Shobha Pandit Sharma, Hyderabad, Secunderabad V. ADIT, Intl. Taxn-2, Hyderabad, Hyderabad

ITA 1418/HYD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3140 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 02-03-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Sale consideration of property below Jantri Value; Audit objection; Fair market value; Set aside; Capital Gains
• Section: 143(3); 50C; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1417/HYD/16 2006-07 SMT. SHOBHA SHARMA, HYDERABAD [PAN: AZMPS3447A] DEPUTY DIRECTOR OF INCOME TAX, INTERNATIONAL TAXES-II, HYDERABAD 1418/HYD/16 FOR ASSESSEE : SHRI M.V.ANIL KUMAR, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 02-03-2020 DATE OF PRONOUNCEMENT : 11-03-2020 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : BOTH ARE ASSESSEES APPEALS FOR THE AY.2006-07, DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD, DATED 11-06-2014. ITA NO.1417/HYD/2016 IS AGAINST THE ASSESSMENT COMPLETED U/S.144 OF THE INCOME TAX ACT [ACT] WHILE THE ITA NO. NO.1418/HYD/2016 IS AGAINST THE ASSESSMENT COMPLETED U/S.143(3) R.W.S.147 OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS A NON- RESIDENT INDIAN. SHE FILED HER RETURN OF INCOME FOR THE AY.200 6-07 ON 12-10-2006, DECLARING LONG TERM CAPITAL GAIN OF RS.27,02,077/-. THE RETURN WAS INITIALLY PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE SAME WAS TAKEN UP FOR ITA NOS. 1417 & 1418/HYD/2016 :- 2 -: SCRUTINY. SINCE NONE APPEARED BEFORE THE ASSESSING O FFICER (AO), THE ASSESSMENT WAS COMPLETED U/S.144 OF THE ACT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE IS THE OWNER OF TWO PROPERTIE S FROM WHICH IT HAS OFFERED LONG TERM CAPITAL GAIN AND SHE I S THE 100% OWNER OF THE (I) PLOT NO.12-13-367/A, ADMEASURIN G 1140.21 SQ. YDS., AND (II) 50% OWNER OF PLOT NO.12-1 3-367/1, ADMEASURING 570.10 SQ. YDS., SITUATED IN SURVEY NOS.1 65 & 166 OF TARNAKA, SECUNDERABAD. THE AO APPLIED THE PRO VISIONS OF SECTION 50C OF THE ACT TO THE ABOVE TRANSACTION AND THUS ARRIVED AT LONG TERM CAPITAL GAIN FOR BOTH THE PROPERTIE S, PUT TOGETHER AT RS.1,03,22,419/-. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A), BUT SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE CIT(A) AS WELL, HE CONFIRMED THE ORDER OF AO. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS IN ITA NO.1417/HYD/2016: 1. YOUR APPELLANT SUBMITS THAT THE CIT(A) OUGHT TO HAVE ANNULLED THE ASSESSMENT IN ABSENCE OF PROPER SERVICE OF NOTICE B Y THE ASSESSING OFFICER. 2. YOUR APPELLANT SUBMITS THAT THE CIT(A) BEFORE PR OCEEDING TO DECIDE THE APPEAL ON MERITS, OUGHT TO HAVE SEEN WHETHER TH E NOTICE WAS PROPERLY SERVED OR NOT ON PRINCIPALS OF NATURAL JUS TICE, IN ABSENCE OF ANY FINDING ON PROPER SERVICE OF NOTICE THE ASSESSM ENT IS BAD IN LAW. 3. YOUR APPELLANT SUBMIT THAT THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACT THAT FAI R MARKET VALUE AS ON 1-4-1981 AS PER THE CERTIFICATE OF SUB REGISTRAR WH ICH IS NOT CORRECT. 4. THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGH T TO HAVE ADOPTED THE VALUE OF LAND AS ON 1-4-1981 AT RS. 1000 PER SQ YRD AND NOT THE VALUE AS PER THE SRO REGISTER AT RS. 75/- PER SQ YR D. YOUR APPELLANT ITA NOS. 1417 & 1418/HYD/2016 :- 3 -: SUBMITS THAT VALUE AS PER SRO REGISTER IS NOT THE F AIR MARKET VALUE AS ON 1-4-1981. 5. THE CIT(A) OUGHT TO HAVE FAIRLY ESTIMATED THE VA LUE OF LAND PER SQ YRD BASED ON VARIOUS JUDICIAL PRONOUNCEMENT OF ITAT AS WELL HIGH COURTS INCLUDING THE JURISDICTIONAL ITAT AND HIGH C OURT INSTEAD OF UPHOLDING THE ORDER OF THE ASSESSING OFFICER, WHICH IS BAD IN LAW. 6. YOUR APPELLANT SUBMITS THAT, IT WAS BROUGHT TO T HE NOTICE OF THE CIT(A) THAT AS PER SALE DEEDS THE ACTUAL UNDIVIDED SHARE OF LAND FALLING TO THE SHARE OF YOUR APPELLANT TRANSFERRED IS 1476.89 SQ. YRDS AS AGAINST 1010.31 SQ. YRDS AS CLAIMED IN THE RETUR N AND THE ACTUAL BUILT UP AREA TRANSFERRED IS 300 SQ. FT. AS AGAINST 200 SQ. FT. AS CLAIMED IN THE RETURN, WHICH SHOULD HAVE BEEN CONSI DERED BY THE CIT(A) IN HIS ORDER AND DIRECTED THE ASSESSING OFFI CER TO COMPUTE THE CAPITAL GAINS ACCORDINGLY. 7. THE CIT(A) AS WELL AS THE ASSESSING OFFICER ARE WELL AWARE OF THE FACT THAT YOUR APPELLANT IS A NON-RESIDENT AND HAD INCURRED THE TRAVELLING EXPENSES FOR THE PURPOSE OF DISPOSING TH E PROPERTY OUGHT TO HAVE ALLOWED THE AMOUNT OF RS. 65,000/- BEING EXPEN DITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRAN SFER. 8. THE CIT (A) AS WELL AS THE ASSESSING OFFICER OUG HT TO HAVE ALLOWED THE AMOUNT OF RS.2,50,000/- BEING BROKERAGE/COMMISS ION PAID, BEING EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER. 5. SINCE BOTH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) ARE EX-PARTE THE ASSESSEE , WE DEEM IT FIT AND PROPER TO REMAND ISSUE TO THE FILE OF AO WITH A DIRECTION TO RECO NSIDER THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING A FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, ITA NO.1417/HYD/2016 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1418/HYD/2016: 7. FACTS PERTAINING TO THE PRESENT APPEAL ARE THAT - AFTER COMPLETION OF ASSESSMENT U/S.144 OF THE ACT, THE AO ISSU ED A ITA NOS. 1417 & 1418/HYD/2016 :- 4 -: NOTICE U/S.148 OF THE ACT ON 09-11-2010, IN RESPONSE TO WHICH, THE ASSESSEE FILED A LETTER, STATING THAT THE ORIGINAL RETURN OF INCOME FILED MAY BE TREATED AS RETURN FILED IN RESP ONSE TO THE NOTICE U/S.148 OF THE ACT . THE AO OBSERVED THAT THE ASSESSEE HAS SOLD A PROPERTY, M/S.VIVIMED LABS LIMITED FOR W HICH THE ASSESSEE HAS RECEIVED PAYMENTS IN FOUR INSTALMENTS. T HE AO ALSO OBSERVED THAT DURING THE COURSE OF RE-ASSESSMEN T PROCEEDINGS, THE ASSESSEE COULD EXPLAIN THE DETAILS OF FIRST THREE PAYMENTS, AMOUNTING TO RS.2,10,00,000/- BUT COULD NOT EXPLAIN THE FOURTH PAYMENT OF RS.10 LAKHS. SINCE THE AS SESSEE FAILED TO SUBMIT THE DETAILS, THE AO TREATED THE SUM OF RS .10 LAKHS AS UN-EXPLAINED AND ADDED THE SAME TO THE SAL E CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS. 7.1. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHO CONFIRMED THE ADDITION AS THE ASSESSEE CO ULD NOT FILE ANY SUBSTANTIAL EVIDENCE AND THE ASSESSEES REPRE SENTATIVE HAD WITHDRAWN HIS VAKALAT. HENCE, THE ASSESSEE IS IN SECOND APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS IN I TA NO.1418/HYD/2016: 1.YOUR APPELLANT SUBMITS THAT THE ISSUE NOTICE UND ER SECTION 148 IS BAD IN LAW. 2. YOUR APPELLANT SUBMIT THAT THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACT THAT ON ISSUE OF NOTICE UNDER SECTION 148 THE ASSESSMENT UNDER SECTION 144 HAS BEEN EFFACED, CONSEQUENTLY THE ASSESSING OFFICER CANNOT ASSESS THE INCOME AS PER ORDER UNDER SECTION 144 WITHOUT THERE BEING A SPEAKING ORDER ON THE ADDITIONS ENVISAGED, FAILING WHICH THE ASSES SMENT UNDER SECTION 143(3) R.W.S.147 IS BAD IN LAW AND THE RETU RN OF INCOME HAS TO BE ACCEPTED IN TOTO. 3. YOUR APPELLANT SUBMITS THAT THE NOTICE UNDER SEC TION 148 MAY HAVE BEEN ISSUED ON AUDIT OBJECTION OR DIFFERENCE OF OPI NION, THERE IS NO ITA NOS. 1417 & 1418/HYD/2016 :- 5 -: INCOME ESCAPED ASSESSMENT, ALL THE DETAILS WERE AVA ILABLE ON RECORD AT THE TIME OF ORIGINAL ASSESSMENT ITSELF. 4. WITHOUT PREJUDICE TO THE ABOVE, YOUR APPELLANT T AKES THE FOLLOWING GROUNDS ON MERITS WITH REGARD TO THE DEEMED DISALLOWANCES/ADJUSTMENTS THE ASSESSING OFFICER ENV ISAGED SO AS TO COMMENCE THE ASSESSMENT WITH 'INCOME AS PER THE ORD ER UNDER SECTION 143(3) R.W.S.144': A. YOUR APPELLANT SUBMIT THAT THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FAC T THAT FAIR MARKET VALUE AS ON 1-4-1981 AS PER THE CERTIFICATE OF SUB- REGISTRAR WHICH IS NOT CORRECT. B. THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGH T TO HAVE ADOPTED THE VALUE OF LAND AS ON 1-4-1981 AT RS. 100 0 PER SQ YRD AND NOT THE VALUE AS PER THE SRO REGISTER AT RS . 75/- PER SQ YRD. YOUR APPELLANT SUBMITS THAT VALUE AS PER SR O REGISTER IS NOT THE FAIR MARKET VALUE AS ON 1-4-1981. C. THE CIT(A) OUGHT TO HAVE FAIRLY ESTIMATED THE VA LUE OF LAND PER SQ YRD BASED ON VARIOUS JUDICIAL PRONOUNCEMENT OF ITAT AS WELL HIGH COURTS INCLUDING THE JURISDICTIONAL ITAT AND HIGH COURT INSTEAD OF UPHOLDING THE ORDER OF THE ASSESSI NG OFFICER, WHICH IS BAD IN LAW. D. YOUR APPELLANT SUBMITS THAT, IT WAS BROUGHT TO T HE NOTICE OF THE CIT(A) THAT AS PER SALE DEEDS THE ACTUAL UNDIVI DED SHARE OF LAND FALLING TO THE SHARE OF YOUR APPELLANT TRANSFE RRED IS 1476.89 SQ. YRDS AS AGAINST 1010.31 SQ. YRDS AS CLA IMED IN THE RETURN AND THE ACTUAL BUILT UP AREA TRANSFERRED IS 300 SQ. FT. AS AGAINST 200 SQ. FT. AS CLAIMED IN THE RETURN, WH ICH SHOULD HAVE BEEN CONSIDERED BY THE CIT(A) IN HIS ORDER AND DIRECTED THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS ACCORDINGLY . E. THE CIT(A) AS WELL AS THE ASSESSING OFFICER ARE WELL AWARE OF THE FACT THAT YOUR APPELLANT IS A NON-RESIDENT AND HAD INCURRED THE TRAVELLING EXPENSES FOR THE PURPOSE OF DISPOSIN G THE PROPERTY OUGHT TO HAVE ALLOWED THE AMOUNT OF RS. 65 ,000/- BEING EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY I N CONNECTION WITH SUCH TRANSFER. F. THE CIT(A) AS WELL AS THE ASSESSING OFFICER OUGH T TO HAVE ALLOWED THE AMOUNT OF RS. 2,50,000/- BEING BROKERAGE/COMMISSION PAID, BEING EXPENDITURE INCURR ED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. ITA NOS. 1417 & 1418/HYD/2016 :- 6 -: 5. THE ASSESSING OFFICER ERRED IN LAW AND FACTS OF THE CASE BY ADDING A FURTHER AMOUNT OF RS. 10,00,000/- TO THE CAPITAL GAINS ASSESSED AS PER SECTION 144, IGNORING THE FACT THAT FULL VALUE OF THE CONSIDERATION RECEIVED HAS BEEN CONSIDERED AT RS. 1,09,07,265 AS PER SRO VALUE AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS.95,00,0 0/- OR RS. 1,05,00,000/- (INCLUSIVE OF RS. 10,00,000), THE ADD ITION IS BAD IN LAW. 6. YOUR APPELLANT SUBMITS THAT WHILE COMPUTING THE CAPITAL GAINS THE SRO VALUE OF RS.1,09,07,625 HAS BEEN CONSIDERED, TH E ADDITION OF RS. 10,00,000/- WOULD AMOUNT TO DOUBLE TAX OF THIS AMOU NT, WHICH IS ALREADY INCLUDED IN THE FULL VALUE OF CONSIDERATION RECEIVED OF RS. 1,09,07,625/-, AS PER SECTION 50C OF THE INCOME TAX ACT, 1961, WHICH IS NOT DISPUTED. THE ADDITION OF RS.10,00,000/- MAY BE DELETED. 8. WE FINE THAT SINCE THE ASSESSEE DID NOT FILE THE DE TAILS BEFORE THE AO AND CIT(A), THE ADDITION OF RS.10 LAKHS HAS BEEN CONFIRMED. IN THE INTEREST OF JUSTICE, WE ARE IN CLINED TO SET ASIDE THE ASSESSMENT U/S.143(3) R.W.S.147 OF THE ACT A ND DIRECT THE AO TO RE-DO THE ASSESSMENT, AFTER GIVING A FAI R OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE RESULT, ITA NO.1418/HYD/2016 IS ALSO TREATED AS ALLOWED FOR STATIST ICAL PURPOSES. 9. TO SUM-UP, BOTH THE APPEALS OF ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2020 SD/- SD/- ( A. MOHAN ALANKAMONY ) ( P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 11-03-2020 TNMM ITA NOS. 1417 & 1418/HYD/2016 :- 7 -: COPY TO : 1. SMT.SHOBHA SHARMA, C/O.M.ANANDAM & CO., CHARTERE D ACCOUNTANTS, 7A, SURYA TOWERS, S.P.ROAD, SECUNDERAB AD. 2. DEPUTY DIRECTOR OF INCOME TAX, INTERNATIONAL TAX ES-II, HYDERABAD. 3. CIT(APPEALS)-V, HYDERABAD. 4. THE ADDL.DIT(IT)-HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.