Madhav Bhargav Chitale, Ratnagiri V. Income-tax Officer, Ward - 3, Ratnagiri

ITA 1069/PUN/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8961 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: SAURABH P RAIRIKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM ./ ITA NO.1069/PUN/2018 / ASSESSMENT YEAR : 2009-10 SHRI MADHAV BHARGAV CHITALE, VADNAKA, CHIPLUN, A/P. CHIPLUN, DIST. RATNAGIRI PAN : AAOPC7709A ....... / APPELLANT ! / V/S. THE INCOME TAX OFFICER, WARD-3, RATNAGIRI. / RESPONDENT APPELLANT BY : SHRI SAURABH P. RAIRIKAR RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 08.10.2018 / DATE OF PRONOUNCEMENT : 12.10.2018 ' / ORDER PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLHAPUR DATED 02.04.2018 R ELATING TO ASSESSMENT YEAR 2009-10 AGAINST ORDER PASSED UNDER SECTION 143(3) O F THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 2 ITA NO.1069/PUN/2018 A.Y.2009-10 1. THE ADDITION CAUSE DUE TO THE VALUATION ADOPTED BY THE ITO VIDE PROVISIONS OF THE ERSTWHILE SECTION 50C OF THE INCO ME TAX ACT, 1961 BE DELETED FOR THE REASON THAT IT BEING EXCESSIVE IN A S MUCH AS THE VALUATION APPRAISED BY THE PROPER VALUATION OFFICER FOR STAMP DUTY PURPOSES IS FOR THE COMPLETED STRUCTURE AS AGAINST THE INCOMPLETE STRUC TURE TRANSFERRED IN THE INSTANT CASE. CONSEQUENTIAL REDUCTION IN THE INTERE ST AMOUNTS AND PENALTIES (IF ANY) SOUGHT TO BE RECOVERED. 2. A REFERENCE TO THE VALUATION OFFICER VIDE PROVIS IONS OF SUB SECTION 2 OF SECTION 50C OF THE INCOME TAX ACT, 1961 MAY KINDLY BE ALLOWED FOR THE REASON THAT THE VALUE ADOPTED BY THE ITO DURING THE ASSESSMENT VIDE PROVISIONS OF SECTION 50C ( RS.52,28,000/-) IS WAY HIGHER THAN THE THEN MARKET VALUE OF RS.31,08,000/- (AS ADOPTED FROM THE REPORT OF AN INDEPENDENT GOVERNMENT VALUER); THE SAID REPORT BEI NG ON THE RECORD WITH ASSESSING OFFICER , ITO WARD-3, RATNAGIRI. 3. ANY OTHER ORDER AS YOUR HONOR DEEMS FIT TO PASS. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T COMPUTATION OF CAPITAL GAIN IN THE HANDS OF ASSESSEE AND APPLICABILITY OF THE P ROVISIONS OF SECTION 50C OF THE ACT. 4. BRIEFLY IN THE FACTS OF THE CASE, THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION HAD SOLD IMMOVABLE PROPERTY VIDE SALE DEED DATED 13.09.2008. THE ASSESSEE HAD SOLD THE PROPERTY AT CHIPLUN. THE ASSE SSEE HAD DECLARED THE SALE CONSIDERATION OF THE PROPERTY AT RS.30,00,000/-.HOW EVER, THE MARKET VALUE OF THE SAID PROPERTY WAS TAKEN BY REGISTRATION AUTHORITY A T RS.52,28,000/-. THE ASSESSEE OFFERED INCOME FROM CAPITAL GAINS BY TAKING SALE CO NSIDERATION OF RS.30,00,000/-. THE ASSESSING OFFICER IN VIEW OF PROVISIONS OF SECT ION 50C OF THE ACT SHOW CAUSED THE ASSESSEE AS TO WHY THE VALUE OF THE SALE CONSID ERATION OF RS.52,28,000/-, FOR WORKING INCOME FROM CAPITAL GAIN, SHOULD NOT BE AD OPTED. THE ASSESSEE CLAIMED THAT FAIR MARKET VALUE OF THE PROPERTY AS ON THE DA TE OF SALE WAS RS.31,08,000/- IN SUPPORT OF WHICH, THE ASSESSEE FURNISHED VALUATION REPORT FROM M/S. DAMBE SURVEYORS & CO., CHIPLUN, THE GOVT. APPROVED VALUER . ANOTHER POINT WHICH WAS RAISED BY THE ASSESSEE WAS THAT THE SAID PROPERTY W AS INCOMPLETE ON THE DATE OF SALE. HOWEVER, THE ASSESSING OFFICER REJECTED BOTH THE PLEAS OF THE ASSESSEE AND ADOPTED THE SALE CONSIDERATION AT RS.52,28,000/-. 3 ITA NO.1069/PUN/2018 A.Y.2009-10 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICE R. NOW, AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 6. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE A SSESSEE IS IN APPEAL. HE FURTHER POINTED, THAT, BEFORE THE ASSESSING OFFICER ORAL SUBMISSIONS WAS MADE FOR MAKING REFERENCE TO THE GOVERNMENT VALUER TO VERIFY THE FAIR MARKET VALUE OF THE PROPERTY, AS PROVIDED UNDER THE PROVISIONS OF SECTI ON 50C OF THE ACT. HE THEN REFERRED TO THE ORDER OF CIT(A) WHERE THE SAID PLEA OF THE ASSESSEE HAS BEEN NOTED. HOWEVER, BOTH, THE ASSESSING OFFICER AND CIT (A) FAILED TO MAKE ANY REFERENCE TO THE GOVERNMENT VALUER. THE LD. AR FOR THE ASSESSEE, THUS, STRESSED THAT THE PROVISIONS OF SECTION 50C OF THE ACT HAVE NOT BEEN APPLIED IN ENTIRETY TO THE FACTS OF THE PRESENT CASE, HENCE, THE MATTER MA Y BE SENT BACK TO THE FILE OF ASSESSING OFFICER FOR MAKING REFERENCE TO THE GOVER NMENT VALUER IN ORDER TO ASCERTAIN FAIR MARKET VALUE OF THE PROPERTY AS ON T HE DATE OF SALE. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PL ACED RELIANCE ON THE ORDER OF ASSESSING OFFICER AND CIT(A). 8. ON PERUSAL OF THE RECORD AND AFTER HEARING BOTH THE AUTHORIZED REPRESENTATIVES, THE ISSUE RAISED FOR ADJUDICATION IS IN RELATION TO THE PROVISIONS OF SECTION 50C OF THE ACT. THE SAID SECTION PROVIDES T HAT IN CASE OF REGISTERED DOCUMENT, THE VALUATION ASSESSED BY THE REGISTRATIO N AUTHORITY SHALL BE ADOPTED AS DEEMED SALE CONSIDERATION FOR COMPUTING INCOME F ROM CAPITAL GAIN. SECTION 50C(2) OF THE ACT PROVIDES THAT IF THE ASSESSING OF FICER, SO DESIRES, HE CAN MAKE REFERENCE TO GOVERNMENT VALUER TO DETERMINE FAIR M ARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE OF PROPERTY AND IF THE SAID VAL UE SO DETERMINED IS LESS THAN THE VALUE WHICH WAS ASSESSED BY THE STATE REGISTRATION AUTHORITY, THEN THE REDUCED VALUE IS TO BE ADOPTED IN THE HANDS OF THE ASSESSEE . 4 ITA NO.1069/PUN/2018 A.Y.2009-10 9. IN THE FACTS OF PRESENT CASE, THE ASSESSEE HAD S OLD EIGHT FLATS AT CHIPLUN FOR TOTAL CONSIDERATION OF RS.30,00,000/-. THE SAID SAL E CONSIDERATION WAS AGREED CONSIDERATION AS PER THE SALE DEED DATED 30.09.2008 . HOWEVER, THE STATE REGISTRATION AUTHORITY VALUED THE SAID PROPERTY SOL D BY THE ASSESSEE AT FAIR MARKET VALUE OF RS.52,28,000/-. THE ASSESSEE CLAIMED THAT THE SAID FLATS WERE UNDER CONSTRUCTION AND HAD NOT BEEN COMPLETED ON THE DATE OF AGREEMENT FOR SALE I.E.29.03.2008 AND HENCE, DIFFERENCE IN THE PRICE. IN ORDER TO SUPPORT ITS CASE, THE ASSESSEE FURNISHED VALUATION REPORT OF APPROVED VAL UER WHERE THE VALUE OF THE PROPERTY WAS DETERMINED AT RS.31,08,000/-. THE ASSE SSING OFFICER NOTICED THAT THE ASSESSEE ALSO FURNISHED SOME CERTIFICATE FROM THE C HIPLUN MUNICIPAL CORPORATION DATED 06.09.2007. THE ASSESSING OFFICER OBSERVED TH AT SINCE THE DATE OF AGREEMENT FOR SALE WAS 29.03.2008, THEN THE SAID CE RTIFICATE PRIOR TO THE DATE OF AGREEMENT COULD NOT BE ACCEPTED AS PROOF OF INCOMPL ETE CONSTRUCTION AS ON THE DATE OF AGREEMENT. 10. SUB SECTION (2) OF SECTION 50C OF THE ACT, PROV IDES THAT WHERE THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB SECTION (1) EXC EEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER AND WHERE T HE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THEN THE ASSESS ING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFIC ER. SINCE THE ASSESSEE HAD FURNISHED CERTIFICATE FROM CHIPLUN MUNICIPAL CORPOR ATION AND ALSO FURNISHED VALUATION REPORT TO JUSTIFY ITS SALE CONSIDERATION OF RS.30,00,000/-, THEN I AM OF THE VIEW THAT THE MATTER SHOULD BE SENT BACK TO THE FIL E OF ASSESSING OFFICER TO MAKE REFERENCE TO GOVERNMENT VALUER IN ORDER TO ASCERTAI N FAIR MARKET VALUE AS ON THE DATE OF SALE. THE ASSESSEE CLAIMS TO HAVE MADE REQU EST BY WAY OF ORAL SUBMISSIONS AND OTHER DOCUMENTS FILED BY ASSESSEE W HICH HAVE BEEN 5 ITA NO.1069/PUN/2018 A.Y.2009-10 ACKNOWLEDGED BY THE CIT(A). HOWEVER, BOTH THE AUTHO RITIES BELOW FAILED TO COMPLY WITH THE PROVISIONS OF THE ACT. HENCE, FOLLOWING TH E PRINCIPLE OF NATURAL JUSTICE, THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OF FICER WITH DIRECTION TO MAKE REFERENCE TO THE GOVERNMENT VALUER TO DETERMINE FAI R MARKET VALUE OF THE PROPERTY, IN ORDER TO COMPUTE THE INCOME OF THE ASSESSEE FROM CAPITAL GAIN. THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 12 TH DAY OF OCTOBER, 2018. SD/- (SUSHMA CHOWLA) /JUDICIAL MEMBER / PUNE; / DATED : 12 TH OCTOBER, 2018. SB ' # $%&' ('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-2, KOLHAPUR. 4. THE PR. CIT-2, KOLHAPUR. 5. !'# $% , & $% , - '() , / DR, ITAT, SMC BENCH, PUNE. 6. #*+ ,- / GUARD FILE. // TRUE COPY // &/ / BY ORDER, 0 $) /PRIVATE SECRETARY & $% , / ITAT, PUNE.