PAWAN KUMAR BANSAL,CHANDIGARH vs. ITO, W-4(5), CHANDIGARH

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ITA 909/CHANDI/2018Status: DisposedITAT Chandigarh19 December 2018AY 2014-155 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that it was unreasonable to assume the income was from other sources, especially since the Assessing Officer had no evidence of other income. The Tribunal directed the Assessing Officer to treat the Rs. 16.50 lacs as part of capital gains.

What were the facts?

The assessee purchased a house and sold it within 18 days. The assessee claimed Rs. 16.50 lacs from the sale of the dilapidated superstructure, treating it as capital gains. The Assessing Officer treated this amount as income from other sources.

What were the issues?

The primary issue was whether the income from the sale of the dilapidated superstructure should be treated as capital gains or income from other sources.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

आदेश/Order

The present appeal has been preferred by the assessee against the order dated 24.4.2018 of the Commissioner of Income Tax(Appeals)-2, Chandigarh [hereinafter referred to as ‘CIT(A)’].

2.

The sole dispute raised in this appeal is regarding the treatment of the head of the income of Rs. 16,50,000/-, whether the same falls under the head ‘capital gains’ or ‘income from other sources’ .

3.

The brief facts relating to the issue are that the assessee purchased a house on 28.2.2014 at the cost of Rs. 2.86 crores. However, within a short span, the assessee has sold the aforesaid house on 18.3.2014 for a consideration of Rs. 2.90 crores. In the Income tax return, the assessee claimed that it had also earned an amount of Rs. 16.50 lacs towards the

ITA No. 909-Chd-2018- Sh. Pawan Kumar Bansal, Chandigarh 2

sale of dilapidated super structure bricks and other material. The plea of the assessee has been that in fact the assessee firstly sold the deplicated

super structure for a sum of Rs. 16.50 lacs and thereafter the plot was sold

vide sale deed dated 18.3.2014. That though in the sale deed, the

nomenclature was mentioned as ‘house’ as the same was mentioned as

such in the earlier purchase deed of dated 28.2.2014. However, that was

required to be mentioned so due to some technical difficulty as the detail

of the properly has been computerized in the office of the Estate officer

and until and unless there is some change in the record brought out by

specific orders, such as, by way of applying for change of map etc., the

detail of property will remain such. It has been further contended that since

the sale was effected within one month of the date of purchase which was

too short a period to effect the change brought in the properly in the

official record, hence, office of the Estate officer picked up the same

dimensions including covered area while registering the sale deed on

18.3.2014. The Ld. Assessing officer further held that since in the sale

deed was effected on 18.3.2014, the covered area was identically

mentioned in the purchase deed dated 28.2.2014, hence, it was doubtful

that the assessee had earned the income of Rs. 16.50 lacs from the sale of

deplicated super structure over the property in question. She, therefore,

treated the aforesaid declared income of Rs. 16.50 lacs as ‘income from

other sources’ and charged tax thereupon accordingly.

4.

The assessee unsuccessfully contested the matter before the CIT(A).

5.

Before this Tribunal, the Ld. Counsel for the assessee has reiterated

the contention as was raised before the lower authorities.

ITA No. 909-Chd-2018- Sh. Pawan Kumar Bansal, Chandigarh 3

6.

On the other hand, the Ld. DR has relied on the findings of the lower

authorities and has further submitted that, even otherwise, the assessee had

not received the aforesaid payment of Rs. 16.50 lacs through banking

channel, rather, the same was shown to be received in cash, therefore, the

assessee has failed to prove that the aforesaid receipt was on account of

sale of debris.

7.

I have considered the rival submissions and have gone through the

record. Admittedly, the house in question was sold within the period of 18

days from the date of purchase. It can safely be assumed that such type of

sale in short span of time is generally done to earn profit / appreciation in

price. The plea of the assessee is that after purchase of the property in

question, he firstly sold the super structure / debris and thereafter sold the

vacant plot and thereby he not only earned a sum of Rs. 16.50 lacs from

the debris but also a gain of Rs. 4 lacs from the sale of the properly in

question. However, after excluding the stamp duty charge and other

expenses net gain earned by the assessee is of Rs. 6 lacs. The assessee has

also given a reasonable explanation that since the sale deed was affected

only after 18 days of the date of purchase, hence, under the circumstances,

the details regarding affecting the changes, removal of the super structure

were not incorporated in the records of the Estate office. Another fact on

the file is that the Assessing officer had no evidence of receipt of any

income by the assessee from any other source. It was only when the

assessee declared the aforesaid receipt of Rs. 16.50 lacs, that the

Assessing officer treated the same as ‘income from other sources’. If the

above treatment of the Assessing officer for the sake of arguments is taken

ITA No. 909-Chd-2018- Sh. Pawan Kumar Bansal, Chandigarh 4

as correct, then, the resultant effect will be that the assessee would have

sold the house in question at a loss after including the stamp duty charges

into the purchase price of the house at Rs. 2.86 crores. Generally, a

prudent man will not sale a property within 18 days of purchase at a loss.

The assessee has shown a reasonable gain of Rs. 6 lacs upon the aforesaid

properly sold within 18 days of the purchase. Moreover, the Assessing

officer did not make any inquiry by sending any inspector etc. to see the

actual position of the property which he may have conveniently verified.

Under the circumstances, it would be unreasonable to assume that the

assessee had earned the aforesaid income of Rs. 16.50 lacs as ‘income from

other sources’. I do not find any justification on the part of the lower

authorities in taking the above amount of Rs. 16.50 lacs under the head

‘income from other sources’ instead of taking it as part of the capital gain

received by the assessee. Therefore, the order of the lower authorities in

treating the aforesaid addition of Rs. 16.50 lacs as ‘income from other

sources’ is not tenable and the same is set aside. The Assessing officer is

directed to treat the amount of Rs. 16.50 lacs as part of the capital gains

earned by the assessee. The appeal of the assessee is accordingly allowed.

In the result, the appeal of the assessee stands allowed.

Order dictated and pronounced in the Open Court immediately on

completion of hearing.

(संजय गग� / SANJAY GARG) �या�यक सद�य/ Judicial Member Dated : 19.12. 2018 “आर.के.”

ITA No. 909-Chd-2018- Sh. Pawan Kumar Bansal, Chandigarh 5

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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