GHANSHYAMBHAI JERAMBHAI RADADIYA,SURAT V. .INCOME TAX OFFICER, WARD-3(2)(2), SURAT

ITA 754/SRT/2024

AI Insights

The case involves Ghanshyambhai Jerambhai Radadiya, the appellant, who contested the reassessment of capital gains on the sale of immovable properties for the assessment years 2011-12 and 2012-13. The Income Tax Officer (ITO) had reopened the assessment under section 148 of the Income-tax Act, 1961, and added a substantial amount to the appellant's income based on the difference between the sale consideration and the jantri value (market rate as determined by the Stamp Valuation Authority). The Commissioner of Income Tax (Appeals) upheld the AO's decision, leading to the appeal before the Tribunal. The Tribunal's decision was influenced by precedents from the Supreme Court and the Gujarat High Court, which clarified the timing of capital gains assessment and the applicable valuations for such transactions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473281 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-07-2024
• Other Referred Cases: CIT vs. Mormasji Mancharji Vaid, PCIT vs. Rajabhai Lumbhabhai Hadiya, Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana, Ushaben Jayantilal Shodhan vs. State of Gujarat
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MINAL KAMBLE
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Capital asset; Sale consideration of property below Jantri Value; Valuation report; Value adopted by valuation officer
• Section: 250; 50C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.754/SRT/2024 Assessment Year: (2011-12) (Physical Hearing) Ghanshyambhai Jerambhai Radadiya, 19, Radha Baug Society, Singanpor Road, Katargam, Surat - 395004 Vs. The ITO, Ward – 3(2)(2), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AIAPR0771P (Appellant) (Respondent) Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Minal Kamble, Sr. DR Date of Hearing 05/11/2024 Date of Pronouncement 09/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 28.06.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2011-12. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment and notice u/s.148 of the Act was issued. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred confirming the action of the Assessing Officer in making addition of Rs.1,10,63,008/ on account of difference between jantri value and sales consideration u/s. 50C of the act. 2 ITA No.754/SRT/2024/AY.2011-12 Ghanshyambhai Jerambhai Radadiya 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 4. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. Ground No.1 was not pressed by the learned Authorized Representative (ld. AR) of the assessee. Hence, ground No.1 is dismissed as not pressed. 4. Brief facts of the case are that assessee filed his return of income on 28.03.2012, declaring total income of Rs.11,29,980/-. As per the information with the Assessing Officer (in short, ‘AO’), the assessee sold immovable properties below the market rate as determined by Stamp Valuation Authority (SVA). In response to notice u/s 148, assessee declared the same total income of Rs.11,29,980/-. The AO found that assessee had sold immovable properties (land) in R. S No.115, Block No.182/1 & 182/2 in three separate deeds. The agreement for sale were made on 25.01.2011 and 10.01.2011. In the computation of long- term capital gain (LTCG) in the ITR for AY.2011-12, assessee had shown long-term capital loss (LTCL) of Rs.1,64,416/- on his 16.66% share in the impugned land. At para 4.1, the AO has worked out the difference of Rs.1,10,63,008/- between the assessed value as per SVA and amounts shown in the sale deed. It may be mentioned that the date of the deeds are 24.03.2011, 07.10.2011 and 29.02.2012. It is thus clear that they pertained to AYs.2011-12 and 2012-13. In response to the show cause notice, the assessee pointed out that the AO has 3 ITA No.754/SRT/2024/AY.2011-12 Ghanshyambhai Jerambhai Radadiya referred the valuation to DVO in case of one of the co-owners of the land namely, Shri Bavalal Bhimalal Singhala and in case of the assessee the assessment may be finalized based on the DVO report. The assessee further stated that two properties were sold in AY.2011-12 and another sale deed was executed in the subsequent AY.2012-13. It was also mentioned that the Jantri rate increased from Rs.2,000/- to Rs.8,000/- per sq. mtr. from AYs.2011-12 to 2012-13. The AO partly accepted submission of assessee that matter of valuation has been referred to DVO for AY.2011-12 but observed that the report is still pending. Hence, assessment was finalized subject to rectification on receipt of DVO report in future. The AO relied on the decision of Hon’ble Gujarat High Court in case of CIT vs. Mormasji Mancharji Vaid, 250 ITR 542 wherein it was held that capital gain on transfer has to be assessed to tax in the AY in which the date of execution of the deed of transfer falls and not the subsequent AY in which the deed is registered. Hence, the AO added Rs.1,10,61,980/- u/s 50C of the Act. 5. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) issued notice on 5 occasions fixing the hearings on 12.01.2021, 05.01.2022, 29.05.2023, 08.08.2023 and 26.06.2024. The assessee requested for adjournment on 05.01.2022. He has not responded to the notice issued earlier or the subsequent 3 notices. Therefore, the CIT(A) relied on various decisions and decided the case on merit. In ground No.2, the impugned issue was adjudicated. He stated that the appellant has not filed any submission as to why provisions of section 50C of the Act is not applicable in his case. He has confirmed the addition made by AO. 4 ITA No.754/SRT/2024/AY.2011-12 Ghanshyambhai Jerambhai Radadiya 6. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The ld. AR has filed a paper book including the DVO report dated 16.09.2019 in case of the co-owner. He has also given a table at page 17 of the paper book showing the rate of DVO, Jantri rate and the amount shown in the deed relied upon by the assessee. The ld. AR submitted that the rate of DVO was more than the Jantri rate and in such circumstance, it would be the valuation of the SVA which would prevail for computing capital gain. He relied on decision of Hon’ble Gujarat High Court in case of PCIT vs. Rajabhai Lumbhabhai Hadiya, (2016) 65 taxmann.com 18 (Gujarat). He submitted that Rs.23,60,673/- can be added in the AY.2011-12. He also submitted that though agreement of sale was made in AY.2011-12, the properties were sold in 2 assessment years i.e., AYs.2011-12 and 2012-13. Sale deed of Sai Associated was executed in AY.2011- 12 and that Rushivihar Infra Pvt. Ltd. was executed in AY.201-13. 7. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. 8. We have heard both parties and perused the materials available on record. We have also deliberated on the decision relied upon by both sides. The CIT(A) has upheld the order of AO without discussing the merit because of non- compliance by the assessee before him. The AO had passed the order by working out the capital gain of both properties in AY.2011-12. In doing so, he has relied on the decision in case of Mormasji Mancharji Vaid (supra) where it is held that for the purpose of capital gain u/s 45 of the Act, transfer is effected when lease is executed rather than when it is registered. Therefore, he has computed the LTCG 5 ITA No.754/SRT/2024/AY.2011-12 Ghanshyambhai Jerambhai Radadiya on both properties and added Rs.1,10,63,008-. However, we find that the Hon’ble Supreme Court in case of Suraj Lamp & Industries Pvt. Ltd. vs. State of Haryana, 340 ITR 1 (SC) held that immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance. Transactions of the nature of general power of attorney sales or sale agreements / general power of attorney / will transfers do not convey title and do not amount to transfer, nor can they be recognized as valid modes of transfers or immovable property. This will apply not only to deeds of conveyance in regard to freehold property but also to transfer of lease hold property. Subsequently, the Hon’ble Gujarat High Court in case of Ushaben Jayantilal Shodhan, (2018) 93 taxmann.com 463 (Gujarat), after referring to the decisions of various courts including the Hon’ble Supreme Court in case of Suraj Lamp & Industries Pvt. Ltd. (supra), held that transfer of immovable property takes place on execution of sale deed and, therefore, to hold that upon mere execution of agreement to sale, immovable property gets transfer to purchaser, even within extended definition of section 2(47), would be incorrect. If the facts of the instant case are considered in the light of the subsequent decision in case of Ushaben Jayantilal Shodhan (supra), it is clear that capital gain would arise in two assessment year i.e., AY.2011-12 and 2012-13 instead of AY.2011-12 only, as held by the AO. The AO is, therefore, directed to re-compute the capital gain in both years as per the discussion made above after giving reasonable opportunity of hearing to assessee. 8.1 The ld. AR has raised another issue that when the valuation of the DVO is more than the value adopted by SVA, value ascertained by the Stamp Duty 6 ITA No.754/SRT/2024/AY.2011-12 Ghanshyambhai Jerambhai Radadiya Authority should be adopted. In the case of Rajabhai Lumbhabhai Hadiya (supra), the Hon’ble Gujarat High Court held that where the assessee challenges the valuation before the AO and the AO calls for valuation report from the valuation officer and the valuation adopted by the valuation officer exceeds value adopted by the State Stamp Duty Authority, it would be valuation of such Authority which would prevail for purpose of computing capital gain. The ld. AR submitted that the value of DVO was more than the value of SVA. Respectfully following the decision of the Hon’ble Gujarat High Court, we direct the AO to verify the rates of both authorities and adopt the rate of SVA, if the same is lower than that of DVO. 9. In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced in the open court on 09/12/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 09/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "