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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER
PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-5, Vadodara in Appeal no. CAB/5- 187/14-15 vide order dated 21/09/2016 passed for the assessment year 2011-12.
I.T.A No. 3431/Ahd/2016 A.Y. 2011-12 Page No. 2 Shri Kirit N. Nagar vs. ITO
The assessee has raised the following Grounds of Appeal:-
“I. The CIT(A) has erred both in Law and in fact in admitting Additional Evidence and since your Appellant has complied with all requirement of Rule 46A the CIT(A) ought to have admitted the same.
II. Without prejudice to above your Appellant further submit that: (1) The CIT(A) has erred in confirming addition of Rs.25,50,000/- out of Rs. 32,00,000/- added by the Assessing Officer u/s.68 of the Act. Your Appellant submits that Sec.68 does not apply to the facts of the case and your Appellant have discharged the onus as required under the Law with regard to the deposit of Rs. 16,50,000/- made by Shri Satish R. Shah and Rs.9,00,000/-made by Shri K. Laxmanbhai.
It is submitted by your Appellant the above two creditors are duly assessed to Income Tax, their identity and credit worthiness is proved and therefore the CIT(A) ought to have deleted the addition of Rs.25,50,000/-.
(2) The CIT(A) has also erred in upholding the applicability u/s.50C of the Act and confirming addition made by the Assessing Officer though the said amount as per Stamp Duty Value is not received by the Appellant.
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It is submitted that your Appellant he has computed Capital Gain as per actual Sale Price received and the higher value adopted for Stamp Duty purposes does not result into any Real Income earned by your appellant and therefore the Capital Gain declared by your Appellant ought to have been accepted by CIT(A).
(3) The CIT(A) has also erred in confirming disallowance of claim of Rs.41,37,081/- made under Sec.54F of the Act by the Assessing Officer.
On facts of the case and as per provisions of Law, it is submitted that your Appellant had made a correct claim u/s.54F of Rs.44,37,081/- which ought to have been allowed.
It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly.
Your Appellant reserves right to add, alter, amend to withdraw any or all Ground of Appeal.”
Further, the assessee has also taken the following additional Grounds of appeal:-
“1. Your Appellant submits that the CIT(A) has erred both in Law and in Fact in upholding the Assessment Order passed by ITO, Ward
I.T.A No. 3431/Ahd/2016 A.Y. 2011-12 Page No. 4 Shri Kirit N. Nagar vs. ITO
2(1), Baroda dated 29-3-2014 and thereby confirming various additions made by the Assessing Officer.
Your Appellant submits that the Assessment Order dated 29-3- 2014 is bad in Law and void ab initio since the same is passed on Saturday being a Holiday in Income-tax Department and therefore such order is in violation of Sec. 10 of General Clauses Act, 1897 and therefore Void ab initio .
Your Appellant also submits that in view of facts and circumstances and the Assessment Order passed by Income-tax Officer, Ward 2(1) dated 29-3-2014 being Void entire proceedings there under including the Tax Demand of Rs. 24,77,260/- be held invalid and cancelled.
It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your Appellant reserves right to add, alter, amend to withdraw any or all Grounds of Appeal.”
The brief facts of the case are that during the course of assessment proceedings, the AO observed that the assessee received a unsecured loan from 3 parties (Shri Satish Shah for � � 16,50,000 , Shri Lakshmanbhai for 9 lakhs and from M/s Nistha sales for � 650,000). The AO observed that despite various opportunities to prove the genuineness of the alleged unsecured loans, the assessee could not provide the Revenue with even the
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basic details/confirmation letters. Accordingly, the AO held that the assessee has failed to prove the genuineness of the 3 unsecured loans claimed to have been taken by him during the impugned assessment year. Accordingly, the AO added the sum of � 32 lakhs u/s 68 of the Act in the hands of the assessee. Further, the AO observed that the assessee sold immovable property for � 1,51,75,000/- on 23-07-2010 as per the value assessed by the Stamp Value Authority, however, the assessee submitted that the property was sold for � 84 lakhs. The AO rejected the assessee’s contention and added a sum of � 41,37,081/- by invoking the provisions of section 50C of the Act. Further, the AO observed that the assessee had claimed exemption under section 54F of the Act against the capital gains tax on sale of immovable property referred to above. However, despite several opportunities, the assessee has not been able to furnish the copy of documents evidencing the purchase of residential house for the purpose of availing deduction under section 54F of the Act. Accordingly, the AO disallowed the assessee’s claim for deduction under section 54F of the Act.
In appeal, the assessee made a request to file additional evidence in the form of bank statements of unsecured creditors, their returns of income for relevant assessment years in order to establish identity, creditworthiness of the unsecured loans taken. Further, the assessee also sought to produce bills/certificates of the M/s Rudra building construction Company to establish that the assessee had completed construction of the house within the permissible time limit so as to be eligible for claiming deduction under section 54F of the Act. However, Ld. CIT(Appeals) rejected assessee’s request for admission of additional evidence. Further, on the merits of the
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case, Ld. CIT(Appeals) gave part relief to the assessee and restricted addition to � 25,50,000/-. However, in respect of the other two grounds of appeal i.e. with respect to additions under section 50C of the Act and disallowance of claim of exemption under section 54F of the Act, the Ld. CIT(Appeals) dismissed assessee’s appeal.
The assessee is in appeal before us against the aforesaid additions. Before us, the counsel for the assessee submitted that the assessee was unable to submitted bills before the AO during the course of assessment proceedings due to paucity of time. The counsel for the assessee submitted that less than 2 months of time was given for the assessee to submit all the requisite details and accordingly, in view of the paucity of time, the assessee could not submit details during the course of assessment proceedings. Further, Ld. CIT(Appeals) in the instant set of facts was wholly unjustified in refusing to admit additional evidence, which goes to the root of the matter and should have been admitted in the interest of justice. The counsel for the assessee drew our attention to pages 31 of paper book and submitted that the assessee had tried to submit details of bills raised by M/s Rudra construction Co before the Ld. CIT(Appeals) in order to establish that the construction work was completed in respect of the residential houses at Ujjain within the time permissible under section 54F of the Act. However, the Ld. CIT(Appeals) has refused to admit additional evidence, which ought to have been admitted in the instant set of facts in the interest of justice.
In response, the Ld. DR relied upon the observations made by Ld. CIT(Appeals) in the appeal order.
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We have heard the rival contentions and perused the material on record. In our considered view, it is established law that in appropriate circumstances/cases, the Ld. CIT(Appeals) should admit additional evidence in the interest of justice, in case the filing of such evidence goes to the root of the matter and is essential to establish the justification/genuineness of the claim of the assessee. Further, we also observe that in the case of Tarun Manmohan Garg v DCIT in ITA number 3208/Ahd/2015 the Ahmedabad ITAT held that even in the absence of a specific request from the assessee, the AO has to give an option to the assessee to the follow the course provided by law under section 50C of the Act. Further, the Calcutta High Court in the case of Sunil Kumar Agrawal v. CIT47 Taxman.com 158 held that where according to assessee, agreed consideration as per conveyance deed was highest prevailing market price of property, it would follow that assessee disputed higher valuation made by Stamp valuation authority and in such case, Assessing Officer should have referred matter to a Valuation Officer as contemplated under section 50C. Accordingly, in light of the above observations, in the interests of justice, we are restoring the file to the assessing officer for fresh adjudication, after giving due opportunity to the assessee to place supporting documents/evidence in order to establish genuineness of unsecured loans to establish details/value regarding sale of property and to examine claim of deduction u/s. 54F of the Act after grating due opportunity of hearing to the assessee.
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In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11-10-2022
Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 11/10/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद