Income Tax Appellate Tribunal - Jaipur
Smt. Kala Manish Dhameja, Jaipur vs Income Tax Officer, Ward-6-1, Jaipur on 20 July, 2020
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES 'B' JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 1061/JP/2019
fu/kZkj.k o"kZ@Assessment Year :2010-11
Smt. Kala Manish Dhameja cuke The ITO,
3/322, Malviya Nagar, Jaipur Vs. Ward 6(1),
Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFYPD8160R
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Sh. K. L. Moolchandani
jktLo dh vksj ls@ Revenue by : Smt. Rooni Pal (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 16/07/2020
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20/07/2020
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)- 2, Jaipur dated 22.07.2019 wherein the assessee has taken following grounds of appeal:-
"1(a) On the facts and in the circumstances of the case, the ld. CIT(A) has factually and legally erred in confirming the action of the ld. AO of initiating the reassessment proceedings u/s 147/148 of the Act on the basis of the reasons recorded in the case of her husband Shri Manish Dhameja, on the ground that it was a typographical mistake. Obviously such findings are devoid of merits and deserve to be quashed summarily.
1(b) On the facts and in the circumstances of the case, the ld. CIT(A) has factually and legally erred in ignoring the vital fact that the so- called typographical mistake was not cured by the ld. AO u/s 292B of ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur the Act even after being pointed out about such mistake by the appellant during the assessment proceedings and the assessment was finalized without curing such omission. Thus the assessment order so passed was bad in law and deserved to be quashed.
1(c) The ld. CIT(A) has factually and legally erred in overlooking the Ground regarding 'validity' of the re-assessment proceedings initiated u/s 147/148 of the Act. Thus the appeal order so passed is not a well reasoned and logical order and the same deserves to be quashed summarily.
2(a) On the facts and in the circumstances of the case, the ld. CIT(A) has factually and legally erred in confirming the addition of Rs. 6,17,720/- made by the ld. AO without appreciating the facts of the case in right perspective. In the process, the ld. CIT(A) has also ignored the vital facts and documented details as submitted during the assessment and appeal proceedings. Thus the appeal order so passed is not a well-considered/reasoned order to be quashed summarily. 2(b) Further, in the process, the ld. CIT(A) has also deviated from the findings of the ld. AO to confirm this addition, without allowing proper and due opportunity to the appellant for such deviation. Thus the appeal order so passed is bad in law and deserves to be quashed summarily."
2. Briefly stated, the facts of the case are that during the year under consideration, the assessee has sold a property situated at D-427, Malviya Nagar, Jaipur for Rs. 15,00,000/- vide sale deed dated 11.03.2010. The said transaction was not disclosed in the original return of income filed by the assessee. Subsequently, the statement of assessee's husband, Sh. Manish Dhameja was recorded u/s 131 and thereafter, the assessee filed the revised return on 30.12.2011 declaring short term capital loss of Rs. 21,280/- against 2 ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur the sale of the aforesaid property. While computing the short term capital loss, the assessee has claimed the cost of land of Rs. 8,82,280/- and construction cost of Rs. 6,39,000/- against the full value of consideration of Rs 15,00,000/-. Thereafter, notice u/s 148 was issued by the Assessing officer stating that the income to the extent of Rs 2,90,317/-, being the unexplained investment amounting to Rs. 2,89,000/- made by the assessee in the year under consideration, has escaped assessment and the reasons so recorded reads as under:-
"The assessee has filed his return of income on 25.03.2011 at total income of Rs. 1,76,040/-. Further assessee filed a revised on 30.12.2011 at total income of Rs. 1,86,800/- declaring short term capital loss of Rs. 21,280/- against sale of immovable property bearing address D-427, Malviya Nagar, Jaipur. The transaction was not reflected in the original return of income filed on 25.03.2011. On the material available with this office, it is gathered that during in open enquiry in his statement the assessee accepted investment in immovable property during the last six years a sum of Rs. 3,50,000/- lacs in house no. D-427, subsequent to its purchase whereas as per computation submitted by him for the calculation of capital gain the amount was shown to be Rs. 6,39,000/-. This depicts that assessee has made unexplained investment amounting to Rs. 2,89,000/- in the year under consideration.
Thus, the assessee has failed to disclose fully and truly all material facts necessary for his assessment. Therefore, I have reason to believe that the income liable to tax has escaped assessment of Rs. 2,89,000/- within the meaning and purview of section 147 of the I.T.Act, 1961 and it is a fit case of issue notice u/s 148 of the I.T. Act, 1961."3 ITA No. 1061/JP/2019
Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur
3. Thereafter, in response to notice u/s 148, assessee filed her return of income on 27.04.2017 declaring total income of Rs. 1,86,800/- including capital loss of Rs. 21,280/- from the sale of the aforesaid property. Thereafter, the AO completed the assessment wherein he disallowed cost of construction of Rs. 6,29,000/- in absence of any evidence towards cost of construction in terms of vouchers/bills of construction material, valuation report of approved valuer etc. The AO accordingly computed short term capital of Rs. 6,17,720/- as against short term capital loss of Rs. 21,280/- claimed by the assessee in her return of income.
4. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and the relevant finding of ld. CIT(A) reads as under:-
"3.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. Regarding cost of construction not being allowed by the Assessing Officer, it is seen that assessee's husband in his statement recorded, admitted the cost of Rs. 3,50,000/- was incurred on the construction but during assessment proceedings, assessee failed to submit the source of such investments. Only, source of a sum of Rs. 1,20,000/- as received from father in law could be produced. Even if assessee's contention is accepted regarding allowbility of cost of construction, the fact remained that the source of construction during the year remained unexplained. Therefore, the addition is sustained by invocation of section 69 of the I.T. Act, 1961. Accordingly to this, ground of appeal is dismissed. "
Against the aforesaid findings of the ld CIT(A), the assessee is in appeal before us.
4 ITA No. 1061/JP/2019Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur
5. In Ground No. 1, the assessee has challenged the validity of reassessment proceedings. In this regard, the ld. AR submitted that the notice u/s 148 has been issued in the name of Sh. Manish Dhameja, husband of the assessee and the same being a fatal mistake cannot be cured u/s 292B of the Act and therefore, for this reason alone, notice u/s 148 and subsequent proceedings should be quashed. It was further submitted that re-assessment proceedings were initiated to assess the escaped income of Rs. 2,89,000/- on account of unexplained investments. However, no addition has been made by the Assessing Officer towards any unexplained investment. Therefore, the very reason for which re-assessment proceedings were initiated were found satisfactorily explained and no addition has been made, than in such a scenario, any other addition made by the Assessing Officer by way of disallowance of the cost of construction cannot be sustained.
6. In Ground No. 2, the assessee has challenged the addition of Rs. 6,17,720/- made by the Assessing Officer under the head "income from the head "capital gains" whereby he has denied the deduction towards the cost of construction. In this regard, it was submitted by the ld AR that there is no dispute that the assessee has purchased the property in the year 2007 the construction was thereafter carried out on the property in the year 2008 and what has been sold in the year 2010 is a constructed property. It was submitted that being an old construction, the assessee has not kept the bills and vouchers towards cost of construction, however, the assessee has submitted a valuation report in support of cost of construction. It was submitted that the said addition has been made by the Assessing Officer ignoring the valuation report which was submitted in support of the cost of construction undertaken on the aforesaid property. It was further submitted 5 ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur that valuation report was duly submitted even before the ld. CIT(A), however, the same has been ignored by both the lower authorities.
7. It was further submitted that the ld. CIT(A) has factually and legally erred in deviating from the findings of the Assessing Officer without assigning any reasons and has gone ahead and made the addition u/s 69 without providing any opportunity to the assessee. It was further submitted that the quantum of the addition as confirmed by the ld. CIT(A) is also not fair and justified. In the above referred findings, the ld. CIT (A) had observed that husband of the appellant had admitted investment of Rs. 3,50,000/- in the said property and the amount of Rs.1,20,000/- was received from father-in-law which was 'acceptable'. Having considered these facts and figures, no such addition was called for. In fact, total investment of Rs.15,21,280/- was made in the said property; which included the purchase of the property and the construction works undertaken thereon. For the purpose, appellant had received bank loan of Rs.10,50,000/- as evident from the Bank documents submitted before the lower authorities. The amount of Rs. 1,20,000/- was received from father-in-law out of his bank withdrawals which were found to be 'acceptable' by the ld. CIT (A) as per above findings. And balance amount of Rs.3,50,000/- was admitted and confirmed by her husband Sh. Manish as deposed in the 'open' enquiry. Thus the entire investment of Rs.15,21,280/- made in the sold property stood fully and satisfactorily explained vide letter dated 4.12.2017. The ld. AO had however turned down such explanation on the plea that such working was not given while filing the Return originally. The ld. CIT (A) did not take note of this explanation and the copy of valuation report etc. and had proceeded entirely on different line without giving any finding on these facts & figures. The ld. CIT (A) had confirmed the addition of Rs.6,17,720/-under section 69 of the Act as unexplained investment in construction works ignoring the vital 6 ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur fact that such investment was made out of the bank loan of Rs.10,50,000/- plus the amounts received from her husband and father-in-law. The above claim of the appellant was never questioned by the Revenue (rather accepted by the ld. CIT (A) in her above findings). Thus the addition so confirmed by the ld. CIT (A) was factually and legally incorrect and deserved to be deleted summarily. As the entire investment in the said property stood explained to the satisfaction of the ld. AO, no addition was rightly made by the ld. AO u/s 69 of the Act. The ld. CIT (A) had failed to appreciate all these facts and had proceeded to confirm the addition of 'equal amount' of Rs. 6,17,720/- under 'different head' on the basis of incorrect and imaginary figures of investment assumed by her arbitrarily.
8. It was further submitted that in the reasons so recorded, the escaped income was estimated at Rs.2,89,000/- as unexplained investment. In fact, in open enquiry, Sh. Manish, the husband of the appellant had informed that he had invested Rs.3,50,000/- in the said property (after securing bank loan of Rs.10,50,000/- and the amount of Rs.1,20,000/- received by the appellant from her father-in-law). A confirmation was also filed in support of such claim along-with supporting copies of the bank accounts etc. No discrepancy or mistake was noted in such contentions and explanation. However, the said explanation was turned down by the ld. AO on the plea that such 'working' was not shown while filing the original return. Accordingly, the 'Valuation Certificate' submitted in support of such construction works was also ignored without assigning any reason and had disallowed the entire cost of construction of Rs.6,17,720/- to make the addition of equal amount; ignoring the bank loan of Rs.10,50,000/- and amounts received from her husband and father-in-law. No addition what-so-ever was however made on account of the un-explained investment of Rs.2,89,720/ as stated in the reasons. From the above discussions, it is seen that both the authorities have been 7 ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur taking contradictory view in respect of the cost of construction and investment made therein as per their personal whims. More-over the explanation regarding sources of investment as explained vide letter dated 4.12.2017 was never questioned, thus warranting no adverse view as evident from the assessment order. Again, the ld. CIT (A) had no reason to change the head of addition without allowing any opportunity to the appellant. And lastly, the quantum of the addition of Rs.6,17,720/- as confirmed by the ld. CIT (A) did not commensurate and match with the figures of investment found to be acceptable. Thus the addition as made and confirmed by the authorities below are devoid of merits and the same deserves to be deleted summarily.
9. The ld. DR is heard who has submitted that in the reasons so recorded before issuance of notice u/s 148, the factual position in the case of assessee has been clearly stated wherein she has sold the aforesaid property bearing D-427, Malviya Nagar, Jaipur. The reason also talks about the original and revised return filed by her. The details of the returned income as well as the date of filing has been clearly mentioned which is not disputed by the assessee. It was further submitted that PAN No. of the assessee was also clearly stated in the reasons so recorded. The name of the husband of the assessee has been wrongly mentioned and the same cannot be a basis to hold re-assessment proceedings as bad in law. It was submitted that the Assessing Officer as well as the ld. CIT(A) have given the finding that such a mistake being typographical mistake can be rectified u/s 292B of the Act and the said findings should be confirmed and the contentions advanced by the ld. AR should be dismissed. Further, on merits, she relied on the findings of the lower authorities and submitted that since the assessee has failed to file any evidence towards cost of construction as well as source of such investment, the addition has been rightly made by the Assessing Officer and 8 ITA No. 1061/JP/2019 Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur which has been confirmed by the ld. CIT(A). She accordingly supported the findings of the lower authorities.
10. We have heard the rival submissions and perused the material available on record. We note that the notice u/s 148 was issued by the Assessing officer stating that the income to the extent of Rs 2,90,317/-, being the unexplained investment amounting to Rs. 2,89,000/- made by the assessee in the year under consideration has escaped assessment. The ld AR has stated at the Bar that the assessee has purchased the property in the year 2007, the construction was thereafter carried out on the property in the year 2008 and which has subsequently being sold in the year 2010. These facts are not disputed by the Revenue and even on perusal of the valuation report, we find that the valuer has stated the year of construction as 2008 and has applied the PWD rates for valuation of cost of construction as relevant for year 2008. Therefore, where there is no construction carried out during the financial year 2009-10 relevant to impugned assessment year, there is no question of any investment made in such property during the year and question of any unexplained investment made during the year under consideration, as so stated in the reasons so recorded, thus, doesn't arise for consideration. In such circumstances, where the very basis for which reassessment proceedings were initiated doesn't survive, there is no basis for making the impugned addition towards failure to substantiate the cost of construction so claimed by the assessee. Even on merits, we find that the cost of construction is supported by the Valuer report which has determined the cost of constriction applying the PWD rates at Rs. 713,150/- as against cost of construction claimed by the assessee amounting to Rs. 639,000/-. In the result, the addition made is hereby deleted and the matter is decided in favour of the assessee and against the Revenue.
9 ITA No. 1061/JP/2019Smt. Kala Manish Dhameja, Jaipur Vs. The ITO, Ward 6(1), Jaipur In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 20/07/2020.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 20/07/2020
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Kala Manish Dhameja, Jaipur
2. izR;FkhZ@ The Respondent- The ITO, Ward 6(1), Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 1061/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 10