TMI Blog2014 (12) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee. Addition of rental income and interest income as income from other sources – Held that:- When the assessee itself is treating the lease rental income and interest income as income from ‘other sources’ in the subsequent AY i.e., AY 2009-10, then it becomes very much clear that it is not temporary exploitation of business asset - Rather it demonstrates that the assessee himself no longer treats the asset leased out as business asset but in the nature of exploitation of property by an owner – the contention of the revenue is accepted that the amount being lease rental and interest have to be treated as income from ‘other sources’ – the order of the CIT(A) is set aside and the matter is remitted back to the AO – Decided in favour of revenue. Allowability of exemption u/s 54F – Held that:- In case of capital gains arising from transfer of any long term capital asset not being a residential house, if the assessee, within the period of one year before or two years after the date on which the transfer took place had purchased a residential house or within the period of three years, has constructed a residential house, then there will be exemption of capital gains - the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - thus, the matter is remitted back to the AO for fresh consideration – Decided in favour of revenue. - ITA Nos. 966 to 968/Hyd/2012, ITA Nos. 969 and 970/Hyd/2012, ITA No. 971/Hyd/2012 - - - Dated:- 29-11-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Petitioner : Shri B. Sai Prasad For the Respondent : Shri B. Sai Prasad ORDER Per Saktijit Dey, J. M: These appeals filed by the department in cases of different assessee-respondents are directed against the orders of CIT(A) pertaining to the assessment years 2003-04,2004-05,2007- 08,2009-10 and 2009-10 respectively. Since identical issues are involved in all these appeals, for the sake of convenience, all these appeals are clubbed together and disposed off by the combined order. ITA No.966/Hyd/2012- asst. Year 2003-04:- 2. In this appeal, the department has raised 5 grounds. Ground Nos. 1 and 5 being general grounds, no adjudication is required. 3. Ground Nos. 2 and 3 relate to a common issue of addition made by the Assessing Officer by estimating the profit at 10% of the gross receipts which was deleted by the CIT (A). 4. Briefly the facts are, the assessee is an individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timation. 6. The learned Departmental Representative referring to the observation made by the Assessing Officer in the assessment order submitted that when the assessee had not produced its books of accounts or any other document in support of claim of expenditure, the Assessing Officer was left with no other option but to estimate the profit by applying a reasonable rate. He further submitted that considering the assessee s line of business, the estimation of profit at 10% is reasonable. He therefore submitted that the addition made by the Assessing Officer should be restored. 7. The learned authorised representative for the assessee, on the other hand, submitted that in case of an assessment u/s 153A of the Act in pursuance to a search and seizure operation routine and general disallowances without any incriminating material found at the time of search cannot be made. In this context, the learned AR relied upon a decision of Hon ble Orissa High Court in case of Utkal Alloys Limited (supra) and in case of All Cargo Global Logistics Ltd., vs. DCIT (137 ITD 287). 8. We have considered rival submissions of the parties and perused the material on record as well as the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, unless the assessee produces its books of accounts and other evidences in support of the claim made in the return of income, the Assessing Officer would be handicapped in computing the income, hence would be forced to estimate the profit. This fact has not been properly appreciated by the first appellate authority. Therefore, considering the fact that the Assessing Officer has resorted to estimation of profit in the absence of books of accounts or other evidences and also considering the contention of the assessee that it has maintained books of accounts in the regular course of business and the books of account are audited, we consider it proper to remit the issue back to the file of the Assessing Officer for considering the same afresh after verifying the books of accounts and other documents which may be available on record or which may be produced by the assessee. We also direct the assessee to cooperate in finalisation of the proceedings by producing books of accounts and other relevant documents. 10. The next issue as raised in ground No.4 relates to deletion by the CIT (A) of addition of an amounts of ₹ 37,419/- and ₹ 14,276/- being the rental income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom other sources as held by the Assessing Officer. We therefore, set aside the order of the CIT (A) on this issue and restore the addition made by the Assessing Officer. Hence, the ground raised by the revenue is allowed. ITA 967/Hyd/2012- asst. Year 2004-05 13. In this appeal, the department has raised 6 grounds. Ground Nos. 1 and 6 being general grounds, no adjudication is required. 14. Ground Nos. 2 and 3 relate to a common issue of addition made by the Assessing Officer by estimating the profit at 10% of the gross receipts which was deleted by the CIT (A). This issue being identical to the issue raised in ground nos. 2 and 3 of ITA No.966/Hyd/2012, following our decision in para-9 of the order hereinabove, we restore the matter back to the file of the Assessing Officer for deciding afresh. 15. The next issue as raised in ground No.4 relates to CIT (A) treating the lease rental income as income from business. 16. This issue is identical to ground No.4 of ITA No.966/Hyd/2012. In view of our decision in para-12 of the order hereinbefore, we decide this issue against the assessee by upholding the view of the Assessing Officer in treating the lease rental income as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative for the assessee, on the other hand reiterating the stand taken before the CIT (A) submitted that it is not a renovation or modification of the existing house as held by the Assessing Officer but construction of an complete additional floor with independent facilities which can be termed as a new house. He therefore submitted that the assessee is eligible for deduction u/s 54F having invested the sale proceeds for construction of the said additional floor. In support of such contention, the learned AR relied upon the following decisions: 1] CIT vs. Smt. K.G.Rukminiamma (331 ITR211) 2] CIT vs. D. Ananda Basappa (309 329) 3] Mrs. Meera Jacob vs. Income-tax Officer (313 ITR 411) 4] ACIT vs. Sudha Gurtoo (15 Taxmann.com 231 (Delhi) 5] Balvantram U.Chimna vs. ITO (72 TTJ (Ahd) 451 6] Dharam Shobha Rani vs. ITO (53 SOT 239 22. We have considered rival submissions of the parties and perused the material on record as well as the orders of the revenue authorities. We have also carefully applied our mind to the decisions relied upon by the learned AR. A plain reading of section 54F of the Act makes it clear that in case of capital gains arising from transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence the ground raised by the department is allowed. 24 In the result, the appeal filed by the department stands allowed. ITA 968/Hyd/2012-asst. Year 2009-10 25. The department is aggrieved of the order passed by the CIT (A) deleting the addition made by the Assessing Officer relying upon information submitted by the assessee without affording an opportunity to the Assessing Officer. 26. Briefly the facts are, during the assessment proceedings, the Assessing Officer noted that in course of search and seizure operations, the gold jewellery found at the premises of the assessee and his other family members was valued at ₹ 4,19,67,132 by the registered valuer, whereas the value of gold jewellery declared by Krishna Kumar and his family members in their respective wealthtax returns filed on 31-3-2008 aggregated to ₹ 2,63,60,261/- which resulted in a difference of ₹ 1,27,60,063/- between the valuation made by the Registered Valuer and wealth declared by the assessee and his family members in the wealth returns. He further noted that the total value of gold jewellery adopted by the department for the entire group i.e., Sri Krishna Kumar and family members as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of total jewellery returned by the assessee and his family members fell short by ₹ 1,27,60,063/- as against the valuation made by the registered valuer. He therefore treated the shortfall of ₹ 1,27,60,063/- as unaccounted investment made by the assessee and added it to the income of the assessee for the impugned assessment year. 28. Being aggrieved of such addition, the assessee preferred an appeal before the CIT (A). The assessee contended before the CIT (A) that during the search and seizure operation, the jewellery of the three families consisting of entire group i.e. families of Krishna Kumar, Sunil Kumar and Mahavir Prasad got mixed up as the same is being used in exchange by one another, therefore the difference in valuation needed to be explained as a group declared in the wealth-tax return by the group was put at ₹ 8,68,47,963/- as against the value of ₹ 11,32,77,199/- determined by the registered valuer. It was submitted that arithmetical mistakes were committed by the valuer as in case of Mahavir Prasad, the mistake was pointed out indicating the difference in valuation to the extent of ₹ 4,60,170/-. Similarly, while giving credit for j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. The CIT (A) observed that if those items are taken into account then the total value of jewellery would be of ₹ 3,51,19,326/- and the excess of jewellery as per valuation report dated 29-1-2009 would only be to the extent of ₹ 68,47,806/- and after deducting there from the difference on account of rate as on 31-3- 2008 and 16-3-2009 of an amount of ₹ 53,59,112/-, the excess can be worked out to ₹ 14,88,694/-. The CIT (A) after working out the excess as above which is also mentioned in para 4.7 of order finally came to the conclusion that out of excess of ₹ 14,88,694/- disallowance to the extent of 50% amounting to ₹ 7,44,347 could be made. 30. The learned Departmental Representative submitted before us that the CIT (A) while allowing the benefit to the assessee considered certain new facts and submissions made by the assessee without giving any opportunity to the Assessing Officer to verify the contentions of the assessee. It was submitted that the assessee had never submitted all these facts before the Assessing Officer which were submitted at the time of hearing of appeal before the CIT (A). He therefore submitted that the CIT (A) at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 60,36,175/- does not appear in para-2 of the assessment order wherein the Assessing Officer has considered the jewellery declared in the case of the assessee and other family members. It is not known whether this fact was brought to the notice of the Assessing Officer by the assessee. Similarly, the silverware valued at ₹ 27,22,890/- also does not find place anywhere in the assessment order. It is also not known whether this fact was brought to the notice of the Assessing Officer that the silverware of ₹ 27,22,890/- stated to have been declared in the wealth-tax return also forms part of the valuation made by the registered valuer. Therefore, in our view, the CIT (A) before accepting the contention of the assessee should have given an opportunity to the Assessing Officer to put forth his opinion on the issue. This is because of the fact, as it appears from the assessment order, the assessee has not submitted the basis for valuation of gold jewellery, stones, diamonds etc. In aforesaid view of the matter, we are inclined to remit the issue back to the file of the Assessing Officer for verifying the claim of the assessee. If the assessee is able to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raasi Developers along with the details of loan sanctioned for ₹ 24 lakh and disbursement of the loan from HDFC. The CIT (A) after considering the submissions of the assessee as well as the information submitted before him was of the view that the cost of acquisition adopted by the assessee while computing the capital gains was correct since the assessee had submitted credible information in the form of evidences produced by him towards the loan taken from HDFC amounting to ₹ 24 lakh as well as the development agreement for construction with M/s. Raasi Developers. He therefore deleted the addition of ₹ 24 lakh. 36. The learned Departmental Representative submitted before us that the CIT (A) was not justified in deleting the addition on considering the fresh information and evidence filed by the assessee without allowing an opportunity to the Assessing Officer for considering the same. 37. The learned AR, on the other hand, strongly supporting the order of the CIT (A) submitted that all the information having been furnished before the Ao, there is no scope for interfering with the order passed by the CIT (A). 38. We have considered submissions of the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition. 43. We have heard the submissions of the parties and perused the orders of the authorities below as well as other materials on record. The sole contention of the learned Departmental Representative is, the CIT (A) without affording a reasonable opportunity to the Assessing Officer has deleted the addition by considering new information. Whereas it is the contention of the learned AR before us that, the assessee along with two other persons had purchased the said property at Gachibowli for a total consideration of ₹ 2,08,85,000/- vide registered sale deed No.9049/2007 dated 13-6-2007. It was therefore submitted that the investment having been made in the financial year 2007-08 and the assessee having shown the same as investment in the balance sheet as on 31-3-2008 it cannot be treated as unexplained investment of the impugned assessment year. Thus, in effect, it is the claim of the assessee that it is only a carry forward of the earlier years investment. However, as can be seen from the assessment order, the assessee has not produced any information or details during the assessment proceeding to substantiate that the investment was made in the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f jewellery declared in wealth-tax return by the assessee and his family members as pointed out by the Assessing Officer. 47. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as materials on record. As can be seen from para-2 of assessment order that there is no mention of either Mahavir Prasad or Smt. Kavita Rani in the list of members. It is not known whether the assessee has submitted materials before the Assessing Officer to indicate that amounts of ₹ 54,31,027 and ₹ 63,88,640/- towards value of jewellery had been declared in the wealth-tax return of Sri Mahavir Prasad (HUF) and Smt. Kavita Rani were submitted before the Assessing Officer. It appears while reconciling the difference, the assessee has brought this fact for the first time to the notice of the first appellate authority. Therefore, in our view, in all fairness, the CIT (A) should have allowed an opportunity to the Assessing Officer to verify the details. Since no opportunity was given to the Assessing Officer before accepting the claim of the assessee on the basis of fresh materials submitted before the first appellate authority, we are incli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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