2011 (7) TMI 708 - AT - Income Tax

Income escaping assessment - LTCG - additional evidence - held that - Under the provisions of Rule 46A of the Income Tax Rules an option is available to the assessee to furnish additional evidence before the CIT(A), which was not furnished before the Assessing Officer - The assessee before us in the return of income had shown the cost of acquisition as its original cost. However, before the CIT(A) a prayer was made for admission of additional evidence alongwith documents establishing the claim of the assessee of having acquired the said property prior to 1st April, 1981. Further, report of the Registered Valuer determining the fair market value as on 1.4.1981 was also furnished as additional evidence. The contention of the assessee in this regard was that the fair market value as on 1st day of April, 1981 is to be adopted as the cost of acquisition under the provisions of section 48 of the Act. - Additional evidence admitted. Under the provisions of the Act admittedly the assessee has the option to adopt the fair market value of the asset as on 1.4.1981 as its cost of acquisition - assessee has filed report of Registered Valuer but the same has not been looked into by the Assessing Officer or the CIT(A) - Appeal is allowed by way of remand.

Summary

Issues:
Appeal against order of Commissioner of Income-tax(A) under section 147/143(3) of the I.T. Act, 1961 for assessment year 2006-07.

Detailed Analysis:

Issue 1:
The appeal challenged the action of the Assessing Officer in issuing a notice under section 148 and reopening the case.

Issue 2:
Dispute over the computation of income from long term capital gains, specifically regarding the adoption of sale consideration and fair market value of property as on 1.4.1981.

Analysis:
The Assessing Officer reopened the case as the assessee did not disclose income from the sale of an industrial plot. The State Revenue Authority valued the property at Rs.20 lacs, while the assessee claimed Rs.9 lacs as the sale consideration. The Assessing Officer adopted the higher value, resulting in long term capital gains of Rs.11,00,125. The CIT(A) upheld this decision despite additional evidence provided by the assessee.

Issue 3:
Failure to consider additional evidence filed before CIT(A) regarding fair market value of property as on 1.4.1981.

Analysis:
The assessee submitted evidence of property allotment in 1955 and a valuation report for fair market value as on 1.4.1981. The CIT(A) did not consider this evidence, leading to the appeal's contention that the fair market value should have been determined based on the evidence provided. The Tribunal agreed and remitted the matter back to the Assessing Officer for proper evaluation.

Issue 4:
Non-consideration of written submissions and additional evidence by CIT(A).

Analysis:
The CIT(A) failed to address the written submissions and additional evidence filed by the assessee, leading to the Tribunal's decision to allow the appeal for statistical purposes. The Tribunal emphasized the importance of considering all evidence before making a decision.

In conclusion, the Tribunal allowed the appeal, remitted the matter back to the Assessing Officer for proper determination of fair market value, and directed a reevaluation of the applicability of section 50C of the Act. The decision highlighted the significance of considering all evidence and providing a fair opportunity for the assessee to present their case.