Income Tax Appellate Tribunal - Jaipur
Shri Shankar Das Shahjwani, Jaipur vs Income Tax Officer, Jaipur on 18 October, 2019
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH 'A' JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 71/JP/2018
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Smt. Parwati Devi (Widow), cuke Income-tax Officer,
Shri Manoj Kumar, Vs. Ward-6(4),
Mohit & Jai (Sons) Jaipur
L/H of Shri Shankar Das Shajwani,
C/o Muskan Honda, Tonk,
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABWPS5846D
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s Assessee by : Shri K. L. Moolchandani (AR)
jktLo dh vksj ls@ Revenue by : Shri Raj Mehra (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 15/10/2019
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 18/10/2019
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee on 22.01.2018 against the order of ld. CIT(A), Ajmer dated 17.07.2017. At the outset, it is noted that the appellant has since expired on 18.01.2018. Subsequently, the assessee has filed revised Form No. 36 on 6.09.2019 duly signed by legal heirs of the assessee and the grounds of appeal taken are as under:-
"1. On the facts and in the circumstances of the case, the ld. Authorities Below have factually and legally erred in turning down the Affidavit of Shri Vijendra Singh Lodhi on the plea that the witness could not be produced in person for cross examination. The view so taken is contrary to the provisions of Evidence Act and is bad in law to be quashed in limine.2 ITA No. 71/JP/2018
Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur
2. On the facts and in the circumstances of the case, the ld. AO had factually and legally erred in taking the cost of acquisition of the plot sold at Nil figure while computing the LTCG. However, the ld. CIT(A) has directed the AO to take such cost of acquisition at Rs. 1 lac plus Rs. 4201/- (Membership Fee and Conversion Charge etc.) for indexation purposes and working out the LTCG without any basis and by ignoring the affidavit of the purchaser, confirming therein the sale of the property for Rs. 18 lac. Thus, the working of the LTCG is based on wrong footings and deserves to be modified."
2. Briefly stated, the facts of the case are that the assessee sold an immovable property situated at 6, Lakhanpuri, Durgapura, Tonk Road, Jaipur for a consideration of Rs. 1,00,00,000/- and the said amount was found deposited in the appellant's bank account. Notice u/s 148 was issued to the assessee on 25.03.2014. However, no return of income was filed in response to the said notice. Subsequently, during the course of assessment proceedings, a show cause was issued to the assessee to file his return of income u/s 148 and to file any documentary evidence with regard acquisition of the property. However, in absence of any response from the assessee, the Assessing Officer proceeded to complete the assessment u/s 144 wherein he brought the whole of the sale consideration to tax under the head "long term capital gains" without allowing any deduction for the cost of acquisition.
3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and sought permission to file copy of the agreement to sale under Rule 46A which was permitted by the ld. CIT(A) and the remand report from the Assessing Officer was called for. After considering the submissions of the assessee as well as the remand report of the Assessing Officer, the ld. CIT(A) has allowed part relief to the assessee and against the said finding, the assessee is in appeal before us.
4. During the course of hearing, the ld. AR submitted that the appellant has expired on 18.1.2018 and his legal heirs have been brought on record and as directed by the Bench, the revised Form 36 duly signed by the legal heirs namely, Smt Parwati Devi, Manoj Kumar, Mohit and Jai has been filed.
3 ITA No. 71/JP/2018Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur
5. It was further submitted by the ld AR that as per AIR received by the Department, during the year under consideration, the appellant had sold a residential plot of Rajhans Cooperative Housing Society, Jaipur for Rs. One Crore. Accordingly, his case was taken up for scrutiny u/s 143(2) of the Act. The appellant being a laymen and ignorant about his legal obligations was totally at sea and un-aware about the implications and consequences of the re-assessment proceedings initiated u/s 147/148 of the Act. Accordingly, no compliance of any of the statutory notices issued to him from time to time with the query letters etc. could be made as discussed in the body of the assessment order. On account of the non-compliance of various notices and query letters, the ld. AO had proceeded to pass an ex-parte order u/s 144 of the Act and computed the entire sale consideration of Rs. 1 crore as 'capital gain' and taxed the same plus income of Rs.1,27,598/- allegedly earned from the advances as noted from his bank statement. Obviously the income so determined under section 144 of the Act was not fair and reasonable and was not legally maintainable; so much so that the credit of the 'Cost of Acquisition' of the property and indexation thereon was not allowed while computing the capital gains. Like-wise, as seen from the bank statement itself, the moneys were advanced at the end of the financial year could hardly yield any interest income. In the circumstances, the assessment order so passed u/s 144 of the Act by the ld. AO on 28.11.2014 was assailed before the ld. CIT (A) on the basis of additional evidences filed under Rule 46A of IT Rules, 1962. The additional evidences consisted of a copy of the 'agreement to sale' of the said property by the seller Shri Vijendera Singh Lodi, certifying therein that the cost of acquisition of the asset at Rs. 18 lac.
6. It was further submitted that in the appealllate proceedings, the ld. CIT (A) was pleased to admit such additional evidences and had obtained remand report from the AO. In the remand report, it was informed by the ld. AO that the affidavit of the witness was not legally maintainable as the witness did not attend his office in compliance to notice issued u/s 131 of the Act. In counter comments, it was informed by the appellant vide letter dated 15.6.2017 that the 4 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur alleged non-compliance on the part of the witness was not in his 'notice'. Having considered the material on the record and the remand report and counter- comments etc., the ld. CIT (A) had opined that the cost of acquisition of the property could not be ignored while working out the capital gains. The ld. CIT (A) had accordingly estimated the cost of acquisition of the asset at Rs.1 lac on the date of purchase i.e. on 31.10.81 and had directed the AO to allow deduction of Rs. 1 lac after allowing indexation as per provisions of Law.
7. It was further submitted that the ld. CIT (A) was satisfied about the purchase of the plot by the appellant in 1981 as evident from the Office records of the 'Society' and from the details of receipt no. etc. as mentioned in the registered sale deed. Thus acquisition of the plot by the appellant in the year 1981 is an admitted fact. The only point of contention is the `Cost of Acquisition' of the said plot. The appellant had shown the cost of this plot at Rs.18 lac as per affidavit of Shri Vijendra Singh Lodhi, who had sold the plot to the appellant in the year 1981. The Authorities below were however not willing to accept the contents of the affidavit of witness on the ground that the witness did not attend the office in person to confirm this fact. In the circumstance, the ld. CIT (A) had estimated the cost of acquisition of the plot at Rs. 1 lac in absence of any material brought on record. Thus the estimated cost of acquisition at Rs. 1 lac is without any basis in absence of any supporting evidence or details. Further as per provisions of Evidence Act, the contents of the affidavit of the witness cannot be rubbished in absence of any contradictory material brought on record. In the circumstances, the affidavit of the witness as submitted by the appellant carried evidentiary value, which should not be shelved summarily on the plea that the witness did not attend the office in person to confirm this fact. Moreover the summons was issued by the ld. AO to the witness directly without notice of the appellant. In the circumstances, the appellant could not ensure the attendance of the witness in compliance to the summons issued u/s 131 of the Act. When the appellant came to know about such non-attendance by the witness, he 5 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur (appellant) was seriously ill and could not contact the witness to confirm this fact in person before the department. Thus the appellant was prevented by reasonable cause from producing the witness in person to confirm this fact. The ld. CIT (A) has however failed to appreciate this fact and has turned down the contents of the affidavit without appreciating the fact that in the absence of any contrary material brought on record, the affidavit of the witness carries evidentiary value as per Evidence Act and should be accepted in support of the cost of acquisition of the plot under consideration. In the circumstances, the findings of the ld. CIT (A) regarding estimated cost of acquisition are devoid of merits and deserves to be quashed. The cost of acquisition of the sold assets should be taken as per affidavit of the witness.
8. It was further submitted by the ld AR that after the demise of the appellant, the legal heirs of the appellant were approached to procure any other cognizable evidence in support of the cost of acquisition of the plot under consideration. They have however expressed their total inability to adduce any other evidence in this regard as the matter was about 38 yrs old. More-over all the sons of the appellant had been putting up separately for a long time so they do not recall any of the details of this transaction. They have also confirmed the fact that they have not inherited any asset from the deceased appellant.
9. It was accordingly submitted by the ld AR that in absence of any contradictory material brought on record, the affidavit of the witness should be accepted as per Evidence Act and the `Capital Gain' be worked out on the basis of the cost of acquisition as shown in such affidavit only. Accordingly, the addition made and confirmed on the basis of arbitrary and estimated figures of Rs. 1 lac as taken by the ld. CIT(A) lac deserves to be deleted.
10. Per contra, the ld. DR submitted that the plot measures 205 sq yards and as per purchase value of Rs 18 lacs submitted by the assessee, it comes to Rs 8780/sq yard which seems excessive and unbelievable as per rates prevalent at that time.
6 ITA No. 71/JP/2018Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur Further, he has relied on the findings of the Assessing Officer as well as ld. CIT(A) and our reference was drawn to the findings of the ld. CIT(A) contained at para 6.3 of his order which is reproduced as under:
"6.3 I have gone through the assessment order, statement of facts, grounds of appeal, written submission, remand report and rejoinder carefully. It is seen that there is no dispute about the amount of sales consideration. The plot of land No. S-6 in Lakhanpuri Scheme of the Rajhans Cooperative Society Ltd. was admittedly sold by the appellant for the sales consideration of Rs. 1 crore. This fact is also verifiable with the copy of registered sale deed dated 01.02.2007 filed by the appellant. As far as the cost of the acquisition of the plot is concerned, during the course of assessment proceedings, the appellant did not furnish any evidence in respect of any cost of acquisition claimed to have been paid by the appellant. During the course of appellate proceedings, the appellant has filed copy of 'agreement to sale' between the appellant and Shri Vijendra Singh Lodi. The agreement is not registered. The agreement is also not even notarized. In the copy of the agreement given by the appellant, there is no signature of buyer or seller. It is seen from the copy of agreement filed by the appellant that the Non Judicial Stamp Paper of Rs. 100/- was purchased on 10.04.1979. The appellant has not produced even the 'original agreement to sale' for verification before the AO either during the course of assessment proceedings or remand proceedings. The AO during the course of remand proceedings had issued a letter dated 17.01.2017 to the appellant as under:-
"Please refer to the appellate proceedings pending in your case for Asstt Year 2007-08 before ld. CIT(A), Ajmer (Camp at Jaipur).
2. It is seen that you have filed a request before Ld. CIT(A) Ajmer (Camp at Jaipur) for admitting additional evidences u/r 46A of the I.T. Rules 1962. In this regard, after going through the assessment record, it is seen that during the year under consideration you had sold a land situated at plot No. S-6, Lakhanpuri Scheme, Durgapura, Tonk Road, Jaipur for a consideration of Rs.7 ITA No. 71/JP/2018
Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur 1.0 crore. During the course of assessment proceedings, you were provided enough opportunities on multiple occasions to explain your side and furnish evidences/documents in respect of cost of acquisition. However, you did not produce anything in support of cost of acquisition. As a result, whole of the sale consideration was added total income as capital gain income.
3. Now, a copy of an agreement to sell is submitted by you before appellate authority as per which you had purchased the aforementioned plot of land for Rs. 18.00 lacs on 10-04-1981 from Shri Vijendera Singh Lodi. In this regard, you are requested to explain / furnish the following.
(i) Please explain the reasons and circumstances as to why the agreement to sell dated 10-04-1981 was not produced during the course of assessment proceedings even after providing opportunities on multiple occasions.
(ii) Please also explain as to where from the copy of agreement dated 10-
04-1981 is arranged. Furnish file detailed explanation in this regard with complete facts. Please produce the original agreement for necessary examination and verification.
(iii) Please state the year from which you have started filing your return of income. Please also state the nature of business and annual incomes over the years.
(iv) It is seen that the purchase cost of plot as per agreement to sell is Rs. 18.00 lacs and the same was paid in cash on 10-04-1091. The plot measures around 205 sq. yards land per sq. yard comes at Rs. 8780/- which seems excessive/ unbelievable as per rates prevalent at that time. Please explain further the purchase cost of Rs. 18.00 was paid in cash in single instalment which is incommensurate to your annual income. Please explain how the source of purchase consideration had been arranged.
(v) It is seen that as per agreement to sell dated 10-04-1081, the plot was purchased in cash from Shri Vijendra Singh Lodi. The transaction being 8 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur executed in cash is unverifiable. Please produce Shri Vijendra Singh for examination. Please also furnish the copies of allotment letter(s), recipt of payment etc. of Raj Hans Cooperative Housing Society (received from Shri Vijendra Singh)
(vi) Please sate the name and address of the owner of house situated at 1155, Sanghi Ji Ki Gali, Chaura Rasta, Jaipur. Please explain your relation with the owner. Please produce the documents of purchase/ownership. If you are the owner of the same. Please produce the documentary evidence of the purchase/ownership.
4. Your reply/ submission should reach to this office on or before 25-01- 2017 failing which the remand report will be sent on the basis of material available on record. Kindly ensure compliance.'' The appellant neither attended the proceedings before the AO nor did he file any explanation or submission before the AO. During the course of remand proceedings, the AO also issued summons u/s 131 to Shri Vijendra Singh Lodi but Shri Vijendra Singh Lodi did not attend the proceedings before the AO. I am of the concerned view that the appellant has failed to prove the genuineness of the copy of the agreement to sales filed by him. Therefore, the copy of agreement to sell filed by the appellant as evidence to substantiate his claim that the plot of land was purchased by him on 10-04- 1981 for Rs. 18 lacs, is not accepted as valid evidence. From the copy of registered sale deed filed by the appellant , it is seen that the appellant had paid Rs. 142/- on 30-10-1981 to the Rajhans Cooperative Society Ltd. towards membership fee and transfer fee. Further, the appellant is also shown to have been paid conversion charges and penalty of Rs. 4,059/- on11-03-1982 to ZEA. Therefore, the AO is directed to allow deduction of these payments Rs. 4201/- (Rs. 142 +4059) towards cost of acquisition of the plot after allowing indexation as per the provisions of the Act. Further, I am of the considered view that even if the appellant has failed to furnish any valid and reliable document in support of any cost of acquisition having been paid 9 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur by him, yet deduction in respect of some reasonable amount of cost of acquisition that might have been paid by him for plot No. S-6 in Lakhanpuri Scheme. I am of the view that it would be fair and reasonable to estimate the cost of acquisition of the plot as on 30.10.1981 at Rs. 1 lac. According, the AO is directed to allow further deduction of Rs. 1 lac towards cost of acquisition of the plot after allowing indexation as per the provisions of the Act. This ground of appeal is decided accordingly."
11. We have considered the rival submissions as well as the relevant material on record. The limited dispute before us relates to non-grant of deduction for cost of acquisition is respect of an immovable property which has been sold by the deceased assessee. It is not in dispute that the property has been purchased by the assessee in Rajhans Cooperative Society and the assessee had subsequently applied for its membership and has paid membership fees and transfer charges in the year 1981. It is therefore not a case where the cost of acquisition cannot be ascertained. Once the sale consideration is brought to tax, it is incumbent on part of the Assessing officer to allow the deduction towards the cost of acquisition. In support of his cost of acquisition of Rs 18 lacs, the assessee has produced an agreement to sell which was entered into with Shri Vijendra Singh. Given that Shri Vijendra Singh didn't appear before the Assessing officer during the remand proceedings and the fact that per sq yard cost so submitted by the assessee at Rs 8780/sq yard was found excessive and unreasonable, the same was found not acceptable by the Assessing officer, however, no alternative cost was determined by the Assessing officer nor matter was referred to the DVO. The ld CIT(A) has given a finding that the agreement to sell was not signed by the buyer and the seller, not registered and original agreement was not submitted for verification. At the same time, he held that it would be reasonable to estimate the cost at Rs 1 lacs which comes to Rs 488/sq yards. In our view, where the Assessing officer disputes the value so submitted by the assessee, it would have been appropriate if the matter was referred to the DVO for determination of the fair market value and then, it would have provided an appropriate basis for comparing with the cost of acquisition so submitted by the assessee. Further, the ld CIT(A) has not given any basis for 10 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur estimating the cost of acquisition. The ld AR has also contended that since the assessee was incapacitated due to his ill heath and the fact that he was not aware when Shri Vijendra Singh Lodhi was summoned by the Assessing officer, he couldn't taken any action to ensure his attendance. Given the fact that the assessee has since expired, the authencity of the agreement to sell has not been established beyond reasonable doubts by the assessee, his legal heirs have also shown their inability to furnish any further evidence in support of cost of acquisition, in the interest of justice and fair play, we are of the view that the matter should be referred to the DVO to ascertain the cost of acquisition. In the result, we set-aside the matter to the file of the Assessing officer with a direction to call the report of the valuation officer for ascertaining the cost of acquisition and then decide as per law. Needless to say, the assessee through his legal heirs should be given an appropriate opportunity.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 18/10/2019.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 18/10/2019
Ganesh Kumar
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. The Appellant- Smt. Parwati Devi (Widow), Tonk
2. The Respondent - ITO, Ward-6(4), Jaipur
3. The CIT(A).
4. The CIT,
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 71/JP/2018) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 11 ITA No. 71/JP/2018 Smt. Parwati Devi (Widow), Tonk vs. ITO, Ward-6(4), Jaipur