The Dy.CIT, Agra v. Sri Amit Jain, Agra

ITA 300/AGR/2009 | 2005-2006
Pronouncement Date: 18-03-2011 | Result: Dismissed

Appeal Details

RSA Number 30020314 RSA 2009
Assessee PAN ADWPJ8978M
Bench Agra
Appeal Number ITA 300/AGR/2009
Duration Of Justice 1 year(s) 7 month(s) 24 day(s)
Appellant The Dy.CIT, Agra
Respondent Sri Amit Jain, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 18-03-2011
Date Of Final Hearing 20-01-2011
Next Hearing Date 20-01-2011
Assessment Year 2005-2006
Appeal Filed On 24-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO. 300 /AGRA/2009 ASSTT. YEAR : 2005-06 DY. COMMISSIONER OF INCOME-TAX VS. SHRI AMIT JAI N CENTRAL CIRCLE AGRA. 17-18 GOPAL KUNJ NEW AG RA. (PAN ADWPJ 8978 M) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI HOMI RAJVANSH CIT DR. FOR RESPONDENT : SHRI K.C. AGARWAL ADVOCATE. ORDER PER BENCH: THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORD ER OF CIT(A) DATED 02.04.2009 FOR A.Y. 2005-06. 2. FIRST ISSUE INVOLVED IN GROUND NO. 1 & 1(I) IN APPEAL RELATES THE DELETION OF ADDITION OF RS.36 44 852/- MADE U/S. 45(2) OF THE INCOME-TAX AC T. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY DALALI CAPITA L GAINS ON SALE OF LAND AND OTHER SOURCES. A SEARCH U/S. 132(1) WAS CONDUCTED AT THE BUSINESS AN D RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS FAMILY MEMBERS THE ASSESSING OFFICER ISSUED NOTICE U/S. 153A ON 24.07.2007 IN RESPONSE TO WHICH THE ASSESSEE FILED RETURNS OF INCOME ON 20.08 .2007 DECLARING THE INCOME OF RS. 11 48 640/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD PURCHASED A LAND AT BASAI ON 24.08.2001 FOR RS.1 89 182/- AS SHOWN IN THE BALANC E SHEET AS ON 31.03.2002. THIS LAND WAS SOLD ON 26.08.2004 FOR RS.12 00 000/- TO SHRI KALYAN SIN GH PATHAK & SURESH CHANDRA PATHAK AND THUS THE ASSESSEE HAD SHOWN PROFIT OF RS.10 10 818 /- ON THIS SALE OF LAND UNDER THE HEAD INCOME 2 FROM BUSINESS OR PROFESSION. THE VALUATION OF THIS PROPERTY FOR THE STAMP PURPOSES WAS RS.38 75 000/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN THIS LAND AS HIS ASSET TILL 31.03.2004 AND IT WAS IN THE YEAR 2004-05 THAT HE FIRST TIME CONVERTED THIS CAPITAL ASSET INTO STOCK IN TRADE. THEREFORE THE CAPITAL GAINS WAS TO BE WORKED OUT AS PER SECTION 45(2) OF THE ACT AND COMPUTED THE SAME AS UNDER : STEP 1. COST OF LAND AS SHOWN BY ASSESSEE IN HIS R ETURN FOR DIFFERENT YEARS 1 89 182/- STEP 2. AS THE LAND WAS SOLD IN THE YEAR 04-05 TH E INDEX COST OF ACQUISITION COMES TO 2 03 148/ - 1 89 182 X 480 447 STEP. 3. IN THE YEAR OF CONVERSION THE VALUE OF THE LAND OF THE ASSESSEE AS NOTIFIED BY DISTRICT AUTHORITIES WAS RS.38 75 000/-. STEP 4. THUS THE LONG TERM CAPITAL GAIN AS PER PRO VISIONS OF SECTION 45(2) COMES TO RS.38 75 000 - 2 03 148 = RS.36 44 852/- THE ASSESSING OFFICER ADDED THE LONG-TERM CAPITAL G AINS AT RS.36 44 852/- WITH THE OBSERVATION THAT THE BUSINESS INCOME OF RS.10 10 818/- SHOWN BY ASSESSEE SHALL NOT BE CONSIDERED WHILE COMPUTING TOTAL INCOME OF ASSESSEE. 3. THE CIT(A) HAS DELETED THE ADDITION WITH THE OBS ERVATION THAT THE IMPUGNED LAND ACQUIRED FOR RS.1 89 182/- ON 24.08.2001 HAS BEEN S HOWN TO BE THE STOCK IN TRADE IN THE BALANCE SHEET AND THIS LAND WAS SOLD FOR RS.12 00 000/- ON 26.08.2004. THUS THE PROFIT ON THE SALE OF THIS LAND OF RS.10 10 818/- HAS BEEN SHOWN BY THE ASSESS EE AS BUSINESS INCOME AS THE ASSESSEE IS RUNNING A REAL ESTATE BUSINESS AND SECTION 50C IS N OT APPLICABLE IN THE CASE OF A DEALER OF REAL 3 ESTATE. THE CIT(A) FURTHER OBSERVED THAT EVEN IF TH E CONVERSION OF LAND IN STOCK-IN TRADE IS TAKEN INTO ACCOUNT AS ON 14.02.2004 AT THE VALUE OF RS.38 75 000/- RESULTING INTO LONG-TERM CAPITAL GAIN OF RS.36 44 852/- THEN THE ACTUAL SALE OF RS.12 00 000/- WILL HAVE TO BE DEDUCTED FROM 38 75 000/- WHICH WILL RESULT THE BUSINESS LOSS OF RS.26 75 000/- WHICH SHALL BE ADJUSTED U/S. 71 OF THE ACT AGAINST THE LONG-TERM CAPITAL GAINS OF R S.36 44 852/- COMPUTED BY AO. THIS ADJUSTMENT WILL RESULT INTO LONG-TERM LOSS OF RS.9 69 853/- AS AGAINST BUSINESS PROFIT OF RS.10 10 818/- SHOWN TAXABLE AT NORMAL RATE OF ABOU T 30% INSTEAD OF SPECIAL RATE OF CAPITAL GAIN OF RS.20%. THUS IT WILL RESULT INTO LOSS OF REVEN UE. HE THEREFORE DELETED THE ADDITION MADE ON ACCOUNT OF LONG-TERM CAPITAL GAINS. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER WHILE SE NDING THE REMAND REPORT HAS NOT MADE ANY COMMENTS ON THE WRITTEN SUBMISSIONS OF ASSESSEE THA T THE ASSESSEE IS A DEALER IN REAL ESTATE AND NOT AN INVESTOR AND THEREFORE THE PROVISIONS OF SE CTION 50C ARE NOT ATTRACTED IN HIS CASE AND THAT THE LAND WAS KEPT AS STOCK IN TRADE SINCE THE VERY BEGINNING AS IT WAS A BUSINESS ASSET. THE LEARNED DR ALSO DID NOT REBUT THE CATEGORICAL FINDI NG GIVEN BY THE CIT(A) THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE EXCUSE U/S. 45(2) WHICH RESULTS INTO LOSS OF REVENUE. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO MATERIAL ON RECORD WHICH MAY LEAD US TO INTERFERE IN THE ORDER OF LEARNED CIT(A). THUS THIS GROUND IN REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE INVOLVED IN GROUND NO. 2 2(I) & 2(II) RELATES TO DELETION OF RS.50 000/- OUT OF TOTAL ADDITION OF RS.70 000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT AND EXPENDITURE IN MOTORCYCLE. THE BRIEF FACTS ARE THAT THE ASSESSEE P URCHASED A MOTORCYCLE BEARING NO. UP 80AD 4 1361 IN THE YEAR 2004-05 FOR RS.60 000/-. ON BEING ASKED TO EXPLAIN THE SOURCE OF INVESTMENT THE ASSESSEE REPLIED THAT THE MOTORCYCLE WAS PURCHA SED OUT OF PETTY GIFTS RECEIVED BY HIM. FOR WANT OF DETAILS/EVIDENCE OF SUCH GIFTS THE ASSESSI NG OFFICER TREATED THE INVESTMENT AS UNEXPLAINED. AFTER ESTIMATING THE EXPENDITURE OF R S.10 000/- ON RUNNING AND MAINTENANCE OF MOTORCYCLE THE ASSESSING OFFICER ADDED A SUM OF RS .70 000/- ON THIS ACCOUNT OUT OF WHICH THE LEARNED CIT(A) DELETED RS.50 000/- AND KEEPING IN VIEW POSSIBILITY OF SUPPRESSION SUSTAINED THE ADDITION AT RS.20 000/-. 6. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IN HIS WRITTEN SUBMISSIONS FURNISHED BEF ORE THE LD. CIT(A) THE ASSESSEE STATED THAT THE ALLEGED MOTORCYCLE WAS NOT NEW BUT AN OLD ONE WHIC H COULD NOT BE MORE THAN RS.20 000/- TO 30000/-. IT WAS ALSO PLEADED THAT THE ASSESSEE BEIN G THE YOUNGEST SON OF HIS FAMILY ACCUMULATED FUNDS OUT OF PETTY GIFTS RECEIVED AT VARIOUS OCCASI ONS FROM PARENTS RELATIVE AND FRIENDS AND INVESTED THE SAME IN PURCHASE OF MOTORCYCLE AND IT WAS NOT POSSIBLE TO GIVE THE DETAILS OF SUCH GIFTS WHICH WERE RECEIVED FROM TIME TO TIME AT VARI OUS OCCASIONS. IN OUR OPINION THE CIT(A) HAS RIGHTLY OBSERVED THAT THE AFORESAID SUBMISSIONS SUP PORTED BY ANNEXURES HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT. THE LD. CIT(A) HAS ALSO FOUND THAT THE IMPUGNED MOTORCYCLE WAS AN OLD ONE. HE THEREFO RE KEEPING IN VIEW THE SUBMISSIONS MADE BY ASSESSEE AND ALSO THE POSSIBILITY OF SUPPRESSION FOR WANT OF COMPLETE DETAILS OF GIFTS HAS DELETED THE ADDITION OF RS.50 000/- AND SUSTAINED I T TO THE EXTENT OF RS.20 000/- WHICH IN THE FACTS AND CIRCUMSTANCES ATTENDING TO THE CASE IN OUR OPINION IS QUITE JUSTIFIED AS THE FINDINGS OF MOTORCYCLE BEING OLD AND ACCUMULATION OF GIFTS RECO RDED BY LD. CIT(A) HAS NOT BEEN CHALLENGED BY THE REVENUE BY PLACING ANY COGENT MATERIAL ON RE CORD. THUS THIS GROUND STANDS DISMISSED. 5 ITA NO. 300 /AGRA/2009 7. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 18.03.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH MARCH 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY