THE ITO, 5(1), INDORE vs. SMT. SUSHMA SHUKLA (JAIN), INDORE

PER SHRI D.T. GARASIA, JM

ITA No. 345/Ind/2015 is filed by the assessee whereas

ITA No. 437/Ind/2015 is filed by the Revenue. Since

identical issues are involved, these appeals are being

disposed of by this consolidated order for the sake of

convenience.

partner in the firm M/s Hitech Infosoft, Ahmedabad, and

also derives income from her individual business. During

the year under consideration the assessee had sold a house

property in Ahmedabad situated at 76, Nehru Park,

Vastrapur. The property was purchased in the year 1991

jointly by her and her husband. After purchase of the

property for Rs. 3,30,000/-, Rs. 9 lacs were invested in the

year 1992 to make the premises liable and habitable. The

value of the house as per Registrar of stamp duty was

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) taken at Rs. 14 lacs approx. and the stamp duty of Rs.

90,002/-. The assessee is maintaining her own cash book,

balance sheet and statement of affairs on day to day basis

from the year 2002-03. The statement of affairs of the

assessee for different years including 1991-92 to 2007-08

were filed before the Assessing Officer on year to year basis.

The co-owner of the property Shri Vikram Kumar Jain alias

Vikram Singh Banthia disappeared in the year 1994

leaving behind a will making Smt. Suhag Kunvar Banthia

his mother as his executrix. Of the estate left by him and

as per his will, the estate was to remain in existence till his

son Dhruv becomes major. The assessee sold her portion of

the house owned by her for Rs.52.5 lacs and also sold the

second part of the bungalow owned by her husband Shri

Vikram Singh Banthia for another Rs.52.5 lacs. The CIT

hasconsidered the amount received by her and, therefore,

the capital gain was taxed in the hands of the assessee.

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) Secondly, the assessee has purchased new properties from

the sale proceeds received by her in Indore at 458, Sirpur,

Indore, from three brothers by three separate registries. It

was purchase of one parental house of Rathore family

where all the three brothers were residing with their family

and the assessee spent Rs. 2.25 lacs on new construction

and part of the house was given on rent and the rental

income is shown in the assessment year 2011-12 onwards.

The Assessing Officer and the learned CIT(A) did not grant

the claim u/s 54 but considered the deduction of claim u/s

54F of the Act. Moreover, the assessee was having huge

cash balance in hand on the opening of the year as evident

from the balance sheet of the earlier assessment year. In

addition, she had received the amount from the firm

wherein she is a partner. She has also withdrawn amounts

from one bank account and deposited in another bank

account as the cheque was issued from the other bank.

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) She had withdrawn amounts from bank and redeposited in

some other bank either on the same day or if the amount

was lying in the locker or given on some loan to her

employees or friend. The learned CIT(A) has not decided

this issue. Considering all these facts, the Assessing Officer

has made the assessment on the ground that as per AIR

information the assessee has made cash deposits of

Rs.19,99,500/- in Axis Bank account during the financial

year 2007-08. The assessee was asked to explain the

source of cash deposit. After considering the reply of the

assessee, the Assessing Officer was of the view that the

assessee could not explain regarding the amount of

Rs.20,35,400/-. Therefore, it was added to the income of

the assessee. In respect of 54F claim the Assessing Officer

observed that the assessee has purchased land at Sirpur

within the Municipal limit of Indore and the land comes

under residential commercial property. Therefore, that land

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) was a plot only and it was handed by residential colony.

Therefore, the Assessing Officer was of the view that the

assessee has not purchased a new residential house but

the assessee has purchased the land. Therefore, exemption

u/s 54F was disallowed and the cost of improvement was

also disallowed. Therefore, the assessee was before the

learned CIT(A). The learned CIT(A) allowed ground nos. 1

and 13 and rest of the grounds were dismissed as under :-

“11. Gr. No. 7 of appeal is against addition of cash

credits of Rs.40 lakh shown as received by appellant

from Estate of Vikram Kumar Jain. According to

appellant this amount of Rs.40 lakh was a part of

capital gain receipt of Rs. 52.50 lakh as 50% part of

Estate of Vikram Kumar Jain, which was received by

appellant. It is seen in registered sale deed that entire

amount on sale of Rs. 1.05 crore was received by

appellant out of which the estate of Sh. Vikram Kumar

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) Jainw as shown as creditor for Rs.40 lakh in this year

& Rs.12.50 lakh in earlier year through journal entries

only. Since entire amount of capital gains of Rs. 1.05

crore is now being taxed in hands of appellant, hence

separate addition of cash credit of Rs.40 lakh which is

part of same amount of Rs.1.05 crore this addition of

cash credit ofRs. 40 lakh in name of Estate of Sh.

Vikram Kumar Banthia (Jain) is hereby deleted. Ground

No. 7 of appeal is allowed.

xxx xxx

capital gain at 30% rate instead of 20%. Since A.O. has

himself accepted such capital gain, as long term capital

gain, hence, there is no locus standi to charge it as 30%

rate. A.O. is directed to charge it at rates applicable to

LTCG. This ground of appeal is allowed.”

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) Rest of the grounds of appeal were dismissed by the

learned CIT(A), therefore, the assessee is in appeal before

the Tribunal against rest of the grounds and the revenue is

in appeal against the relief granted by the learned CIT(A).

the assessee, who happens to be ex-Commissioner of

Income Tax, has argued the matter personally. During the

course of hearing, the assessee has taken th ground that

no sufficient opportunity of hearing was granted to the

assessee and secondly the notice u/s 142 was not served

on the assessee. This ground was taken before us. During

the course of hearing, wehave verified the record and the

assessee’s counsel has agreed that the notice u/s 142 was

issued and that notice was properly served, therefore, he

has agreed before us that he is not pressing ground nos. 1

to 4 regarding notice u/s 142(2) of the Act. Therefore, these

grounds were dismissed during the course of hearing.

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) 4. During the course of hearing regarding the remaining

grounds it was argued by the learned counsel for the

assessee mainly that the assessee and her husband sold

the property at Nehru Park, Ahmedabad, and the assessee

has shown the capital gain of Rs. 52,50,000/- on the sale

of the property of the assessee and claimed the indexation

cost of Rs.9,69,095/- and he has also claimed cost of

improvement of Rs. 22,23,676/-. The assessee has also

claimed deduction u/s 54F of the Act for purchase of

property at Sirpur, Indore. The learned counsel for the

assessee fairly conceded before us that the assessee has

purchased new property which is a land surrounded by

many residential houses and it was also decided by the

Court in that property that it was residential property.

Therefore, 54F deduction must be allowed but the learned

counsel for the assessee fairly admitted that the DVO

report was not obtained by the revenue authorities before

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) rejecting the claim u/s 54F of the Act. The Assessing

Officer did not call for the DVO report before rejecting the

claim of the assessee u/s 54F of the Act.

of the authorities below.

We find that an identical issue had come up before the

Tribunal in the case of Shrichand Makhija s. ITO; ITA No.

426/Ind/2016 and the Tribunal vide its order dated

8.6.2016 has decided the issue as under :-

“This is an appeal preferred by the assessee against the order dated 19.2.2016 of the learned CIT(A)-22, New Delhi, having concurrent jurisdiction of CIT(A), Indore. 2. The only ground taken by the assessee in this appeal is that the learned CIT(A) was not justified in confirming the action of the Assessing Officer in making addition of Rs.3,89,750/- by invoking provisions of section 50C of the Act. 3. Brief facts of the case are that during the year under consideration the assessee sold agricultural land situated at village Tejpur Gadbadi, Tehsil Indore which was in the joint name of Shri Pankaj 10

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) Makhija for Rs.10,79,500/- (market value) on 6.8.2005 but in the return of income the assessee has taken sale consideration of Rs. 1,50,000/- (1/2 share) for the calculation of long term capital gain. After indexation, the assessee has shown Rs. 30,475/- as income from long term capital gain in the computation of income. The Assessing Officer while considering the case of the assessee calculated the long term capital gain on agricultural land at Rs.4,20,225/- whereas in the computation filed, the assessee has shown the same at Rs.30,475/-. The Assessing Officer, therefore, added Rs.3,89,750/- to the total income of the assessee. 4. Being aggrieved with the addition made by the Assessing Officer, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) considering the facts of the case and the submissions of the assessee, confirmed the action of the Assessing Officer. Now, the assessee is in appeal before the Tribunal. 5. Before me, the learned counsel for the assessee submitted that the learned CIT(A) was not justified in confirming the action of the Assessing Officer in making the addition without any basis. He submitted that the Assessing Officer, who is not a technical expert, instead of estimating the long term capital gain himself, should have referred the matter to the DVO for valuation of agricultural land. The learned counsel for the assessee also relied upon the decision of the Jodhpur Bench of the Tribunal in the case of Meghraj Baid vs. ITO; (2008) 114 TTJ (d) 841.

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) 6. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that the long term capital gain as calculated in the case by them is fully justified. 7. I have heard both the sides. After considering the arguments of both the sides, I am of the view that the Assessing Officer was not an expert in calculating the value of the agricultural land sold and as such it was incumbent upon him to refer the matter to the DVO for valuation of the same. A similar issue was decided by Jodhpur Bench of the Tribunal in the case of Meghraj Baid vs. ITO; (2008) 114 TTJ (d) 841 wherein the Assessing Officer was directed to refer the issue to the DVO. Considering this aspect of the matter, I direct the Assessing Officer to refer the matter to the DVO for calculation of the sale of agricultural land and accordingly compute the long term capital gain thereon. I order accordingly.”

Respectfully following the above decision of the Tribunal,

we direct the Assessing Officer to refer the matter to the

DVO before disallowing the claim u/s 54F of the Act and

after obtaining his report on the issue, decide the same

according after affording the assessee reasonable

opportunity of being heard.

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) 7. In respect of the departmental appeal and the

assessee’s appeal against cash credit, we rely upon the

decision of the Hon'ble jurisdictional High Court in the case

of Tolaram Hassomal; 298 ITR 22 wherein it is held that

when the assessee’s claim is not examined and if the

examined at the end of the Assessing Officer then the

matter is to be restored to the Assessing Officer and the

decision of the learned CIT(A) is to be reversed. Therefore,

following the decision of the Hon'ble jurisdictional High

Court, we restore the whole of the issues to the file of the

Assessing Officer for de novo assessment. The Assessing

Officer is directed to decide the matter afresh after

considering all the material available on record. The

assessee is not at liberty to file any additional documentary

evidence before the Assessing Officer so that the matter

may not become more complicated. Therefore, in the

interest of justice and fair play, the Assessing Officer is

ITA Nos.345/Ind/15 & 437/Ind/2015 Smt. Sushma Shukla (Jain) directed to obtain the report of the DVO and decide the

matter afresh as per the record available on record.

departmental appeal are allowed for statistical purposes.

The order has been pronounced in open Court on

19th January, 2017.

Sd/- Sd/- (ओ.पी.मीना) (डी.ट�.गरा�सया) लेखा सद�य �या�यक सद�य (O.P.Meena) (D.T.Garasia) Accountant Member Judicial Member

�दनांक /Dated : 19th January, 2017.

Dn/