SRI CHANDAN KUMAR AGARWAL,KOLKATA vs. I.T.O WD - 32(2),KOLKATA, KOLKATA

This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XIX, Kolkata in appeal No.187/CIT(A)-XIX/ITO, Wd- 32(2)/Kol/12-13 dated 26.03.2013. Assessment was framed by ITO Ward- 32(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 12.12.2011 for assessment year 2009-10.

Facts of the case in brief are that assessee in the present case is an individual and engaged in the wholesale business of Sarees. During the year, assessee has sold property on dated 26.05.2008 which was purchased on 30.06.2006 for an amount of ₹4 lacs. As per the District Valuation Officer (DVO for short) the said property was valued at ₹39,17,714/- which was accepted by assessee. However, assessee has declared the gain arose as a result of sale of the property as Long Term Capital Gains (LTCG for short) and claimed exemption u/s 54 of the Act. During the assessment proceedings, AO observed that period of holding of the property is less than 36 months and accordingly he denied the exemption claimed by assessee u/s. 54 of the Act.

Aggrieved, assessee preferred an appeal before Ld. CIT(A) where assessee has taken a new plea and submitted that impugned property was owned both by assessee and his wife and produced purchase deed of the property in support of his claim. Assessee before Ld. CIT(A) pleaded that assessee being 50% owner of the property should be liable to tax under the head “capital gains” to the extent of 50% only. However, Ld. CIT(A) disregarded the plea of assessee by observing as under:- “v. There is no material on the record which suggests that the investment in property, whose sale is resulting into capital gain, was made by appellant’s wife also and the receipt from sale of such capital assets is equally deposited in her bank account and such claim of capital gain is made by filing return of income. From the copy of deed filed it is noticed that there is no PAN No. for Mrs. Richa Agarwal. This also suggest that there is no source of income in the hands of Mrs Richa Agarwal and the appellant has not been filing regular return of income suggesting no source of any income in her hands. In view of Sh. Chandan Kr Agarwal v. ITO Wd-32(2) Kol. Page 3 this also the taxability of capital gain has been rightly done in the hands of person, where the source of income exists. In the background of all these details the belated claim of appellant for claiming capital gain equally in the hands of appellant and his wife is nothing but an after-thought which is not substantiated by proper material and thereby lacking justification. In view of aforesaid discussion the 3rd grounds of appeal raised by the appellant is rejected and charging of capital gain in the hands of appellant is upheld.”

Before us Ld. AR filed a paper book which is running pages 1 to 117 and stated that assessee is owner of 50% of the property so he should be liable to be taxed to the extent of 50% only and cited various case laws. He drew our attention at page 53 of the paper book where PAN No. of Mrs Richa Agarwal, wife of assessee was recorded. Again Ld. AR also drew our attention at page 22 of the paper book where the registry documents were placed and name of assessee and his wife were also appearing on the registry papers and on page at 81 of the paper book where the signature of vendor being assessee and his wife were duly recorded. In rejoinder, Ld. DR vehemently relied on the orders of Authorities Below and submitted that purchase document of the property were not signed by both the parties as assessee and his wife. He further stated that there is no mention that he has made the investment at the time of purchase of the said property where the entire amount was invested by assessee himself or by his wife or jointly.

We have heard rival contentions and perused the materials available on record. We find that assessee has declared entire capital gains in its individual hand at the time of assessment. However, before appellate stage assessee declared himself to be the owner of the said property to the extent of 50% and for remaining 50% his wife was the owner of the property. Assessee prayed before Ld. CIT(A) to tax the capital gains in both the hands but Ld. CIT(A) disregarded the claim of assessee by holding that there is no information about the investment in property and wife of assessee has not declared the capital gains in her return of income. There was no PAN No. of Mrs. Richa Sh. Chandan Kr Agarwal v. ITO Wd-32(2) Kol. Page 4 Agarwal, wife of assessee. Now the question before us arose whether the capital gains should be taxed in the hands of assessee and his wife in the aforesaid facts and circumstances. From the facts of the case, we find that Ld. AR failed to bring about the person who has actually made investment in the property in question. We also find that this issue was not raised before the AO. In the absence of necessary information, we are inclined to restore this issue to the file of AO for fresh adjudication according to law in the interest of justice and fair play. The assessee is directed to extend full cooperation to the AO. Hence, ground of assessee’s appeal is allowed for statistical purpose.

Grounds No.1, 2 and 4 raised by assessee in his appeal have not been pressed by the Ld. AR of assessee at the time of hearing before us. Those are, therefore, dismissed as not pressed.