RITESH B SHAH (HUF), MUMBAI V. ITO 16(2)(2), MUMBAI

ITA 1177/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5029 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G TRALSHAWALA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Tangible material; Fair market value; Valuation report
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI . . , ! ' , # $ BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 1177 / / 2012 A.YS. 2005-06 ITA NO. : 1177/MUM/2012 (ASSESSMENT YEAR: 2005-06) RITESH B. SHAH (HUF), FLAT NO. 11, LE JARDIN, KASHIBAI NAVRANGE ROAD, GAMDEVI, MUMBAI -400 007 .: PAN: AANHS 1240 R VS INCOME-TAX OFFICER 16(2)(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. TRALSHAWALA RESPONDENT BY : SHRI NEERAJ BANSAL /DATE OF HEARING : 11-09-2013 !' / DATE OF PRONOUNCEMENT : 13-09-2013 ( O R D E R ! ' , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) 27, MUMBAI, DATED 29.11.2011, WHEREIN, THE FOLLOWING GROUN DS HAVE BEEN RAISED: 1) IN LAW AND ON THE FACTS & IN THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE HONBLE C.I.T.(A) ERRED IN UPHOLDING THE VALIDI TY OF THE NOTICE ISSUED U/S 148(2), WITHOUT APPRECIATING THAT THERE WERE NO COGENT REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT AND TH ERE WAS NO NEW MATERIAL GATHERED BY THE A.O. FOR REOPENING OF THE ASSESSMENT. 2) IN LAW AND ON THE FACTS & IN THE CIRCUMSTANCES O F THE APPELLANTS CASE, THE HONBLE C.I.T.(A) ERRED IN RELYING ON THE VALUA TION REPORT AS PREPARED BY SHRI UMRIGAR, WHICH ADOPTED RENT CAPITALIZATION METHOD UNDER WEALTH TAX ACT INSTEAD OF RELYING ON THE VALUATION REPORT OF SHRI GANJAWALA WHICH WAS FOR THE PURPOSE OF DETERMINING THE FAIR MARKET RITESH B. SHA H (HUF) ITA 1177/M/2012 2 VALUE (FMV) AS ON 01.04.1981 WHICH WAS UNDER THE PR OVISIONS OF THE INCOME TAX ACT, 1961 FOR THE PURPOSE OF COMPUTING T HE CAPITAL GAINS MADE ON THE SALE OF THE IMPUGNED PROPERTY. 2. THE FACTS OF THE CASE AS PER THE ORDERS OF THE REV ENUE AUTHORITIES ARE THAT THE ASSESSEE IS A CO-OWNER OF THE PROPERTY S ITUATED AT PLOT NO. 10B(E) SION MATUNGA ESTATE, KOLIWADA, MUMBAI, HAVING 11.11% SHARE DURING THE FINANCIAL YEAR 2004-2005 THE SAID. PROP ERTY WAS SOLD FOR A TOTAL CONSIDERATION OF RS. 4,21,00,000/- AS PER DEV ELOPMENT AGREEMENT DATED 22-06-04. AS PER THE BOMBAY STAMP OFFICE AUTHORITIES1 VALUATI ON OF THE PROPERTY WAS DETERMINED AT RS. 4,94,61,600/- AND STAMP DUTY ON THE SAME WAS PAID BY THE PURCHASER. THE ASSESSEE COMPUTED ITS LONG TERM CAPITAL GAIN BA SED ON HIS SHARE OF THE SALE VALUE OF THE PROPERTY AS PER THE SALE C ONSIDERATION AS PER DEVELOPMENT AGREEMENT STATED ABOVE. THE LEARNED ASSESSING OFFICER CALCULATED THE LONG T ERM CAPITAL GAIN BY TAKING THE STAMP OFFICE VALUATION OF RS. 4,94,61,60 0/- INSTEAD OF SALE CONSIDERATION OF RS. 4,.21,00,000/- WITHOUT REFERRI NG THE VALUATION TO THE VALUATION DEPARTMENT AS REQUIRED U/S 50C OF THE ACT. THE ASSESSEE REQUESTED VIDE THEIR LETTERS DATED 04- 12-2007 AND 08-12- 2007 TO THE LEARNED ASSESSING OFFICER THAT VALUATIO N OF THE PROPERTY BE REFERRED TO THE VALUATION DEPARTMENT. THE APPELLANT CLAIMED DEDUCTION OF INDEXED COST OF ACQUISITION OF THE PROPERTY AND FOR THE SAID PURPOSE OBTAINED THE VALU ATION REPORT AS ON 01-04-1981 OF H. GANJAWALA CO., ARCHITECTS & REGIST ERED VALUER. THE ASSESSING OFFICER ACCEPTED THE ORDER OF DISTRIC T VALUATION OFFICER DATED 20-12-2007 AND REJECTED THE VALUATION REPORT AS ON 01-04-81 OF H. GANJAWALA & CO., ARCHITECTS & REGISTERED VALUER WITHOUT ANY APPLICATION OF MIND AS TO WHY REPORT OBTAINED BY TH E APPELLANT SHOULD RIOT HE CONSIDERED. THE APPELLANT CALCULATED THE LONG TERM CAPITAL GAIN INDEXING THE COST OF PROPERTY FROM THE YEAR 1-4-1981 THE PROPERTY WAS INHERITED BY THE ASSESSEE AS PER DEED OF PARTITION AMONG THE FAMILY MEMBERS WHO OWNED PROPERTY BEFORE 1-4-1981. AS THE LEARNED ASSESSING OFFICER HAS NO AUTHORITY I SSUE NOTICE U/S. 148 AND AS THE ASSESSMENT MADE U/S 143(3) IS TIME BARRE D, THE ENTIRE; ASSESSMENT PROCEEDING IS REQUIRED TO BE SQUASHED. 3. THE AO REJECTED ALL THE CONTENTIONS RAISED BEFORE HIM, BOTH WITH REGARD TO ISSUE OF NOTICE U/S 148 AND MERITS. 4. THE ASSESSEE APPROACHED THE CIT(A), WHO SUSTAINED TH E ORDER OF THE AO. 5. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 6. AT THE TIME OF HEARING, THE AR PLACED BEFORE US THE C OPY OF THE ORDER OF THE COORDINATE BENCH AT MUMBAI, IN THE CASE OF THE CO-OWNER RITESH B. SHA H (HUF) ITA 1177/M/2012 3 OF THE PROPERTY, WHOSE VALUATION HAS BEEN THE BONE OF CO NTENTION. THE AR PLACED THE COPY OF THE ORDER OF SHRI JAY HARSHAD SH AH (HUF) VS. ITO IN ITA NO. 1178/MUM/2012. 7. THE AR POINTED OUT THAT THE ISSUE OF REOPENING HAS B EEN SUSTAINED BY THE COORDINATE BENCH IN PARA 5, WHEREIN, IT WAS OBSERV ED, 5. THE LD. COUNSEL REFERRING TO THE ISSUE OF SECT ION 148 SUBMITTED THAT THE ASSESSEE HAS ENCLOSED SALE AGREEMENT TO TH E RETURN FILED AND SINCE RETURN WAS ACCEPTED U/S. 141 THERE IS NO TANGIBLE MATERIAL TO RE-OPEN THE ASSESSMENT U/S. 14 7. HE RELIED ON VARIOUS DECISIONS FOR THE PROPOSITION THAT RE-OP ENING CAN NOT BE ACCEPTED IF THERE IS NO OTHER TANGIBLE MATERIAL. AFTER CONSIDERING OBJECTIONS/SUBMISSIONS OF THE ASSESSEE, WE NOTICED THAT IT IS ONLY THE PROCESSING U/S. 143(1) WHICH WA S COMPLETED IN ASSESSEES CASE AND AO TOOK PROCEEDINGS IN ALL T HE GROUP CASES AS CAN BE SEEN FROM THE VARIOUS ORDERS BEFORE ITAT FOR EXAMINING THE CAPITAL GAINS COMPUTATION. SINCE NOT ONLY IN ASSESSEES CASE BUT ACTION WAS TAKEN IN OTHER CO-OW NERS CASE, WE ARE OF THE OPINION THAT ACTION OF THE AO HAS TO BE UPHELD, KEEPING IN VIEW THE PRINCIPLES LAID DOWN BY THE HON 'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P VT. LTD. (291 ITR 500)(SC). ACCORDINGLY, WE ARE OF THE OPINION TH AT THERE IS NO MERIT IN GROUND NO. 1 RAISED BY THE ASSESSEE AND AC CORDINGLY THE SAME WAS REJECTED. 8. THE AR, THEREFORE, CONCEDED, THAT THE COORDINATE BENC H HAS GIVEN A FINDING, WHICH HAS TO BE FOLLOWED IN THE INSTANT CASE. 9. IN SO FAR AS THE MERITS AS PER GROUND NO. 2 BEFORE U S, THE AR POINTED OUT THAT THE COORDINATE BENCH HAS RESTORED TH E ISSUE TO THE FILE OF THE AO, THE ASSESSEES OBJECTION ON ADOPTING REPORT OF SHR I UMRIGAR FOR THE PURPOSE OF CAPITAL GAINS ALSO REQUIRED DETAILED EXAMINATION OF THE AO, AS CIT(A) TOOK UPON HIMSELF WITHOUT GIVI NG OPPORTUNITY TO THE AO. IN VIEW OF THESE, SINCE THE ISSUE OF ADO PTION OF VALUE UNDER SECTION 50C WAS REFERRED TO THE AO BY THE CIT (A), THIS ISSUE ALSO REQUIRED TO BE SET ASIDE TO THE FILE OF AO. THEREFORE, BOTH ISSUE OF SALE CONSIDERATION UNDER SECTION 50C( 2) AND COST OF ACQUISITION AS ON 01.04.81 FOR COMPUTING OF CAPITAL GAINS SHOULD BE EXAMINED BY AO AFRESH. FOR THIS, THE ORDER OF TH E AO IS SET ASIDE AND ISSUE RESTORED TO THE FILE OF AO. THE AO IS DIRECTED TO KEEP IN MIND THE ORDERS OF ITAT IN OTHER CO-OWNER C ASES AND ALSO PRINCIPLES LAID DOWN ON THE ABOVE TWO ISSUES. BEFORE DECIDING THE ISSUE, ASSESSEE SHOULD BE GIVEN DUE OP PORTUNITY IN THE PROCEEDINGS. WITH THESE DIRECTIONS, THE ISSUE O F GROUND NO.2 IS RESTORED TO THE FILE OF AO. RITESH B. SHA H (HUF) ITA 1177/M/2012 4 10. THE AR, THEREFORE, SUBMITTED THAT FOR THE SAKE OF CONS ISTENCY IN THE CASES OF THE CO-OWNERS, AND FOR A UNIFORM OBSERVATION , THE INSTANT CASE DESERVES TO BE RESTORED TO THE AO WITH THE SIMILAR FINDINGS. 11. THE DR PLACED RELIANCE ON THE DECISIONS OF THE REVENU E AUTHORITIES. 12. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VIEW, T HAT THE COORDINATE BENCH IN THE CASE OF THE CO-OWNER SHRI JAY HARSHAD SHAH (HUF) DESERVES TO BE FOLLOWED, WHEREIN, THE ISSUE OF REOPENING IS SUSTAINED, AND THE MERITS HAS BEEN RESTORED TO THE FILE OF THE AO. 13. RESPECTFULLY, FOLLOWING, THE ORDERS IN ITA NO. 1178/MUM/2 012, WE REJECT GROUND NO. 1 AND RESTORE THE ISSUE INVOLVED IN GROUND NO. 2 TO THE FILE OF THE AO AND IT IS HELD TO BE ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE CASE OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2013. SD/- SD/- ( . . ) ( ! ' ) (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 13 TH SEPTEMBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 27 )* I / THE CIT (A)-27, MUMBAI. 4) & & ' /ADDL. CIT16 , )* I / THE CIT/CIT16-, MUMBAI, 5) +,- . / , & . , )* / THE D.R. D BENCH, MUMBAI. RITESH B. SHA H (HUF) ITA 1177/M/2012 5 6) -/ 0 COPY TO GUARD FILE. &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & . , )* DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS