Deputy Commissioner of Income tax, Nashik V. Sagar Suresh Somwanshi, Nashik

ITA 1375/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3208 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Valuation report
• Section: 133(6); 131

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.1375/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2, NASHIK ....... / APPELLANT / V/S. SHRI SAGAR SURESH SOMWANSHI, A-2, MURLIDHAR NEAR INDRAPRASHTA HALL, OLD GANGAPUR NAKA, GANGAPUR ROAD, NASHIK 422 013 PAN : BHOPS2699G / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 19-06-2018 / DATE OF PRONOUNCEMENT : 14-08-2018 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 17-0 3-2017 FOR THE ASSESSMENT YEAR 2012-13. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. THE NOTICE OF THE APPEAL WAS SENT TO THE ASSESS EE ON 24-04-2018 THROUGH RPAD FOR 19-06-2018. THE NOTICE WAS DULY SER VED ON 03-05-2018. ACKNOWLEDGMENT OF SERVICE OF NOTICE IS AVAILABLE ON RECORD. DESPITE SERVICE OF NOTICE, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE NO R ANY LETTER 2 ITA NO. 1375/PUN/2017, A.Y. 2012-13 SEEKING ADJOURNMENT FROM ASSESSEE/RESPONDENT HAS BEEN RECEIVED. IT APPEARS THAT THE ASSESSEE IS NOT KEEN TO DEFEND HIS CA SE. UNDER SUCH CIRCUMSTANCES, WE PROCEED TO DECIDE THE APPEAL OF REVEN UE WITH THE ASSISTANCE OF BY LD. DEPARTMENTAL REPRESENTATIVE AND THE MATERIA L AVAILABLE ON RECORD. 3. THE REVENUE IN THIS APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.1,65,50,809/- ON ACCOUNT OF LONG TERM CAPITAL GAINS ON SALE OF PLOTS. 4. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS RUNNING A FAST FOOD RESTAURANT. THE ASSES SEE FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29-03-2013 DECLARING TOTAL INCOME OF RS.87,04,594/-. THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY UNDER CASS. STATUTORY NOTICE U/S.143(2) OF THE A CT WAS ISSUED TO THE ASSESSEE ON 13-08-2013. DURING THE COURSE OF SCRU TINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSE SSEE HAS SOLD TWO PLOTS OF LAND (HEREIN AFTER REFERRED TO AS P-1 AND P-2). TH E P-1 WAS SOLD FOR RS.3,10,00,000/-, THE MARKET VALUE FOR STAMP DUTY PURPOSES OF THE SAID PLOT WAS RS.3,08,71,000/-. THE P-2 WAS SOLD FOR RS.50,00,000/ - AND THE MARKET VALUE FOR STAMP DUTY PURPOSES OF THE SAID PLOT W AS RS.55,50,000/-. IN P-1, THE ASSESSEE HAD 100% SHARE AND IN P-2 THE A SSESSEE HAD ONLY 14.28% SHARE. BOTH THESE PLOTS WERE ACQUIRED BY THE AS SESSEE PRIOR TO 01-04-1981. THUS, FOR THE PURPOSE OF CALCULATING LONG TER M CAPITAL GAINS, THE ASSESSEE VALUED THE PROPERTY AS ON 01-04-1981. T HE ASSESSEE DECLARED THE VALUE OF P-1 AS ON 01-04-1981 AT RS.20,05,500/- AND P-2 AT RS.4,35,000/-. THE ASSESSING OFFICER MADE REFERENCE TO THE DEPARTMENT VALUATION OFFICER (DVO) U/S.55A FOR DETERMINING FAIR MARKET VALUE OF BOTH THE PROPERTIES. THE VALUATION OFFICER ASCERTAINED THE FAIR M ARKET VALUE OF 3 ITA NO. 1375/PUN/2017, A.Y. 2012-13 P-1 AS ON 01-04-1981 AT RS.1,75,000/- AND P-2 AS RS.31,5 00/-. ON THE BASIS OF THE VALUATION REPORT BY DVO, THE AO RE-COMPUTE D THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE AND MADE ADDITION. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27-03-2015, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 5. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADD ITION BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. M/S. PUJA PRINTS 360 ITR 697. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSING OFFICER HAD NO POWER TO REFER VALU ATION OF PROPERTIES TO DVO WHERE THE VALUE DECLARED BY THE ASSE SSEE IS MORE THAN THE FAIR MARKET VALUE. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. SHRI AJAY MODI REPRESENTING THE DEPARTMENT VEHEMENTL Y SUPPORTED THE FINDINGS OF ASSESSING OFFICER AND SUBMITTED THAT REFERENC E TO THE DVO WAS MADE BY THE ASSESSING OFFICER ON 23-03-2014. HE SUB MITTED THAT THE AMENDMENT TO SECTION 55A OF THE ACT WAS MADE BY THE FINANCE ACT, 2012 W.E.F. 01-07-2012. THUS, REFERENCE TO THE DVO WAS MADE M UCH AFTER THE AMENDMENT TO SECTION 55A OF THE ACT. THE COMMISSIONER O F INCOME TAX (APPEALS) HAS ERRED IN APPLYING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. M/S. PUJA PRINTS. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DEPART MENTAL REPRESENTATIVE AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE ONLY DISPUTE IN APPEAL IS WHETHER THE AMENDED PROVISIONS OF SECTION 55A WOULD APPLY TO THE FACTS OF THE PRESENT CASE. UNDISPUT EDLY, THE ASSESSEE 4 ITA NO. 1375/PUN/2017, A.Y. 2012-13 HAS SOLD THE PROPERTY IN THE PERIOD RELEVANT TO THE ASS ESSMENT YEAR 2012- 13. REFERENCE TO THE DVO FOR VALUATION OF PROPERTY CAN BE MADE UNDER THE PROVISIONS OF SECTION 55A. THE PROVISIONS OF SECTION 55 A WERE AMENDED BY THE FINANCE ACT, 2012 W.E.F. 01-07-2012. PRIOR TO THE AMENDMENT, ASSESSING OFFICER COULD HAVE MADE REFERENCE TO DVO ONLY I F THE VALUE OF ASSET CLAIMED BY ASSESSEE IS LESS THAN THE FAIR MARKET VALUE. IN THE PR ESENT CASE UNDISPUTEDLY THE VALUE OF PLOTS SOLD BY ASSESSEE IS MUCH HIGHER THAN THE FAIR MARKET VALUE DETERMINED BY THE DVO. EVEN IF REFER ENCE IS MADE TO DVO AFTER THE DATE OF AMENDMENT, THE UNAMENDED PROVISION S OF SECTION 55A WOULD APPLY TO THE TRANSACTIONS ENTERED INTO PRIOR TO THE DATE OF AMENDMENT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S . PUJA PRINTS (SUPRA) HAS HELD THAT AMENDED PROVISIONS OF SECTION 55A WOULD NOT APPLY RETROSPECTIVELY. THE RELEVANT EXTRACT OF THE OBS ERVATION OF HONBLE HIGH COURT ON THE APPLICABILITY OF THE AMENDED PROVISIONS OF SECTION 55A READS AS UNDER : 9 THE CONTENTION OF THE REVENUE THAT THE REFERENC E TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFFICER IS SUSTA INABLE IN VIEW OF SECTION 55A(A) (II) OF THE ACT IS NOT ACCEPTABLE. THIS IS F OR THE REASON THAT SECTION 55A(B)OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVERED BY SECTION 55A(A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RESORT CANNOT BE HAD TO THE RESIDUARY CL AUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CB DT CIRCULAR DATED 25 NOVEMBER 1972 CAN HAVE NO APPLICATION IN THE FACE O F THE CLEAR POSITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTO RY PROVISIONS BY THE REVENUE AS FOUND IN CIRCULAR ISSUED BY THE CBDT IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND T O THE CONTRARY. 10. THE CONTENTION OF THE REVENUE THAT THE ASSESSIN G OFFICER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS POWER UNDER SECTIONS 131 , 133(6) AND 142(2) OF THE ACT IS ENTIRELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SUPRA). HOWEVER, THE APEX COUR T IN SMT. AMIYA BALA PAUL (SUPRA) HAS REVERSED THE DECISION OF THE GUWAH ATI HIGH COURT AND HELD THAT IF THE POWER TO REFER ANY DISPUTE WITH REGARD TO THE VALUATION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTIONS 31(1) ,136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPECIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFIC PROVISION UNDER WHICH THE REFERENCE CAN BE MADE 5 ITA NO. 1375/PUN/2017, A.Y. 2012-13 TO THE DEPARTMENTAL VALUATION OFFICER IS AVAILABLE, THERE IS NO OCCASION FOR THE ASSESSING OFFICER TO INVOKE THE GENERAL POWERS OF E NQUIRY. THUS, IN VIEW OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT, THE AMENDED PROVISIONS OF SECTION 55A WOULD NOT APPLY TO THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE PRIOR TO AMENDMENT. 8. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION. THE APPEAL OF REVENUE IS DISMISSED BEING BEREFT OF ANY MERIT. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 14 TH DAY OF AUGUST, 2018. SD/- SD/- ( . /D. KARUNAKARA RAO) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 14 TH AUGUST, 2018 SATISH ! $ ! $ ! $ ! $ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ! ( ) / THE CIT(A)-2, NASHIK 4. THE PR. CIT2, NASHIK 5. , , SMC & , / DR, ITAT, SMC BENCH, PUNE. 6. ) / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY, , / ITAT, PUNE