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Income Tax Appellate Tribunal, NAGPUR BENCH : NAGPUR
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK RIPOTE
ORDER PER SATBEER SINGH GODARA, J.M. :
This assessee’s appeal arises against the Pr. CIT(A)- 2, Nagpur’s Order dated 26.02.2020, passed u/sec.263(1) of the Income Tax Act, 1961 (in short "the Act").
Heard both the parties. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal :
“Whether on the facts and circumstances, the learned CIT has erred in coming to the conclusion that assessment 2 ITA.No.94/Nag./2020 order passed by learned AO u/s 143(3) dated 07.11.2017 is erroneous and prejudicial to the interests of the revenue and in setting aside the assessment order with a direction to the learned AO to conduct proper enquiry and examination.
2. Whether on the facts and circumstances, the learned CIT erred in not appreciating the fact that, the learned AO had examined the issue of long term capital gains and deduction claimed by the assessee u/s 54 by issuing show cause notices from time to time, and had thereafter accepted the claim of the assessee; thus the order cannot be termed as erroneous.
3. Whether on the facts and circumstances, the learned CIT grossly erred in observing that, during assessment proceedings the assessee had submitted that he did not have any details or vouchers for cost of improvement; which is false, incorrect and contrary to the facts on record.
4. Whether on the facts and circumstances, the learned CIT grossly overlooked the fact that, during assessment proceedings, vide show cause notice dated 11/08/2017, the learned AO had specifically asked the assessee to produce documentary evidences in respect of purchase cost and additions thereon, which were duly produced by 3 ITA.No.94/Nag./2020 the assessee and corroborated by learned AO's observations in the assessment order.
5. Whether on the facts and circumstances, the learned CIT erred in not appreciating that, the learned AO had mentioned in assessment order that, only vouchers for expenses amounting to Rs. 12,700 could not be produced, for which separate addition was made.
6. Whether on the facts and circumstances, the learned CIT erred in not considering the submission filed by the assessee before learned CIT on 10/01/2020, wherein it was clearly submitted that details and vouchers for improvement cost were produced during assessment proceedings.
7. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off.”
Both the parties next invited our attention to the PCIT’s impugned revision directions holding the Assessing Officer’s sec.143(3) regular assessment dated 07.11.2017 as an erroneous one causing prejudice to the interest of the Revenue as under :
“4. I have carefully considered the facts of the case and the assessment order along with the contentions of the assessee. So far as Assessment Order dated 14-11-
4 ITA.No.94/Nag./2020 2017 is concerned I have gone through the order sheets and questionnaires issued by the AO. It is seen that while computing the long term Capital Gain, the assessee has claimed index cost of improvement for F.Y. 1989-90 of Rs.12,94,586/- and for F.Y. 1991-92 of Rs.2,71,180/-, Further during’ the course of assessment proceedings it is seen that the AO had made a query regarding the cost of improvement claimed by the assessee. It was submitted by the assessee that he has not having any details of the expenses relating to cost of improvement claimed by him in the computation of Capital Gain. The assessee himself has stated that no evidence for expenses claimed on improvement of the property in question is available with him. There was no. other evidence to show that indeed some construction in the nature of ‘Improvement’ had taken place. Under these circumstances, the assessee will not be entitled to the indexed cost of improvement for F.Yrs. 1989-90 and 1991-92 as claimed by him. The entire expenses (i.e., indexed cost of improvement) amounting to Rs.15,65,766/- (1294586+271180) will be required to be disallowed and added back to the total income of the assessee. Even though there was no material on record with the Assessing Officer, the Assessing Officer was not right in restricting the above disallowance to Rs.65300/- only. Hence, the order passed by the AO is erroneous and 5 ITA.No.94/Nag./2020 prejudicial to the interest of the revenue. This is ratified by the decision of the High Court of Himachal Pradesh in the case of the Commissioner of- Income Tax, Patiala Vs Himachal Pradesh Financial Corporation [2010] 186 TAXMAN 105 (HP) dated 29.05.2008.
During the revision proceedings u/s 263 of the I.T. Act, 1961, the assessee’s counsel was confronted with the facts of the case. The counsel has stated that. evidence for expenses claimed on improvement of the property in question is not available with him. He was not able to provide any other evidence to support his claim. Under these circumstances, the assessee is not entitled to the indexed cost of improvement for F.Yrs. 1989-90 and 1991- 92 as claimed by him. The entire, expenses (i.e., indexed cost of improvement) amounting to Rs.15,65,766/- (1294586+271180) will be required to be disallowed and added back to the total income of the assessee. The AO has failed to disallow the entire index cost of improvement which has resulted in under assessment of income and thus causing prejudice to the interest of the Revenue.
In view of the above narrated facts and circumstances of the case, considering the findings of the' Judgment of the Hon’ble ITAT/High Courts on the issue, and keeping in view .the Fairness, Judiciousness and 6 ITA.No.94/Nag./2020 Transparency of the facts as emerged out in the present ease, I am of the considered view that above order u/s.143(3) dated 07.11.2017 is erroneous and prejudicial to the interest of the revenue and therefore is set-aside. The AO is directed to pass the Order afresh after proper enquiry and after thoroughly examining the above referred issue which lead to under assessment and loss of revenue after giving reasonable opportunity of being, heard to the assessee.”
Learned counsel representing the assessee vehemently argued during the course of hearing that the Assessing Officer had rightly framed his impugned assessment not disallowing the corresponding expenses for the purpose of computing the long term capital gains. Mr. Agrawal took us to the assessee’s paper book running into 22 pages comprising of the case records and other details. His case in light thereof is that once the Assessing Officer had carried out all the necessary enquiries for the purpose of cost of acquisition/improvement of the capital asset(s) in issue; his assessment is neither erroneous nor had caused prejudice to the interest of the Revenue attracting sec.263 revision jurisdiction.
5. Revenue has drawn strong support from the PCIT’s foregoing revision directions.
7 ITA.No.94/Nag./2020 6. We have given our thoughtful consideration to the foregoing vehement rival stands and find no merit in assessee’s arguments. This is for the precise reason that there is not even a single notice by the Assessing Officer raising specific queries of the details of cost of acquisition/ improvement claimed at the assessee’s behest whilst computing his capital gains. We make it clear that the assessee’s case before us is that although we are in assessment year 2015-16; however, the impugned expenditure had been incurred from assessment year 1989-90 onwards. That being the case, it was assessee’s bounden duty only to file the requisite supportive material during the course of assessment on being put to question by the Assessing Officer. That has admittedly not been done as the facts before us speak for themselves. Faced with the situation, we quote Malabar Industrial Company Ltd. vs. CIT [2000] 243 ITR 83 (SC), Rampyari Devi Saraogi vs. CIT [1968] 67 ITR 84 (SC), Tara Devi Aggarwal vs CIT 1973 SCR (2)1035 and CIT vs. Paville Projects Pvt. Ltd., [2023] 453 ITR 447 (SC); to confirm the learned PCIT’s revision directions. Ordered accordingly.
This assessee’s appeal is dismissed in above terms.
8 ITA.No.94/Nag./2020 Order pronounced in the open Court on 26.10.2023.