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Facts
The assessee, Federation of Rajasthan Trade & Industry, filed a return of income declaring nil income for Assessment Year 2014-15. The case was selected for scrutiny. The Assessing Officer (AO) made an addition of Rs. 57,50,287/- under the head of capital gain, which was sustained by the CIT(A). The assessee contended that the fair market value adopted by the AO was incorrect.
Held
The Tribunal noted that the CIT(A) had not given the assessee an opportunity to file written submissions before passing the order. The Tribunal also noted that the assessee claimed additional evidence, which was not produced before the lower authorities. Considering that the order was ex-parte, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication, allowing the assessee an opportunity to present their case and submit necessary replies.
Key Issues
The primary issue was the correctness of the fair market value adopted by the AO for calculating capital gains. Additionally, the Tribunal considered the AO's disallowance of setting off business loss against capital gains and the procedural issue of the CIT(A) not providing an opportunity for personal hearing.
Sections Cited
Section 143(3), Section 127, Section 142(1), Section 48, Section 55(2), Section 71, Section 139(1), Section 139(3), Section 250, Section 251, Section 148A(6), Section 148A(b), Section 148A(d), Section 149(1)(a), Section 49, Section 53A
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 217/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2014-15 Federation of Rajasthan Trade & cuke The ITO-Exemption Industry Vs. Ward-2, A-7, 2nd Floor, Ganpati Enclave, Jaipur. Civil Lines, Ajmer Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCF0138J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rahul Pandya (Adv.) & Shri Priyesh Kasliwal (Adv.) jktLo dh vksj ls@ Revenue by : Shri Anoop Singh (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 06/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 04/10/2024 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This appeal is filed by the assessee aggrieved from the order of the Ld. CIT(A), National Faceless Appeal Centre, Delhi dated 29.12.2023 [Here in after referred as “CIT(A)/NFAC”] for the assessment year 2014- 15, which in turn arise from the order dated 30.12.2016 passed under section 143(3) of the Income Tax Act, [Here in after referred as “Act” ] by the AO.
Federation of Rajasthan Trade & Industry 2. The assessee has raised following grounds:- “1) That the Ld. Commissioner of Income tax (Appeals) has grossly erred in holding and sustaining the addition of Rs. 57,50,287/ under the head of capital gain and sustained the order passed by the assessing officer in this head is per se illegal.
2) That the Ld. Commissioner of Income tax (Appeals) has grossly erred in sustaining the method to estimate the fair market value of the sold out property and assess at Rs. 3,49,713/- for calculating the capital gain at Rs 57,50,287/- as made by the assessing officer is not proper and based on assumption and presumption basis.
3) That the Ld. Commissioner Appeal grossly erred in sustaining the addition of Rs. 57,50,287/- as capital gain as made by the assessing officer which is based on hypothetical method without applying the correct formulae to arrive at capital gain and not applied the correct formulae in accordance with law and therefore, such addition is liable to be deleted 4) That the commissioner Appeals has grossly erred in holding and sustaining the order passed by the assessing officer while for not allowing the set off of the business loss of Rs. 10,59,845/- from the long term capital gain and also wrongly held that income from capital gain could not be set off from business loss as assessee has filed the return after due date prescribed under the Income Tax Act.
5) That the Commissioner Appeals has grossly erred in holding and sustaining the finding of the Assessing Officer that the assessee has shown business loss of 10,59,845/- in its computation of total income but it is not deductible in the case of Company, loss cannot have treated as application and therefore, such conclusion is not sustainable.
6) That the Ld. Commissioner Appeals has grossly erred in not allowing the opportunity of personal hearing on 29.12.2023 considering the fact that the Notice U/s 250 was issued to file the written submission on or before 28.12.2023 and further passed the order on 29.12.2023 as such rule of principle of natural justice has not been followed.
7) The Humble Appellant reserves its right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal.”
Federation of Rajasthan Trade & Industry 3. The brief facts of the case are that the return of income was filed on 20/12/2014 declaring nil income. The case was selected for scrutiny through CASS. Notice u/s 143(2) was issued on 31/08/2015 by the ITO(E), Ward-1, Jaipur which was duly served upon the assessee on 01/09/2015. Subsequently, this case has been received on transfer to ITO (exemption-2), Jaipur to complete scrutiny assessment in compliance to order u/s 127 of the I.T. Act, passed by CIT (Exemption), Jaipur dated 01/07/2016. Notice u/s 142(1) of the Income Tax Act, was issued on 08/07/2016 by the ITO (exemption-2). In response, Ld. AR of the assessee society attended the assessment proceedings from time to time and furnished requisite documents/submissions which are placed on record. Books of account were produced which were examined on test check basis by the AO. The assessee is registered under the Rajasthan non trading companies Act, 1960 as well as registered under section 12AA of Income-tax Act, 1961 vide order No.35 dated 02.05.2014. The assessee company declared total receipts of Rs.52,04,840/-, application Rs.63,65,209/- and loss of Rs.11,60,369/- including depreciation of Rs.1,00,525/- for the year under consideration. The assessee society has also declared sale proceeds of building amounting of Rs.61,00,000/- and declared capital loss of Rs.50,450/- under this head.
Federation of Rajasthan Trade & Industry 3.1 The ld. AO noted that details were called-for from the assessee relating to receipts, applications and long term capital loss shown in the computation of total income. The AR of the assessee company filed requisite details. On perusal of details filed, it was revealed that the assessee company has declared sale proceeds of Rs.61,00,000/- and after claiming indexing benefit, it has declared LTCL of Rs.50,450/-. The assessee has claimed cost of property as on 01.04.1981 at Rs.6,55,000/-. The assessee was asked that when value of the property as on 01.06.1973 was at Rs.20,625/- then how they adopted value of said property at Rs.6,55,000/-. What was basis of arriving at Rs. 6,55,000/-. In response, the AR furnished a written reply stating therein that “(i) as per section 55(2) the assessee has option to take either cost or fair market value; (ii) assessee has taken fair market value as cost of acquisition. It is a measure of inflation that finds application in tax law, when computing long term capital gains on sale of assets. Section 48 of the income tax Act defines the index as what is notified by the Central Government every year, having regard to 75 per cent or average rise in the consumer price index (CPI) for urban non-manual employees for the immediately preceding previous year. (iii) we consider that price of a capital asset has risen in tandem with base price rise. (iv) cost of acquisition is historical, the concept of indexed cost allows to the taxpayer to factor in the impact of Federation of Rajasthan Trade & Industry inflation on cost. (v) the base year was F.Y. 1981-82 and Cll was 10 and Cll for the year under consideration 939, it means when fair market value of the property for the FY 2013-14 is Rs.61,00,000/- when Cll is 939 then obviously fair market value has to Rs.6,49,627/- for FY 1981-82 when Cll was 100. It is fair valued method and should be accepted. (vi) we does not knows how you valued fair market value of Rs. 55,000/- as on 01/04/1981. It is absolutely non-scientific, hypostatical and wrong calculated value and request you to please us method of valuation of Rs.55000/- looking to the above facts you are requested to please accept the FMV”.
3.2 The ld. AO noted that the contention of the assessee considered carefully but not found substance therein because as per argument of the assessee. He further noted that if we consider fair market value as per index at 939 as on 31.03.2014 in place of 100 as on 1/04/1981. There is enhancement of 9.39 times in 32 years (as on 31.03.1982 and 31.03.2014). Similarly he see the enhancement of indexing value in 8 years (31.03.1982 to 31.03.1990) there is enhancement of 1.72 times (index is at 172). Thus, going in reverse in earlier 8 years (31.03.1982 to 31.03.1974) we may assume decrease of 0.72 times (index may be assumed at 0.72% increase in relevant 8 years (31.03.1974 to 31.03.1982). This formula can be best way to estimate fair market value Federation of Rajasthan Trade & Industry of the sold out property. therefore, Ld. AO apply this formula and as per this formula, fair market value of sold out property comes at Rs.3,49,713/- as per calculation follows:-
Purchase value as on 01.06.1973 Rs. 20,625/- Add: Taxes/stamp duty paid as per registry deed Rs. 902/- Other expenses as per registry deed Rs. 126/- Total as on 01.06.1973 21,653/- Fair market value adopted as on 31.03.1981 i.e. AY-1981-82 21,603x1.72=Rs. 37,243/- Fair Market value of sold out property as on 31.03.2014 i.e. 37,243x9.39=Rs. 3,49,713/- AY-2014-15 Capital gain arrives 61,00,000(-)349713=Rs. 57,50,287/- 3.3 Further, the Ld. AO noted that the assessee was also asked to bring any sale deed or registry of identical property during the period of relevant year of this property sold in question. Ample opportunities were given to the assessee to bring justification of claimed fair market value in its computation of total income amounting to Rs.6,55,000/-. But assessee failed to execute onus to prove the genuineness of his claim of fair market value as on 01.04.1981. In view of that Ld. AO applied fair market value of sold out property by the assessee company as on 01.04.1981 at Rs.37,243/- as per above tabulated formula and indexing value Rs.3,49,713/- as on 31.03.2014. Thus, amount of long term capital gain Federation of Rajasthan Trade & Industry comes to Rs.57,50,287/-. The Assessee is a trust company which is registered u/s 12AA of the IT Act, therefore, entire capital gain is to be taxed in the hands of the trust at normal prevailing rate. Though the assessee has claimed business loss of Rs. 10,59,845/- in its computation of total income but it is not deductible because in a case of trust, loss cannot be treated as application. Apart from this, the claimed business loss cannot be set off from the income from capital gain because return has been filed by the assessee late from stipulated date prescribed u/s 139(1) of the IT Act.
Being aggrieved, from the said order of assessment, the assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving following findings on the issue:-
“6. The issues were considered. The assessment order, grounds of appeal, and relevant provisions of law were carefully perused. Ground No. 1 contends that the AO wrongly estimated the fair market value of the property as of 01.04.1981. From the assessment order, it is apparent that the appellant had claimed the cost of the property as of 01.04.1981 at Rs.6,55,000/- for the calculation of capital gain. The value of the property as of 01.06.1973 was Rs.20,625/-. The AO asked during the assessment proceeding to justify the value of land as of 01.04.1981 at Rs.6,55,000/- with documentary evidence. However, the appellant could not successfully explain the same. The appellant did not discharge the onus when specifically asked to do so by the Assessing officer. In the absence of any documentary evidence submitted by the appellant, the AO estimated the value as of 01.04.1981 for computing capital gain based on percentage Federation of Rajasthan Trade & Industry increase/inflation year-wise, in the absence of justification by the appellant for its claim. The appellant did not furnish any documentary evidence in support of its grounds of appeal in the course of the appellate proceeding. Hence, in the absence of any material available on record, I am left with no option butto go by the estimation made by the AO in the assessment order. Accordingly, I am not inclined to interfere with the decision of the AO taken on this ground. Ground No. 1 is dismissed.
7. Ground No. 2 pertains to the action of the AO on the set-off of loss. The grounds of appeal and the relevant facts in the assessment order were examined and found that the appellant has stated that business loss may be set off from the capital gain and added that since carry forward of set off loss is not involved in the case, hence return filed after the due date is not relevant. The issue was considered and found that the contention of the appellant is not found to be sustainable as per section 71 of the Act, where there is no income under the head capital gain, set off against his income is not allowed. Here, the capital gain was calculated by the AO to the tune of Rs.57,50,287/-. Moreover, the return of income was filed after the due date invoking the provisions of section u/s 139(3). Hence, I find no merit in the contention. Accordingly, I am inclined to interfere with the decision of the AO taken on this ground. Ground No. 2 is dismissed.
8. Ground No. 3 is related to any alteration, amendment or addition to any ground of appeal before or during the hearing proceedings of the appeal. But, no such option was exercised by the appellant or came across during appellate proceedings. Hence, these grounds of appeal are considered dismissed for statistical purposes.
9. In the result, the appeal is dismissed, Order passed under sec 250 read with sec. 251 of the Act.”
Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal before us on the grounds as reiterated in para 2 above. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:- “Brief Facts:-
Federation of Rajasthan Trade & Industry That the humble Appellant filed the original Return of Income on Dt 20/12/2014 declaring Nil Income and the case was selected for Scrutiny under CASS. The Humble Appellant received Notices, and the Humble Appellant attended the case & filled Reply time to time. That the humble Appellant is registered under the Rajasthan non trading Companies Act, 1960 and registered under section 12AA of Income Tax Act, 1961 vide Order No. 35 dated 02-05-2014. That the Humble Appellant declared total Receipts of Rs. 5204840/-, and Expenditure incurred of Rs. 6365209/- ie Application of funds and loss of 11,60,369/- (including Depreciation of Rs. 1,00,525/-) for the year under consideration. The Humble Appellant has also declared sale proceeds of building amounting of Rs. 61,00,000/- and after claiming indexing benefit, declared Long term capital loss of Rs. 50,450/-. That the Humble Appellant has claimed the cost of Property as on 01-04-1981 at Rs. 6,55,000/-. That the Learned Assessing Officer considered only Purchase value of Rs. 21,653/ as on 01-06-1973, Taxes/Stamp Duty paid as per Registry Deed & Other Expenses infact the humble Appellant have purchased the roof of Shops & made construction of 1485 Sq Ft. (wherein 3 Rooms, 1 Kitchen & an Bathroom) & Total Cost incurred of Rs. 6,55,000/- at Second Floor but as per Valuation Report is Rs. 686882/-. issued by registered valuer & Chartered Engineer No. Cat-1/056/CCIT/R & MP/T3/JPR Registered by Ministry of Finance Government of India. Thus, the cost of Construction taken by Humble Appellant is Rs. 6,55,000/- le less than the Fair Market Value of Rs. 6,86,882/- as per certified Valuer. "Further as per Section 55. (1) for the purposes of 93[section 48 and 49), 951(b) cost of any improvement, (2) in relation to any other capital asset,] (i) where the capital asset became the property of the previous owner of the assessee before the 96[1st day of April, 97[1981]]. 98[*] means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after the said date by the previous owner or the assessee, and (i) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property, and, where the capital asset became the property of the assessee by any of the modes specified in 99(sub- section (1) of section 49, by the previous owner, but does not include any expenditure which is deductible in computing the income chargeable under the head Interest on securities, Income from house property, Profits and gains of business or profession, or Income from other sources and the expression improvement shall be construed accordingly 1(2) 2[For the purposes of sections 48 and 49, cost of acquisition, (b) in relation to any other capital asset. ] (i) where the capital asset became the property of the assessee before the 41st day of April 5[1981]], means the cost of acquisition of the asset to the assessee or the fair Federation of Rajasthan Trade & Industry market value of the asset on the 41st day of April, 5[1981]], at the option of the assessee, (ii) where the capital asset became the property of the assessee by any of the modes specified in 6(sub-section (1) of) section 49, and the capital asset became the property of the previous owner before the 4[1st day of April, 5[1981]], means the cost of the capital asset to the previous owner of the fair market value of the asset on the 4[1st day of April, 5[1981]], at the option of the assessee; (3) Where the cost for which the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner" Thus, The Learned Assessing Officer has erred on facts and in law by applying wrong estimation of Fair market value as on 01.04.1981 as per section 55(2) of IT Act, 1961 in- spite of complete explanation given to him. The Ld AO has wrongly estimated first Rs 55000/- and thereafter Rs.37243/- in his order after taking non scientific formula Le. calculated reverse in earlier 8 years. Ground of Appeal:- 1) That the Ld. Commissioner of Income tax (Appeals) has grossly erred in holding and sustaining the addition of Rs. 57,50,287/- under the head of capital gain and sustained the order passed by the assessing officer in this head is per se illegal. 2) That the Ld. Commissioner of Income tax (Appeals) has grossly erred in sustaining the method to estimate the fair market value of the property sold and Assess at Rs. 3,49,713/- by Learned Assessing Officer for calculating the capital gain at Rs. 57,50,287/- is not correct & as per provisions of Law. 3) That the Ld. Commissioner Appeal grossly erred in sustaining the addition of Rs. 57,50,287/- as capital gain as Assessed by the Learned Assessing Officer which is based on hypothetical method without applying the correct formula to arrive at capital gain and not applied the correct formula in accordance with law. Therefore, the addition is liable to be deleted. 4) That the commissioner Appeals has also grossly erred in holding and sustaining the order passed by the assessing officer while for not allowing the set off of the business loss of Rs. 10,59,845/- from the long term capital gain and also wrongly held that income from capital gain could not be set off from business loss as assessee has filed the return after due date prescribed under the Income Tax Act.- "Not Pressed" 5) That the Commissioner Appeals has grossly erred in holding and sustaining the finding of the Assessing Officer that the assessee has shown business loss of 10,59,845/-in its computation of total income but it is not deductible in the case of Company, loss cannot treated as application and therefore, such conclusion is not sustainable. "Not Pressed" 6) That the Ld. Commissioner Appeals has grossly erred in not allowing the opportunity of personal hearing on 29.12.2023 considering the fact that the Notice U/s 250 was issued to file the written submission on or before 28.12.2023 and further Federation of Rajasthan Trade & Industry passed the order on 29.12.2023 as such rule of principle of natural justice has not been followed. 7) The Humble Appellant reserves its right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal.
Written Submission:-
1. 1. That the Ld. Commissioner of Income tax (Appeals) has grossly erred in holding and sustaining the addition of Rs. 57,50,287/- under the head of capital gain and sustained the order passed by the assessing officer in this head is per se illegal.
2. That the Ld. Commissioner of Income tax (Appeals) has grossly erred in sustaining the method to estimate the fair market value of the property sold and Assess at Rs. 3,49,713/- by Learned Assessing Officer for calculating the capital gain at Rs. 57,50,287/- is not correct & as per provisions of Law.
3. That the Ld. Commissioner Appeal grossly erred in sustaining the addition of Rs. 57,50,287/- as capital gain as Assessed by the Learned Assessing Officer which is based on hypothetical method without applying the correct formula to arrive at capital gain and not applied the correct formula in accordance with law. Therefore, the addition is liable to be deleted. That the humble Appellant filed the Original Return of Income on Dt 20/12/2014 declaring Nil Income and the case was selected for Scrutiny under CASS. The Humble Appellant received Notices, and the Humble Appellant attended the case & filled Reply time to time.
That the humble Appellant is registered under the Rajasthan non trading Companies Act, 1960 and registered under section 12AA of Income Tax Act, 1961 vide Order No. 35 dated 02-05-2014. That the Humble Appellant declared total Receipts of Rs. 5204840/-, and Expenditure incurred of Rs. 6365209/- ie Application of funds and loss of 11,60,369/- (including Depreciation of Rs. 1,00,525/-) for the year under consideration. The Humble Appellant has also declared sale proceeds of building amounting of Rs. 61,00,000/- and after claiming indexing benefit, declared Long term capital loss of Rs. 50,450/-. That the Humble Appellant has claimed the cost of Property as on 01-04-1981 at Rs. 6,55,000/-. That the Learned Assessing Officer considered only Purchase value of Rs. 21,653/- as on 01-06-1973, Taxes/Stamp Duty paid as per Registry Deed & Other Expenses infact the humble Appellant have purchased the roof of Shops & made construction of 1485 Sq Ft. (wherein 3 Rooms, 1 Kitchen & an Bathroom) & Total Cost incurred of Rs. 6,55,000/- at Second Floor but as per Valuation Report is Rs. 6,86,882/-. issued by registered valuer & Chartered Engineer No. Cat-1/056/CCIT/R & MP/T3/JPR Registered by Ministry of Finance Government of India. Thus, the cost of Construction taken by Humble Appellant is Rs. 6,55,000/- ie less than the Fair Market Value of Rs. 6,86,882/- as per certified Valuer.
Federation of Rajasthan Trade & Industry That as per provisions of Section 55(2) is as under:- (b) in relation to any other capital asset.-] (i) where the capital asset became the property of the assessee before the "[1st day of April, [1981]], means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the [1st day of April, [1981]], at the option of the assessee; (ii) where the capital asset became the property of the assessee by any of the modes specified in "[sub-section (1) of] section 49, and the capital asset became the property of the previous owner before the "[1st day of April, [1981]], means the cost of the capital asset to the previous owner or the fair market value of the asset on the "[1st day of April, [1981]], at the option of the assessee; We are submitting herewith copy of Purchase Deed, Copy of Sale Deed, Copy of Valuation Deed, Computation of Total Income & Affidavit for your kind perusal. We are relying on the following Judicial Pronouncement in support of our contention as per below:- a That the Hon'ble HIGH COURT OF KARNATAKA incase of Smt. KrishnaBajaj v. Assistant Commissioner of Income-tax, Circle -5(1) [2014] 41 taxmann.com 445 (Karnataka) held that "Section 55, read with section 53A, of the Income-tax Act, 1961 Capital gains Cost of acquisition [Fair Market Value] Assessment year 2001-02 - Whether for levying capital gain tax for purpose of computing capital gain tax, fair market value, which is to be taken into consideration, is price which property would fetch on sale in open market on relevant date Held, yes Whether Wealth Tax Act provides a mechanism under which property is valued and net wealth determined for purpose of payment of wealth tax and it is not a fair market value - Held, yes - Whether in determining fair market value, guideline value prescribed for purpose of stamp duty registration under relevant Stamp Act and Indian Registration Act or net wealth value arrived at under provisions of Wealth Tax Act, could not be guiding factor - Held, yes [Para 5][In favour of assessee]" b. the Hon'ble HIGH COURT OF ALLAHABAD incase of Principal Commissioner of Income Tax v. Smt. Vidhi Agarwal [2017] 88 taxmann.com 306 (Allahabad) held that "Section 55 of the Income-tax Act, 1961-Capital gains Cost of acquisition (Valuation report) - Assessment year 2009-10-Assessee's mother-in-law gifted a flat to assessee which she had purchased in year 1970 - During relevant assessment year, assessee sold said flat For purpose of computation of capital gains, assessee relied on provision of section 55(2)(b)(ii) - She disclosed value of flat in question as on 1-4- 1981 on basis of valuation report submitted by approved valuer - Assessing Officer disbelieved aforesaid valuation report submitted by assessee in support of her claim as to cost of acquisition of flat on reasoning that assessee had not led any evidence in support of valuation report, such as circle rate etc. Tribunal set aside objection raised by Assessing Officer - Whether approved valuer's report itself is a piece of evidence and Act does not require that opinion of approved valuer should have been supported Federation of Rajasthan Trade & Industry with further evidence in shape of circle rate or exemplar sale deeds etc. Held, yes Whether even otherwise, since there was nothing on record to doubt correctness of report or its contents, impugned order passed by Tribunal did not require any interference Held, yes [Para 12] [In favour of assessee]" C. the Hon'ble ITAT MUMBAI BENCH 'D' incase of Meher R. Surti v. Income-tax Officer [2013] 40 taxmann.com 138 (Mumbai - Trib.) held that "II. Section 55, read with section 49, of the Income-tax Act, 1961 Capital gains - Cost of acquisition [Transfer of tenancy right] - Assessment year 2009-10-Assessee transferred tenancy right in a property which was inherited from her grandfather who had acquired the same in 1944-45-While computing capital gains, assessee claimed cost of acquisition being fair market value as on 1-4- 1981 Assessing Officer held that there was no cost incurred for purchase/acquisition of tenancy rights and accordingly took cost of acquisition at nil Whether case of assessee fell under section 49(1)(iii)(a) and once capital asset in question became property of assessee as per section 49(1)(iii)(a) and previous owner acquired property prior to 1-4-1981, then cost of acquisition of capital asset for purpose of sections 48 and 49 shall be cost of acquisition of asset to previous owner or fair market value (FMV) of asset as on 1-4-1981 at option of assessee provided under provisions of section 55(2)(ii)(b) - Held, yes [Paras 21825] [In favour of assessee)" We therefore request the Hon'ble Bench to kindly accept the cost of Acquisition of Rs. 6,55,000/- as on 01-04-1981 in terms of Section 55(2)(b) (i) & (ii) of Income Tax Act.
6. That the Ld. Commissioner Appeals has grossly erred in not allowing the opportunity of personal hearing on 29.12.2023 considering the fact that the Notice U/s 250 was issued to file the written submission on or before 28.12.2023 and further passed the order on 29.12.2023 as such rule of principle of natural justice has not been followed. The aspect of calculating the days in a case where the provision requires a notice of 'not less than particular days', has been dealt with by the Hon'ble Supreme Court in the Pioneer Motors (Private) Ltd. v. Municipal Council, Nagrecoil: AIR 1967 SC 684, wherein it has, inter-alia, been laid down as under: "The words "not being less than one month" do imply that clear one month's notice was necessary to be given, that is, both the first day and the last day of the month had to be excluded. To put it in the language used by Maxwell on Interpretation of Statutes, 10ª Edition, p. 351 :- “………..when……….. 'not less than' so many days are to intervene, both the terminal days are excluded from the computation." It has been laid down by the Hon'ble Supreme Court that both the terminal days have to be excluded for the purpose of complying with the requirement of words 'not less than days". Admittedly, in the present case, the notice dated 16.03.2022 was issued/posted on 17.03.2022 and the date fixed for response was 23.03.2022. Excluding two days i.e. the date of sending of the notice as well the last date indicated, even if the notice was received by the petitioner, the same falls short of Federation of Rajasthan Trade & Industry seven days period, as envisaged by provisions of Section 148A(6) of the Act; and as such, for violation of mandatory provisions of Section 148A(b) of the Act, the notice issued to the petitioner cannot be sustained. The Hon'ble HIGH COURT RAJASTHAN incase of Bijendra Singh v. Principal Chief Commissioner of Income-tax [2024] 162 taxmann.com 66 (Rajasthan) Held that "Section 69, read with sections 148, 148A and 149, of the Income-tax Act, 1961 Unexplained investments (Reassessment) - Assessment year 2015- 16 Assessing Officer issued on assessee a notice under section 148A(b) dated 16-3-2022 pertaining to assessment year 2015-16 with allegations that he had deposited amount of Rs. 42.15 lakhs and Rs. 41.65 lakhs in his bank account and called upon him to file response on or before 23-3-2022 Assessing Officer further passed an order under section 148A(d) on assessee and simultaneously issued notice under section 148 Whether since as per record notice under section 148A(b) was posted on 17-3-2022 and date fixed for response was 23-3-2022 and excluding two days, i.e., date of sending of notice as well as last date indicated notice fell short of seven days period, impugned notice could not be sustained Held, yes Whether further statement of account filed by assessee indicated amount of Rs. 42.15 lakhs only having been deposited by him in bank, which was clearly less than Rs. 50 lakhs, in terms of provisions of sections 149(1)(a) notice issued under section 148A(b) was ex-facie barred by limitation - Held, yes - Whether thus, notices issued under sections 148A(b) and 148 and order passed under section 148A(d) deserved to be set aside - Held, yes [Paras 12, 15, 16 and 17] [In favour of assessee]"
In view of the above, we request you to kindly accept the Appeal & delete the Additions made vide order Dt 30/12/2016 & oblige.”
The ld. AR for the assessee also filed prayer for additional evidence which reads as under:-
“We wish to submit that the major issue in respect of the above appeal before the Honorable Bench is Valuation of Property as on 01-04-1981which is Sold on Dt 14/10/2013. The learned Assessing Officer (Exemptions), Ward - 2, Jaipur has disallowed the said Cost of Acquisition as on 01-04-1981 of Rs. 6,55,000/- and making Assumption & Presumption taken the value to Rs. 37,243/-. That the Learned Assessing Officer (Exemptions), Ward 2, Jaipur have not allowed the cost of Construction of 1 Floor as mentioned in the Sale Deed (Page 4). That the humble Appellant have purchased only Shop& thereafter made the construction of 1ª Floor which the Learned Assessing Officer (Exemptions), Federation of Rajasthan Trade & Industry Ward 2, Jaipur have not considered while calculations made for Cost of Acquisition as on 01-04-1981. Since the Honorable Tribunal being the last fact finding authority therefore in this regard, the appellant wishes to place before the Honorable Tribunal the following documents:
1.
Copy of Valuation Report prepared by SC Khanna being Registered Valuer & Chartered Engineer No. Cat-1/056/CCIT/R & MP/T 3/JPR.Registered by Ministry of Finance Government of India. The Humble Appellant was unable to produce these documents due to the lower Authorities have not asked to produce the said document. That the cost of Construction of 2nd Floor as mentioned in the Sale Deed (Page -2, 3 &4)which was made after purchase of said Property but the Cost of Construction is not evaluated / considered by the Learned CIT(A) & Learned Assessing Officer while passing the Orders. We therefore request the Honorable Tribunal to exercise the power vested in it under Rule 29 of The Income Tax Appellate Tribunal Rules and admit the additional evidences as it has crucial bearing on the issues that arise in this Appeal."
7. To support the various grounds so raised by the assessee, the ld. AR relied upon the following evidences in support of the contentions so raised:-
S. No. Particulars Page No. 1. Computation of total income 1 2. Copy of sale deed (kanta Agarwal) 2-14 3. Copy of sale deed ( Dinesh Agarwal) 15-25 4. Copy of purchase deed 26-38 5. Copy of notice dt. 22.12.2023 39-42 6. Copy of valuation report 43-56 7. Affidavit of Shri Suresh Kumar Agarwal 57-58
Per contra, ld. DR relied on the orders of the lower authorities.
Federation of Rajasthan Trade & Industry 9. We have heard both the parties and perused the materials available on record. We note from the grounds raised by the assessee before us specifically Ground 6 that Ld. CIT(A) has not given any opportunity to file the written submissions on or before 22.12.2023 and passed the order dated 29.12.2023. The ld. CIT(E) has issued various notices to the assessee but the assessee did not submit any written submission or has not produced any material facts and documentary evidence in support of the claim made in the ground of appeal before the ld. CIT(A) and the ld. CIT(A) has adjudicated the case based on the material available on record and upheld the decision of the ld. AO. Before us, ld. AR for the assessee has submitted that additional evidence showed be admitted, where the major issues in respect of the appeal before us is a valuation of property on 01.04.1981 which is sold on 14.10.2013, the said document was not produced before the lower authorities. We note that the Assessing Officer has disallowed the said cost of acquisition as on 01.04.1981 of Rs. 6,55,000/- where the ld. AO has not allowed the cost of construction of first floor as mentioned in the sale deed. Before us, ld. AR for the assessee fairly accepted that he was unable to produce the documents before the lower authorities while passing the order. The ld. DR has not objected to the prayer of the assessee to remand back the matter to the file of the ld. CIT(A). Since it was an ex-parte order, considering the overall Federation of Rajasthan Trade & Industry facts of the case and looking to the facts /grievance of the assessee as raised hereinabove, the bench feels that one more chance should be given to the assessee to contest the case before the ld. CIT(A) and submit the necessary reply to resolve the issue raised in the appeal before him. Thus the appeal of the assessee is restored to the file of the ld. CIT(A) for afresh adjudication of the case but by providing one more opportunity in this case.
10. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(A) independently in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 04/10/2024.