DAMODAR LAL SONI,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh HkkxpUn] ys[kk lnL; ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 805/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2007-08 Cuke Shri Damodar Lal Soni The ITO Vs. D-232/233, Vidhdyadhar Nagar, Jaipur Ward- 4(2), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGXPS 0891 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by: Shri Tanuj Agarwal, CA jktLo dh vksj ls@ Revenue by :Shri R.A. Verma, Addl. CIT- DR lquokbZ dh rkjh[k@ Date of Hearing : 29/12/2016 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 3/01/2017 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A)-5, Jaipur dated 22-06-2016 for the assessment year 2007-08 raising therein following grounds:- ‘’1. That on the facts and circumstances of the case and in law, the ld. CIT(A) grossly erred in not quashing the reopening of assessment u/s 147 of the I.T. Act, 1961 and also erred in not treating the reassessment order passed as illegal and unjustified and void ab initio. 2. That on the facts and circumstances of the case and in law, the ld. CIT(A) grossly erred in sustaining an addition of Rs. 3,39,450/- as Long term capital gain from

2 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . sale of house property thereby wrongly considering the cost of improvement of Rs. 2,40,000/- incurred on that property as Nil.’’

2.1 Apropos Ground No. 1 and 2 of the assessee, the facts of the case

as emerges from the order of the ld. CIT(A) is as under:-

‘’2.3 I have considered the fats of the case, the assessment order and the submissions of the appellant. The appellant has stated that he had applied for copy of reasons recorded u/s 148. This application purportedly submitted on 25-11- 2011, a copy of which was filed in the submissions. The same was forwarded to the AO for his comments, who vide remand report dated 10-02-2016 has stated that there is no such letter on record requesting for reasons. It is further observed that the letter dated 25-11-2011 requesting for reasons for reopening contains the following remark: ‘’Kindly provide the reasons recorded u/s 147, so that I may be able to file the Return in the prescribed form.’’ However, the Return in response to notice u/s 148 had already been filed vide letter dated 23-1-2011 and submitted on 25-11-2011, which casts further doubt on authenticity of the said letter since the letter is filed after the filing of Return in response to notice u/s 148. Moreover, this letter is stamped but not signed by the receiver and also there is no inward serial number mentioned thereon. In any case, since the letter has not been submitted to the AO, he could not have taken cognizance of the same. Also there is no further request letter filed by the assessee requesting for reasons. Moreover, the assessee was fully aware of a complaint filed against him by his relatives with JDA, police and IT Department regarding certain false claims made by the assessee in the Return. He was thus aware of the reasons behind reopening , which is presumably why he did not ask for the said reasons. Considering the entire set of facts, the AO has rightly proceeded with the reassessment proceedings and did not commit any blunder in not supplying the reasons as they were never asked for from him. Accordingly Ground Nos. 1 and 2 are dismissed.

3 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . 2.2 During the course of hearing, the ld. AR of the assessee prayed that

the lower authorities have erred in not quashing the reopening of the

assessment u/s 147 of the Act which should be quashed.

2.3 The ld. DR relied on the orders of the lower authorities

2.4 I have heard the rival contentions and perused the materials

available on record. It is noted from the available records that reopening

of the assessment made u/s 147 of the Act by the AO had been rejected

by the ld. CIT(A). It is further noted that the ld. AR of the assessee had

not advanced any new arguments during the course of hearing for

rebutting the action of the lower authorities on the issue of reopening of

the assessment u/s 147 of the Act. Therefore, taking into consideration all

the facts, circumstances including the written submission of the

assessee’s case, I find no merit in the arguments advanced by the ld. AR

of the assessee at the time of hearing before the Bench. Hence, the order

of the ld. CIT(A) is sustained and Ground No. 1 and 2 of the assessee are

dismissed.

3.1 Apropos Ground No. 3 of the assessee, the facts of the case as

emerges from the order of the ld. CIT(A) is as under:-

3.3 I have considered the facts of the case, the assessment order and the submissions of the appellant. The brief facts of the case are that the assessee had shown sale of residential house atD-186, Vidhyadhar Nagar for Rs.

4 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . 4,00,000/- showing Long term capital gain of Rs. 13,222/- thereon in the original return of income. The year of acquisition of the said property was shown as F.Y. 1993-94 and the year of improvement was shown as F.Y. 1993-94 and the year of improvement was shown as F.Y. 1998-99, the cost of improving being Rs. 2,40,000/-. However, in the return filed in response to notice u/s 148, the year of acquisition was shown as F.Y. 1987-88, and the year of improvement was preponed to F.Y. 1992-93, the cost of improvement being the same. This resulted in increase in indexed cost of acquisition as well as indexed cost of improvement, due to which Long term capital loss of Rs. 2,29,115/- was computed. In the assessment u/s 143(3) r.w.s. 147, the AO adopted the sale consideration of Rs. 5,23,284/- taking the DLC rate of the said property as per Section 50C. He further adopted year of acquisition as 1987-88 and cost of acquisition at Rs. 17,500/- on the basis of documents submitted by the assessee. The AO denied giving any benefit of cost of improvement in the absence of any supporting evidence and worked Long term capital gain at Rs. 4,62,734/-. The first contention of the assessee is that provisions of Section 50C are inapplicable in his case since the property in question is allotted as leasehold property by JDA for 99 years. Hon'ble ITAT Jaipur bemch has considered the question of applicability of Section 50C on leasehold properties in the case of M/s. Jaipur Times Industries vs. ITO in ITA No. 429/JP/2012 dated 26-02-2014 wherein it was held that the deeming fiction of Section 50C does not apply to immovable properties allotted on lease since it is leasehold rights in the land or building that are transferred and not ‘land or building’’ per se. Since the impugned property is held under lease of 99 years as per clause 5 of the allotment letter of JDA, it is held that provisions of Section 50C will not apply thereto. Accordingly, the AO is directed to adopt the full value of consideration as Rs. 4,00,000/- as per the sale deed.

‘’3.4 The assessee has further contended that in the Return filed in response to notice u/s 148, he had corrected the year of improvement from F.Y. 1998-99 as stated in the

5 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . original return to F.Y. 1992-93 in the return in response to notice u/s 148, due to the fact that such improvement was carried out by his father, who was alive till 11-03-1994. The cost of improvement has been stated as Rs. 2,40,000/- in both the returns. The preponement of year of improvement has resulted in computation of capital loss of Rs. 2,29,115/- in the return in response to notice u/s 148. It is noteworthy that the assessee never filed a revised return within the permissible time limit to claim the said loss, even though the facts were always in his knowledge. Thus, the shifting of the year of improvement to F.Y. 1992-93 now, casts a doubt about the authenticity of the claim which appears to have been made to frustrate the entire exercise of re-assessment. In this regard, it is noteworthy that the assessee does not possess any evidence regarding such cost of improvement having been incurred in F.Y. 1992-93. More particularly there is no evidence to prove the magnitude of such cost. The assessee has furnished certain vague affidavits from several persons claiming to have done the said work or to have witnessed the said work. However, no details of the cost incurred or payment details thereof have been submitted. The assessee has also furnished an affidavit claiming the cost as Rs. 2,40,000/- but devoid of any supporting evidence, the same can at best be said to be a self serving document without any credentials. The AO has correctly noted that the said property alongwith its cost has not been shown in the balance sheet of the assessee as on31-03-2006 and 31-03- 2007, placed on record, whereas his father had passed away in March 1994. In this way, there is no evidence, whatsoever, regarding the magnitude as well as year of incurring the claimed cost of improvement. Accordingly, the AO’s action in disallowing the cost of improvements is hereby upheld. The assessable Long term capital gain on sale of the impugned property accordingly works out to Rs. 3,39,450/- (4,00,000 – 60,550) after giving deduction for indexed cost of acquisition of Rs. 60,550/-.’’

3.2 During the course of hearing, the ld. AR of the assessee prayed that

the ld. CIT(A) has erred in sustaining an addition of Rs. 3,39,450/- as

6 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . Long term capital gain for sale of house property and wrongly

considering the cost of improvement of Rs. 2,40,000/- incurred on the

property at nil.

3.3 The ld. DR relied on the orders of the lower authorities

3.4 I have heard the rival contentions and perused the materials

available on record. It is noted that the issue of dispute raised by the

assessee in his appeal is regarding sustaining an addition of Rs.

3,39,450/- as Long term capital gain from sale of property and thereby

wrongly considering the cost of improvement of Rs. 2,40,000/- incurred

on that property as Nil. It is noted from the records that the assessee had

sold a property situated at D-186, Vidhyadhar Nagar, Jaipur on 16-11-

2006 to Smt. Sarla Devi for a consideration of Rs. 4.00 lacs. The

evaluated value taken by the Sub-Registrar –II, Jaipur for stamp duty

purpose was of Rs. 5,23,284/-. The assessee had shown sale consideration

at Rs. 4.00 lacs for capital gain purposes which according to AO was

violation of provisions of Section 50C of the I.T. Act, 1961. The AO also

observed that the assessee was not having any basis for adopting cost of

Rs. 2,40,000/- in 1992-93 as the assessee was not having purchase bill or

documentary evidence in support of construction expenses of house.

However, the AO did not allow the benefit of cost of improvement of Rs.

7 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . 2,40,000/- observing that the property under consideration was purchased

by his late father Shri Ramdeen Soni for consideration of Rs. 17,500/- on

8-10-1987 and benefit of cost of improvement is not given as there is no

evidence to have incurred expenditure on account of construction/ repair

/ renovation of the property either by his late father or the assessee

himself. Thus the AO computed the total income of the assessee in the

assessment order as under:-

In first appeal, the ld. CIT(A) sustained the addition of Rs. 3,39,450/- as

Long term capital gain from sale of house property and also did not allow

the cost of improvement of Rs. 2,40,000/- incurred on the aforesaid

property as nil. It is noted from the available records that there was only

construction of ground floor in the property in question which is evident

from page 101 & 102 of the paper book while in the sale deed the

description of the area of the property in question which has been sold,

contain ground and first floor. It evident from page 24 of the paper book.

8 ITA No. 805/JP/2016 Shri Damodar Lal Soni vs. ITO, Ward- 4 (2), Jaipur . Thus it appears from the records that there was definite some expenditure incurred on additional construction of the property. The dispute of expenditure incurred remains whether it was in the assessment year 1998- 99 as claimed in the original return in A.Y. 1992-93 or it was claimed on receipt of the notice u/s 148 of the Act. Since no evidence is available on record, therefore, the assessee's original claim in the assessment year 1998-99 is being accepted as the assessee failed to establish that the expenditure was incurred in the F.Y. 1992-93. Thus Ground No. 3 of the assessee is partly allowed. 4.0 In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 3 /01/2017

Sd/- ¼HkkxpUn½ (Bhagchand) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 3 /01/ 2017 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Damodar Lal Soni, Jaipur 1. izR;FkhZ@ The Respondent- The ITO, Ward- 4 (2), Jaipur 2. 3. vk;dj vk;qDr¼vihy½@ CIT(A). vk;dj vk;qDr@ CIT, 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 805/JP/2016 ) 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत