Shri Uday Raj Mishra, Pratapgarh V. ITO, Pratapgarh

ITA 137/ALLD/2011

• Counselvise Citation: 13720714 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 05-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: S P A GARWAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Fair market value; Valuation report; Reassessment proceedings
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.137/A/2011 ASSESSMENT YEAR: 2003-04 SHRI UDAI RAJ MISHRA, VS. INCOME TAX OFFICE R, BHAGWA CHUNGI, PRATAPARH. PRATAPGARH. (PAN: ACHPM 8864 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.P. AGARWAL, ADVOCATE RESPONDENT BY : SHRI Y.P. SRIVASTAVA, D.R. DATE OF HEARING : 31.10.2012 DATE OF PRONOUNCEMENT : 08.11.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 16.03.2011 PASSED BY THE LD. CIT(A)-II, LUCKNOW FOR THE ASSESS MENT YEAR 2003-04. 2. THE ASSESSEE HAS RAISED AS MANY AS 15 GROUNDS OF APPEAL. HOWEVER, THE LEARNED AUTHORISED REPRESENTATIVE HAS PRESSED AND A RGUED ONLY GROUND NOS.10, 11, 13, 14 & 15 WHICH ARE REPRODUCED AS BELOW:- 10. BECAUSE, THERE IS NO ADVERSE MATERIAL ON RECOR D TO DISBELIEVE THE SALE CONSIDERATION AS SHOWN IN THE SALE DEEDS. THUS, CAPITAL GAINS ITA NO.137/A/2011 A.Y. 2003-04 2 WORKED OUT AND ADMITTED AT RS.68758.00 AND SHOWN IN THE RETURN WAS QUITE CORRECT, 11. BECAUSE IN ANY CASE WITHOUT PREJUDICE TO ABOVE CONTENTIONS EVEN AS PER DVO REPORT WORKING OUT MARKET VALUE AT RS.1472100.00 AS AGAINST AS PER ASSESSEE AS PER SALE DEED AT RS.1 082000.00 GIVING A DIFFERENCE OF ONLY RS.390100.00 WAS NOT JUSTIFIED T O BE CONSIDERED FOR WORKING OUT CAPITAL GAIN. 13. BECAUSE, THE CIT(A) HAS NOT TAKEN THE ACTUAL SA LE CONSIDERATION FOR WORKING OUT CAPITAL GAIN. 14. BECAUSE, THE VALUATION AS PER DVO OF ALL LANDS WHICH WERE SOLD AS WORKED OUT BY HIM AT RS.14,72,100.00, IN ANY CAS E SHOULD HAVE BEEN CONSIDERED BY CIT(A) FOR PURPOSES OF WORKING O UT CAPITAL GAINS AND NOT AT RS.28,44,340.00. 15. BECAUSE, IN VIEW OF VARIOUS JUDICIAL PRONOUNCEM ENTS, ONLY THE SALE CONSIDERATION AS PER SALE DEED SHOULD BE TAKEN INTO CONSIDERATION AND NOT ANY OTHER VALUE FOR THE PURPOSES OF WORKING OUT CAPITAL GAIN. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.2,24,160/- WHICH INC LUDED CAPITAL GAIN OF RS.68,758/-. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) ON 28. 03.2006 DETERMINING TOTAL INCOME OF RS.24,85,160/- AND ADDITION OF RS.22,61,0 00/- WAS MADE BEING UNEXPLAINED GAIN ON SALE OF PLOT. THE ASSESSEE FIL ED APPEAL BEFORE THE CIT(A) WHEREIN THE CIT(A) HAS CONFIRMED THE ORDER OF ASSE SSING OFFICER. THE ASSESSEE PREFERRED APPEAL BEFORE THE I.T.A.T. AND THE I.T.A. T. VIDE ITS ORDER DATED 19.11.2008 IN ITA NO.233/ALLD/2008 RESTORED THE MAT TER TO THE FILE OF ASSESSING OFFICER TO DECIDE DENOVO. IN COMPLIANCE TO THE DIR ECTION OF I.T.A.T., THE ASSESSING ITA NO.137/A/2011 A.Y. 2003-04 3 OFFICER IN FRESH ASSESSMENT ORDER DATED 31.12.2009 REPEATED THE ADDITION OF RS.22,61,000/- AS UNEXPLAINED CAPITAL GAIN. 4. THE CIT(A) IN THE IMPUGNED ORDER ALLOWED RELIEF OF RS.5,08,660/- AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.17,52,34 0/- AS UNDER :- (PARAGRAPH NOS.6.2 & 6.3) 6.2 I HAVE GONE THROUGH THE SUBMISSIONS OF THE APP ELLANT AND ALSO THE FACTS OF THE CASE. AT THE OUTSET, THE LAND IS SITUATED WITHIN 8 KMS. FROM THE MUNICIPAL AREA. THE PART OF LAND IS WITHI N THE MUNICIPAL LIMIT AND PART OF LAND IS OUTSIDE THE MUNICIPAL ARE A. BUT, IT DOES NOT MAKE ANY DIFFERENCE AS THE WHOLE LAND IS SITUATED W ITHIN 8 KMS. FROM THE MUNICIPAL AREA AS REPORTED BY THE ASSESSING OFF ICER. THE APPELLANT HAS NOT FILED ANY DOCUMENTARY EVIDENCE TO REBUT THE SE FACTS. AS REGARD, THE CHARGEABILITY OF CAPITAL GAINS ON THE SALE OF LAND, THE APPELLANT HAS HIMSELF SHOWN THE NET CAPITAL GAINS A MOUNTING TO RS.68,758/- AFTER CALCULATING LONG TERM AND SHOT TE RM CAPITAL GAINS IN HIS RETURN OF INCOME OF THE YEAR UNDER CONSIDERATIO N. MOREOVER, IT IS ADMITTED FACTS THAT THE APPELLANT HAS DEVELOPED THE LAND FOR THE PURPOSE OF PLOTTING OF LAND AND AFTER PLOTTING THE SAME, THE 16 PLOTS WERE SOLD FOR THE PURPOSE OF CONSTRUCTION OF THE HO USES. IT SHOWS THAT THE LAND WAS NOT SOLD FOR THE PURPOSE OF AGRICULTUR E AND/OR AGRICULTURE OPERATIONS I.E. FOR CULTIVATION ETC. T HUS, THE APPELLANT HIMSELF HAS CHANGED THE NATURE OF AGRICULTURAL LAND . THEREFORE, THE CONTENTIONS OF THE APPELLANT ON THIS POINT ARE NOT FOUND CORRECT AND ACCEPTABLE. 6.2.I AS REGARD THE VALUE OF THE PLOTS SOLD FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS, THE ASSESSING OFFICER HAS SHOWN THE SAME AT RS.10,82,000/- ON THE BASIS OF SALE CONSIDERATIO N SHOWN IN THE SALE DEEDS. HOWEVER, THE ASSESSING OFFICER HAS ADOPTED THE VALUE AT RS.33,53,000/- ON THE BASIS OF CIRCLE RATES PRESCRI BED FOR THE PURPOSE OF STAMP DUTY BY INVOKING THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961. DURING THE REASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER HAS MADE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICE R FOR THE PURPOSE OF VALUATION OF PROPERTY. SINCE THE VALUATION REPO RT OF THE DEPARTMENTAL VALUATION OFFICER WAS NOT RECEIVED, TH E IMPUGNED ITA NO.137/A/2011 A.Y. 2003-04 4 ASSESSMENT IS MADE WITHOUT WAITING FOR THE VALUATIO N REPORT AS THE ASSESSMENT WAS GETTING TIME BARRED ON 31.12.2009. THE DEPARTMENTAL VALUATION OFFICER HAS GIVEN HIS VALUATION REPORT VI DE NO.06/IT/AVO/ALLD/2010-11/264 DATED 07.12.2010. IN HIS VALUATION REPORT, THE DVO HAS VALUED THE TOTAL COST OF LAND A T RS.28,44,340/- (RS.65,780/- PLUS RS.16,48,400/- PLUS RS.11,30,160/ -) AND THE NET VALUE OF PROPERTY AT RS.14,72,100/-. THE DVO HAS W ORKED OUT THE NET VALUE OF PROPERTY AT RS.14,72,100/- AFTER REDUCING THE DEVELOPMENT CHARGES, ARCHITECTURAL FEES, BROKERAGE, BUILDER/INV ESTOR PROFIT ETC. FROM THE TOTAL VALUE OF RS.28,44,380/- OF THE PLOTS SOLD. 6.2.II THE SUBMISSION DATED 19.01.2011 ALONG WITH I TS ENCLOSURES INCLUDING THE VALUATION REPORT OF THE DVO, WAS SENT TO THE ASSESSING OFFICER ON 19.01.2011 FOR HIS COMMENTS/REMAND REPOR T. THE ASSESSING OFFICER HAS SENT HIS REMAND REPORT VIDE LETTER DATE D 15.02.2011 GIVING HIS COMMENTS ON SOME POINTS RAISED BY THE APPELLANT IN HIS SUBMISSIONS. HOWEVER, THE ASSESSING OFFICER HAS NO T MADE ANY COMMENTS/REPORT ON THE POINT OF THE VALUATION REPOR T OF THE DVO. IT MEANS, THE ASSESSING OFFICER HAS NOTHING TO COMMENT S UPON THE VALUATION REPORT OF THE DVO. THE APPELLANT HAS NEI THER ATTENDED ON THE DATE OF HEARING ON 16.03.2011, NOR HAS FILED AN Y REPLY IN RESPONSE TO THE REMAND REPORT. THE VALUATION REPORT OF THE DVO HAS BEEN CONSIDERED. 6.3 SUBJECT TO THE ABOVE DISCUSSION, THE FAIR MARKE T VALUE OF THE LAND IS TAKEN AT RS.28,44,340/- AS VALUED BY THE DV O, AS AGAINST RS.33,53,000/- ADOPTED ON THE BASIS OF THE CIRCLE R ATE OF STAMP VALUATION AUTHORITY. THUS, THE ADDITION IS REDUCED TO RS.17,52,340/-. THE APPELLANT GET RELIEF OF RS.5,08,660/-. THE GRO UNDS OF APPEAL ARE DECIDED ACCORDINGLY. (CONFIRMED: RS.17,52,340/- AND RELIEF: RS.5,08,660/ -) 5. AS STATED ABOVE THAT THE LEARNED AUTHORISED REPR ESENTATIVE HAS ARGUED ONLY ON THE ISSUE OF ESTIMATION OF SALE CONSIDERATION OF SALE OF PLOT ESTIMATED BY THE D.V.O. AND SALE CONSIDERATION TAKEN AS PER THE SALE DEED BY THE ASSESSEE. THE ASSESSEE HAS TAKEN THE SALE CONSIDERATION AS PER SA LE DEED AT RS.10,82,000/- WHEREAS THE D.V.O. HAS VALUED THE SAME AT RS.14,72, 100/-. THE DIFFERENCE WAS OF ITA NO.137/A/2011 A.Y. 2003-04 5 RS.3,90,100/-. THE LEARNED AUTHORISED REPRESENTATI VE FURTHER SUBMITTED THAT THE CIT(A) HAS WRONGLY CONSIDERED FAIR MARKET VALUE OF THE LAND ONLY BY TAKING THE VALUE AS DETERMINED BY THE A.O. AT RS.28,44,340/-. THE CIT(A) OUGHT TO HAVE CONSIDERED THE DEVELOPMENT CHARGES AND OTHER DEVELO PMENT EXPENSES FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN. LEARNED AU THORISED REPRESENTATIVE SUBMITTED THAT THE VALUATION AS PER THE D.V.O. OF L AND WHICH WERE SOLD AS WORKED OUT BY HIM AT RS.14,72,100/- AND IN ANY CASE IT SHO ULD HAVE BEEN CONSIDERED BY THE CIT(A) FOR THE PURPOSE OF WORKING OUT CAPITAL INSTE AD OF RS.28,44,340/-. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDER OF CIT(A). 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE ISSUE TO BE EXAMINED IN THIS CASE IS ONLY IN RESPECT OF SALE CONSIDERATION OF SALE OF PLOTS. THE ASSESSEE DECLA RED SALE CONSIDERATION OF RS.10,82,000/-. THE ASSESSING OFFICER INVOKED SECT ION 50C OF THE ACT AND REFERRED THE MATTER TO THE D.V.O. THE D.V.O. ESTIM ATED THE LAND VALUE AT RS.28,44,340/- AFTER REDUCING DEVELOPMENT CHARGES, ARCHITECTURAL FEES ETC. NET VALUE OF THE PROPERTY TAKEN BY D.V.O. AT RS.14,72,1 00/-. IN OTHER WORDS, THE D.V.O. HAS CONSIDERED RS.13,72,240/- (28,44,340 1 4,72,100) BEING DEVELOPMENT CHARGES, ARCHITECTURAL FEES ETC. WHEN THE ASSESSIN G OFFICER INVOKED SECTION 50C OF ITA NO.137/A/2011 A.Y. 2003-04 6 THE ACT, THE ENTIRE CALCULATION OF CAPITAL GAIN IS REQUIRED TO BE CALCULATED IN ACCORDANCE WITH SECTION 50C OF THE ACT. SECTION 50 C OF THE ACT PROVIDES WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF THE TRANSFER OF CAPITAL ASSETS, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VA LUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT STAMP VALUATION AUT HORITY FOR THE PURPOSE OF PAYMENT OF TAMP DUTY IN RESPECT OF SUCH TRANSFER, T HE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. SUB-SECTION (2) OF SECTION 50C OF THE ACT FURTHER PROVIDES THAT THE A. O. CAN REFER THE VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. SUB-SECTIO N(3) OF SECTION 50C PROVIDES THAT WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) O F SECTION 50C EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y, THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FU LL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. WHEN THE ASSESSING OFFICER REFERRED THE MATTER TO THE D.V.O., THE REPORT OF TH E D.V.O. SHOULD BE ACCEPTED UNLESS SOME CONTRARY MATERIAL IS FOUND. IN THE CAS E UNDER CONSIDERATION, THE D.V.O. VALUED THE NET VALUE OF PROPERTY AT RS.14,72 ,100/- AGAINST WHICH THE CIT(A) HAS TAKEN RS.28,44,340/-. THE CIT(A) DID NO T GIVE ANY REASON WHY THE NET VALUE OF PROPERTY OF RS.14,72,100/- WAS NOT CONSIDE RED FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE DEVELOPMENT COST IS REQUIRED TO BE REDUCED ITA NO.137/A/2011 A.Y. 2003-04 7 FROM THE TOTAL COST VALUED BY THE D.V.O. THE TOTAL COST DETERMINED BY THE D.V.O. WAS RS.28,44,340/- AND IF THE DEVELOPMENT COST OF R S.13,72,240/- IS REDUCED, THE NET VALUE OF THE PROPERTY COMES TO RS.14,72,100/-. THEREFORE, WE FIND THAT THE CIT(A) OUGHT TO HAVE TAKEN NET VALUE OF THE PROPERT Y AT RS.14,72,100/- INSTEAD OF RS.28,44,340/-. WE ACCORDINGLY DIRECT THE ASSESSIN G OFFICER TO RECALCULATE THE CAPITAL GAIN, CONSIDERING THE TOTAL SALE CONSIDERAT ION AT RS.14,72,100/- AS AGAINST SALE CONSIDERATION DECLARED BY THE ASSESSEE AT RS.1 0,82,000/-, AS AGAINST THE VALUE TAKEN AT RS.33,53,000/- BY STAMP VALUATION AUTHORIT Y AND ADOPTED BY THE ASSESSING OFFICER AND AS AGAINST THE VALUE OF RS.28,44,340/- TAKEN BY THE CIT(A). 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED AS DISCUSSED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY