RANENDRA SINGH, MIRZAPUR V. IT OFFICER, MIRZAPUR

ITA 133/ALLD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9565 (ITAT-ALLAHABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 18-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR N C AGRAWAL
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Cost of acquisition; Fair market value; Set aside
• Section: 50C; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH SMC ALLAHABAD [THROUGH VIRTUAL COURT] BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.161 /ALLD/2018 ASSESSMENT YEAR: 2005 - 06 MAHENDRA SINGH RATHORE S/O MITHAILAL MAKARIKHOH, MIRZAPUR - 231001 V. INCOME TAX OFFICER, WARD - III(2), MIRZAPUR - 231001 . TAN/PAN: AQEPR4289A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI DR. N.C. AGRAWAL, C.A. RESPONDENT BY: SHRI A.K. SINGH , CIT ( SR. DR) DATE OF HEARING: 20 .07 .202 1 DATE OF PRONOUNCEMENT: 28 .07. 202 1 & ITA NO.133/ALLD/2018 ASSESSMENT YEAR: 2005 - 2006 RAJENDRA SINGH S/O MITHAILAL MAKARIKHOH, MIRZAPUR - 231001 V. INCOME TAX OFFICER, WARD - III(3), MIRZAPUR - 231001. TAN/PAN: ECGPS0837F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI DR. N.C. AGRAWAL, C.A. RESPONDENT BY: SHRI A.K. SINGH , CIT ( SR. DR) DATE OF HEARING: 20 .07 .202 1 DATE OF PRONOUNCEMENT: 28 .07. 202 1 O R D E R PER SHRI VIJAY PAL RAO , JUDICIAL MEMBER : ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 2 THESE TWO APPEAL S BY TWO RELATED ASSESSEE S ARE D IRECTED AGAINST TWO SEPARATE ORDER S OF CIT(A PPEALS) , BOTH DATED 31 . 08.2019 FOR THE A.Y . 2005 - 06 . 2. I N ITA NO. 161 /ALLD/2018 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - (I) BECAUSE THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE PROVISIONS OF SECTION 50 (C) ARE APPLICABLE . (II) BECAUSE THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING LTCG AT RS . 5,59,445. (III) BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS . 10,000 AS OTHER INCOME. (I V) BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO LAW, FACTS AND PRINCIPLES OF NATURAL JUSTICE . 3. GROUND NOS. 1 & 2 ARE REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 50 C OF THE INCOME TAX ACT IN RESPECT OF S A L E OF LAND BY FOUR CO - OWNERS . THE ASSESSEE SOLD IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 19,50,000/ - . THE PROPERTY WAS VALUED FOR THE PURPOSE OF STAMP DUTY AT RS. 53,00,000/ - DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER INVOKE THE PROVISIONS OF SECTION 50C AND TOOK THE FULL VALUE CONSIDERATION AT RS. 53,00,000/ - BEING THE STAMP DUTY VALUATION. THE ASSESSING OFFICER ACCORDINGLY COMPUTED THE CAPITAL GAIN AFTER ALLOWING THE INDEX COST OF ACQUISITION AT RS.22,37,780/ - AND ONE FOURTH SHARE OF THE ASSESSEE AT RS. 5,59,445/ - . T HE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT(A) AND CONTENDED THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY I N QUESTION BUT I S ONLY A TENANT. T HE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 4 . B EFORE THE TRIBUNAL T HE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE LAND IN QUESTION IS A BHUMIDARI LAND AND THE ASSESSEE IS HAVING ONLY THE RIGHTS TO USE THE LAND FOR AGRICULTURAL PURPOSE AS THE OWNER SHIP OF THE LAND IS VESTED TO THE STATE GOVERNMENT. THUS, THE LD. AR HAS SUBMITTED THAT THE ASSESSEE IS ONLY A TENANT AND THE DEEMED CONSIDERATION UNDER SECTION 50C OF THE INCO ME TAX ACT IS NOT APPLICABLE IN CASE OF TRANSFER OF TENANCY ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 3 RIGHTS. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTION OF HIGH COURT, IN CASE OF HAKIM JI BRICK INDUSTRIES (EIT UDYOG VS. STATE OF UP) 2003 (94) RD 122. THE L D. AR HAS ALSO REFERRED TO THE SALE - DEED DATED 27 TH MAY 1961 VIDE WHICH THE LAND WAS PURCHASED BY THE ASSESSEE FAMILY. 5 . THE LD. AR HAS REFERRED TO THE PROVISIONS OF THE UP ZAMIDARI ABOLITION AND LAND REFORMS ACT, 1951 AND SUBMITTED THAT AS PER SECTION 4 THE OWNER OF THE LAND IS THE STATE GOVERNMENT AND BHUMIDARI RIGHT IS ONLY TENANCY RIGHT. THEREFORE, THE BHUMIDAR IS ONLY A TENANT AND NOT AN OWNER OF THE LAND. HE HAS THEN, REFERRED TO THE DECISION OF THE KOLKATA BENCHES OF THE TRIBUNAL D T. 27 TH FEB, 2012 IN CASE OF CIT VS. TEJINDER SINGH IN ITA NO. 1459/KOL./2011 AND C.O. NO. 62/KOL/2011 AND SUBMITTED THAT THE TRIBUNAL HELD THAT AS IN CASE OF TRANSFER OF LEASE HOLDLAND THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE .T HE TRIBUNAL OBSERVE D THAT WHAT IS TRANSFERRED BY THE ASSESSEE IS THE TENANCY RIGHTS AND NOT LAND OR BUILDING OR BOTH. THEREFORE, THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. 6. ON THE OTHER HAND, LD . DR HAS SUBMITTED THAT WHAT IS SOLD BY THE ASSESSEE IS A LAND AND NOT THE TENANCY RIGHTS. HE HAS REFERRED TO SALE DEED DT. 26.06.2004 AND SUBMITTED THAT AS PER CLAUSES 6 AND 7 OF THE SALE DEED, IT IS PACIFIED THAT T HE LAND IN QUESTION DOES NOT FALL IN THE C E I LING, NAZUL OR LEASEHOLD LAND . F URTHER THE SELLE R HAVE CLAIMED TO HAVE THE EXCLUS IVE AND ABSOLUTE OWNERSHIP OF THE LAND. THE LAND WAS SOLD BY CO - OWNERS BEING THE EXCLUSIVE OWNERS OF THE LAND AND NOT AS A TENANT S . THEREFORE, THE PROVISIONS OF SECTION 50C ARE APPLICABLE BASED ON THE STAMP DUTY VALUATING AT THE TIME OF SALE AND REGISTRATION OF SALE DEED AND NOT AT THE TIME OF PURCHASE. THE LD. D R HAS SUBMITTED THE LAND IN QUESTION IS A FREEHOLD LAND AND THE ASSESSEE HAS TRANSFERRED A FREEHOLD LAND AND NOT A TENANCY RIGHT THEREIN. HENCE, THE ASSESSING OFFI CER HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT. 7 . I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD . THE DISPUTE I S REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 50C FOR ADOPTION OF DEEMED FULL VALUE CONSIDERATION , WHILE COMPUTING THE CAPITAL GAIN ARISING FROM THE SALE OF ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 4 LAND IN QUESTION. THE ASSESSEE HAS CLAIMED THAT THE LAND IN QUESTION IS A BHUMIDAR I LAND AND THE OWNERSHIP IS VE STED WITH THE STATE GOVERNMENT . H ENCE , THE ASSESSEE H AS TRANSFERRED ONLY THE TENANCY RIGHTS IN THE LAND . I N SUPPORT OF HIS CONTENTION THE ASSESSEE HAS REFERRED TO THE SALE DEED DT. 27 TH MAY, 1961 WHEREBY THE LAND WAS PURCHASED BY THE FAMILY OF THE ASSESSEE. THERE IS NO DISPUTE THAT IF THE LAND IS A LEASEHOLD LAND AND THE ASSESSEE IS NOT HAVING THE ABSOLUTE OWNERSHIP BUT ONLY HAVING THE RIGHT TO USE TH E LAND FOR SPECIFIC PURPOSE THEN TRANSFER OF SUCH A RIGHT IN THE LAND WOULD AMOUNT TO TRANSFER OF TENANCY RIGHT AND NOT T HE OWNERSHIP. HOWEVER, IN THE CASE IN HAND AS PER THE SALE DEED DT. 26 TH MAY 2004 THE PARTIES HAVE SPECIFICALLY STATED THAT THE LAND IN QUESTION IS FREE FROM ANY ENCUMBRANCE AND DOES NOT FA L L IN THE CATEGORY OF CEILING , NAZUL OR LEASEHOLD . T HEREFORE, WHAT IS TRANSFERRED BY THE ASSESSEES AS PER SALE DEED DT. 26 TH MAY 2004 IS THE OWNERSHIP OF THE LA ND FOR A CONSIDERATION OF RS. 9 , 5 0,000 / - WHEREAS THE LAND WAS VALUED F OR STAMP DUTY PURPOSE AT RS. 53,00,000/ - . NEITHER THE ASSESSING OFFICER HAS CONDUCTED ANY IN QUIRY REGARDING ANY CHANGE IN THE STAT U S OF THE LAND IN QUESTION AFTER THE SAME WAS PURCHASED IN THE YEAR 1961 TILL IT WAS SOLD IN THE YEAR 2004 N OR THE ASSESSEE HAS BROUGHT ON RECORD ANY MATERIAL TO SAY THAT THE LAND STILL REMAINS BHUMIDARI LAND AND THE A SSESSEE WAS HAVING ONLY A TENANCY RIGHTS IN THE LAND IN QUESTION. T HEREFORE, THIS FACTUAL ASPECT I S REQUIRED TO BE VERIFIED AFTER CONDUCTING A PROPER INQU IRY PARTICULARLY FROM THE REVENUE DEPARTMENT OF THE STATE GOVERNM ENT IN RESPECT OF THE STATUS OF THE L AND AT THE TIME OF SALE ON 26.06.2004. HENCE, IN THE FACTS OF CIRCUMSTANCES THE CASE AND IN THE INTEREST OF JUSTICE, THIS ISSUE IS SET ASIDE TO BE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER CONDUCTING A PR OPER INQUIRY REGARDING THE STATUS OF THE LAND ON THE DATE OF SALE, AND THEN DECIDE THE SAME AS PER LAW. 8. GROUND NO. 3 IS REGARDING CONFIRMATION OF A DDITION ON ACCOUNT OF INCOME FROM OTHER SOURCES . A T THE TIME OF HEARING THE LD. AR OF THE ASS ESSEE HAS STATED AT BAR THAT THE ASSESSE E DOES NOT PRESS GROUND NO. 3 AND THE SAME MAY BE DISMISSED AS NOT PRESSED . THE LD. DR HAS RAISED NO OBJECTION IF THE GROUND NO. 3 OF THE APPEAL IS DISMISSED . A CCORDINGLY GROUND NO. 3 OF THE ASSESSEE S APPEAL I S DISMISSED BEING NOT PRESSED . 9 . IN ITA NO. 133 /ALLD/2018 , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. - ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 5 (I) BECAUSE THE CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THAT THE PROVISION OF SECTION 50(C) ARE APPLICABLE. (II) BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADO PTION OF RATE @ RS. 45 PER SQ. YARD INSTEAD OF FMV AS ON 1.4.81 @ RS. 74 PER SQ. YARD. (III) BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING LTCG AT RS. 7,31,867. (IV) BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS. 36,450 AS OTHER INCOME. 1 0 . GROUND NOS. 1 & 3 IS REGARDING ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 50 (C) OF THE INCOME TAX ACT. THIS GROUND IS COMMON AND IDENTICAL TO GROUND NO 1 & 2 RAISED IN APPEAL NO. 161 OF 20018. IN VIEW OF THE FINDING ON THIS ISSUE IN I.T.A.T. NO. 161 THE SAME IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTIONS. 11 . GROUND NO. 2 IS REGARDING DETERMINATION OF FAIR MARKET VALUE AS ON 01.04.1981. 1 2 . I HAVE HEARD LD. AR AS WELL AS LD. DR AND CONSIDER ED THE RELEVANT MATERIAL ON RECORD . A T THE OUTSET THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER HAS ACCEPTED THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981 IN THE CASE OF ITA NO. 161 OF 2018 WHEREAS IN THE CASE OF CO - OWNER IN ITA NO. 133 OF 2018 THE ASSESSING OFFICER HAS ADOPTED A DIFFERENT VALUATION. IT TRANSPIRES F ROM THE RECORD THAT THE ASSESSING OFFICER HAS ACCEPTED THE FAIR MARKET VALUE AS ON 01.04.1981 IN CASE OF MAHENDRA SINGH WHER EAS THE DIFFERENT VALUATION WAS ADOPTED IN CASE OF RAJENDRA SINGH. THERE CANNOT BE TWO VALUATION OF THE SAME LAND WHEN THE LAND WAS JOINTLY OWNED BY THE ASSESSES AND SOLD BY ONE SALE - DEED . ACCORDINGLY ADDITION MADE BY THE ASSESSING OFFICER BY ADOPTING A DIFFERENT FAIR MARKET VALUE AS ON 01.04.1981 IN C ASE OF RAJENDRA SINGH IN ITA NO. 133 OF 2018 IS DELETED. ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 6 13 . THE GROUND NO. 4 IS REGARDING THE ADDITION MADE UNDER THE HEAD INCOME FROM OTHER SOURCES . A T THE TIME OF HEARING LD. AR HAS STATED AS BA R THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 4 OF APPEAL AND THE SAME MAY BE DISMISSED AS NOT PRESSED . THE LD. DR HAS RAISED NO OBJECTION FOR THE GROUND NO. 4 APPEAL IS DISMISSED . A CCORDINGLY GROUND NO. 4 OF THE ASSESSEE S APPEAL I S DISMISSED BEING NOT PRESSED . 1 4 . IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE PARTLY ALLOWED FOR THE STATISTICAL PURPOSE. THE O RDER IS PR ONOUNCED IN THE OPEN COURT THROUGH VIDEO CONFERENCING ON 28 /07/2021 SD / - / - [ VIJAY PAL RAO ] JUDICIAL MEMBER DATED: 28 /07 /2021 ALLAHABAD KD/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) - 4. CIT 5. DR //TRUE COPY// BY ORDER ITA NO S . 161 AND 1 33 / ALLD/20 18 MAHENDRA SINGH RATHORE& RAJENDRA SINGH 7 ASSISTANT REGISTRAR