OM PRAKASH SHARMA,JAIPUR vs. INCOME TAX OFFICER WARD-7(2), JAIPUR

आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES,”SMC’’ JAIPUR

Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBkSM+ deys'kt;UrHkkbZ] ys[kk lnL; ds le{k
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA. No. 258/JPR/2025
fu/kZkj.ko"kZ@AssessmentYears : 2009-10
Ward-7(2),
Jaipur
LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: BWKPS 4112 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri S.B. Natani, CA jktLo dh vksjls@Revenue by :Shri Gautam Singh Choudhary, Addl.CIT -DR a lquokbZ dh rkjh[k@Date of Hearing : 07/04/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 22 /04/2025

vkns'k@ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

The assessee has filed an appeal against the order of the order of the learned National Faceless Appeal Centre, Delhi [ for short CIT(A)] dated
20.12.2024 for the assessment year 2009-10 in the matter of Section 143(3)/ 147 of the Income Tax Act, 1961 raising therein following grounds of appeal:-

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‘’1. That in the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the order passed by the AO u/s 147/143(3) in pursuance to notice issued u/s 148 unlawfully.

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9. In the result, the appeal is dismissed.’’
2.2
During the course of hearing, the ld.AR of the assessee has filed the detailed written submission along with case laws as under:-
Ground No. 1
That In the facts and circumstances of the case and in law the learned CIT(A) has erred in confirming the order passed by the learned AO under section 147/143(3) in pursuance to notice issued under section 148 unlawfully.

The learned AO was requested under letter dated 18.11.2019 copy of which is available on paper book page no. cited supra to furnish copy of reason recorded as well as copy of sanction given by the specified authority under section 151 but the same has not made available to the assessee till date. In the absence of copy of sanction letter under section 151 by the specified authority, the assessment is not backed by legal sanction. The assessee submits that in the case of the assessee no sanction under section 151 from the specified authority was obtained. If there had been sanction under section 151 the same should have been provided to the assessee. Despite passing of 6 years these primary records had not been made available to the assessee. The Hon’ble ITAT is requested to quash the assessment order on this ground alone.

It is further submitted that although learned AO was having complete facts regarding the sale and acquisition of plots No. 73, sold by the assessee

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OM PRAKASH SHARMA VS ITO, WARD 7(2), JAIPUR during the year under consideration but despite this the learned AO has unlawfully not given deduction of indexed cost of acquisition. The assessee was a power of attorney holder of Smt Leela sharma who had acquired of plat on 22.06.1991 for a total sum of 16,171/- (Rs,
5,055 on16.05.198 + Rs. 6,116.00 on 22.06.1990). The cost of acquisition is mentioned in the copy of sale deed which is available on paper book page
No…10 to 17. In view of this it was incumbent on the part of the learned AO to have allowed deduction of indexed cost of acquisition of Rs, 16,171/- as on 22.06.1990 which comes to Rs,6,07,550/- as on 16.09.2008. It is settled positions of law that total sale of the plot cannot be considered as income. Thus the notice under section 148 was issued determining wrong income. The following case law as quoted in support.
Services & Ors (SLP(C) 2275/2007 (Hon’ble Supreme Court)

The Hon’ble Supreme Court has held as under :-
“It is important to bear in mind that under section 4 the levy is on “total income” of the assessee computed in accordance with and subject to the provisions of the Income Tax Act. What is chargeable to tax under the Income Tax Act is the profit and gains of a year. What is chargeable to tax under the Income Tax Act is not the gross receipts, but income. Under the Income Tax Act, the tax is on income and not on gross receipts.”
Hon’ble MP High Court
The Hon’ble High Court held that total sale cannot be regarded as the profit of the assessee. The net profit rate has to be adopted and once a net profit rate is adopted, it cannot be said that there is perversity of 5
0654 – Hon’ble Gujrat High Court

The Hon’ble High Court held that it cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales.
(2008) 304 ITR 0052 – Hon’ble M.P. HighCourt

In this case, the Hon’ble Madhya Pradesh High Court held that the entire sale proceeds of the assessee cannot be treated as its income and net profit has to be applied.

v.M/s Abhishek Corporation Vs. DCIT
ITA No. 153/Ahd/1997 – ITAT, Ahmedabad

The Hon’ble ITAT held that even though it is established from the seized documents that the assessee was receiving premium/on money on booking of flats belonging to third parties, entire receipts cannot be 6
OM PRAKASH SHARMA VS ITO, WARD 7(2), JAIPUR treated as income of the assessee, only net profit rate can be applied on such unaccounted receipts/sales for making addition.
(2010) 325 ITR 0410 (Hon’ble Gujarat High Court)
The Hon’ble High Court upheld the order of the ld. ITAT and held that any addition that is to be made is not in respect of the sale consideration, but only in respect of the profit.
“The authority making a best judgment assessment must make an honest and fair estimate of the income of the assessee, same must not be capricious but should have a reasonable nexus to the available material and the circumstances of the case.”

SNo
Notice issued u/s Date of issue of notice
Date for response
Response given if any 1
u/s 142(1)
06.06.2016
&
27.06.2016
13.07.2016
12.07.2016
2
u/s 142 (1) & 143
(2)
01.08.2016
05.08.2016
05.08.2016
3
u/s 142(1)
11.08.2016
26.08.2016

These facts have been mentioned by the learned AO at para No. 2 on page
No. 2 of the assessment order. From the above it is crystal clear that the assessee has responded each and every notices issued by the learned AO in the given time. In-spite of the learned AO has mentioned in the show cause notice dated 18.11.2016 that the assessee is non cooperative and in such circumstances why assessment should not be completed under section 144
of the income tax Act 1961. The relevant para of the order is quoted :- djnkrk ds ekeys esa mijk r fu/kkZj.k dk;Zokgh ds nkSjku djnkrk ds ekeys esa dk;kZy; ds i= fnukad 18-11-
2016 ds }kjk vfUre volj@’kk kt uksfVl tkjh dj Mkd ds }kjk rkfey djok;k x;kA tks fuEu izdkj gS%&
^^ mijk r fo"k;kUrxZr ys[k gS fd vkids ekeys esa izkIr lwpukvksa ds vk/kkj ij vk;dj vf/kfu;e 1961 dh
/kkjk 147 ds rgr dkj.k fjdkMZ dj ekuuh; iz/kku vk;dj vk;qDr & r`rh;] t;iqj ds vuqeksnu ls vk;dj vf/kfu;e 1961 dh /kkjk 148 ds rgr uksfVl fnukad 31-03-2016 tkjh dj Mkd }kjk rkfey djok;k x;kA vkids ekeys esa le; ij lwpuk;sa ,oa vkidk tokc izkIr djus ds fy;s vk;dj vf/kfu;e 1961 dh /kkjk 142
¼1½ ds rgr fnukad 06-06-2016 ,oa fnukad 27-06-2016 dks tkjh dj lquok;h fnukad 22-06-2016 ,oa fnukad
13-07-2016 j[kh x;hA vkids }kjk fnukad 12-07-2016 dks tokc izLrqr dj vk;dj fooj.kh is’k dh x;hA vkids ekeys esa vk;dj vf/kfu;e 1961 dh /kkjk 142¼1½ ,oa /kkjk 143¼2½ ds rgr fnukad 01-08-2016 dks tkjh dj lquok;h fnukad 05-08-2016 j[kh x;hA vkids ekeys esa vkids izfrfuf/k Jh ,l-ch- ukVk.kh }kjk fnukad 05-
08- 2016 dks tokc izLrqr fd;k x;kA vk;dj vf/kfu;e 1961 dh /kkjk 142¼1½ ds rgr fnukad 11-08-2016 dks

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OM PRAKASH SHARMA VS ITO, WARD 7(2), JAIPUR iqu% uksfVl tkjh dj lquok;h fnukad 26-08-2016 j[kh x;hA vkids }kjk u rks vk;dj fooj.k Hkjh x;h vkSj u dksbZ tokc izLrqr fd;k x;k gSA vkidks eq[R;kjvke fu;qDr djus ds dkj.kksa dh tkudkjh ,oa fooj.k izLrqr djus ds fy, fnukad 24-10-2016 dks Jherh yhyk ’kekZ iRuh Jh ,l- ,e- ’kekZ IykWV uacj 52@46] f’kizkiFk ekuljksoj] t;iqj dks i= tkjh dj fnukad 26-10-2016 dks O;fDrxr :Ik ls rkfey djokdj lquok;h fnukad
09-11-2016 j[kh x;hA Jherh yhyk ’kekZ }kjk i= dk tokc ugha fn;k x;k gSA blls Li"V gS fd foØ; fd;k x;k IykWV vkidk gh gSA ftlds foØ; ij vkids }kjk iwWath ykHk ij vk;dj ugha fn;k x;k gSA
Jीमान यह स्प"ट है कि आपके }ारा आयकर अधिनियम] 1961 की निधार्रण कायर्वाही में असहयाेग करने का रवैया
viuk fy;k x;kA pwWfd vkids ekeys esa esjs ikl dk;kZy; ds fjdkMZ esa miyC/k fooj.k@lwpukvksa ds vk/kkj ij
आयकर अधिनियम 1961 की धारा 144 के तहत निधार्रण करने के अतिरिक्त काेइर् अन्य विकल्प नहीं हैA अतः
vkidks vkids ekeys esa viuk i{k j[kus ,oa okafNr lwpuk;sa izLrqr djus dk vfUre volj fn;k tk jgk gSA
;fn vki mDr i=@uksfVl dk tokc izLrqr djus esa vleFkZ jgrs gSa] rks ;g ekuk tk;sxk dh vki vius dj fu/kkZj.k ds laca/k esa dksbZ fooj.k@tokc gh ughsa djuk pkgrs gSa o vkidks vius ekeys esa /kkjk 144 ds rgr fu/kkZj.k ij dksbZ vkifRr ugha gSA vkids ekeys esa fu/kkZj.k fuEu fooj.kksa @lwpukvksa ds vk/kkj ij fd;k tkuk izLrkfor gS%&
vkids }kjk foRrh; o"kZ 2008&09 ds nkSjku Jh gsesUr dqekj esgrk dks :i;s 13]50]000@& dh jkf’k ij IykWV uacj 370] u;k uacj 73] vkWfQllZ dSEil foLrkj] fljlh jksM] t;iqj dk foØ; fnukad 16-09-2008 dks fd;k x;k gSA ftldh fcØh MhM dks lcjftVªkj & t;iqj f}th;] t;iqj }kjk fu"ikfnr fd;k x;k gSA djnkrk }kjk lc&jftLVªkj }kjk fu"ikfnr ewY; ij ¼vk;dj vf/kfu;e dh /kkjk 50 lh ½ ds vuqlkj IykWV foØ; ij iwWthxr ykHk ij vk;dj ugha fn;k x;k gSA vr% vkids ekeys esa :- 13]50]5000@& jkf’k D;ksa u v?kksf"kr iwWthxr ykHk ekurs gq;s dqy vk; esa tksMdj fu/kkZj.k dj fn;k tk;sA vr% vkils vuqjks/k gS fd vki Lo;a ;k vius izkf/kd`r izfrfuf/k ds }kjk vkids dj fu/kkZj.k o"k 2009&10 ds ekeys esa mDr O;ogkj ds laca/k esa tokc@fooj.k dk;kZy; vk;dj vf/kdkjh okMZ 7 ¼2½ t;iqj] lh & 95] ckck fl)ukFk Hkou] tuiFk] ykydksBh] t;iqj esa fnukad 28-11-2016
13,50,000/- made by the learned AO wrongly treating the entire sale proceeds of land as capital gains.

The learned AO had made additions of Rs. 13,50,000 which is the total sales consideration of the plot sold by the assessee under holder of Power of Attorney during the year under consideration. The action of the learned AO cannot be called by no stretch of imagination being in accordance with law. The learned AO was required to give deduction under section 48/49 of the income Tax Act 1961. The assessee has sold the plot in the capacity of Power of attorney holder executed in his favour by the plot owner Smt
Leela Sharma. In view of this the cost of purchase of plot in the hands of Smt. Leela Sharma was required to be given deduction against the sale consideration. The capital gains are computed as under.
Cost price of land

Rs. 16171.00
Date of purchase