SHRI RAMESH BALANI,AJMER vs. INCOME TAX OFFICER, WARD-1-2, AJMER

This appeal by the assessee is directed against the order dated 09.07.2018 of ld. CIT (Appeals), Ajmer for the assessment year 2010-11. The assessee has raised the following grounds of appeal :-

None has appeared on behalf of the assessee despite the fact that the assessee has been seeking adjournments since filing of the appeal as well as a notice through RPAD was issued to the assessee. The assessee has filed a letter dated 06.04.2019 with the request that the case of the assessee may be heard and disposed off on the basis of written submissions. In view of the above facts, the appeal of the assessee is heard and disposed off ex parte by considering the written submissions of the assessee.

During the year under consideration, the assessee has sold a plot bearing no. 43, Nehru Co-operative Society Ltd., Somaplur Road, Ajay Nagar, Ajmer for a consideration of Rs. 7,00,000/- through his Power of Attorney. The assessee has not declared the capital gain arising from sale of the said property in the return of income. Consequently, the AO has reopened the assessment by issuing a notice under section 148 on 28th March, 2017 based on the information that the assessee has sold an immovable property. The assessee contended before the AO that the property was sold by the assessee in the year 2001 as per the Power of Attorney in favour of Shri Nanak Chand Laungani. The AO after examination of Shri Nanak Chand Laungani held that the property sold through Power of Attorney was sale made by the assessee and accordingly assessed the Long Term Capital Gain in the hands of the assessee. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed.

In the written submissions, the assessee has reiterated his contention that the property was sold in the year 2001 when the assessee executed the Power of Attorney in favour of Shri Nanak Chand Laungani. The AO has examined the assessee and recorded his statement. However, except the Power of Attorney, the assessee could not produce any other material to show that the property was sold at the time of appointing the Attorney. On the contrary, Shri Nanak Chand Laungani filed a declaration stating that no ownership was transferred in his favour and he was only acting on behalf of the assessee who is the owner of the property. Even after going through the sale deed executed by Shri Nanak Chand Laungani, it is revealed that he has acted in the capacity of Power of Attorney-holder of the assessee. Thus neither the sale deed dated 30.07.2009 nor the Power of Attorney reveals that any sale consideration was received by the assessee at the time of execution of Power of Attorney. Even otherwise, the averments made in the Power of Attorney as well as in the sale deed do not constitute any prior sale by the assessee in favour of Shri Nanak Chand Laungani. Thus in the facts and circumstances of the case, this contention of the assessee is devoid of any merit or substance. The assessee has also raised another contention of indexed cost of acquisition and improvement of the property which was not accepted by the AO as well as ld. CIT (A). The assessee sought to file an additional evidence before the ld. CIT (A) in support of the claim of expenditure incurred by the assessee regarding regularization of plot of land, payment made to the Society etc. Once the assessee has produced the receipt issued by the Society as well as the payment made to the authorities for regularization of plot, then the said expenditure should have been examined by the authorities below. Since the AO as well as the ld. CIT (A) declined to accept the said evidence sought to be produced, therefore, in the facts and circumstances of the case indexed cost of improvement/acquisition is required to be considered at the level of the AO. Hence the issue of indexed cost of improvement/acquisition is set aside to the record of the AO to verify and consider the claim along with the supporting evidence and then decide the same as per law.

Since the assessee has not declared the sale of this property in the return of income for the year under consideration and subsequently the AO received the information about the sale of the property in question, therefore, these facts came to the knowledge of the AO constitute a tangible material to form the belief that the income assessable to tax has escaped assessment. Hence, I do not find any merit or substance in the ground no. 2 of the assessee’s appeal. The same is dismissed.

In the result, the appeal of the assessee is partly allowed for statistical purposes.