ITO-5(5), BANDA V. SHRI PRANAV TRIPATHI, MAHOBA

ITA 161/ALLD/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2168 (ITAT-ALLAHABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 10-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APPLICATION
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 154; 50C; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.161/ALLD/2017 Assessment Year: 2014-15 Income Tax Officer, 5(5), Banda, U.P. v. Sh. Pranav Tripathi, S/o Sh. Shiv Shankar Tripathi Mauza-Mochipura, Gate No. 193, Kabrai, Distt. Mahoba, U.P. PAN-AEAPT4795B (Assessee) (Respondent) Appellant by: Application Respondent by: Mr. A.K. Singh, Sr. DR Date of hearing: 11.05.2022 Date of pronouncement: 17.05.2022 O R D E R PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the Revenue is directed against the order dated 31 st May, 2017 of CIT(A) for the Assessment Year 2014-15. 2. None has appeared on behalf of the assessee-respondent when this appeal was called for hearing. It transpires from the record that this appeal is pending since 2017 and assessee has been seeking adjournments right from the beginning whenever of the appeal was fixed for hearing. On last more than dozen of occasions, the hearing of the appeal was adjourned on the request of the assessee. On 15.3.2022, last opportunity was granted to the assessee to argue the case. Despite the last opportunity on 15.3.2022 as well as more than dozen of earlier opportunities, none has appeared on behalf of the assessee respondent. Though the application for seeking the adjournment is filed on the ground of health issue of the counsel of the assessee. The ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 2 Tribunal rejected the request for adjournment vide separate order dated 11.5.2022 as under:- “None appeared on behalf of the assessee when this appeal was called for hearing. A letter dated 10 th May, 2022 has been filed by the learned counsel for the assessee seeking adjournment of the hearing on the ground of health issue. This appeal is pending for about last five years and since beginning the assessee has been seeking adjournments. During the Covid period, the hearings of the appeals were conducted through video conference and no adjournments were denied by the Bench. But even after the physical hearings have been started, the assessee is seeking adjournments on one pretext or other. It is pertinent to mention that the learned counsel for the assessee/respondent has been seeking adjournments for last more than one month in all the cases represented by him on the same ground of health issue. We cannot adjourn all the cases for indefinite number of times. Since the appeal is five years old and assessee has not shown any interest in participating in the proceeding before the Tribunal, we decline to grant the adjournment of hearing and propose to hear and dispose of this appeal by Department ex parte.” 3. Thus the case was taken for ex parte hearing and adjudication. The Revenue has raised the following grounds in this appeal:- “1. That on facts and circumstances of the case, the Ld. CIT(A) has erred in law that the assessee has transferred his whole business as whole i.e. treating sale as Slump Sale u/s 50B of the IT Act, 1961. Some assets such as truck, computer were not transferred/sold by him and also land was never part of balance sheet as its value is zero in balance sheet and assessee himself has claimed LTCG & STCG in his Income Tax Return. Hence Provisions of Section 50C of the IT Act, 1961 are clearly attracted in this case. Provisions of Section 50B of the IT Act, 1961 (Slump Sale) are attracted only when undertaking as a whole along with all assets and liabilities are transferred, which is not the case here, as report of Chartered Accountants in form 3CEA has not been furnished along with Income Tax Return. 2. That on facts and circumstances of the case, the Ld. CIT(A) has erred in law that there is no difference in sale consideration of the property as reflected in ITR and sale consideration as reflected in AIR. Assessee sold land and P&M etc, for sale value of Rs.80,00,0007/- whereas as per Stamp Valuation Authority its market value is Rs.2,45,80,000/-, hence as per provisions of Section 50C of the IT Act, 1961, there is definitely difference. 3. That on facts and circumstance of the case, the Ld. CIT(A) has erred in law in deleting the addition on the ground that fresh application for valuation to DVO ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 3 was not sent by the AO, ignoring the facts that DVO was not justified in returning the original reference to AO on the ground that case cannot be completed within time limitation of 31.12.2016 when benefit of provisions of section 155(15) of the IT Act, 1961 were available to the AO to re-compute the capital gains by taking the revised value as the value of consideration and the provision of section 154 shall apply thereto. 4. That on facts and circumstances of the case, the Ld. CIT(A) has erred in law that fresh application for valuation to DVO was not sent by the AO because DVO vide its letter dated Misc./V0/Income Tax Officer/KNP/2016-17/321 dated 20.12.2016 informed that valuation of this case cannot be completed within time limitation of 31.12.2016 and this case has not been taken into valuation case pendency register and will be started only after receipt of fresh application. Hence because scrutiny assessment was barred by limitation on 31.12.2016 and fate of the fresh reference to DVO would be the same as that of original reference hence assessing officer has passed assessment order on the basis of valuation done by Stamp Valuation Authority. 5. Modification of ground clause and addition of new ground clause. That the appellant craves leaves to add or amend any one or more of the grounds of appeal as stated above as and when need for doing so may arise.” 4. The learned DR has submitted that the assessee sought strong crushing plant alongwith land for a consideration of Rs. 80,00,000/- whereas as per the stamp duty authority, the property was valued at Rs. 2,45,80,000/-. The details of the land, plant and machinery have been given by the Sub Registrar which are separately valued for the purpose of stamp duty. The land was valued for the stamp duty purpose at Rs. 2,14,59,900/- which was purchased by the assessee on 19.01.2005 for a consideration of Rs. 2,60,000/-. The Assessing Officer asked the assessee to justify the valuation as shown in the sale deed for calculation of short term capital gain as well as long term capital gain declared by the assessee in the return of income. The assessee contended before the Assessing Officer that the market value of the crushing plant is not more than the actual consideration as shown in the sale deed. The Assessing Officer invoked the provisions of section 50C of the Income Tax Act and took the full value consideration of land at Rs. 2,14,59,900/-, being the value determined for stamp duty purpose. Similarly, the Assessing Officer has taken the value adopted by the stamp duty authority in respect of the written down value of plant and crusher and assessed ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 4 the short term capital gain as per the provisions of section 50 of the Income Tax Act. Though the Assessing Officer made a reference of the valuation to the DVO for determination of the fair market value of the industrial land on 1.12.2016. However, the DVO has informed the Assessing Officer that valuation cases requires certain minimum time for giving enough opportunity / advance notice to assessee for documents submission, reminder property inspection, filing objections preparation of valuation report etc., which needs minimum two months’ time. Thus due to shortage of time, the DVO did not take up the case for valuation. Since it was a time barring case therefore, the AO completed the assessment as per the provision of section 50 and 50C to adopt deemed full value of consideration. The CIT(A) accepted the valuation of the assessee and deleted the addition on the ground that the Assessing Officer ought to have made a fresh request for determination of fair market value as per section 50C(2) of the Income Tax Act. Since the Assessing Officer has not send the fresh request to the DVO, the value claimed by the assessee ought to have been accepted. Thus, the learned DR has submitted that in any case, so far as the factory land is concerned, the same is not a depreciable asset and therefore, the capital gain on sale of the land has to be computed as per the provision of section 50C of the Act. The other asset like plant and machinery may be valued as per the provisions of section 50 of the Act. He has thus contended that instead of deleting the addition, the CIT(A) ought to have called for a remand report by referring the valuation to the DVO. 5. We have considered the contention of the learned DR as well as the arguments of the assessee advanced before the CIT(A). The main contention of the assessee before the CIT(A) was that the assessee has supported the valuation by Valuation report of the authorized valuer alongwith sales instance in the area and in the absence of any contrary material brought on record by the Assessing Officer, the said valuation report should have been accepted by the Assessing Officer. We are unable to accept this contention of the assessee because there is a specific provisions of section 50C of the Income Tax Act to consider deemed full value consideration, so far as the sale of ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 5 the land is concerned. Since the land is not a depreciable asset therefore, the capital gain arising from the sale of land would be computed in the manner as prescribed under section 48 read with section 50C of the Income Tax Act. There is not dispute on the point that the stamp duty valuation of the land in question was determined by the stamp duty authority at Rs. 2,14,59,900/-, whereas the assessee has shown the total consideration in the sale deed at Rs. 80,00,000/-. The assessee has objected to the adoption of deemed full value consideration as determined by the stamp duty authority in terms of section 50C of the Act and consequently the Assessing Officer has also referred the determination of the fair market value of the land to the DVO as required under section 50C(2) of the Income Tax Act. This is a procedure prescribed for determination of fair market value when the sale consideration shown by the assessee is less than the stamp duty valuation and assessee has objected to the adoption of the stamp duty valuation as deemed full value consideration then it is mandated that the fair market value has to be determined by the DVO. The Assessing Officer is not bound to accept the valuation report filed by the assessee before the fair market value determined by the DVO. There is no dispute that the DVO has not taken up the case for determination of the fair market value due to paucity of time as the assessment was to be completed by 31.12.2016. 6. In these peculiar facts as discussed above, the CIT(A) ought to have followed the process of determination of the fair market value of the land as provided under section 50C and particularly under section 50C(2) of the Income Tax Act by making a reference to the DVO. The CIT(A) has accepted the valuation declined by assessee instead of calling for a remand report after making reference to the DVO. The determination of the valuation of the land is a matter of experts opinion and therefore, without seeking the fair market value from the DVO, it cannot be determined by the Assessing Officer or CIT(A) as what should be the fair market value of the land in question. Though the assessee has filed a valuation report however, the same is only in support of the sale consideration shown in the sale deed and therefore, when the ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 6 stamp duty valuation is many times higher than the valuation claimed by the assessee then the question of determination of valuation has to be resolved by referring the same to the DVO. The assessee could have raised all the objections with the support of the report of authorized valuer in the proceedings before the DVO. 7. Thus in the facts and circumstances of the case, we find that the CIT(A) has passed the impugned order and accepting the value as declared by the assessee in a haste without following the due process prescribed in the statute. The CIT(A) is having co-terminus power to that of the Assessing Officer and therefore, ought to have ascertain the fair market value of the land by making a reference to the DVO. Hence, in the interest of justice, we set aside the impugned order of the CIT(A) and remand the matter to the record of the Assessing Officer for deciding the same after getting the fair market value of the land by making a reference to the DVO. 8. There was no issue before the Assessing Officer regarding Slump Sale and applicability of section 50B of the Income Tax Act. However, the CIT(A) has observed in the impugned order that the case falls under section 50B and not under section 50C of the Act without calling the comments of the Assessing Officer which is a clear violation of Rule 46A of the Income Tax Rules. Further, the said observation of the CIT(A) that it is a slump sale is not based on the verification of actual facts of the case as well as examination of the transfer documents to arrive at the conclusion that the sale in question is a Slump Sale or not. Therefore, the observation of the CIT(A) on this point is not based on the facts but it is a solely based on the contention of the assessee without ascertaining the relevant facts by conducting an enquiry which is not justified. Accordingly, in the facts and circumstances of the case and in the interest of justice, we set aside the entire issue of computation of short term capital gain and long term capital gain as well as the applicability of provision of section 50B to the record of the Assessing Officer for deciding the same afresh after getting the fair market value of the asset determined by the DVO. Needless to say the assessee be given an appropriate opportunity of hearing before passing the fresh order. ITA No. 161/ALLD/2017 Sh. Pranav Tripathi 7 9. In the result, the appeal of the Revenue is allowed for statistical purposes. Order was pronounced in the open Court on 11.05.2022 after conclusion of hearing and reduced in writing and signed on the date given below. Sd/- Sd/- [RAMIT KOCHAR] [VIJAY PAL RAO] ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 17.5.2022 Allahabad sh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Sr. P.S.