G.MOHAN, MADURAI V. ITO NON CORPORATE WARD 2(4), MADURAI

ITA 1386/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6091 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARI GOVIND
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Set aside
• Section: 50C

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL A SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.1386/CHNY/2019 ' #$' / ASSESSMENT YEAR : 2009-10 SHRI G. MOHAN, 9H, MARUDHUPANDIAN STREET, TIRUNAGAR, MADURAI 625 006. PAN : ALLPM 5696 E V. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(4), MADURAI 625 002. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : NONE ()&' * + / RESPONDENT BY : SHRI K. HARI GOVIND, JCIT , # * -. / DATE OF HEARING : 11.07.2019 /0$ * -. / DATE OF PRONOUNCEMENT : 02.08.2019 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -2, MADURA I, DATED 05.03.2019 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF ISSU E OF NOTICE OF HEARING. THEREFORE, I HEARD THE LD. D.R. AND PR OCEEDED TO DISPOSE THE APPEAL ON MERIT. 2 I.T.A. NO.1386/CHNY/19 3. SHRI K. HARI GOVIND, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE INHERITED THE PROPERTY BY WAY OF WILL EXECUTED BY HIS MOTHER. ACCORDING TO THE LD. D.R., THE ASSESSEE IS HAVING 1/5 TH SHARE IN THE PROPERTY. THE ASSESSEE CLAIMS THAT H IS MOTHER PURCHASED THE PROPERTY IN 1956 AND CONSTRUCT ED BUILDING THEREON. THE WILL WAS EXECUTED ON 05.03.2007. THE ASSESSEES MOTHER EXPIRED ON 02.05.2007. THEREFORE, ACCORDING TO THE LD. D.R., AS PER THE SUB-CLAUSE (III) UNDER EXPLANATION TO SECTION 48 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE COST OF THE LAND TO BE ADOPTED IS WHEN THE ASSESSEE HELD THE LAND FOR F IRST TIME. ACCORDINGLY, THE VALUE AS ON 02.05.2007 WAS ADOPTED FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. ACCORDING TO T HE LD. D.R., THE ASSESSEE HAS RAISED ONE MORE GROUND WITH REGARD TO SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS UNDER SECTION 50C OF THE ACT. HOWEVER, THERE IS NO DISCU SSION WITH REGARD TO SALE CONSIDERATION IN THE ASSESSMENT ORDER AS WE LL AS IN THE CIT(APPEALS)S ORDER. 4. I HEARD THE LD. D.R. AND PERUSED THE RELEVANT MA TERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEES MOTHER PURCHASED THE PROPERTY IN THE YEAR 1956 AND EXECUTE D A WILL ON 3 I.T.A. NO.1386/CHNY/19 05.03.2007. IT IS ALSO NOT IN DISPUTE THAT THE ASS ESSEES MOTHER EXPIRED ON 02.05.2007. THEREFORE, THE QUESTION ARI SES FOR CONSIDERATION IS WHETHER THE MARKET VALUE HAS TO BE ESTIMATED FOR ASCERTAINING THE COST OF ACQUISITION AS ON 01.04.19 81 OR AS ON 02.05.2007 WHEN THE ASSESSEES MOTHER EXPIRED AND T HE ASSESSEE ACQUIRED RIGHT THROUGH WILL? THIS ISSUE WAS EXAMIN ED BY THE BOMBAY HIGH COURT IN CIT V. MANJULA J. SHAH (2013) 355 ITR 474. THE BOMBAY HIGH COURT FOUND THAT THE COST OF ACQUIS ITION OF THE ORIGINAL OWNER HAS TO BE TAKEN INTO CONSIDERATION. IN OTHER WORDS, THE COST OF ACQUISITION BY THE ASSESSEES MOTHER HA S TO BE TAKEN INTO CONSIDERATION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE FAIR MARKET VALUE AS ON 01.04.1981 HAS TO BE ESTIMATED FOR THE PURPOSE OF COMPUTING CAPITAL GAIN . THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT FOR THE PURPOSE O F COMPUTING CAPITAL GAIN AS ON 01.04.1981, THE ASSESSING OFFICE R IS EXPECTED TO CONSIDER VARIOUS FACTORS SUCH AS THE LOCATION OF TH E PROPERTY, AREA OF THE LAND, INFRASTRUCTURE FACILITIES AVAILABLE AROUN D THE LAND, ACCESS TO PUBLIC FACILITIES SUCH AS ROAD, ETC., POTENTIAL FOR FUTURE DEVELOPMENT, ETC. APART FROM THE GUIDELINE VALUE OF REGISTRATION DEPARTMENT AND COMPARATIVE SALE INSTANCE AT THE RELEVANT POINT OF TIME IN THE LOCALITY. THESE FACTORS WERE NOT TAKEN INTO CONSID ERATION. 4 I.T.A. NO.1386/CHNY/19 THEREFORE, THE MATTER NEEDS TO BE RE-EXAMINED BY TH E ASSESSING OFFICER. 5. THE CIT(APPEALS) HAS DISMISSED THE APPEAL WITHOU T EXAMINING ANYTHING ON MERIT. THE CIT(APPEALS) HAS SIMPLY OBSERVED THAT HE PROCEEDED TO DISPOSE THE APPEAL ON MERIT. DISPOSAL OF APPEAL ON MERIT MEANS RE-APPRECIATING T HE MATERIAL AVAILABLE ON RECORD, RECONSIDERATION OF ISSUES ARIS E FOR CONSIDERATION AND RECORDING THE REASONING OF THE CIT(APPEALS) FOR CONCLUSION REACHED THEREON BY WAY OF A SPEAKING ORDER. IN THI S CASE, EVEN THOUGH THE CIT(APPEALS) HAS REFERRED THAT HE WILL D ISPOSE THE APPEAL ON MERIT, HE SIMPLY SAYS THAT NOTHING ON REC ORD TO JUSTIFY ANY OF THE GROUNDS OF APPEAL OF THE APPELLANT. OTHER T HAN THIS OBSERVATION, HE HAS NOT DISPOSED ANYTHING ON MERIT. THEREFORE, THIS IS NOT A WAY OF DISPOSING APPEAL ON MERIT. 6. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) CANNOT DISOWN HIS RESPONSIBILITY CAUSE D UNDER THE SCHEME OF INCOME-TAX ACT. UNDER THE SCHEME OF INCO ME-TAX ACT, THE CIT(APPEALS) HAS ALL THE POWERS OF THE ASSESSIN G OFFICER, INCLUDING THE POWER TO ENHANCE THE ASSESSMENT. IF THE CIT(APPEALS) SIMPLY DISMISSES THE APPEAL WITHOUT RE -EXAMINING THE 5 I.T.A. NO.1386/CHNY/19 MATERIAL AVAILABLE ON RECORD, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT IT WOULD AMOUNT TO FAILURE ON THE PART OF THE CIT(APPEALS) TO EXERCISE THE STATUTORY POWER CONFER RED ON HIM. THE CIT(APPEALS) IS EXPECTED TO CALL FOR RECORDS FROM T HE ASSESSING OFFICER AND RE-APPRECIATE THE SAME. THE APPLICATIO N OF MIND TO MATERIAL AVAILABLE ON RECORD SHALL BE REFLECTED IN THE APPELLATE ORDER. THEREFORE, OBSERVATION BY THE CIT(APPEALS) THAT HE IS PROCEEDING TO DISPOSE THE APPEAL ON MERIT DOES NOT IN ANY WAY AMO UNT TO DISPOSAL OF APPEAL ON MERIT. SINCE THE FACTS NEED TO BE EXA MINED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, TH E ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RE-EXAMINE THE ISSUE AND ESTIMATE THE COST OF ACQUISITION AS ON 01.04.1981 AFTER TAKING ALL THE FACTORS WHICH WE RE REFERRED ABOVE INTO CONSIDERATION AND ALSO CONSIDERING APPLICABILI TY OF SECTION 50C OF THE ACT AND THEREAFTER DECIDE THE ISSUE AFRESH I N ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6 I.T.A. NO.1386/CHNY/19 ORDER PRONOUNCED IN THE COURT ON 2 ND AUGUST, 2019 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 2 ND AUGUST, 2019 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-2, MADURAI 4. PRINCIPAL CIT-1, MADURAI 5. 4#7 (- /DR 6. 8' 9 /GF.