Kaushlendra Singh, Lucknow V. Income Tax Officer, Lucknow

ITA 102/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4770 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Opportunity of being heard; Principle of natural justice; Valuation report
• Section: 147; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.102/LKW/2014 ASSESSMENT YEAR:2006-07 INCOME TAX OFFICER, RANGE-1(2), LUCKNOW. VS SHRI KAUSHLENDRA SINGH, SMRITI RAVINDRA PALLI, FAIZABAD ROAD, LUCKNOW. PAN:ADKPS0252K (RESPONDENT) (APPELLANT) SHRI R. C. JAIN, F.C.A. SHRI ABHISHEK KHANNA, F.C.A. APPELLANT BY SHRI RAJIV JAIN, CIT, D.R. RESPONDENT BY 21/01/2016 DATE OF HEARING 03 / 02 /2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT(A)-I, LUCKNOW DATED 15/12/2013 FOR THE ASSESSME NT YEAR 2006-07. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: A. BECAUSE THE ORDER PASSED BY COURT BELOW SUFFERS FROM MATERIAL IRREGULARITY OF LAW AS WELL AS OF FACTS AN D IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. B. BECAUSE THE COURT BELOW FAIL TO APPRECIATE THAT THE PROPERTY BELONGS TO HUF AND CAPITAL GAIN ARRIVED TO HUF CANNOT BE ASSESSED IN THE HANDS OF CO-PARCENERS AS PER PROVISIONS OF SECTION 10(2) OF INCOME TAX ACT 1961, DESPITE THE FACT THAT ASSESSMENT HAD BEEN MADE ON PROTECTIVE BASIS, PRIMA-FACE ACCEPTED THE FACT THAT THE PROPERTY BELONGS TO HUF BY INITIATION OF ASSESSMENT 2 PROCEEDINGS U/S 147 AGAINST THE HUF FOR THE SAME ASSESSMENT YEAR 2006-07. WITHOUT PREJUDICE TO ABOVE GROUND NO. B: C. BECAUSE THE COURT BELOW ILLEGALLY DISALLOWED TH E CLAIM OF SECTION 54 OF INCOME TAX ACT 1961, WITHOUT GIVING P ROPER OPPORTUNITY. D. BECAUSE THE CONCLUSIONS AND OBSERVATIONS OF THE COURT BELOW ARE BASED ON CONJECTURE AND SURMISES. E. BECAUSE THE REFERENCE MADE U/S 55A (B)(II) OF IN COME TAX ACT 1961 WAS ILLEGAL AB-INITIO AND CONTRARY TO PROVISIONS OF INCOME TAX ACT 1961. F. BECAUSE THE COURT BELOW WITHOUT JUDICIALLY CONSI DERING THE VALUATION REPORT MADE BY APPROVED REGISTERED VALUER , ILLEGALLY ADOPTED THE VALUATION REPORT MADE BY DIST RICT VALUATION OFFICER (DVO) IN CALCULATING THE LONG TER M CAPITAL GAIN, WHICH SUFFERS FROM VARIOUS LEGAL AND FACTUAL INFIRMITIES. 3. AS PER SUBSEQUENT LETTER, IT IS SUBMITTED BY TH E ASSESSEE THAT GROUND NO. C IS BEING REVISED BY THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND. THE REVISED GROUND NO. C AND ADDITIONAL GROUNDS A RE AS UNDER: REVISED GROUND BECAUSE THE LEARNED INCOME TAX OFFICER DID NOT CON SIDER THE INVESTMENTS MADE BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 54 OF THE I.T. ACT 1961 AND I LLEGALLY DISALLOWED THE GENUINE CLAIM OF DEDUCTION U/S 54 OF THE I.T. ACT 1961. ADDITIONAL GROUND BECAUSE THE LEARNED INCOME TAX OFFICER PASSED THE ORDER IN CONTRAVENTION OF THE DIRECTIONS GIVEN BY LEARNED CI T-1, LUCKNOW DIRECTING HIM TO COMPLETE THE ASSESSMENT IN VIEW OF CREDIT OF RS.85 LAKHS ONLY. 3 4. IN COURSE OF HEARING BEFORE US, A QUERY WAS RAIS ED BY THE BENCH AS TO WHETHER THE IMPUGNED PROPERTY, ON THE SALE OF WHICH CAPITAL GAIN WAS COMPUTED BY THE ASSESSING OFFICER, IS CAPITAL ASSE T OR NOT AND WHETHER THE SAME IS OWNED BY THE ASSESSEE OR NOT. REGARDING TH IS CLAIM THAT THE PROPERTY IS BELONGING TO THE HUF, THIS QUERY WAS AL SO RAISED AS TO WHETHER ANY CAPITAL GAIN HAS BEEN OFFERED BY THE ASSESSEE I N THE HANDS OF THE HUF. IN REPLY, IT WAS FAIRLY CONCEDED BY LEARNED A. R. O F THE ASSESSEE THAT THE ASSESSEE IS NOT DISPUTING THAT THE IMPUGNED PROPERT Y IS CAPITAL ASSET AND THE SAME OWNED BY THE ASSESSEE JOINTLY BY HIS BROTHER A ND THEREFORE, CAPITAL GAIN TAX IS PAYABLE BY THE ASSESSEE. HIS ONLY SUBM ISSION WAS THAT THE CAPITAL GAIN AMOUNT WAS NOT PROPERLY COMPUTED BY TH E ASSESSING OFFICER AND THEREFORE, THE MATTER SHOULD BE RESTORED BACK T O THE FILE OF THE ASSESSING OFFICER FOR PROPER COMPUTATION OF CAPITAL GAIN AMOUNT AND IT WAS THE SECOND SUBMISSION THAT THE ASSESSEES CLAIM REG ARDING DEDUCTION U/S 54 SHOULD ALSO BE EXAMINED AFRESH BY THE ASSESSING OFF ICER. 5. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IT IS NOTED BY THE CIT(A) ON PAGE NO. 4 OF HIS ORDER THAT IN RESPE CT OF VALUE OF THE PROPERTY AS ON 01/04/81, THE MAIN DIFFERENCE IS IN THE VALUE OF LAND BECAUSE THE VALUE OF BUILDING AS PER THE APPROVED VALUER AN D AS PER D.V.O. IS NOT HAVING MUCH DIFFERENCE BECAUSE THE REGISTERED VALUE R HAS VALUED THE PROPERTY AT RS.2.55 LAC WHEREAS THE SAME WAS VALUED BY D.V.O. AT RS.2.32 LAC. THE MAIN DIFFERENCE IS VALUE OF LAND, WHICH W AS VALUED BY D.V.O. AT RS.1,47,680/- BY ADOPTING THE RATE OF RS.4/- PER SQ . FT. WHEREAS THE SAME WAS VALUED BY REGISTERED VALUER AT RS.3,22,280/- BY ADOPTING THE VALUE OF LAND AT RS.9/- PER SQ. FT. HE HAS FURTHER NOTED TH AT REGARDING LAND RATE, THE D.M. CIRCLE RATE IS FIXED AT RS.4 TO 9 PER SQ. FT. HE HAS ALSO NOTED THAT THE 4 LAND IN QUESTION IS VERY NEAR TO FAIZABAD ROAD AND IN FRONT OF INDIRA NAGAR COLONY, BEING DEVELOPED BY U.P. AWAS EVAM VIKAS PAR ISHAD. THE CLAIM OF THE ASSESSEE WAS THAT THE ACTUAL LAND RATE IN AREA DURING 1981 WAS MUCH ABOVE THE CIRCLE RATE BUT WITHOUT GIVING ANY SPECIF IC FINDING IN RESPECT OF THIS CLAIM OF THE ASSESSEE, IT WAS HELD THAT THE VALUE A DOPTED BY THE D.V.O. SHOULD BE APPROVED. IN OUR CONSIDERED OPINION, ON THIS ASPECT THE MATTER SHOULD GO BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH DECISION BECAUSE IF THE VALUE ADOPTED BY D.V.O. IS QUESTIONED THEN THE OBJECTION OF THE ASSESSEE AGAINST THE D.V.O. REPORT SHOULD BE DECIDE D. IN THIS REGARD, CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE ALLAHAB AD HIGH COURT RENDERED IN THE CASE OF CWT VS. DR. H. RAHMAN [1991] 189 ITR 307 (ALL). IN THIS REGARD, WE FIND THAT THIS JUDGMENT IS IN RESPECT OF SECTION 16A OF WEALTH TAX ACT. AS PER SECTION 55A OF THE I.T. ACT, APART FR OM SUB SECTION (6) OF SECTION 16A OF WEALTH TAX ACT, VARIOUS OTHER SECTIO NS OF WEALTH TAX ACT ARE ALSO APPLICABLE. AS PER SUB SECTION (3A) OF SECTIO N 23 OF WEALTH TAX ACT 1957, IF THE VALUATION OF ANY ASSET IS OBJECTED TO IN APPEAL, COMMISSIONER (APPEAL) SHALL GIVE AN OPPORTUNITY OF BEING HEARD T O THE VALUATION OFFICER AND THEREAFTER DECIDE THE ISSUE REGARDING THESE OBJ ECTIONS RAISED BY THE ASSESSEE AGAINST THE REPORT OF VALUATION OFFICER. SINCE THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IS IN THE CONTEXT OF W EALTH TAX ACT AND NOT I.T. ACT, THE SAME CANNOT BE FOLLOWED WITHOUT REFER RING TO OTHER PROVISIONS OF WEALTH TAX, WHICH ARE MADE SPECIFICALLY APPLICAB LE IN I.T. ACT PROCEEDINGS U/S 55A OF THE ACT AND ONE OF SUCH SECTIONS IS SUB SECTION (3A) AND (4) OF SECTION 23. SINCE CIT(A) HAS NOT FOLLOWED THE PROV ISIONS OF SUB SECTION (3A) AND (4) OF SECTION 23, HIS ORDER ON THIS ISSUE REGA RDING THE OBJECTION OF THE ASSESSEE AGAINST THE REPORT OF D.V.O. IS NOT SUSTAI NABLE. CONSIDERING THE FACTS OF THE PRESENT CASE, WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION REGARDI NG THE AMOUNT OF CAPITAL GAIN AND WHILE DOING SO, THE ASSESSING OFFICER SHOU LD DISPOSE OF THE 5 OBJECTION OF THE ASSESSEE, WHICH ARE RAISED BY THE ASSESSEE AGAINST THE REPORT OF THE D.V.O. AND THEREAFTER HE SHOULD DECID E THE ISSUE BY WAY OF PASSING OF SPEAKING AND REASONED ORDER AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN ADD ITION TO THIS, THE ASSESSING OFFICER SHOULD ALSO DECIDE AFRESH REGARDI NG ALLOWABILITY OF DEDUCTION TO THE ASSESSEE U/S 54 OF THE ACT BY WAY OF PASSING A REASONED AND SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. WITH THESE OBSERVATIONS, WE SET ASID E THE ORDER OF CIT(A) AND RESTORE BACK THE MATTER TO THE ASSESSING OFFICE R TO DECIDE TWO ASPECTS I.E. THE QUANTUM OF CAPITAL GAIN AND ALLOWABILITY O F DEDUCTION U/S 54 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:03/02/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR