Assessee wins LTCG computation dispute after AO incorrectly mixed seized documents with original return data

The ITAT Surat ruled in favor of the assessee regarding computation of long-term capital gains (LTCG). The AO incorrectly took sale consideration from seized documents but accepted cost of acquisition from the original return filed under section 139. The tribunal held this created inequality in LTCG computation, emphasizing that when both sale consideration and cost of acquisition are mentioned in seized material, the AO must consider both for fair calculation. The tribunal applied the principle of apple-to-apple comparison to ensure equitable treatment and deleted the addition made by the AO.

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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.

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