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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI T. S. KAPOOR & MS. SUCHITRA KAMBLE
This is an appeal filed by the assessee against the order of Learned CIT(A)-XXVI, New Delhi dated 02/02/2016 pertaining to assessment year 2006-2007.
The assessee has taken various grounds of appeal which are both on legal in nature and on merits of the case. However, during the course of hearing before us, Learned A.R. argued only grounds on merits therefore, ground No. 1 to 4, which are legal in nature, are dismissed as not pressed.
3. Learned A.R. submitted that during search proceedings incriminating documents were found on the basis of which an addition of Rs.13 lac has been made. Learned A.R. in this respect invited our attention the assessment order where the Assessing Officer had made an addition of Rs.13 lac on account of sums received of Rs.3 lac on 18/05/2005 and ~ 2 ~ Rs.10 lac on 21/02/2005 on account of sale of jewellery. Learned A.R. also invited our attention to the seized documents, placed at pages 78 and 79 of the paper book. Learned A.R. submitted that the Assessing Officer has made the addition of total amount as Short Term Capital Gain without considering the cost price of the jewellery and capital gains are taxed only for the difference amount of sale consideration and the cost of acquisition. Therefore, it was prayed that the matter may be set aside to the Assessing Officer to determine the correct amount of capital gain as entire amount cannot be treated as short term capital gain.
4. Learned D.R., on the other hand, submitted that the Assessing Officer was correct in making the addition of the total amount as the assessee was not able to file any explanation. It was submitted that assessee during the proceedings before the authorities below had only been saying that the document was a dumb document and therefore, no addition was possible and at this stage the Learned A.R. is saying that the addition can only be made on account of gain only. It was submitted by Learned D.R. that the assessee did not take any plea during the proceedings before the authorities below. Learned D.R. relied on the order of Hon'ble Delhi High Court in the case of CIT vs. Sonal Construction [2012-TIOL-851-High Court-DEL-IT] (Delhi).
5. Learned A.R., in his rejoinder, submitted that it is wrong on the part of Learned D.R. to say that no such submissions on merits were made before the authorities below. As regards the proceedings before the Assessing Officer, Learned A.R. submitted that assessment was completed in a short period of two months which is apparent from the assessment order whereas the Assessing Officer gave first notice on 11/10/2010 and completed the assessment on 31/12/2010. It was submitted that before CIT(A) the assessee did argue on the merits also and our attention was invited to page 15 of the CIT(A)’s order where the assessee had requested the Learned
~ 3 ~ CIT(A) that no inquiry was made by the Assessing Officer from any person regarding authenticity of the seized documents.
We have heard the rival parties and have gone through the material placed on record. We find that Assessing Officer has passed the order in a short span of two months and has recorded in his findings that the amount of Rs.13 lac was received on account of sale of jewellery and has made the addition of entire amount of Rs.13 lac as short term capital gain presuming the cost of jewellery to be nil. The act of the Assessing Officer is not correct as short term capital gain can be calculated only by reducing the cost of acquisition of an item sold. The argument of Learned D.R. that such argument was taken before the authorities below has no force in view of the fact that assessing authorities have to tax only the correct income. On the one hand the Assessing Officer himself held that the amount was received on account of sale of jewellery therefore, he should have calculated the capital gain only and should not have made the addition of the entire sale consideration. Therefore, in the interest of substantial justice, we set aside the issue regarding consideration of calculation of capital gain to the Assessing Officer with a direction to make the addition only to the extent of short term capital gain if any earned by the assessee. Needless to say that the assessee will be afforded a reasonable and sufficient opportunity of being heard to the assessee. As a result, the legal grounds of the appeal are dismissed whereas the grounds on merits are allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed. (Order pronounced in the open court on 12/04/2019) Sd/. Sd/. (SUCHITRA KAMBLE) ( T. S. KAPOOR ) Judicial Member Accountant Member Dated:12/04/2019 *Singh
~ 4 ~ Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T.,