MRS. NEETA GUPTA,NEW DELHI vs. ACIT, NEW DELHI

It next emerges with the able assistance from the Revenue side during the course of hearing that the assessee’s instant four appeals involve a common background of facts. The assessee had sold/transferred her capital asset i.e. 2nd Floor of her house property D-2/3, Geetanjali Enclave, New Delhi-17 and declared long term capital gains of Rs.37,98,050/-, after claiming cost of acquisition as Rs.1,56,69,137/- in A.Y. 2009- 10. Learned Assessing Officer set into motion section 148/147 reopening in the year of construction thereof i.e. assessment year 2006-07 (F.Y. 2005-06) as well which culminated in addition of the corresponding cost of improvement of Rs.1,33,80,690/-, as “unexplained” in assessment framed on 26.03.2014. The Revenue is further very fair in clarifying before us that the learned assessing authority’s regular assessment dated 28.12.2011 in A.Y. 2009-10 ended up in disallowing the assessee’s cost of acquisition after indexation i.e. Rs.1,33,80,690/- which had been added in F.Y. 2005-06 herein above as not supported by filing the cogent supportive evidence whilst computing the long term capital gains in the year of ITA Nos. 2354 & 5421/Del/2014 ITA Nos. 2186 & 6416/Del/2016 Neeta Gupta

Learned CIT(A)’s case in his lower appellate findings in A.Y. 2009-10 is that the assessee’s cost of acquisition deserve to be partly allowed along with re-computation of her long term capital gains to short term capital gains in very terms. Mr. Jain next submits that the assessee’s latter twin penalty appeal i.e. ITA No. 5461/Del/2014 and ITA No. 6416/Del/2016 are directed against the Assessing Officer’s and the CIT(A)’s respective actions holding her to have concealed and furnished inaccurate particulars of income regarding the claim of cost of acquisition

We advert to the first and foremost assessment year 2006- 07. A perusal of the assessment order dated 26.03.2014 fairly indicates that the assessee had filed her original return on 31.10.2006 which culminated in learned Assessing Officer’s section 143(3) regular assessment on 20.11.2008. And the learned Assessing Officer thereafter initiated section 148/147 reopening based on his scrutiny’s findings in A.Y. 2009-10. He accordingly issued section 148 notice dated 21.03.2013 i.e. beyond a period of four years from the end of the relevant assessment year. That being the clinching case and the learned Assessing Officer not have raised even a whisper alleging the assessee to have not disclosed all her relevant particulars “fully” and “truly”, we are of the considered view that the impugned reopening herein is not sustainable in law as per section 147 first proviso and going by Hindustan Lever Ltd. vs. R.B. Wadkar (2004) 268 ITR 332. Their lordships have settled the issue in assessee’s favour and against the department that ITA Nos. 2354 & 5421/Del/2014 ITA Nos. 2186 & 6416/Del/2016 Neeta Gupta

So far as the assessee’s second appeal ITA No. 2354/Del/2014 is directed against both the learned authorities’ action partly rejecting her cost of acquisition/improvement and enhancement of long term capital gains to the short term capital gains (supra) is concerned, Mr. Jain takes us to the CIT(A)’s lower appellate discussion on the said former issue reading as under: “7.5 The admitted cost of old property is Rs.1,32,50,000/- (cost of entire property: Rs.1,25,00,000/- plus stamp duty Rs.7,50,000/-). Thus, to arrive the cost of acquisition of 2nd Floor property, 20% of Rs. 1,32,50,000/- which works out to Rs.26,50,000/- is added to the cost of construction of 2nd Floor property is Rs. 1,29,14,000/-. Thus the cost of acquisition of 2nd Floor property is worked out at Rs.1,55,64,000/- (Rs.26,50,000/- as against the claim of cost of acquisition of Rs.80,32,812/- plus Rs.1,29,14,000/- as against the claim of cost of improvement of Rs.1,56,69,138/-). Accordingly, the STCG of Rs.1,19,36,000/- is worked out which has to be assessed in place of LTCG of Rs.1,94,67,188/- assessed in the impugned order. Accordingly, I order so. Thus, there is an enhancement of Rs.53,82,812/-

It is thus clear that once the assessee’s cost of acquisition of improvement, as the case may be, had already been arrived at Rs.1,33,80,690/- whilst treating as unexplained in A..Y. 2006-07 herein, we are of the considered view that there is hardly any scope of any change therein in the year of sale/transfer of the capital asset. We thus see no reason to accept the Revenue’s vehement arguments supporting the impugned apportionment in the year of transfer which amounts to a mutually contradictory approach. The assessee’s instant former grievance is accepted therefore. Ordered accordingly.

Coming to the learned CIT(A)’s action enhancing the assessee’s capital gains from long term to short term only (supra), we hereby quote Mistry (1962) 44 ITR 891 (SC), CIT vs. Sardari Lal & Co. (2001) 251 ITR 864(Del.) and CIT vs. Union Tyres (1999) 240 ITR 556(Del) to conclude that he could not add a new head of income or disallowance; as the case may be, while exercising

The assessee’s latter twin penalty appeals ITA No. 5461/Del/2015 and 6416/Del/2016 succeed once we have accepted her quantum case ITA No. 2354/Del/2016. Both these appeals succeed therefore.

These assessee’s four appeals are allowed in above terms. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 22/01/2025. (S. Rifaur Rahman) (Satbeer Singh Godara) Accountant Member Judicial Member