Income Tax Appellate Tribunal - Delhi
Kalindi Woolen Mills Ltd , New Delhi vs Assessee on 13 September, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH "D" DELHI)
BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE PRESIDENT
AND SHRI A.D. JAIN, JUDICIAL MEMBER
ITA No. 4308(Del)2009
Assessment year: 2006-07
M/s. Kalindi Woolen Mills Ltd., Dy.Commissioner of Income Tax,
D-9/3, Okhla Indl. Area, Phase II, v. Cir. 5(1), New Delhi.
New Delhi-110020.
ITA No. 4309(Del)2009
Assessment year: 2006-07
M/s. Kalindi Bright Steels & Tubes Ltd. Dy.Commissioner of I. Tax,
D-9/3, Okhla Indl. Area, Phase II, v. Cir. 5(1), New Delhi.
New Delhi-110020.
(Appellant) (Respondent)
Appellant by: Shri Hiren Mehta, CA
Respondent by: Ms. Y. Kakkar & Shri Sudesh Garg, CIT,DR
ORDER
PER A.D. JAIN, J.M.
ITA No 4309 (Del)2009:
This is assessee's appeal for assessment year 2006-07 against the order dated 13.09.2009 passed by the Commissioner of Income Tax(Appeals)VIII, New Delhi, taking the following amended grounds:-2 ITA Nos. 4308 & 4309(Del)09
"1. The order passed by the Appellate Authority is bad in law andbad in facts.
2. The ld. CIT (A) has passed the order on the basis of surmises and conjectures.
3. The ld. CIT(A) while examining the applicability of section 50 C and the issue of sale consideration of land at "Circle Rate", the ld. AO and the ld. CIT(A) have not appreciated the fact that the land has actually been sold above the "Circle Rate". The facts have been mentioned in the written submissions filed by the assessee before the ld. CIT(A). The value of land measuring 6.749 hectares at the "Circle Rate" of ` 16 lakhs per hectare works out to ` 1,07,98,400/- whereas the actual sale price received from sale of land was ` 1,81,22,000/- which is much higher than the "Circle Rate". The ld. AO and the ld. CIT(A) have instead concluded that the sale was below the "Circle Rate" and proceeded on inaccurate inferences.
4. The ld. CIT(A) having observed and recorded that the two sale deeds categorically state the "Circle Rate"of land as ` 16 lakhs per hectare and also that the land value as per "Circle Rate" is ` 61,40,800/- * ` 46,57,600/- totaling to ` 1,07,98,400/-, erred om accepting the ld. AO's conclusion that the "Circle Rate" is ` 1,60,65,000/-.
5. The ld. CIT(A) failed to appreciate that merely because the rate of stamp duty on property held by firm/company is double than that held by an individual, it does not and cannot mean that there are two different "Circle Rates" of the same plot of land - one if held by an individual and another if held by a firm/company.
6. The ld. CIT(A)has failed to consider the well established view repeatedly held by the Hon'ble Supreme Court and various other High Courts that the "Circle Rate"have no statutory base or force and cannot form the foundation for determining the market value of land. In the case of "Ram Adhar v. State of UP and Ors.", the Hon'ble High Court at Allahabad and in the case of Thulasimani 3 ITA Nos. 4308 & 4309(Del)09 Ammal v. CIT and Anr." [2000] 158 CTR 0005-(Mad), the Hon'ble Madras High Court and in the case of "Ramesh Chand Bansal v. District Magistrate/Collector, Ghaziabad AIR 1999 SC 2126, the Hon'ble Supreme Court have all held this view.
7. The assessee company has taken the fair market value of the land sold as ` 66,82,955/- as on 31.03.1981 as valued by a registered valuer at the behest of banks and financial institutions at the time of OTS settlement. The ld. AO has neither given weightage to this valuation report nor considered the fair market value of the land as on 01.04.1981. The ld. CIT(Appeals) erred in upholding this view of the ld. AO."
2. Ground No.1 is general.
3. Apropos ground No.2, the assessee has contended that the ld. CIT(A) has erred in rejecting its application seeking admission of additional evidence. In this regard, as available from the impugned order, the assessee's filing of the application for additional evidence, a report was called for by the ld. CIT(A) from the AO. The assessee submitted that it could not produce the evidence sought to be produced by way of the additional evidence, before the AO, as the assessee had not been given sufficient time by the AO for producing the evidence; and that the business of the assessee had been suspended temporarily and therefore, the assessee required sometime to trace the documents.
4. The ld. CIT(A) observed that the assessee did not fulfill the requisite conditions for allowance of production of additional evidence; that though the assessee had contended that it had not allowed sufficient time to properly 4 ITA Nos. 4308 & 4309(Del)09 represent its case before the AO, this was factually incorrect; that in the assessment proceedings, the AO had allowed ample opportunity to the assessee company to file the requisite information and details which it entitled to rely on; that the assessee, instead of furnishing the information, continued to ask for adjournments on one pretext or the other; that in these circumstances, the AO had to complete the assessment on 26.12.08, as the assessment was getting time barred on 31.12.08; that non-compliance on the part of the assessee should not be permitted to form a basis for submission of additional evidence at the appellate stage, particularly where the assessee does not spell out the compelling circumstances which prevented it from submitting the evidence sought to be produced at the appellate stage, before the AO; and that further, the assessee had not submitted any particular document which was sought to be filed under Rule 46A of the I.T. Rules. In this manner, the ld. CIT(A) rejected the assessee's application for admission of additional evidence.
5. Before us, the learned counsel for the assessee has contended that it was only on 17.12.08 that for the first time, the assessee raised questions to the assessee; that the assessee had made a complete disclosure in its balance sheet, a copy of relevant portion whereof is at Assessee's Paper Book ('APB' for short). The learned counsel for the assessee has contended, as 5 ITA Nos. 4308 & 4309(Del)09 also available from the Statement of Facts filed before us, that the assessee company, Kalindi Bright Steels & Tubes Ltd., because of financial problems became sick and was registered with BIFR as case No. 60/93; that the BIFR recommended winding up of the company and the Hon'ble Delhi High Court ordered winding up of the company on 28.04.98; that vide its order dated 27.5.98, the Hon'ble High Court appointed Shri L.R. Narayanan of Canara Bank as Liquidator of the company with directions to take over the assets and books of account of the company forthwith; that the bankers of the company and financial institutions initiated recovery proceedings against the company; that during the year, the company concluded OTS proposals with the banks and financial institutions and with the permission of the Hon'ble Delhi High Court vide its order dated 17.5.05, the assessee company entered into an agreement to sell the industrial plot of land of the company; that the agreement to sell was placed before the Hon'ble High Court, in the presence of the banks and financial institutions and with the approval of the Hon'ble High Court, the property were sold to pay off the dues of the banks and financial institutions; that after settlement of the dues of the banks and the financial institutions, the Hon'ble Delhi High Court vide its order dated 22.8.05 stayed the winding up proceedings, recalled the appointment of Liquidator and directed him to hand over the possession of 6 ITA Nos. 4308 & 4309(Del)09 the assets and books of accounts of the company to its Directors; that the company was permitted to complete the legal formalities, finalise accounts, hold meetings and file necessary returns; that it was after reinstatement of possession, the company got to finalise the accounts and file the returns; that the return for assessment year 2006-07, i.e., the year under consideration, it was filed on 29.11.06, declaring net taxable income as 'nil' after set off of brought forward loss with the returned taxable income of ` 4,27,530/-; that as such, the company, including its office record, books of account and all the assets were under the control and custody of the Liquidator and remained to be so for ten to twelve years, which was beyond the control of the management of the assessee company; that the reinstatement of possession after ten to twelve years, the record and books were either not available or were in such a torn/damaged condition that they were beyond any reference or use; that on repossession, the inventories of stores/spares, tools, lubricating oil and fixed assets of the office equipment, tube well, furniture, etc. were found to have been stolen or burgled or destroyed and damaged beyond any use or value. The learned counsel for the assessee has contended that a copy of the application for admission of additional evidence, as filed before the ld. CIT(A), is at APB 8 to 14; that therein, all the facts have been narrated before the ld. CIT(A); that in the said 7 ITA Nos. 4308 & 4309(Del)09 circumstances, the AO did not provide the assessee company with sufficient time for producing the evidence sought to be produced as additional evidence before the ld. CIT(A); that the business of the assessee company having been suspended temporarily, time was required to trace the said documents; that the ld. CIT(A) has failed to take into consideration these facts, coupled with the fact that because of the temporary suspension of the assessee's business, the persons who had advanced loans were not co- operating with the assessee. It has also been contended that the one time settlement ultimately came about only in 2008. The learned counsel for the assessee has sought to place reliance on "Dwarika Prasad v. ITO", 63 ITD 1(Pat)[TM[, wherein, it had been held, inter alia, that in the day-to-day human affairs, there may be sufficient valid and explainable reasons as to why relevant evidence was not produced before the AO; and that if the Tribunal come across a crucial document like a bank account to prove all the three ingredients essential to establish the truth of the cash credits, it would not be in the interests of justice to deny admission of such crucial evidence by simply stating that it was not produced before the AO but was produced at the latest stage.
6. The ld. DR, on the other hand, has strongly supported the impugned order in this regard, contending that as correctly observed by the ld. CIT(A), 8 ITA Nos. 4308 & 4309(Del)09 the assessee never spelt out the compelling circumstances preventing it from submitting the evidence sought to be admitted as additional evidence.
7. We have heard the parties and have perused the record. We find force in the grievance of the assessee regarding the action of the ld. CIT(A) in refusing to admit the additional evidence sought to be produced by the assessee. It remains undisputed that the assessee company had become sick and was registered with BIFR . It recommended its winding up. It was, actually, ordered by the Hon'ble Delhi High Court to be wound up. A Liquidator was appointed. He took over the assets and books of account of the company. The business of the company was, therefore, temporarily suspended. It was only in 2008 that a one time settlement came about and the assessee company came out of the red. All the records had been all this while lying with the Liquidator, appointed in 1998. For over a decade, nothing moved. It was in these circumstances, that the assessee was unable to produce the relevant record before the AO. The ld. CIT(A) has rejected the assessee's application for admission of additional evidence, oblivious of these facts. Accordingly, we remit this matter to the AO for decision afresh, in accordance with law, on taking into consideration the fresh evidence filed by the assessee before the ld. CIT(A).
9 ITA Nos. 4308 & 4309(Del)09
8. Coming to ground No.3, the AO observed that the assessee had shown long term capital loss of ` 1,50,92,286/- on account of sale of land belonging to M/s. W.T.(India)Ltd., which was amalgamated with the asessee company as per the order dated 4.12.89 passed by the Hon'ble Delhi High Court. The AO observed that the sale deed dated 14.10.05 showed the sale value at ` 1,07,82,000/-, whereas as per the Circle Rate, the sale value came to ` 1,60,65,000/-. The assessee was asked to show cause as to why the Circle Rate be not taken as the value of the sale consideration of the land in accordance with section 50 C of the I.T. Act. The AO also noticed that as per the Sale Deeds, the total value for which lands had been sold, was ` 1,86,72,000/- as against ` 1,81,22,000/-.
9. Apropos the alleged difference in Circle Rate and the value for which the land had been sold, the assessee submitted that the sale value of the land was at best the prevailing market rate. The assessee had not made any claim that the value adopted or assessed by the Stamp Valuation Authority exceeded the fair market value of the property as on the date of transfer. It was stated that the valuation of land was also got done by PICUP and Bank of India. Concerning the difference between the total value for which the lands had been sold, i.e., ` 1,86,72,000/-, as against ` 1,81,22,000/-, as shown 10 ITA Nos. 4308 & 4309(Del)09 in the return, it was explained that the Sale Deed included the building amount of ` 5,50,000/-, which was depreciable asset, computed separately.
10. The AO took the Circle Rate value of the land sold at ` 1,60,65,000/- as the value of sale consideration, statedly, in view of the provisions of Section 50 C of the Act. Further, observing that the assessee had taken the fair market value of the land sold at ` 66,82,955/- as on 31.3.81; that this value had been indexed with regard to the cost inflation indices; that the assessee had in fact any basis for so valuing the land; that the respective Purchase Deeds of the lands sold had not been filed despite the assessee having been asked to do so; that so, the assessee had not established the basis for taking the fair market value of the land sold at ` 66,82,955/- as on 31.3.81. The AO, as such, took the value of land sold at ` 6,04,719/-, which was the difference of opening stock of value as on 1.4.05 at ` 9,62,935/- and closing stock as on 31.3.06, at ` 3,58,218/- as per the Schedule of fixed assets, for the purpose of calculation of capital gain on the sale of land. The capital gain was thus worked out at ` 2,28,00,281/- as against long term capital loss of ` 1,50,92,286/-, as claimed by the assessee.
11. The ld. CIT(A) confirmed the AO's action, holding that section 50 C(1) clearly provides that in a case where the consideration received and 11 ITA Nos. 4308 & 4309(Del)09 accruing as a result of transfer of a capital asset being land or building or both is less than the value adopted or assessed by the Stamp Valuation Authority for the purpose of payment of stamp duty, the AO would adopt the value so adopted by the Stamp Valuation Authority for the purpose of capital gains; and that this was what had been done by the AO in the present case.
12. Before us, the learned counsel for the assessee has contended that firstly, the ld. CIT(A) has erred in not giving any finding with regard to the cost of land taken by the AO at ` 6,04,719/- as against the fair market value of the land at ` 66,82,955/- as on 1.4.81, based on the valuation report of the Government Approved Valuer; that the area of the land sold on 14.10.05 was 3.8380 hectare ; that the Circle Rate for the land was ` 16,00,000/- per hectare; that however, for the payment of stamp duty, this rate was doubled, since the land was in the name of the firm; that the AO had taken the value of the land at ` 1,60,65,000/-, which was wrong and the AO should have taken the value of the land at ` 60,00,000/- per hectare only and not at ` 32,00,000/- per hectare, the rate having been doubled only for determining the stamp duty; that further, the ld. CIT(A) has not made any comment about the AO having not allowed any indexation benefit to the assessee while 12 ITA Nos. 4308 & 4309(Del)09 calculating the long term capital gain. It has further been contended that all the details of the land had been filed before the AO; that however, the AO did not refer the matter to the Departmental Valuation Officer. In this regard, reliance has been placed on "Chandini Bhuchar", 191 Taxmann 142(P&H), which has been upheld by the Hon'ble High Court. It has further been contended that the AO went wrong in observing that there was no basis for valuation of the land. It has been pointed out that the valuation as on 1.4.81 has been given in the copy of Valuation Report dated 26.6.06 (APB 235 - 242), which was filed before both the Authorities below. It has also been contended that the Purchase Deed as asked for by the AO could not be produced since it was with the official Liquidator and not in the possession of the assessee; that however, it was sought to be filed by way of additional evidence before the ld. CIT(A); and that however, the ld. CIT(A) failed to deal with this aspect of the matter.
13. The ld. DR, on the other hand, has placed strong reliance on the impugned order. As discussed above, since all the papers and books of account of the assessee were lying with the official Liquidator for over a decade, it had remained impossible for the assessee to produce the same before the AO and the application for additional evidence filed by the assessee before the ld. CIT(A) was rejected. While dealing with ground 13 ITA Nos. 4308 & 4309(Del)09 No.2 above, we have remitted the matter to the file of the AO, to be decided afresh in accordance with law on considering the additional evidence filed by the assessee. In accordance therewith, this issue is also remitted to the file of the AO to be decided afresh on considering the relevant evidence in accordance with law.
14. The amended ground No.4 pertains to disallowance of interest expenditure of ` 8,53,916/- paid to banks and financial institutions and rates and taxes amounting to ` 80,250/-, as per the provisions of section 43 B of the Act. The disallowance was made by the AO on account of the failure of the assessee to produce evidence of the payment and the ld. CIT(A) confirmed the AO's order.
15. The learned counsel for the assessee has submitted that the interest was paid to banks and financial institutions as a part of one time settlement which was ultimately arrived at and successfully implemented; that the assessee had also shown interest waiver income from this OTS aggregating to ` 3,17,49,880/-; that had the interest payment not been done to the banks and financial institutions, the OTS could not have come about; that while making the disallowance, the AO observed that u/s 43 B of the Act, it is allowable on payment basis; that however, in the balance sheet as on 31.3.06, there is no interest payable; that the amount in question was paid in 14 ITA Nos. 4308 & 4309(Del)09 the balance sheet and is allowable; that the details of ` 8,53,916/- are ` 8,02,215/- paid to Bank of India and ` 51,701/- paid to PICUP. Reference has been made to the details of interest paid (APB 271). Attention has also been drawn to APB 278 and 283 which are the payment certificate from Bank of India and No Due Certificate from PICUP. The learned counsel has further contended that under Rates and Taxes ` 75,000/- was paid to MCD as property tax and ` 5,250/- was paid as filing cost; and that as such, there is no case of disallowance u/s 43 B of the Act. Attention has been drawn to APB 307 to 309, which are the details of expenses and the copy of bank statement for the relevant period concerning the legal charges and Rates and Taxes.
16. Attention has also been drawn to APB 27, which is a copy of assessee's balance sheet as on 31.3.06, showing that all liabilities stood paid off . It has been pointed out that the total current liability was of ` 3.42 lakhs. It has been contended that this being so, addition of ` 8,00,000/- could not have been made. Attention has again been drawn to APB 278, which is the copy of No Due Certificate from the Bank of India, issued on 15.9.05.
17. The ld. DR, has placed strong reliance on the impugned order. 15 ITA Nos. 4308 & 4309(Del)09
18. Here again, it is seen, that the relevant evidence was sought to be placed for the first time before the ld. CIT(A), which request was rejected. In order to arrive at a correct conclusion in the matter, the AO would have to consider the evidence. Accordingly, this issue is also remitted to the file of the AO to be decided in accordance with law on considering the evidence filed by the assessee.
19. The amended ground No.5 concerns disallowance of ` 22,200/-. The AO disallowed the legal expenses of ` 22,200/- u/s 40(a)(ia) of the Act, observing that no TDS had been deducted on this amount. The ld. CIT(A) upheld the disallowance.
20. It has been contended on behalf of the assessee that the amount of ` 22,200/- constituted two small payments of ` 1,500/- and ` 700/- in respect of Sales Tax matters, made to Allahabad Bank and Ghaziabad Pleader. It has been contended that the balance amount of ` 20,000/- was paid to a Delhi High Court Lawyer and that therefore, TDS was not liable to be deducted u/s 194 J of the Act. Attention has been drawn to APB 307, which are details of expenses.
21. The ld. DR has again sought to rely on the impugned order. 16 ITA Nos. 4308 & 4309(Del)09
22. The details of the expenses were not before the AO. Therefore, the AO will examine these details now and pass a fresh order on the issue in accordance with law.
23. The amended ground No.6 pertains to disallowance of written off amounts pertaining to sundry debtors - ` 5,24,426/-, advances - ` 5,00,144/- , fixed assets - ` 1,05,129/- and inventories - ` 6,13,234/-. The disallowance was made for non-availability of evidence and it was confirmed by the ld. CIT(A).
24. On behalf of the assessee, it has been contended that full details were furnished regarding these write off and the AO went wrong in observing that no details were filed; that these details were filed before the ld. CIT(A) also; that the debtors related to Government, Semi-Government of India Fame Organisations; that the debts had arisen out of sale of steel tubes and plates and represented claims and deductions made by them on account of quality, like supply and shortages. Attention has been drawn to APB 290 to 297. APB 290 contains details of the amounts written off, whereas APB 291 to 297 are copies of ledger account. It has been further contended that the advances were in the nature of advances to Steel Authority, Telephone Department, State Electricity Board, Excise Duty, etc. It has been submitted that these advances had all been adjusted by the parties towards 17 ITA Nos. 4308 & 4309(Del)09 their claims and deductions were no longer receivable. Reference has been made to APB 298 to 306, which are the details of and Notes on the amounts written off, as also the copies of ledger account. It has been further stated that the inventories were in the nature of stores/spares, LDO and loose tools; that the assets were in the custody of the Liquidator and the Hon'ble High Court; that they were of perishable nature and required regular care and maintenance; and that the assets were abandoned and unattended too for ten to twelve years, which was beyond the control of the assessee company. Attention has been drawn to APB 284 to 287, which are the details of the amounts written off and copies of ledger account. Apropos the fixed assets written off, attention has been drawn to APB 288 to 290, containing the details of the debtors written off.
25. The ld. DR has again relied on the impugned order.
26. Here also, in keeping with the earlier years, the matter is remitted to the file of the AO to be examined and decided afresh in the light of the evidence filed by the assessee.
27. The amended ground No.7 challenges confirmation of addition of ` 67,50,000/- in respect of unsecured loans raised during the year. The AO observed that the assessee company had shown unsecured loan of ` 1,30,85,20,000/-. The assessee was asked to furnish ledger accounts, 18 ITA Nos. 4308 & 4309(Del)09 confirmations, bank statement and copy of ITR in respect of unsecured loans. The assessee could not do so, for the afore-discussed reasons. The AO held that the assessee had not discharged its burden of proving genuineness of the transactions and the credit worthiness of the identity of some of the creditors amounting to ` 70,00,000/-. The amount of ` 70,00,000/- was thus added. The ld. CIT(A) deleted the addition representing unsecured loans of ` 1,00,000/- from Ishwar Chand Rana and ` 1,50,000/- from Indian Traders Corporation. Refused to admit the additional evidence filed by the assessee, the ld. CIT(A) confirmed the balance addition of ` 67,50,000/-.
28. The learned counsel for the assessee has mentioned that the additional evidence filed before the ld. CIT(A) contained the relevant evidence with regard to the unsecured loans. Reference has been made to APB 243,244, 245 and 246 to 262, which are, respectively, confirmations from and ITR return and balance sheet of SRGP Industries Limited. Referring to APB 265 to 268, it has been submitted that these are copies of confirmation from and ITR balance sheet, Bank Statement, respectively of Sunita Bhartia. Then, APB 269 and 270 have been stated to be confirmation and certificate confirming loan from Super Lucrative Multifin (P)Ltd., Kolkata.
29. The ld. DR relies on the impugned order.
19 ITA Nos. 4308 & 4309(Del)09
30. The situation remains much the same with regard to this issue also, the evidence concerning unsecured loans could not be produced before the AO because of the afore-discussed inability of the assessee. The same was filed before the ld. CIT(A) who rejected the application for admission of additional evidence. As such, this issue too, is remitted to the file of the AO for decision afresh in accordance with law on considering the evidence filed by the assessee.
31. In view of the above, the assessee's appeal in ITA No. 4309(Del)2009 for assessment year 2006-07, is treated as allowed for statistical purposes. ITA No 4308 (Del)2009:
32. Herein, the assessee is Kalindi Woolen Mills Ltd. The appeal is for assessment year 2006-07. The grounds and issues are much the same as in ITA No. 4309(Del)2009, but for ground No.3. The grounds taken by the assessee read as follows:
"1. The order passed by the Appellate Authority is bad in law andbad in facts.
2. The ld. CIT (A) has passed the order on the basis of surmises and conjectures.20 ITA Nos. 4308 & 4309(Del)09
3. The ld. AO and ld. CIT(A) while examining the applicability of the section 50 C and the issue of sale consideration of land sold at "Circle Rate", have not applied their mind to the fact that the land has actually been sold above the "Circle Rate". The facts have been mentioned in the written submissions filed by the assessee before the ld. CIT(A). The value of land measuring 1.113 hectare as per "Circle Rate" of ` 16 lakhs per hectare works out to ` 17,80,800/- and the actual sale price received from sale of land was ` 32,63,000/- which is much higher than the "Circle Rate". The ld. AO and the ld. CIT(A) have surprisingly concluded that the sale was below the "Circle Rate" which is contrary to facts.
4. The ld. CIT(A) failed to appreciate that merely because the rate of stamp duty on property held by firm/company is double than that held by an individual, it does not and cannot mean that there are two different "Circle Rates" of the same plot of land -one if held by an individual and another if held by a firm/company.
5. The ld. CIT(A) has failed to consider the well established view repeatedly held by the Hon'ble Supreme Court and various other High Courts that the "Circle Rate" have no statutory base or force and cannot form the foundation for determining the market value of land. In the case of "Ram Adhar v. State of UP and Ors.", the Hon'ble High Court at Allahabad and in the case of Thulasimani Ammal v. CIT and Anr." [2000] 158 CTR 0005-(Mad), the Hon'ble Madras High Court and in the case of "Ramesh Chand Bansal v. District Magistrate/Collector, Ghaziabad AIR 1999 SC 2126, the Hon'ble Supreme Court have all held this view."
33. Ground No. 1 is general.
34. Ground No. 2 corresponds to ground No.2 in ITA No. 4309(Del)2009. Our observations with regard to ground No.2 in ITA No. 4309(Del)2009 are squarely applicable, the facts and circumstances herein being the same as in that case. Accordingly, ground No. 2 is accepted and the additional 21 ITA Nos. 4308 & 4309(Del)09 evidence filed by the assessee is remitted to the file of the AO to be entertained and examined and dealt with issue-wise.
35. Ground No.4 states that the ld. CIT(A) has erred in confirming the disallowance of administrative expenses aggregated to ` 10,85,944/-. The disallowance was made, again, for the assessee not having produced the relevant details before the AO. The details of the administrative expenses disallowed are at APB 77 to 91 [for ITA No. 4308(Del)09]. These contain details of interest to banks and financial institutions, No Due Certificate dated 15.9.05 of Bank of India, letter dated 17.6.05 of the assessee to Bank of India for payment of interest along with copy of cheque, letter dated 3.9.05 from the assessee to UPFC for interest payment under OTS details of amounts written off and other expenses, the receipts issued by ROC for fees paid for filing documents and copy of bank statement of the assessee for assessment year 2006-07.
36. In the facts and circumstances discussed while dealing with ITA No. 4309(Del)09, this issue is remitted to the file of the AO to be decided afresh in accordance with law on considering evidence produced by the assessee by way of additional evidence before the ld. CIT(A).
37. Ground No. 5 states that the ld. CIT(A) has erred in confirming the addition of ` 51,10,000/- in respect of unsecured loans. This issue 22 ITA Nos. 4308 & 4309(Del)09 corresponds to the amended ground No.7 in ITA No. 4309(Del)09, for similar reasons as discussed therein, this issue is also remitted to the file of the AO to be decided afresh in accordance with law on entertaining and considering the evidence filed by the assessee. It has been pointed out that APB 69 to 76 contain all the relevant documents with regard to the unsecured loans. These documents are balance confirmation of M/s. Kalindi International, acknowledgement of return of income filed by Kalindi International for assessment year 2006-07, balance confirmations of Kalindi International, Hi Fi Trade Com Pvt. Ltd., now known as Octal Suppliers Pvt. Ltd., return of income e-filed by M/s. Octal Suppliers Pvt. Ltd. For assessment year 2006-07, balance confirmation of M/s. Tripti Merchants Pvt. Ltd., acknowledgement of return of income e-filed by Tripti Merchants Pvt. Ltd. for assessment year 2006-07, details of brought forward unsecured loans of ` 45,000/- from Ritu Delmia, documents pertaining to administrative expenses disallowed, details of interest to Bank and FI, copy of No Due Certificate of Bank of India dated 15.9.2005, copy of letter dated 17.8.2005 of appellant to Bank of India for payment of interest along with copy of cheque, copy of letter dated 30.9.2005 of appellant to UPFC for interest payment under OTS settlement, details of amount written off and other expenses, copies of receipts issued by Registrar of Companies (ROC) 23 ITA Nos. 4308 & 4309(Del)09 for fees paid for filing documents and copy of Bank Statement of the appellant for A.Y. 2006-07
38. Ground No. 3 states that the ld. CIT(A) has erred in confirming the capital gain of ` 57,83,640/- computed by the AO u/s 50 C of the Act. It has been contended on behalf of the assessee that it was not taken in the original grounds of appeal filed by the assessee before the ld. CIT(A), it was taken as an additional ground by way of the assessee's written submissions dated 7.9.09 (APB 6). The impugned order, however, does not even consider it.
39. It is seen that the contention on behalf of the assessee is correct. Though this issue was not taken before the ld. CIT(A) in the original grounds of appeal filed, it was raised as an additional ground in the written submissions dated 7.9.09 filed by the assessee before the ld. CIT(A) (copy at APB 1 to 3, relevant portion at page 2), stating as follows:-
"Issue II -Applicability of section 50 C with regard to sale of property.
The learned AO has made mathematical errors and assumed inaccurate figures while invoking the provisions of section 50 C of the I.T. Act, 1961.
i) The Sale Deed of 14.10.2005 shows (a)the Circle Rate of land as ` 16 lakhs per hectare, (b) the area sold as 1.113 hectare, (c) the land value as per Circle Rate to be ` 17,80,800/-, (d) the Circle Value doubled to ` 35,61,600/- for stamp duty purposes as the property belonged to a firm/company and not to any individual, (e) the assessed value of old boundary wall as ` 1 lakh and 30 year old, broken and dilapidated factory building as ` 24,53,000/-, and (f) 24 ITA Nos. 4308 & 4309(Del)09 the total of land value + boundary wall + factory building, after rounding off, as ` 61,15,000/- for levy of stamp duty. The sale deed of 14.10.05 shows (a) the Circle Rate of land as ` 16 lakhs per hectare, (b) the area sold as 1.113 hectare, (c) the land value as per Circle Rate to be ` 17,80,800/-.
ii) Thus the sale deeds of 14.10.05 records the land value as per Circle Rate as ` 17,80,800/-.
iii) The actual sale value received by the company is ` 37,63,000/-. If the value of factory building ` 5,00,000/- is excluded, then the sale value received for the land comes to ` 32,63,000/-, i.e., higher than the Circle Rate.
iv) The learned AO could not appreciate this point while framing the assessment order.
v) The learned AO has accepted the factory building sale value at ` 5,00,000/- and therefore, this needs no explanation.
vi) The observation of the learned AO that the purchase price of the land has not been disclosed by the company is incorrect. This value has been mentioned even in the computation filed with the return. The purchase deeds are customarily handed over to the buyer.
vii) That the ld. AO has made inaccurate inferences andmathematical errors.
viii) The valuation basis of 31.3.81 as contained in the valuation report was duly filed before the ld. AO but ignored by him. The valuation report clearly stated that the market value of land at ` 11,31,350/- which was the basis for calculating the cost of acquisition."
25 ITA Nos. 4308 & 4309(Del)09
40. Further, APB page 6 is the assessee's request dated 7.9.09 before the ld. CIT(A) for admission of the following additional ground:-
"The AO invoked section 50 C of the Income Tax Act, 1961 by assuming the Circle Rate as the sale value of the land whereas the land was sold at market rate which is a price below the Circle Rate. The assessee during the course of assessment proceedings requested the AO to refer the valuation to a Valuation Officer as per the provisions laid down in section 50 C but the AO did not accede to the request and completed the assessment without observing the due process of law and violating then principles of natural justice."
41. In the impugned order, however, the ld. CIT(A) has not considered the aforesaid additional ground raised by the assessee. The matter, in our considered opinion, requires adjudication at the end of the AO and so along with all the other issues, this issue is also remitted to the file of the AO for fresh adjudication in accordance with law on affording adequate opportunity of hearing to the assessee.
42. Therefore, ITA No 4308 (Del)2009 is also allowed for statistical purposes.
26 ITA Nos. 4308 & 4309(Del)09
43. In the result, both the appeals of both the assessees are allowed for statistical purpose, as indicated.
Order pronounced in the open court 02.12.2011.
Sd/- sd/-
(G.E. Veerabhadrappa) (A.D. Jain)
President Judicial Member
Dated: 02.12.2011.
*RM
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
True copy
By order
Dy. Registrar