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Income Tax Appellate Tribunal, AGRA BENCH: AGRA
Before: SHRI A. D. JAIN, & DR. MITHA LAL MEENA
PER, A. D. JAIN, JUDICIAL MEMBER:
These appeals were instituted in the name of Swami Ram Swaroop Sharma, the assessee, on 20.01.2016. However, the ld. Counsel for the assessee has placed before us, Death Certificate of Swami Ram Swaroop Sharma, the assessee, who is stated therein to have expired on 17.02.2018. The appeals are now sought to be continued in the name of Kapil Sharma, the executor of the estate of the deceased Swami Ram Swaroop Sharma, in place of the deceased. A copy of the deceased assessee’s registered will dated 13.04.2016 has been placed on record. By virtue of this will, the said Kapil Sharma, son of Late Pt. Bal Krishna Sharma, resident of 167, Gali Rawalia, Mandi Ram Das, Mathura, was appointed executor of the will and, thereby, all the estate of the assessee. Revised Forms No.36 have been filed.
The Department would have no objection to the above request.
Accordingly, in terms of Rule 26 of the ITAT Rules, 1963, this request is accepted. Necessary changes in the record be made, as such.
ITA No. 16/Agra/2016 This appeal has been filed against the CIT(A)’s order dated 18.01.2013, 4. deciding the appeal an ex parte qua the assessee, partly allowing it. The following Grounds of appeal have been raised:
ITA No. 16/Agra/2016 3 &ITA No. 146/Agra/2017 “That the ld. CIT(A) has erred both on facts and in law in estimating the net i. income from Rasleela at Rs.8,00,000/- by allowing expenditure at 50% of the purported gross receipts of Rs.16,00,408/- whereas in fact a sum of Rs.12,50,000/- embedded in the said gross receipts represented a part of the sale consideration of an immovable property belonging to the assessee and credited by means of a cheque in his bank account on 31.12.2007.
ii. Without prejudice to Ground No.1, the ld. CIT(A) after accepting that the income from the activity of performing Rasleela could not be considered as bogus income, erred in restricting the deduction on account of expenditure to the extent of 50% of the gross receipts whereas the claim as made was allowable in full. In any case only as an alternative submission the disallowance sustained was on the higher side”.
The facts are that the AO, in the assessment order, added certain credit entries appearing in the assessee’s bank account, aggregating to Rs.18,80,408/- and, after allowing the benefit of certain cash deposits amounting to Rs.2,80,000/-, the AO estimated the assessee’s income from Rasleela at Rs.16,00,408/-, treating the same to be bogus. On appeal, the ld. CIT(A), by virtue of the impugned order, estimated the assessee’s income from Rasleela at Rs.8 lac, by allowing 50% as expenditure and treating the same to have been, the genuinely earned income of the
ITA No. 16/Agra/2016 4 &ITA No. 146/Agra/2017
assessee, and not bogus income. This order is under challenge in the present appeal.
By way of appeal effect, the assessee’s income was reduced to 6. Rs.11,87,436/-. Subsequently, the AO received AIR Information that the assessee, during the year, had sold an immovable property, having stamp value of Rs.36,50,000/-. The assessee having, as per the AO, not declared any capital gain on this transaction and having not responded to the AO’s requisition in this regard, the assessee’s completed assessment was reopened and a reassessment order was passed on 21.03.2016, assessing long term gain at Rs.27,31,667/- and arriving at a total income of Rs.39,29,103/-. This order is stated to have been challenged before the ld. CIT(A) and hitherto pending in such appeal.
Apropos the non-representation on behalf of the assessee in the case before the Authorities below, it has been contended that such non-representation before the AO and the CIT(A) was not on account of any disregard for the Authorities, but due to the extremely poor health of the assessee, his old age, intermittent memory loss and his inability to comprehend the importance and relevance of any document.
An application of production of additional evidence has been filed, contending therein, besides the above facts, that a sum of Rs.12,50,000/-, credited in the assessee’s bank account through cheque on 31.12.2017, was, as a matter of
ITA No. 16/Agra/2016 5 &ITA No. 146/Agra/2017
fact, a part of the sale consideration of immovable property sold for Rs.15 lac with a purchase price of Rs.8 lac, resulting in long term capital gain of Rs.4,95,573/-; that the said sum of Rs.12,50,000/- also formed a part of the figure of Rs.16,00,408/- treated by the AO as the assessee’s income from Rasleela; that the assessment made u/s 147 of the Act, of the long term capital gain, as per order dated 21.03.2016, as above, is under appeal before the ld. CIT(A); that thus, the sum of Rs.12,50,000/- credited in the assessee’s bank account on 31.12.2007 has been included twice, once for estimating the income of the assessee from Rasleela, and again, for working out the long term capital gain; that if the sum of Rs.12,50,000/- is excluded from the figure of Rs.16,00,408/-, the latter being the estimate of the assessee’s income from Rasleela, the resultant figure would be Rs.3,50,408/-, and after a further reduction of 50%, i.e., the relief given by the ld. CIT(A), the assessee’s income from Rasleela would come to Rs.1,75,204/-.
It is in support of the above submissions, that the assessee seeks to place on record a copy of sale deed dated 29.12.2007 concerning the transaction of sale of immovable property and a copy of the assessment order dated 21.03.2016, passed under sections 147/143(3) of the Act.
The ld. DR has objected to the admission of the sale deed, as according to him, the sale deed dated is 29.12.2007 and it ought to have been filed before the AO, which was not done.
ITA No. 16/Agra/2016 6 &ITA No. 146/Agra/2017
Having considered the matter in the light of the rival contentions and the material placed on record, we find that the sale deed in question is the sale deed which is the basis of the transaction qua which the addition was made by the AO on reopening the completed assessment of the assessee. This assessment, as stated, is under challenge and pending before the ld. CIT(A). That controversy is directly related to the one presently before us, as is clear from the above contentions of the assessee. The sale deed in question needs must be gone into to decide the issue of long term capital gain and also the issue before us. This document, thus, goes to the root of the matter and it is required to be taken into consideration for a just and fair decision of the matter in accordance with law. Indisputably, it could not be produced before the Authorities below, because of the assessee’s failing health, physical, as well as mental. The assessee, to reiterate, is no more alive. Then, otherwise too, he cannot be said to have stood to gain anything by withholding this documentary evidence so vital to his claim. All considered, this sale deed goes to the very root of the sale transaction forming the basis of the addition made by the AO, and as such, in the interest of justice, it requires to be taken on record and read in evidence. This sale deed is, accordingly, admitted, as additional evidence.
So far as regards the assessment order dated 21.03.2016, firstly, the same is, as noted, the subject matter of appeal pending before the ld. CIT(A). Further, it is a public document. Accordingly, this order is also admitted.
ITA No. 16/Agra/2016 7 &ITA No. 146/Agra/2017
Since the issue with regard to the assessment of the long term capital gain is pending before the ld. CIT(A), this issue would have a direct bearing on the assessment of the assessee’s income from Rasleela too. Therefore, this matter is remitted to the file of the ld. CIT(A), to be decided afresh along with the matter pertaining to long term capital gain, as stated to be pending before him, in accordance with law, on taking into consideration the aforesaid sale deed dated 29.12.2007, which sale deed is also stated to be a part of the record of the Department in the reassessment proceedings pertaining to the long term capital gain. All pleas available under the law shall remain so available to the assessee. The assessee shall be provided due and adequate opportunity of hearing to support his case. On his part, the assessee, no doubt, shall co-operate in the fresh proceedings before the ld. CIT(A). Ordered accordingly.
In the result for statistical purposes, the appeal is treated as allowed.
ITA No. 146/Agra/2017
This appeal is directed against the order dated 21.02.2017, passed by the ld. CIT(A), confirming the levy of concealment penalty of Rs.2,66,220/- on the assessee, in respect of additions sustained under the heads of income from Rasleela and interest from FDR. The following grounds have been raised:
ITA No. 16/Agra/2016 8 &ITA No. 146/Agra/2017 “1. That the learned CIT(A) erred both on facts and in law in confirming the penalty of Rs.2,66,220/- imposed by the AO u/s 271(l)(c) of the Income-tax Act, 1961.
That the order passed by the learned CIT(A) is violative of the principles of natural justice having taken recourse to material available on the assessment record of the assessee and drawing adverse inferences therefrom without allowing an opportunity of being heard to the appellant. The order is required to be set aside on this ground itself.
Without prejudice to Ground No.2, the learned CIT(A) erred in confirming the penalty u/s 271(l)(c) in respect of the income from 'Rasleela' in spite of the order of the learned CIT(A) in the quantum proceedings wherein the said income had been held to be genuine and the addition upheld in part on estimated basis.
That the learned CIT(A) erred in not deciding Ground No,4 in the appeal pertaining to the quantum of income under the head 'Rasleela'.
Without prejudice to Ground No.2, the learned CIT(A) erred in confirming the penalty u/s 271(l)(c) in respect of the interest income on a FDR with the bank and which according to the appellant was taxable in the year of maturity and which otherwise had been subjected to TDS there being no loss of revenue.”
ITA No. 16/Agra/2016 9 &ITA No. 146/Agra/2017
At the outset, the ld. Counsel for the assessee has contended that the penalty
is unsustainable in law, having been imposed on estimate income.
The ld. DR, on the other hand, has placed strong reliance on the impugned
order and certain judicial decisions.
Since the matter pertaining to the quantum addition has been remitted to the
file of the ld. CIT(A), as above, the issue of penalty pertaining to the quantum
addition is also remanded to the file of the ld. CIT(A), with similar directions as in
the quantum appeal, to be decided in accordance with law, in consonance with the
decision to be taken in the matter pertaining to the quantum appeal, i.e.,
16/Agra/2016. Ordered accordingly.
In the result, both the appeals are treated as allowed, for statistical purposes.
Order pronounced in the open court on 09/07/2018.
Sd/- Sd/- (DR. MITHA LAL MEENA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER
*AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR