MR. ARUN MONGA,GURGAON vs. ITO, GURGAON

The present appeal has been filed by the assessee assailing the correctness of the order dated 02.02.2016 of CIT(A)-1, Gurgaon pertaining to 2006–07 assessment year on the following grounds:-

“The subject appeal is against the order of Commissioner of Income Tax Appeals (1) 3rd floor HSIDC Bhawan Udyog Vihar Phase-5 Gurgaon. 1. the Commissioner appeal has erred in not allowing the cost of the construction for the property no 19/1b Shakti Nagar Delhi 11007 while calculating the long terms capital gains earned by the assessee from the sale proceeds of the above said property. 2. the Commissioner appeal again has not allowed the cost of the construction spent by the assessee on the plot no 1-853 bought by him to be constructed and competed within a period of 36 months from the date of the sale of the property no 19/1B Shakti Nagar Delhi 110007 out of the funds received by him from the sale of the property no 19/1B Shakti Nagar while calculating the long terms capital gains earned. 3. the assessee holds the rights to add or delete any grounds during the course of hearing.”

Accordingly, notice under section 148 of the I.T.Act, 1961 was issued to the assessee and a NIL return was filed claiming that the money had been invested in a fresh property at I- 853, at Gurgaon. The fresh investment was explained as under:-

Cost of Land Rs.15,50,000/- Cost of Stamp Duty Rs.62,000/- Amount paid for construction Rs.9,00,000/- Total Rs.26,12,000/- I.T.A .No.-2063/Del/2016 Arun Monga vs ITO 2.1. The assessee was required to explain the alleged payment of Rs. 9 lakhs explained to be for construction. The assessee stated that lump sum payment had been made to “M/s Khemka Builders, C-1, Block Market, Palam Vihar, Near Railway Crossing, Gurgaon holding TIN 06491926057. This was a lump sum payment as such no such break up of expense is available with us.” In support of the said claim, certain bills were produced by the assessee allegedly raised by M/s Khemka Builders i.e.Bill No.474 dated 02.09.2006; 994 dated 21.09.2006; 719 dated 12.09.2006; 714 dated 12.09.2006; 901 dated 19.09.2006; 208 dated 27.09.2006; 185 dated 27.09.2006; 038 dated 23.09.2006; and 891 dated 28.10.2006. Considering the fact that the assessee failed to file copy of Contract Agreement with the said builder and copies of bills and vouchers in respect of material purchased for construction or Copy of site plan, date of commencement of construction and completion certificate etc. the assessee’s explanation was considered to be not acceptable on account of these above reasons alongwith the fact that vide reply submitted on 06.03.2014 it was noted that the assessee had admitted that M/s Khemka Builder had closed his shop and was not traceable at the moment.

I.T.A .No.-2063/Del/2016 Arun Monga vs ITO

Page 3 of 4 4.1. Accordingly, it was his limited prayer that the matter may be remanded to the CIT(A) permitting the assessee to file the completion certificate and the site plan in support of the claim that a construction did take place on the said property. It was his submission that it is not the case of the Revenue that M/s Khemka Builder was in any way connected with the assessee. The said concern it was submitted admittedly was an unconnected independent concern engaged at the relevant point of time in construction and building business. For whatever reasons, it was submitted the concern subsequently shut shop but this fact it was submitted cannot be held against the assessee. It was submitted that there was no reason for the assessee to continuously remain in touch with the said concern and the assessee cannot be expected to furnish his forwarding address. It was also his submission that the assessee does not have the paraphernalia to provide the current correct address of the said concern. However, it was his submission that the fact remains that 9 lakh was handed over to the said builder as a lump sum payment and the details of purchase of material etc. i.e. the breakup of expenses would be known to M/s Khemka Builders. The nature and extent of construction which took place, it was submitted can be seen from the site plan and completion certificate which is a necessary evidence.

Page 4 of 4 expected to maintain tabs on all people and concerns with whom he transacts during his lifetime. No doubt the onus is on the assessee to support its claim but the onus is limited to what an assessee is capable of doing. Even otherwise, it is seen that the necessary evidence like site plan and completion certification itself has not been considered which was stated to have been filed before the AO and for re-filing the same allegedly one opportunity was given by the CIT(A). The opportunity as per statement made in the Court could not be availed of by the assessee on account of reasons beyond its control. Accordingly, accepting the common prayer the impugned order is set aside and the issue is remanded to the file of the CIT(A) with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Permission to file any other fresh evidence in support of the claim if so required shall be provided by the CIT(A) as per Rules. It may not be out of place to state that it is in the best interests of the assessee to participate fully and fairly in the proceedings before the Ld. CIT(A) and it is hoped that the opportunity so provided in good faith is not abused by the assessee, as failing which the Ld. Commissioner it is made clear would be at liberty to pass a speaking order in accordance with law on the basis of material available on record.