the order of the ld. CIT(Appeals) as well as quash the 154 order. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 23 r d February, 2023. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 23 rd day of February, 2023 Copies to :(1) Jai Prakash Bhartia, 20, Mandevilla Gardens, Flat-3D, Kolkata-700019 IT(SS)A No. 33/KOL/2022 Assessment Year: 2006-2007 Jai Prakash Bhartia 5 (2) Deputy Commissioner of Income Tax, Central Circle-2(2), Kolkata, 110, Shantipally, 4 th Floor, Kolkata-700107 (3) Commissioner of Income Tax(Appeals), Kolkata-20; 4) Commissioner of Income Tax- ; (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.