Sh. Sandeep Goyal, Ludhiana V. ITO, Ludhiana

ITA 1175/CHANDI/2011

• Counselvise Citation: 117521514 RSA 2011
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: D K GOYAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 147; 148; 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1175 /CHD/2011 (ASSESSMENT YEAR : 2006-07) SH.SANDEEP GOYAL VS. THE INCOME TAX OFFICER, S/0 SH.RAJESH GOYAL, VI (3), 177-A, SARABHA NAGAR, LUDHIANA. LUDHIANA. PAN: ACBPG7187R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K.GOYAL RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 19.03.2012 DATE OF PRONOUNCEMENT : 29.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA D ATED 26.09.2011 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE THE LEARNED CIT (APPEALS) HAS ERRED IN LAW & FACTS BY NOT APPRECIATING THE CONCEPTUAL SUBJECT THAT THE FAIR MARKET VALUE IS RS.5 LAKHS INSTEAD OF RS.9.40 LAKHS AS ADOPTED BY THE ASSESSING OFFICER, ON ACCOUNT OF VARIOUS REASONS GIVEN IN WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER & THE CIT (APPEALS). 2. BECAUSE THE ACTION OF ASSESSING OFFICER & CIT (APPEALS) IS UNDER CHALLENGE ON FACTS & LAW BY NOT CONSIDERING THE VALUATION MADE BY THE REGISTERED VALUER AS WELL AS THE ASSISTANT VALUATION OFFICER IN WHICH DETAILED REASONS FOR ADOPTING THE VALUATION LOWER THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVERNMENT REFERRED TO AS THE STAMP VALUATION AUTHORITY ARE MENTIONED. 2 3. BECAUSE THE ACTION OF ASSESSING OFFICER AS WELL AS CIT (APPEALS) IS UNDER CHALLENGE SINCE NOT HAVING APPRECIATED THE FACTS, DOCUMENTS, EVIDENCE, DECISION RELIED & PROVISION OF ACT IN ITS TRUE SENSE & SPIRITS. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN REL ATION TO THE FAIR MARKET VALUE OF THE PROPERTY TO BE ADOPTED. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD LAND MEASURING 469.58 SQ.MTRS. SITUATED AT MAUZA MAJRA PRAGANA, KENDRIYADOON, DIST T. DEHRADUN FOR RS.5 LACS. THE REGISTERING AUTHORITY FOR STAMP PUR POSES HAD ADOPTED THE VALUE AT RS.9,40,000/-, ON WHICH STAMP DUTY OF RS.9 4,000/- WAS PAID BY THE ASSESSEE. THE PROVISIONS OF SECTION 50C OF THE ACT WERE APPLICABLE IN THE CASE. THE ASSESSEE HAD DECLARED THE VALUE O F LAND AT RS.5 LACS ONLY. THE ASSESSING OFFICER ACCORDINGLY INITIATED PROCEEDINGS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT AS THERE WAS ESCAPEMENT OF INCOME AMOUNTING TO RS.4,40,000/-. I N RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THE ASS ESSEE SUBMITTED THAT THE ORIGINAL RETURN OF INCOME FILED BY HIM SHOULD B E TREATED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED REPORT OF APPROVED VALUER ESTIMATING THE VALUE OF LAND AT RS.5,16,000/-. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE FAIR MARKET VALUE OF THE PROPERTY S HOULD NOT BE ADOPTED AT RS.940,000/-. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE THAT THE VALUE OF THE PROPERTY SOLD BY HIM WAS MUCH LESS THAN THE OTHER PROPERTIES AS THERE WAS NO ADEQUATE PLACE TO PARK AND ALSO DIMENS ION OF THE PROPERTY AFFECTED THE PRICE. THE ASSESSING OFFICER REJECTIN G THE CLAIM OF THE ASSESSEE, IN VIEW OF THE PROVISIONS OF SECTION 50C OF THE ACT, ADOPTED THE SALE PRICE OF LAND AT RS.9,40,000/- AND COMPUTE D THE INCOME FROM LONG TERM CAPITAL GAIN AT RS.5,93,520/-. 3 5. DURING THE APPELLATE PROCEEDINGS THE CIT (APPEAL S) DIRECTED THE ASSESSING OFFICER TO REFER THE MATTER OF VALUATION TO THE ASSISTANT VALUATION OFFICER (AVO). IN COMPLIANCE, THE ASSESS ING OFFICER REFERRED THE MATTER TO THE CONCERNED AVO, WHO VIDE HIS REPOR T DATED 6.5.2011 ESTIMATED THE VALUE OF THE PROPERTY AT RS.7,04,300/ -. THE CIT (APPEALS) VIDE PARAS 5.3 AND 5.4 HELD AS UNDER: 5.3 FURTHER, THE REPORT OF THE REGISTERED VALUER SUBMITTED BY THE APPELLANT ALONGWITH HIS SUBMISSIONS SHOWS THE VALUE OF THE SAME PROPERTY AT 5,16,000/- ALMOST WITH THE SAME OBSERVATIONS WITH WHICH THE ASSTT. VALUATION OFFICER HAS PREPARED HIS REPORT OF ESTIMATING VALUE AT RS.7,04,300/-. THEREFORE, KEEPING IN VIEW THE ABOVE, I AM OF THE VIEW THAT BOTH VALUES ARE NOT CONSIDERABLE IN THIS CASE DUE TO DISPUTE IN ESTIMATED VALUES IN SAID REPORTS, AS BOTH REPORTS ARE PREPARED BY TECHNICAL EXPERTS. 5.4 KEEPING IN VIEW THE ABOVE FACTUAL POSITION OF T HE CASE, I AM OF THE OPINION THAT THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AS ADOPTED BY THE AO I.E. RS.9,40,000/- IS UPHELD AND RELEVANT GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS COVERED BY THE RATIO LAID DOWN BY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF RAMENDRA VIKRAM SINGH VS. ITO (2010) 36 DTR (LUC KNOW)(TRIB) 129 AND IN THE CASE OF RAHUL CONSTRUCTIONS VS. DCIT (20 10) 38 DTR (PUNE)(TRIB) 19. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION T O THE APPLICATION OF PROVISIONS OF SECTION 50C OF THE ACT. WHERE THE AS SESSEE HAS SOLD THE IMMOVABLE PROPERTY, PROVISIONS OF SECTION 50C OF TH E ACT PROVIDES THAT 4 IN ALL SUCH CASES WHERE THE SALE VALUE DECLARED BY THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE REGISTERING AUTHORITIES, BY AD OPTING A VALUE OTHER THAN THE SALE VALUE DECLARED BY THE ASSESSEE, THEN THE SAID VALUE IS TO BE ADOPTED SUBJECT TO THE PROVISIONS OF SUB-SECTION (2 ) AND (3) OF SECTION 50C OF THE ACT, WHICH CARVE OUT EXCEPTIONS FROM THE SITUATION DESCRIBED IN SUB-SECTION (1) OF SECTION 50C OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD ITS PROPERTY IN D EHRADUN AND SALE VALUE AS PER THE SALE DEED WAS RS.5 LACS. HOWEVER THE REGISTERING AUTHORITIES HAD ADOPTED THE VALUE AT RS.9,40,000/- ON WHICH THE ASSESSEE HAD PAID STAMP DUTY OF RS.94,000/-. IN VIEW OF THE PROVISIONS OF SECTION 50C(1) OF THE ACT THE ASSESSING OFFICER ADOPTED THE SAID VALUE OF RS.9,40,000/- FOR COMPUTING THE INCOME FROM LONG TE RM CAPITAL GAIN ON SALE OF PROPERTY IN THE HANDS OF THE ASSESSEE. THE GRIEVANCE OF THE ASSESSEE IS THAT AS PER THE REGISTERED VALUER, THE VALUE OF THE SAID PROPERTY IS TO BE TAKEN AT RS.5,16,000/-. DURING T HE COURSE OF APPELLATE PROCEEDINGS THE ASSESSING OFFICER HAD MADE REFERENC E TO THE VALUER WHO HAD ESTIMATED THE VALUE OF PROPERTY AT RS.7,04,300/ -. 9. UNDER THE PROVISIONS OF SECTION 50C(2) OF THE AC T WHERE THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT T HE VALUE SO ASSESSED OR ADOPTED BY THE STAMP VALUATION AUTHORITIES EXCEE DS THE FAIR MARKET VALUE OF THE PROPERTY, AS ON THE DAY OF TRANSFER, T HEN THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSE T TO A VALUATION OFFICER AND WHERE SUCH REFERENCE IS MADE THE PROVIS IONS OF VARIOUS SECTIONS OF THE WEALTH TAX ACT, AS ENUMERATED, SHAL L APPLY IN RELATION TO SUCH REFERENCE. THE REFERENCE TO THE VALUATION OFF ICER WOULD BE MADE IN SUCH CASES WHERE THE ASSESSEE HAS NOT DISPUTED THE SAID ADOPTION OF VALUE BEFORE ANY OTHER AUTHORITIES, COURT OR HIGH COURT B Y WAY OF APPEAL, REVISION, ETC. UNDER SECTION 50C (3) OF THE ACT W HERE THE VALUE OF 5 PROPERTY UNDER SUB-SECTION (2) EXCEEDS THE VALUE AD OPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY, THEN THE VALUE SO AD OPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED, AS A RESULT OF TRANSFER. THE ISSUE ARI SING IN THE PRESENT APPEAL IS AGAINST THE ADOPTION OF SALE VALUE, INVOK ING THE PROVISIONS OF SECTION 50C OF THE ACT. SIMILAR ISSUE OF APPLICATI ON OF PROVISIONS OF SECTION 50C OF THE ACT AROSE BEFORE THE LUCKNOW BEN CH OF THE TRIBUNAL IN THE CASE OF RAMENDRA VIKRAM SINGH VS. ITO (SUPRA ), WHEREIN IT WAS HELD AS UNDER: 23. THE EXPLANATORY NOTES ISSUED WHILE INTRODUCIN G S. 50C AND CBDT CIRCULAR NO. 8 OF 2002 [(2002) 178 CTR (ST) 9 : (2002) 258 ITR (ST) 13], STATUTE CLEARLY SUPPORT THE ABOVE CONCLUS IONS. THEY HAVE BEEN DISCUSSED IN DETAIL IN JITENDRA MOHAN SAXENA'S (SUP RA) CASE. FURTHER, THE WORDS USED IN SUB-S. (3) TO S. 50C AT THE BEGINNING ARE 'SUBJECT TO THE PROVISIONS CONTAINED IN SUB-S. (2)'. IT MEANS THAT A SEPARATE AREA IS CARVED OUT FROM THE SITUATIONS PROVIDED IN SUB-S. ( 3). THE THREE SUB- SECTIONS OF S. 50C COVER THREE DIFFERENT SITUATIONS . SUB-S. (1) DEALS WITH GENERAL SITUATION AND WOULD BE INVOKED BY AO IF NO CLAIM IS MADE BY THE ASSESSEE THAT FAIR MARKET VALUE OF THE PROPERTY SOL D IS LESS THAN THE VALUATION MADE BY THE SVA. WHEN SUCH A CLAIM IS MAD E THEN THE CASE WOULD BE DEALT WITH UNDER SUB-S. (2) OR SUB-S. (3). THE AO WOULD MAKE A REFERENCE WHEN SUCH A CLAIM IS MADE, TO THE DVO, WH O WILL SUBMIT A REPORT FOLLOWING THE PROCEDURE LAID DOWN UNDER SUB- S. (2). IN FACT, SUB- SS. (2) AND (3) CARVE OUT EXCEPTIONS FROM THE SITUA TION DESCRIBED IN SUB-S. (1). WHERE VALUATION DONE BY DVO IS MORE THAN THE VALUATION DONE BY THE SVA, IT WOULD BE COVERED BY SUB-S. (3) AND THE DECLARED SALE CONSIDERATION WOULD BE REPLACED BY VALUATION DONE B Y SVA. ON THE OTHER HAND, WHERE VALUATION DONE BY DVO IS LESS THAN THE VALUATION DONE BY SVA THEN THAT SITUATION WOULD BE COVERED BY SUB-S. (2). THE VALUATION SO DONE BY THE DVO WOULD BE BINDING ON THE AO WITHIN T HE MEANING OF SUB- S. (6) OF S. 16A OF WT ACT WHICH HAVE BEEN MADE APP LICABLE FOR REFERENCE MADE UNDER S. 50C(2). BUT WHERE NO CLAIM IS MADE BY THE ASSESSEE BEFORE THE AO THAT FAIR MARKET VALUE OF THE CAPITAL ASSET SO SOLD IS LESS THAN THE VALUATION DONE BY THE SVA, THEN IT WOULD B E ENTIRELY COVERED UNDER SUB-S. (1). 10. THE LUCKNOW BENCH OF THE TRIBUNAL THUS HELD THA T WHERE VALUATION DONE BY DVO IS MORE THAN THE VALUATION DONE BY THE SVA, IT WOULD BE COVERED BY SUB-S. (3) AND THE DECLARED SALE CONSIDERATION WOULD BE REPLACED B Y VALUATION DONE BY SVA. ON THE OTHER HAND, WHERE VALUATION DONE BY DVO IS LESS THAN THE VALUATION DONE BY SVA THEN THAT SITUATION WOULD BE COVERED BY SUB-S. (2). THE VALUATION SO DO NE BY THE DVO WOULD BE BINDING ON THE AO 6 WITHIN THE MEANING OF SUB-S. (6) OF S. 16A OF WT AC T WHICH HAVE BEEN MADE APPLICABLE FOR REFERENCE MADE UNDER S. 50C(2). BUT WHERE NO CLAIM IS MADE BY THE ASSESSEE BEFORE THE AO THAT FAIR MARKET VALUE OF THE CAPITAL ASSET SO SOLD IS L ESS THAN THE VALUATION DONE BY THE SVA, THEN IT WOULD BE ENTIRELY COVERED UNDER SUB-S. (1). 11. APPLYING THE ABOVE SAID RATIO LAID DOWN BY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF RAMENDRA VIKRAM SINGH V S. ITO (SUPRA), TO THE FACTS OF THE PRESENT CASE, WE FIND THAT THE AVO IN THE PRESENT CASE HAD ESTIMATED THE VALUE OF THE PROPERTY AT RS.7,04, 300/- AS AGAINST THE VALUE ESTIMATED BY THE STAMP VALUATION AUTHORITY AT RS.9,40,000/-. SO THE VALUE FOR THE PURPOSES OF COMPUTING THE INCOME FROM LONG TERM CAPITAL GAIN IN THE CASE OF THE ASSESSEE, IN VIEW O F THE PROVISIONS OF SECTION 50C (2) OF THE ACT, IS TO BE TAKEN AT RS.7, 04,300/-. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE IN COME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE BY ADOPT ING THE SALE VALUE AT RS.7,04,300/-. IN VIEW THEREOF, GROUND OF APPEAL N OS.1 AND 2 RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7