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TMI Blog2014 (11) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee claimed to have incurred the expenditure for improvement amounting to ₹ 1,22,98,550/-. The property is sold on 31.3.2008 - Another property was purchased on 10.1.2007 for ₹ 18,69,638/-, cost of improvement is claimed at ₹ 61,48,700/- and the property is sold on 30.1.2008 - it certainly requires examination whether the profit/loss from the sale of those two properties is assessable under the head capital gains or business income- the matter is to be remitted back to the AO for re-examination of whole issue and pass a speaking order – Decided in favour of revenue. - ITA No.4713/Del/2012, ITA No.3850/Del/2012 - - - Dated:- 22-8-2014 - SHRI G.D. AGRAWAL AND SHRI CHANDRA MOHAN GARG, JJ For The Revenue by : Ms. Ashima Nab, Sr.DR. For The Assessee by : Shri Ashwani Taneja, Advocate and Shri Somil Agarwal, CA. ORDER PER G.D. AGRAWAL, VP : These appeals by the Revenue and the assessee are directed against the order of learned CIT(A)-XXX, New Delhi dated 14th June, 2012 for the AY 2008-09. 2. The Revenue has raised the following grounds in its appeal:- 1. On the facts and circumstances of the case, the ld.CIT(A) had erred in deleting ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that income of the assessee is taxable under the head business and profession instead of capital gain as shown by the assessee in the return. 5. That having regard to the facts and circumstances of the case ld.CIT(A) has erred in law and on facts in imposing penalty of ₹ 25,000/- u/s 271A of the Income Tax Act, 1961 and the same is beyond the jurisdiction, illegal and contrary to law and facts. 6. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other. 4. Since all the grounds of both the appeals are interrelated, we take them together. 5. The facts of the case are that for the year under consideration, the assessee filed the return declaring income of ₹ 11,06,220/- on 20 th October, 2008, which included short term capital gains of ₹ 4,82,726/- on the sale of two properties at GK-1/GK-3. On one property, the assessee has shown the capital gain of ₹ 38,51,064/- while on another property, the assessee has shown the capital loss of ₹ 33,68,338/-. The above capital gain/capital loss was worked out after clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of ledger payments and the compounding fee, the assessee does not possess any other evidence. Therefore, the CIT(A) was not justified in admitting the additional evidence. She, alternatively, submitted that if the additional evidence has been admitted by the CIT(A) overruling the Assessing Officer s objection, he should have allowed an opportunity to the assessee to examine those additional evidence. She, therefore, submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored or, alternatively, the matter may be set aside to the file of the Assessing Officer. 7. Learned counsel for the assessee, on the other hand, stated that the Assessing Officer asked the assessee to produce the evidence with regard to cost of improvement vide order sheet entry dated 15 th December, 2010 and passed the assessment order on 30th December, 2010. Thus, the total time allowed to the assessee was less than 15 days. Considering these facts, the CIT(A) has rightly admitted the additional evidence. He further submitted that the CIT(A) has allowed an opportunity to the Assessing Officer before admitting the additional evidence and if the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admission of additional evidence and he has not given any comment on the additional evidence submitted by the assessee. The CIT(A) rightly overruled the Assessing Officer s objection and admitted the additional evidence but, in our opinion, thereafter, he should have allowed another opportunity to the Assessing Officer for submitting his comments on the additional evidence furnished by the assessee. On these facts, the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Manish Build Well (P.) Ltd. [2012] 204 Taxman 106 would be applicable, wherein their Lordships held as under:- It is for the aforesaid reason that rule 46A starts in a negative manner by saying that an appellant before the Commissioner (Appeals) shall not be entitled to produce before him any evidence, whether oral or documentary, other than the evidence adduced by him before the Assessing Officer. After making such a general statement, exceptions have been carved out that in certain circumstances it would be open to the Commissioner (Appeals) to admit additional evidence. Therefore, additional evidence can be produced at the first appellate stage only when conditions stipulated in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition under Section 69B made by the CIT(A) and his observation with regard to the head of income and levy of penalty under Section 271A is concerned, we find that all these aspects were not considered by the Assessing Officer. The CIT(A) made these additions and observations without allowing any specific opportunity to the assessee which cannot be said to be justified. At the same time, we are of the opinion that the issue with regard to the source of cost of improvement also needs examination. The issue whether the income from sale of property is to be assessed under the head capital gains or business income also needs examination because from the details submitted by the assessee, we find that one property at GK-1 was purchased by the assessee on 2.4.2006 for ₹ 43,00,386/- and assessee claimed to have incurred the expenditure for improvement amounting to ₹ 1,22,98,550/-. The property is sold on 31.3.2008. Another property was purchased on 10.1.2007 for ₹ 18,69,638/-, cost of improvement is claimed at ₹ 61,48,700/- and the property is sold on 30.1.2008. On these facts, it certainly requires examination whether the profit/loss from the sale of those two p ..... 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