2023 (11) TMI 97 - AT - Income Tax

Inequality in Computation of LTCG - AO took only sale consideration from the seized material AND not cost of acquisition - AO accepted cost of acquisition with indexation filed in original return of income filed u/s 139 - As argued when sale consideration of a capital asset is taken by the assessing officer from the seized documents, then cost of acquisition should also be accepted which is mentioned in the seized documents to compute long term capital HELD THAT - We note that an apple-to-apple comparison is often needed in legal cases to ensure that similar facts and circumstances are being considered when making legal decisions. This principle is closely related to the concept of fairness in adjudication. The legal systems aim to treat similar cases similarly to ensure fairness and consistency in the application of the law. In case of equity and justice an apple-to-apple comparison helps to ensure that the legal outcome is just and equitable. If different standards are applied to similar cases, it can result in unequal treatment under the law. In the assessee s case under consideration, as observed that in order to compute the long term capital gain (LTCG), AO took sale consideration from the seized material, however, the cost of acquisition of the said asset was also mentioned in the seized material, but the AO has not taken into account to compute LTCG, which is not tenable. It creates inequality in the computation of LTCG, as when the sale consideration and cost of acquisition, both are mentioned in the seized material, then in that circumstances the Assessing Officer has to consider both to compute LTCG. Therefore, the approach of the Assessing Officer to take the sale consideration from seized material and cost of acquisition from assessee s return of income, is not acceptable, as it creates discrimination in the computation of LTCG - addition made by AO should be deleted. Decided in favour of assessee.

Summary

Issues:
The judgment involves issues related to long term capital gain calculation, rejection of cost of acquisition with indexation, initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, and the validity of assessment framed under section 143(3) read with section 153C of the Act based on material found during a search action.

Long Term Capital Gain Calculation:
The appeal pertained to the assessment year 2015-16 and challenged the addition of long term capital gain by the Assessing Officer. The Assessing Officer had taken the sale consideration from seized documents but did not consider the cost of acquisition mentioned in the same documents. The appellant argued for harmony in the computation of LTCG, emphasizing that both sale consideration and cost of acquisition from seized material should be considered. The Tribunal agreed, stating that an "apple-to-apple" comparison is crucial to ensure fairness and consistency in legal decisions. Therefore, the addition made by the Assessing Officer was deleted, as failure to consider both sale consideration and cost of acquisition from seized material created inequality in LTCG computation.

Rejection of Cost of Acquisition with Indexation:
The appellant contested the rejection of the cost of acquisition with indexation by the Assessing Officer, who had added an amount as undisclosed long term capital gain. The Tribunal noted that if sale consideration was taken from seized material, the cost of acquisition from the same material should also be accepted to compute LTCG. As the Assessing Officer did not consider the cost of acquisition from seized material, the rejection was deemed unacceptable, and the addition was deleted.

Initiation of Penalty Proceedings:
The appellant challenged the initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act. However, the Tribunal's decision did not specifically address this issue in the summary provided.

Validity of Assessment under Section 143(3) read with Section 153C:
The appellant raised a ground of appeal questioning the validity of the assessment under section 143(3) read with section 153C of the Act, based on material found during a search action. The Tribunal dismissed this additional ground of appeal as not pressed by the appellant, indicating that the issue was not pursued further during the proceedings.

Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing the importance of considering both sale consideration and cost of acquisition from seized material to ensure fairness and consistency in LTCG computation. The addition made by the Assessing Officer was deleted based on the principle of "apple-to-apple" comparison, leading to the favorable outcome for the appellant.