Sh. Barjinder Singh Bhatti, Chandigarh V. ITO, Chandigarh

ITA 1101/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90235 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: NAVTEJ KUMAR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Gift; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report
• Section: 54B; 50C; 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1101/CHD/2014 ASSESSMENT YEAR: 2010-11 SHRI BARJINDER SINGH BHATTI, VS THE ITO, # 1136, SECTOR 36-C, WARD 4(1), CHANDIGARH. CHANDIGARH. PAN: AAHPB7272Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVTEJ KUMAR RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 09.07.2015 DATE OF PRONOUNCEMENT : 15.07.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) CHANDIGARH DATED 15.10.2014 FOR ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IN THE GROUND OF APPEAL BEFORE LD. CIT(APPEALS) CHALLENGED THE ORDER OF ASSESSING OFFI CER IN REJECTING MARKET VALUATION AS ON 01.04.1981 AS CALC ULATED BY THE REGISTERED VALUER AT RS. 8,35,217/- AND AGA INST CALCULATED FAIR MARKET VALUE AT RS. 2,32,800/- WITH OUT TAKING EXPERT OPINION. 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD SOLD SOME LANDS AT VILLAGE BARNALA KALAN ON DIFFE RENT DATES 2 AND WORKED OUT CAPITAL GAIN AS UNDER : SALE CONSIDERATION : RS. 99,63,600/- LESS: INDEXED COST (835217 X 632 / 100) RS. 52,78,571/- LONG TERM CAPITAL GAIN RS. 46,84,429/- LESS DEDUCTION U/S 54B RS. 46,84,444/- (GAINS INVESTED IN CAPITAL GAIN ACCOUNT) BALANCE LONG TERM CAPITAL GAIN TAXABLE RS. NIL 3(I) THE VALUE OF THE LAND AS ON 01.04.1981 WAS TAK EN ON THE BASIS OF VALUATION MADE BY A REGISTERED VALUER. THE ASSESSING OFFICER NOTICED FROM THE VALUATION REPORT THAT THE VALUATION WAS DONE AT 3.5 TIMES OF THE SALE RAT E AS PER THE REGISTERED DEED IN 1981 @ 24,000/-PER KANAL. FOR THE SAKE OF READY REFERENCE, RELEVANT PORTION OF TH E VALUER REPORT IS REPRODUCED BELOW : I) THERE ARE THREE SALE INSTANCES AVAILABLE IN YEAR 1981, WHERE ON RECORD REGISTRIES ARE AVAILABLE WITH US, WHERE BIG PRICES OF LANDS WERE SOLD @ RS. 48000/- PER 2.0 KANALS IN THE SAME AREA. THIS WORKS OUT TO BE RS. 1,92,000/- PER ACRE. II) AS THERE WAS NO MINIMUM GUIDELINE RATES IN THOSE TIMES (1981) FOR CALCULATION OF STAMP PAPERS AND COST OF REGISTRATION WAS VERY HIGH I.E. TO THE TUNE OF 14% OF LAND PRICE SHOWN IN THE REGISTRATION, PURCHASER WAS INTERESTED IN SHOWING THE MINIMUM POSSIBLE VALUE OF LAND PROPERTIES. III) BUT BEING ON SALE SIDE, WE ARE TAKING MARKET VALUE OF THE ABOVE LAND TO BE AT THE RATE OF 3.5 TIMES TH AN THAT SHOWN IN REGISTRATION DEEDS OF YEAR 1981. IT HAD A VERY GOOD PRICE ( AS ON 1.4.1981). 4. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE VALUER HAD IGNORED CONCRETE EVIDENCE I.E. SALES REGISTRATION DEED MADE IN 1981, WHICH WAS THE BASE FOR THE VALUATION REPORT AND HAD, RESORTED TO EXPECTATI ON AND 3 IMAGINATION THAT IN THAT AREA, PRICE/ VALUE OF LAND MUST HAVE BEEN 4 TO5 TIMES HIGHER THAN THAT SHOWN IN THE REGISTRATION DEED. HE ACCORDINGLY ADOPTED THE RATE OF RS. 24,000/- PER KANAL AS ON 01.04.1981 FOR THE PURPOSE S OF COMPUTING CAPITAL GAIN. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS COUNS EL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING O FFICER ASSUMED THE ROLE OF A VALUER FOR COMPUTING CAPITAL GAIN WHEREAS SECTION 142A CLEARLY STIPULATES THAT REFERE NCE IS TO BE MADE TO THE VALUATION OFFICER AND EVEN SECTIO N 50C PRESCRIBES THAT THE VALUATION MAY BE SOUGHT FROM TH E DISTRICT -VALUATION OFFICER (HEREINAFTER REFERRED T O AS 'DVO). RELIANCE HAS BEEN PLACED ON THE JUDGEMENTS OF HON'BLE ALLAHABAD HIGH COURT IN THE CASES OF CHANDR A NARAIN CHAUDHRI IN ITA NO. 287 OF 2011 AND RAJ KUMA RI VIMLA DEVI (279 ITR 360) AND HON'BLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF CHANDANI BHOCHAR (223 ITR 510). IT HAS ALSO BEEN CONTENDED THAT IT WAS A PRIM E LAND AND THE SALE RATE OF THIS LAND WAS MUCH MORE THAN T HE RATE AT WHICH OTHER LANDS WERE REGISTERED IN THAT A REA. 6. THE LD. CIT(APPEALS) CONSIDERING SUBMISSION OF T HE ASSESSEE, DISMISSED THE APPEAL OF THE ASSESSEE ON T HIS ISSUE. HIS FINDINGS IN PARA 3.3 TO 3.3.3 ARE REPRO DUCED AS UNDER : 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL REFERENCE TO DVO UNDER SECTION 142A CAN BE MADE ONLY IN A SITUATION WHERE ESTIMATE OF VALUE OF INVESTMENT IN ACCORDANCE WITH SECTION 69,69A OR 4 69B OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS ACT) OR FAIR MARKET VALUE OF PROPE RTY REFERRED TO IN SECTION 56(2) OF THE ACT IS TO BE MA DE. REFERENCE TO VALUATION OFFICER CANNOT BE MADE UNDER SECTION 142A FOR VALUATION OF THE PROPERTY FO R THE PURPOSES OF COMPUTING CAPITAL GAIN. HENCE, THE ARGUMENT OF THE LD. COUNSEL THAT THE ASSESSING OFFICER SHOULD HAVE MADE REFERENCE TO THE VALUATION OFFICER UNDER SECTION 142A IS NOT CORRECT AND IS ACCORDINGLY REJECTED. 3.3.1 AS PER THE PROVISIONS OF SECTION 50C OF THE ACT, WHERE THE CONSIDERATION RECEIVED AS A RESULT O F THE TRANSFER OF A CAPITAL ASSET IS LESS THAN THE VA LUE ADOPTED OR ASSESSED BY ANY STAMP VALUATION AUTHORITY, THE MATTER CAN BE REFERRED TO THE VALUATION OFFICER IF THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS MORE THAN FAIR MARKET VALUE OF THE PROPERTY. IN THE INSTANT CASE, THE ISSUE BEFORE ASSESSING OFFICER WAS NOT OF THE VALUATION O F PROPERTY AS ON THE DATE OF SALE, BUT FOR COMPUTING C OST OF ACQUISITION AS ON 01.04.1981 AND SO THE MATTER COULD NOT HAVE TEEN ; REFERRED TO THE VALUATION OFFICER UNDER SECTION 50C OF THE ACT: THEREFORE, THE CONTENTION OF THE LD. COUNSEL THAT THE MATTER SHOULD HAVE BEEN REFERRED T O THE VALUATION OFFICER U/S 50C IS ALSO NOT CORRECT AND IS ACCORDINGLY REJECTED. 3.3.2 THE APPELLANT HAS RELIED UPON A NUMBER OF JUDGEMENTS, WHICH ARE DISCUSSED BELOW : I) CHANDRA NARAIN CHAUDHRY (SUPRA) IN THIS CASE, THE VALUE OF THE PROPERTY WAS ADOPTED A S PER THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY. IN FIRST APPEAL, THE ARGUMENT OF THE ASSESSEE THAT IT WAS A DISTRESS SALE AND SO THE VALUATION MADE BY REGISTERED VALUER WAS ACCEPTED BY THE LD. COMMISSIONER OF INCOME TAX (A). THE HON'BLE TRIBUNAL HAD CONFIRMED THE FINDINGS OF LD. CIT(APPEALS). THE DEPARTMENT FIELD FURTHER APPEAL BEFORE THE HON'BLE HIGH COURT AND HIGH COURT REMANDED THE MATTER TO THE ASSESSING OFFICER TO DEC IDE THE VALUATION OF CAPITAL ASSET IN ACCORDANCE WITH LAW. THE HON'BLE COURT HAD HELD AS UNDER IN THIS CASE.: '14. WE ARE OF THE VIEW THAT WHENEVER OBJECTION IS TAKEN OR CLAIM IS MADE BEFORE AO, THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE (STAMP VALUATION AUTHORITY UNDER SUB-SECTION (L) OF SECTION 50-C EXCEEDS THE FEAR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER, THE AO HAS TO APPLY HIS MIND ON THE VALIDITY OF THE OBJECTION OF THE ASSESSED HE MAY EITHER ACCEPT THE VALUATION OF THE PROPERTY ON 5 THE BASIS OF THE REPORT OF THE APPROVED VALUER FILED BY THE ASSESSEE, OR INVITE OBJECTION FROM 'THE DEPARTMENT AND REFER THE QUESTION OF VALUATION OF T HE CAPITAL ASSET TO DVO IN ACCORDANCE WITH SECTION 55 A OF THE ACT. IN ALL THESE EVENTS, THE AO HAS TO RECORD VALID REASONS, WHICH ARE JUSTIFIABLE IN LAW. H E IS NOT REQUIRED TO ADOPT AN EVASIVE APPROACH OF APPLYING DEEMING PROVISION WITHOUT DECIDING THE OBJECTION OR TO REFER THE MATTER TO THE DVO UNDER SECTION 55-A OF THE ACT AS A MATTER OF COURSE, WITHOUT CONSIDERING THE REPORT OF APPROVED VALUER SUBMITTED BY THE ASSESSEE. IN ALL SUCH CASES, THE REASONS RECORDED BY THE AO MAY BE QUESTIONED BY THE ASSESSEE OR THE DEPARTMENT AS THE CASE MAY BE. 15. THE QUESTIONS OF LAW, AS FRAMED IN THE MEMO OF APPEAL, ARE DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE ORDER OF ITAT DATED 10.05.2011 IS SET ASIDE. THE MATTER IS REMANDED TO ASSESSING OFFICER TO DECIDE THE VALUATION OF THE CAPITAL ASSET IN ACCORDANCE WITH LAW AS EXPLAINED BY US IN THIS JUDGEMENT. THUS, THE HON'BLE COURT HAD MERELY HELD THAT THE ASSE SSING OFFICER HAS TO APPLY HIS MIND ON THE VALIDITY OF OBJE CTION OF THE ASSESSEE REGARDING THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY, IF IT EXCEEDS THE FAIR MARKET VA LUE. IN THE INSTANT CASE, THE ISSUE IS REGARDING VALUATION AS ON 01.04.1981 FOR COMPUTING THE INDEXED COST AND SO TH E ISSUE HERE IS ENTIRELY DIFFERENT TO THE ISSUE DECIDED BY T HE HON'BLE COURT. THE RATIO OF THIS JUDGEMENT IS ACCORDINGLY NOT APPLICABLE TO THE CASE OF THE APPELLANT (II) CHANDANI BHOCHAR (SUPRA) IN THIS CASE, THE ASSESSING OFFICER APPLIED THE PROVISIONS OF SECTION 50C FOR COMPUTING UNEXPLAINED INVESTMENT IN PROPERTY AND MAKING ADDITION UNDER SECTION 69B OF THE ACT. THE ADDITION MADE WAS DELETED IN FIRST APPEAL AND THE ORDER OF THE LD. CIT(APPEALS) WAS AFFIRMED BY HON'BLE TRIBUNAL AND SUBSEQUENTLY BY HON'BLE PUNJAB & HARYANA HIGH COURT. PROVISIONS OF SECTION 50C ARE FOR THE PURPOSE OF DETERMINING THE SALE CONSIDERATION FOR COMPUTING CAPITAL GAIN AND THE VALUE DETERMINED BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF COMPUTATION OF STAMP DUTY CANNOT BE ADOPTED FOR COMPUTING UNEXPLAINED INVESTMENT UNDER SECTION 69B. THEREFORE, THE ISSUE INVOLVED IN THIS CASE WAS REGARDING ADDITION U/S69B WHEREAS IN THE INSTANT CASE, THE ISSUE IS REGARDING COST OF ACQUISITION AS ON 01.04.1981 FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN, THE ISSUE INVOLVED BEING ENTIRELY 6 DIFFERENT, THE RATIO OF THIS JUDGEMENT IS ALSO NOT APPLICABLE TO THE CASE OF THE APPELLANT. III) RAJ KUMARI VIMLA DEVI (SUPRA) IN THIS CASE, THE HON'BLE HIGH COURT HAD HELD THAT THE HON'BLE TRIBUNAL WAS CORRECT IN HOLDING THAT THE RULES FRAMED UNDER THE STAMP DUTY ACT ARE NOT CONCLUSIVE FOR DETERMINATION OF MARKET VALUE OF PROPERTIES AND SO THE DEEMED GIFT COULD NOT BE TAXED. THE CASE PERTAINS TO A.Y. 1981-82 AND THE QUESTION BEFORE THE HON'BLE COURT WAS RELATED TO DEEMED GIFT WHEREAS IN THE INSTANT CASE, THE ISSUE IS REGARDING VALUATION FOR THE PURPOSE OF DETERMINATION OF COST OF ACQUISITION OF THE PROPERTY. THEREFORE, THE ISSUE IN THE PRESENT CASE .IS ENTIRELY DIFFERENT AND THIS JUDGEMENT IS OF NO HELP TO THE APPELLANT. 3:3.3 THE ASSESSING OFFICER HAS COMPUTED THE COST O F ACQUISITION AS ON 01.04.1981 BY APPLYING THE RATE MENTIONED BY THE REGISTERED VALUER IN HIS VALUATION REPORT I.E. RS. 24,000/- PER KANAL, THE REGISTERED VALUER HAS MENTIONED IN HIS REPORT THAT IT WAS EXPECTED THAT THE PRICE OF LAND IN THAT AREA MUST H AVE BEEN 4 TO 5 TIMES HIGHER THAN WHAT WAS SHOWN IN THE REGISTRATION DEED, BUT TO BE ON THE SAFER SIDE HE W AS ADOPTING IT TO BE AT 3.5 TIMES OF WHAT WAS SHOWN IN THE REGISTRATION DEED. AT THE OUTSET, IT MAY BE MENTIONED THAT THERE WAS NO SCIENTIFIC/RATIONAL BAS IS FOR THE REGISTERED VALUER TO TAKE THE RATE OF 3.5 T IMES OF THE RATE OF REGISTRATION. MOREOVER, IF HE WAS T AKING THE COST OF ACQUISITION AT 3.5 TIMES OF THE REGISTE RED DEED, THE SAME FACTOR/MULTIPLIER SHOULD HAVE BEEN USED FOR DECLARING THE SALE CONSIDERATION WHICH WAS NOT DONE. BE THAT AS IT MAY, THE ASSESSING OFFICE R HAS RIGHTLY ADOPTED THE RATE OF RS. 24,000/- PER KA NAL AS ON 01.4.1981, WHICH IS THE RATE AT WHICH THE REGISTRATION HAD BEEN DONE IN 1981 AND HIS ACTION I N THIS REGARD IS UPHELD. GROUNDS OF APPEAL NOS. 2, 3 AND 4 ARE DISMISSED. 7. THE ASSESSEE IN THE PRESENT APPEAL, RAISED THE S AME ISSUE AND IT IS ALSO STATED THAT LD. CIT(APPEALS) E RRED IN UP-HOLDING THE ORDER OF THE ASSESSING OFFICER IN OV ER-RIDING THE REPORT OF TECHNICAL VALUER, WITHOUT SUPPORTING EVIDENCE FROM A DVO WHICH IS BAD IN LAW. THE LD. COUNSEL FO R THE 7 ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER, FOR REJECTING THE REPORT OF THE REGISTERED VALUER SHOULD HAVE REF ERRED THE MATTER TO THE DVO AND IN THE ABSENCE OF ANY EVI DENCE ON RECORD, THE REPORT OF REGISTERED VALUER SHOULD B E ACCEPTED WITH REGARD TO THE MARKET VALUE AS ON 01.0 4.1981 FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. THEREF ORE, ORDERS OF THE AUTHORITIES BELOW MAY BE SET ASIDE. 8. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND DO NOT SUBSCRIBE TO THE VIEWS OF THE AUTHORITIES BELOW. T HE ASSESSEE FILED REPORT OF REGISTERED VALUER IN SUPPO RT OF THE MARKET VALUE AS ON 01.04.1981. THE ASSESSING OFFIC ER WAS NOT HAVING ANY EVIDENCE OR MATERIAL BEFORE HIM TO CONTRADICT THE REPORT OF THE REGISTERED VALUER. TH E ASSESSING OFFICER, IF WAS NOT SATISFIED WITH THE RE PORT OF THE REGISTERED VALUER, COULD HAVE MADE A REFERENCE TO T HE DEPARTMENTAL VALUATION OFFICER UNDER SECTION 55A OF THE ACT FOR THE PURPOSE OF COMPUTING INCOME FROM CAPITA L GAINS. THE ASSESSING OFFICER HAS THUS, NOT ACTED I N ACCORDANCE WITH LAW AND WITHOUT ANY BASIS OR EVIDEN CE IN HIS POSSESSION, DID NOT ACCEPT REPORT OF THE REGIST ERED VALUER. IN THE ABSENCE OF ANY MATERIAL ON RECORD, ASSESSING OFFICER SHOULD NOT HAVE MADE HIS OWN CALC ULATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS. TH E ORDERS OF THE AUTHORITIES BELOW, THUS, CANNOT BE SUSTAINED IN LAW. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIE S BELOW 8 AND DIRECT ASSESSING OFFICER TO ACCEPT VALUATION RE PORTED BY THE ASSESSEE AS PER REPORT OF THE REGISTERED VALUER AS ON 01.04.1981 AND ACCEPT THE COMPUTATION FILED BY THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH JULY,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH