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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & T.R. SENTHIL KUMAR
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER
This appeal is filed by the assessee against the order dated 5.1.2015 passed by the Ld. Commissioner of Income Tax-3, Ahmedabad relating to the assessment year 2010-11 by invoking provisions of section 263 of the Income Tax Act, 1961 ("the Act" for short).
This is the 32nd hearing of the case before the Tribunal. None appeared on behalf of the assessee, however, written submissions dated 15.5.2018 is placed on record. With this written submissions and the assistance of the ld.DR, we proceed to dispose of the appeal filed by the assessee.
ITA No.1834/Ahd/2015
Brief facts of the case is this that the assessee is an individual drawing income from salary and other sources. For the Asstt.Year 2010- 11, the assessee filed its return of income on 25.7.2011 declaring a total income of Rs.5,66,180/-. The same was processed under section 143(1) of the Act, and then taken up for scrutiny assessment and notice under section 143(2) and 142(1) were being issued from time to time, and the assessment has been completed. During this assessment year, the assessee has sold immovable property for Rs.1,58,96,310/-. The assessee has claimed cost of acquisition at Rs.16,31,855/-, cost of improvement of Rs.1,25,59,126/- and the assessee offered long term capital gain of Rs.17,05,330/- by way of revised statement of total income. The same was accepted by the AO and assessed the income at Rs.19,71,507/- and levied consequential interest under section 234A, 234B and 234C of the Act, and also initiated penalty proceedings under section 271(1)(c) of the Act.
A perusal of the above assessment order and relevant records by the ld.CIT following details are revealed:
“2.2 On verification of purchase and sale of land in terms of its measurement and survey number, the following detail have been revealed:- Survey Sq.mtr. Purchase Reference of Survey Sq. Reference of mtrs. No. of land Of land consider document for No. of document of purch ation purchase land sale purchased land ased sold sold 1440/3 4148 Rs.82960 KAD/657/1993 1440/2 1670 Sale deed & registered on 1440/4 10.03.2010 1441 8950 Rs.1790000 KAD/658/1993 1441 8871
1455 15075 Rs.190000 KAD/659/1993 1455 15102
1456 8903 Rs.178060 KAD/660/1993 1456 2999
Total Land 37076 Rs.630020 Total 28462 Land
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2.3 Thus, from the above table, it is revealed that out of total land area od 37076.sq. mtrs., the land admeasuring of 28462 sq. mtrs. has been sold leaving 8614 sq. mtrs. of land as owned by the assessee. Further, land shown as Survey No. 1440/3 of 4148 sq. rntrs. appears to have not been in the sale deed made with this party. If the area of this land is excluded for working out the cost of acquisition, the revised cost of acquisition of sold land would be as under:- Survey No. Sq. meter Year of Purchase price as Cost of acquisition for purchase claimed by you working out capital gain
1993 1440/3 4148 Rs. 82,960 Nil (for the reasons mentioned above.) 1993 1441 8950 Rs. 1,79,000 Rs. 1,79,000 1993 1455 15075 Rs. 1,90,000 Rs. 1,90,000 1993 1456 8903 Rs. 1,78,060 Rs. 1,78,060 Total 37076 Rs. 6,30,020 Rs. 5,47,060/-
Rs. 4,19,960/- Proportionate cost of acquisition of land for 28462 sq. mtr. sold to Rainbow Paper Mills
2.4 Since the AO has not considered the facts now noticed on verification of the records and allowed the long term capital gain as claimed by the assessee while finalizing the assessment, it appears that the assessment order is erroneous and prejudicial to the interest of revenue by allowing incorrect cost of acquisition.”
The ld.CIT on perusal of the sale deed executed with Rainbow Papers Ltd. by the assessee, which was registered on 10.3.2010 revealed that no improvement in the property sold Rajpur Sim has been shown in the description of the land given in the sale deed. Photographs affixed to the said sale deed also do not reflect that there was any kind of improvement. On comparison of the description of the vouchers with the contents of the description of the land sold, it was further noticed that the assessee had claimed to have incurred major expenses, but without verifying the genuineness of the expenses incurred, source of payments, thus, the assessment order has been passed erroneously which is also prejudicial to the interest of the Revenue. A show cause notice issued calling for explanation from the assessee. In response to the show cause
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notice, the assessee vide his reply letter dated 16.1.2014 made the following contentions:
i) He is not the owner of the land which is actually owned by the Company, viz. M/s.Kinjal Metal Ltd. in which he is one of the Director; ii) He showed the capital gain in his own return by mistake; the capital gain should be shown in the hands of the company; iii) All the details were given to the AO during the proceeding which were examined by him.
Considering the reply filed by the assessee, the ld.CIT has observed as under:
“4.2 The assessee has made the above submission but has not given any evidence that he has filed the return of the company showing the return of company. The assessee has not only showed the capital gain in his return but has accepted the addition made by the AO by not filling the appeal against the addition. Even after the addition, the assessee has not filed the return of the company declaring the said income in the hand of the company. Therefore, the stand of the assessee at this late stage cannot be accepted that the income does not belong to him. Further, even at this stage the assessee is not able to submit the evidence of the cost of improvement. The assessee is not be able to answer the contention made from para 4.1 to 5.1 of the show cause notice. Specifically, the assessee is not able to answer the contention made in para 4.2 that the assessee still had land measuring 8614 sq. mtrs. The assessee had not accounted for the Survey No. 1440/3 measuring 1441 sq. mtrs. which is claimed to have been sold to Rainbow Papers Mill as no reference has been made to survey no. in the sale deed. Since the survey no. is not mentioned in the sale deed. It is clear that this land has not been sold. The assessee has not explained this issue and the AO had not verified this issues. Further in respect of the cost of Improvement the assessee has not been able to submit evidence even at this stage. The AO failed to verify the claim of expenses in respect of cost of improvement.”
Thus, the ld.CIT set aside the assessment order dated 25.3.2013 and directed the AO to make de novo assessment and pass fresh order giving opportunity to the assessee. Aggrieved against the revision order, the assessee is in appeal before us by raising the following grounds of appeal:
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“1. The ld.CIT-3, Ahmedabad (herein after referred to as "Ld. CIT"] erred in passing the order dated 05.01.2015 under Section 263 of the Act without appreciating that the Assessment Order dated 25.03.2013 passed under section 143(3) is neither erroneous nor prejudicial to the interest of revenue. Hence, there is no jurisdiction to invoke the provisions of Section 263 of the Act. Therefore, the order dated 05.01.2015 passed by the Ld. CIT under section 263 of the Act is bad in law and the same may be quashed. 2. The Ld. CIT failed to appreciate that while passing the Assessment Order dated 25.03.2013 the Ld. Assessing Officer has passed the assessment order after due application of mind and after carrying on required investigations. Hence, the Ld. CIT is not justified in invoking the provisions of Section 263 of the Act. 3. Without prejudice to the above the Ld. CIT failed to appreciate that the issues raised during the course of the proceedings u/s 263 do not satisfy the condition that the assessment order dated 25.03.2013 is erroneous as well as prejudicial to the interests of revenue. Therefore, the order passed under section 263 of the Act dated 05.01.2015 is bad in law and hence, the same may be quashed and set aside.”
The ld.DR appearing for the Revenue states that grounds raised by the assessee are general in nature without any material or evidence in support of his claim. However, written arguments filed by the assessee is also challenging invocation of section 263 and also relied on the decisions of Hon’ble Supreme Court in the case of Malabar Industries (2000) 243 ITR 83 (SC) and CIT Vs. Max India Ltd, (2007) 295 ITR 282 (SC). In para- 17 of the written submissions, the assessee pleaded that it was due to an inadvertent mistake that the long term capital gain was assessed in his hand though the same was supposed to be assessed in the hands of M/s.Kinjal Metal Ltd. and relied upon the decision of jurisdictional High Court in the case of Chandrakant J. Patel Vs. V.N. Srivastava, (2011) 330 ITR 310 (Guj) wherein it was held that, if the assessee has made a mistake while filing the return of income, it was for the AO to assist the assessee by pointing out the said mistake to him and ensuring him that he was taxed only in respect of the income which was chargeable to tax. Thus, the assessee pleaded in the written submission to quash 263-order passed by the ld.CIT and allow the appeal of the assessee.
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Per contra, the ld.DR submitted that revision order passed by the Commissioner is well within the provisions of section 263 of the Act. The ld.CIT in its order has clearly observed that after the scrutiny assessment has been completed in the hands of the assessee, and addition has been made, the assessee ought to have filed return of the company declaring such income, capital gain in the hands of the company viz. Kinjal Metal Ltd. This was not done by the assessee and no further explanation has been offered. The assessee also could not produce evidence in the cost of improvement as stated in the show cause notice. The assessee also could not address various discrepancies against the sale of the land pointed out in this show cause notice issued by the ld.CIT. In the absence of any evidence, and explanation of the assessee, the revision order is required to be upheld and assessee’s appeal is to be dismissed on this count.
We have given thoughtful consideration and perused the material available on record. We prima facie find that when the assessee has claimed that the said sale of land is wrongly offered in his hand, he has not made any attempt to bring before the authorities namely the return filed by the Company viz. Kinjal Metal Ltd. wherein he was one of the directors. The assessee also not placed on record any documents to make its claim that the immovable property belonged to the company. In the absence of the same, we do not want to interfere with the order passed by the ld.CIT invoking the provisions of section 263 of the Act. Thus, the grounds raised by the assessee are hereby rejected.
In the result, appeal of the assessee is dismissed.
Order pronounced in the Court on 29th April, 2022 at Ahmedabad.
Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad, dated 29/04/2022