SHRI VIKRAM JAIN, TIRUPPUR V. DCIT CIRCLE 1, TIRUPPUR

CO 78/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8006 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S LAKSHMIVENKATARAMAN
• Assessee Lawyers: R CLEMENT RAMESH KUMAR
• Keywords: Fair market value; Valuation report
• Section: 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.600/CHNY/2018 & C.O. NO.78/CHNY/2018 (IN I.T.A. NO.600/CHNY/2018) ( )( / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, TIRUPUR. V. SHRI VIKRAM JAIN, T-14, A-BLOCK, PRIME ENCLAVE, AVINASHI ROAD, TIRUPUR 641 603. PAN : ACEPJ 8768 J (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) +, - . / APPELLANT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL.CIT /0+, - . / RESPONDENT BY : SHRI T.S. LAKSHMIVENKATARAMAN, FCA 1 - 2$ / DATE OF HEARING : 11.06.2019 34) - 2$ / DATE OF PRONOUNCEMENT : 18.07.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, COIMBA TORE, DATED 12.12.2017 AND PERTAINS TO ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(APPEALS). THEREFORE, WE HEARD BOTH THE APP EAL AND THE 2 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 CROSS-OBJECTION TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI R. CLEMENT RAMESH KUMAR, THE LD. DEPARTMENT AL REPRESENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISE S FOR CONSIDERATION IS DETERMINATION OF FAIR MARKET VALUE AS ON 01.04.1981 FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. ACCORDI NG TO THE LD. D.R., THE ASSESSEE IS ONE OF THE CO-OWNERS, ALONG W ITH TWO OTHERS, IN RESPECT OF THE LAND SITUATED AT KHASRA NO.216, K HATENA, AGRA. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER OF ONE OF THE CO- OWNERS, REFERRED THE MATTER TO THE VALUATION OFFICE R. THE VALUATION OFFICER DETERMINED THE FAIR MARKET VALUE AS ON 01.0 4.1981 AT 654/- PER SQ.MTR. SUBSEQUENTLY, ACCORDING TO THE LD. D.R ., THE DEPARTMENTAL VALUATION OFFICER FILED THE REVISED VA LUATION REPORT ON THE GROUND THAT HE WAS IN POSSESSION OF A COMPARABL E SALE INSTANCE WHICH CAME SUBSEQUENTLY. ACCORDINGLY, HE FILED THE REVISED VALUATION ESTIMATING AS ON 01.04.1981 AT 82.06 PER SQ.MTR. ACCORDING TO THE LD. D.R., THE REGISTERED VALUER ES TIMATED THE FAIR MARKET VALUE AS ON 01.04.1981 AT 750/- PER SQ.MTR. AS PER REVERSE INDEX METHOD, THE VALUATION COMES TO 963/- PER SQ.MTR. HOWEVER, ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THE VALUATION AS ON 3 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 01.04.1981 AT 450/- PER SQ.MTR. ON A QUERY FROM THE BENCH, THE LD. D.R. CLARIFIED THAT THE ASSESSING OFFICER OF TH E PRESENT ASSESSEE HAS NOT REFERRED THE MATTER TO THE VALUATION OFFICE R. SINCE THERE WAS VALUATION REPORT BY A TECHNICAL EXPERT BY WHICH THE FAIR MARKET VALUE WAS ESTIMATED TO 82.06 PER SQ.MTR., ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HAS ADOPTED THE SAME. HOWEVER, ON APPEAL BY THE ASSESSEE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THE FAIR MARKET VALUE AS ON 01.04.1981 AS ADOPTED BY THE ASSESSEE AT 450 PER SQ.MTR. WAS REASONABLE AND DIRECTED THE ASSESSING OFFICER TO ADOPT THE SAME. THE ONLY CONTENTION OF THE LD. D.R. BEFORE THIS TRIBUNAL IS THAT THE DEPARTMENTAL VALUATION OFFICER IN THE CASE OF ONE O F THE CO-OWNERS INSPECTED THE PREMISES IN PERSON AND ON THE BASIS O F A COMPARABLE SALE INSTANCE, ESTIMATED THE FAIR MARKET VALUE AS O N 01.04.1981, AT 82.06 PER SQ.MTR., THEREFORE, THAT CANNOT BE IGNORE D BY THE CIT(APPEALS). HENCE, ACCORDING TO THE LD. D.R., TH E CIT(APPEALS) IS NOT JUSTIFIED IN ACCEPTING THE FAIR MARKET VALUE AS ESTIMATED BY THE ASSESSEE AT 450/- PER SQ.MTR. 3. ON THE CONTRARY, SHRI T.S. LAKSHMIVENKATARAMAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT AT THE FIRST INSTANCE, 4 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 THE DEPARTMENTAL VALUATION OFFICER IN THE CASE OF T HE CO-OWNER, VALUED THE FAIR MARKET VALUE AT 654 PER SQ.MTR. IN FACT, ACCORDING TO THE LD. REPRESENTATIVE, THE VALUATION OFFICER HA S TAKEN THE GUIDELINE VALUE / CIRCLE RATE IN THE YEAR 1979 FOR THE PURPOSE OF ESTIMATING THE FAIR MARKET VALUE AT 654/- PER SQ.MTR. SUBSEQUENTLY, THE VALUATION OFFICER CLAIMED THAT HE CAME ACROSS A COMPARABLE SALE INSTANCE IN RESPECT OF KHASARA NO.540, 541, 544 NAG AR NIGAM NO.19/6, MOH KHATENA. ACCORDING TO THE LD. REPRE SENTATIVE, A COMPARABLE SALE INSTANCE, WHICH WAS REFERRED BY THE DEPARTMENTAL VALUATION OFFICER IN THE CASE OF CO-OWNER, REFERS T HE LAND AT KHASRA 540, 541 AND 544. ACCORDING TO THE LD. REPRESENTAT IVE, THE SUBJECT LAND WHICH IS UNDER CONSIDERATION IN THIS APPEAL IS AT KHASRA NO.216. THEREFORE, THE COMPARABLE SALE INSTANCE RE FERRED BY THE DEPARTMENTAL VALUATION OFFICER RELATES TO THE LAND WHICH WAS SITUATED IN A FAR OFF PLACE. HENCE, ACCORDING TO T HE LD. REPRESENTATIVE, THE SALE INSTANCE REFERRED BY THE D EPARTMENTAL VALUATION OFFICER IN THE CASE OF ANOTHER CO-OWNER C ANNOT BE A BASIS TO ESTIMATE THE FAIR MARKET VALUE IN THE CASE OF TH E ASSESSEE. REFERRING TO THE GUIDELINE VALUE / CIRCLE RATE, ACC ORDING TO THE LD. REPRESENTATIVE, THE VERY SAME DEPARTMENTAL VALUATIO N OFFICER ESTIMATED THE VALUE AS ON 01.04.1981 AT 654/- PER SQ.MTR., 5 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 WHEREAS, THE ASSESSEE IS CLAIMING 450/- PER SQ.MTR. HENCE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ADOPT FAIR MARKET VALUE AS ON 01.04.1981 AT 450 PER SQ.MTR. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR ESTIMATING THE FAIR MARKET VALUE, THE ASSESSING OFFICER WAS EX PECTED TO CONSIDER VARIOUS FACTORS SUCH AS THE LOCATION OF LA ND, AREA OF THE LAND, INFRASTRUCTURE FACILITIES AVAILABLE AROUND TH E LAND, POTENTIAL FOR FUTURE DEVELOPMENT, GUIDELINE VALUE / CIRCLE RATE A ND OTHER FACTORS WHICH WOULD INFLUENCE THE MARKET RATE IN THAT LOCAL ITY. THE DEPARTMENTAL VALUATION OFFICER IN THE CASE OF ANOTH ER CO-OWNER, AFTER CONSIDERING THE LOCALITY, CIRCLE RATE / GUIDE LINE VALUE AND OTHER FACTORS, ADMITTEDLY ESTIMATED THE FAIR MARKET VALUE AS ON 01.04.1981 AT 654/- PER SQ.MTR. SUBSEQUENTLY, HE MODIFIED THIS R EPORT AND FILED A REVISED ESTIMATE AT 82.06 PER SQ.MTR. THE REASON FOR SUCH MODIFICATION / REVISION IS THAT THE DVO CAME ACROSS A COMPARABLE SALE INSTANCE AS ON 16.03.1981. ADMITTEDLY, THE AS SESSEES LAND IS SITUATED AT KHASRA NO.216. THE COMPARABLE SALE INS TANCE REFERRED BY THE DEPARTMENTAL VALUATION OFFICER IS SITUATED A T KHASRA NO.540, 6 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 541 AND 544. THEREFORE, IT IS NOT ADJACENT TO THE ASSESSEES LAND. THE DISTANCE BETWEEN THE ASSESSEES LAND AND COMPAR ABLE SALE INSTANCE REFERRED BY THE DEPARTMENTAL VALUATION OFF ICER WAS NOT BROUGHT ON RECORD BY BOTH THE ASSESSING OFFICER AND BY THE DEPARTMENTAL VALUATION OFFICER. 5. THE DEPARTMENTAL VALUATION OFFICER HIMSELF CLAIM S THAT THE SUBJECT LAND IS SITUATED ON THE MAIN ROAD, NAMELY, KHATENA ROAD ADJOINING JAIPUR HOUSE COLONY AND 200 MTR DISTANCE FROM POLICE STATION. THE DEPARTMENTAL VALUATION OFFICER HAS AL SO INDICATED THAT THE LAND AT PRESENT IS SURROUNDED ON BOTH SIDES BY COMMERCIAL / BUSINESS PREMISES, RAILWAY STATION, COLLEGES, HOSPI TALS, MALLS, ETC. THEREFORE, IT IS OBVIOUS THAT THE LAND IN QUESTION IS SITUATED AT A PRIME LOCATION AT AGRA. NO DOUBT, COMPARABLE SALE INSTANCE IN THE VERY SAME LOCALITY IS ALSO ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION FOR ESTIMATING FAIR MARKET VALUE AS O N 01.04.1981. AT THE VERY SAME TIME, OTHER FACTORS SUCH AS POTENTIAL FOR FUTURE DEVELOPMENT, INFRASTRUCTURE FACILITIES AVAILABLE AR OUND THE LAND, ACCESS TO THE PUBLIC ROAD, ETC. CANNOT BE IGNORED. IN THIS CASE, ADMITTEDLY, THE LAND IN QUESTION IS SITUATED ON THE KHATENA MAIN ROAD AND THERE IS A POTENTIAL FOR FUTURE DEVELOPMEN T. IN FACT, THERE 7 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 ARE COMMERCIAL COMPLEXES / MALLS HAVE COME UP AT PR ESENT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT 450/- PER SQ.MTR. WOULD BE VERY REASONABLE AFTER CONSIDERING THE LOCALITY OF THE LAND, POTENTIAL FOR FUTURE DEVELOPMENT, INFRASTRUCT URE FACILITIES AVAILABLE AROUND THE LAND, CIRCLE RATE / GUIDELINE VALUE, ETC. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY IN RESPECT OF THE VALU ATION AS ON 01.04.1981 AND ACCORDINGLY THE SAME IS CONFIRMED. 6. NOW COMING TO THE CROSS-OBJECTION FILED BY THE A SSESSEE, THE FIRST ISSUE IS WITH REGARD TO REOPENING OF ASSESSME NT. ACCORDING TO THE LD. REPRESENTATIVE, NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS NOT SERVED ON TH E ASSESSEE. THEREFORE, THE REOPENING ITSELF IS INVALID, HENCE, THERE CANNOT BE ANY ASSESSMENT. 7. ON THE CONTRARY, SHRI R. CLEMENT RAMESH KUMAR, T HE LD. D.R., AFTER VERIFYING THE ORIGINAL FILE, SUBMITTED THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS SERVED ON THE ASSESSEE A ND THERE IS A POSTAL ACKNOWLEDGEMENT AVAILABLE ON RECORD AS A PRO OF OF SERVICE OF NOTICE ON THE ASSESSEE. IN VIEW OF THE ABOVE, ACC ORDING TO THE LD. D.R., THE NOTICE UNDER SECTION 148 OF THE ACT WAS A CTUALLY SERVED ON 8 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 THE ASSESSEE, HENCE, THE ASSESSMENT WAS REOPENED AF TER FOLLOWING THE PROCEDURE. 8. BY WAY OF REJOINDER, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT ORDER IS BARRED BY LI MITATION. ACCORDING TO THE LD. REPRESENTATIVE, AFTER THE NOTI CE SAID TO BE ISSUED UNDER SECTION 148 OF THE ACT, THE RETURN OF INCOME WAS NOT FILED AND THE ASSESSING OFFICER REFERRED ONLY THE R ETURN SAID TO BE FILED ON 29.03.2014. THEREFORE, ACCORDING TO THE L D. REPRESENTATIVE, THE NOTICE ISSUED ON 22.07.2016 ON THE BASIS OF THE RETURN FILED ON 29.03.2014 IS NOT VALID. IN OTHER WORDS, ACCORDING TO THE LD. REPRESENTATIVE, TIME LIMIT FOR ISSUE OF NOTICE ON T HE BASIS OF THE RETURN FILED ON 29.03.2014 HAS ALREADY EXPIRED, HEN CE, THERE CANNOT BE ANY VALID ASSESSMENT. 9. ON THE CONTRARY, SHRI R. CLEMENT RAMESH KUMAR, T HE LD. D.R. SUBMITTED THAT AFTER THE RECEIPT OF NOTICE UND ER SECTION 148 OF THE ACT, NO DOUBT, THE ASSESSEE HAS NOT FILED ANY R ETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE FOR APPEARANCE OF THE ASSESSEE. IN THE NOTICE, THE ASSESSING OFFICER REF ERRED TO SECTION 143(2) OF THE ACT. HOWEVER, ACCORDING TO THE LD. D .R., IT IS FOR ASSESSMENT. THE ASSESSEE APPEARED IN PERSON AND CO -OPERATED 9 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 WITH THE DEPARTMENT IN COMPLETING THE ASSESSMENT. THEREFORE, ACCORDING TO THE LD. D.R., IT CANNOT BE SAID THAT T HE ORDER WAS BARRED BY LIMITATION. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE NOTICE ISSUED BY THE ASSESSING OFFICER REFERRED TO SECTION 143(2) OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION TH AT MERE MENTIONING OF WRONG PROVISION OF LAW CANNOT BE A REASON TO INV ALIDATE A NOTICE OF HEARING ISSUED BY THE ASSESSING OFFICER. AFTER REOPENING ASSESSMENT, THE ASSESSING OFFICER PROCEEDED FURTHER TO COMPLETE THE ASSESSMENT. AT THE BEST, WE MAY SAY THAT IT IS A NOTICE ISSUED UNDER SECTION 144 OF THE ACT FOR COMPLETION OF ASSE SSMENT. THE ASSESSEE, IN FACT, PARTICIPATED IN THE ASSESSMENT P ROCEEDING AND FILED ALL THE MATERIAL REQUIRED FOR COMPLETING THE ASSESSMENT. THEREFORE, AT THIS STAGE, THE ASSESSEE CANNOT SAY T HAT THE ORDER OF THE ASSESSING OFFICER IS BARRED BY LIMITATION. THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS SERVED ON THE ASSE SSEE AND POSTAL ACKNOWLEDGEMENT IS AVAILABLE ON THE ASSESSME NT RECORD. THEREFORE, THE ASSESSMENT WAS VALIDLY REOPENED. 10 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 11. THE ASSESSEE HAS ALSO RAISED ONE MORE GROUND WI TH REGARD TO IMPROVEMENT MADE TO THE PROPERTY DURING THE YEAR S 1982-83, 1983-84, 1984-85 AND 1985-86. THE ASSESSING OFFICE R ALLOWED 10% OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE IN EACH FINANCIAL YEAR. HOWEVER, THE CIT(APPEALS) ALLOWED 25% OF THE COST OF IMPROVEMENT CLAIMED INSTEAD OF 10% ALLOWED BY TH E ASSESSING OFFICER. 12. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASS ESSEE AND THE LD. D.R., WE ALSO PERUSED THE MATERIAL AVAILABL E ON RECORD. THE EXPENDITURE SAID TO BE INCURRED FOR IMPROVEMENT IS NOT IN DISPUTE. WHAT IS IN DISPUTE IS QUANTUM OF THE AMOUNT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT 50% OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED WHILE COMPUTING INDEXATI ON AND CAPITAL GAIN. IN VIEW OF THIS, ORDERS OF BOTH THE AUTHORIT IES BELOW ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO A LLOW 50% OF THE COST OF IMPROVEMENT. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS-OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. 11 I.T.A. NO.600/CHNY/18 C.O. NO.78/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 18 TH JULY, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 18 TH JULY, 2019. KRI. - /278 98)2 /COPY TO: 1. +, /APPELLANT 2. /0+, /RESPONDENT 3. 1 :2 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT- 3, COIMBATORE 5. 8; /2 /DR 6. <( = /GF.