MRS. ARUNA J KAPSE, NASHIK,NASHIK vs. DCIT CENTRAL CIRCLE,1, NASHIK, NASHIK

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

These two appeals filed by two different assessees, related to each 1.

other, are emanating out of the consolidated order of Commissioner of

Income Tax (Appeals) – 1, Nagpur dated 29.08.2008 for block period 1997-

98 to 2003-04.

appeals filed by two different assessees are against the consolidated order

of Commissioner of Income Tax (Appeals) – 1, Nagpur the issues involved

in both the appeals are identical except for the assessee and the amounts

involved and therefore the submissions made by them while arguing one

appeal would be equally applicable to the other appeal also and thus both

the appeals can be heard together. In view of the aforesaid submissions of

both the parties, we, for the sake of convenience, proceed to dispose of both

the appeals by a consolidated order but however, proceed with narrating

the facts in ITA No.163/PUN/2019 for block period 1997-09 to 2003-04.

under :-

Assessee is an individual who is stated to be engaged in supervision

of construction activities. A search and seizure action u/s 132 of the Act

was conducted in the case of Prakash Laddha Group on 09.10.2002. The

block assessments were completed in F.Y. 2004-05. During the verification

of material found in the search, it was seen that Prakash Laddha had

acquired shares of M/s. Vastukrupa Construction (India) Pvt. Ltd. from Mr.

and Mrs. Janardhan Kapse. Prakash Laddha in the statement recorded

u/s 132(4) of the Act on 11.10.2002 had accepted the acquisition of shares

of Vastukrupa Construction (India) Pvt. Ltd from Mr. and Mrs. Janardhan

Kapse. It was noted that Vastukrupa Construction (India) Pvt. Ltd was

incorporated in the year 1991 and was doing the business of land

development and construction of residential and commercial complex and

its Authorized Capital was Rs.5 lakhs and Paid up Capital was

Rs.1,80,000/-. Mr. and Mrs. Janardhan Kapse were holding 400 shares

each. Mr. Laddha submitted that the total sale price of the company was

fixed at Rs.45 lakhs. It was further stated that assessee had received Rs.5

lakhs by cheque from Prakash Laddha and her husband had received Rs.5

lakhs cheque and further Prakash Laddha had issued post dated cheques

for the balance amount to the assessee which could not be encashed. In

view of the aforesaid facts, notice u/s 158BD was issued and served on the

assessee. Thereafter, the case was taken up for scrutiny and subsequently,

assessment was framed u/s 158BD r.w.s 143(3) of the Act vide order

dt.21.11.2006 and the total undisclosed income was determined at

Rs.21,89,923/- on account of capital gains on sale of shares of Vastukrupa

Construction (India) Pvt. Ltd. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who vide order dt.29.09.2008 (in

appeal No.CIT(A)-1/160/2007-08) dismissed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), assessee carried the matter before the

Tribunal. The Co-ordinate Bench of the Tribunal vide consolidated order

in the case of assessee and her husband in ITA No.163 & 164/PN/2019

vide order dt.10.07.2015 dismissed the appeals of the assessee.

Thereafter, assessee filed M.A.N.45/PN/2015 wherein it was submitted by

the assessee that while deciding the issue, the Tribunal had considered the

assessment order passed u/s 158BD r.w.s. 143(3) of the Act and order of

Ld.CIT(A) dated 26.12.2006 passed in the case of Shri Prakash Laddha. It

was assessee’s submission that the assessment order as well as order of

Ld.CIT were neither referred by the assessee nor the Ld. D.R. during the

course of hearing and no arguments were placed on the above documents.

It was further the submission of the assessee that the assessee was not

confronted with the same nor any opportunity was given by the Tribunal.

Assessee therefore submitted that there was mistake in the order of the

Tribunal and sought for its re-calling and decide it afresh on merits. The

Tribunal vide order passed in M.A.No.45 dt.29.06.2016 recalled the order of

the Tribunal for fresh hearing. Accordingly, the assessee is now before us

in the second round and has raised the following grounds :

“1. On the facts and in law the CIT(A) has erred in adopting sale consideration for transfer of 400 shares at Rs. 22,50,000/- as against Rs.5,00,000/-. 2. On the facts and in law the CIT(A) has erred in not appreciating the fact that the consideration for transfer of 400 shares was Rs. 5,00,000/- as per copy of share transfer form seized in action u/s. 132(4), statement of Mr. Prakash Laddha u/s. 132(4) and statement of cross examination of Mr. Prakash Laddha. 3. On the facts and in law the CIT(A) has erred in accepting part of the contents of the letter filed by the appellant beneficial to the revenue and rejecting part of the contents of the same letter, which is not beneficial to the revenue against the proposition of law laid down by hon'ble Pune ITAT, in the case of 'Chandramohan Mehta Vs. ACIT, 71 ITD 245. 4. On the facts and in law the CIT(A) has erred in taxing the consideration of Rs. 27,00,000/- towards expenditure incurred by the appellant for site development of the land during 1990-91 to 31/3/2000 Rs.13,37,745/-. 5. On the facts and in law the CIT(A) has erred in not appreciating the fact that, no consideration towards expenditure incurred by the appellant for site development of the land was received and the purchaser is also not willing to pay the same and litigating the same in Nashik Court. 6. On the facts and in law the CIT(A) has erred in not considering cost of land development etc. incurred by the appellant at Rs. 13,37,745/- while arriving at taxable capital gain.”

admission of additional grounds before the Tribunal while the matter was

being heard in the first round and the additional ground was with respect

to challenging the invocation of provisions of Sec.158BD as it was

assessee’s submission that there was no undisclosed income arisen

belonging to the assessees as found in the material seized.

under :

“1. The learned AO erred on facts and in law in invoking action u/s 158BD without any indication in the material seized at Annexure – A item No.18 that any undisclosed income is arriving or belonging to the appellant. 2. The learned AO erred in law and on facts in assessing the capital gain in the block assessment u/s 158BD when the respective investments as also the subsequent sale of shares had been disclosed by the appellant in the regular returns filed by the appellant before the date of search.”

No.164/PN/2009 for the block period 1997-98 to 2003-04.

authorities and further submitted that of the consideration of Rs. 45 lakhs,

Rs. 35 lakhs was never received by the assessee or her husband as the

cheques issued by Mr. Prakash Laddha were not honoured by him and in

such a situation, no addition was called for in the present case. The

Ld.A.R. submitted that since the order has been recalled, the jurisdictional

issue of assessment framed u/s 158BD also needs to be decided now. She

submitted that the AO has erred in invoking action u/s 158BD of the Act

more so, as the respective investments were disclosed by the assessee in

the returns of income filed prior to search. She therefore submitted that

the assessment order passed u/s 158BD of the Act be set aside. Ld. D.R.

on the other hand, supported the order of lower authorities.

record. The issue which arises in the present appeal is consequent to the

order in Miscellaneous Application (M.A.) filed by the assessee against the

order of the Tribunal dated 29.06.2016. The Tribunal while deciding the

appeal of the assessee in the first round had decided the issue of 158BD

vide Para 7 and 8 and held as under :

“7. We have heard the submissions made by rival sides and have perused the orders of the authorities below. The first argument raised by the ld. AR is with respect to validity of proceedings u/s. 158BD. We find that the assessees had neither raised this ground before the Commissioner of Income Tax (Appeals) nor this ground has been taken in the grounds of appeal before the Tribunal. The ld. AR for the first time has assailed the invoking of jurisdiction u/s. 158BD in oral arguments before the Tribunal. The ld. DR has strongly objected to the same. It is a well settled law that the appellant can raise fresh legal ground before the Tribunal even if it is not taken before the First Appellate Authority. However, the appellant has to make an application for raising such additional ground. National Thermal Power Corp. Ltd. v. CIT 229 ITR 383 (SC). De`hors the fact that invoking of jurisdiction u/s. 158 BD has been challenged without any formal application for admitting additional ground, we are deciding this issue.

No.9 onwards. The assessee filed M.A. against the order of the Tribunal

and in Para 1 of the M.A. the assessee referred to the decisions of Tribunal

in Paras 11 and 12 and has adjudicated the issue. The issue was decided

by the Tribunal on the basis of the material which was never confronted to

the assessee i.e., the letter of Shri Prakash P. Laddha mentioned in Para

No.11 of the Tribunal’s order. We have perused the M.A. filed by the

assessee and find no mention of Paras 7 and 8 of the order of the Tribunal

dated 10.07.2015 by which the Tribunal decided the issue of invoking

jurisdiction u/s 158BD of the Act.”

M.A.No.45/PN/2015 order dated 29.06.2016, the Tribunal had recalled its

order and Registry was asked to list the appeal of the assessee for fresh

hearing after due course. In this regard, it is the case of the assessee that

both the issues of the jurisdiction i.e., the application of provisions of

Sec.158BD and on merits have been recorded. We find no merit in the

said plea of the assessee. The M.A. is clearly for the limited purpose

wherein the reference was only made to the issue decided in Paras 11 and

12 i.e., the issue decided on merits. No reference made to Paras 7 and 8 of

the original order of the Tribunal order by which the jurisdictional issue

was decided. Hence, this plea of the assessee is dismissed.

present facts, any addition is warranted on account of the sale of shares

over and above the cheque amount received by the assessee and Shri

Janardhan R. Kapse. The assessee Ms. Aruna Kapse had sold 400 shares

for consideration of Rs.13 lakhs and the other assessee Shri Janardhan R.

Kapse had sold 400 shares at Rs.32 lakhs. The total sale consideration

was fixed at Rs.45 lakhs. Both the assessees claim to have received Rs.5

lakh each by cheque from Shri Prakash Laddha. For the remaining

amount, post dated cheques were issued which were dishonoured.

Laddha and his wife Mrs. Aruna Laddha accepted the purchase of shares

for a total consideration of Rs.45 lakhs. During the course of 158 BD

proceedings, the assessee claimed that the amount due from Prakash

Laddha on account of dishonour of cheques were not received till date and

issue arose between the parties wherein the case was pending before the

District Court, Nashik. The assessee claims that they had only received the

sum of Rs.5 lakhs each. Another plea raised was that the they have spent

a sum of Rs.17,49,617/- for improvement of site of land. The AO was of

the view that since both the assessees had equal number of shares in

Vastukrupa Construction (India) Pvt. Ltd., then the sale consideration

should be equally divided. Thus, AO computed the long term capital gains

on the sale of shares after giving benefit of indexation. However, the claim

of unsecured loan given for improvement of sites was not allowed.

the case on the admission of the assessee that it was to be received Rs.45

lakhs as sale consideration. The next contention was that it had only

received Rs.10 lakhs and the balance Rs.30 lakhs was not received by the

assessee till the date of transaction. Since the post dated cheques

remained dishonoured, the assessee also claimed deduction on account of

expenditure incurred for improvement of site totaling to Rs.17,49,617/-

and claimed that the same was in the nature of unsecured loan to the

company. The assessee further claimed that sum of Rs.45 lakhs was not

only towards transfer of shares but also repayment of cost of improvement

of site. The assessee failed to furnish any evidence of payment of the

amount towards improvement of site and this plea of the assessee was

rejected. Before us also no such evidence has been filed. In any case, the

assessee had claimed to have sold the shares for a sum of Rs.45 lakhs

against which it had jointly received Rs.10 lakhs and for balance there was

dispute pending before the District Court, Nashik. While assessing the

income under the head of capital gains, the sale consideration of the assets

sold is to be taken into account, whether the amount is received or to be

receivable in future. Undoubtedly since the assessee only pleads that they

received Rs. 5 lakhs each towards sale consideration, it should be adopted.

But the transaction was for a sum of Rs.45 lakhs jointly to be received by

the two persons. Hence, for the purpose of inclusion of capital gains, the

said amount is to be adopted irrespective of the fact that the balance

amount has not been received. We have decided this issue on the basis of

the facts and the law point. The plea of the assessee in the M.A.

proceeding was that it had not received copies of seized documents and

hence, that evidence cannot be used against the assessee. The Tribunal in

M.A. had accepted the said plea of the assessee. However we have

proceeded to decide the appeal on the merits of the case keeping in mind

the facts and law involved and are not deciding the issue on the basis of

the seized documents. In view thereof, the plea of the Ld. D.R. for the

Revenue is that it was immaterial whether the sale consideration was

received in full or part while deciding the issue of the capital gains is

accepted and the grounds of appeal raised by the assessee are dismissed.

Order pronounced on 16th day of October, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-1, Nagpur. 4. CIT (Central), Nagpur. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.