Nirmal Santra, Kolkata V. I.T.O., Ward - 44(3), Kolkata, Kolkata

ITA 1/KOL/2023

AI Insights

The case involves an appeal by Nirmal Santra against the order passed by the Commissioner of Income-tax (Appeals)-NFAC, Delhi, which upheld an adjustment made by the Assistant Commissioner of Income Tax, Centralized Processing Centre. The adjustment involved a long-term capital gain addition of Rs. 36,81,810, invoking the deeming provisions of Section 50C of the Income Tax Act, 1961. The assessee contested that the fair market value of the property was Rs. 15 lakh, as opposed to Rs. 51,81,810 assessed by the Stamp Valuation Authority. The ITAT found merit in the assessee's argument, referencing a similar case by the Hon'ble Jurisdictional High Court, and directed a re-evaluation of the property by the Departmental Valuation Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128747 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 20-02-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 01-01-2023
• Other Referred Cases: Sunil Kumar Agarwal vs. CIT [2014] 47 taxmann.com 158 (Calcutta)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Reasonable cause; Fair market value; Set aside
• Section: 50C; 143(1); 250

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय गग ग , न्याधयक सदस्य एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra.........................................................Appellant [PAN: AKOPS 6530 P] Vs. ITO, Ward-44(3) Kolkata.......................................Respondent Appearances by: Sh. Somnath Ghosh, Adv., appeared on behalf of the Assessee. Smt. Ranu Biswas, Addl. CIT, Sr. D/R, appeared on behalf of the Revenue. Date of concluding the hearing : February 21 st , 2023 Date of pronouncing the order : May 11 th , 2023 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2019-20 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi [in I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 2 of 7 short ld. “CIT(A)”] dated 03.10.2022 arising out of the assessment order framed u/s 143(1) of the Act dated 21.07.2020. 2. Registry has informed that the appeal is time barred by 3 days. During the course of hearing, ld. Counsel for the assessee has stated the reasons for the said delay. We find force in the reasons stated therein and are satisfied that the assessee was prevented for reasonable cause in filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 3. The assessee is in appeal before the Tribunal raising the following grounds: “1. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC failed to appreciate that none of the conditions precedent existed and/or have been complied with and/or fulfilled by the Ld. Assistant Director of Income Tax, Centralized Processing Centre in framing the impugned order u/s. 143(1) of the Income Tax Act, 1961 by resorting to an adjustment of Rs. 36,81,810/- by invoking the deeming provisions of s. 50C of the Income Tax Act, 1961 and the specious order dated 03-10-2022 upholding such action to that extent is therefore ab initio void, ultra vires, and ex-facie null in law. 2. FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s. 143(1) of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)-NFAC was absolutely in error in upholding the action of the Ld. Assistant Director of Income Tax, Centralized Processing Centre of sustaining an adjustment which is beyond the scope of the enactment and the purported conclusion reached on that behalf is completely unfounded, unjustified, and untenable in law. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC was absolutely in error in upholding the adjustment in the sum of Rs. 36,81,810/-made u/s. 50C of the Income Tax Act, 1961 by the Ld. Assistant Commissioner of Income Tax, Centralized Processing Centre without any sanction of law in that respect and the purported findings I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 3 of 7 on that behalf is altogether unfounded, unjustified, and untenable in law. 4. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC considered improper facts, failed to consider proper position in law and came to an erroneous finding thereupon in upholding the impugned adjustment of Rs. 36,81,810/- made by the Ld. Assistant Commissioner of Income Tax, Centralized Processing Centre within the scope of s. 50C of the Income Tax Act, 1961 which is completely opposed to law.” 4. Though the assessee has raised four grounds of appeal but the sole grievance relates to addition of Rs. 36,81,810/- made by ld. AO invoking the deeming provisions of Section 50C of the Act. 5. At the outset, ld. Counsel for the assessee submitted that the case of the assessee is squarely covered by the decision of Hon'ble Jurisdictional High Court in the case of Sunil Kumar Agarwal vs. CIT reported in [2014] 47 taxmann.com 158 (Calcutta). 6. On the other hand, ld. D/R vehemently argued supporting the orders of both the lower authorities but failed to controvert the submissions made by ld. Counsel for the assessee. 7. We have heard rival contentions and perused the records placed before us. The issue for our consideration is whether ld. CIT(A) was justified in confirming the action of ld. AO making addition of Rs. 36,81,810/- by invoking the deeming provisions of Section 50C of the Act. We notice that the assessee is an individual and filed ITR Form No. 3 on 01.11.2019. In the column of computation of capital gain appearing in the ITR Form No. 3, the assessee has disclosed the transaction of long term capital gain. In the said detail which is appearing in the back side of page no. 32 of the paperbook long term capital gain has been computed at Rs. I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 4 of 7 2,27,852/-. For computing the said capital gain sale consideration is said to have been received at Rs. 15 lakh. Index cost of acquisition and index cost of improvement is at Rs. 12,72,148/-. The index cost is not in dispute before us. The assessee in column no. ‘B’ of Schedule ‘CG’ has stated the full value of consideration received/receivable at Rs. 15 lakh. Against the value of property as per Stamp Valuation Authority, the assessee has mentioned Rs. 51,81,810/-. However, under the column ‘full value of consideration’ adopted as per Section 50C of the Act for the purpose of capital gain the assessee has mentioned Rs. 15 lakh only. When the case was processed u/s 143(1)(a) of the Act the computer system by default picked up the figure of value of property as per Stamp Valuation Authority i.e. Rs. 51,81,810/- and computed the long term capital gain accordingly thereby making addition of Rs. 36,81,810/-. Before us the contention of ld. Counsel for the assessee is that the fair market value of the property was Rs. 15 lakh only and for this purpose a letter was also filed to the District Collector, Hooghly dated 18.12.2010 requesting to initiate the proceeding for determination of the market value of the land in question sold by the assessee. 8. Under these given facts and circumstances, we would like to go through the finding of Hon'ble Jurisdictional High Court in the case of Sunil Kumar Agarwal (supra) and the same reads as follows: “6. We have considered the rival submissions advanced by the learned advocates appearing for the parties. The submission of Ms. Ghutghutia that the requirement of clauses a) and (b) of sub-Section (2) of Section 50C has not been met by the assessee, can hardly be accepted. The requirement of clause (b) of sub-Section (2) of Section 50C was evidently met. The only question is whether the requirement I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 5 of 7 of clause (a) of sub-Section (2) of Section 50C was met by the assessee. 7. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer. 8. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. 9. For the aforesaid reasons, the order under challenge is set aside. 10. The impugned order including orders passed by the CIT(A) and the assessing officer are all set aside. The matter is remanded to the I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 6 of 7 assessing officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is made, the assessment shall be made de novo in accordance with law.” 9. We find that the above judgment of the Hon'ble Jurisdictional High Court is squarely applicable on the facts of the instant case and the issue raised before us. Therefore, since the assessee has claimed and that the sale consideration received by it is at Rs. 15 lakh is equivalent to the fair market value of the said land and not the value adopted by the Stamp Valuation Authority at Rs. 51,81,810/-, therefore, the lower authorities ought to have referred the matter to the Departmental Valuation Officer for valuing the fair market value of the said property. Therefore, under these given facts and circumstances, ground nos. 1, 3 & 4 raised by the assessee are allowed for statistical purposes and the matter is restored to the jurisdictional Assessing Officer for carrying out necessary exercise of referring the matter to the Departmental Valuation Officer and then to decide in accordance with law as discussed herein above. 10. As far as ground no. 2 raised by the assessee that the addition made by the Centralized Processing Center (in short the ‘CPC’) u/s 143(1) of the Act was out of the scope and ambit of provisions of Section 143(1) of the Act, we fail to find any merit in the said ground since the CPC is equipped with computer software system and it picks up the data available in the income tax return. Since in the respective column appearing in the head ‘capital gain’ the assessee has mentioned the figure of sale consideration as well as the deemed value of property as per the Stamp Valuation Authority, the computer system automatically picks up the full I.T.A. No.: 1/KOL/2023 Assessment Year: 2019-20 Nirmal Santra. Page 7 of 7 value of consideration adopted as per Section 50C of the Act for the purpose of capital gain as stated by the assessee in ITR Form No. 3 i.e. value of property as per Stamp Valuation Authority and processed the return accordingly. Since the assessee has all rights to challenge such intimation u/s 143(1)(a) of the Act, ground no. 2 raised by the assessee deserves to be dismissed. 11. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Kolkata, the 11 th May, 2023 Sd/- Sd/- [Sanjay Garg] [Manish Borad] Judicial Member Accountant Member Dated: 11.05.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. Nirmal Santra, C/o. S.N. Ghosh & Associates, Advocates, Sagar Mansion, 2, Garstin Place, 2 nd Floor, Suite Nos. 202 & 203, Hare Street, Kolkata-700 001 2. ITO, Ward-44(3) Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata