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Bikram Singh Versus DCIT Circle 15 (1) New Delhi

[2016] 48 ITR (Trib) 689 - Capital gain addition - jurisdiction of AO by computing income of the assessee on the basis of the income as per Section 143(3) - Held that:- The Assessing Officer has acted beyond the jurisdiction by computing income of the assessee on the basis of the income as per Section 143(3) where as the intimation was u/s 143(1). The CIT(A) acted beyond its power by directing the Assessing Officer to tax the capital gains in respect of sale of land at Gurgaon, though, there was .....

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f the assessment - Decided in favour of assessee - I.T.A. No. 3522/DEL/2013 - Dated:- 13-4-2016 - Shri S. V. Mehrotra, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Appellant : Sh. C. S. Aggarwal, Sr. Advocate & Sh. R. P. Mall, Adv For the Respondent : Shri J. James Singh, Sr. DR ORDER Per Suchitra Kamble, JM This appeal is filed against the order dated 1/3/2013 passed by CIT (A)- XVIII, New Delhi by the assessee. 2. The grounds of appeal are follows:- 1. That the Learne .....

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₹ 76,22,919/- being the income assessed U/S 143(1) of the Income Tax Act. 1.2 That the CIT (A) has failed to appreciate that the aforesaid difference of ₹ 19, 10,145/- represented the income declared by the assessee as an agricultural income and thus there was no justification to have proceeded to compute the income on the basis of the income computed u/s 143(1) of the Income Tax Act, as the A.O. while framing the assessment has held 50% of the said sum as declared by way of an agric .....

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ng of land and as such there could be no income derived or accrued on the investment and disinvestment made. The findings of the CIT(A) in the appellate order in para 4.3 is highly misconceived and are arbitrary. 2.2 That the learned Commissioner of Income Tax (Appeals) has grossly erred in failing to appreciate that appellant was the owner of the agricultural land and sold the aforesaid agricultural land measuring 15 Kanal 11 marlas for a consideration of ₹ 3,11,00,000/- and out of the af .....

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hase of agricultural land of ₹ 4,33,85,625/-, failing to appreciate that since the appellant had purchased the aforesaid land and for himself, the finding that appellant has earned alleged commission income from the aforesaid transaction of purchase of agricultural land is highly misconceived, arbitrary and contrary to the fact. 4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition of ₹ 9,55,074/- out of an income of S .....

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llant has produced complete information with regard to the sale of the agricultural produce i.e. bill number, date and name of the purchaser alongwith the sale slips, as such, addition sustained ignoring the evidence/material is perverse and untenable in law. 5. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in directing the learned AO to bring to tax the capital gain on sale and purchase of the agricultural land, as such a direction under sectio .....

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f capital gain was neither the subject matter of assessment nor the appellant has raised any ground to that effect, as such, it was beyond the jurisdiction of the learned Commissioner of Income Tax (Appeals) to introduce a new source of income and power of learned Commissioner of Income Tax (Appeals) is confined to those items of income which were the subject-matter of original assessment in an appeal filed by the assessee. 5.2 That the learned CIT(A) had acted without jurisdiction when by an or .....

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erred in failing to comprehend and appreciate that, she had no jurisdiction, to direct the A.O to bring to tax the purported gain, which arose on the sale of an agricultural land, as profit on sale of the agriculture land had not been subjected to tax or even such a head of income, was even considered by A.O while framing the assessment. 5.5 That the Learned CIT(A) has failed to appreciate that, in the absence of an assessment having been made in respect of the purported capital gain by the A.O .....

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e order. 5.7 That, even otherwise and without prejudice, the Learned CIT(A) has failed to comprehend that, since the directions issued resulted into enhancement of income, no such direction could have been issued without issuing a notice of enhancement and notice issued to the appellant cannot be regarded as notice of enhancement. 6. That the Learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording an erroneous finding that no purchase deed or sale deed has be .....

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f ₹ 29,232/- u/s 234A of the Act and, interest of ₹ 4,82,328/- u/s 234B of the Act and ₹ 18,426/- u/s 234C of the Act, which is not leviable at all. It is therefore, prayed that, additions/disallowances made to the income returned by the appellant along with interest levied may kindly be deleted and appeal of the appellant be allowed. 3. The assessee filed return of income of ₹ 57,12,774/- on 30.09.2009. The return was processed under Section 143(1) of the Income Tax Act, .....

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date no one attended the proceedings. Accordingly, the Assessment was completed ex-parte on merits on the basis of the information available on record. 4. At the beginning of the assessment year, assessee was holding agricultural land valuing ₹ 2,54,30,709/- and during the year, it purchased land valuing ₹ 5,78,92,966/- and after selling the agricultural land of ₹ 2,97,12,813/- closing balance of the Agricultural land was declared at ₹ 5,36,10,862/-. The assessee during .....

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es of ₹ 13,7,187/- was not honored as such, consideration of the sale of the agricultural land was declared at ₹ 2,97,12,813/- (page 144 -145 of the Paper Book). 5. The Assessing Officer made an addition of ₹ 14,85,641/- towards a commission as brokerage at 5% on the made by the assessee of its own land. In making the aforesaid addition A.O observed that the assessee had sold land measuring 50 canal, 11 marlas for a consideration of ₹ 3,11,000/- and the assessee has furni .....

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in the assessment order u/s 143(3) of the Act. But further added ₹ 9, 55,074/- being 50% of the total agricultural income. The Assessing Officer further disallowed one fourth of the vending machine expenses at around ₹ 10,05,299/-. The Assessing Officer observed there were no details given for vending machine expenses by the assessee. The assessee went in appeal before the CIT (A). The CIT (A) directed the Assessing Officer to tax capital gains in respect of income earn by the asses .....

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e land measured 15 canal and 11 marla was situated in Gurgaon and was sold to M/s SRP Builders Ltd, there was no documentary evidence in regard to purchase of the said land filed by the assessee. The CIT(A) further noted that the said land whether was agricultural and situated outside the municipal limits was not supported by any evidence as assessee did not filed any documentary evidence. While taking further note of Assessing Officer mentioned in the assessment order that instead of sale consi .....

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commission brokerage on the sale transaction undertaken by the assessee. Before the CIT (A) the assessee took stand that the said commission paid is the expense in the hands of the assessee and not income while taking stand the assessee pointed out the order-sheet entry dated 16/8/2012 the sale was submitted before the CIT(A). The CIT (A) finally hold that no purchase deed or sale deed was furnished by the assessee. Either during assessment proceedings or during appellate proceedings except deed .....

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source and quantum of the expenditure incurred on purchase of seeds, watering and labour etc, and thus rejected the appeal of the assessee. As relates to addition of ₹ 2, 51,325/- while disallowing 25% of expenses. The CIT (A) held that the ledger account was not supported by any documentary evidence/vouchers. Thus, the said ground was rejected. 7. The Ld. AR submitted that the Assessing Officer made no enquiry. The Assessing Officer did not allege that the assessee had derived any income .....

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ead which could be subject matter of appeal or makes an enquiry about the head and source of income, the CIT(A) does not have any power under Section 251 of the Act either to make an addition or even set aside the assessment to do so. This is well settled law. In this context heavy reliance had been placed on the judgment of full Bench of Delhi High Court in the case of CIT vs. Sardari Lal & Co. reported in 251 ITR 864. The Ld. AR further submitted that the direction of the CIT(A) to AO to t .....

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lable to the CIT(A) under section 251(1)(a) of the Act. 8. The Ld. AR further submitted that when the assessee had sold his own land, there could be no occasion to even arbitrarily assume that the assessee has earned income by way of commission. Despite the aforesaid facts on record, he held that the assessee has earned a commission @ 5% on the sale of the land and thus made an addition of ₹ 14,85,6411-. It is absolutely evident from the aforesaid facts such an addition has been made which .....

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e said show cause notice was received by the assessee on 15.12.2011 and vide the aforesaid notice, assessee was required to file its reply on 16.12.2011. It is submitted that as the assessee was at Mumbai on 15.12.2011, 16.12.2011, 17.12.2011 and 18.12.2011 being Saturday and Sunday made compliance on the next working day i.e. on 19.12.2011 (page 147 - 148 of the Paper Book). Thus the allegation was refuted by the Ld. AR. Aforesaid fact was duly stated in the grounds of appeal before the CIT(A) .....

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hus made no adverse comments as none of the additions made were as a result of any non- compliance of a notice warranting an assessment u/s 144 of the Act. That assessee is earning agricultural income year after year and in all preceding years, agricultural income earned by the assessee has been accepted as such, an addition made to the total income by reducing the declared income from agricultural activities from ₹ 19,10,149/- to ₹ 9,55,074/- is manifestly erroneous. The income earn .....

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isclosed a net profit of ₹ 2,96,060/- on receipt of ₹ 14,01,143/- which included vending machine expenses of ₹ 10,05,299/- and margin of profit declared by the assessee is 15%. Further, in respect of details of expenses, it is submitted that income from aforesaid activity i.e. sale of tea coffee through vending machine ,was earned in cash and also the expenditure for vending machine is also made in cash, however all such expenses are duly recorded in the books of assessee. As s .....

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t all relevant in this particular case as the assessee himself has not availed any opportunity given to him. 10. The Ld. AR in rejoinder submitted that the assessee on 19/11/2011 i.e. On the very same day when he arrived from Bombay has given his reply and the enclosures therein as a detailed to his assessment proceedings he has shown the acknowledgement of the Department. Therefore, the Ld. AR submitted that this appeal should be allowed. 11. We have perused all the records and heard both the c .....

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