Vasamsetty Veera Venkata Satyanarayana Vs ITO (ITAT Hyderabad)
Conclusion: Assessees could not claim cost of improvement and indexation cost as assessee had to furnish some evidence and in the absence of any evidence or information, the information contained in the registered sale deed was required to be accepted.
Held: Assessee was an individual and derived income from business, long term capital gain and from other sources. Assessee had filed his return of income for the AY 2016-17 on 24.03.2018 declaring income of Rs. 8,26,153/-. A search and seizure operation u/s.132 was conducted on the assessee as part of the searches conducted on M/s. Skill Promoters Pvt. Ltd. Group and others on 22.10.2019. Accordingly, notice u/s. 153C was issued to the assessee. In response to the notice, assessee had not filed any return of income. However, assessee filed return of income on 24.03.2018 for the A.Y. 2016-17. Subsequently, notices u/s. 142(1) was issued to assessee by AO. Thereafter, AO had completed the assessment u/s. 153C inter alia by making addition of Rs.1,30,01,435/- on account of Long Term Capital Gains. Revenue, submitted that on the basis of the registered sale deed, assessee had claimed long term capital gain and indexation cost whereas in the agreement of sale dated 21.11.2015 the property had been shown as vacant plot of land. Hence considering the above assessee had wrongly claimed long term capital gain as well as indexation cost. Assessee filed appeal before CIT(A), who granted partial relief to assessee. It was held that to claim the cost of improvement and indexation cost, assessee had to furnish some evidence and in the absence of any evidence or information, then the information contained in the registered sale deed was required to be accepted. Therefore, the information contained in the registered sale deed related to the assessee and AO had rightly invoked the jurisdiction under section 153C.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The captioned appeals are filed by the assessee, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals) – 12, Hyderabad dt.28.09.2022 for A.Y. 2016-17.
2. The grounds raised by the assessee in ITA No.706/Hyd/2022 for A.Y. 2016-17 read as under :
“1. For that the Order of the Learned Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case.
2. For that the Learned Commissioner of Income Tax (Appeals) has erred in upholding the Order u/s 153C r.w.s 144 of the Act in the absence of any incriminating material pertaining to the Appellant found from the persons searched.
3. For that the Learned Commissioner of Income Tax (Appeals) erred in denying the benefit of indexation on cost of improvement incurred during FY 2004-05 amounting to Rs.37,77,148/- having directed the Assessing Officer to allow the claim of cost of improvement on account of compound wall, parking area, drying platforms, roads, leveling and soil dumping workings amounting to Rs.16,17,779/-.
3. Similar grounds were raised by the assessee in other appeal also i.e., ITA 707/Hyd/2022 for A.Y. 2017-18 except the amounts involved in.
4. Before us, at the outset, both the parties submitted that the issues raised in both the appeals were identical. In view of the aforesaid submissions, we, for the sake of convenience proceed to dispose of both the captioned appeals by a consolidated order but however refer to the facts in ITA No.706/Hyd/2022 for A.Y. 2016-17.
5. The brief facts of the case are that assessee is an individual and derives income from business, long term capital gain and from other sources. The assessee had filed his return of income for the AY 2016-17 on 24.03.2018 declaring income of Rs. 8,26,153/-. A search and seizure operation u/s.132 was conducted on the assessee as part of the searches conducted on M/s. Skill Promoters Pvt. Ltd. Group and others on 22.10.2019. Accordingly, notice u/s. 153C was issued to the assessee. In response to the notice, the assessee had not filed any return of income. However, the assessee filed return of income on 24.03.2018 for the A.Y. 2016-17. Subsequently, notices u/s. 142(1) was issued to the assessee by the AO. Thereafter, Assessing Officer had completed the assessment u/s. 153C of the I.T. Act, interalia by making addition of Rs.1,30,01,435/- on account of Long Term Capital Gains.
6. Feeling aggrieved by the order passed by the assessing officer, assessee filed appeal before the Ld. CIT(A), who granted partial relief to the assessee.
7. Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.
8. Ground No.1 is general in nature and requires no adjudication. Ground No.2 is with respect to upholding the order of Assessing Officer u/s 153C r.w.s. 144 of the Act by the ld.CIT(A) and Ground No.3 is with respect to the addition of Rs.33,65,988/- confirmed by the ld.CIT(A).
Ground No.2
9. Before us, ld. AR has submitted that the registered sale deed executed between M/s. SRD Exports, a proprietary concern represented by its Proprietor Sri VV. Satyanarayana Vasamsetty and M/s. Optimus Pharma Pvt. Ltd. represented by its Managing Director Sri D. Srinivasa Reddy for the shed on open plot admeasuring 142/P, 143/P and 145/P admeasuring 10,008 sq.yards situated at EPIP Pashamylaram Village, Patancheru dt.21.11.2015 for an amount of Rs.1,58,22,000/-was not an incriminating document pertaining to the assessee and therefore, cannot form basis of the addition u/s 153C of the Act. It was submitted that the registered sale deed though recovered from the residential premises of searched person cannot be said to be an incriminating document, per se as the said registered sale deed was available in public domain and therefore, cannot be said to be an incriminating document. Further, it was submitted that the said document does not pertain to the assessee as it pertains to the searched person namely, M/s. Optimus Pharma Pvt. Ltd and therefore, cannot be relied upon by the Assessing Officer to make an addition. In reply to the above said submission, the ld.AR relied upon the following decisions :
