Income Tax Appellate Tribunal - Indore
Shri Ramswaroop Thakur, Indore vs The Ito 4(3), Indore on 19 January, 2018
ITA No. 1537/Ind/2016 A.Y. 2009-10
Ramswaroop Thakur
आयकर अपील
य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.1537/Ind/2016
Assessment Year: 2009-10
Shri Ramswaroop Income Tax Officer,
Thakur, Vs. 4(3) , Indore
44, Banganga,
Indore
(Appellant) (Respondent )
PAN No.AATPT3589Q
Respondent by Shri K.G.Goyal, Sr.DR
Appellant by Shri Ram Gilda,Advocate
(AR)
Date of Hearing: 16.01.2018
Date of Pronouncement: 19.01.2018
ORDER
PER MANISH BORAD, AM.
This appeal filed by the Assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)-II, Indore [in short referred to as the CIT (A)] dated 28.10.2016 and is arising out of the order u/s 143(3) of the Income Tax Act dated 21.12.2011 framed by the Income Tax Officer-4(3), Indore pertaining to Assessment Year 2009-10.
1 ITA No. 1537/Ind/2016 A.Y. 2009-10Ramswaroop Thakur
2. Briefly stated the facts as culled out from the records are that the assessee is an individual. The return of income filed on 05.11.2009 declaring income of Rs.2,11,760/- and agricultural income of Rs.1,09,000/- case selected for scrutiny through CASS. Necesssary notices u/s 143(2) and 142(1) of the I.T. Act were served upon the assessee on 19.8.2010. AIR information was received which revealed that the assessee has deposited cash of Rs.25,10,000/- with State Bank of India, Sukhliya, Indore. Source of this cash deposit was asked from the assessee. In response it was submitted that advance in cash was received for the sale of agricultural land situated at Village Jakhya, Tahsil Sanwer, Dist. Indore. The agricultural land was ancestral and inherited by assessee's father from his fore fathers long back. It is not disputed at the end of Assessing Officer about the sale consideration at Rs.97,65,000/- and 1/3 share of assessee at Rs.32,55,000/-. However, the Ld. Assessing Officer was not convinced with the fair market value taken by the assessee as on 1.4.81 and indexed cost calculation. Ld.A.O applied the fair market value on the basis of information received from Sub-Registrar and accordingly calculated the long term capital gain of Rs.30,76,748/-. Minor addition for income from other source at Rs.49,000/- on account of excess agricultural income shown and other additions towards interest on FDR at Rs.8,504/- and disallowance u/s 80C at Rs.4,746/- was made. Assessment u/s 143(3) of the Act was completed at total income of Rs.33,50,760/- and agriculture income of Rs.60,000/- after making various additions and demand notice was issued to the assessee.
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3. Aggrieved assessee preferred appeal before the Ld. CIT(A) and challenged the order of the Ld. Assessing Officer by alleging that the Ld. A.O extended the area of scrutiny without obtaining the permission of the higher authorities as required by Circular dated 26.10.06, 23.5.2007 and 8.9.2010 issued by Central Board of Direct Taxes. However the assessee failed to succeed in the appeal and went before the Tribunal on this legal issue. The Tribunal vide its order dated 22.6.2016 allowed the assessee's appeal for statistical purposes restoring it to the file of Ld. CIT(A) for adjudicating the legal ground raised by the assessee before the Tribunal. Subsequent there to the Ld.CIT(A) following the directions of the Tribunal adjudicated the issue of limited jurisdiction and the remand report was called from the Assessing Officer. Legal ground of the assessee raised was dismissed justifying the action of the A.O.
4. Now the assessee is in appeal before this Tribunal raising various grounds of appeal.
1. That the Learned CIT(A)-II has grossly erred in confirming the area of scrutiny without obtaining the prior approval of higher authorities as required by circular dated 26/10/2006, 23rd May 2007 and 8th September 2010 issued by CBDT for scrutiny of cases under AIR.
2. That the Learned CIT(A)-II has also erred in confirming the additions made without obtaining the prior approval of the higher authorities.
3. That the addition made and confirmed of Rs.30,76,748/- on account of long term capital gain is illegal, wrong and unjustified.
4. That the authorities below have not considered the valuation report of registered valuer approved by Government of India.
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5. That the authorities below have also not considered the fair market value as on 01/04/1981 as defined in section 2(22B) of the Act.
6. That the dalali expenses of Rs.1,33,334/- disallowed and confirmed is illegal, wrong and unjustified.
7. That the disallowance of deduction of Rs.4746/- u/s 80C is also illegal, wrong and bad in law.
8. That the appellant craves leave to add alters, amend and/or withdraw any grounds of appeal on or before the hearing of appeal"
5. Ground No.1 and 2 challenges the finding of Ld.CIT(A) confirming the area of scrutiny taken up by Ld.A.O without obtaining the prior approval of the higher authority. Ground No.3 to 7 are on merits challenging various additions made by the Ld. A.O in the assessment order. Ground No.8 is general in nature which needs no adjudication.
6. We first take up Ground No. 1 & 2 wherein the assessee has challenged the action of Ld. A.O exceeding its jurisdiction. We heard both the parties and gone through the records carefully. The case was selected for scrutiny through CASS. Specific information about the cash deposit of Rs.25,10,000/- with State Bank of India, Sukliya was brought to the notice of the Assessing Officer. This bank account is owned by the assessee. It is also not disputed about the cash deposited at Rs.25,10,000/- belongs to the assessee. This was the "lead" with the Assessing Officer to scrutinize the assessee's case. In the course of this clarification 4 ITA No. 1537/Ind/2016 A.Y. 2009-10 Ramswaroop Thakur and justification of the alleged cash deposit was examined and the Ld.A.O reviewed the transaction of capital gain and accordingly made an addition of Rs.30,76,748/-. Further from the perusal of the assessment order we observe that no other issue has been taken up by the A.O except the issue emanating out of the alleged cash deposit as well as certain minor additions made before completing the assessment.
7. We further observe that the Ld. CIT(A) dismissed this legal ground of the assessee after calling for the remand report observing as follows;
"1. The appeal is filed against order u/s 143(3) of the Income Tax Act, 1961 dated 21.12.2011 passed by ITO-4(3), Indore. Following grounds have been raised in appeal:-
The Hon'ble Tribunal has set aside the appeal to decide the following additional grounds of appeal with reference to the circulars of the CBDT :- a. Whether on the facts and in the circumstance of the case, the learned assessing officer was justified in extending the area of scrutiny without obtaining the permission of higher authorities as required by circular dt. 26.10.2006, 23rd May, 2007 and 8th September, 2010 issued by CBDT the scrutiny of cases under AIR.
b. Whether on the facts and in the circumstances of the cases, the additions made without obtaining the prior approval of the higher authorities are liable to deleted.
2. In this case the appeal order was passed on 31.03.2004 by the CIT(A)-II, Indore dismissing the appeal of the appellant. Subsequently, the matter was restored back to the file of CIT(A)-II with the direction to decide the additional grounds afresh dealing with the circulars of CBDT as quoted by the appellant. Thus, the matter restored back by the Hon'ble ITAT with the limited jurisdiction to decide upon the fact as to whether the AO had exceeded its jurisdiction in limited scrutiny in light of the various CBDT circulars. However, I find that the AIR information was with respect to the cash deposit made by the appellant. Thus, the AO has verified the cash deposit which is a direct result of the capital gains so arisen to the appellant. Thus, the AO was well within its right and jurisdiction to verify the correctness of claim with respect to the capital gain. The AO was 5 ITA No. 1537/Ind/2016 A.Y. 2009-10 Ramswaroop Thakur asked to specifically comment on the same and I would like to reproduce the copy of the remand report sent by him in this regard:-
"2. All the additions were made after verification the reasons as mentioned in CASS like -
(a) Addition on account of capital gain (As raised from the source of cash deposit)
(b) Addition on account of agricultural income. (As an investment & expenditure made in agricultural activities)
(c) Addition in respect of FDR (as a investment)
(d) Addition account of u/s 80c (investment in LIC)
3. No addition was made beyond limited reason as cited in CASS.
4. The Ld.CIT(A) also appreciated the crystal findings of the AO and also dismissed the appeal of the assessee vide appeal No.IT-806/11-12/172 dated 31.03.2014.
5. The AO passed the order u/s 143(3) of the given assessment AY on 21/12/2011 after discussion made with the Range head as reported in the office note.
6. Therefore, no prior approval of the Administrative Commissioner was required in this case as the assessment order was passed under limited grounds as directed".
2.1 The reply to the remand report is also to be reproduced as below:-
"That the learned assessing officer is fair enough to accept the following facts:
(a) That the case was selected through CASS for limited scrutiny.
(b) That the limited scrutiny was for examination of source of cash deposit in the saving account and not other aspect of the matter.
(c) No approval was obtained by the assessing officer to widen the scrutiny from the administrative commissioner.
2. That the assessing officer is not permitted to make the additions on account of capital gain, agricultural income and deduction u/s 80C and interest income without the prior approval of administrative commissioner.
3. That the circulars of the CBDT are very clear and authorize the assessing officer to make the additions on specific items only.
4. That the jurisdiction of the assessing officer in limited scrutiny is limited to examine the source of deposit only. If the find same escapement of income then he is bound to seek prior approval of administrative commissioner before examining the other issues.
5. That the assessing officer travelled beyond his jurisdiction to make the addition on account of capital gain, agricultural income, interest income and deduction u/s 80C.
6. That the appellant relies upon the circulars of the CBDT and the decisions already submitted as per our previous submission.
7. The circulars of the CBDT are binding on the authorities as per the following decisions:
(a) CWT vs. Sanwarmal Shiv Kumar (1988) 171 ITR 377 (Raj.) 6 ITA No. 1537/Ind/2016 A.Y. 2009-10 Ramswaroop Thakur
(b) CIT Vs. Malayala Manorama & Co. (1983)
(c) CIT vs Mrs Antar Mohan Singh (1982)
(d) Catholic Syrian Bank Ltd Vs. CIT 2012(3) SCC 784 (SC)
(e) B.S. BAJAJ Vs. CIT (1996) 222 ITR 41 (P&H)
8. That assessment order passed deserves to be annulled. Without prejudice to the above, we further submit as under.
9. That the valuation report by the registered valuer approved by Government of India for fair market value as on 01/04/1981 (Copy enclose herewith on page No. 1 to 5) not considered by the assessing officer.
10. That the assessing officer adopted the value of sub-registrar for the cost of acquisition as on 01/04/1981, which is not permitted in law. It is the fair market value as defined in section 2(22B) of the Act and not sub-registrar value.
11. Appellant relies upon the following decisions:-
(a) Pyare Mohan Mathur (HUF) Vs. ITO (copy enclosed on page no.6 to 11)
(b) Smt. Krishna Bajaj Vs. ACIT reported in 267 CTR 0172 (Karnataka High Court) Under the circumstances and in view the legal position and case laws, we request to consider the fair market value of Rs.4,92,000/- (1/3rd share of Rs.14,76,000 of the appellant) as per cost of acquisition as on 01/04/1981 for indexation of long term capital gain. The index cost for deduction is Rs.28,63,440/-) 2.2 After going through the remand report it is abundantly clear that the AO has not exceeded its jurisdiction in limited scrutiny by verifying and consequently making an addition on account of capital gain. I have duly considered the submissions of the appellant and his reply to the remand report so given. The appellant has pleaded that the jurisdiction of the AO is limited to examining the source of cash deposit. However, it's only in the process of examining the source of cash deposit that the AO verified the claim of the appellant and thereby ended up making the addition on account of capital gain. Thus, this ground of appeal is dismissed."
8. From the perusal of the findings of Ld.CIT(A) and in view of the facts discussed herein above we find no reason to interfere in the findings of Ld. CIT(A) dismissing this legal ground and are of view that the Ld.A.O has not exceeded his jurisdiction in the limited scrutiny. In the result Ground No.1 & 2 of assessee's appeal are dismissed.
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9. Now we take up Ground No.3,4,5,6 & 7 which relates to the merits and challenges the additions made by the A.O for long term capital gain from sale of land at Rs.30,76,748/-, disallowance of alleged expenses at Rs.1,33,334/- and disallowance of deduction of Rs.4,746/- u/s 80C of the Act. From perusal of the Ld. CIT(A)'s order we find that none of these grounds have been adjudicated by him. The Ld.CIT(A) had only dealt with the legal ground which we have already decided in preceding paras.
10. We therefore in the given facts and circumstances are of the view that grounds 3 to 7 needs to be adjudicated first by Ld.CIT(A) and accordingly direct him to pass a speaking order adjudicating these grounds. We accordingly restore the issue raised in Ground No. 3 to 7 to the file of Ld. CIT(A). Needless to mention that a proper opportunity of being heard is provided to the assessee. In the result Ground No. 3 to 7 are allowed for statistical purpose.
11. Ground No.8 is general in nature which needs no adjudication.
12. In the result, the appeal of the assessee is partly allowed for statistical purpose.
The order pronounced in the open Court on 19.01.2018.
Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 19, January, 2018
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ITA No. 1537/Ind/2016 A.Y. 2009-10
Ramswaroop Thakur
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Private Secretary/DDO, Indore 9 ITA No. 1537/Ind/2016 A.Y. 2009-10 Ramswaroop Thakur
1. Date of dictation : 17/01/2018
2. Date on which the typed draft is placed before the Dictating Member : 18/01/2018
3. Date on which approved draft comes to the Sr.P.S./P.S: 18.1.2018
4. Date on which the fair order is placed before the dictating Member for pronouncement: 18.1.2018
5. Date on which the fair order comes back to the Sr.P.S./P.S.:
19.1.2018
6. Date on which the file goes to the Bench Clerk:19.1.18
7. Date on which the file goes to the Head Clerk:
8. The date on which the file goes to the Assisstant Registrar for signature of the order.
9. Date of Despatch of the Order:
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