ITO, Bangalore V. Shri. G. Basavaraju, Bangalore

ITA 151/BANG/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0669 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 19-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: P DINESH
• Keywords: Cost of acquisition; Valuation report; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.151/BANG/2007 ASSESSMENT YEAR : 2003-04 THE INCOME TAX OFFICER, WARD 8(2), BANGALORE. : APPELLANT VS. SMT. B. SUNITHA, L/R OF LATE SHRI G. BASAVARAJ, NO.323, 15 TH CROSS, SADASHIVANAGAR, BANGALORE. : RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI RESPONDENT BY : SHRI P. DINESH O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV FOR THE ASSESSMENT YEAR 2003-04, ORIGINAL LY, IN THE CASE OF G.BASAVARAJ AND SUBSEQUENTLY, THE REVENUE HAD FURN ISHED A REVISED FROM NO.36 IN THE NAME OF THE LEGAL HEIR - SMT.B.SUNITHA , D/O OF G.BASAVARAJ SINCE THE ASSESSEE IS NO MORE. TO SUBSTANTIATE ITS CLAIM, THE REVENUE HAD FURNISHED A COPY OF RELEVANT DEATH CERTIFICATE AND AN AFFIDAVIT (IN SUPPORT OF THE CLAIM MADE BY THE ASSESSEES LEGAL REPRESENTATI VE). ITA NO.151/BANG/07 PAGE 2 OF 7 2. AFTER DUE CONSIDERATION OF THE RELEVANT FACTS, T HE REGISTRY WAS DIRECTED TO TAKE THIS PIECE OF INFORMATION ON RECOR D. 3. THE REVENUE, IN ITS GROUNDS OF APPEAL, HAS RAISE D FIVE GROUNDS. ON A PERUSAL, GROUND NOS: 1 AND 5 ARE GENERAL WHICH, I N OUR CONSIDERED VIEW, DO NOT SURVIVE FOR ADJUDICATION. IN THE REMAINING GROUNDS, THE ESSENCE AND SUBSTANCE OF THE ISSUE IS LARGELY CONFINED TO (I) THE CIT(A) HAD ERRED IN CALCULATING THE AREA OF TH E SITE NO.36 AT 1053 SFT AS AGAINST 9566.37 SFT AND, THUS, ESTIMATED THE VALUE OF SITE WRONGLY AT RS.55/SFT. - ERRED TO APPRECIATE THAT THE AO HAD ADOPTED THE RAT E OF THE SITE AS ON 1.4.81 AFTER TAKING INTO ACCOUNT THE PREVAILI NG RATE IN THE VICINITY; & - THE ASSESSEES VALUER HAD NOT GIVEN ANY COMPARABLE SALE INSTANCES TO ARRIVE AT HIS CONCLUSION. 4. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE AN INDIVIDUAL DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR IN DISPUTE, HAD SOLD A LAND PROPERTY AD-MEASURING 4895 SFT SITUATE D AT JAYALAKSHIMIPURAM, MYSORE, FOR RS.15 LAKHS AND BY ADOPTING THE COST OF ACQUISITION AS ON 1.4.81 AT RS.3.33 LAKHS, BASED ON THE VALUERS REPO RT DT.16/9/03 AT RS.68/SFT. HOWEVER, THE AO, ON THE BASIS OF SALE I NSTANCES OBTAINED FROM THE SUB-REGISTRAR OF MYSORE [ S.RS SL.NO.1500 SA LE OF A SITE ADMEASURING 59 X 102 1/3 + 100 FT. BY 2 WAS REGISTERED FOR RS.47000 ON 18/7/81 AND S.RS SL.NO.3927 DT.20/1/82 SALE OF A SITE NO.65 AD- MEASURING 60 X 75 FOR RS.35000] HAD ADOPTED THE VAL UE OF THE SITE AT RS.7.87/SFT AS ON 1.4.81 AND, THUS, HE DETERMINED T HE VALUE OF LAND AND ALSO C.G. AT RS.13,27,800/- AS AGAINST SHOWN BY THE ASSESSEE AT RS.47250/-. ITA NO.151/BANG/07 PAGE 3 OF 7 5. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE BEFOR E THE CIT(A) FOR REDRESS. AFTER DUE CONSIDERATION OF THE ASSESSEES CONTENTION, THE LD. CIT(A) HAD OBSERVED THUS [ON PAGE 5] ..I FIND THAT WHILE FIXING THE RATE OF SALE PER SQFT IN THE CASE OF SALE INSTANCES (1) ABOVE, THE ASSESSING OFFICER HAS COMMITTED A CALCULATION MISTAKE VIZ., S ITE MEASURING 59 X 102 1/3 + 100 FT DIVIDED BY 2 WAS RE GISTERED FOR RS.47000/- ON 18/7/1981 WHICH MEANS THE SQFT RA TE IS (RS.47000 / 1053) RS.44.63. SECONDLY, HE HAS NOT STATED WHETHER THE SALE INSTANCES ADOPTED BY HIM ARE ACTUA LLY COMPARABLE OR NOT, I.E., WHETHER THEY ARE IN THE VI CINITY OF THAT LOCALITY OR IN THE SAME LOCALITY WHERE THE SOLD PRO PERTY WAS LOCATED. THIRDLY, I FIND THE RATE OF RS.35 PER SQF T IN THE FY 2002-03 VERY LOW. ON THE OTHER HAND, I ALSO FIND T HE RATE OF RS.304/307 PER SQFT IN FY 2002-03 TO BE HIGH. WHAT I INTEND TO SAY IS THAT THE RATIO AS ON 1/4/1981 WAS NEITHE R RS.7.87/- ADOPTED BY THE ASSESSING OFFICER NOR RS.6 8/- ADOPTED BY THE REGISTERED VALUER SEEM TO BE CORRECT. I HAVE NOTHING TO BASE MY ESTIMATION, BUT CONSIDERING THE TREND OF MYSORE CITY IN 1980S, I CONSIDER THE RATE OF RS.55/- PER S QFT AS IN 1981 (RS.246 IN FY 2002-03 AS PER CIF). THIS DETERMINATI ON OF RATE HAS BEEN DONE KEEPING IN VIEW OF THE FACT THAT IN ONE OF THE CASES CITED BY THE ASSESSING OFFICER, THE RATE COMES TO RS.45/- PER SFT AND THAT PLACES COVERED IN SALE INSTANCES BY THE ASSESSING OFFICER ARE SEEN TO BE NOT IN A POSH LOCALITY LIKE JAYALAXMIPURAM, MYSORE. THEREFORE, THE ASSESSING O FFICER IS DIRECTED TO RECALCULATE THE CAPITAL GAINS AT THE RA TE OF RS.55/- AS ON 1/4/1981 (RS.246/- IN FY 2003-03). ITA NO.151/BANG/07 PAGE 4 OF 7 6. AGITATED UPON, THE REVENUE HAS COME UP WITH THE PRESENT APPEAL. THE LD. D R IN HER SPIRITED ARGUMENT SUBMITTED THAT , THE CIT (A), WITHOUT LOOKING IN TO THE FACTS OF THE CASE AND THE WELL RE ASONING OF THE AO, HAD REJECTED THE WORKING OF THE AO AND ADOPTED HIS OWN METHOD OF WORKING WHICH DID NOT COMMAND ANY MERIT. IT WAS, THEREFORE , PLEADED THAT THE IMPUGNED ORDER OF THE CIT (A) REQUIRES TO BE ANNULL ED AND THAT OF THE AO BE RESTORED. DURING THE COURSE OF HEARING, THE LD. D.R HAD FURNISHED A PAPER BOOK CONTAINING 1-7 PAGES WHICH, INTER ALIA, CONSIST OF CORRESPONDENCE BETWEEN THE AO AND THE ADIT(INV) OF MYSORE AND ALSO A COPY OF VALUERS REPORT FURNISHED BY THE ASSESSEE. 6.1. ON HIS PART, THE LD. A RS ASSERTION WAS MAIN LY CENTRED ON THE FINDING OF THE LD.CIT (A) WHICH WAS WELL BALANCED A ND, THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. HE HAD ALS O FURNISHED A PAPER BOOK WHICH CONTAINED (I) COPY OF VALUERS REPORT AND (II ) THE COPIES OF CORRESPONDENCE MADE WITH THE AO. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND ALSO THE RELEVANT RECORDS. THE PAPER BOOKS FURNISHED BY EITHER PARTY WERE ALSO DULY LOOKED INTO. 7.1. AT THE OUT-SET, WE ARE CONSTRAINED TO POINT O UT THAT CERTAIN GLARING SHORT-COMINGS HAVE BEEN CROPPED UP IN THE FINDINGS OF THE LD. CIT(A), A FEW OF WHICH, ARE LISTED AS UNDER: (I) THE CIT(A) HAD POINTED OUT THAT THE AO HAD COMMITTE D A CALCULATION MISTAKE WITH REGARD TO SITE ADMEASURING 59 X 102 1/3 + 100 DIVIDED BY 2, WHEREAS, THE CIT(A) HAD ARRIVED AT THE RATE ITA NO.151/BANG/07 PAGE 5 OF 7 OF RS.44.63/SFT. (RS.47000 / 1053). WE ARE UNABLE TO UNDERSTAND AS TO HOW AND WHERE FROM THE CIT(A) GOT THE FIGURE OF 1053 SFT. AS PER OUR WORKING THE TOTAL AREA OF THE SITE COMES TO 5970.8 SFT AND IN OUR VIEW THERE WAS NO FLAW THE WORKING OF TH E AO TOO. HOWEVER, THE REVENUE, IN ITS GROUNDS OF APPEAL BEFO RE US, HAD AGITATED THAT THE CIT(A) HAD ERRED CALCULATING THE AREA OF THE SITE NO.36 AT 1053 SFT AS AGAINST THE ACTUAL AREA OF 9566.37 SFT . HOW THE REVENUE HAS NOW GOT THE INFLATED FIGURE OF 9566.37 SFT IS ANYBODYS GUESS? (II) THE SALE INSTANCES FURNISHED BY THE SUB-REGISTRAR O F MYSORE WERE, IN FACT, IN III BLOCK OF JAYALAXMIPURAM WHERE THE S UBJECT PROPERTY WAS LOCATED. THUS, THE CIT (A) CANNOT BRUSH ASIDE THE ACTION OF THE AO THAT SECONDLY, HE (THE AO) HAS NOT STATED W HETHER THE SALE INSTANCES ADOPTED BY HIM ARE ACTUALLY COMPARABLE OR NOT, I.E., WHETHER THEY ARE IN THE VICINITY OF THAT LOCALITY O R IN THE SAME LOCALITY WHERE THE SOLD PROPERTY WAS LOCATED. (III) THE CIT(A) HAD ADOPTED THE RATE OF RS.55/- SOLELY B ASED ON THE FIGURE OF RS.45/SFT.[PURPORTED TO HAVE BEEN ONE OF THE CASES CITED BY THE AO] WHICH IS BASICALLY AND ARITHMETICALLY WRONG ; (IV) THE VALUER REPORT FURNISHED BY THE ASSESSEE, PUT IT MILDLY, IS BALD WITHOUT ANY BASIS FOR ADOPTING SUCH A FIGURE; (V) THE CIT(A) HIMSELF HAD CONCEDED THAT HE DID NOT HAV E ANY BASE FOR HIS ESTIMATION, HOWEVER, HE HAD CONSIDERED THE RATE OF RS.55/SFT. [PRESUMABLY TAKING THE FIGURE OF RS.45/S FT ONE OF THE CASES ALLEGEDLY CITED BY THE AO THIS FIGURE WAS CALCULATED BY THE CIT(A) HIMSELF WHICH WAS AN ARITHMETIC BLUNDER] IN OUR CONSIDERED VIEW, WITHOUT BASE, ANY ESTIMATION DOESN T HAVE LEGS TO WITHSTAND. ITA NO.151/BANG/07 PAGE 6 OF 7 7.2. IN AN OVERALL CONSIDERATION OF THE FACTS AND C IRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PARAGRA PHS AND TO CLEAR THE STALEMATE ON THE ISSUE WHICH WAS CREATED BY THE LD. CIT(A), WE ARE OF THE UNANIMOUS VIEW THAT THE MATTER SHOULD BE REMITTED B ACK ON THE FILE OF THE CIT(A) WITH DIRECTIONS (I) TO LOOK INTO THE ISSUE IN TOTALITY AND IN A COMPREH ENSIVE MANNER TO ARRIVE AT A CONCLUSION, BY GIVING A SPEAKING ORDER; (II) THE SALES INSTANCES FURNISHED BY THE REGISTRATION A UTHORITY WERE IN BLOCK III OF JAYALAXMIPURAM WHERE THE SUBJECT PROPE RTY IS LOCATED. THIS ASPECT MAY BE TAKEN INTO COGNIZANCE OF, WHILE DECIDING THE ISSUE; (III) THE VALUERS REPORT OF THE ASSESSEE DOES NOT CONTAI N ANY DETAILS AS TO THE METHOD ADOPTED BY HIM TO ARRIVE AT THE VALUE OF THE PROPERTY. THEREFORE THE ASSESSEE MAY BE REQUIRED T O FURNISH A DETAILED VALUATION REPORT ACCOMPANIED BY ALL RELEVA NT INFORMATION AND ALSO COMPARABLE SALE INSTANCES ETC. (IV) THE REVENUE MAY BE REQUIRED TO CLARIFY THE EXACT AR EA OF THE SITE NO.36. IN VIEW OF THE ABOVE AND TO FACILITATE THE LD. CIT( A) TO CARRY OUT THE DIRECTIONS CONTAINED IN THE FORE-GOING PARAGRAPH, T HE ISSUE IS REMITTED BACK ON THE FILE OF THE CIT(A). IT IS ORDERED ACCORDIN GLY. 8. IN THE RESULT , THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.151/BANG/07 PAGE 7 OF 7 PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF NOVEMBER, 2009. SD/- SD/- ( GEORGE GEORGE K.) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH NOVEMBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.