M/s. Radhika Sales Corporation, Pune V. Additonal Commissioner of Income-tax,

ITA 1474/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1788 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1474 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 M/S. RADHIKA SALES CORPORATION, SHOP NO. 14, NEAR ARYA SAMAJ, PIMPRI COLONY, PIMPRI, PUNE 411017 PAN : AABFR2807D ....... / APPELLANT / V/S. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 8, PUNE / RESPONDENT ASSESSEE BY : MS. DEEPA KHARE REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 1 3 - 11 - 2018 / DATE OF PRONOUNCEMENT : 16 - 11 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 9, PUNE DATED 20 - 05 - 2016 FOR THE ASSESSMENT YEAR 20 11 - 12. 2 ITA NO . 1474/PUN/2016, A.Y. 2011 - 12 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSEE SOLD ITS LAND CO MPRISING IN S. NO. 259, CHINCHWAD, PUNE AND OFFERED GAIN ARISING FROM SALE OF LAND RS.1,02,85,427/ - AS LONG TERM CAPITAL GAIN. THE SALE CONSIDERATION AS DISCLOSED BY THE ASSESSEE IN RESPECT OF AFORESAID LAND WAS RS.1,10,00,000/ - . IN SCRUTINY ASSESSMENT P ROCEEDINGS THE ASSESSING OFFICER TOOK THE VALUE OF LAND AT RS.1,39,18,750/ - AS PER GOVERNMENT VALUATION FOR STAMP PURPOSE. THE ASSESSEE TOOK OBJECTION TO THE PROPOSED ENHANCEMENT , CONSEQUENTLY THE VALUATION OF PROPERTY WAS REFERRED TO THE DEPARTMENT VALUA TION OFFICER (DVO) UNDER THE PROVISIONS OF SECTION 50C(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). THE DVO VIDE HIS REPORT DATED 30 - 12 - 2013 ASSESSED THE VALUE OF PROPERTY AT RS.1,20,38,000/ - . THE ASSESSING OFFICER MADE ADDITION OF RS.10,38,000/ - I.E. THE DIFFERENCE BETWEEN THE VALUE ASSESSED BY DVO MINUS THE VALUE DECLARED BY ASSESSEE. AGGRIEVED AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 23 - 01 - 2014 PASSED U/S. 143(3), THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE FIRST APPELLATE AUTHORITY DISMISSED THE APPEAL OF ASSES SEE IN TOTO. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AND HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.10,38 ,000/ - ON ACCOUNT OF CAPITAL GAINS TOWARDS DIFFERENCE BETWEEN THE ACTUAL CONSIDERATION A ND VALUATION FOR STAMP PURPOSES U/S. 50C. 2. THE LEARNED CIT ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE MARKET VALUE OF THE IMPUGNED LAND SOLD WAS LESS TH AN VALUATION ADOPTED FOR STAMP DUTY PURPOSE WHICH DVO FAILED TO CONSIDER. THE LEARNED CIT(A) ERRED OUGHT TO HAVE CONSIDERED THE VARIOUS FACTORS AFFECTING THE PRICE OF THE LAND WHILE DECIDING THE FAIR MARKET VALUE. 3 ITA NO . 1474/PUN/2016, A.Y. 2011 - 12 3. T HE APPELLANT CRAVES TO ADD, ALTER, MODIFY OR SUBSTITUTE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3. MS. DEEPA KHARE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SOLD THE LAND FOR RS.1,10,00,000/ - . DURING SCRUTINY ASSESSMENT PROCEEDINGS THE DVO ASSESSED THE VALUE OF LAND IN QUESTION AT RS.1,20,38,000/ - . THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE ASSESSED BY THE DVO IS APPROXIMATELY 9.43% I.E. LESS THAN 10%. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTIONS VS. DE PUTY COMMISSIONER OF INCOME TAX REPORTED AS 38 DTR 19 AND IN THE CASE OF DATTATRAYA KERBA LONKAR VS. DEPUTY COMMISSIONER OF INCOME TAX IN ITA NO. 1818/PUN/2014 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 30 - 01 - 2017 HAS HELD THAT WHERE THE DIFFERENCE BETWEEN FAI R MARKET VALUE AS DETERMINED BY THE DVO AND THE ACTUAL SALE CONSIDERATION AS DISCLOSED BY THE ASSESSEE IS LESS THAN 10%, NO ADDITION IS TO BE MADE. THE LD. AR TO FURTHER STRENGTHEN HER SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HONBLE PATNA HIGH COUR T IN THE CASE OF BIMLA SINGH VS. COMMISSIONER OF INCOME TAX REPORTED AS 308 ITR 71. 4. ON THE OTHER HAND SHRI SUDHENDU DAS REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE RAISED IN THE APPEAL BY THE ASSESSEE IS AGAINST THE ADDITION OF RS.10,38,000/ - ON ACCOUNT OF DIFFERENCE IN LONG TERM CAPITAL GAIN 4 ITA NO . 1474/PUN/2016, A.Y. 2011 - 12 DECLARED BY THE ASSESSEE AND COMPUTED BY THE ASSESSING OFFICER AFTER CONSIDERING THE DVOS VALUATION REPORT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS DISCLOSED SALE CONSIDERATION OF THE LAND AS RS.1,10,00,000/ - . DURING THE SCRUTINY ASSESSMENT PROCEEDINGS REFERENCE WAS MADE TO DVO FOR THE VALUATION OF PROPERTY. THE DVO VIDE REPORT DATED 30 - 12 - 2013 DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AS RS.1,20,38,000/ - . THE DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION DECLARED BY THE ASSESSEE AND THE FAIR MARKET VALUE DETERMINED BY THE DVO IS APPROXIMATELY 9.43%. WE FIND THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DATTATRAYA KERBA LONKAR VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THE DECISION RENDERED IN THE CASE OF RAHUL CONSTRUCTIONS VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) AND THE JUDGMENT OF HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SINGH VS. COMMISSIONER OF INCOME TAX (SUPRA) HAS HELD AS UNDER : 8. WE FIND MERIT IN THE SUBMISSION OF LD. A.R. THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE DETERMINED BY THE DVO AND ACTUAL SALE CONSIDERATION IS RS.7,14,530/ - I.E SLIGHTLY MORE THAN 2 PER CENT OF THE SALE CONSIDERATION. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTION V/S. DCIT (SUPRA) HAS HELD THAT WHERE DIFFERENCE BETWEEN THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AND FAIR MARKET VALUE AS DETERMINED BY THE DVO U/S 50C IS LESS THAN 10 PERCENT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SUBSTITUTING TH E VALUE DETERMINED FOR SALE CONSIDERATION DISCLOSED BY THE ASSESSEE. THE CO - ORDINATE BENCH AFTER CONSIDERING THE PROVISIONS OF SECTION 50C OF THE ACT AND THE PROVISION OF SECTION 23A AND 24(5) OF THE WEALTH TAX ACT HELD AS UNDER : - 13. A COMBINED READIN G OF THE ABOVE PROVISIONS SHOWS THAT THE VALUATION ADOPTED BY THE DVO IS SUBJECT TO APPEAL AND THE SAME IS NOT FINAL. IN THE INSTANT CASE WE FIND THAT AS AAGAINST THE VALUE OF RS. 28,73,000/ - ADOPTED BY THE STAMP VALUATION AUTHORITIES, THE DVO HAS DETERMIN ED THE FMV ON THE DATE OF TRANSFER AT RS. 20,55,000/ - . THIS ITSELF SHOWS THAT THERE IS WIDE VARIATION BETWEEN THE TWO VALUES. FURTHER, THE VALUE ADOPTED BY THE DVO IS ALSO BASED ON SOME ESTIMATE. WE FIND THAT THE DIFFERENCE BETWEEN SALE CONSIDERATION SHOW N BY THE ASSESSEE AT RS.19,00,000/ - AND THE FMV DETERMINED BY THE DVO AT RS.20,55,000/ - IS ONLY RS. 1,55,000 WHICH IS LESS THAN 10 PER CENT. THE COURTS AND TRIBUNALS ARE CONSISTENTLY TAKING A LIBERAL APPROACH IN FAVOUR OF THE ASSESSEE WHERE THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY THE ASSESSEE AND THE VALUE ADOPTED BY THE DVO IS LESS THAN 10 PER CENT. 5 ITA NO . 1474/PUN/2016, A.Y. 2011 - 12 14. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT V/S. HARPREET HOTELS (P) LTD. VIDE ITA NOS. 1156 - 1160/PN/2000 AND RELIED ON BY T HE LEARNED COUNSEL FOR THE ASSESSEE HAD DISMISSED THE APPEAL FILED BY THE REVENUE WHERE THE CIT(A) HAD DELETED THE UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTION ON THE GROUND THAT THE DIFFERENCE BETWEEN THE FIGURE SHOWN BY THE ASSESSEE AND THE FIGURE OF THE DVO IS HARDLY 10 PERCENT. 15. SIMILARLY, WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S. KAADDU JAYGHOSH APPASAHEB, VIDE ITA NO.441/PN/2004 FOR THE ASST. YR 1992 - 1993 AND RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE FOLLOWING THE DECISION OF THE J&K HIGH COURT IN THE CASE OF HONEST GROUP OF HOTELS (P) LTD. V/S CIT (2002) 177 CTR (J&K) 232 HAD HELD THAT WHEN THE MARGIN BETWEEN THE VALUE AS GIVEN BY THE ASSESSEE AND THE DEPARTMENTAL VALUER WAS LESS THAN 10 PER CENT , THE DIFFERENT I S LIABLE TO BE IGNORED AND THE ADDITION MADE BY THE A.O CANNOT BE SUSTAINED. 16. SINCE IN THE INSTANT CASE SUCH DIFFERENCE IS LESS THAN 10 PER CENT AND CONSIDERING THE FACT THAT VALUATION IS ALWAYS A MATTER OF ESTIMATION WHERE SOME DEGREE OF DIFFERENCE BOUND TO OCCUR, WE ARE OF THE CONSIDERED OPINION THAT THE A.O. IN THE INSTANT CASE IS NOT JUSTIFIED IN SUBSTITUTING THE SALE CONSIDERATION AT RS.20,55,000 AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS.19,00,000/ - DISCLOSED BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO TAKE RS.19,00,000/ - ONLY AS THE SALE CONSIDERATION OF THE PROPERTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9. THE LD. A.R OF THE ASSESSEE HAS FURTHER PLACED RELIANCE ON THE DE CISION OF HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SINGH V/S. CIT (SUPRA) WHEREIN HONBLE HIGH COURT HAS HELD THAT DIFFERENCE BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND AS DETERMINED BY THE ASSESSING OFFICER BEING LESS THAN 15 PER CENT , THE SAME IS TO BE IGNORED FOR THE PURPOSES OF ADDITION. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S. SADNA GUPTA 352 ITA 595 HELD THAT UNLESS AND UNTIL THERE WAS SOME OTHER EVIDENCE TO INDICATE THAT EXTRA CONSIDERATION HAD FLOWED IN TRANSACTION F OR PURCHASE OF PROPERTY, REPORT OF DVO COULD NOT FORM BASIS OF ANY ADDITION ON PART OF REVENUE. IN ABSENCE OF ANY EVIDENCE NO RELIANCE COULD BE PLACED ON THE REPORT OF DVO FOR MAKING ADDITION. 10. THUS, IN VIEW OF THE FACT THAT THE DIFFERENCE BETWEEN SALE CONSIDERATION AND THE MARKET VALUE DETERMINED BY THE DVO IS NOT SUBSTANTIAL AND IS APPROXIMATELY LITTLE OVER 2 PER CENT OF THE ACTUAL SALE CONSIDERATION, WE FIND NO REASON FOR REJECTING ACTUAL SALE CONSIDERATION MENTIONED IN THE SALE DEED FOR DETERMINING LONG TERM CAPITAL GAIN. ACCORDINGLY, THE GROUND NO.1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO ADOPT ACTUAL SALE CONSIDERATION AS MENTIONED IN THE SALE DEED AS A FAIR MARKET VALUE FOR DETERMINING THE LONG TERM CAPITA L GAIN. 6 ITA NO . 1474/PUN/2016, A.Y. 2011 - 12 6. IN THE LIGHT OF THE FACTS OF THE CASE AND THE DECISIONS DISCUSSED ABOVE, WE FIND MERIT IN THE SUBMISSIONS OF ASSESSEE. IN THE PRESENT CASE, SINCE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE DETERMINED BY THE DVO IS LESS THAN 10% , NO ADDITION IN RESPECT OF LONG TERM CAPITAL GAIN S IS WARRANTED. THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ARE ACCORDINGLY, SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 16 TH DAY OF NOVEMBER, 2018 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 16 TH NOVEMBER, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 9, P UNE 4. / THE PR. CIT - 5, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE