M/S ARCHI MEDES INDIA CONSULTANTS PVT LTD,NEW DELHI vs. ITO, NEW DELHI

PER SUDHANSHU SRIVASTAVA, J.M.: This appeal is preferred by the assessee against order dated

27.10.2014 passed by the Ld. CIT (Appeals)- V, New Delhi for

assessment year 2011-12.

return of income declaring a loss of Rs. 24,23,278/-. The case was

selected for scrutiny and during the course of assessment

proceedings, the Assessing officer observed that the assessee had

sold house property for an amount of Rs. 2,65,00,000/-. The

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Assessing Officer (AO) noticed that the assessee had capitalized

this property as a business asset and had claimed depreciation

every year from the year of purchase till the date of sale. The AO

noted that the written down value as on 31st March, 2011 for the

building was zero as the complete block of assets had been sold off.

Accordingly, the AO made an addition of Rs. 40,61,380/- being the

short term capital gain. Further, it was also noticed by the AO that

the assessee had capitalized interest paid to ICICI bank amounting

to Rs. 45,86,336/- and had added the same to the cost of the

building. The AO did not agree with the capitalization of the

interest and he added this amount also to the income of the

assessee. Further disallowance of Rs. 3,00,000/- was made out of

various expenses and the assessment was completed at an income

of Rs. 65,24,440/-. On appeal, the Ld. CIT (Appeals) partly allowed

the assessee’s appeal by deleting the ad hoc addition of Rs.

3,00,000/- out of the various expenses but upheld the addition on

account of short term capital gains as well as disallowance of

interest paid to ICICI Bank. Now, the assessee has approached the

ITAT and has raised the following grounds of appeal:-

“1. That the assessee denies his liability to be

assessee at an income of Rs. 62,24,440/-

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of the case the Ld. CIT (A) has erred in law and on facts in

not giving benefit of Rs. 80,98,103 while working out the

short term capital gains on sale of property as done by Ld.

AO and that too by recording incorrect facts.

amend the grounds of appeal at any stage and all the

grounds are without prejudice to each other.”

that there was a delay of approximately seven and half months in

filing of the appeal. Our attention was drawn to the delay

condonation application submitted by the assessee and it was

submitted that due to some family disputes, the Managing Director

of the assessee company was jailed for 50 days and the appeal

could be filed only after a family settlement had been reached. This

resulted in delay in filing of appeal. It was submitted that there was

no negligence on the part of the assessee in filing the appeal but

the appeal could not be filed due to matters beyond the control of

the assessee company. It was prayed that the delay be condoned.

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for condonation of delay and submitted that the averments of the

assessee were not verifiable.

the contents of the affidavit filed by the assessee in this regard and

looking into facts and circumstances of the case, we are of the

opinion that the delay in filing of the appeal was indeed beyond the

control of the assessee company and, therefore, we deem it fit to

condone the delay and admit the appeal for hearing.

assessee, submitted that the interest portion was not capitalized by

the assessee as has been averred by the AO in the assessment

order and he drew our attention to the copy of the audited balance

sheet for the assessment years 2009-10, 2010-11 and 2011-12

placed in the paper book to substantiate his argument. Our

attention was also drawn to the interest certificate issued by the

ICICI Bank Ltd. to substantiate the amount of interest. It was also

submitted that the interest portion was not treated as part of the

cost for the purpose of computation of capital gains and, therefore,

the lower authorities had erred in disallowing the assessee’s claim

and not giving benefit of Rs. 80,98,103/- while working out the

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short term capital gains. It was also submitted that both the lower

authorities had recorded incorrect facts while adjudicating the

issue.

heavy reliance on the orders of the lower authorities and submitted

that the disallowance had rightly been made.

the material available on record. A perusal of the orders of both the

lower authorities shows that the averment of the Ld. Authorised

Representative that the facts have not been correctly recorded by

the lower authorities is correct in so far as both the lower

authorities have not recorded facts in a proper manner while

adjudicating the issue. Unfortunately, the assessee has also not

cared to file a paper book in this regard to enable us to verify the

veracity of the various figures and the facts, as submitted before

the lower authorities, by the assessee could be verified. We feel that

it was incumbent upon the assessee to have filed relevant

documents before us to enable us to examine the matter in proper

perspective. However, the assessee has failed in this regard. All the

same, in interest of justice we deem it appropriate to restore the

issue to the file of the Ld. CIT (Appeals) with the direction to re-

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examine the issue after correct appreciation and recording of facts

and thereafter pass a speaking order after providing due

opportunity to the assessee. We also direct the assessee to produce

all relevant documents before the Ld. CIT (Appeals) in support of its

claim when it is called upon to do so by the Ld. CIT (Appeals)

failing which the Ld. CIT (Appeals) will be at liberty to proceed ex

parte against the assessee and adjudicate the issue in accordance

with law.

statistical purposes.

Order pronounced in the open court on 04.01.2019.

Sd/- Sd/- (G.D.AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER

Dated: 04.01.2019 *BR*