2021 (3) TMI 865 - AT - Income Tax

Short term capital gain - execution of two sale deeds by the assessee i.e. dated 19/05/2008 and another dated 16/03/2009 - Admission of additional evidence - HELD THAT - We found that the assessee had placed on record Rajinama dated 30/06/2009 which was consequently followed by registered cancellation deed dated 05/11/2009. Since the assessee has already placed on record Rajinama dated 30/06/2009 but could not place on record registered cancellation deed dated 05/11/2009 because of the reasons mentioned above, in our view, the cancellation deed dated 05/11/2009 is a registered document and cancellation deed was followed by Rajinama dated 30/06/2009 which have already been placed on record by the assessee. Since according to the assessee, the said Rajinama dated 30/06/2009 was already filed before the A.O. and the cancellation deed was not available at that time with the assessee and after assessment, the assessee obtained a certified true copy of the cancellation deed from the Sub-Registrar, therefore, the case of the assessee is covered by Clause (c) of Rule 46A of the Rules. We are of the considered view that since the veracity of the registered cancellation deed dated 05/11/2009 has not been disputed by the revenue in any manner, therefore, the ld. CIT(A) ought to have admitted the said documents as additional evidence. Since ld. CIT(A) has not admitted the Registered Cancellation deed dated 05/11/2009, therefore, keeping in view our above discussion, we direct the ld. CIT(A) to admit the Registered Cancellation deed dated 05/11/2009 as additional evidence. Since, we have allowed the additional evidence of the assessee, therefore, in the interest of justice, we restore the matter back to the ld. CIT(A) for deciding the issue of short term capital gain afresh by taking into consideration the fact of registered cancellation deed dated 05/11/2009.

Summary

Issues:
1. Dispute over short term capital gain on the sale of a property.
2. Rejection of additional evidence under Rule 46A by the CIT(A).
3. Failure to decide the issue of short term capital gain computation on another property.

Issue 1: Dispute over Short Term Capital Gain:

The appeal concerned the assessment year 2009-10 where the assessee challenged the addition of short term capital gain by the Assessing Officer. The dispute arose from the alleged sale of a property in Jaipur twice, leading to conflicting sale considerations. The assessee argued that the initial sale deed was fraudulently executed and subsequently canceled through a Rajinama and a registered cancellation deed. The CIT(A) confirmed the addition, disregarding the cancellation evidence submitted under Rule 46A. The ITAT held that the registered cancellation deed should have been admitted as additional evidence, directing the CIT(A) to reconsider the short term capital gain issue.

Issue 2: Rejection of Additional Evidence under Rule 46A:

The assessee filed an application under Rule 46A before the CIT(A) to admit additional evidence of the registered cancellation deed. The CIT(A) rejected the application, stating it was not covered under any provision of Rule 46A. The ITAT disagreed, finding the cancellation deed crucial to the case and falling under Clause (c) of Rule 46A. The ITAT directed the CIT(A) to accept the registered cancellation deed as additional evidence, emphasizing the importance of considering all relevant documents.

Issue 3: Failure to Decide Short Term Capital Gain Computation:

The appeal also raised a ground regarding the computation of short term capital gain on another property, which the CIT(A) did not address due to the primary issue's disposition. The ITAT, having remanded the main issue back to the CIT(A), also instructed the CIT(A) to reconsider and decide the computation of short term capital gain on the second property, ensuring the assessee's right to a fair hearing.

In conclusion, the ITAT allowed the appeal for statistical purposes, highlighting the importance of admitting crucial evidence and ensuring a comprehensive review of all relevant issues in tax assessments. The decision emphasized the need for a fair and thorough consideration of evidence to uphold the principles of natural justice in tax disputes.