ALOK GHOSH ,KOLKATA vs. ITO,WD.28(4),KOLKATA, KOLKATA

Present for: Appellant by : Shri Rip Das, FCA Respondent by : Ms. Monalisha Pal Mukherjee, JCIT Date of Hearing : 29.08.2023 Date of Pronouncement : 31.08.2023 O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

by the assessee are reproduced as under: “1. That the Assessment Order passed by the Learned Income Tax Officer, Ward - 28(4) / Kolkata, u/s 143(3) of the Income Tax Act, 1961 as well as the confirmation / modification of the same in the Appeal Order passed u/s 250 of the Act is unlawful, unwarranted and against natural justice.

2. That your appellant submits that correct computation of Long Term Capital Gain be directed to be computed by considering the Indexed Cost of both the properties sold as per the provisions of section 48(2) of the Act and so also proper deduction u/s 54 of the Act be allowed for investment in new house property. Hence it is prayed that arbitrary addition of Rs.13,23,960/- be directed to be deleted from the head of "Long Term Capital Gain" by making correct computation by allowing indexation benefit u/s 48(2) and deduction u/s 54 of the Act. [Relief Claimed - Deletion of Rs.13,23,960/-].”

2. However, the said declared income was recomputed at Rs.17,63,420/- in the Assessment Order passed u/s 143(3) of the Income Tax Act, 1961 dated 04.12.2018 passed by the Learned Income Tax Officer, Ward - 28(4), Kolkata (hereinafter referred to as Ld. ITO) by disallowing the entire claim of deduction preferred u/s 54 of the Act, without stating any sustainable reason thereof.

3. Being aggrieved by the said Order passed u/s 143(3), your appellant preferred an Appeal before the Learned Commissioner of Income Tax (Appeals) - 8, Kolkata on 18.12.2018. The Appeal Order was passed on 18.05.2023 by the Learned Commissioner of Income Tax, NFAC, Delhi [hereinafter referred to as Ld. CIT(A)] by modifying / upholding the order passed u/s 143(3) of the Act. The Learned CIT (A), while passing order u/s 250 has stated that response has been submitted by the appellant but no written submission has been filed. Therefore, the instant appeal is preferred by your appellant before your honours for redressal and appraisal, by enumerating the facts of the case as below.

4. Before us, Ld. Counsel for the assessee pointed out that Ld. AO has computed long term capital gain on the sale transaction of two house properties in contravention to the provisions of the Act and adopted his own methodology to arrive at taxable long term capital gain. For this, he referred to para 5 of the impugned assessment order wherein the total sales value of both the house properties taken together is at a value of Rs. 85 lakhs. However, instead of deducting cost of acquisition with indexation, Ld. AO has taken the amount of “loan to HDFC” of Rs.10,39,000/-. Ld. AO has allowed the claim of commission or brokerage of Rs. 1 lakh and has also given a deduction for investment in new house property. Since no deduction was given for the cost of acquisition with their indexation, assessee went in appeal before the Ld. CIT(A).

5. Ld. Counsel referred to para 7.30 of the order of Ld. CIT(A) to point out that he had opined about committing of mistake by the Ld. AO in allowing deduction of Rs.10.39,000/- of loan to HDFC. In this respect, Ld. CIT(A) noted that such a mistake committed by Ld. AO is a prima facie mistake, apparent from record, amenable for rectification u/s. 154 of the Act. He thus, directed the Ld. AO to rectify the said mistake by invoking the provisions of section 154 after affording an opportunity of being heard to the assessee.

5. Ld. Sr. DR. pointed the fact that assessee suo moto computed long term capital gain arising from sale of two properties without claiming any deduction u/s. 48 of the Act towards cost of acquisition with indexation. He referred to income tax return filed in Form ITR-2 dated 06.07.2016 wherein no claim is made towards cost of acquisition with indexation. On this fact, Ld. CIT(A) held that assessee is not entitled to claim deduction u/s. 48 for the first time, during the course of assessment proceedings unless made by way of filing revised return u/s. 139(5) of the Act. He thus, held that since assessee has not filed any revised return for the purpose of claiming deduction of cost of acquisition with indexation u/s. 48 of the Act, claim of the assessee is not admitted.

6. Ld. Counsel for the assessee referred to computation of income placed at page 3 of the paper book to submit that assessee had claimed deduction and offered Rs.31,000/- as income from capital gain which was subjected to tax @ 20%. He admitted that there was mistake in claiming the correct deduction towards cost of acquisition with indexation from the full value of sale consideration of the two house properties which was corrected in the course of assessment proceedings as well as before the Ld. CIT(A). In this respect Ld. Counsel referred to the correct computation of income which included claim of cost of acquisition with indexation, placed at page 4 of the paper book. He thus, prayed that the matter may be remitted back to the file of Ld. AO who can examine and verify the details furnished by the assessee, substantiating the claim since all the relevant documents are placed in the paper book, corroborating the cost of acquisition with indexation and claim of deduction u/s. 54 for investment made in new house property.