Jagadishwar Rao Madhavaram, Hyd, Hyderabad V. ITO, Ward-11(5), Hyd, Hyderabad

ITA 1208/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2347 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Cost of acquisition; Fair market value; Revised return
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1208/HYD/2016 ASSESSMENT YEAR: 2008-09 SRI JAGADESHWAR RAO MADHAVARAM, HYDERABAD [PAN: ABGPR8677P] VS INCOME TAX OFFICER, WARD-11(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SMT. N. SWAPNA, DR DATE OF HEARING : 30-11-2017 DATE OF PRONOUNCEMENT : 06-12-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 30-06-2016, FOR THE AY. 2008-09 ON THE ISSUE OF ADOPT ION OF SALE CONSIDERATION INVOKING PROVISIONS OF SECTION 50C OF TH E INCOME TAX ACT [ACT]. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE, AN INDIVIDUAL HAD SOLD TWO PROPERTIES DURING THE YEAR. ON ONE PROPERTY THERE WAS LONG TERM CAPITAL GAIN WHICH WAS CLAIMED EXEMPT AS SALE OF AGRICULTURAL LAND. IN A SURVEY, ASSESSEE ADMITTED THE LONG TERM CAPITAL GAIN AND FILED REVISED RETURN, ON WHICH THERE IS NO DISPUTE. I.T.A. NO. 1208/HYD/2016 :- 2 - : THE PRESENT DISPUTE IS WITH REFERENCE TO THE SECOND PR OPERTY SOLD BY ASSESSEE. 2.1. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE AL ONG WITH CO- OWNER SOLD A PROPERTY SITUATED IN HAKEEMPET. IT WAS CLA IMED THAT IT WAS SOLD FOR RS. 40,00,000/- AND HENCE HIS 1/4 TH SHARE THEREIN AMOUNTING TO RS. 10,00,000/- WAS OFFERED BY HIM AFTE R DEDUCTING THERE FROM THE COST OF ACQUISITION THEREOF. HOWEVER, SINCE THE VALUE OF THE SAID LAND AS PER SRO WAS RS. 91,37,500/-, THE ASSESSING OFFICER( AO )REFERRING TO SECTION 50C CALLED UPON THE ASSESSEE AS TO WHY HE SHOULD NOT ADOPT ASSESSEE'S 1/4 TH SHARE AT RS. 22,84,375/- INSTEAD OF RS. 10,00,000/- OFFERED BY ASSESSEE IN THE RETURN. ASSESSEE IN REPLY SUBMITTED AS UNDER:- 'I HAD OFFERED INCOME FROM SHORT TERM CAPITAL GAINS ON SALE OF HAFEEZPET LAND. I AM ENCLOSING A COPY OF THE PURCHA SE DEED EVIDENCING MY CO-OWNERSHIP 25% SHARE IN THE PROPERTY. THE PROPORT IONATE COST IS CLAIMED AS EXPENDITURE. SALE CONSIDERATION OF RS. 10,00,000 OFFERED BY ME IN THE COMPUTATION REPRESENTS MY SHARE OF CONSIDERATION AS REFLECTED IN THE REGISTERED SALE DEED. THE VALUE ADOPTED BY THE SRO IS HIGHER THAN THE SALE CONSIDERATION RECEIVED BY ME. THE SOLE PURPOSE OF FIXING THE RATES AS PER SRO IS TO COLLECT STAMP DUTY. THESE RATES DO NO T REFLECT THE ACTUAL PREVAILING FAIR MARKET VALUE. THESE AREA-WISE RATES OF SRO ARE ADOPTED BY FIXING A UNIFORM RATE OF LAND FOR THE ENTIRE AREA/L OCALITY, WHICH INHERENTLY DISREGARDS PECULIAR FEATURES OF PARTICULAR PROPERTY . THERE CAN BE WIDE VARIATIONS IN PRICE OF LAND IN THE SAME AREA DUE TO DIFFERENT REASONS. THE SWEEPING GENERALIZATIONS INHERENT IN THE CIRCLE RAT ES CANNOT HOLD GOOD IN ALL SITUATIONS. IT IS, THEREFORE, NOT UNCOMMON THAT WHILE FIXING THE AREA RATES, LOCAL AUTHORITIES DO ERR ON THE SIDE OF EXCE SSIVE QUOTES BY ADOPTING HIGHER RATES OF LAND IN A PARTICULAR AREA. I, THERE FORE, REQUEST YOUR GOODSELVES TO ADOPT THE SALE CONSIDERATION AS REFLE CTED IN THE SALE DEED AS THE FAIR MARKET VALUE OF THE PROPERTY AT THE TIME O F SALE.' 2.2. HOWEVER, THE AO STATING THAT ASSESSEE'S ARGUMENTS A RE NOT ACCEPTABLE BECAUSE THE PROVISIONS U/S. 50C PROVIDE FO R ADOPTION OF ASSESSED VALUE BY REGISTRATION AUTHORITIES, THAT ASSESSE E HAD NOT I.T.A. NO. 1208/HYD/2016 :- 3 - : DISPUTED THE ASSESSMENT MADE BY THE REGISTRATION AUTHORITI ES, ADDED THE DIFFERENCE BETWEEN THE SRO VALUE AND THE VAL UE RETURNED BY ASSESSEE TO THE INCOME RETURNED. 3. BEFORE THE LD.CIT(A), ASSESSEE HAS RAISED SPECIFI C GROUNDS (GROUND NOS. 3 AND 4) CONTENDING THAT AO OUGHT TO HAVE REFERRED THE MATTER TO VALUATION OFFICER AND NOT JUSTIFIED IN HIS REASONING THAT ASSESSEE HAD NOT DISPUTED THE VALUE MADE BY REGISTE RING AUTHORITY. LD.CIT(A) HAD UPHELD THE ACTION OF AO BY S TATING AS UNDER: THE ASSESSING OFFICER CATEGORICALLY MENTIONED THAT ASSESSEE HAD NOT DISPUTED THE ASSESSMENT MADE BY THE REGISTRATIO N AUTHORITIES. THE ASSESSEE HAD ALSO NOT REQUESTED FOR VALUATION TO BE MADE BY THE VALUATION OFFICER. SINCE THE ASSESSING OFFICER VIEWED THAT T HERE IS NO NEED OF REFERRING THE CASE TO VALUATION OFFICER I HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS JUSTIFIED IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 50C. HENCE ALL THE GROUNDS OF APPEAL ARE DISMISSED . 4. REFERRING TO THE GROUNDS RAISED BEFORE THE LD.CIT(A ) AND FACTS STATED, IT WAS THE SUBMISSION OF THE LD. COUNSEL THAT LD.C IT(A) GOT CONFUSED WITH ADMISSION OF LONG TERM CAPITAL GAIN IN SURVEY AND ADOPTION OF VALUES U/S. 50C AND WRONGLY OPINED THAT A SSESSEE HAD TRIED TO EVADE TAXES. THESE TWO ISSUES ARE NOT CONNECTE D. THE DISPUTE IS WITH REFERENCE TO THE SECOND PROPERTY ON WHI CH PROVISIONS OF SECTION 50C WAS ADOPTED. IT WAS SUBMITT ED THAT THE REFERENCE TO VALUATION OFFICER IS MANDATORY AND IF AO AND CIT(A) FAILED TO REFER, IN SPITE OF ASSESSEE OBJECTING BEFORE AO AND RAISING SPECIFIC GROUNDS BEFORE CIT(A), THE ADOPTION OF VALU ES U/S. 50C SHOULD BE STRUCK-OFF AND NO FURTHER CHANCE SHOULD BE GIVEN. HE RELIED ON CO-ORDINATE BENCH DECISION IN THE CASE OF ACIT VS. LALITHA KARAN IN ITA NO. 1130/HYD/2015 DT. 04-01-201 7, WHEREIN I.T.A. NO. 1208/HYD/2016 :- 4 - : THE CO-ORDINATE BENCH AT HYDERABAD HAD UPHELD THE ACTION OF LD.CIT(A) IN DELETING THE ADDITION, AS AO FAILED TO RE FER THE MATTER TO DVO UNDER THE MANDATORY PROVISIONS OF SECTION 50C(2) . 5. LD.DR, HOWEVER, RELIED ON THE ORDERS OF AO AND CI T(A) AND HAS SUBMITTED THAT THE MATTER MAY BE REFERRED TO AO AGAIN TO COMPLY WITH THE PROVISIONS, AS ASSESSEE HAD NOT SPEC IFICALLY REQUESTED THE REFERENCE. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS. IT IS TRUE THAT THE CO-ORDINATE BENCH HAD UPHELD THE ORDER OF LD.CIT(A) W HEREIN THE ASSESSEE HAD SPECIFICALLY REQUESTED FOR REFERENCE TO VALUATION OFFICER AND AO FAILED IN HIS DUTY, IN THE ABOVE REFERRED CA SE OF ACIT VS. LALITHA KARAN IN ITA NO. 1130/HYD/2015 DT. 04-01-201 7. IN THIS CASE, HOWEVER, THE ASSESSEE HAD GIVEN REASONS WHY THE STAMP VALUE SHOULD NOT BE ADOPTED, BUT NOT MADE ANY SPECIFIC REQUEST FOR REFERENCE TO VALUATION OFFICER. EVEN THOUGH SPECIFIC OBJECTIONS WERE RAISED BEFORE THE LD.CIT(A), LD.CIT(A) FAILED TO CONS IDER THE GROUNDS AND IN FACT, GOT CONFUSED WITH ANOTHER ISSUE OF ADMISS ION OF LONG TERM CAPITAL GAIN DURING THE SURVEY, TO OPINE THAT ASSE SSEE TRIED TO EVADE TAXES. THE ACTION OF CIT(A) IN REJECTING THE SP ECIFIC CONTENTIONS IS NOT CORRECT. HE SHOULD HAVE DIRECTED THE AO TO REFER THE MATTER TO VALUATION CELL. IN FACT, THE GROUNDS RAIS ED ARE NOT ADDRESSED BY CIT(A), EVEN THOUGH HE HAD CONSIDERED T HE MANDATORY NATURE OF SECTION 50C IN HIS DECISION PART. IT WAS ALSO SUBMITTED THAT NO ACTION WAS TAKEN ON THE CO-SHARER WHO HA S SOLD THE BALANCE PROPERTY. I.T.A. NO. 1208/HYD/2016 :- 5 - : 7. THE CO-ORDINATE BENCH AT MUMBAI IN THE CASE OF RI NA SURENDRA PATEL VS. ITO IN ITA NO. 943/M/2012 DT. 03- 07-2013 HAS CONSIDERED THE SIMILAR FACTS AND HELD AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE INFORMATION FILED BEFOR E US. WE FIND THAT THE ORDER OF ASSESSMENT EVIDENCES THE FACTS RELATING TO THE OBJECTIONS RAISED BY THE ASSESSEE WITH REGARD TO THE LOWER MARKET VAL UE OF THE FLAT AT MIRA ROAD AND PARA 6 OF THE ASSESSMENT ORDER IS RELEVANT HERE. OF COURSE, THERE IS NO EXPRESSED PRAYER FOR MAKING A REQUEST FOR REF ERENCE TO THE VALUATION OFFICER U/S 50C(2) OF THE ACT. HOWEVER, THE IMPUGNE D ORDER OF THE CIT (A) CONTAINS THE ASSESSEE'S REQUEST FOR REFERRAL TO THE DVO AND OBJECTION FOR ADOPTING THE MARKET VALUE OF RS. 11.25 LACS WITHOUT ATTENDING TO THE DISADVANTAGES NARRATED BY THE ASSESSEE BEFORE THE A UTHORITIES. CIT (A) INSTEAD OF RECTIFYING THE SAID DEFICIENCIES IN THE ORDER OF THE AO, HE PREFERRED TO DISMISS THE ASSESSEE'S OBJECTIONS BY S IMPLY MENTIONING THAT THE ASSESSEE FAILED TO MAKE A FORMAL PRAYER FOR REF ERRAL OF THE PROPERTY TO THE DVO FOR WANT OF MARKET VALUATION. IN OUR OPINIO N, SUCH DECISION IS NOT PROPER CONSIDERING THE 'PRINCIPLES OF NATURAL JUSTI CE' AND ADMINISTRATION OF JUSTICE TO THE APPELLANT. THEREFORE, WE FIND IT REL EVANT TO ACCEPT THE PRAYER OF THE ASSESSEE FOR SETTING ASIDE THE GROUNDS RAISE D BEFORE US TO THE FILES OF THE AO FOR FRESH ADJUDICATION OF THE ISSUES RAIS ED IN ACCORDANCE WITH LAW AFTER GRANTING A REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESS EE ARE SET ASIDE. 8. IN THE CASE OF RAJ KUMARI AGARWAL VS. DCIT [150 I TD 597] (AGRA-TRIB) THE CO-ORDINATE BENCH AT AGRA HAS HELD AS UNDER: ONCE THE ASSESSEE CLAIMS THAT THE ACTUAL MARKET VA LUE OF THE LAND OR BUILDING IS LESS THAN STAMP DUTY VALUATION ADOPT ED BY THE AUTHORITIES, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO REFER TH E VALUATION OF SAID LAND OR BUILDING TO THE DEPARTMENTAL VALUATION OFFICER. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS NOT DONE SO. IN VIEW OF THIS FACTUAL POSITION, IT IS DEEMED FIT AND PROPER TO REMIT THE MATTER TO THE FI LE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO AFTER MAKING A REF ERENCE TO THE DVO, AND COMPLETING THE ASSESSMENT ON THE BASIS OF THE VALUA TION SO RECEIVED FROM THE DVO. . 9. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, I AM O F THE OPINION THAT IT IS FIT AND PROPER TO REMIT THE MATTER TO AO FOR ADJU DICATING DENOVO AFTER MAKING A REFERENCE TO THE DVO AND AFTER GIVING DUE I.T.A. NO. 1208/HYD/2016 :- 6 - : OPPORTUNITY TO ASSESSEE AND CONSIDERING HIS OBJECTION S. THE ISSUE IN THESE GROUNDS ARE ACCORDINGLY SET ASIDE TO THE FIL E OF AO FOR ADJUDICATING AFRESH AS PER FACTS AND LAW. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 6 TH DECEMBER, 2017 TNMM I.T.A. NO. 1208/HYD/2016 :- 7 - : COPY TO : 1. SRI JAGADESHWAR RAO MADHAVARAM, C/O. CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD- 11(3), HYDERABAD. 3. CIT (APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.