Appeal details
Counselvise Citation
[2021] 104 COUNSELVISE.COM (IT) 7727 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 6 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-11-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2012-2013
Appeal Filed On
02-05-2018
Judgement Text
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ ‘B’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD (Conducted through Virtual Court) BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.1127/Ahd/2018 With Cross Objection No.94/Ahd/2019 नधा रण वष / Asstt.Year : 2012-13 ITO, Ward-3(3)(11) Ahmedabad. Vs. Shri Ajay J. Mehta 801, 8 th Floor Astron Tek Park Opp: Fun Republic Cinema Satellite, Ahmedabad. PAN : ANVPM 4947 Q (Applicant) (Responent) Revenue by : Shri R.R. Makwana, Sr.DR Assessee by : Shri Biren Shah, AR स ु नवाई क तार ख/D a t e o f H e a r i n g : 0 8 / 1 1 / 2 0 2 1 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 2 5 / 1 1 / 2 0 2 1 आदेश/O R D E R PER RAJPAL YADAV, VICE-PRESIDENT: Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-3, Ahmedabad dated 22.02.2018 passed for the Asstt.Year 2012-13. On receipt of notice in the Revenue’s appeal, the assessee has filed cross objection bearing no.94/Ahd/2019. Both are disposed of by this common order. 2. Revenue has taken four grounds of appeal. However, only one issue involved in all these four grounds related to determination of deemed sale consideration under section 50C of the Income Tax Act, ITA No.1127/Ahd/2018 With CO 2 1961 for the purpose of computation of capital gain under section 48 of the Act. 3. Brief facts of the case are that the ld.AO has got an information that the assessee has sold a property on 29.9.2011 for a consideration of Rs.80,00,000/- vide registered sale deed bearing no.3273 made with Sub-Registrar Office, Bavla, Ahmedabad. For the purpose of stamp duty valuation, this property was valued at Rs.5,82,39,975/-. On the strength of this information, he recorded reasons and reopened the assessment by issuance of notice under section 148 of the Act on 16.4.2015. The ld.AO has passed the assessment order whereby he made an addition of Rs.5,52,03,376/-. The ld.AO recorded a finding that this property was purchased on 18.9.2010 for a consideration of Rs.24 lakhs and sold on 28.9.2011 disclosing the sale consideration of Rs.80.00 lakhs. The said deed was registered on 29.9.2011. The ld.AO further observed that the assessee has paid a sum of Rs.6,36,599/- for converting this land to non-agriculture land. Thus, he took cost of acquisition at Rs.30,36,599/-. According to the assessee, short term capital gain comes to Rs.49,63,401/- i.e. Rs.80,00,000/- minus Rs.30,36,599/- (sale value minus cost of property). However, the AO took sale consideration at Rs.5,82,39,975/- with the aid of section 50C of the Act. 4. Dissatisfied with computation of the capital gain, the assessee carried the matter in appeal. He has challenged reopening of the assessment which has been rejected by the ld.CIT(A). The assessee has also challenged computation of long term capital gain. The ITA No.1127/Ahd/2018 With CO 3 ld.CIT(A) accepted contentions of the assessee by recording following finding: “5. Decision: I have carefully gone through the reassessment order, submissions filed by the Appellant; remand report furnished by the Assessing Officer and the Appellant's response to the same. The brief facts of the case are that Appellant has sold immoveable property being non- agricultural land at Block No. 456 in Village: Sankod, TA: Bavia, Sub- Dist: Dholka, for consideration of Rs.80,00,0007-to M/s. Ashwa Infracon Pvt. Limited. The Sub-Registrar has valued the property at Rs.5,82,39,975/- whereas sale deed executed during the year shows vale value at Rs.80,00,000/-. The above property was purchased by Appellant on 17th September, 2010 for Rs. 24,00,000/-hence AO has adopted jantri value as correct sale value and computed Short Term Capital Gain at Rs.5,52,07,376/- as against income from capital gain shown in Return of Income under Section 148 of the Act for Rs.49,63,401/-. While making above addition, AO has adopted jantri value as market price of the property as final stamp duty of Rs.28,54,000/- was paid on sale of such property. The AO has also observed that as Appellant was not attending the Assessment Proceedings, summons under Section 131 was issued to the purchaser of the property and Director of the Company has attended the matter with AO wherein he has stated that Ashwa Infracon Pvt. Limited has made agreement with Appellant for purchase of property for Rs.80,00,000/- and stamp duty of Rs. 3,96,000/- was paid on 31st March, 2011. He further informed the AO that sale deed was not registered due to unavoidable circumstances and jantri value was revised with effect from 1st April, 2011 hence he had to pay additional payment of Rs.24,58,000/- at the time of registration of final sale deed on 28th September, 2011. The AO has considered market value of the property at Rs.5,82,39,975/- and computed Short Term Capital Gain accordingly. During the course of Appellate Hearing, Appellant has submitted additional evidence as stated hereinabove and based upon such documents, ARs of the Appellant have argued that agreement to sell was executed on 23rd December, 2010 for sale of property to Ashwa Infracon Pvt. Limited for Rs.80,00,000/-, out of which payment of Rs.19,30,000/- was received on 16th September, 2010, Rs. 10,00,0007- was received on 13th October, 2010 and Rs.25,00,000/- was received on 26th February, 2011 in support of such payment Appellant has submitted copy of bank statement and on verification of the same it is noticed that the above cheques have been realized on such dates. On this basis Appellant has argued that part payment out of agreed consideration was received by Appellant hence agreement to sell executed with buyer of the property was acted upon in substance. The Appellant has also stated that even purchaser party has paid stamp duty of Rs. 3,96,0007- payable on agreed consideration of Rs.80,00,000/-which is also prevailing jantri value of the ITA No.1127/Ahd/2018 With CO 4 property. This fact is also confirmed from the copy of certificate No.IN- GJ16516924342402J dated 31.03.2011, issued under the seal of Sub- Registrar, Bav!a, Govt. of Gujarat. These facts were also admitted by authorized person of buyer of the property and on this basis, Appellant contended that consideration of above property is Rs.80,00,000/- and not Rs.5,82,39,975/-. The delay in registration of sale deed was only on the ground that Appellant was obliged to convert agricultural land into non- agricultural land and such process has taken considerable time. The Appellant has also referred to provisions of Section 2(47) of the Act and contended that transfer of capital asset is before 1st April, 2011 because part performance was already executed with reference to agreement to sell and AO is not justified in making addition adopting jantri value prevailing on the date of execution of final sale deed. The Appellant has mainly relied upon following decisions: (i) Allahabad High Court in the case of Commissioner of Income Tax-11, Agra Versus Sh.ShimbhuMehra, Sh. Vishnu Saran Mehra, Shri Jagdish Saran Mehra, Shri Suman Mehra,Shri KeshoMehra, Sh. Shankar Saran Mehra (Income Tax Appeal No. 373 of 2010, 365 of 2010, 376of2010, 377of2010, 439 of 2010, 442 of 2010) (ii) Mumbai Tribunal in case of Sureshchandra Agarwal v. Income-tax Officer, Ward 20(3)(3) [2011] 15 taxmann.com 115 (Mum.). (iii) Ahmedabad Tribunal in case of Upendra Chinubhai Shah Vs.ACIT vide ITA No: 1552/Ahd/2015 dated 10/08/2016. The Appellant has also argued that as transfer of immoveable property is effected on the date of execution of agreement to sell, jantri value needs to be adopted on the date of execution of agreement to sell and not as per final sale deed. Reliance is mainly placed on following decisions: (i) Hyderabad bench in case of S. Venkat Reddy reported in] 32 taxmann.com 324 (ii) ITAT Delhi in the case of /TO Ward-5(1) New Delhi Versus M/s. Modipqn Ltd. (ITA No. 2049/D&I/2009, ITA No. 2171/Del/2009) (iii) ITAT Bangalore in the case of M/s. Bharathi Dev Anandani Versus Asst Commissioner of Income-tax, Circle 8 (1), Bangalore. (ITA No.882/Bang/2014) (iv) ITAT Visakhapatnam in the case of Koduru Satya Srinivas & Koduru Anupama Versus Assistant Commissioner of Income ITA No.1127/Ahd/2018 With CO 5 Tax, Circle-2 (1) Vijayawada (No.- ITA No. 556A/izag/2008, & ITA No. 557/Vizag/2008) The Appellant has also argued that provisions of Section 50C are amended by Finance Act, 2016 wherein it was brought on Statute that when agreement fixing the amount of consideration and date of registration for transfer of capital assets are not the same, the value adopted by stamp valuation authority on the date of agreement may be taken for the purpose of computation of full value of consideration provided Assessee has received partial amount through account payee cheque before date of agreement for transfer. The Appellant has also contended that such amendment is retrospective amendment for which reliance is placed on following decisions; (i) Ahmedabad ITAT in case of Dharamshibhai Sonani in ITA No. 1237/Ahd/2Q13 dated 3rd September, 2016 • (ii) Vizang Tribunal in case of Chalasani Naga RatnaKumari vs. /TO vide ITA No: 639A/Vizag/2013 dated 23/12/2016 (iii) Ahmedabad ITAT in case of Hansaben Bhaulabhai Prajapati in ITA No. 2412/Ahd/2016 dated 31/10/2017 5.1 The AO in the Remand Report has contended that Appellant has remained non-compliant during Assessment Proceedings in current year as well as in A.Y. 2010-11 hence additional evidences should not be admitted. The AO has also contended that agreement to sell with possession submitted by Appellant shows part payment out of total consideration of Rs.80,00,000/- but Appellant has not submitted such document in Assessment Proceedings and even as per information gathered by her, document was notarized by Kanubhai J. Patel who has made criminal offence for which she has submitted order of Hon'ble Gujarat High Court. In rejoinder Appellant has mainly relied upon written submission filed by him and with regard to authenticity of additional evidence, Appellant has contended that during the course of Assessment Proceedings AO has issued summons to buyer of the property wherein authorized person on behalf of buyer has categorically stated that he has executed agreement with Appellant for transfer of property at Rs.80,00,000/- hence agreement cannot be treated as afterthought. The Appellant has also drawn attention to the fact that buyer of the property has paid stamp duty of Rs.3,96,000/- on 31st March, 2011 for above property and has submitted certificate of stamp duty issued by Sub- Registrar, Bavla, on such date fqr conveyance of immoveable property. On this basis AR of the Appellant has argued that if no agreement to sell is executed, how Sub-Registrar will issue stamp duty certificate in the name of buyer of the property and how buyer of the property will make payment of stamp duty on consideration of Rs.80,00,000/-. Thus, it was stated by Appellant that agreement to sell executed by him was a valid ITA No.1127/Ahd/2018 With CO 6 document. The Appellant has also stated that the person who has notarized was subject to criminal offence for transactions not related to Appellant and if he has forged certain documents in certain : cases, it cannot be presumed that all the documents notarized by him are forged documents. 5.2 On careful consideration of entire facts, it is observed that Appellant has submitted various additional evidences which mainly include agreement to sell, sale deed and copy of bank statement. It is observed that sale deed is already registered deed and it was already available on record of AO. The bank statements were submitted by Appellant in support of his argument that part payment was received pursuant to agreement to sell and such documents being third party documents and directly relatable to issue involved in present appeal hence same are admitted along with agreement to sell submitted by Appellant The Appellant has mainly contended that he has not submitted such documents as he was not aware about consistent failure on the part of his representative. He has appointed another consultant when it came to his notice that his earlier representative had failed to submit documents and even Return of Income under Section 148 of the Act. It is also observed that Appellant filed his Return of Income under Section 148 of the Act on 5th March, 2016 and order was passed on 15th March, 2016 hence even new consultant had no sufficient time for making compliance in Assessment Proceedings. It is also observed that Remand Report was also obtained from AO and her contentions are also considered while adjudicating the present issue. The AO in the Remand Report has contended that Appellant has even remained non-compliant even in Assessment Proceedings for A.Y. 2010-11 hence additional evidence should not be admitted for present year. However, it is observed that Assessment Order for A.Y. 2010-11 was passed under Section 143(3) of the Act and no additions have been made in returned income which proves that Appellant has fully complied with details during Assessment Proceedings for A.Y. 2010-11. The Hon'ble Gujarat High Court in the case of CIT V/s Kamlaben Sureshchandra Bhatti [2014] 44 taxmann.com 459 has held as under: Section 251 of the Income Tax Act, 1961, read with Rule 46A of the Income Tax Rules, 1962 - Commissioner (Appeals) - Powers of (Power to admit additional evidence) - In course of assessment, notice of hearing issued by Assessing Officer was received by Assessee on date of hearing itself - Assessee thus could not produce necessary evidence on such date - Subsequently, when Assessee attended office of Assessing Officer with necessary evidence, he learnt that order of assessment was already passed - In such circumstances, Commissioner (Appeals) permitted additional evidence to be produced before him and while doing so, he also ITA No.1127/Ahd/2018 With CO 7 called remand report from Assessing Officer- Whether on facts, addition of additional evidence could not be stated to be in breach of requirement of Rule 46A particularly when interest of revenue was safeguarded by calling for remand report and permitting Assessing Officer to comment on such additional evidence ~ Held, yes [Para 4] [In favour of Assessee Hon'ble Punjab & Haryana High Court in the case of PCIT V/s Daljit Singh SRA 80 taxmann.com 271 has held that "where additional evidences filed under Rule 46A were relevant for Calculation of real income, same was required to be admitted. Thus, entire additional evidences submitted by Appellant are admitted". The reasons adduced by Appellant are found to be reasonable and additional evidences are admitted under Rule 46A. The return of income in response to notice u/s.148 has been filed on 05.03.2016 but the assessment order has been issued on 15.03.2016 and this fact has important bearing while deciding to admit additional evidences. After considering all the facts and circumstances, the additional evidence submitted by toe appellant is admitted as there was a reasonable cause for not producing the evidences before the A. O. and the same is considered necessary to go to the root of the controversy involved. Therefore, same are admitted for adjudication to provide natural justice to appellant and such admission is supported by following case laws: - Kamlaben S Bhatti 44 Taxman.com 459 (Guj.) - Dharmamdev Finance Pvt Limited 43 taxman.com 395 (Guj.). - ACIT VS Jogindersingh (ITA No. 2942/DELHI/2011) ITAT, Delhi - Anmol Colour India Pvt. Ltd. Vs. ITO 31 SOT 18 (JP) 121ITJ 269: ITAT, Jaipur. - CIT Vs. Khanpur Cool Synthicate (1964) 53IJR 225 (SC): 5.3 .So far as merits of the case are concerned, it is observed that AO has proceeded to make addition u/s 50C of the Act considering JANTRI Value prevailing as on the date of sale and has ignored JANTRI value as on the date of execution of agreement to sale considering such document as not valid document. It is observed that as per final sale deed executed with buyer of the property, appellant has received Rs Rs. 19,30,000 on 16th September, 2010, Rs.10,00,000/- on 13th October, 2010 and Rs.25,00,000/- on 26th February, 2011 and such amounts are duly reflected in bank statement of appellant. These are credible independent evidences not amenable to manipulation by the appellant and these facts are not disputed by AO in the remand report. These facts clearly prove that appellant has received consideration for part performance of contract on or before 31st March 2011 wherein Old JANTRI was prevailing. The Jantri Value was revised on 18th April 2011. If appellant has not entered into any agreement to sale, how he would receive such consideration on ITA No.1127/Ahd/2018 With CO 8 various dates as claimed. The appellant has also submitted Stamp Duty certificate issued by the Government of Gujarat which is part of sale deed executed with buyer of the property. As per such document, purchasing party i.e. Ashwa InfraconPvt Ltd has paid stamp duty amounting to Rs. 3,96,000/-computed on the basis of the Jantri value on 31st March 2011 which is as per JANTRI value prevailing in the financial year in which agreement to sale was executed. The above document is authentic document and available with Sub registrar who has clearly mentioned that as on 31st March 2011, market value of the above property was Rs 80,00,000/- and buyer has paid proper stamp duly. It is also observed that in said document, Ashwa Infracon Pvt Ltd is mentioned as buyer of the property and appellant is mentioned as seller of the property. This being independent document clearly supports the contention of appellant that agreement to sale was executed prior to sale deed and due to such agreement only, buyer of the appellant had paid stamp duty applicable on sale value of land as on 31st March 2011. The AO has doubted genuineness of such document mainly on the ground that notary to such document is subject to criminal proceedings before Hon'ble Gujarat High court. On careful consideration of decision of Hon'ble high court as submitted by AO in remand report, notary was subject to criminal proceedings not in the case of appellant or for documents notarized in case of appellant and even in said case, High court has given bail to said notary and there is no definite allegation against. Mr. Kanubhai J Patel, Notary having specific bearing on the instant case. It is also observed that if one person is found to be guilty for forging document in Notary, it cannot be held that all documents notarized by him are always forged documents and there is nothing on record that as on the date of notary of above document, he was debarred from doing such notary whereas independent evidence in form of certificate issued by Sub registrar, market value of the property was Rs 80,00,OOO/- and stamp duty was already paid before there is increase in any JANTRI value. It is observed that as sale deed was not registered before increase in JANTRI value, buyer of the property has to paid additional stamp duty considering JANTRI value prevailing as on the date of sale. The circumstantial independent evidences such as transactions through banking channel prove that the banakhat was actually in existence much before 18.04.2011, the day on which jantri value was revised. It is also observed that during .the course of assessment proceedings, AO has also issued summons the buyer of the property wherein director of the company has stated that due to illness, authorized person would attend hearing and same was accepted by AO. During the course of hearing, such authorized person has categorically admitted that buyer has entered into agreement to sale (banakhat) with appellant for purchase of property for Rs 80,00,000/-, paid stamp duty on 31st March 2011 considering value of property at Rs. 80,00,000/- and paid additional stamp duty subsequently because sale deed was delayed for final ITA No.1127/Ahd/2018 With CO 9 registration. The relevant observation of AO from assessment order is as under: "10. Shri Dipal Shah, CA and AR of the assessee again attended the office of the undersigned and case discussed with him. He informed the undersigned that M/s AshwalnfraconPvt Ltd had made agreement with Shri Aiav J Mehta to purchase the impugned immovable property from Aiav J Mehta for a consideration of Rs. 80,00,000/- with condition that he should convert the said land from agricultural to non agriculture and the consideration agreed upon includes the payment required to be made to the government for such conversion. Accordingly Shri Ajay J Mehta made the required payment for conversion the land from agriculture to non agriculture. Accordingly sale deed prepared and purchaser i.e. M/s Ashwalnfracon Pvt Ltd made payment of Rs. 3,96,000/- towards stamp duty charges on 31/03/2011. However the deed could not be registered for some unknown reason. .Subsequently, on 28/09/2011, the sale deed executed earlier, registered with SRO, Bavla, Dist. Ahmedabad. However SRO, Bavla, had valued the property at Rs.5,82,39,975/-for the purpose of stamp duty charges as the Jantri rates revised with effect from 01/04/2011 and accordingly the purchaser had to make payment of Rs: 24,58,000/- for stamp duty and registered the sale deed for the immovable property in question. The AR of the assessee also stated that it was not the fault of the purchaser and due to delay in registering the document, the Jantri rates hiked to very high rate." The above facts clearly prove that agreement to sale deed was executed and on that basis only the sale deed was prepared and stamp duty was paid on the basis of JANTRI value prevailing at the relevant time. It was also stated by authorized person that sale deed got registered late hence buyer had to pay additional stamp duty. The appellant has submitted independent documents to prove that agreement to sale was existing and substantial portion was received by appellant as per such agreement to sale. 5.4 It is also observed that section 50C was amended by Finance Act 2016 wherein it is stated that "where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer....." and in said section, it has been clarified that part consideration should have been received through account payee cheque on or before date of agreement for transfer and such conditions are duly complied by appellant. It is observed that in following cases, Hon'ble Ahmedabad ITAT has considered provisions of section 50C as ITA No.1127/Ahd/2018 With CO 10 retrospective and held that JANTRI value need to be considered as on the date of agreement to sale. (i) Ahmedabad ITAT in case of Hansaben Bhaulabhai Prajapati in ITA No. 2412/Ahd/2016 dated 31/10/2017 "4. We have heard both the parties. Case file perused. Learned Authorized Representative strongly argues that both the lower authorities have erred in making the impugned addition of long term capital gains in view of jantri price revised on 18.04.2011 i.e. falling between the date of registered agreement coming on 02.02.2011 and sale deed dated 13,07.2011. The Revenue's case on the other hand is that the assesses had never transferred the asset in question before the above jantri price increase. We find in this factual backdrop that a co-ordinate bench decision in DharamshibhaiSonani vs. ACIT ITA No.1237/Ahd/2013 decided on 30.09.2016 takes note of second proviso to Section 50C inserted by the Finance Act, 2016 w.e.f. 01.04.2017 to be curative and having retrospective effect as under 5. We notice in view of all these developments that the assessee has received his earnest money in furtherance to the registered sale agreement dated 02.02.2011 on 10.03.2011. Relevant cheques details already find mention in ClT(A)'s order page 9. We observe in these facts that the registered agreement followed by receipt of advance money by banking channel form sufficient reasons to attract the above former proviso to Section 50C of the Act stipulating in very clear terms that where the date of the agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement is to be taken for the purpose of full value of consideration. We therefore accept assessee's arguments in principle. The Assessing Officer is accordingly directed to verify necessary facts as per law for the purpose of adopting the above agreement value in order to compute the consequential capital gains." Ahmedabad ITAT in case of Dharamshibhai Sonani in ITA No. 1237/Ahd/2013 dated 30th September, 2016: Facts: During the course of reopened assessment proceedings, the Assessing Officer took note of fact that the assessee, along with a co-owner, had sold certain land at Village Behstan, Surat, on 24.04.2007 at stated consideration of Rs.45,00,000/-whereas on that day, according to the stamp duty valuation authority, this land ITA No.1127/Ahd/2018 With CO 11 was valued at Rs.76,21,800/-. It was in this backdrop that the Assessing Officer sought to add Rs. 15,60,900/-to the value of sale consideration, for the purpose of computing capital gains, received by the assessee. It was explained by the assessee that though a registered "agreement to sell" was executed on 29.06.2005, the sale deed of land could finally be executed only on 24.04.2007 since the land was agricultural land, since the buyer was a private limited company, which could have purchased only non agricultural land, and since land was required to be converted into non-agricultural land before execution of sale deed. The stamp duty valuation as on 24.04.2007 was therefore, according to the assessee, not relevant for ascertaining whether the sale consideration was suppressed which is what is relevant for the purpose of section 50C. This explanation was, however, rejected. What, according to the Assessing Officer, was relevant was the date on which sale deed is executed. The Assessing Officer proceeded to adopt sale consideration, under section 50C, at stamp duty valuation rate. Aggrieved, assessee carried the matter in appeal before the learned CIT(A) but without any success. The assessee was not satisfied and went in further appeal before Hon'ble ITAT who on careful consideration of facts held as under: "[9] So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g.the conversion of use of land) are to be ignored.lt is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer 'for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so. ITA No.1127/Ahd/2018 With CO 12 [10] I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in which there is a fall in the stamp duty valuation rates with the passage of time. Such a situation has actually arisen in many places in the country, such as in Gurgaon (New Delhi) and even in Dehradun (Uttarakhand and some other places. It is therefore possible that, at first sight, first proviso to Section 50C may seem to work to the disadvantage of the assessee in certain situation in the event of the word 'may' being construed as mandatory in application, but then one cannot be oblivious to- the fact that this proviso states that the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer (emphasis supplied)" making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in ' harmony with the legislative intention, insertion of words "at the option of the assessee" between "stamp valuation authority on the date of agreement may" and" be taken for the purposes of computing full value of consideration for such transfer", in first provisio to Section 50C(1), could have made the legal provision even more unambiguous. [11] In the result, the appeal is allowed in the terms indicated above." 5.5 It is also observed that on identical facts, various courts have even before amendment to section 50C has held that JANTRI value need to be taken on the date of agreement to sale (banakhat). Reliance is placed on following decisions. (i) ITAT Visakhapatnam in the case of Koduru Satya Sn'nivas & Koduru Anupama Versus Assistant Commissioner of Income Tax, Circle-2 (1) Vijayawada (No.- ITA No. 556/Vizag/2008, & ITA No. 557/Vizag/2008) in which it was held that: "6. In the cases before us also, there is no dispute that the assessees herein entered into sale agreements on 04-6-2005 and the sale value fixed on that date was equivalent to the SRO rates fixed for ITA No.1127/Ahd/2018 With CO 13 stamp duty purposes. The conveyance deed was registered on 25.8.2005, i.e, within a period of three months. Though the SRO rates had been raised upwards on that date, yet, as observed in the above cited case, the assessees herein have fulfilled a contractual obligation, which they are bound by law to carry out. Since the process of sale has been initiated from the date of sale agreement, we have held in the above cited case that the applicability of provisions of section 50C should be looked at only on the date of sale agreement. In the instant cases, the question of adoption of a higher value by invoking the provisions of section 50C on the date of sale agreement does not arise as the sale value fixed by the assessees was equivalent to the SRO value for stamp duty purposes. ITAT Bangalore in the case of M/s. Bharathi Dev Anandani Versus Asst. Commissioner of Income-tax, Circle 8 (1), Bangalore. (ITA No.882/Bang/2014) Deduction u/s 50C computation - whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C - Held that- Once the parties have agreed upon the sale consideration of the property in the year 2005, then it will be immaterial if the final sale deed was executed in the year 2007 when final payment was made to the assessee by the purchaser. It is not the case of the AO that the payment received by the assessee prior to sale deed was not part of the sale consideration. Therefore, when the assessee has received part sale consideration since 11/5/2005, then for the purpose of sec. 50C of the Act, the Fair Market Value has to be applied in the year in which the parties have decided and agreed upon the sale consideration and not in the year when the sale deed was executed Even if stamp duty valuation of the property at the time of registration of sale deed is adopted as full consideration, the same has to be subject to the verification whether the market value of the property at the time of sale consideration agreed upon by the parties is less than the valuation adopted by the stamp valuation authority then as per provisions of Sec.50C(2) market value of the property is required to be taken after consideration of relevant facts including prevailing rate at the time of sale consideration agreed upon between the parties. (iii) ITAT Delhi in the case of ITO Ward-5(1) New Delhi Versus M/s. Modipon Ltd. (ITA No. 2049/Del/2009, ITA No. 2171/Del/2009) ITA No.1127/Ahd/2018 With CO 14 Determination of capital gain on transfer of plot of land at Ghaziabad - Held that:- By executing the sale deed in June, 2005, the assesses has only completed the contractual obligation imposed upon it by virtue of the sale agreement, Since the process of sale has been initiated from the date of sale agreement, in our opinion, the character of the transaction vis-a-vis Income tax Act should be determined on ] the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be locked at only on the date of sale agreement. The assessee has filed a certificate obtained from the Joint Sub Registrar, Visakhapatnam, regarding market value of the impugned property as on the date of the sale agreements. The said certificate was not produced before the tax authorities. As already held that the provisions of section 50C should be applied of the impugned sale transactions as on the date on which sale agreements were entered into. Since the applicability of section 50C as on the date of sale agreements is required to be examined by the AO, we set aside the issue to the file of the AO with a direction to compute the capital gains on sale of impugned properties after applying the provisions of section 50C as on the date of sale agreements. Accordingly, the order of Ld.CIT(A) is reversed. - . Considering the above facts and relying upon various decisions referred (supra), it is my opinion that the AO was. not justified in adopting JANTRI value prevailing as on the date of registering the sale deed as correct market price and re-computing capital gain u/s 50C of the Act. Thus, addition made by AO considering short term capital gain computed by AO for Rs.5,52,07,376/- is hereby deleted and AO is directed to compute capital gain considering sale value of the property at Rs 80,00,000/-. Ground No.2 of appeal is allowed.” 5. With the assistance of the ld.representatives, we have gone through the record carefully. Before we embark upon an enquiry on the facts of the present case, let us take provision of section 48 of the Act, which provides mechanism for computation of capital gain. Section 48 postulates the following conditions: (i) expenditure incurred wholly and exclusively in connection with such transfer, and (ii) the cost of acquisition asset and the cost of any improvement thereto. ITA No.1127/Ahd/2018 With CO 15 6. Further, section 50C of the Act provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. In other words, full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty. 7. There is no dispute with regard to the fact that stamp valuation authority has determined value of the property for charging stamp duty at Rs.5,82,39,975/-, but referring to the fact brought the notice of the ld.Revenue authorities is that the assessee has purchased this property on 17.9.2010 for a consideration of Rs.24 lakhs. Thereafter, it was converted to non-agriculture land. The assessee has sold the same on 28.9.2011. The assessee had entered into an agreement with M/s.Ashwal Infracon P.Ltd. on 23.12.2010 and sale consideration was settled at Rs.80.00 lakhs. The assessee has received part payment through account payee cheque. Stamp duty valuation authority have revised their valuation on 1.4.2011, and thereafter vendee was required to pay additional stamp duty of Rs.24,58,000/-. Section 50C has been amended by incorporation of the following provisions: Special provision for full value of consideration in certain cases. 50C. (1) ....... ITA No.1127/Ahd/2018 With CO 16 Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer: ..... ..... ... 8. These provisions have been entered in the section with effect from 1.4.2017. A perusal of these provisions would indicate that if the date of registration for transfer of capital assets, and date of agreement are different, and valuation of the property for the purpose of payment of stamps also differs on these dates, then stamp valuation on the date of agreement is to be deemed as full consideration for the purpose of section 50C of the Act. The only caveat provided in this regard has been contemplated in second provisos that payment or part payment of consideration must be through bank channel because that can avoid manipulation of agreement at the end of the party for avoiding determination of deemed consideration under section 50C of the Act. This aspect has been considered by the ITAT, Ahmedabad Benches in large number cases and the ld.CIT(A) has referred the decision of ITAT in the case of Dharamshibhai Sonani in ITA No.1237/Ahd/2013 in the finding extracted (supra). In the present case, we find that there are two different dates. One is 23.12.2010 when the assessee entered into an agreement for sale of this property and another 29.9.2011 when the sale deed was ultimately registered. At the time of ITA No.1127/Ahd/2018 With CO 17 agreement and prior to that the assessee has received part payments through negotiation. Such payments have been received through account payee cheque. He received Rs.25 lakhs on 26.2.2011 and Rs.10.00 lakhs on 13.10.2010. This part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis-à-vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and this aspect has been dealt with by the ld.CIT(A) elaborately in the finding extracted (supra), therefore, no interference from our side is called in the impugned order on the issue. 9. As far as cross objection is concerned, the assessee has challenged reopening of the assessment under section 147 of the Act. We find that the AO got concrete information about the sale of the property and therefore he has a reason to believe that income has escaped assessment, and has rightly reopened. The ld.CIT(A) has examined this issue elaborately, and has rightly rejected the contentions of the assessee. We do not find any merit in this CO of the assessee. It is dismissed. s 10. In the result, appeal of the Revenue as well as CO of the assessee are dismissed. Order pronounced in the Court on 25 th November, 2021 at Ahmedabad. Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER Sd/- (RAJPAL YADAV) VICE-PRESIDENT Ahmedabad; Dated 25/11/2021
