Prashant P. Nahar, Pune V. Income-tax Officer, Ward - 12(3), Pune

ITA 1294/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7572 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 09-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Assessee Lawyers: P S SHINGTE
• Keywords: Capital asset; Valuation report; Set aside; Capital Gains
• Section: 56(2)(vii)(b); 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.1294/PUN/2018 / ASSESSMENT YEAR : 2014-15 SH RI PRASHANT PRAKASH NAHAR, 1577, TILAK ROAD, SADASHIV PETH, PUNE 411030. PAN : ACOPN6082F. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 12(3), PUNE. . / RESPONDENT ASSESSEE BY : SHRI P.S. SHINGTE. REVENUE BY : SHRI SANJEEV GHEI. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS) 8, PUNE DATED 14.06 .2018 FOR A.Y. 2014-15. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOME FROM HOUSE PROPERTY, BUSINESS AND CAPITAL GAINS. ASSESSEE ORIGINALLY FILE D HIS RETURN OF INCOME FOR A.Y. 2014-15 ON 28.09.2014 DECLARING TOTAL TAXA BLE INCOME / DATE OF HEARING : 19.09.2019 / DATE OF PRONOUNCEMENT: 24.10.2019 2 AT RS.8,62,160/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 22.12.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.47,1 7,660/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 14.06.2018 (IN APPEAL NO.PN/C IT(A)- 8/ITO, WD.12(3)/308/2018-19) DISMISSED THE APPEAL OF THE A SSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL AND HAS RAISED THE FOLLOWING GROUNDS : 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT (A) HAS ERRED IN NOT APPRECIATING THE LEGAL SUBMISSION THAT THOUGH THE ASSESSING OFFICER MADE THE REFERENCE TO DVO ON 13/12/2016, TH E ASSESSMENT ORDER HOWEVER HAVE BEEN MADE WITHOUT GETTING THE DVO'S RE PORT ON RECORD OBVIOUSLY BECAUSE ASSESSING OFFICER HAD MADE THE RE FERENCE JUST 9 DAYS BEFORE THE COMPLETION OF ASSESSMENT ORDER DATED 221 1212016. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT (A) HAS ERRED IN NOT TAKING ANY COGNIZANCE OF REPORT OF THE APPRO VED VALUER WITHOUT POINTING OUT ANY DEFECT THEREIN. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND W ITHOUT PREJUDICE TO THE ABOVE GROUNDS THE LEARNED CIT (A) HAS ERRED IN RELY ING ON THE VALUATION ESTIMATED BY THE DVO BY HIS REPORT DATED 27-03-2018 MUCH AFTER THE COMPLETION OF ASSESSMENT ORDER WHICH IS NOT PERMISS IBLE IN LAW AS THE VERY DVO'S REPORT DATED 27-03-2018 IS NON-EST. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND W ITHOUT PREJUDICE TO THE ABOVE GROUNDS THE LEARNED CIT (A) HAS ERRED AND IN NOT APPRECIATING THE SEVERAL ADVERSITIES ATTACHED TO THE PROPERTY SOLD U NDER CONSIDERATION AS WELL AS THE OBJECTIONS RAISED BY THE APPELLANT. 3. SUBSEQUENTLY, ASSESSEE HAS FILED THE ADDITIONAL GROUNDS WHICH READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LOWER AUTHORITIES HAVE ERRED IN REPLACING THE HIGHER COST AS AGAINST ACTUAL CONSIDERATION PAID BY THE APPELLANT, BY INVOKING PR OVISIONS OF SECTION 56(2)(VII)(B) , AND OVA ALSO ERRED IN ESTIMATING TH E VALUE OF LAND HIGHER THAN THE ACTUAL PURCHASE VALUE OF THE LAND, ESPECIALLY I N VIEW OF THE FACT THAT BALANCE HALF PORTION OF THE SAME LAND HAS BEEN VALU ED BY ANOTHER OVA AT MUCH LESS PRICE, AND APPELLANT PRAYS FOR THE ADOPTI ON OF THE LOWER VALUE AS PER THE LATEST OVA REPORT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LOWER AUTHORITIES HAVE ERRED IN INVOKING THE PROVISIONS O F SECTION 56(2)(VII)(B) OF THE INCOME TAX ACT, 1961 WITH REFERENCE TO LAND PUR CHASED BY THE 3 APPELLANT, ESPECIALLY IN VIEW OF THE FACT THAT SAID 1AND WHICH IS RESERVATION LAND AND OWNER IS ENTITLED TO HAVE TRAN SFERRABLE DEVELOPMENT RIGHT (TOR), AND ACCORDINGLY SAME IS PURCHASED WITH THE INTENTION OF CARRYING OUT THE BUSINESS AND ACCORDINGLY HELD AS STOCK IN TRADE, AND SINCE PROVISIONS OF SAID SECTIO N APPLIES TO CAPITAL ASSET . 4. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHE R. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTICE D THAT ASSESSEE ALONG WITH JOINT OWNERS HAD PURCHASED LAND SITU ATED AT SL.NO.56 AT HISSA NO.1 AT MUAJE BHAVDHAN KHURD FOR A CON SIDERATION OF RS.1,80,00,000/- AS AGAINST THE MARKET VALUE OF THE PROPER TY OF RS.4,75,66,500/- FROM SHRI VASANT GANPAT GURAV AND OTH ERS. THE ASSESSEES SHARE WAS 1/3 RD OF RS.1,80,00,000/- AND THUS, ASSESSEES SHARE IN PURCHASE CONSIDERATION WAS RS.60,00,000/- AS AGA INST THE 1/3 RD SHARE OF MARKET VALUE OF RS.4,75,66,500/- I.E., AT RS.98,55,5 00/-. AO THUS NOTED THAT THERE WAS A DIFFERENCE OF RS.38,55,500/- IN ASSESSEES SHARE OF PURCHASE CONSIDERATION. THE ASSESSEE WAS ASKE D TO SHOW CAUSE AS TO WHY THE ADDITION SHOULD NOT BE MADE BETWEEN THE STAMP DUTY VALUATION AND ACTUAL PURCHASE CONSIDERATION. THE ASSESS EE MADE THE SUBMISSIONS WHICH WERE NOT FOUND ACCEPTABLE TO THE AO. A O NOTED THAT THE AGREEMENT OF SALE WAS NOT EXECUTED AND REGISTERED AND IT WAS ONLY A SAMJAUTA KARARNAMA. AO HELD THAT THE ACTUAL PURCHASE CONSID ERATION OF PROPERTY IS MORE THAN THE STAMP VALUATION OF PROPERTY BY RS.38,55,500/- AND THEREFORE ON THE BASIS OF DIFFERENCE (BETWEEN RS.98,55,500/- AND RS.60,00,000/-), HE MADE AN ADDITION OF RS.38,55,5000/- AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 4 6. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE DISTRICT VALUATION OFFICER (DVO) HAD DETERMINED THE VALUE OF THE PROPERTY AT RS.4,46,09,0 00/-. HE SUBMITTED THAT THE VALUE OF THE SAME PROPERTY WAS MADE BY THE DVO, MUMBAI IN THE CASE OF MR. AMIT NAHAR, THE CO-OWNER OF T HE PROPERTY AND IN HIS CASE, THE VALUER VIDE VALUATION REPORT DATED 03.05.20 19 HAD VALUED THE PROPERTY AT RS.2,12,45,000/- AND IN SUPPORT OF HIS CO NTENTION, HE PLACED ON RECORD THE COPY OF THE AFORESAID VALUATION REPO RT WHICH IS PLACED AT PAGES 1 TO 8 OF THE PAPER BOOK. HE THEREFOR E SUBMITTED THAT WHEN THERE ARE TWO DIFFERENT VALUES OF THE SAME LAND BY T WO DIFFERENT GOVERNMENT APPROVED VALUERS THEN THE VALUATION REPORT WHEREIN THE VALUE SHOWN IS LESS AND IS BENEFICIAL TO THE ASSESSEE BE ACCEPTED. 7. IN THE PRESENT CASE, LD.A.R. SUBMITTED THAT THE VALUA TION DONE BY THE DVO, MUMBAI IS LOWER THAN THE VALUATION DONE BY THE DVO, PUNE AND HENCE, THE VALUATION REPORT GIVEN BY THE DVO, MUMBAI BE ACCEPTED. HE FAIRLY ADMITTED THAT THE VALUATION REPORT GIVEN BY THE DVO, MUMBAI WAS NOT BEFORE THE LOWER AUTHORITIES AND IT BEING AN ADD ITIONAL EVIDENCE, THE SAME MAY BE TAKEN ON RECORD AND SENT TO THE LOWE R AUTHORITIES FOR VERIFICATION AND THEREAFTER DETERMINE THE VALUATION OF THE L AND. WITH RESPECT TO THE APPLICABILITY OF SEC.56(2)(VII)(B) OF THE ACT, HE SUBMITTED THAT THE LAND WHICH THE ASSESSEE HAS PURCHASED WAS WIT H THE INTENTION TO TRADE AND BUSINESS AND THEREFORE IT WAS A STOCK-IN- TRADE AND IN SUCH A SITUATION, HE SUBMITTED THAT PROVISIONS OF SEC.56(2)(VII)(B) OF THE ACT CANNOT BE APPLIED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LOWER AUTHORITIES AND WITH RESPECT TO THE NON-APPLICABILITY OF SEC.56(2)(VII)(B) OF THE ACT, HE SUBMITTED THAT ASSESSEE HAS NOT BROUGHT 5 ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE LAND P URCHASED BY THE ASSESSEE WAS A STOCK-IN-TRADE AND HE WAS IN THE BUSINE SS OF LAND DEALINGS. HE ON THE CONTRARY POINTED TO THE NOTING OF TH E AO IN THE ASSESSMENT ORDER WHICH STATES THAT THE ASSESSEE TO B E A COMMISSION AGENT. HE FURTHER SUBMITTED THAT THE OBJECTIONS WITH R ESPECT TO THE VALUATION OF PROPERTY WERE MET BY THE DVO, PUNE AND THE VALUATION REPORT GIVEN BY THE DVO, PUNE HAD BEEN CONSIDERED BY L D.CIT(A) WHILE DECIDING THE ISSUE. HE THUS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE VALUATION OF THE PROPERTY. I FIND THAT THE DVO, PUNE HAD VALUED T HE PROPERTY AT RS.4,46,09,000/- BUT IT IS ALSO A FACT THAT THE SAME PROPE RTY HAS BEEN VALUED BY THE DVO, MUMBAI VIDE VALUATION REPORT DATED 0 3.05.2019 AT RS.2,12,45,000/-. IT IS THUS SEEN THAT THERE IS A SUBS TANTIAL DIFFERENCE BETWEEN THE VALUES MENTIONED BY THE DVO AT MUMBAI AN D THE DVO OF PUNE OF THE SAME PROPERTY IN THEIR RESPECTIVE VALUATION R EPORTS. IT IS ALSO A FACT THAT THE VALUATION REPORT OF THE DVO, MUMBAI WAS N OT BEFORE THE AUTHORITIES WHILE FRAMING THE ASSESSMENT. IN SUCH A SITUAT ION, I AM OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE VALUATION REP ORT OF THE DVO OF MUMBAI BE ALSO MADE AVAILABLE TO THE LOWER AUTHORITIES FOR H IM AND THEREAFTER TO DETERMINE THE VALUE OF THE LAND IN ACCOR DANCE WITH THE LAW. I THEREFORE SET ASIDE THE ISSUE TO THE FILE OF AO. SINCE TH E ISSUE OF VALUATION HAS BEEN SET ASIDE TO THE FILE OF AO, I ALSO DIRE CT THE AO TO CONSIDER THE SUBMISSION OF THE ASSESSEE ABOUT THE NON- APPLICABILITY OF SEC.56(2)(VII)(B) OF THE ACT IN VIEW OF THE FACT THAT IT IS ASS ESSEES SUBMISSION THAT HE HAS PURCHASED THE LAND FOR THE PURPO SE OF BUSINESS AND IT WAS A STOCK-IN-TRADE. I THEREFORE WITHOUT DECIDING THE ISSUE ON 6 MERITS RESTORE THE ISSUE TO THE FILE OF AO. NEEDLESS TO STA TE THAT AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH ALL THE DETAILS CALLED FOR BY T HE AUTHORITIES. IN VIEW OF MY DECISION TO RESTORE THE ISSUE TO THE FILE OF AO, I AM NOT ADJUDICATING ON MERITS THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED FOR STATI STICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 24 TH DAY OF OCTOBER, 2019. SD /- - ( ANIL CHATURVEDI ) / ACCOUNTANT MEMBER PUNE; DATED : 24 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-8, PUNE. PR. CIT-4, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.