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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R Per Shri A.K. Garodia, Accountant Member These three appeals are filed by the assessee which are directed against three separate orders of ld. CIT(A)-5, Bangalore all dated 14.12.2017 for Assessment Years 2007-08, 2008-09 and 2010-11.All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
The grounds raised
by the assessee for Assessment Year 2007-08 in are as under. “1. On the facts and in the circumstances of the case, the reopening of the assessment U/s.147 of the Act by issuing the notice U/s.148 was opposed to law and accordingly the assessment as made is liable to be cancelled.
2. The conditions precedent being absent, the reopening of the assessment U/s.147 is bad in law.
3. There being no omission much less an omission of declaration of income in therelevant assessment year in the return of income filed by the appellant, the reopening of the assessment U/s.147 was without jurisdiction and consequently the reassessment is liable to be annulled.
4. The learned CIT(A) erred confirming the addition made under the head short term capital gains and making addition of Rs.22,71,901/- in the hands of the appellant.
5. The learned CIT(A) ought to have appreciated that the 'transaction did not belong to the appellant individually and the transactions were required to be considered in the hands of AOP in which the appellant was a member with 1/7thshare.
6. The learned CIT(A) having perused the agreement of AOP ought to have appreciated that there was a valid AOP in existence which carried on the transaction as business transaction/ adventure in the nature of trade and accordingly the AOP alone was liable to tax and no part of the income if any of the AOP was liable to be confirmed in the hands of the appellant.
7. On the facts the learned CIT(A) ought to have appreciated that the transaction did not yield income which had ended up in loss and even if the appellant was liable to be assessed on his share it was loss, which was required to be considered for set off against his other income.
8. The learned CIT (A) ought to have appreciated the submission of Appellant regarding the Hon’ble ITAT, the appeal of the other co- parceners has sent back to the AO with the direction that the expenditure incurred has to be allowed proportionately.
9. The ld CIT (A) ought to have considered the documentary evidences filed with regard to the expenditure incurred for development of land, or given one more opportunity before the AO for explanation. Thus, the ld CIT(A) ought to have allowed the expenditure incurred in full
10. Without prejudice, the impugned additions confirmed are opposed to law in that no adequate opportunity was given to the appellant to prove the genuineness of the transaction and the financial results there from besides the source of investment.
11. Without prejudice, the additions/disallowances were excessive, arbitrary and unreasonable and ought to be reduced substantially.
12. The learned CIT(A) erred in confirming the interest u/s.234A, 234B and 234C of the Act.
13. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”
The grounds raised
by the assessee for Assessment Year 2008-09 in are as under. “1. On the facts and in the circumstances of the case, the reopening of the assessment U/s.147 of the Act by issuing the notice U/s.148 was opposed to law and accordingly the assessment as made is liable to be cancelled.
2. The conditions precedent being absent, the reopening of the assessment U/s.147 is bad in law.
3. There being no omission much less an omission of declaration of income in therelevant assessment year in the return of income filed by the appellant, the reopening of the assessment U/s.147 was without jurisdiction and consequently the reassessment is liable to be annulled.
4. The learned CIT(A) erred confirming the addition made under the head short term capital gains and making addition of Rs. 7,36,466/- in the hands of the appellant.
5. The learned CIT(A) ought to have appreciated that the 'transaction did not belong to the appellant individually and the transactions were required to be considered in the hands of AOP in which the appellant was a member with 1/7thshare.
6. The learned CIT(A) having perused the agreement of AOP ought to have appreciated that there was a valid AOP in existence which carried on the transaction as business transaction/ adventure in the nature of trade and accordingly the AOP alone was liable to tax and no part of the income if any of the AOP was liable to be confirmed in the hands of the appellant.
7. On the facts the learned CIT(A) ought to have appreciated that the transaction did not yield income which had ended up in loss and even if the appellant was liable to be assessed on his share it was loss, which was required to be considered for set off against his other income.
8. The learned CIT (A) ought to have appreciated the submission of Appellant regarding the Hon’ble ITAT, the appeal of the other co- parceners has sent back to the AO with the direction that the expenditure incurred has to be allowed proportionately.
9. The ld CIT (A) ought to have considered the documentary evidences filed with regard to the expenditure incurred for development of land, or given one more opportunity before the AO for explanation. Thus, the ld CIT(A) ought to have allowed the expenditure incurred in full
Without prejudice, the impugned additions confirmed are opposed to law in that no adequate opportunity was given to the appellant to prove the genuineness of the transaction and the financial results there from besides the source of investment.
Without prejudice, the additions/disallowances were excessive, arbitrary and unreasonable and ought to be reduced substantially. 12. The learned CIT(A) erred in confirming the interest u/s.234A, 234B and 234C of the Act. 13. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.” 4. The grounds raised
by the assessee for Assessment Year 2010-11 in are as under. “1. On the facts and in the circumstances of the case, the reopening of the assessment U/s.147 of the Act by issuing the notice U/s.148 was opposed to law and accordingly the assessment as made is liable to be cancelled.
2. The conditions precedent being absent, the reopening of the assessment U/s.147 is bad in law.
3. There being no omission much less an omission of declaration of income in therelevant assessment year in the return of income filed by the appellant, the reopening of the assessment U/s.147 was without jurisdiction and consequently the reassessment is liable to be annulled.
4. The learned CIT(A) erred confirming the addition made under the head short term capital gains and making addition of Rs. 15,20,697/- in the hands of the appellant.
5. The learned CIT(A) ought to have appreciated that the 'transaction did not belong to the appellant individually and the transactions were required to be considered in the hands of AOP in which the appellant was a member with 1/7thshare.
6. The learned CIT(A) having perused the agreement of AOP ought to have appreciated that there was a valid AOP in existence which carried on the transaction as business transaction/ adventure in the nature of trade and accordingly the AOP alone was liable to tax and no part of the income if any of the AOP was liable to be confirmed in the hands of the appellant.
7. On the facts the learned CIT(A) ought to have appreciated that the transaction did not yield income which had ended up in loss and even if the appellant was liable to be assessed on his share it was loss, which was required to be considered for set off against his other income.
8. The learned CIT (A) ought to have appreciated the submission of Appellant regarding the Hon’ble ITAT, the appeal of the other co- parceners has sent back to the AO with the direction that the expenditure incurred has to be allowed proportionately. 9. The ld CIT (A) ought to have considered the documentary evidences filed with regard to the expenditure incurred for development of land, or given one more opportunity before the AO for explanation. Thus, the ld CIT(A) ought to have allowed the expenditure incurred in full 10. Without prejudice, the impugned additions confirmed are opposed to law in that no adequate opportunity was given to the appellant to prove the genuineness of the transaction and the financial results there from besides the source of investment. 11. Without prejudice, the additions/disallowances were excessive, arbitrary and unreasonable and ought to be reduced substantially. 12. The learned CIT(A) erred in confirming the interest u/s.234A, 234B and 234C of the Act. 13. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.” 5. It was submitted by ld. AR of the assessee that ground nos. 1 to 6 are not pressed and accordingly these grounds are rejected as not pressed in all the three years.Regarding merit of the case i.e. ground nos. 7 to 10, she submitted that in the case of co-owners i.e. Smt. M. Lakshmi Vs. ITO in & 542/Bang/2017 and Smt. H. Gayathri Vs. ITO in ITA Nos. 575, 540 & 541/Bang/2017 dated 26.05.2017, the Tribunal has restored back the matter to AO for fresh decision. She submitted a copy of this combined Tribunal order and drawn my attention to Para 7 of this Tribunal order in this regard. She also submitted that Tribunal has restored the matter back to the file of AO for fresh decision on this basis that AO had not taken into consideration the expenditure incurred by the assessee for carving out 90 plots out of the total lands purchased and for this carving out, some expenditure is bound to be incurred.
She submitted that on page no. 10 of the paper book is the detail of year-wise expenditure in respect of cost of development incurred by the assessee i.e. amounts of Rs. 74,45,632/- in the year 2004-05, Rs. 16,01,685/- in the year 2005-06 and Rs. 1,06,73,876/- in the year 2006-07. She submitted that in the same line, in the present case also, the matter may be restored back to the file of AO for fresh decision. The ld. DR of revenue supported the orders of authorities below. He also submitted that the details of expenses incurred now being filed was not made available to the authorities below and therefore, this is new evidence which should not be admitted.
I have considered the rival submissions. It is seen that in para 6.1 of the assessment order for Assessment Year 2010-11 as per the ANNEXURE-1, it is noted by the AO that enquiries were conducted at the office of the sub-registrar, Kengeri and also at Banashankari to find out about the activities of the assessee in connection with investments made in immovable properties along with six others and the details of those properties are also mentioned in the same Para in which assessee’s share is worked out at 1/7th of the total value of such land. Hence this is apparent that the assessee is co-owner of these lands. Now I reproduce para no. 7 of the Tribunal order rendered in the case of Smt. M. Lakshmi Vs. ITO (supra) and Smt. H. Gayathri Vs. ITO (supra). The same is as under. “7. Having carefully examined the orders of lower authorities, I find that the AO has computed the short term capital gain, but while doing so, he has not taken into account the expenditure incurred in levelling the plot. Undisputedly the assessee has carved out 90 plots out of the total lands purchased and for its carving out, some expenditure is bound to be incurred. But the AO did not taken into account the expenditure incurred in this regard and he has computed the short term capital gain without taking into account the expenditure incurred after the purchase of plot. This approach of AO is incorrect as for developing a plot, some expenditure is bound to be incurred. Therefore, I am of the view that this issue requires readjudication by the AO and I accordingly set aside the order of CIT(Appeals) and restore the matter to the file of AO with a direction to reexamine the claim of expenditure incurred in levelling of the plot or otherwise relevant for the purpose of computation of short term capital gain.”
From the above para reproduced from the Tribunal order, it comes out that it is held by the Tribunal in these two cases that the AO has not taken into account the expenditure incurred in respect of carving out 90 plots out of the total land purchased. It is also held by the Tribunal that some expenditure is bound to be incurred for this purpose. But the AO has not taken into consideration those expenses. Therefore, the matter is restored back to the file of AO for fresh decision with the direction that the claim of the expenditure incurred in levelling of the plot or otherwise relevant should be re-examined and the matter may be decided afresh. In the present case which is of a co-owner, I respectfully follow this Tribunal order in the case of co-owners and set aside the order of CIT(A) in the present case also in all the three years and restore the matter back to the file of AO for fresh decision with the same directions as were given by the Tribunal in para 7 of the Tribunal order which is reproduced above.The AO should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee.
In the result, all the three appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.