SRI ANIL H LAD ,BELLARY vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-7(1)(2), BANGALORE

The present appeal is filed by the assessee against the order of the CIT (A) -10, Bengaluru, dated.03.01.2018, for the assessment year 2012-13, on the following effective ground : The learned CIT (A) is not justified in upholding the addition of Rs.34,60,000/- in respect of the income computed under the head “Capital gains” on the sale of a flat by restricting the indexed cost ITA.1082/Bang/2018 page - 2 of acquisition of the said flat sold by the appellant in the absence of the purchase deed, to Rs.2,78,27,116/- being the indexed cost of acquisition calculated on the basis of the price paid for an adjacent flat as against the sum of Rs.3,12,58,013/- claimed by the appellant under the facts and in the circumstances of the appellant’s case.

Brief facts are, the assessee filed his return of income on 30-09-2012 declaring total income of Rs.1,05,11,044/-. The case was taken up for scrutiny. During the scrutiny proceedings the AO noticed that during the year under appeal the appellant has offered long term capital gains of Rs. 44,86,747/- on sale of flat no. G-007 in New Delhi. On a sale consideration of Rs. 3,57,74,760/- the assessee has claimed indexed cost of acquisition at Rs.3,12,58,013/-. The AO called for supporting documents for the cost of acquisition including the purchase agreement or the purchase deed. The A/R of the appellant failed to produce the purchase agreement or purchase deed before the AO but he submitted a copy of the purchase deed for the adjacent flat G-008 in the same apartment. It was noticed by the AC that the cost of acquisition of the flat G-008 was Rs. 5,400/- per sq.ft. whereas it was much higher in the case G-007. The AO proposed to the AR to adopt the cost of acquisition at the rate of Rs.5,400/- per sq.ft which was the cost of acquisition for flat no. G-008. The A/R of the appellant agreed to the proposal and accordingly the AC determined the cost of acquisition of the flat at Rs.1,83,97,800/-. This figure came to Rs.2,78,27,116/- after indexation. On recalculation as per the ITA.1082/Bang/2018 page - 3 new indexed cost of acquisition the capital gains came to Rs.79,47,645/- as against Rs.44,86,747/- declared by the appellant. Accordingly, the AO made an addition of the difference of the two figures which came to Rs. 34,60,899/-. Aggrieved by this addition, the assessee filed an appeal before the CIT (A).

The CIT (A) in para 5 of his order has given the finding, which is as under : I have gone through the written submission and statement of facts and also the assessment order. Before the AO as well as in the appeal proceedings the appellant took the plea that all the payments for the purchase of the flat were made through bank and that the appellant is trying to obtain the purchase deed. However, no such deed was produced. In the absence of any new evidence produced before me, I am of the considered opinion that the AO has rightly adopted the figure of the adjacent flat no. G-008 and has made the calculation of capital gains in accordance with the provision of law. I do not find any reason to interfere with the finding of the AO which was agreed to by the A/R of the appellant. Accordingly, I confirm the addition of Rs. 34,60,899/-. Further aggrieved by the confirmation of the addition by the CIT(A), the assessee has filed this appeal before us.

Before us, the Ld.AR has filed a paper book along with application for submitting additional documents. It was the submission of the Ld. AR that the allotment letter was not produced before the lower authorities, which goes to show the acquisition of flat, which is the subject matter of the present proceedings. The reasons given by the Ld. AR are found in para 6, 7 and 8 of the application. The Ld. AR submitted that the ITA.1082/Bang/2018 page - 4 additional documents may be permitted to be filed before the Tribunal.

The Ld. DR has opposed the filing of the additional documents.

We have heard the rival contentions and perused the record. For the reasons mentioned in the application, we allow the filing of additional documents on record. Since we have admitted additional documents including the allotment letter wherein cost of acquisition of unit was shown at Rs.2,04,42,720/-, whereas the cost of acquisition of the adjoining property shown at Rs.1,83,97,800/- in assessment order . The properties, nos.G 008 and G 007 are situated in the same floor and are having the same size and were owned by assessee , but different cost of acquisition were shown .

The assessee had supported different cost of acquisition by drawn our attention to the ledger account of the builder, namely, Lifestyle Buildcon P. Ltd, as well as to the other documents forming part of the paper book . In our view, allotment letter goes to the root of the matter hence is required to be examined by lowere authorities. Therefore we deem it appropriate to remand the matter to the file of the CIT (A) for verify the authenticity and legality of this allotment letter and to find out whether the consideration mentioned in the allotment letter was actual consideration paid by the assessee for acquisition of this flat or not. The CIT (A) is also directed to take any other further proceedings as he deems proper to find out the true cost of acquisition of the flat including issuing ITA.1082/Bang/2018 page - 5 summons to Builder . Needless to say while doing so, the CIT (A) shall give due opportunity of hearing to the assessee and follow the principle of natural justice 5/.

In the result, appeal of the assessee is allowed for statistical purpose.