ACIT, CHENNAI V. Sundari Venugopal, CHENNAI

ITA 1211/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8688 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH J
• Assessee Lawyers: SRIDHARERODE
• Keywords: Value adopted by valuation officer; Question of law; Cost of acquisition; Fair market value; Valuation report; Competent authority; Condonation of delay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1211/MDS./2016 / ASSESSMENT YEAR :2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-15, CHENNAI-34. VS. MRS.SUNDARI VENUGOPAL, C-1,AURA ONE APPARTMENTS, 1 ST MAIN ROAD, SHASTRI NAGAR, ADYAR, CHENNAI. [PAN BRWPS 6988 R ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.A.V.SREEKANTH,JCIT,DR /RESPONDENT BY : MR.SRIDHAR,ERODE,ADVOCATE / DATE OF HEARING : 14 - 0 7 - 201 6 !' / DATE OF PRONOUNCEMENT : 29 - 0 7 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENNAI DA TED 13.01.2016 PERTAINING TO ASSESSMENT YEAR 2011-12. ITA NO. 1211/MDS./2016 :- 2 -: 2. THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS WITH REGARD TO ADOPT THE VALUE GIVEN BY GOVERNMENT REGISTERED VALU ER, EVEN THOUGH THE SUB REGISTRAR (STAMP VALUATION AUTHORITY) IS TH E COMPETENT AUTHORITY TO GIVE VALUATION OF LAND. 3. ON PERUSING THE APPEAL, WE FIND THAT THE AO HA D FILED THE APPEAL WITH DELAY OF 21 DAYS. THE LEARNED AO HAS SU BMITTED A PETITION DATED 03.05.2016 SEEKING CONDONATION OF DELAY AND THE AO STATED IN THIS PETITION THAT THE DELAY OF 21 DAYS IN FILING T HE APPEAL BEFORE THIS TRIBUNAL IS ON ACCOUNT OF MIXING UP OF PAPERS IN HI S OFFICE AND IT TOOK TIME TO LOCATE THE SAME AND AS SOON AS HE TRACED TH E RECORDS, HE FILED THE APPEAL ON 03.05.2016. IN OUR OPINION, THE REASO NS EXPLAINED BY THE AO FOR FILING THE APPEAL BELATEDLY IS BONAFIDE. ACCORDINGLY, THE DELAY IS CONDONED. 4. THE FACTS OF THE ISSUE ARE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD TAK EN A VALUATION OF ` 500 PER SQ.FT. FOR EXPANSION OF GROUND FLOOR & CONS TRUCTION OF FIRST FLOOR IN 1981, WHICH WAS FELT TO BE EXORBITANT VALU E TAKEN BY THE ASSESSEE FOR CALCULATING CONSTRUCTION COST FOR THE YEAR 1981. THE ASSESSEE HAS ADOPTED A VALUE OF ` 80 PER SQ.FT. FOR THE CALCULATION OF INDEXED COST OF IMPROVEMENT. THUS, THE SAME IS CONS IDERED FOR CALCULATING THE INDEXED COST OF IMPROVEMENT. HENCE, THE DIFFERENCE IS DISALLOWED AND BROUGHT TO TAX UNDER THE HEAD CAPIT AL ITA NO. 1211/MDS./2016 :- 3 -: GAIN. AGGRIEVED WITH THE ORDER OF AO, THE ASSESSE E CARRIED THE APPEAL BEFORE THE LD.CIT(A). 5. DURING THE COURSE OF FIRST APPELLATE PROCEEDING S, THE ASSESSEE FILED A COPY OF APPROVED VALUER SHOWING THE VALUE OF LAND AT ` 1,17,875/- AND BUILDING AT ` 5,36,550/- (@ ` 150/- PER SQ.FT. FOR GROUND FLOOR AND @ ` 125/- PER. SQ.FT FOR FIRST FLOOR). THE CIT(A) CALL ED FOR REMAND REPORT FROM THE AO VIDE HIS LETTER DATED 24.12.2015. THE AO HAD NOT SENT ANY REPORT. HENCE, CIT(A) DIRECTED THE AO TO ADOPT INDEXED COST OF CONSTRUCTION/IMPROVEMENT AS DETERMI NED BY THE APPROVED VALUER AND RE-CALCULATE THE LONG TERM CAPI TAL GAINS. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE SIMILAR ISSUE CAME FOR CONSIDERATION BE FORE THE CO-ORDIANTE BENCH IN THE CASE OF ACIT VS. SHRI ASHWIN JOSHI IN ITA NO.1428/HYD./2012 FOR ASSESSMENT YEAR 2009-10 VIDE ORDER DATED 31.07.2013. IT WAS HELD AS FOLLOWS:- 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE BOMBAY HIGH C OURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAMAN KUMAR SINGHVI HAS BEEN HELD THAT WITH RESPECT TO THE DETERMINATIO N OF THE FAIR MARKET VALUE AS ON VT APRIL, 1981 THE VALUATION DON E BY A REGISTERED VALUER OF THE INCOME TAX DEPARTMENT WOUL D CERTAINLY TAKE PRECEDENCE OVER NABI GUIDE TO HOUSE TAX. THE C OURT HAD CONCLUDED THAT THE DETERMINATION OF FAIR MARKET VAL UE AS ON 1ST ITA NO. 1211/MDS./2016 :- 4 -: APRIL, 1981 IS A QUESTION OF FACT AND THE TRIBUNAL S DECISION THAT THE FAIR MARKET VALUE AS ESTIMATED BY THE REGISTERE D VALUER ON 1 ST APRIL, 1981 IS ACCEPTABLE. IT ALSO HELD THAT THE FI NDING OF THE TRIBUNAL IS NEITHER PERVERSE NOR ARBITRARILY DONE S O AS TO RAISE A SUBSTANTIAL QUESTION OF LAW. 19. THOUGH THE VALUATION DONE BY THE REGISTERED VAL UER IS WITH REGARD TO A SPECIFIC PROPERTY AND IS CLAIMED BY THE LEARNED COUNSEL FOR THE ASSESSEE AS MOST APPROPRIATE AND CO RRECT VALUATION WHICH IS TO BE ADOPTED IN DETERMINING THE COST OF ACQUISITION WHILE WORKING OUT THE CAPITAL GAIN, WE HAVE ALSO TO TAKE INTO ACCOUNT THE ARGUMENT OPPOSING THE ADOPTIO N OF THE SAME ON THE GROUND THAT THE REGISTERED VALUER WOULD BE INFLUENCED BY VESTED INTEREST HAVING BEEN CHOSEN BY THE ASSESSEE FOR THE PURPOS OF VALUING THE PROPERTY. THEREFORE, THE FAIR MARKET VALUE HAS TO BE BASED ON COMPARABLE SALE INSTANCES. IN THE CASE OF DCIT VS. CHATURBHUJ VALLABHDAS HUF, MUMBAI BENCH 130 LTD 230 IT HAS BEEN CONCLUDED THAT REFERENCE TO VALUATION OFFICER UNDER S. 55A CAN BE MADE BY A.O. IGNORING THE REPORT OF REGISTERED VALUER RE GARDLESS OF THE FACT THAT THE FAIR MARKET VALUE OF THE PROPE RTY AS ON 1ST APRIL, 1981 AS SHOWN BY THE ASSESSEE WAS MORE T HAN ITS REAL FAIR MARKET VALUE; VALUATION REPORT OF THE DVO IS A RELEVANT AND ADMISSIBLE EVIDENCE ON THE MATTER IN I SSUE IRRESPECTIVE OF ILLEGALITY OF REFERENCE MADE BY THE A. 0. 20. IN THE CASE OF DCIT (INTERNATIONAL TAXATION) VS . HARBIR SINGH (2012) 34 CCH 167 (DEL.) (TRIBU.) IT HAS BEEN HELD BY THE DELHI BENCH OF THE TRIBUNAL THAT IN RESPECT OF COST OF AC QUISITION AS ON 1.4.1981 OF THE LAND SITUATED AT E-25, NEW DEFENCE COLONY, NEW DELHI, THE ASSESSEE ADOPTED COST OF ACQUISITION AS PER REPORT OF ITA NO. 1211/MDS./2016 :- 5 -: REGISTERED VALUER WHILE THE A,Q. DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE OR 66 PERCENT INCREASE IN RATES FOR DE TERMINING COST OF ACQUISITION OVER AND ABOVE THE AVERAGE AUCTION RATE S OF LAND IN THE SAFDARJUNG ENCLAVE AREA. BOTH THE ASSESSEE AND REVE NUE ARE AGGRIEVED WITH THE FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR FAIRLY ADMITTED THAT THERE WAS NO BASIS FOR INCREAS ING THE AVERAGE AUCTION RATES PREVAILING IN SAFDARJUNG ENCLAVE 66 P ERCENT WHILE THE LEARNED DR VEHEMENTLY ARGUED THAT REPORT OF REGISTE RED VALUER BEING WITHOUT ANY BASIS NOR HAVING CONSIDERED COMPA RATIVE INSTANCES OF COST OF LAND AS ON 1.4.1981 IN DEFENCE COLONY OR ADJOINING AREAS, COULD NOT BE RELIED UPON. IN THE L IGHT OF THESE SUBMISSIONS ON BEHALF OF BOTH THE PARTIES, CONSIDER ING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN THE REPORT OF REGISTERED VALUER DOES NOT DISCLOSE THE BASIS FO R CHOOSING AVERAGE LAND AUCTION RATES IN SAFDARJUNG ENCLAVE AR EA NOR THE BASIS OF INCREASE OF SUCH RATES BY 66 PERCENT AND NOR EVE N ANY REASONS FOR NOT IDENTIFYING COMPARATIVE INSTANCES OF COST O F SIMILARLY SITUATE PROPERTIES IN DEFENCE COLONY AREA WHILE THE IMPUGNE D ORDER DOES NOT DISCLOSE THE BASIS OF INCREASE BY 40 PERCENT OV ER THE AVERAGE AUCTION RATES IN SAFDARJUNG ENCLAVE AREA, NOT MUCH RELIANCE CAN BE PLACED ON THE VALUATION REPORT PREPARED BY THE REGI STERED VALUER AND PARTLY RELIED UPON BY THE LEARNED CIT(A). THE D ETERMINATION OF COST OF ACQUISITION OF A PROPERTY IS A TECHNICAL AS PECT AND WITHOUT HAVING COMPLETE FACTS AND DETAILS OF PROPERTY, ITS LOCATION, AND ITS SURROUNDINGS AND COMPARATIVE INSTANCES OF SIMILARLY SITUATE PROPERTIES, COST OF ACQUISITION AS ON 1.4.1981 CANN OT BE DETERMINED IN A PRECISE MANNER. THE LEARNED CIT(A) HAVING NOT ADVERTED TO ALL THESE ASPECTS NOW RAISED, APPARENTLY THE IMPUGNED O RDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, THE MATTER RESTORED TO THE FILE OF THE A .O. FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW, AFTER HAV ING A REPORT OF DISTRICT VALUATION OFFICER ON THE COST OF ACQUISITI ON AS ON 1.4.1981 ITA NO. 1211/MDS./2016 :- 6 -: OF THE SAID PROPERTY AND OF COURSE AFTER ALLOWING S UFFICIENT OPPORTUNITY TO THE ASSESSEE. 21. THEREFORE, IN OUR OPINION, THE ASSESSING OFFICE R SHOULD CONSIDER THE FOLLOWING 1. THE REGISTERED VALUER REPORT AS SUBMITTED BY THE ASSESSEE. 2. REFERENCE TO THE DVO HAS TO BE MADE BY THE ASSES SING OFFICER AND THE REPORT OF THE DVO ON THE COST OF ACQUISITIO N AS ON 01/04/1981 OF THE PROPERTY HAS TO BE CONSIDERED. 3. INHERENT QUALITY OF THE PROPERTY NAMELY SIZE, LO CATION, ROAD FRONTAGE, CORNER PLOT, IF ANY, ETC. TO BE EXAMINED. 4. ANY COMPARABLE PROPERTY IN THE SAME LOCALITY SHO ULD BE TAKEN FOR CONSIDERATION. 22. THEREAFTER, THE ASSESSING OFFICER SHALL AFTER E XAMINING THOROUGHLY THE NATURE OF THE PROPERTY AND THE PECUL IAR CIRCUMSTANCES AS WELL AS THE VALUES GIVEN BY THE DI FFERENT PERSONS NAMELY DVO AND THE REGISTERED VALUER SHALL DECIDE T HE ISSUE DENOVO. IT IS NEEDLESS TO SAY THAT A REASONABLE OPP ORTUNITY OF BEING HEARD SHOULD BE GIVEN TO THE ASSESSEE. 6.1 THE SAME WAS FOLLOWED BY THE HYDERABAD BENCH I N THE CASE OF SMT.AMINA KHATOON IN ITA NO.1599/HYD./2012 VIDE ORD ER DATED 05.09.2013. IN VIEW OF THIS, WE ARE INCLINED TO RE MIT THE ISSUE TO THE ITA NO. 1211/MDS./2016 :- 7 -: FILE OF AO WITH SIMILAR DIRECTION GIVEN IN THE TRIB UNALS ORDER CITED ABOVE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 29 TH JULY, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 29 TH JULY, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF