Masud Ahmed Qureshi, Jalna V. Income-tax Officer,

ITA 143/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93817 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.143/PN/2014 (ASSESSMENT YEAR : 2008-09) SHRI MASUD AHMED QURESHI, GUD GALLI, MANGAL BAZAAR, JALNA 431 203 PAN NO. AADPQ6006H .. APPELLANT VS. ITO, WARD-1(3), JALNA .. RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI Y.K. BHASKAR DATE OF HEARING : 10-06-2015 DATE OF PRONOUNCEMENT : 12-06-2015 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22-11-2013 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT (APPEAL), AURANGABAD HAS ERRED IN CONFIR MING THE VALUE ADOPTED BY THE A.O. U/S.50 C TO THE TUNE OF RS. 4768571/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. HAS . ADOPTED THE VALUE OF RS.4768571/- IN SPITE OF T HE FACT THAT THE ASSESSEE HAS RAISED OBJECTION THAT VALUE DETERMINED BY REVENUE AUTHORITY IS EXCESSIVE, WHICH THE HON'BLE CIT (APPEAL) HAS ERRED IN CONFIRMING THE SAME. 3. THE APPELLANT CRAVES TO LEAVE, TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL. 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT AS PER THE INFORMATION AVAILABLE ON RECORD, THE AO NOTED THAT THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND SITUATED AT SUR VEY NO.270, MANTHA BY-PASS FOR RS.4,10,000/- ON 30-10-2000 WHICH HE SOLD FOR RS.5 LAKHS ON 08-05-2007. ON VERIFICATION OF THE AFORESAID SALE DEED, IT WAS NOTICED THAT THE MARKET VALUE OF THE SAID PROPERTY FOR THE PURPOSE OF STAMP DUTY WAS RS.60,80,000/-. HOWEVER, THE ASSESSEE CHALLENGED THE VALUATION BEFORE THE COLLECTOR OF STAMPS, JALNA BY MAKING AN ADJUDICATION APPLICATION AND ACCORDINGLY, THE COLLECTOR OF STAMPS, JALNA DETERMINED THE MARKET VALUE OF THE LAND FOR STAMP DUTY PURPOSES AT RS.53,25,000/- U/S.32(B) OF THE BOMBAY STAMP ACT, 1958 READ WITH ARTICLE 25(B) OF SCHEDULE -I OF BOMBAY STAMP ACT, 1958. THE AO FURTHER NOTED THAT THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME DECLARING CAPITA L GAIN ON SALE OF THE SAID LAND. THEREFORE, THE AO ISSUED N OTICE U/S.148 OF THE I.T. ACT. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED RETURN OF INCOME ON 13-10-2011 DECLARING TO TAL INCOME OF RS.2,33,300/-. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN ALONG WITH THE REVISED COMPUTATION ON 31- 12- 2012 DECLARING TOTAL INCOME OF RS.1,11,047/- AND AGRICULTURAL INCOME OF RS.1,01,047/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAD COMPUTED THE LONG TERM C APITAL GAIN IN THE ORIGINAL RETURN AT RS.1,21,996/- BY DISCLOSING AS UNDER : 3 INCOME FROM LONG TERM CAPITAL GAIN SALE OF ITEMS AS PER LIST ENCLOSED 53,25,000 LESS: (COST OF ACQUISITION ETC.) INDEXATION COST OF ACQUISITION 5,56,429 INDEXATION COST OF IMPROVEMENT 46,11,575 COST OF TRANSFER 35,000 52,03,004 LESS : EXEMPTIONS U/S.54B, 54D/54G ETC.) EXEMPTION U/S.54F NIL 1,21,996 HOWEVER, IN THE REVISED RETURN, THE LONG TERM CAPITAL WAS DECLARED AT NIL. THE AO IN THE ASSESSMENT AFTER CONSIDERIN G THE INDEXED COST OF ACQUISITION AT RS.5,56,429/- DETERMINED THE LONG TERM CAPITAL GAIN AT RS.47,68,571/-. SIMILARLY, HE ALSO DETERMINED THE INCOME FROM HOUSE PROPERTY AT RS.4,45,200/- AS AGAINST RS.1,11,300/- DECLARED BY THE ASSESSEE. ACCORDINGLY, THE AO DETERMINED THE TOTAL INCOM E OF THE ASSESSEE AT RS.52,13,771/-, I.E. (CAPITAL GAIN RS.47,68,571 + HOSE PROPERTY INCOME - RS.4,45,200). 5. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE DETERMINATION OF CAPITAL GAIN AT RS.47,68,571/- AS AGAINST RS.1,21,996/- CLAIMED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.148. THE COST OF IMPROVEMENT CLAIMED AT RS.46,11,578/- AND RS.35,000/- TOWARDS COST OF TRANSFER WA S WITHDRAWN BEFORE THE CIT(A) ON THE GROUND THAT DUE TO MISTAKE OF THE PERSON WHO PREPARED THE RETURN OF INCOME SUCH CLAIM WAS MADE. HOWEVER, THE ASSESSEE CHALLENGED THE ACTION OF THE AO IN NOT ALLOWING SUFFICIENT TIME TO PRODUCE TH E VALUATION REPORT OF THE PROPERTY DURING ASSESSMENT PROCEEDINGS. 6. HOWEVER, THE LD.CIT(A) REJECTED THE ABOVE CONTENTION OF THE ASSESSEE ON THE GROUND THAT DESPITE HAVING SUFFICIENT TIME THE ASSESSEE DID NOT PRODUCE VALUATION OF THE PROPERTY EITHER 4 DURING ASSESSMENT PROCEEDINGS OR BEFORE HIM DURING APPELLA TE PROCEEDINGS. HE ACCORDINGLY HELD THAT THE LONG TERM CAP ITAL GAIN DETERMINED BY THE AO AT RS.47,68,571/- IS JUSTIFIED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS AGAINST THE SALE PRICE OF RS.5 LAKHS RECEIVED BY THE ASS ESSEE THE STAMP VALUATION AUTHORITY HAS DETERMINED THE VALUE O F THE PROPERTY FOR STAMP DUTY PURPOSE AT RS.60,80,000/- WHICH WAS SUBSEQUENTLY REDUCED TO RS.53,25,000/-. HE SUBMITTED TH AT ALTHOUGH THE ASSESSEE HAD NOT STRAIGHT AWAY ASKED THE AO OR THE CIT(A) TO REFER THE MATTER TO THE DVO FOR VALUATION O F THE PROPERTY, HOWEVER, IT WAS CATEGORICALLY STATED THAT ALTHO UGH AN AMOUNT OF RS.53,25,000/- WAS TAKEN DUE TO THE DEEMING PROVISION OF SECTION 50C, HOWEVER, NO SUCH AMOUNT WAS RECEIVED BY THE ASSESSEE FROM THE VALUE OF THE SAID LAND. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE B ENCH TO THE FOLLOWING SUBMISSION MADE BEFORE THE AO WHICH THE AO HIMSELF HAS INCORPORATED AT PAGE 6 OF HIS ORDER AND WHICH READS AS UNDER : REGARDING THE VALUE ADOPTED AT RS. 53,25,000/- BY THE PER SON BY WHOM THE RETURN IS PREPARED IT IS SUBMITTED THAT THE SAID AMOUNT FIGURE WAS CONSIDERED DUE TO THE DEEMING PROVISI ONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961. HOWEVER, NO SUCH AMOUNT IS RECEIVED BY ME OR THE VALUE OF SAID LAND, AS PER MARKET VALUE WAS NOT TO THE EXTENT OF RS. 53,25,000/- ON THE DATE OF SALE OF THIS PROPERTY. IN JALNA AREA THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY ARE BASED ON AS PER SQUARE FOOT AREA WHICH ARE NOT IS ANY WAS ADOPTED IN THE CASE OF LAND WHI CH IS AGRICULTURE LAND AND WHICH IS NOT NON AGRICULTURAL LAND. HE SUBMITTED THAT BEFORE CIT(A) ALSO THE ASSESSEE HAS ST ATED THAT THE AO DID NOT GIVE ANY OPPORTUNITY TO PRODUCE TH E 5 VALUATION OF THE PROPERTY TO THE ASSESSEE SO AS TO JUS TIFY THE ADDITION. 9. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF K.K. NAG LTD. VS. ADDL.CIT REPORTED IN 52 SOT 381 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT ALTHOUGH SECTION 50C IS A DEEMING PROVISION AND OSTENSIBLY INVOLVED IN CREATION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE, NOTWITHSTANDING THE PERSONS OF THE EXPRESSION MAY IN SECTION 50C(2)(A), THE AO OUGHT TO REFER THE MATTER TO T HE VALUATION OFFICER FOR ASCERTAINING THE VALUE OF THE CAPITAL ASS ET. HE ACCORDINGLY SUBMITTED THAT IN THE INTEREST OF JUSTICE THE MATTER MAY BE RESTORED TO THE FILE OF THE AO WITH A DIREC TION TO REFER THE MATTER TO THE DVO AND ACCORDINGLY RECOMPUTE THE CAPITAL GAIN. 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT NOWHERE THE ASSESSEE HAS ASKED THE AO OR THE CIT(A) T O REFER THE MATTER TO THE DVO FOR DETERMINING THE MARKET VALUE OF THE PROPERTY STATING THAT THE STAMP DUTY VALUATION IS MORE THAN THE MARKET VALUE, THEREFORE, THE ORDER OF THE CIT(A) SHOU LD BE UPHELD. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US . THERE IS NO DISPUTE TO THE FACT THAT IN THE INSTANT CASE AS AGAINST THE SALE CONSIDERATION OF RS.5 LAKHS DECLARED BY TH E 6 ASSESSEE FOR THE SALE OF THE LAND IN QUESTION, THE STAMP DUTY AUTHORITIES DETERMINED THE MARKET VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSES AT RS.53,25,000/- AND THE ASSESSEE HAS TAKEN THE SAME AS PER PROVISIONS OF SECTION 50C FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. IT IS THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT ALTHOUGH HE HAS NOT CATEGORICALLY REQUESTED THE AO TO REFER THE MATTER TO THE DVO AS PER THE PROVISIONS OF SECTION 50C(2), HOWEVER, IT WAS CATEGORICALLY STATED BEFORE THE AO THAT ASSESSEE HAS R ECEIVED ONLY RS.5 LAKHS AND THE VALUE OF THE LAND AS PER MARKET VALUE WAS NOT TO THE EXTENT OF RS.53,25,000/- ON THE DATE OF SALE OF THIS PROPERTY. IT WAS ALSO STATED BEFORE THE AO THAT IN JALNA AREA THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY AR E BASED ON SQ.FT. AREA BASIS. EVEN BEFORE THE CIT(A) ALSO THE ASSES SEE HAS MADE SIMILAR ARGUMENTS. THEREFORE, UNDER THESE CIRCUMSTANCES THE QUESTION THAT ARISES IS AS TO WHETHER THE AO SHOULD HAVE REFERRED THE MATTER TO THE DVO FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER WHEN THE ASSESSEE CLAIMS BEFORE HIM THA T THE MARKET VALUE OF THE PROPERTY IS NOT TO THE EXTENT OF TH E VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY. 12. WE FIND UNDER SOMEWHAT SIMILAR CIRCUMSTANCES THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF K.K.NAG LTD. (SUPRA) HAS OBSERVED AS UNDER : 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL STANDS AND FIND THAT THE PLEA OF THE ASSESSEE IS QUITE JUSTIFIED. SECTI ON 50C OF THE ACT PRESCRIBES FOR ADOPTION OF FULL VALUE OF CONSIDERA TION IN CERTAIN CASES. IT IS PROVIDED THAT WHERE THE CONSIDERAT ION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED BY AN AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE S OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE N THE 7 VALUE SO ADOPTED BY THE STATE GOVERNMENT AUTHORITY SH ALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVE D OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE SAID PROVISIONS OF SUB-SEC TION (1) OF SECTION 50C ARE FURTHER CIRCUMSCRIBED BY SUB-SEC TION (2) OF SECTION 50C. IN TERMS OF CLAUSE (A) OF SUB-SECTION (2) OF SECTION 50C, IT IS PROVIDED THAT WHERE AN ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UN DER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THEN THE ASSESSING OFFICER MAY REFER VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFIC ER. IN THIS CASE, FACTUALLY IT IS EVIDENT THAT THE ASSESSEE HAD CLAIMED I N THE RETURN OF INCOME ITSELF THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE AS ON THE D ATE OF TRANSFER AS PROVIDED IN SECTION 50C(2)(A) OF THE ACT. IN OUR VIEW, UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER OUGHT TO H AVE REFERRED THE MATTER TO THE VALUATION OFFICER INSTEAD OF STRAIGHTAWAY DEEMING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONSIDERATION. THE POI NT MADE OUT BY THE REVENUE THAT IT IS ONLY DISCRETIONARY ON THE P ART OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER, IN OUR VIEW, IS QUITE UNTENABLE. THE DISCRETION VESTED IN THE ASSESSING OFFICER, IN OUR CONSIDERED OPINION, IN SUCH A SI TUATION IS REQUIRED TO BE USED IN A JUDICIOUS MANNER. SECTION 50C OF THE ACT IS A DEEMING PROVISION AND OSTENSIBLY INVOLVE CREA TION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THEREFORE , NOTWITHSTANDING THE PRESENCE OF THE EXPRESSION 'MAY' IN SECTION 50C(2)(A), IN OUR VIEW, THE ASSESSING OFFICER IN THIS CA SE OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER F OR ASCERTAINING THE VALUE OF THE CAPITAL ASSET IN QUESTION. THEREFORE , IN THIS VIEW OF THE MATTER WITHOUT GOING INTO FURTHER MERITS OF THE DISPUTE, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) AND DIRECT THE ASSESSING OFFICER TO ADOPT THE COURSE MEN TIONED IN SECTION 50C(2)(A) OF THE ACT AND THEREAFTER PROCE ED TO DETERMINE CAPITAL GAIN ON SALE OF LAND AND BUILDING. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THIS REGA RD AND ADJUDICATE THE ISSUE AFRESH. THUS, ON THIS GROUND THE ASSE SSEE SUCCEEDS FOR STATISTICAL PURPOSES. 13. SINCE IN THE INSTANT CASE THE ASSESSEE HAD SUBMITTE D BEFORE THE AO THAT NEITHER HE HAS RECEIVED AN AMOUNT O F RS.53,25,000/- NOR THE MARKET VALUE OF THE PROPERTY IS RS.53,25,000/-, THEREFORE, FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL CITED (SUPRA), WE ARE OF THE CONSIDER ED OPINION THAT THE AO SHOULD HAVE REFERRED THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER. WE THEREFORE RESTORE THIS ISSUE TO THE FILE 8 OF THE AO WITH A DIRECTION TO REFER THE MATTER TO THE DV O FOR DETERMINING THE FAIR MARKET VALUE ON THE DATE OF TRANSFER OF THE PROPERTY AND COMPUTE THE CAPITAL GAIN ON THE BASIS OF SUCH REPORT OF THE DVO. NEEDLESS TO SAY THE AO SHALL D ECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 12-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 12TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), AURANGABAD 4. CIT, AURANGABAD 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE