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ACIT, Central Circle 22, New Delhi Versus Shri Gurnam Arora and Vica-Versa

2016 (4) TMI 576 - ITAT DELHI

Disallowance of long term capital loss - assessment u/s 153A - Held that:- Addition made by the AO by disallowing long term capital loss was not based on any incriminating material found during search operation. Accordingly, the addition is held to be not sustainable in law and so directed to be deleted.- Decided in favour of assessee. - ITA No.3284/Del./2013, CO No.213/Del/2013 - Dated:- 22-2-2016 - SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Assessee : Shri .....

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erm capital loss of ₹ 1,05,76,383/- shown to have been incurred on sale of property located at Masjid Moth, Greater Kailash-II, New Delhi. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition made by the A.O. on account of disallowance of long term capital loss by admitting additional evidence even though the A.O had objected to its admission on both on principle and on merits. 3. On the facts and in the circumstances of the case, the CIT(A) h .....

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leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. The grounds taken in the cross objection by the assessee are as under:- 1. That the order passed under section 153A / 143(3) and the additions made are illegal, bad in law and without jurisdiction. 2. That no incriminating material was seized during the search that suggested in any manner any undisclosed investment in the property at Masjid Moth, hence the addition made is ille .....

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ssion of additional evidence; and cross objection of the assessee is that no addiction can be made without any incriminating material seized during search u/s 153A proceedings. 4. Brief facts of the case are that the assessee filed original return on 11.04.2005 declaring income of ₹ 67,00,137/-. A search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter the Act ) was carried out in Kohinoor Foods Ltd. Group of cases on 05.12.2007 and a search warranted was issued on the a .....

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It was noticed that after reducing the expenditure of brokerage/commission, the net sale consideration received was of ₹ 82,84,000/-. The AO further noticed that by working out the benefit of cost of indexation on the acquisition of the said property and improvement thereon, the value of the said asset came to ₹ 1,88,60,383/- and the assessee thus claimed in his return of income long term capital loss of ₹ 1,05,76,383/- (Rs.1,88,60,383/- minus ₹ 82,84,000/-). The AO held .....

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he submissions of the assessee, deleted the addition as under :- 6. I have gone through the above submissions of the appellant and have perused the AO's order and considered the facts and evidences on record. 6.1 From the perusal of the assessment order it is seen that AO s objection is that the said property at Masjid Moth has not been shown in the balance sheet for the assessment years 2002-03 and 2003-04 and since no documents viz. purchase deed and sale deed for the said property were fi .....

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s of land vide lease deed dated 06.02.1981. (b) By agreement dated 5.9.85 and supplementary agreement dated 07.12.1988 Vipps India Ltd entered into agreement with.1.K. Synthetics for constructing multi storied commercial bldg. (c) J.K. Synthetics purchased the flat from Vipps India Ltd. (d) DDA granted to Vipps India Ltd the occupancy certificate on 24.2.92. (e) J.K. Synthetics agreed to sell the property to appellant, apartment No.501 for ₹ 76.50 lakhs on 28.07.1983. (f) Appellant sold th .....

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y is not allowable. 6.3 When the AO was given the opportunity to give his comments on the documents, the appellant filed during the appellate proceedings, the AO vide his letter dated 24.12.1012had objected to the above documents as additional evidence. In this regard, I am of the view that the balance sheet which were filed from Assessment Year 1994-95 till Assessment year 2003-04 is part of the AO s assessment record, therefore there is no question of filing any new/additional evidences, there .....

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e deed and purchase deed are taken as additional evidence as appellant's case falls under Rule 46A(1)(b) and (d). 6.4 Thus from the above discussion and from the perusal of the appellant balance sheet for Assessment Year 1994-95 till 2003-04 where the property in question is regularly duly been reflected, I hold that the AO's view that loss on sale of property is not allowable being an unaccounted assets is not correct. Hence, the addition of ₹ 1,05,76,383/- made by the AO deserves .....

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the order of the CIT (A) be set aside and that of the AO be restored. 7. On the other hand, the ld. AR for the assessee relied on the order of the ld. CIT (A) and reiterated the submissions made before him. He submitted that the assessee sold equity share of M/s. Satnam Overseas Ltd., M/s. Union Overseas Bank, M/s. Oriental Bank of Commerce and M/s. Global Trust Bank and units of UTI and after claiming the indexation on the cost of acquisition of the equity shares/units showed long term capital .....

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n the same year, the assessee sold a property located at Masjid Moth, New Delhi which was purchased in the year 1993-94 for ₹ 84,26,500/- and the sale consideration of the property was shown at ₹ 85,00,000/- and ₹ 2,16,000/- was claimed towards brokerage and commission on sale of this property, therefore, the net sale consideration was declared at ₹ 82,84,000/-. He submitted that after indexation on the cost of acquisition and improvements thereto, the indexed cost of pro .....

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till AY 2003-04 showing a value of ₹ 1,09,17,797/- (including cost of improvement) as on 31.03.2003. As regards AO s objection that the assessee became owner of the property only on 14.02.2003 by virtue of an irrevocable power of attorney executed by M/s. Vipps India, he clarified that as the assessee sold the property to Shri Sethi vide sale deed dated 12.06.2004 and since the buyer, Shri Sethi insisted for an irrevocable power of attorney signed by the original seller to Ms. J.K. Synthet .....

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in the name of M/s. Vipps India which sold it to M/s. J.K. Synthetics Ltd. and from whom the assessee had purchased the property. Therefore, he submitted that the contention of the AO that the assessee had become the owner of the property only on 14.02.2003 was erroneous as the property in question was purchased by the assessee in the year 1993. 7.1 Ld. AR further submitted that the assessee purchased the property against agreement to sell dated 28.07.1993 and the said property was duly reflect .....

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o the documents filed as additional evidence. He submitted that the ld. CIT (A) rightly appreciated that the balance sheets for AYs 1994-95 to 2003-04 filed before the ld. CIT (A) were part of the AO s assessment record and as regards the new documents i.e. purchase deed and sale deed of the property which were filed during the appellate proceedings for the first time, again the ld. CIT (A) rightly held that the said property was sold five years back and that they were given just 40 days to coll .....

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that, the items of regular assessment cannot be added back in the proceedings u/s 153A when no incriminating documents were found in respect of disallowed amounts in the search proceedings. 7.4 In view of his submissions made above, ld. AR wants us not to interfere with the order of the ld. CIT (A) and pleaded to uphold the same. 8. We have heard both the sides and perused the material on record. First of all, we are inclined to decide the cross objection raised by the assessee in which the ass .....

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it on short term deposits with banks. The interest received on such deposits was offered by the assessee itself for tax and the assessment was completed on that basis. Even before the Commissioner of Income-tax (Appeals), the inclusion of this amount was neither challenged by the assessee nor considered by the Commissioner of Income-tax (Appeals). The assessee filed an appeal before the Tribunal. The inclusion of the amount was not objected to even in the grounds of appeal as originally filed be .....

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note that the assessee contended that it was entitled to the deduction in view of two orders of the Special Benches of the Tribunal and the assessee further stated that it, had raised these additional grounds on learning about the legal position subsequently. 10. The Tribunal declined to entertain these additional grounds. The Supreme Court did not answer the question on merits, but framed the following question and held as under:- "4. The Tribunal has framed as many as five questions while .....

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ability of the assessee, whether the Tribunal has jurisdiction to examine the same." Under Section 254 of the Income Tax Act the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with the appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an ass .....

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.to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department has a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier." 11. Therefore, the objection of the ld. DR regarding adjudication of this ground is rejected and we proceed to deal with it. From a perus .....

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07 / 2014 has laid the law on this issue as under :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY .....

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. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relev .....

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