HARISH KUMAR BAHETI,BHILWARA vs. ACIT, CIRCLE, BHILWARA

आदेश / O R D E R

Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2014-15 contest the order of Ld. Commissioner of Income-Tax-(Appeals), Ajmer, [in short referred to as ‘CIT(A)’],

ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 Appeal No.408/2016-17 dated 09/11/2017 on following effective grounds:-

ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 related with quantum of cost of improvement incurred by the assessee starting from Financial Years (FY) 2001-02 to 2012-13. As per assessee’s submissions, it incurred purchase & construction cost in the following manner:- No. Particulars Date Amount (Rs.) 1. Purchase & Construction 21/08/2001 Rs.9 Lacs 2. Improvement 31/03/2003 Rs.6.50 Lacs 3. Improvement 31/03/2005 Rs.9 Lacs 4. Improvement 31/03/2007 Rs.5 Lacs 5. Improvement 31/12/2011 Rs.7.50 Lacs 6. Improvement 31/03/2013 Rs.3 Lacs Total Rs.40 Lacs Accordingly, the assessee was asked to furnish the details of cost and cost of improvement. In reply, it was submitted that construction was made on the plot from time to time as per assessee’s financial position. The same was stated to be sourced from financial institutions like ICICI Bank Limited & LIC Housing Finance Ltd. (LIC HFL). In support of the same, loan disbursement certificates issued by the financial institutions were furnished. 3.3 Notices u/s 133(6) was issued to both the lenders for confirmation of account. The information received from ICICI Bank Ltd revealed that loan of Rs.5 Lacs sanctioned in FY 2006-07 was personal loan whereas loan of Rs.14.50 Lacs taken from LIC HFL was home entity loan which could be used for other purposes like children education / marriage / travel etc. Further, year of improvement did not match with the date of loan sanctioned. Accordingly, the assessee was show-caused as to why the cost of improvement be not denied.

4 ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 3.4 Although the assessee reiterated its stand, however, it was noted that the though property was purchased during financial year 2001-02 but the loan was sanctioned on 29/12/2002 which was claimed to be utilized in FY 2001-02. The lease deed dated 13/09/2002 showed that the land was purchased in FY 2002-03 and thereafter the building was constructed. Accordingly, the purchase date and initial construction period should be FY 2002-03 and not 2001-02 to compute indexation benefit. 3.5 The assessee claimed cost of improvement of Rs.6.50 Lacs in FY 2002-03. However, from the details submitted regarding source of investment, no improvement was shown to have been done in FY 2002-03 and therefore, the said improvement was disallowed. Out of loan of Rs.9 Lacs sanctioned in FY 2004-05, an adhoc disallowance of 10% was made since the assessee did not give details of improvement and actual expenses incurred. The cost of improvement of Rs.5 Lacs stated to be incurred in FY 2006-07 was disallowed since the loan of ICICI Bank was a personal loan. Out of improvement of Rs.7.50 Lacs stated to be incurred in FY 2011-12, an adhoc disallowance of 10% was made. Further since cost of improvement was made during FY 2011-12 and the property was sold on 27/09/2013, benefit of indexation was not to be allowed. The cost of improvement of Rs.3 Lacs was claimed for FY 2012- 13. However, during assessment proceedings, the assessee revised the same to Rs.9.50 Lacs which was denied since the loan

5 ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 obtained from LIC HFL could be used for other purposes and further the loan amount of Rs.14.50 Lacs did not match with cost of improvement of Rs.9.50 Lacs In nutshell, the cost of acquisition was well as improvement was restricted in all to Rs.23.85 Lacs. The same resulted into Long- Term Capital Gain of Rs.23.49 Lacs in the hands of the assessee. 3.6 Another addition was on account of cash deposit of Rs.13.50 Lacs in one of the saving account maintained by the assessee with Axis Bank, Bhilwara. The assessee submitted that the deposits were sourced out of salary income. Vide another submission dated 19/09/2016, the assessee submitted that it withdrew Rs.28.55 Lacs on various dates and advanced the same to friends and relatives as well as used for personal purposes. The sum so advanced was deposited into the bank as and when collected from the parties. However, in the absence of any supporting evidences the said plea was rejected. 3.7 Upon perusal of bank account, it was noted that there was no such cash withdrawals as claimed by the assessee. Further, the assessee had deposited a sum of Rs.3.10 Lacs in April 2013 for which no details were furnished. Finally, after correlating the cash withdrawals and deposits, Ld. AO made an addition of Rs.7.10 Lacs in the hands of the assessee. 4. Aggrieved, the assessee assailed both the additions before Ld. CIT(A) by way of elaborate written submissions, which have already been extracted in the impugned order. Drawing attention to the loans taken by assessee, it was submitted that Ld. AO was not

6 ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 justified in ignoring the loan availed and utilized for house construction. However, without specifically dealing with the same, Ld. CIT(A), at para 4.3, chose to confirm the action of Ld.AO in determining capital gains of Rs.23.49 Lacs. Similarly the addition of Rs.7.10 Lacs was confirmed in a mechanical manner without going into the factual matrix of the case. The assessee had raised another ground by contending that Ld. AO erred in not considering the investment in new residential property purchased for Rs.30 Lacs stated to be purchased on 22/01/2014. However, the same was rejected by observing that the assessee did not furnish any evidence to show that any such claim was made before Ld. AO. Aggrieved as aforesaid, the assessee is under appeal before us. 5. Upon careful perusal of factual matrix as enumerated in the preceding paragraphs, it is quite discernible that Ld. AO rendered specific findings as to why the cost of improvement incurred by the assessee over various financial years was to be disallowed. Upon further appeal, it was incumbent upon Ld. CIT(A) to meet out the specific objections raised by the assessee during appellate proceedings and deal with the same. However, we find that no independent findings have been rendered by first appellate authority on any of the issue and he has merely chosen to confirm the stand of Ld. AO. Further, no facts have been rendered by any of the lower authorities with respect to benefit arising out of fresh investment in new residential property for Rs.30 Lacs stated to be made by the assessee on 22/01/2014.

7 ITA No.56/Jodh/2018 Shri Harish Kumar Baheti Assessment Year: 2014-15 Therefore, on the facts and circumstances of the case, we deem it fit to restore all the issues back to the file of Ld. CIT(A) for de-novo adjudication. The Ld. CIT(A) is directed to reconsider the objections raised by the assessee against the additions so made and deal with the issues by way of speaking order. 6. The appeal stands allowed for statistical purposes. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (Sandeep Gosain) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member

मुंबई Mumbai; िदनांकDated : 21/12/2020 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Jodhpur 5. गाड�फाईल / Guard File 6.

आदेशानुसार/ BY ORDER,

उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, जोधपुर / ITAT, Jodhpur.