Niharika Estates Pvt. Limited, Kolkata V. ITO, WD-3(3), KOLKATA, Kolkata

ITA 1460/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9593 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2016
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI ABY T.VARKEY, JM & DR.ARJUN L AL SAINI, AM ] I.T.A NO.1460/KOL/201 6 ASSESSMENT YEAR : 2007-0 8 NIHARIKA ESTATES (P)LTD. -VS.- I.T.O., W ARD-3(3), KOLKATA KOLKATA [PAN : AAACN 8743 J] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT : NONE DATE OF HEARING : 28.12.2016. DATE OF PRONOUNCEMENT : 06 .01.2017. ORDER PER ABY T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-5, KOLKATA DATED 26.05.2016 FOR AY 2007-08. 2. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THOUGH HE HAS RAISED FIVE GROUNDS THE ASSESSEE IS NOT PRESSING G ROUND NOS. 3, 4 AND 5. THEREFORE GROUND NOS. 3,4,AND 5 ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 1 AND 2 RAISED BY THE ASSESSEE AR E IN RESPECT TO ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO UNDER THE HEAD CAPITAL GAIN WITHOUT REFERRING THE MATTER TO THE DVO. 4. THE BRIEF FACTS OF THE CASE IS THAT THE ASSE SSEE COMPANY FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,77,773/- WHICH WAS L ATER ON SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD SOLD THE PROPERTY AT P- 2 ITA NO.1460/KOL/2016 NIHARIKA ESTATES (P)LTD. A.YR.2007-08 2 4, CIT ROAD, GROUND FLOOR, SCHEME-VIM,KOLKATA-70005 4 ON 2.11.2006 TO SHRI PRADIP KUMAR AGARWAL FOR RS.11,00,000/-. THE AO NOTICED TH AT FOR THE PURPOSE OF REGISTRATION MARKET VALUE WAS DETERMINED AT OF RS.24,20,000/- ( I.E VALUE FOR THE PURPOSE OF LEVY OF STAMP DUTY AND REGISTRATION OF DEED OF CONVEYANCE). THE AO THEREAFTER ISSUED A LETTER TO THE ASSESSEE COMPANY ON 04.12.2009 TO SHOW CAUSE AS TO WHY THE VALUE OF RS.24,20,000/- SO ADOPTED BY THE STAMP VALUATION AU THORITIES SHOULD NOT BE TAKEN AS THE FULL VALUE OF CONSIDERATION RECEIVED AS A RESULT OF SALE OF PROPERTY. ACCORDING TO THE AO, SINCE NO REPLY WAS RECEIVED FROM THE ASSESSEE, HE C ALCULATED THE LONG TERM CAPITAL GAIN AT RS.17,14,646/-. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE APPEAL. AGGRIEVED TH E ASSESSEE IS BEFORE US. 5. NONE APPEARED ON BEHALF OF THE DEPARTMENT. HO WEVER, ON PERUSAL OF THE RECORDS WE ARE OF THE OPINION THAT WE CAN DISPOSE OF THIS APPE AL AFTER HEARING THE LD. AR. WE HAVE HEARD THE LD. AR AND PERUSED THE RECORDS. WE FIND T HAT THE ISSUE IS NO LONGER RE-INTEGRA. FROM A PERUSAL OF THE GROUNDS RAISED, IT IS CLEAR T HAT THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE AO, NOT TO REFER TO THE DVO BEFORE COMPUTING THE CAPITAL GAIN. SIMILAR PLEA WAS RAISED BY AN ASSESSEE BEFORE THE HONBLE C ALCUTTA HIGH COURT WHEREIN THE JURISDICTIONAL HIGH COURT VIDE ORDER IN GA NO.3686 OF 2013, ITAT NO.221 OF 2013 ORDER DATED 13 TH MARCH, 2014 DEALT WITH THE ISSUE SIMILAR TO THAT W HAT IS BEING AGITATED BEFORE US. THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT WHILE INTERPRETING CLAUSE (A) AND (B) OF SUB-SECTION 2 OF SECTION 50 C OF THE ACT AS UNDER :- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A DVANCED BY THE LEARNED ADVOCATES APPEARING FOR THE PARTIES. THE SUBMISSION OF MS. GH UTGHUTIA THAT THE REQUIREMENT OF CLAUSES A) AND (B) OF SUB-SECTION 2 OF SECTION 50C HAS NOT BEEN MET BY THE ASSESSEE, CAN HARDLY BE ACCEPTED. THE REQUIREMENT OF CLAUSE (B) O F SUB-SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQ UIREMENT OF CLAUSE (A) OF SUB-SECTION 2 OF SECTION 50C WAS MET BY THE ASSESSEE. WE HAVE ALREADY SET OUT HEREINABOVE THE REC ITAL APPEARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRE SUMABLY, THE CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILING PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSI TION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT SUB REGISTRAR WAS THE F AIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENCE CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER 3 ITA NO.1460/KOL/2016 NIHARIKA ESTATES (P)LTD. A.YR.2007-08 3 ACCEPT IT OR DISPUTE IT. THE ASSESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB- REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGRE ED CONSIDERATION OF A SUM OF RS.I0 LAKHS WHICH, ACCORDING TO THE ASSESSEE, WAS THE HIG HEST PREVAILING MARKET PRICE. IT WOULD FOLLOW AUTOMATICALLY THAT HIS CASE WAS THAT THE FAI R MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS ASSESSED BY THE DISTRICT SUB REGI STRAR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, IN FAIRNESS, HAVE GIVEN A N OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICE R CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COURSE, IN ALL SUCH CASES THE ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPARTME NTAL VALUATION OFFICER. FOR THE AFORESAID REASONS, WE ARE OF THE OP INION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INT END THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CA RE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THER E IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSESSEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSESSING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUN DEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COU RSE PROVIDED BY LAW. FOR THE AFORESAID REASONS, THE ORDER UNDE R CHALLENGE IS SET ASIDE. THE IMPUGNED ORDER INCLUDING ORDERS PASSED BY THE CIT(A) AND THE ASSESSING OFFICER ARE ALL SET ASIDE. THE MATTER IS REMANDED TO THE AS SESSING OFFICER. HE SHALL REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER IN ACCORDANCE WITH LAW. AFTER SUCH VALUATION IS MADE, THE ASSESSMENT SHALL BE MADE DE NOVO IN ACCOR DANCE WITH LAW. 6. IN THE LIGHT OF THE JURISDICTIONAL HIGH COU RTS RATIO (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND THE MATTER IS REMANDED TO THE ASSESSING OFFICER. HE SHALL REFER THE MATTER TO THE DEPARTMENTAL VALUAITON OFFICER IN ACC ORDANCE WITH LAW. AFTER SUCH VALUATION IS MADE, THE ASSESSMENT SHALL BE MADE DE NOVO IN ACCORDANCE WITH LAW. 7. IN THE RESULT THE APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 06. 01.2017. SD/- SD/- [DR.A.L.SAINI] [ ABY T.VARKEY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 06 . 01.2017. [RG PS] 4 ITA NO.1460/KOL/2016 NIHARIKA ESTATES (P)LTD. A.YR.2007-08 4 COPY OF THE ORDER FORWARDED TO: 1.NIHARIKA ESTATES PVT. LTD., P-1, HIDE LANE, 9 TH FLOOR, KOLKATA-700073. 2. I.T.O., WARD-3(3), KOLKATA. . 3..CIT(A)-5, KOLKATA 4. CIT 5, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES