INCOME TAX OFFICER, WARD-1(1), TIRUPATI vs. DEVAPATLA SUBHADRAMMA, TIRUPATI

This appeal filed by the Revenue is directed against the order dated 29.09.2023 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2016-17.

Facts of the case, in brief, are that the assessee derives income from house property and filed her return of income for the impugned A.Y on 23.3.2018 declaring total income of Rs.4,72,520/-. The case was selected for limited scrutiny to verify the (i) cash deposits and transaction in property and (ii) capital gain/loss on sale of property. The ITA 581 of 2023 Devapatla Subhadramma Assessing Officer thereafter issued notice u/s 143(2) of the I.T. Act on 09.08. 2018. Since the assessee did not respond to the above notice, the Assessing Officer issued letter on 18.09.2018 and calling for certain information. In absence of any reply, another notice dated 8.10.2018 was issued which also remained uncompiled with. A show cause notice calling for the objection of the assessee for completion of the assessment u/s 144 was issued on 29.10.2018. The assessee did not respond to this notice also. The Assessing Officer therefore, proceeded to complete the assessment u/s144 of the I.T. Act on the basis of material available on record.

The Assessing Officer observed from the AIR data that the assessee sold a property on 25.11.2015 for an amount of Rs.3,40,06,000/-. However, she has admitted Rs.2,58,93,000/- as full value of consideration received on account of sale of property. Further, she has claimed Rs.2,54,62,480/- as cost of acquisition out of the sale consideration received and admitted Rs.4,30,520/- as Short- Term Capital Gains. In absence of production of purchase deed of the property purchased for Rs. 2,54,62,480/- and in absence of any evidence to support her claim towards cost of acquisition and reasons for the difference in sale consideration received as per AIR data and as per her admission in return of income, the Assessing Officer treated the entire sale consideration at Rs. 3,40,06,000/- as Capital Gains. Since the assessee had already admitted Short Term Capital Gain of Rs.4,30,520/-, the Assessing Officer added the balance amount of Rs. 3,35,75,480/- to the total income of the assessee.

The Assessing Officer further observed from the data received in his office that the assessee has sold one more property on 23.09.2015 for Rs.16,06,000/- but she has not disclosed this sale in her return of income filed for the A.Y.2016-17 and had not admitted any Capital Gain on account of this sale. In absence of any reply from the side of the assessee, the Assessing Officer treated the entire amount of Rs.16,06,000/- as undisclosed capital gains and added the same to the total income of the assessee.

The Assessing Officer similarly observed from the data received in his office that the assessee has made Cash Deposits of Rs.2,29,30,000/- in her savings bank account. In absence of any evidence to explain the source of such cash deposits, the Assessing Officer made addition of Rs.2,29,30,000/- as unexplained cash deposit and added the same to the total income of the assessee.

In appeal, the learned CIT (A) NFAC gave part relief to the assessee. So far as the addition of Rs.3,35,75,480/- is concerned, the learned CIT (A) NFAC restored the issue to the file of the Assessing Officer with direction to verify and work out the actual cost of acquisition of the immovable property claimed by the assessee and allow the cost of acquisition by observing as under:

So far as the addition of Rs.2,29,30,000/- as unexplained cash deposit is concerned, the learned CIT (A) deleted the addition by observing as under:

So far as the addition of Rs.16,06,000/- made by the Assessing Officer is concerned, the learned CIT (A) NFAC partly allowed the same by observing as under: “11.1. I have carefully considered the facts of the case, the submission of the appellant and evidences on record. The appellant sold a property on 23.9.2015 for ITA 581 of 2023 Devapatla Subhadramma

Aggrieved with such order of the learned CIT (A) the Revenue is in appeal before the Tribunal by raising the following grounds:

The learned DR strongly challenged the order of the learned CIT (A). He submitted that when the Stamp Valuation Authority have valued the property at Rs.3,40,06,000/-, the learned CIT (A) should have considered the same as full value of consideration u/s 50C of the I.T. Act Similarly, the deletion of the amount of Rs.2,29,30,000/- towards unexplained cash deposit was erroneously deleted by the learned CIT (A) on the basis of submission of the assessee without adjudicating on the difference amount of Rs.29,95,000/- as per the grounds of appeal. He accordingly submitted that the order of the learned CIT (A) be reversed or alternatively the matter may be remanded back to the file of the Assessing Officer for fresh adjudication.

So far as the first issue raised by the Revenue in the grounds of appeal is concerned, the learned Counsel for the assessee, while supporting the order of the learned CIT (A) submitted that the learned CIT (A) has restored the issue to the file of the Assessing Officer with a direction to verify and work out the actual cost of acquisition of the immovable property and allow the cost of acquisition in computing the capital gain. Referring to the order giving effect dated 2.11.2023, he submitted that the Assessing Officer after due verification of the various details furnished before him on the basis of the order of the learned CIT (A) has accepted the Short-Term Capital Gain admitted by the assessee at Rs.4,30,520/- and therefore, the ground raised by the Revenue on this issue needs to be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. So far as the first issue raised by the Revenue challenging the order of the learned CIT (A) in not considering the value of the property at Rs.3,40,06,000/- as adopted by the Stamp Valuation Authority is concerned, we find the learned CIT (A) in his order has categorically mentioned that the various additional evidences filed before him were forwarded to the Assessing Officer for his comments but the Assessing Officer for the reasons best known to him did not give any remand report for which the learned CIT (A) restored the issue to the file of the Assessing Officer with a direction to verify and work out the actual cost of acquisition of the immovable property claimed by the assessee and allow the cost of acquisition in computing the capital gain. We find the Assessing Officer in the order giving effect dated 2.11.2023 has accepted the short-term capital gain declared by the assessee at Rs.4,30,520/- by recording as under:

So far as the grounds of appeal No.3 and 4 are concerned, we find these relate to the order of the learned CIT (A) in deleting the addition of Rs.2,29,30,000/-. We find in absence of any details furnished before the Assessing Officer, he made addition of Rs.2,29,30,000/- being unexplained cash deposits in the bank account. We find the assessee before the learned CIT (A), submitted a petition under Rule 46A of the I.T.

Grounds 1 and 5 being general in nature are dismissed.