Jay Deepakkumar Rawal, Surat V. ACIT Central Circle-4, Surat

ITSSA 77/SRT/2022

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The case involves Jay Deepakkumar Rawal, the appellant, who contested the addition of Rs.16,11,628 as undisclosed long-term capital gain by the Assessing Officer under sections 143(3) r.w.s. 153C of the Income Tax Act, 1961. The addition was based on discrepancies between the sale consideration and the cost of acquisition of a property, as recorded in the assessee's return and the seized documents during a search operation. The Tribunal's decision focused on the inconsistency in the Assessing Officer's use of seized documents for determining sale consideration but not for the cost of acquisition, leading to the deletion of the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302227 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 22-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Document seized; Cost of acquisition; Documents seized
• Section: 132; 271(1)(c); 139; 143(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM आयकर (खोज और जÞती) सं./IT(SS)A No.77/SRT/2022 (िनधाŊरणवषŊ / Assessment Year: (2015-16) (Physical Court Hearing) Jay Deepakkumar Rawal 501, Suramya Apartment, Dumas Road, Piplod, Surat-395007 Vs. Assistant Commissioner of Income Tax, Central Circle-4, Surat, Room No. 508, 5 th Floor, Aaykar Bhavan, Majura Gate, Surat-395001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AGMPR 7368 G (अपीलाथŎ/Appellant ) (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से/ Assessee by : Shri P.M. Jagasheth, CA राजˢ की ओर से /Respondent by : Shri Ashok B.Koli, CIT-DR सुनवाईकीतारीख/ Date of Hearing : 04/08/2023 घोषणाकीतारीख/Date of Pronouncement : 11/09/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to the assessment year 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-4, Surat dated 14.05.2022, which in turn arises out of an assessment order passed by the Assessing Officer (‘AO’ for short) u/s 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide order dated 24.12.2018. 2. Grounds of appeal raised by assessee are as follows: “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.16,11,628/- on account of long term capital gain calculated and rejecting cost of acquisition with indexation of Rs.47,91,931/- against the sale value of Rs.54,70,101/- declared in return field u/s 153C of the Act and accepted cost of acquisition with indexation filed in original return of income filed u/s 139 of the Act Rs.38,58,473/-. Page | 2 IT(SS)A No.77/SRT/2022 A.Y. 2015-16 Jay D. Rawal 2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in calculating long term capital gain. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961. 4.It is therefore prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. The assessee has also filed additional ground of appeal on 10.07.2023, which is reproduced below: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in farming assessment under section 143(3) r.w.s. 153C of the Act is not tenable in the eyes of the law since such assessment has been framed on the basis material found and seized during the course of search action carried out u/s 132 of the Income Tax Act, 1961 from the residence premises of the assessee.” 4. At the outset, Learned Counsel for the assessee, informs the Bench that assessee does not wish to press above “additional ground of appeal”, therefore, we dismiss the additional ground of appeal raised by the assessee as “not pressed”. 5. Appeal arises this way. The assessee is an individual and filed his return of income on 20.03.2016, declaring total income of Rs.14,60,310/-. There was search action u/s 132 of the Act, in the K. Star group of cases, where certain incriminating documents relating to the assessee were found, the details of which were reproduced by the assessing officer on page nos. 1&2 of the assessment order. The solitary issue in the assessee`s case is that when sale consideration of a capital asset is taken by the assessing officer from the seized documents, then cost of acquisition should also be accepted which is mentioned in the seized documents to compute long term capital. Page | 3 IT(SS)A No.77/SRT/2022 A.Y. 2015-16 Jay D. Rawal According to the Assessing Officer, the assessee had offered ‘long term capital gain’ (in brief ‘LTCG’) on sale of property at Rs.15,58,473/-. During the course of search in the residence of the assessee, a document relating to sale of immovable property was found and seized as Annexure A-1 page 114 to 144. As per the said document, the assessee had sold flat No.A-701, in project Neelkanth Residency, on 25.07.2014. The sale consideration mentioned in the sale deed was Rs.18,85,000/- (Though the sale consideration shown in return was Rs.23,00,000/-). In the excel sheet found in assessee’s laptop show the total sale consideration of the said property at Rs.54,70,101/-. In response to notice u/s 153C of the Act, the assessee accepted the full value of consideration received on sale of flat at Rs.54,70,101/- and offered the consideration received in cash, apart from Rs.23,00,000/- offered for tax amounting to Rs.31,70,101/-. However, the assessee revised his indexed cost from Rs.38,58,473/- to Rs.47,91,931/- on the basis of the fact that since Assessing Officer has taken the sale consideration from seized material therefore Assessing Officer ought to take cost of acquisition of that asset which was mentioned in the seized material. However, assessing officer has rejected the contention of the assessee and made the addition to the tune of Rs.16,11,628/- as undisclosed long term capital gain. 6. On appeal, ld CIT(A) confirmed the action of the Assessing Officer. Aggrieved by the order of Ld. CIT(A) the assessee is in further appeal before us. 7. The Shri P.M. Jagasheth, Learned Counsel for the assessee, pleaded that addition was made by the Assessing Officer based on the seized material, that is, Assessing Officer has considered the sale consideration of the asset per seized material. Therefore, the expenditure relating to that asset should also be considered as per seized material. There should be harmony Page | 4 IT(SS)A No.77/SRT/2022 A.Y. 2015-16 Jay D. Rawal in the computation of LTCG. Therefore, ld Counsel contended that if the expenses were to be taken as per seized material, then there would be no addition in the hands of the assessee, and therefore the addition made by the Assessing Officer may be deleted. 8. On the other hand, Ld. CIT-DR for the Revenue reiterated the findings of Assessing Officer and submitted that assessee has originally taken the cost of acquisition of the asset, as shown in the return of income, therefore cost shown in the return of income may be continued and sale consideration of that asset may be taken from seized material, to compute the long term capital gain. The Ld. CIT-DR also pointed out that assessee has paid money out of unexplained amount, so cost of acquisition mentioned in the seized material may not be considered, and therefore addition made by the Assessing Officer may be sustained. 9. We have heard the rival parties and have gone through the material placed on record. We note that an "apple-to-apple" comparison is often needed in legal cases to ensure that similar facts and circumstances are being considered when making legal decisions. This principle is closely related to the concept of fairness in adjudication. The legal systems aim to treat similar cases similarly to ensure fairness and consistency in the application of the law. In case of ‘equity and justice’ an "apple-to-apple" comparison helps to ensure that the legal outcome is just and equitable. If different standards are applied to similar cases, it can result in unequal treatment under the law. 10. In the assessee`s case under consideration, we have observed that in order to compute the long term capital gain (LTCG), the Assessing Officer took sale consideration from the seized material, however, the cost of acquisition of the said asset was also mentioned in the seized material, but Page | 5 IT(SS)A No.77/SRT/2022 A.Y. 2015-16 Jay D. Rawal the Assessing Officer has not taken into account to compute LTCG, which is not tenable. It creates inequality in the computation of LTCG, that is, when sale consideration of a capital asset is taken by the Assessing Officer from the seized documents, then cost of acquisition should also be accepted, which is mentioned in the seized documents, to compute long term capital. In other words, when the sale consideration and cost of acquisition, both are mentioned in the seized material, then in that circumstances the Assessing Officer has to consider both to compute LTCG. Therefore, the approach of the Assessing Officer to take the sale consideration from seized material and cost of acquisition from assessee`s return of income, is not acceptable, as it creates discrimination in the computation of LTCG. As we have pointed out above, that an "apple-to-apple" comparison is essential in legal cases to ensure consistency, fairness, and the proper application of legal principles. Therefore, considering the foregoing reasons, facts and circumstances, we are of the view that addition made by the Assessing Officer should be deleted. Accordingly, we delete the addition. 11. In the result, appeal of the assessee is allowed. Order pronounced on 11/09/2023 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 11/09/2023 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat rue copy/