SANDEEP SHARMA, Jaipur V. ACIT, Jaipur

ITA 15/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5198 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 143(3); 50C; 133(6)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 15/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. SHRI SANDEEP SHARMA, AA-5, ANITA COLONY, BAJAJ NAGAR, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ADUPS 5851 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 09/08/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE PERTAINING TO ASSESSMEN T YEAR 2011-12 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 15.12.2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 69,5 0,536/- MADE BY LD. AO BY INVOKING THE PROVISION OF SECTION 50C AND THEREB Y COMPUTING INCOME FROM LONG TERM CAPITAL GAIN AT RS. 66,03,683/- AS A GAINST LONG TERM CAPITAL LOSS OF RS. 3,46,853/- CLAIMED BY THE ASSESSEE, ARB ITRARILY. 1.1. THAT THE LD. CIT (A) HAS FURTHER ERRED IN NOT APPRE CIATING THE FACT THAT SALE OF PROPERTY WAS MADE THROUGH AGREEMENT TO SALE AND SUCH TRANSACTION WAS NOT REGISTERED WITH REVENUE AUTHORI TIES, ADDITION MADE BY LD. AO BY INVOKING THE PROVISION OF SECTION 50C AND COMPUTING THE INCOME FROM CAPITAL GAIN BY ADOPTING THE DLC RATE @ RS. 6,970/- PER SQUARE FEET WITHOUT DETERMINING THE FAIR MARKET VAL UE DESERVES TO BE DELETED. 2 ITA NO 15/JP/2015 SHRI SANDEEP SHARMA. 1.2. THAT THE LD. CIT (A) HAS FURTHER ERRED IN NOT BRING ING ON RECORD ANY MATERIAL TO ESTABLISH THE FACT THAT DLC RATE SO ADO PTED IS IN CONSONANCE TO THE FAIR MARKET VALUE OF THE PROPERTY, THUS THE ADDITION MADE MERELY ON ASSUMPTION AND PRESUMPTION DESERVES TO BE DELETED. 1.3. THAT THE LD. CIT (A) HAS FURTHER FAILED TO PROPERTY APPRECIATE THE OBJECTIONS RAISED BY THE ASSESSEE IN ADOPTING THE D LC PRICE AS SALE CONSIDERATION WHEN THE ASSESSEE HAS CLAIMED TO CHAR GE THE REAL TIME PRICE FULLY COMMENSURATE WITH THE OPEN MARKET, THUS THE ADDITION MADE WITHOUT BRINGING ON RECORD ANY COGENT MATERIAL DESERVES TO BE DELETED. 1.4. THAT THE LD. CIT (A) HAS ERRED IN IGNORING THE FACT OF NOT MAKING THE REFERENCE TO DVO WHEN THE ASSESSEE HAS RAISED THE S ERIOUS OBJECTIONS REGARDING ADOPTION OF THE DLC RATE BASED ON STAMP V ALUATION AUTHORITIES WHICH IS AGAINST THE PRINCIPAL OF NATUR AL JUSTICE THUS INCOME FROM CAPITAL GAIN COMPUTED WITHOUT AFFORDING THE PR OPER OPPORTUNITY TO THE ASSESSEE DESERVES TO BE HOLD BAD IN LAW AND ON FACTS AND ADDITION MADE DESERVES TO BE DELETED. 1.5. THAT THE LD. CIT (A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE AREA SOLD REPRESENTS TOTAL SUPER BUILT UP AREA WHEREAS T HE PRICE PAID IS FOR BUILT UP AREA THUS, THE DLC RATE IF APPLIED, SAME S HOULD BE COMPUTED WITH REFERENCE TO BUILT UP AREA. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED UNDER SECTIO N 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DAT ED 18.03.2014. WHILE FRAMING THE ASSESSMENT, THE AO COMPUTED CAPITAL GAIN BY ADOPTIN G THE VALUE ON THE BASIS OF DLC RATE. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFER RED APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APP EAL. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 4. THE EFFECTIVE GROUND IN THIS APPEAL IS AGAINST A DOPTING THE SALE VALUE OF THE PROPERTY ON THE BASIS OF DLC RATE. 3 ITA NO 15/JP/2015 SHRI SANDEEP SHARMA. 4.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF AND SUBMITTED THAT THE AUTHORITIES BE LOW WERE NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF DLC RATE. THE LD. COUN SEL SUBMITTED THAT THE MANDATE OF THE PROVISIONS OF SECTION 50C IS THAT WHERE THE ASS ESSEE CLAIMS BEFORE THE AO THAT THE VALUE ADOPTED OR ASSESSABLE BY STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) OF SECTION 50C EXCEEDS THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER, THE AO MAY REFER THE ISSUE OF VALUATION OF THE CAPITAL ASSET T O A VALUATION OFFICER. THE LD. COUNSEL SUBMITTED THAT SUB-SECTION (2) PROVIDES THA T IN CASES WHERE THE ASSESSEE HAS OBJECTED TO THE ADOPTION OF VALUE DETERMINED BY STAMP VALUATION AUTHORITY AS THE FAIR MARKET VALUE, THE ASSESSING OFFICER HAS TO MAKE A REFERENCE TO THE VALUATION OFFICER U/S 55A OF THE ACT. IT IS CONTENDED THAT T HIS REFERENCE U/S 50C(2) HAS BEEN HELD TO BE MANDATORY AND NOT OPTIONAL. THE LD. COU NSEL PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF MINAKESHI VS. ACIT, 226 CTR 625. IT WAS HELD THAT RIGHT OF ASSESSEE U/S 50 C IS A VALUABLE STATUTORY RIGHT AVAILABLE TO PROTECT HIS INTEREST AGAINST ARBITRARI NESS WHICH MAY CREEP IN WHILE FIXING THE VALUE OF CAPITAL GAIN AND IT IS THE SAFEGUARD G IVEN TO THE ASSESSEE. THE SAID RIGHT HAS BEEN HELD TO BE MORE EFFECTIVE IN CASES WHERE T HE PARTIES TO THE DOCUMENT HAVE NOT TAKEN ANY STEPS TO DEFEND OR TO INITIATE PROCEE DINGS UNDER STAMP LAW. THE LD. COUNSEL PLACED RELIANCE ON THE FOLLOWING DECISIONS :- SUNIL KUMAR AGARWAL VS. CIT GA NO. 3686 OF 2013 (CAL.HC) ABBAS I. RESAMWALA VS. ITO ITA NO. 3093/MUM/2009 (BCAJ VOL. 41-B MAG. PAGE 33 ). A.SHAIK MOHIDEEN VS. ITO 123 TTJ 411 (CHENNAI-A) 4 ITA NO 15/JP/2015 SHRI SANDEEP SHARMA. THE LD. COUNSEL SUBMITTED THAT THE ACTION OF THE AO IN ADOPTING THE VALUE ADOPTED BY STAMP VALUATION AUTHORITIES TO BE THE FULL VALUE OF SALE CONSIDERATION WITHOUT REFERRING THE MATTER TO VALUATION OFFICER IS BAD IN LAW AND DEFIES THE PROCEDURE LAID DOWN U/S 50C(2) AND ACCORDINGLY RENDERS THE ENTIRE ASSESSMENT ORDER DEFECTIVE AND BAD IN LAW WHICH DESERVES TO BE STRUCK DOWN AND THE CONSEQUENT ADDITION OF RS. 69,50,536/- DESERVES TO BE DELETED. ALTERNATIVELY, THE LD. COUNSEL SUBMITTED THAT THE MATTER MAY BE SENT BACK TO THE FILE OF THE AO FOR F RESH CONSIDERATION IN THE LIGHT OF OBJECTION TO VALUATION MADE BY ASSESSEE VIS--VIS A S PROVIDED U/S 50C(2) OF THE ACT. 4.2. ON THE CONTRARY, THE LD. D/R SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO HAD ISSUED SHOW CAUSE NOTICE FOR ADOPTING SALE CONSIDERATION ON THE BASIS OF DLC RATE. IN RESPONSE THERETO, THE ASSESSEE HAS DULY REPLIED AND OBJECTED TO THE ADOPTION OF SUCH DLC RA TE. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE AO HAS APPLIED DLC RATE . THE AO IN THE ASSESSMENT ORDER HAS OBSERVED THAT THE PRESENT CASE NEEDS NO R EFERENCE TO THE DVO SINCE THE ASSESSEE DID NOT CLAIM BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS MORE THAN THE FAIR MARKET VALUE OF TH E SAID PROPERTY. THIS OBSERVATION OF THE AO IS CONTRARY TO THE REPORT AS IN THE ASSES SMENT ORDER ITSELF, THE AO HAS REPRODUCED AS UNDER :- SO FAR AS YOUR PROPOSAL TO ADOPT THE DLC PRICE AS THE SALE CONSIDERATION FOR COMPUTATION OF CAPITAL GAINS, THE ASSESSEE WOULD LIKE TO STRONG OBJECT TO IT AND WOULD LIKE TO SUBMIT THE FOLLOWING MOST IMPORTANT FACTORS WHICH EFFECT THE VALUATION OF PRO PERTY UNDER QUESTION :- 5 ITA NO 15/JP/2015 SHRI SANDEEP SHARMA. 1. LOCATION OF THE PROPERTY 2. AREA OF THE PROPERTY 3. USAGE OF THE PROPERTY THIS IS ALSO LASTLY SUBMITTED THAT IN THE EVENT THE SUBMISSION OF THE ASSESSEE IS NOT ACCEPTABLE THE ASSESSEE MAY BE AFFO RDED AN OPPORTUNITY TO CHALLENGE THE VALUATION ARRIVED AT B Y YOUR GOODSELF AND ALSO ADVISE THE PROPER FORM WHERE SUCH A CHALLENGE TO THE VALUATION COULD BE MADE AS THE STAMP AUTHORITY DOES NOT ENTER TAIN A CASE OF APPEAL UNLESS THE VALUATION IS UNDER DISPUTE AND IS BASED ON THE ORDERS FOUND APPEALABLE UNDER THE STAMPS ACT AS THE VALUAT ION WHICH MAY BE ADOPTED BY ANY ASSESSING AUTHORITY UNDER INCOME TAX ACT IS NOT APPEALABLE BEFORE THE STAMPS AUTHORITY WHICH IS A S ERIOUS ANOMALY WHICH DEROGATES THE RIGHTS OF APPEAL OF THE ASSESSE E. THE LD. CIT (A) ALSO DID NOT CONSIDER THE SUBMISSIO NS OF THE ASSESSEE. THE LD. CIT (A) HAS DECIDED THE ISSUE IN PARA 2.4 OF HIS ORDER AS UNDER : 2.4. IN THIS BACKGROUND WHEN THE PROVISIONS OF SEC TION 50C ARE APPLICABLE TO THE TRANSACTION IN QUESTION, IT WAS T HE DUTY OF THE ASSESSING OFFICER TO DETERMINE THE VALUE ASSESSABL E BY THE STAMP DUTY AUTHORITIES. THE ASSESSING OFFICER HAS OBTAINED THE ASSESSABLE VALUE OF THE PROPERTY BY MAKING INQUIRIES U/S 133(6) WITH TH E STAMP DUTY VALUATION AUTHORITIES. THE VALUE GIVEN BY THE STAMP DUTY VALUATION AUTHORITIES IS RS. 6970 PER SQ. FT. OF BUILT UP ARE A. IT IS NOT REQUIRED OF THE ASSESSING OFFICER TO ESTABLISH THAT THE DLC RAT E SO ADOPTED IS IN CONSONANCE OF THE FAIR MARKET VALUE OF THE PROPERTY . THEREFORE, GROUND NO. 1.2 IS DISMISSED. ON THE FINDINGS OF BOTH THE AUTHORITIES BELOW, IT I S EVIDENT THAT THEY HAVE NOT APPRECIATED THE ISSUE IN RIGHT PERSPECTIVE. THE ASS ESSEE HAS OBJECTED TO THE VALUATION OF THE PROPERTY ON THE BASIS OF STAMP VAL UATION AUTHORITYS RATE. THEREFORE, IN OUR CONSIDERED VIEW, THE AO OUGHT TO HAVE REFERR ED THE ISSUE OF VALUATION OF CAPITAL ASSET TO THE VALUATION OFFICER. IN THE LIG HT OF ABOVE DISCUSSION, WE HEREBY SET ASIDE THE IMPUGNED ORDER AND RESTORE THE ISSUE TO T HE FILE OF THE AO FOR DENOVO ASSESSMENT. THE AO IS HEREBY DIRECTED TO REFER THE ISSUE OF CAPITAL ASSET TO THE 6 ITA NO 15/JP/2015 SHRI SANDEEP SHARMA. VALUATION OFFICER IN TERMS OF SECTION 50C(2) OF THE ACT AND AFTER RECEIVING THE VALUATION REPORT, COMPUTE CAPITAL GAIN ACCORDINGLY. NEEDLESS TO SAY THAT THE ASSESSING OFFICER WOULD AFFORD REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09/08/201 6. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 09/08/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI SANDEEP SHARMA, JAIPUR. 2. THE RESPONDENT- THE ACIT CIRCLE-6, JAIPUR. 3. THE CIT, 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 15/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR