SUNIL RAMBHAU WAGH,PUNE vs. INCOME TAX OFFICER WARD-3(3), PUNE, PUNE

Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income. It was gathered that the assessee along with others has sold an immovable property at Rs.1,30,00,000/- on 12.01.2011 but the capital gain on sale of such property was not offered to tax. The Assessing Officer, therefore, after recording reasons and after obtaining the prior approval of the competent authority re-opened the case u/s 147 of the Act. Notice u/s 148 of the Act was accordingly issued and served on the assessee. However, the assessee did not file any return in response to the said notice. Subsequently, the statutory notice issued u/s 142(1) of the Act also remained non-complied with. The Assessing Officer, therefore, proceeded to complete the assessment u/s 144 of the Act. Since the assessee has sold the property at Rs.1,30,00,000/- along with Mrs. Padma Neelkanth Shirole, the Assessing Officer determined 50% share of the assessee at Rs.65,00,000/- and brought the same to tax under ‘Long term capital gain’.

Before the CIT(A) / NFAC, the assessee submitted that the share of the assessee in the immovable property sold is only 1/3rd and that the Assessing Officer has not given the benefit of cost of acquisition and the amount paid to the consenting party. The CIT(A) / NFAC forwarded the additional evidences to the Assessing Officer for his comments and the Assessing Officer in his report submitted that he has no objection for admission of the additional evidences now furnished by the assessee.

The CIT(A) / NFAC although held that the property is owned by three persons, however, he upheld the action of the Assessing Officer in treating the share of the assessee at Rs.65,00,000/- in the property sold. Although the Ld. CIT(A) / NFAC accepted the contention of the assessee regarding the computation of capital gain by allowing the share of cost of acquisition, however, he directed the Assessing Officer to verify the same and allow accordingly. So far as the payment of Rs.20,00,000/- to the consenting party is concerned, he rejected the same on the ground that there is no provision in the I.T. Act, 1961 for allowing such expenses out of the sale consideration.

Aggrieved with such order of CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:

The Ld. Counsel for the assessee submitted that although the sale deed clearly and categorically states that there are three sellers, the CIT(A) / NFAC committed an error by not allocating 1/3rd share of the sale consideration and instead upheld the action of the Assessing Officer in determining the share of the assessee at Rs.65,00,000/-. Further, the amount paid by the assessee to the consenting party was not allowed as a deduction from the sale consideration for determination of the capital gain. Referring to various pages of the paper book, he submitted that the assessee was duty bound to pay the amount of Rs.20,00,000/- to one Mr. Ankush Rambhau Chandere who is the consenting party without which the property could not have been sold. The Ld. Counsel for the assessee also filed certain additional evidences in the form of affidavit for payment from Mr. Ankush Rambhau Chandere confirming the receipt of consideration and handing over the possession of the land. He accordingly submitted that the grounds raised by the assessee should be allowed.

The Ld. DR on the other hand, heavily relied on the orders of Assessing Officer and Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case determined the long term capital gain in the hands of assessee at Rs.65,00,000/- being 50% of the sale consideration for sale of immovable property at Rs.1,30,00,000/-. We find although the CIT(A) / NFAC accepted that the share of the assessee is 1/3rd, however, he upheld the action of the Assessing Officer in treating the share of the assessee at Rs.65,00,000/-. Further, he did not allow the amount of Rs.20,00,000/- paid to one Mr. Ankush Rambhau Chandere who is the consenting party as deduction. Since the order of the CIT(A) / NFAC is erroneous to the extent that he has considered the share of the assessee at 50% as against 1/3rd and since the assessee has filed certain additional evidences in support of his claim of deduction of the amount paid to the consenting party, therefore, after admitting the additional evidence, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh as per fact and law after affording due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

The assessee in the impugned appeal has challenged the order of CIT(A) / NFAC in confirming the penalty of Rs.13,06,040/- levied by the Assessing Officer u/s 271(1)(c) of the Act.

After hearing both the sides, we find that the quantum appeal filed by the assessee has been restored to the file of Assessing Officer for fresh adjudication. We, therefore, deem it proper to restore the issue of penalty also to the file of the Assessing Officer for adjudication afresh as per fact and law after affording due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.