Y.Lakshmi Narasimha Murthy , , Visakhapatnam V. The Assistant Commissioner of Income Tax, Circle-2(1), Visakhapatnam

ITA 125/VIZ/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7707 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: C V S MURTHY
• Keywords: Sale consideration of property below Jantri Value; Valuation report; Set aside; Capital Gains
• Section: 143(3); 50C; 201; 148; 263; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 1 25 /VIZ/201 8 ( / A SSESSMENT Y EAR : 20 09 - 10 ) Y.L AKSHMI NARASIMHA MURTHY FLAT NO.58, SECTOR - 11 MVP COLONY VISAKHAPATNAM [PAN : AATPM8260D] VS. ASST.COMMISSIONER OF INCOME TAX CIRCLE - 2(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI CVS MURTHY, AR / RESPONDENT BY : S HRI TSN MURTHY, CIT DR / DATE OF HEARING : 2 5 . 0 9 . 201 9 / DATE OF PRONOUNCEMENT : 30 . 10 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX ( PR.CIT ) - 1, VISAKHAPATNAM IN F. NO. PR.CIT - 1/VSP/263/2017 - 18 DATED 14 .0 2 .201 8 FOR THE ASSESSMENT YEAR (A.Y.) 20 09 - 10. 2 I.T.A. NO . 1 25 /VIZ/201 8 , A.Y.20 09 - 1 0 Y.LAKSHMI NARASIMHA MURTHY , VI SAKHAPATNAM 2. IN THIS CASE, ALL GROUNDS OF APPEAL ARE RELATED TO THE VALIDITY OF ORDER PASSED U/S 263 OF THE INCO ME TAX ACT,1961 (IN SHORT ACT). IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.5,10,340/ - AND DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAD SOLD THE IMMOVABLE PROPERTY LOCAT ED AT PEETHALAVANIPALEM, VISAKHAPATNAM VIDE DOCUMENT NO.4028/2008 DATED 16.10.2008 FOR A CONSIDERATION OF RS.7,50,000/ - , WHEREAS THE MARKET VALUE OF THE SAID PROPERTY WAS RS.15,84,000/ - . THE ASSESSMENT WAS REOPENED FOR THE PURPOSE OF UNDERSTATEMENT OF INC OME WITH REGARD TO CAPITAL GAINS. ACCORDINGLY, ISSUED NOTICE U/S 148 AND TAKEN UP THE CASE FOR ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS REFERRED THE VALUATION OF THE PROPERTIES SOLD TO THE EXECUTIVE ENGINEER, VALUATION CELL, VISAKHAPATNA M ON 26.10.2016 IN ORDER TO ASCERTAIN THE CORRECTNESS OF THE PROPERTY VALUE. SINCE, THE VALUATION RE PORT WAS NOT RECEIVED BY THE AO BEFORE THE TIME LIMIT AVAILABLE FOR COMPLETION OF ASSESSMENTS, THE AO COMPLETED THE ASSESSMENT ACCEPTING THE INCOME RETURN ED BY THE ASSESSEE BY ORDER U/S 143(3) DATED 30.12.2016 PENDING RECEIPT OF VALUATION REPORT. SUBSEQUENTLY, THE LD.PRINCIPAL COMMISSIONER OF INCOME TAX(PCIT) HAS TAKEN UP THE CASE FOR REVISION AND OBSERVED THAT THE PROPERTY SOLD BY THE ASSESSEE VIDE DOCUMEN T 4028/2008 DATED 16.10.2008 REGISTERED WITH 3 I.T.A. NO . 1 25 /VIZ/201 8 , A.Y.20 09 - 1 0 Y.LAKSHMI NARASIMHA MURTHY , VI SAKHAPATNAM THE JOINT SUB REGISTRAR, VISAKHAPATNAM FOR A CONSIDERATION OF RS.7,50,000/ - AND THE MARKET VALUE OF THE PROPERTY WAS RS.15,84,000/ - . SINCE THE ASSESSMENT WAS REOPENED FOR THE PURPOSE OF VERIFICATION OF CAPITAL GAINS, THE AO OUGHT TO HAVE COMPLETED THE ASSESSMENT ADOPTING THE VALUE AS PER U/S 50C OF THE ACT , ADOPTING THE STAMPS AND REGISTRATION VALUE(SRO). THUS, HELD THAT THE ASSESSMENT MADE BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, SET ASIDE THE ASSESSMENT WITH A DIRECTION TO REDO THE ASSESSMENT. 3. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE AO HAS CONSIDERED THE ISSUE WITH REGARD TO CAPITAL GAINS AND REFERRED THE MATTER TO THE VALUATION OFFICER. SINCE THE V ALUATION OFFICER DID NOT SUBMIT THE REPORT, THE AO HAS COMPLETED THE ASSESSMENT ACCEPTING THE INCOME RETURNED. THEREFORE, ARGUED THAT THERE IS NO ERROR IN THE ORDER PASSED BY THE AO, HENCE, THERE IS NO CASE FOR REVISION U/S 263 OF THE ACT. 4. ON THE OTHER HAND, THE LD.DR ARGUED THAT AS PER PAGE NO.2 OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSMENT WAS REOPENED FOR THE PURPOSE OF VERIFICATION OF CAPITAL GAINS AND THE MARKET VALUE OF THE PROPERTY WAS RS.15,84,000/ - . THOUGH THE AO HAS REF ERRED THE VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION CELL, DUE TO NON COOPERATION FROM 4 I.T.A. NO . 1 25 /VIZ/201 8 , A.Y.20 09 - 1 0 Y.LAKSHMI NARASIMHA MURTHY , VI SAKHAPATNAM THE ASSESSEE, THE VALUATION OFFICER COULD NOT SUBMIT THE REPORT AND THE AO INSTEAD OF COMPLETING THE ASSESSMENT ADOPTING THE VALUE AS PER THE S TAMPS AND REG ISTRATION AUTHORITIES AS PROVIDED UNDER SECTION 50C OF THE ACT, COMPLETED THE ASSESSMENT ACCEPTING THE INCOME RETURNED, THEREFORE, COMMITTED AN ERROR BY COMPLETELY OMITTING THE ISSUE FOR IT WAS REOPENED WITHOUT EXAMINATION AND CAUSED PREJUDICE TO THE RE VENUE DUE TO NON TAXATION OF THE CAPITAL GAINS REPRESENTING THE DIFFERENCE BETWEEN THE SALE CONSIDERATION AND THE VALUE AS PER SECTION 50C OF THE ACT. THEREFORE, ARGUED THAT THE LD.PR.CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION AND NO INTERFERENCE IS C ALLED FOR, HENCE REQUESTED TO UPHOLD THE ORDER OF THE LD.PR.CIT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSMENT WAS REOPENED FOR THE PURPOSE OF CAPITAL GAINS. AS PER PAGE NO.2 OF THE ASSE SSMENT ORDER, THE MARKET VALUE OF THE PROPERTY (STAMPS AND REGISTRATION AUTHORITIES VALUE) WAS RS.15,84,000/ - AGAINST WHICH THE DOCUMENT WAS REGISTERED FOR CONSIDERATION OF RS.7,50,000/ - . AS OBSERVED FROM THE ORDER OF THE LD.PR.CIT, THE VALUE AS PER 50C W AS RS.22,02,000/ - BUT NOT 15,84,000/ - AND THERE WAS AN ERROR IN THE NOTICE ISSUED BY THE AO WITH REGARD TO VALUATION 5 I.T.A. NO . 1 25 /VIZ/201 8 , A.Y.20 09 - 1 0 Y.LAKSHMI NARASIMHA MURTHY , VI SAKHAPATNAM OF THE PROPERTY. ON GOING THROUGH THE ASSESSMENT ORDER, IT IS FOUND THAT THE AO NEITHER EXAMINED THE TAXABILITY OF CAPITAL GAINS AS PER SE CTION 50C OF THE INCOME TAX ACT NOR ADOPTED THE VALUE AS PER SECTION 50C THOUGH THERE WAS HUGE DIFFERENCE BETWEEN THE SALE CONSIDERATION AND THE VALUE AS PER SRO. THEREFORE, THE ASS ESSMENT ORDER PASSED BY THE AO WA S ERRONEOUS IN AS MUCH AS NOT EXAMINING THE ISSUE WITH REGARD TO MARKET VALUE OF THE PROPERTY AS PER THE STAMPS AND REGISTRATION AUTHORITY AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE HOLD THAT THE LD.CIT(A) HAS RIGHTLY TAKEN UP THE CASE FOR REVISION AND ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A). 5.1. HAVING UPHELD THE ORDER OF THE LD.CIT(A), WE ARE OF THE CONSIDERED OPINION THAT SINCE, THE ISSUE WAS REFERRED TO THE VALUATION CELL FOR ASCERTAINING THE CORRECT VALUE U/S 50C OF THE ACT, THE ISSUE NEEDS TO BE REMITTED BACK TO THE FILE OF THE AO TO EXAMINE THE MARKET VALUE AND TO TAX THE MARKET VALUE OR THE VALUE DETERMINED BY THE VALUATION OFFICER AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT. ACCORDINGLY, THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 6 I.T.A. NO . 1 25 /VIZ/201 8 , A.Y.20 09 - 1 0 Y.LAKSHMI NARASIMHA MURTHY , VI SAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2019 S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 30 . 10 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - Y.L AKSHMI NARASIMHA MURTHY, FLAT NO.58, SECTOR - 11, MVP COLONY, VISAKHAPATNAM 2 . / THE REVENUE - ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX - 1 , VI SAKHAPATNAM 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM