Assessee failed to produce Additional Evidence before Dept due to Family Disputes: ITAT directs AO to consider Matter Afresh [Read Order]

The Ahmedabad Income Tax Appellate Tribunal ( ITAT ) has held that assessee failed to produce additional evidence before department due to family disputes and directs AO to consider matter afresh.

The assessee is an individual. During the assessment year 2015-16, the assessee has derived income from long term capital gains and income from other sources. The assessee has e-filed his return of income declaring total income at Rs.16,26,920/-. The return was processed under section 143(1) of the Income Tax Act, 1961, and thereafter the same was selected for scrutiny assessment proceedings. Notices u/s.142(1) & 143(2) were issued and the assessee was being heard from time to time. During the assessment proceedings, the AO noticed that in the statement of income under computation of “long term capital gains”, the assessee has shown 50% of sale consideration in respect of immovable property being “Tulsi Bungalow” at Rs.2,83,62,760/-instead of 50% of sale consideration of the property at Rs.2,50,00,000/- as per the sale deed. This property was jointly held by his wife, Smt.Rajshri Vatsal Parikh as a co-owner.

The assessee claimed that difference of Rs.33,62,760/- was on account of compensation received for late payment of sale consideration paid by purchaser. From the sale consideration received from the sale of “Tulsi Bungalow”, the assessee reinvested by purchasing immovable property at Belvadere Flats for Rs.2,12,30,000/- and claimed deduction under section 54 of the Act, and the net long term capital gain of Rs.11,47,101/- was offered to tax. However, the AO has not accepted the above explanation given by the assessee and treated receipt of compensation for late payment as income from other sources, and worked out entire capital gain on sale of the property at Rs.2,80,50,000/- and determined total income at Rs.3,30,39,680/- and demanded tax of Rs.74,79,270/- including interest under section 234B and 234C of the Act.

Aggrieved against this assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The CIT (A) held that terms and conditions of sale deed did not support interest on late payment of sale consideration and that it was part of the sale consideration, and therefore, the AO has treated the amount on late payment of interest under the head “income from other sources”. CIT (A) confirmed addition made by the AO of Rs.2,80,50,000/- on account of undisclosed long term capital gain. In this background, the assessee has filed additional evidence before the Tribunal for consideration of his claim.

The appellant submitted that on account of family dispute, the same could not be obtained from the rival parties and could not be produced before the lower authorities. The AO called for specific details and called for the supporting documents of trust deed, dissolution deed, copy of Will and cost of acquisition details. However, the appellant could not file the copy of will and trust deed and claimed that since the cost of acquisition and sale consideration is same, therefore no capital gain is payable.” But ultimately, the CIT (A) confirmed addition made by the AO of Rs.2,80,50,000/- on account of undisclosed long term capital gain. In this background, the assessee has filed additional evidence before the Tribunal for consideration of his claim.

The division bench presided by Sri Pramod M. Jagtap, Vice President and T.R. Senthil Kumar, Judicial Member has held that “we find that additional evidences are produced for the first time before the Tribunal. These documents were not filed before the lower authorities during assessment proceedings due to family disputes. Therefore, in the interest of justice, we deem it fit to remand the matter back to the file of the AO. The AO shall look into the record, documents and other evidences produced by the assessee, and thereafter pass a fresh speaking order in accordance with law, after providing reasonable opportunity to the assessee. Needless to say, the assessee shall cooperate with the AO by providing the details required by the AO for completion of de novo assessment. With this direction, we dispose of the appeal of the assessee”.

To Read the full text of the Order CLICK HERE

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