RAM SWAROOP BALAI,JAIPUR vs. DCIT, CIRCLE -7, JAIPUR

आ आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 225/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2011-12
Circle-7,
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AWCPS 9424 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri S.L. Jain, Adv .,
Shri, Ashok Kumar Gupta, Adv.,
Shri Shrawan Kumar Gupta, Adv. &
Shri Puneet Pareek, Adv.
jktLo dh vksj ls@ Revenue by : Shri Anup Singh, Addl. CIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 21/01/2025

?kks"k.kk dh rkjh[k@ Date of Pronouncement : 12/03/2025

vkns'k@ ORDER

PER DR. S. SEETHALAKSHMI, J.M.

The present appeal has been filed by the assessee against the order of ld. CIT
(Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 04.08.2023
passed under section 250 of the I.T. Act, 1961, for the assessment year 2011-12. 2. The assessee has raised the following grounds of appeal :-
1. Initiation and complete proceeding is illegal;

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Under the facts and circumstances of the case ld. CIT (A) grossly erred in confirming the invalid and illegal action of ld. AO while complete assessment proceeding including initiation u/s 147/148 is illegal, invalid and without juri iction and barred by limitation hence may kindly be quashed.

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“ I, Ram Swaroop Balai S/o Shri Mohri Lal Balai aged 64 years, R/o Village
Gajsinghpura, Ajmer Road, Jaipur, Rajasthan, do hereby solemnly affirm on oath as under :-

Palce: Jaipur Date : 26.02.2023
Palce: Jaipur Date : 26.02.2023

Deponent

The ld. A/R relied on the judgments of the Hon’ble Supreme Court in the case of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC) and requested for taking a liberal approach for condonation of delay. The ld. A/R further relying on the judgment of Hon’ble Supreme Court in the case of Vedbai vs. Shantaram Baburam Patil & Others, 253 ITR 798 (SC) submitted that the Apex
Court have again reiterated that the expression “sufficient cause” should receive a liberal construction and held that advancing of substantial justice should be of prime importance. The ld. A/R, therefore, prayed that looking to the above facts and circumstances and settled legal position, the delay of 149 days caused may kindly be condoned.
4. Considering the reasons mentioned in the said application, we feel that the reasons mentioned by the assessee constitute sufficient cause for not filing the appeal within the time before us. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji,
1987 AIR 1353 (SC), we condone the delay of 149 days in filing the appeal before us.

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5. The brief facts of the case are that the assessee is an Individual, filed his original return of income for the assessment year 2011-12 on 23.06.2011 declaring total income of Rs. 4,69,490/- which was processed under section 143(1) of the IT Act, 1961. Later on, it was noticed that during the year under consideration, the assessee has sold an immovable property bearing Khasra No. 1228 and 1229
situated at village Mahapura, Tehsil Sanganer, Jaipur for a sale consideration of Rs. 5,21,00,000/- along with two co-owners viz. Sh. Gopal S/o Sh. Mohari Lal and Sh. Madhoram S/o Sh. Ramchandra. As per the information available with the AO, the assessee has received a sum of Rs. 1,41,17,321/- as his share in the property sold in question out of total sale consideration of Rs. 5,21,00,000/-. On perusal of details filed, the AO noticed that the assessee has declared sale consideration of Rs.
96,07,500/- instead of Rs. 1,41,17,321/- as received by him against sale of property. The AO noticed that the assessee has claimed deduction u/s 54F at Rs.
46,78,000/- and deduction under sec. 54EC at Rs. 37,00,000/-. As per the AO, the deductions claimed by the assessee are not admissible in absence of evidences.
Accordingly, notice under section 148 of the IT Act, 1961 was issued on 23.03.2018 after recording proper reasons and satisfaction of competent authority, which was duly served upon the assessee. In compliance to notice, the assessee has e-filed his return of income on 19.04.2018 declaring total income of Rs.
4,69,490/-. Thereafter, notice under section 143(2) of the IT Act, 1961 was issued

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requiring certain data/information/explanation/evidence through electronically mode. Further, notice under section 142(1) of the IT Act, 1961 along with show cause notice was issued on 22.11.2018 and 06.12.2018. In compliance to the notices, the assessee filed requisite details vide letter dated 28.11.2018 and 10.12.2018 which have been placed on record. The AO considered the submissions of the assessee but could not found the same satisfactory. Accordingly, the AO completed the assessment under section 147/143(3) of the IT Act, 1961 dated 31.12.2018 by working out capital gain of Rs. 57,27,453/- instead of LTCG of Rs. 2,94,100/- as declared by the assessee considering sale consideration at Rs. 1,41,17,321/- as per the provision of section 50C of the IT Act and made an addition on account of long term capital gain for Rs. 54,33,353/- and reduced the indexed cost from Rs. 18,23,077/- to Rs.
8,99,545/- and assessed the total income at Rs. 59,02,840/- by raising a demand of Rs. 21,58,090/-. Aggrieved by the order of AO, the assessee preferred an appeal before the ld. CIT (A). The ld. CIT (A) considering the submissions filed before him, partly allowed the appeal of the assessee.
6. At the time of hearing before us, the ld. A/R of the assessee reiterated the submissions as made before the lower authorities. The ld. A/R further filed ground-wise written submissions which are being reproduced hereunder :-

“ Ground No. 1 Initiation and complete proceeding is illegal
Apropos to this ground we submits that in this case the Ld. AO did not issued the notice u/s 143(2) in the format as notified by the CBDT vide letter F.No. CBDT vide letter
F.No. 225/162/2016/ITA.11. Ground No. 4 Disallowed Rs. 42,99,000/- by ignoring the facts which are sufficiently backed up;
(a) Assessee did not received the full consideration
In this instant case the Ld. CIT has appreciated the action of the Ld. AO of making an addition u/s 50C of the act assuming that the assesse received the amount of Rs.
1,41,17,321/- as his share in the total sales consideration taken for the purpose of stamp duty valuation.
In this connection it is pertinent to mention that the assessee sold a land with two other co-owners situated at Village- Mahapura Tehsil- sanganer through a registered sale deed annexed at PB "45-68" dated 24/11/2018 for a total sale consideration of Rs.
5,21,00,000/- .
It is an undisputed fact that the assessee sold the land for a consideration of Rs.
5,21,00,000/- and stamp duty valuation adopted by the registration authorities is Rs.
5,21,64,000/-.
In this connection it is worth mentioning here that the sale consideration always been decided on the basis of the utility of the land which is outcome of the improvement made in the land and the cost of this improvement made is allowed as expenses on account of cost of improvement while calculating capital gain under income tax act.
In this case the sale consideration is decided for Rs. 5,21,00,000/- in the registered sales deed which specifically include the cost of conversion of land which was to be incurred and borne by the seller of the land i.e. assessee as mentioned in sale deed at pg.no. 4.(PB
51)

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Thus, the buyer paid consideration to all the sellers after deducting the above said expense resultantly, assessee received only Rs. 98,01,000/- for his share, for which assessee also given the affidavit dated 10/12/2018 annexed at PB “34” but Ld. AO not appreciated the same. Assessee received this amount of Rs. 98,01,000/- in his bank account, bank statement of which is annexed at PB “73-101”.
The assessee vide letter dated 28/11/2018 very well elaborately explained that assessee only received Rs. 98,01,000/- out of his share in total sale consideration of Rs.
1,41,00,000/- as cheque worth Rs. 42,99,000/- were not encashed by the assessee because the amount of Rs. 42,99,000/- were for conversion expenses and as per mutual understanding and a verbal agreement were to be adjusted from the total sales consideration of Rs. 5,21,00,000/-. The above said letter is annexed at PB “26”.
If this was not the case that the buyer given the consideration after deduction of the above said expenses, the assessee would have taken criminal as well as civil remedy against the buyer for not paying full consideration and if the conversion expenses would have been incurred by the buyer, total sales consideration as agreed and mentioned in the sale deed would have been given to the seller without deducting any expenses on account of conversion expenses.
Thus, in this case the assessee have disclosed the fully and truly all the material facts by disclosing the total sale consideration after deducting the conversation expenses.
However, the Ld. CIT in the order dated passed 04/08/2023 observed that:-
“8.2 . . . . . .As per the provisions of section 50C appellant has to adopt amount of sale consideration as per section 50C i.e Rs.1,41,17,321/- while computing the capital gain. If appellant has made any expenses as claimed by the appellant like conversion expenses including incidental expenses, the same has to be claimed under cost of improvement. In order to claim the same appellant needs to prove that payment for such expenses has been made and appellant has to submit documentary evidences regarding the same. In present case appellant has not submitted any evidence that any such expenses has been incurred by the appellant or by the buyer on behalf of the appellant. Accordingly AO has rightly disallowed the same. In view of the above ground of appeal no 5 is hereby dismissed.”

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In the above stated observation the Ld. CIT stated two point as follows:
i.
The appellant should have shown full consideration for his part and then claim conversion expenses
Our submission - The tax effect of both the process i.e taken by assessee and the Ld.
CIT, is same in this case. And in the return of income filed in response to the notice u.s
148 of the act, the asseessee have opted the method as described by the Ld. CIT.
ii.
The appellant have not submitted documentary evidences for cost of conversation.
Our submission -
During the course of adjudication proceedings before the Ld. AO, assessee through a letter, annexed at PB page no “26”, dated 28/11/2018 requested for examination of the buyer to reach at true conclusion as the all expenses regarding conversion were incurred by the buyer and it can only be established by buyer through books of accounts, receipts, challans and other evidences but the Ld. AO ignored the request made by the assesse.
Assessee through various letters reiterated the same facts before the Ld. AO but not appreciated by the Ld. AO and passed the assessment order arbitrarily in the mechanical manner.
It is notable to mention here that all the consideration received by the assessee were through cheques and duly deposited by the assesse in his bank accounts and Ld. AO is failed to bring any cogent and corroborative material on record that assessee received any other amount from buyer, through cash or any other mode, whereas assessee’s contention is very well supported by the bank statements and affidavit of assesse and buyer of the land.
Hence, the addition made by the Ld. AO arbitrarily and without conducting proper inquiry, even after legitimate request made by the assesse, under 50C of the act on the basis of mere conjuncture and surmises are liable to be deleted.
(b) Ld. AO ignored the affidavit of the assessee
In this case the Ld. AO while disallowing the cost of transfer expenses observed as follows
“The assessee claimed cost of transfer expenses of Rs. 42,99,000/- The assessee was asked to furnish the justification and supporting document of his claim and show cause notice was also issued vide note sheet entry on 73/1212018- The AR of the assessee

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submitted reply on 10.12.2018 stating that "computation of total income where the gross amount of sale consideration is shown and the expenditure on conversion which was incurred by the purchaser is deducted". I have considered the reply of the assessee but the reply of the assessee is not tenable as the assessee failed to furnish the supporting document of his claim of transfer expenses. Therefore, the claim of the assessee of transfer expenses is disallowed. And added to the income of the assessee.”
It is pertinent to mention that the above view taken by the Ld. AO is totally wrong as the assessee discharged his onus by providing his affidavit to support his contention which also give sanctity to the contention of the assessee, but the Ld. AO neither appreciated the affidavit of the assessee nor controverted it and it is settled law that Once an affidavit is furnished, it should be presumed to be a correct statement of facts, if not controverted.
To support our contention we are relaying on the following judgements which states that,
When a statement is given in affidavit the same is proved to be correct unless proved otherwise.
 Juri ictional ITAT
Shri Ramesh Chand Mittal, Kota vs Income Tax Officer, Ward-2-2, Kota on 11
June, 2019
“5. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that during the course of assessment, it was explained to the AO that the gift was received on 31.05.2011 by the assessee from his mother in law who was having sufficient cash in hand at the time of giving gift as per income returned during the year. The Gift Deed was written on 28.09.2011 and due to oversight, this very date was mentioned as the date of gift in the Gift Declaration. The assessee also furnished a duly sworn and affirmed Affidavit, dated 04.02.2015, to this effect. An Affidavit is an important piece of evidence to prove or to disprove a fact which cannot be proved or disproved by documentary evidence. The Affidavit too has been summarily rejected by the AO.
6. It is held in the under-noted decisions that it is not open to the department to disbelieve the contents of an affidavit unless the person who gave the affidavit was put to cross examination and, if put to cross examination, not unless the Assessing
Officer has found fault with the same :
 Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC)
 Dilip Kumar Roy v. CIT (1974) 94 ITR 1 (Bom.)

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 Rajshree Synthetics P. Ltd. v. CIT (2002) 256 ITR 331 (Raj.)”
7. From the record we found that income of the donor during the year was Rs. 2,49,712/-.
She was mother in law of the assessee having sufficient cash in hand as on 31/03/2011. For this effect, the assessee has also filed statement showing availability of cash on the date of gift. The donor was aged about 71 years at that time. However, due to poor health, she could not appear before the A.O. Mere non-appearance before the A.O. could not be made reason to disbelieve the genuineness of gift when other documentary evidences so filed support the fact of gift. From the record we found that the confirmation from the donor, copy of acknowledgment of return of income and computation of income were submitted to the ld. AO during the course of the assessment proceedings.
8. In view of above discussion, we restore the matter back to the file of the A.O. for deciding the issue afresh in terms of our above direction.
9. During the course of assessment, the A.O. has also disallowed interest of Rs.
1,56,538/- on the plea that interest bearing funds have 5 ITA 954/JP/2018_ Ramesh
Chand Mittal Vs. ITO been diverted for non-business purposes. From the record, we found that before the A.O. the assessee has submitted statement of interest free fund available with the assessee in the form of his capital to the tune of Rs. 26,08,598/- and also interest free unsecured loan of Rs. 25,62,288/-. Thus, the interest free funds available with the assessee was much more than the interest free amount given by him.
Accordingly, no disallowance of interest is warranted. We direct accordingly.
10. In the result, appeal of the assessee is allowed in part.”
“Since the explanation of the assessee and the affidavits of Shri P.C. Dhadda and Shri
Bafna have not been disproved by any of the authorities below, in such circumstances and facts of the case, the explanation of the assessee has to be accepted and no adverse view can be drawn from the explanation or the statements made or submitted by the assessee. Shri N.M. Ranka relied upon the decisions of Hon'ble apex Court in the cases of Mehta Parikh & Co. (supra), State v. Guljari Lal Tandon and J.A. Naidu v. State of Maharastra .”

Supreme court
Mehta Parikh & Co v. ITO (1956) 30 ITR 181 (SC)/AIR 1956 SC 554

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S.143(3) : Assessment – Affidavit – When a statement is given in affidavit the same is proved to be correct unless proved otherwise [S.69A, High Denomination Bank
Notes (Demonetisations) Ordinance, 1946, Indian Income-tax Act, 1922, S.23 ]
And the above said judgement is followed by Hon’ble Supreme Court in the case of Daulat Ram Rawatmull v. CIT (1973) 87 ITR 349 (SC) stating that Once an affidavit is furnished, it should be presumed to be a correct statement of facts. If these facts are to be controverted, either the deponent must be examined or evidence contrary to facts must be led. In the absence of these the affidavits could not be ignored.
Ground No. 3 objections not disposed off;
Apropos to this ground we submit that the vide letter dated 28/11/2018 annexed at PB
"26" raised objection against the notice issued under section 148 of the act but the Ld.
AO did not disposed off the objection of the assessee.
It is settled law that of disposing off the objections against the notice issued under section 148 by a separate and speaking order is a mandatory requirement in view of the judgment of the Hon’ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs. ITO
(supra), the failure of the AO to dispose off the objections renders the reassessment order not sustainable in law.
Our aforesaid view is supported by the decision of juri ictionl ITAT Jaipur in the matter of M/s. Girraj Prasad Gilara HUF, Jaipur ITA No. 354/JP/2019 dated
06/10/2020. In the above said judgement Hon’ble relied following judgements and held as follows:-
1. Pushpak Bullion Pvt. Ltd. vs. DCIT, 379 ITR 81 (Guj.)
2. GKN Driveshafts (India) Ltd. vs. ITO, 259 ITR 19 (SC)
3. Allana Cold Storage Ltd. vs. ITO (Bombay High Court)
“Thus the requirement of disposing off the objections against the notice issued under section 148 by a separate and speaking order is a mandatory requirement in view of the judgment of the Hon’ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs.
ITO (supra), the failure of the AO to dispose off the objections renders the reassessment order not sustainable in law. In the case in hand there is complete failure on the part of the AO to dispose off the objections against notice u/s 148 of the Act and not merely a procedural irregularity of separate and speaking order. Accordingly, in the facts and circumstances of the case and specifically involving the issue of addition of Rs.
2,71,317/-, we find that in this case the AO does not deserve a second inning.

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10. In the result, appeal of the assessee is allowed.”
PRAYER
Hence in view of above facts submissions and legal position of law, the addition may kindly be directed to be deleted.”