Deepa Bhupatrai Shah, Bhavnagar v. The ACIT.,Circle-1,, Bhavnagar

ITA 631/AHD/2008 | 2004-2005
Pronouncement Date: 31-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 63120514 RSA 2008
Assessee PAN ABIPV3317J
Bench Ahmedabad
Appeal Number ITA 631/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 11 day(s)
Appellant Deepa Bhupatrai Shah, Bhavnagar
Respondent The ACIT.,Circle-1,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 31-05-2010
Date Of Final Hearing 10-05-2010
Next Hearing Date 10-05-2010
Assessment Year 2004-2005
Appeal Filed On 18-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' [BEFORE SHRI T K SHARMA JM & SHRI A N PAHUJA AM] ITA NO.631/AHD/2008 (ASSESSMENT YEAR:-2004-05) DEEPA BHUPATRAI SHAH 2559 POOJA ANJALI CO-OP. HOUSING SOCIETY HILL DRIVE BHAVNAGAR [PAN:ABIPV3317J] V/S ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1 BHAVNAGAR [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI B R POPAT AR REVENUE BY:- SMT. NEETA SHAH DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATE D 05-11-2007 OF THE LD. CIT(APPEALS)-XX AHMEDABAD RA ISES THE FOLLOWING GROUNDS :- THE HONBLE CIT(A) HAS ERRED IN 1. CONFIRMING THE ACTION OF THE AO IN REJECTING THE LEGITIMATE REQUEST CUM CLAIM OF THE APPELLANT TO TREAT THE CAPITAL GAIN AS LONG TERM CAPITAL GAIN AS THE RIGHTS OVER THE CAPITAL ASSETS WERE CLEARLY ACQUIRED IN THE MONTH OF JUNE 1993. 2. CONFIRMING THE ACTION OF AO IN TREATING THE CASH COMPONENT OF THE CONSIDERATION IN RESPECT OF THE TRANSFER OF THE CAP ITAL ASSETS AS UNEXPLAINED CASH CREDIT THUS SUBJECTING THE SAME T O SEPARATE ADDITION UNDER SECTION 68. 3. NOT ADJUDICATING THE THIRD GROUND OF APPEAL AS TAKEN UP BY THE APPELLANT BEFORE HIM. CONSIDERING THE FACTS OF THE CASE AND THE LEGAL POSITION HE OUGHT TO HAVE HELD THAT IF THE CASH CO MPONENT OF THE CONSIDERATION IS TO BE TREATED AS UNEXPLAINED CASH CREDIT A CORRESPONDING REDUCTION IN THE TRANSFER PRICE HAS T O BE GIVEN THUS REDUCING THE RESULTANT CAPITAL GAIN BY THAT AMOUNT. 4. REJECTING THE FOURTH GROUND OF APPEAL OF THE APP ELLANT ABOUT THE ORDER BEING NOT ENFORCEABLE AS THE SAME WAS SERVED UPON THE APPELLANT MUCH AFTER THE LIMITATION PERIOD. ITA NO.631/AHD/2008 2 5. IN CONFIRMING THE ACTION OF THE DEPARTMENT IN CH ARGING INTEREST U/S 234B OF THE ACT DESPITE THE FACT THAT THERE HAS BEEN NO SPECIFIC MENTION THEREOF IN THE BODY OF THE ASSESSMENT ORDER. THE ASSESSEE CRAVES LEAVE TO ADD AMEND DELETE OR ALTER ONE MORE GROUNDS OF APPEAL. 2 ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING IN COME OF RS.5 58 880/- FILED ON 28/07/2004 BY THE ASSESSEE HAVING TUTION AND INTEREST INCOME BESIDES SHORT TERM CAPITAL GAINS W AS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] ON 2 6.7.2005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER [AO IN SHORT] FOUND A NOTE ANNEXED WITH THE RETURN REVEAL ING AS UNDER: 1. 'THE UNDERSIGNED HAD ACQUIRED RIGHTS OVER AN IMM OVABLE PROPERTY IN THE MONTH OF JUNE 1993 WHICH WAS UNDE R CONSTRUCTION AT MUMBAI AT THE RELEVANT POINT OF TIM E. THESE RIGHTS WERE ACQUIRED JOINTLY WITH SHRI KISHOR CHIMANLAL PAREKH (ADDRESS : 8-2 VERMA VILLA CO OP HSG. SOC. LTD VITHALBHAI ROAD VILE PARLE (WEST) MUMBAI - 400 056 PAN : AAFPP6377C). IN THE RATIO OF 3:1 BY PAYING A SUM OF RS.176000/- (BEING 75% OF AN AGGREGATE AMOUNT OF RS.234000/- THE BALANCE HAVING BEEN PAID BY SHRI K.C.PAREKH) ON 23RD JUNE 1993 TO M/S.DESAI BUILDERS OF 10 LABH KUNJ LAJPATRAI ROAD (NORTH) VILLE PARLE (WEST) MUMBAI. THIS PAYMENT W AS MADE BY CROSSED ACCOUNT PAYEE DEMAND DRAFT AND THE SAME WAS SOURCED FROM OUT OF MY CREDIT BALANCE LYIN G WITH THE BANKING ACCOUNT MAINTAINED BY ME WITH THE BHAVNAGAR BRANCH OF UNION BANK OF INDIA. THE CONTRA CT SUBJECT MATTER OF THE AFORESAID PAYMENT OF INSTALLM ENT FOR BOOKING THE RIGHTS OVER THE IMMOVABLE PROPERTY WAS SUBSEQUENTLY REDUCED IN WRITING BY EXECUTING A SATA KAT ON STAMP PAPER OF PRESCRIBED VALUE AND GETTING THE SAME REGISTERED WITH THE OFFICE OF THE JOINT SUB REGISTR AR MUMBAI. COPY OF THE INDEX IN THIS REGARD IS ENCLOSE D HEREWITH FOR THE PURPOSE. THIS REGISTRATION WAS DON E ON NOVEMBER 07 2001 (COPY OF AGREEMENT ENCLOSED HEREWITH). ITA NO.631/AHD/2008 3 2. THE RIGHTS OVER THE AFORESAID IMMOVABLE PROPERTY JOINTLY HELD WITH K.C.PAREKH HAVE BEEN TRANSFERRED DURING T HE YEAR IN FAVOUR OF SHRI KETAN RAMESHCHANDRA JATAKIA AND SHRI BHAVESH RAMESHCHANDRA JATAKIA RESIDENT OF MUMBAI. 3. THE PROPORTIONATE AMOUNT OF THE CASH COMPONENT O F THE CONSIDERATION RECEIVED BY THE UNDERSIGNED HAS BEEN UTILIZED IN FULL FOR MAKING PART PAYMENT OF THE UNP AID CONSIDERATION OF THE PURCHASE PRICE. THE PROPORTION ATE AMOUNT OF THE BALANCE UNPAID CONSIDERATION AMOUNTIN G RS.132150/- HAS BEEN PAID TO THE BUILDER BY WITHDRA WING THE EQUIVALENT AMOUNT FROM MY BANKING ACCOUNT ON SEPTEMBER 15 2003 4. THOUGH THE RIGHTS OVER THE AFORESAID PROPERTY WE RE ACQUIRED IN THE MONTH OF JUNE 1993 WHEN THE INITIA L PAYMENT WAS MADE TO THE BUILDER CONSIDERING THE FA CT THAT THE SATAKHAT WAS EXECUTED AND GOT REGISTERED A S LATE AS ON NOVEMBER 2001 THIS IS BEING TREATED A CASE O F SHORT TERM CAPITAL GAINS AS A MATTER OF ABUNDANT CA UTION AND THE TAX IS BEING PAID ACCORDINGLY. 5. THE SALES CONSIDERATION BEING DISCLOSED IS IN AC CORDANCE WITH THE PREVAILING MARKET PRICE OF THE PROPERTY A S CERTIFIED BY THE STAMP VALUATION AUTHORITY AT MUMBA I.' 2.1 THEREAFTER THE ASSESSEE IN HER SUBMISSIONS DATED 04.01.2006 REITERATED WHAT WAS STATED IN THE AFORESAID NOTE A TTACHED WITH THE RETURN. IT WAS ALSO MENTIONED IN THE SUBMISSIONS TH AT THE PROPORTIONATE AMOUNT OF THE CASH COMPONENT OF THE C ONSIDERATION RECEIVED BY THE ASSESSEE HAD BEEN UTILIZED IN FULL FOR MAKING PART PAYMENT OF UNPAID CONSIDERATION OF THE PURCHASE PRI CE. ON ENQUIRIES FROM SHRI KETAN RAMESHCHANDRA JATAKIA AND SHRI BHAV ESH RAMESHCHANDRA JATAKIA MUMBAI THE PURCHASERS OF TH E FLAT NO. 905 ASOPLAV SV ROAD BORIVALI(W) MUMBAI THESE PURC HASERS REPLIED ON 06.12.06 THAT THEY EACH HAD 50% SHARE IN THE SAID FLAT PURCHASED ON 04.09.2003 FOR A CONSIDERATION OF RS.1 0 08 000/- PAID THROUGH PO/CHQ. THEY ALSO ENCLOSED A COPY OF RECEIP T SIGNED ON 06.09.2003 ON REVENUE STAMP BY SHRI KISHOR C. PAREK H AND FOR MRS. DEEPA B. SHAH THROUGH HER CONSTITUTED ATTORNEY MR.V ASANT D. SHAH ITA NO.631/AHD/2008 4 AT MUMBAI REPRODUCED ON PAGE-4 OF THE ASSESSMENT O RDER AND FURTHER DENIED TO HAVE PAID ANY CASH TO THE ASSESSE E.. 2.2 THE ASSESSEE WHILE DRAWING ATTENTION TO HE R LETTER DATED 25- 11-2006 SUBMITTED THAT GAINS ON TRANSFER OF HER RIG HTS BE TREATED AS LONG TERM CAPITAL GAINS. HOWEVER THE AO DID NOT AC CEPT THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HERSELF CORRECTLY TREATED THE TRANSACTION AS SHORT TERM CAP ITAL GAIN IN TERMS OF THE SATAKHAT REGISTERED ON 07.11.2001 A COPY OF WHICH WAS ALSO FILED BY THE ASSESSEE.. THEREAFTER ON ACCOUNT OF SUBSEQUENT DEV ELOPMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CHA NGED HER STAND AND HAS REQUESTED TO TREAT THE CAPITAL GAIN AS LONG TERM RA THER THAN SHORT TERM WHICH HAD BEEN CORRECTLY SHOWN BY HER IN THE RETURN OF INCOME FILED. THE AO WHILE POINTING OUT TO THE DETAILS OF THE FOLLOWING PAYMENTS TO DES AI BUILDERS MUMBAI SR. NO. DATE MODE OF PAYMENT AMOUNT RS. REMARKS 1 23-06-1993 DEMAND DRAFT CHEQUE 1 76 000 58 000 FROM DEEPA SHAH FROM K C PAREKH 2 04-09-2003 CASH CHEQUE 3 29 250 2 09 750 FROM DEEPA SHAH FROM K C PAREKH 3 16-09-2003 CASH 1 31 650 44 550 FROM DEEPA SHAH FROM K C PAREKH TOTAL 8 49 200 CONCLUDED THAT SINCE A MAJORITY OF THE PAYMENTS WER E MADE IN THE F.Y.2003-04 AND THE SATAKHAT WAS EXECUTED AND REGISTERED ON 07. 11.2001 THE REQUEST OF THE ASSESSEE FOR TREATING THE PROCEEDS FROM SALE OF PRO PERTY AS LONG TERM INSTEAD OF SHORT TERM IS NOT ACCEPTED. ITA NO.631/AHD/2008 5 3. ON APPEAL THE ASSESSEE WHILE REITERATING THEIR CONTENTIONS BEFORE THE AO SUBMITTED THAT THE ASSESSEE HAD ACQUI RED RIGHTS OVER THE AFORESAID IMMOVABLE PROPERTY IN MUMBAI IN THE MONT H OF JUNE 1993 JOINTLY WITH SHRI KISHOR CHIMANLAL PAREKH IN THE RATIO OF 3:1 BY PAYING A SUM OF RS.1 76 000/- (BEING 75% OF AGGREGATE AMOUNT OF RS.2 34 000/- TH E BALANCE INSTALMENT HAVING BEEN PAID BY SHRI K. C. PAREKH) ON 23 RD JUNE 1993 TO M/S DESAI BUILDERS OF MUMBAI BEING THE BUILDER OF THE PROPERTY. THIS PAY MENT WAS MADE BY CROSSED ACCOUNT PAYEE DEMAND DRAFT AND THE SAME WAS SOURCED OUT OF THE CREDIT BALANCE LYING WITH THE BANK ACCOUNT REGULARLY MAINT AINED BY THE ASSESSEE. THE FACT OF THE AFORESAID MENTIONED EARNEST MONEY DEPOS IT HAVING BEEN RECEIVED BY THE BUILDER WAS ALSO MENTIONED IN THE REGISTERED SA TAKHAT EXECUTED LATER IN THE MONTH OF NOVEMBER 2001. SINCE THE ASSESSEE HAD TR ANSFERRED HER AFORESAID RIGHTS DURING THE YEAR UNDER CONSIDERATION IN FAVOU R OF SHRI KETAN RAMESHCHANDRA JATAKIA AND SHRI BHAVESH RAMESHCHANDR A JATAKIA OF MUMBAI THE GAINS SO ARISING WERE LONG TERM CAPITAL GAINS PARTICULARLY WHEN THE AO INDEPENDENTLY ASCERTAINED THE FACTS DIRECTLY FROM THE BUILDER. AFTER CONSIDERING THESE SUBMISSIONS THE LD. CIT(A) CONCLUDED AS UNDE R: 4 I HAVE CONSIDERED THE FACTS OF THE CASE ASSESSI NG OFFICER'S DINGS HIS OBSERVATIONS IN THE ASSESSMENT ORDER DETAILED SUBMISSIONS / ARGUMENTS MADE BY THE APPELLANT BEFORE THE ASSESSIN G OFFICER AS WELL AS BEFORE ME. IT IS SEEN THAT FOR THE PROPERTY UNDER C ONSIDERATION MAJOR PORTION OF CONSIDERATION WAS PAID BY THE APPELLANT AND HER JOINT OWNER IN THE FY 2003-04. THE PROPERTY WAS AGREED TO BE PURCH ASED FROM THE BUILDER JOINTLY BY SMT. DEEPABEN B. SHAH (THE APPEL LANT) AND ONE OTHER SHRI K.C. PAREKH. AS REGARDS RIGHT OVER THE PROPERT Y AS CLAIMED BY THE APPELLANT IT IS NOT CLARIFIED AS TO HOW IN THE JOI NT NAME RIGHTS WERE ASSIGNED IN 1993. THE APPELLANT HAS HERSELF AT VERY FIRST TIME WHILE FILING THE RETURN OF INCOME ON 28-7-2004 CLAIMED SHORT TER M CAPITAL GAINS ONLY ON SALE OF PROPERTY. THE SAID PROPERTY WAS NEVER IN PO SSESSION OF THE APPELLANT AND THE JOINT OWNER. FINALLY IT WAS SOLD BY THE BUILDER ON 7-11- 2001. NOT ANY DOCUMENT REGARDING PROPERTY ISSUED I N 1993 HAS BEEN FILED BY THE APPELLANT TO SUBSTANTIATE THE CLAIM OF THE A PPELLANT WITH REGARD TO LONG TERM CAPITAL GAIN. 4.1 IN VIEW OF ALL THESE FACTS IT IS CLEAR THAT TH ERE AROSE ONLY SHORT TERM CAPITAL GAINS AND NOT LONG TERM CAPITAL GAINS. THE CONTENTION AND THE APPELLANT'S CLAIM OF LONG TERM CAPITAL GAIN AND BEN EFIT OF INDEXATION IS THEREFORE REJECTED. ITA NO.631/AHD/2008 6 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED AR ON BEHAL F OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE CIT( A) CONTENDED THAT SINCE THE RIGHTS OVER THE FLAT AT MUMBAI WERE ACQUI RED WAY BACK IN THE MONTH OF JUNE 1993 BY PAYING THE DEPOSIT AMOU NT BY CROSSED ACCOUNT PAYEE CHEQUE TO THE BUILDER OF THE SCHEME THE RESULTANT GAIN WAS IN THE NATURE OF LONG TERM CAPITAL GAIN. I T WAS POINTED OUT THAT THE AFORESAID LONG TERM CAPITAL GAIN WAS ORIG INALLY TREATED AS SHORT TERM CAPITAL GAIN ALBEIT AS A MEASURE OF ABU NDANT CAUTION AS MENTIONED IN THE NOTES FORMING PART OF THE RETURN O F INCOME. TO A QUERY BY THE BENCH THE LD. AR ADMITTED THAT THE AS SESSEE DID NOT HAVE ANY EVIDENCE IN THE FORM OF AGREEMENT OR REC EIPT OF PAYMENT TOWARDS BOOKING OF AFORESAID FLAT IN MUMBAI IN JUN E 1993 NOR HE COULD INFORM THE STATUS OF THE ASSESSMENT IN THE CA SE OF THE CO- OWNER SHRI K. C. PAREKH OR EVEN IN RESPECT OF ANNEX URE-E RELATING TO PAYMENT OF RS. 2 34 000/- REFERRED TO ON PAGE 6 OF THE AGR EEMENT EXECUTED ON 7.11.2001. THE LEARNED DR ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE LD. CIT(A) CONTENDED THAT THE ASSESSEE DID NOT FURN ISH ANY DOCUMENT BEFORE THE AO AND THE LEARNED CIT(A) EVIDENCING TH AT RIGHTS IN FLAT NO. 905 ASOPLAV SV ROAD BORIVALI(W) MUMBAI VESTED IN HER AND THE CO-OWNER IN JUNE 1993. THE ONLY DOCUMENT IS SATAK AT REGISTERED ON 7.11.2001. THEREFORE THE LD. CIT(A) RIGHTLY REJECT ED THE CLAIM OF THE ASSESSEE THE LD. DR PLEADED. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FCATS OF THE CASE. THE ISSUE BEFORE US IS AS TO WHETHER OR NOT THE RIGHTS IN FLAT NO. 905 ASOPLAV SV ROAD BORIVALI(W) MUMBAI VE STED IN THE ASSESSEE IN JUNE 1993 AND THEREFORE GAIN ARISING O N TRANSFER OF THESE RIGHTS IN THE YEAR UNDER CONSIDERATION COULD BE ASSESSED AS LONG TERM CAPITAL GAINS. INITIALLY THE ASSESSEE CLA IMED IN THE RETURN THAT THE SAID GAINS WERE SHORT TERM CAPITAL GAINS. HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CHANGED HER ITA NO.631/AHD/2008 7 STAND CLAIMING THE SAID GAINS AS LONG TERM CAPITAL GAINS. ADMITTEDLY THE ASSESSEE DID NOT HAVE ANY EVIDENCE IN THE FOR M OF AGREEMENT OR RECEIPT OF PAYMENT TOWARDS BOOKING OF AFORESAID FLAT IN MUMBAI IN JUNE 1993 NOR THE LD. AR COULD INFORM THE STATUS OF THE ASSESSMENT IN THE CASE OF THE CO-OWNER SHRI K. C. PAREKH AS TO HOW THE GAINS WERE TREATED IN HIS HANDS. UNDISPUTEDLY THE ASSESSEE H AD NOT TAKEN POSSESSION OF THE AFORESAID FLAT. THE ONLY PIECE OF INFORMATION THE LD. AR POINTED OUT THAT ON ENQUIRIES BY THE AO M/S DESAI BUILDERS COMMUNICATE D VIDE LETTER DATED 18.11.2006 THAT THEY HAD RECEIVED PAYMENT OF RS.1 7 6 000/- THROUGH DEMAND DRAFT FROM MRS. DEEPA SHAH AND RS.58 000/ - FROM SH RI K.C.PAREKH ON 23.6.1993 TOWARDS RIGHTS OVER THE FLAT NO.905 A WING 9 TH FLOOR ASHOPALAV MUMBAI. [PG. 21 & 22 OF THE PAPER BOOK] . HOWEVER WE FIND FROM THE COPY OF BANK ACCOUNT NO.14343 OF THE ASSESSEE WITH THE UNION BAN K OF INDIA[PAGE 26 & 27 OF THE PAPER BOOK] THAT AFTER CREDIT OF AN AMOUNT OF RS. 76 000/- ON 29.6.1993 AN AMOUNT OF RS.1 76 000 HAS BEEN DEBITED IN THE NAME OF DESAI BUILDERS. IN THE NOTE ANNEXED WITH THE RETURN IT WAS MENTIONED THAT THE ASSESSEE HAD ACQUIRED RIGHTS OVER THE AFORESAID IMMOVABLE PROPERTY IN MUMBAI IN THE MONTH OF JUNE 1 993 JOINTLY WITH SHRI KISHOR CHIMANLAL PAREKH IN THE RATIO OF 3:1 BY PAYING A SU M OF RS.1 76 000/- (BEING 75% OF AGGREGATE AMOUNT OF RS.2 34 000/- THE BALANCE I NSTALMENT HAVING BEEN PAID BY SHRI K. C. PAREKH ) ON 23 RD JUNE 1993 TO M/S DESAI BUILDERS OF MUMBAI BEING THE BUILDER OF THE PROPERTY. THUS THE ASSESSEE IS CLAIMING THAT THE AMOUNT WAS PAID ON 23.6.1993 WHILE THE COPY OF BANK ACCOUNT O F THE ASSESSEE SHOWS AN ENTRY OF RS. 1 76 000/- ONLY ON 29.6.1993. THE EXA CT DATE OF PAYMENT HAS NOT BEEN CLARIFIED BEFORE US.. MOREOVER WHETHER OR NOT THE SAID AMOUNT OF RS. 1 76 000/- WAS TOWARDS THE AFORESAID FLAT NO. 905 ASOPLAV SVROAD BORIVALI(W) MUMBAI IS NOT SUBSTANTIATED BY ANY EV IDENCE. WE ALSO FIND FROM THE COPY OF AGREEMENT EXECUTED ON 7.11.20 01 BETWEEN THE ASSESSEE/HER CO-OWNER AND M/S DESAI BUILDERS THAT THE APPROVAL FOR CONSTRUCTION OF BUILDINGS AND STRUCTURES WAS RECEIV ED BY M/S DESAI BUILDERS ONLY VIDE IOD NO. CE/6688/BP(WS)/AR OF 199 4 DATED 3.3.1994 WHILE COMMENCEMENT CERTIFICATE WAS ISSUED ONLY ON ITA NO.631/AHD/2008 8 2.4.1994. HOW COULD THE ASSESSEE PURCHASED RIGHTS OVER THE SAID FLAT EVEN BEFORE SANCTION OF THE PLAN HAS ALSO NOT BEEN EXPLAINED. IT WAS ONLY UNDER THE AFORESAID AGREEMENT THAT THE M/ S DESAI BUILDERS HAD AGREED TO SELL FLAT NO.905 A WING 9 TH FLOOR ASHOPALAV MUMBAI TO THE ASSESSEE AND HER CO-OWNER FOR A CONSIDERATION OF RS . 8 49 200/- AND PRIOR TO EXECUTION OF THE AGREEMENT M/S DESAI BUIL DERS HAVE CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS. 2 34 000 REPRESENTING 15% OF THE PRICE . THE AMOUNT OF RS. 2 34 000 IS S TATED TO HAVE BEEN RECEIVED BY BUILDERS THROUGH A CHEQUE NO.24259 8 DRAWN ON UBI BHAVNAGAR. THE DATE OF CHEQUE IS NOWHERE MENTI ONED IN THE SAID AGREEMENT OR EVEN IN THE IMPUGNED ORDERS. THIS IS ALSO NOT CLEAR WHO HAS ISSUED THE SAID CHEQUE AND WHO OWNS T HE SAID BANK ACCOUNT NOR THE LD. AR OR THE LD. DR COULD THROW AN Y LIGHT ON THESE ASPECTS. THE AFORESAID FACTS NOTICED BY US DO NOT FIND A MENTION IN THE IMPUGNED ORDERS AND CONSEQUENTLY THERE IS NO QUESTION OF ANY FINDINGS OF THE AO/CIT(A) ON THESE ASPECTS. RATHER THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO ON THE GROUND THAT N O DOCUMENT ISSUED IN 1993 HAS BEEN FILED BY THE ASSESSEE TO SU BSTANTIATE HER CLAIM NOR THE ASSESSEE CLARIFIED HOW THE RIGHTS WER E ASSIGNED IN THE JOINT NAME IN 1993. IN THESE CIRCUMSTANCES ESPECI ALLY WHEN IT IS NOT EVIDENT AS TO WHO ISSUED CHEQUE NO.242598 FOR RS. 2 34 000/- TO M/S DESAI BUILDERS FROM SOME ACCOUNT WITH UNION BANK OF INDIA BHAVNAGAR WHILE EVEN DATE OF CHEQUE IS NOT KNOWN N OR THE LD. AR COULD INFORM THE STATUS OF THE ASSESSMENT IN THE CA SE OF THE CO- OWNER SHRI K. C. PAREKH OR EVEN IN RESPECT OF ANNEX URE-E RELATING TO PAYEMENT OF RS. 2 34 000/- REFERRED TO ON PAGE 6 OF THE AGR EEMENT EXECUTED ON 7.11.2001 WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE F INDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE D IRECTIONS TO RE-EXAMINE THE CLAIM OF THE ASSESSEE RAISED IN THIS GROUND IN THE LIGHT OF OUR AFORESAID OBSERVATIONS IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND KEEPING IN MIND THE PROVISIONS OF SEC. 50C OF THE ACT. THE AO IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRIES NECESSA RY TO ASCERTAIN THE ITA NO.631/AHD/2008 9 GENUINENESS OF THE CLAIM. WITH THESE DIRECTIONS GR OUND NO. 1 RAISED BY THE ASSESSEE IS DISPOSED OF . 6. GROUND NO.2 RELATES TO AN ADDITION OF RS. 3 29 2 50/- U/S 68 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE AO NOTICED THAT THE ASSESSEE PAID AN AMOUNT OF RS.3 29 250/- ON 4.9.2003 TO M/S DESAI BUILDERS. THE ASSESSEE EXPLA INED THAT THE SAID AMOUNT WAS RECEIVED FROM SHRI KETAN RAMESH CHA NDRA JATAKIA AND SHRI BHAVESH RAMESH CHANDRA JATAKIA ON ACCOUNT TRANSFER OF HER RIGHTS OVER FLAT NO. 905 ASOPLAV SV ROAD BORIVA LI(W) MUMBAI ACQUIRED BY HER 1993. HOWEVER THE SAID JOINT PURCH ASERS IN THEIR REPLY RECEIVED BY THE AO ON 6.12.2006 STATED THAT T HEY HAD PAID ONLY AN AMOUNT RS. 10 08 000/ THROUGH THE BANK AS PER FO LLOWING DETAILS . DATE P.O./ CH.NO. DRAWN IN FAVOUR OF NAME OF THE BANK & BRANCH. AMOUNT 06.09.2003 579081 MRS.DEEPA B. SHAH DENA BANK YOGI NAGAR BORIVII (W) MUMBAI. 7 56 000/- 06.09.2003 329045 MR. KISHOR C. PAREKH - ABHYUDAYA CO OP BANK LTD MAIAD (E) MUMBAI. 2 52 000/- TOTAL : 10 08 000/- THE AFORESAID PURCHASERS ALSO SUBMITTED A COPY OF R ECEIPT ISSUED THE ASSESSEE TOWARDS SALE OF THE FLAT. THE SAID RECEIPT WAS SIG NED BY SHRI KISHORE C PAREKH AND THE ASSESSEE THOUGH HER CONSTITUTED ATTORNEY MR . VASANT D SHAH AS MENTIONED ON PAGE 3 & 4 OF THE ASSESSMENT ORDER. SI NCE NO CASH WAS PAID BY THE AFORESAID PURCHASERS THE AO ISSUED A SHOW CAU SE NOTICE TO THE ASSESSEE ITA NO.631/AHD/2008 10 ON 15.12.2006 PROPOSING TO ADD THE AFORESAID AMOU NT OF RS.3 29 250/- U/S 68 OF THE ACT. IN RESPONSE THE ASSESSEE INTER ALIA ENC LOSED A RECEIPT MENTIONING CASH COMPONENT RECEIVED FROM THE AFORESAID PURCHASE RS. THE AO FOUND THAT THE SAID RECEIPT DIFFERED FROM THE EARLIER RECEIPT. THE EARLIER RECEIPT DATED 6.9.200 HAD BEEN SIGNED BY SHRI KISHORE C PAREKH AND THE AFORES AID CONSTITUTED ATTORNEY ON BEHALF OF THE ASSESSEE AND HAD BEEN EXECUTED AT MUM BAI WHILE THE CASH RECEIPT DATED 4.9.2003 FURNISHED BY HE ASSESSEE DI D NOT MENTION THE PLACE OF EXECUTION. SINCE THE SAID RECEIPT WAS FURNISHED BY THE ASSESSEE ONLY AFTER RECEIVING SHOWCAUSE NOTICE THE AO REJECTED THE S AID DOCUMENT ESPECIALLY WHEN THE AFORESAID TWO PURCHASERS DENIED TO HAVE PA ID ANY CASH. THE SOURCE OF CASH REMAINING UNEXPLAINED THE AO ADDED THE AFORE SAID AMOUNT U/S 68 OF THE ACT. 7. ON APPEAL THE ASSESSEE REITERATED THEIR CONTENT IONS BEFORE THE AO. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE L D. CIT(A) UPHELD THE ADDITION IN THE FOLLOWING TERMS. 5. AS REGARDS THE CASH COMPONENT OF RS.3 29 250/- WHICH HAS BEEN ADDED BY THE ASSESSING OFFICER U/S.68 OF THE ACT I T IS TO BE MENTIONED HERE THAT AS PER DETAILS OF RECEIPT SIGNED BY THE CONSTI TUTED ATTORNEY SHRI VASANT D. SHAH OF MRS. DEEPA B. SHAH AND SHRI KISHOR C. PA REKH AND WITNESSED BY TWO WITNESSES ON 16-9-2003 IT IS VERY CLEAR THA T THE APPELLANT WITH MR. KISHOR C. PAREKH RECEIVED THE AMOUNT OF SALE CONSID ERATION ON ACCOUNT OF FULL AND FINAL SETTLEMENT OF RS.10 08 000/- BY CHEQ UE. THERE IS NO MENTION THAT THE AMOUNT WAS ALSO RECEIVED IN CASH FROM THE PURCHASERS WHICH HAS BEEN CLAIMED BY THE APPELLANT. THE AMOUNT PAID IN C ASH TO SHRI DESAI BUILDERS ON 4-9-2003 STANDS UNEXPLAINED AS THE PURC HASERS OF THE FLAT IN THEIR REPLY HAVE NOT ACKNOWLEDGED PAYMENT OF ANY CA SH TO THE APPELLANT. IT IS SEEN THAT AT THE LATER STAGE ANOTHER RECEIPT TO THE EFFECT THAT APPELLANT RECEIVED CASH WAS PRODUCED WHICH SHOWS THAT IT IS S ELF PREPARED RECEIPT WHICH IS NOT ACCEPTABLE. HENCE THE SOURCE OF RS.3 29 250/-STILL REMAINS UNEXPLAINED. THE APPELLANT COULD NOT EXPLAIN THIS V ITAL FACT AS REGARDS THE CASH AMOUNT OF RS.3 29 250/- AND COULD NOT SUBSTANT IATE HER CLAIM THEREFORE THE ASSESSING OFFICER'S ACTION IN MAKING THE ADDITION U/S. 68 OF RS.3 29 250/-IS HEREBY CONFIRMED. 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED AR ON BEHAL F OF THE ASSESSEE ITA NO.631/AHD/2008 11 REITERATED THE SUBMISSIONS BEFORE THE LD. CIT(A). T HE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD. CIT (A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE AFORESAID PURCHASERS SH RI KETAN RAMESH CHANDRA JATAKIA AND SHRI BHAVESH RAMESH CHANDRA JAT AKIA SPECIFICALLY DENIED TO HAVE PAID ANY CASH TO THE AS SESSEE WHICH THE ASSESSEE CLAIMS SHE HAD PAID TO M/S DESAI BUILDERS. NEITHER BEFORE THE AO/LD. CIT(A) OR EVEN BEFORE US THE ASSESSEE E XPLAINED THE SOURCE OF AFORESAID CASH PAID TO THE BUILDERS ON 4. 9.2003. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE GROU ND NO. 2 IN THE APPEAL IS DISMISSED. 10 GROUND NO.3 RELATES TO NON-ADJUDICATION OF THEIR THIRD GROUND IN THE APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A). IT WAS MENTIONED IN THE SAID GROUND THAT IF THE CASH COMPONENT OF TH E CONSIDERATION IS TREATED AS UNEXPLAINED CASH CREDIT A CORRESPONDIN G REDUCTION IN THE TRANSFER PRICE HAS TO BE GIVEN. THERE IS NO DISCU SSION ON THIS ASPECT IN THE ASSESSMENT ORDER OR EVEN IN THE IMPUG NED ORDER OF THE LD. CIT(A). ON AN APPLICATION MOVED BY THE ASSESSE E U/S 154 OF THE ACT THE LD. CIT(A) VIDE ORDER DATED 29.7.2008 REJE CTED THE SAID APPLICATION ON THE GROUND THAT THAT NEITHER DURING THE APPELLATE PROCEEDINGS NOR EVEN IN THE RECTIFICATION PROCEEDI NGS THE ASSESSEE COULD POINT OUT ANY MISTAKE IN CALCULATION OF CAPIT AL GAINS. THE ASSESSEE ALSO DID NOT PUT FORTH ANY ARGUMENT WITH S PECIFIC COMPUTATION AND CLARIFICATION BEFORE THE LD. CIT(A) AS OBSERVED BY HIM. 11. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. CIT(A). WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LD. CIT(A) THE LD. AR CONTENDED THAT WITHOUT P REJUDICE TO THEIR ITA NO.631/AHD/2008 12 OTHER GROUNDS OF APPEAL AND THE ARGUMENTS MADE THER E UNDER IF THE CONSIDERATION DISCLOSED IN THE TRANSFER DEED AND PA SSED ON THROUGH BANKING CHANNEL WAS TO BE CONSIDERED AS FAIR MARKET VALUE SO AS TO IGNORE THE CASH COMPONENT TREATED AS UNEXPLAINED C ASH CREDIT THERE WAS NO REASON FOR THE AO TO STILL TAX THE CAP ITAL GAIN ON THE FULL VALUE OF CONSIDERATION. SINCE THE LOWER AUTHORITIES DID NOT RECORD THEIR FINDINGS ON THIS ASPECT AND WE HAVE RESTORED THE ISSUE RAISED IN GROUND NO.1 OF THE APPEAL TO THE FILE OF THE AO WE CONSIDER IT FAIR AND APPROPRIATE TO RESTORE THE ISSUE RAISED IN TH IS GROUND ALSO TO THE FILE OF THE AO WITH THE DIRECTIONS TO CONSIDER THE CLAIM OF THE ASSESSEE WHILE ADJUDICATING ISSUE RAISED IN GROUN D NO.1 OF THE APPEAL IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFIC IENT OPPORTUNITY TO THE ASSESSEE AND KEEPING IN MIND THE PROVISIONS OF SEC. 50C OF THE ACT . WITH THESE DIRECTIONS GROUND NO. 3 IN THE APPEAL IS AL SO DISPOSED OF. 12 GROUND NO.4 RELATES TO THE ORDER BEING NOT ENFO RCEABLE HAVING BEEN SERVED ON 20.1.2007. THE ASSESSEE CONT ENDED BEFORE THE LD. CIT(A) THAT THE ORDER HAVING BEEN SERVED M UCH AFTER THE LIMITATION PERIOD WAS BARRED BY LIMITATION. THE L D. CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT NOTHING CONTRARY HAS BEEN PROVED BY THE ASSESSEE WITH SPECIFIC INSTA NCE THAT THE MATTER WAS TIME BARRED OR THAT THE ORDER WAS PASSED BEYOND TIME LIM IT. ONLY SINCE THE SERVICE OF ORDER WAS MADE ON THE APPELLANT ON 20-1-2007 CANNOT ESTABLISH THAT THE ASSESSMENT ORDER MIGHT HAVE BEEN PASSED BEYOND THE STIPULATED TIME THE LD. CIT(A) CONCLUDED. 13 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED AR MERELY R EITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CIT(A) WHILE THE LD . DR SUPPORTED THE IMPUGNED ORDER. ITA NO.631/AHD/2008 13 14. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. THE PROVISIONS OF SEC. 143(3) OF THE ACT STIPULATE MAKING OF AN ASSESSMENT DETERMINING TOTAL INCOME OR LOSS AND DETERMINATION OF SUM PAYABLE BY THE ASSESSEE THROUG H AN ORDER IN WRITING. THE PROVISIONS OF SEC. 153(1)(A) OF THE AC T STIPULATE TIME LIMIT FOR MAKING ASSESSMENT U/S 143 OF THE ACT WHIL E PROVISIONS OF SEC. 156 ENVISAGE SERVICE OF DEMAND NOTICE IN PURSU ANCE TO ANY ORDER DETERMINING TAX INTEREST PENALTY FINE OR ANY OTHER SUM PAYABLE BY THE ASSESSEE. THERE IS NO PROVISION UND ER THE ACT STIPULATING TIME LIMIT FOR SERVICE OF AN ASSESSMENT ORDER U/S 143(3) OR DEMAND NOTICE U/S 156 OF THE ACT WITHIN THE TIME STIPULATED FOR COMPLETION OF AN ASSESSMENT . ALTHOUGH THE ACT DOE S NOT LAY DOWN ANY PERIOD OF LIMITATION WITHIN WHICH A NOTICE OF D EMAND U/S 156 OF THE ACT HAS TO BE SERVED WE ARE OF THE OPINION THA T IT MUST BE SERVED WITHIN A REASONABLE TIME. WHAT WOULD BE REAS ONABLE PERIOD DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE. NO HARD AND FAST RULE CAN BE LAID DOWN IN THIS REGARD. THERE IS NO REQUIREMENT THAT SERVICE MUST BE EFFECTED BEFORE THE EXPIRY DATE FOR COMPLETION OF ASSESSMENT. IN RAJENDRA NARAYAN BHANJA DEO VS. CIT AIR 1925 PAT 58 1 A NOTICE OF DEMAND ISSUED FOURTEEN MONTHS AFTER EXPIRY OF ASSES SMENT YEAR WAS HELD TO HAVE BEEN ISSUED WITHIN REASONABLE TIME. SUB-S. (1) OF S. 153 OF THE ACT REQUIRES AN ITO TO PASS AN ORDER OF ASSESSM ENT WITHIN THE PERIOD PRESCRIBED IN THE ACT. IT DOES NOT REQUIRE THAT THE DEMAND NOTICE SHOULD ALSO BE ISSUED WITHIN THAT PERIOD. THE WORDS ' ORDER OF ASS ESSMENT ' CANNOT BE CONSTRUED AS TO INCLUDE A DEMAND NOTICE AS WELL. SIMPLY BECAU SE DEMAND NOTICE WAS SERVED ON 20.1.2007 IN THE INSTANT CASE DOES NOT I MPLY THAT ASSESSMENT ORDER WAS ALSO PASSED BEYOND THE LIMITATION. THE LD. AR O N BEHALF OF THE ASSESSEE DID NOT PLACE BEFORE US ANY MATERIAL SUGGESTING THAT A SSESSMENT ORDER WAS PASSED BEYOND THE LIMITATION STIPULATED UNDER THE RELEVAN T PROVISIONS OF THE ACT. IN THE ABSENCE OF ANY BASIS WE ARE NOT INCLINED TO INTERF ERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE GROUND NO. 4 IN THE APPEAL IS DI SMISSED. ITA NO.631/AHD/2008 14 15. GROUND NO.5 RELATES TO CHARGING OF INTERE ST U/S 234B OF THE ACT. THE AO WHILE COMPLETING THE ASSESSMENT DIRECT ED TO CHARGE INTEREST AS PER PROVISIONS OF THE ACT. ACCORDINGLY INTEREST U/S 234B OF THE ACT WAS CHARGED IN THE COMPUTATION OF TOTAL TAX AND DEMAND NOTICE WAS SENT. ON APPEAL THE ASSESSEE CONTENDED THAT LEVY OF INTEREST U/S 234B OF THE ACT DOES NOT FLOW FROM THE ASSESSMENT ORDER. HOWEVER THE LD. CIT(A) WHILE RELYING UPON D ECISION IN THE CASE OF CIT VS. ANJUM MH GHASWALA 252 ITR1(SC) UPHE LD THE LEVY OF INTEREST. 16. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR APPEARING BE FORE US DID NOT MAKE ANY SUBMISSION ON THIS GROUND. THE LEVY OF IN TEREST U/S 234B OF THE ACT BEING MANDATORY [COMMISSIONER OF INCOME TAX. VS ANJUM M. H. GHASWALA AND OTHERS 252 ITR 1(SC) AFFIRMED BY HON'BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ] THIS GROUND IS DISMISSED. HOWEVER THE AO MAY ALLOW CONSEQUENTIAL RELIEF IF ANY WHILE GIVING EFFECT TO THIS ORDER. 17. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF THE RESIDUARY GROUND ACCORDINGLY THE SAID GROUND IS DISMISSED. 18. IN THE RESULT APPEAL IS PARTLY ALLOWED BUT FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 31 -05- 2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 31-05-2010 ITA NO.631/AHD/2008 15 COPY OF THE ORDER FORWARDED TO : 1. DEEPA BHUPATRAI SHAH 2559 POOJA ANJALI CO-OP. HOUSING SOCIETY HILL DRIVE BHAVNAGAR 2. THE ACIT CIRCLE-1 BHAVNAGAR 3. CIT CONCERNED 4. CIT(A)-XX AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD