CHARU BIPINKUMAR SHAH, MUMBAI V. ITO 23(2)2, MUMBAI

ITA 1629/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2638 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1130/MUM/2012 ASSESSMENT YEAR: 2008-09 BIPINKUMAR V. SHAH, 3, SAROJ HOUSE, AHUJA BHAVAN, B.P. CROSS ROAD NO.4, MULUND (W), MUMBAI-4000800 PAN: AAMPS4740H VS. IT O 23(2) - 1 , MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.1629/MUM/2012 ASSESSMENT YEAR: 2008-09 CHARU BIPINKUMAR SHAH, 3, SAROJ HOUSE, AHUJA BHAVAN, B.P. CROSS ROAD NO.4, MULUND (W), MUMBAI-4000800 PAN: AAKPS2945N VS. IT O 23(2) - 2 , MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. MEHUL SHAH REVENUE BY : SHRI B.S.BIST (DR) DATE OF HEARING : 11.08.2015 DATE OF PRONOUNCEMENT : 30.10.2015 O R D E R 2 ITA NO. 1130 & 1629/M/2012 BIPINKUMAR V. SHAH PER PAWAN SINGH, JM: 1. THESE TWO IDENTICAL APPEALS WERE FILED BY THE ASSES SEE ON THE IDENTICAL GROUNDS. THE GROUNDS RAISED IN THE PRESENT APPEALS ARE AS UN DER: 1. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED IN UPHOLD ING ACTION OF THE ASSESSING OFFICER IN INVOKING PROVISIONS OF SECTION 50C AND SUBSTITUTING STAMP DUTY VALUATION OF RS 2,215,595 (1/2 IN CASE O F YOUR APPELLANT) IN PLACE OF SALE PRICE OF RS 2,000,000 (1/2 IN CASE OF YOUR APPELLANT) WITHOUT REFERRING THE MATTER TO THE VALUATION OFFICER AND WITHOUT APP RECIATING THAT THE ACTUAL MARKET VALUE OF THE PROPERTY WAS LESS AT THE TIME O F SALE AND EVEN AT THE TIME OF PURCHASE OF PROPERTY AGAINST STAMP DUTY VAL UATION. 2. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED IN RESTRI CTING COST OF IMPROVEMENT AMOUNTING TO RS 400,000 (1/2 IN CASE OF YOUR APPELLANT) AND UPHOLDING DISALLOWANCE OF BALANCE RS 330,000 (1/2 I N CASE OF YOUR APPELLANT) OUT OF TOTAL EXPENDITURE OF RS 730,000 ( 1/2 IN CASE OF YOUR APPELLANT) MERELY ON THE PRETEXT THAT THE SAID AMOU NT WAS PAID BY CASH, DESPITE HAVING ALL THE MATERIAL AS TO SOURCE OF CAS H IN THE HANDS OF THE APPELLANT AS WELL AS RECEIPT HAVING BEEN CONFIRMED BY THE RECIPIENT. 3. YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, AL TER, MODIFY, AND 1 OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEF ORE FINAL DISPOSAL OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 29.03.2011 DECLARING TOTAL INCOME OF RS. 1,01,000/-. THE RETURN WAS SELECTED FOR SCRUTINY, THE ASSESSING OFFICER (AO) AFTER GIVING OPPORTUNITY OF HEARING MADE THE ADDITION OF RS. 10,07,797/- U/S 50C OF THE I.T. ACT AND RS. 3,65,000/- ON ACCOUNT OF COST OF IMPROVEMENT AND FURTHER NOT ALLOWED DEDUCTION U/S 8 0 C OF THE ACT, AND INITIATED PENALTY PROCEEDING U/S 271(C) OF THE ACT IN ITS ORD ER DATED 30.12,AGAINST WHICH AN APPEAL WAS FILED BEFORE THE CIT(A). THE CIT(A) W HILE DISPOSING THE APPEAL OF THE ASSESSEE IN THE IMPUGNED ORDER DATED 31.01.2011 , CONFIRMED THE ADDITION MADE U/S- 50C OF THE ACT,WHILE CONSIDERING THE COST OF IMPROVEMENT, THE CIT(A) RESTRICTED IT TO RS 2,00,000/- ONLY, HOWEVER, THE ADDITION MADE U/S 80 C WAS DELETED AGAINST WHICH THE PRESENT APPEAL IS FILED B EFORE THIS TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. 4. THE AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE RELIED UPON THE JUDGMENT OF CO-ORDINATE BENCH IN ITA NO. 6211/M/12 IN THE CASE OF ITO VS. NITIN J. LATHIWALA DATED 24.12.2013, (2008) 24 SOT (DEL) TITLED AS MAN JU RANI JAIN AND (2008) 23 SOT 25 (JODH.) TITLED AS MEGHRAJ BAID VS. ITO. IN CASE OF ITO VS. MANJU RANI JAIN, THE CO-ORDINATE BENCH OF DELHI TRIBUNAL HELD AS UNDER: SECTION 50C, READ WITH SECTIONS 48 AND 55A, OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - FULL VALUE OF CONSIDERATION IN CERT AIN CASES - ASSESSMENT YEAR 2003-04 - DURING RELEVANT PREVIOUS YEAR, ASSES SEE HAD- SOLD HER HALF SHARE IN FOUR PROPERTIES SITUATED AT AGRA AND HAD O FFERED CAPITAL GAIN FOR TAXATION-ASSESSING OFFICER, HAVING NOTICED THAT FUL L VALUE OF SALE CONSIDERATION DECLARED BY ASSESSEE FOR ENTIRE FOUR PROPERTIES WAS RS. 40,48,000, WHILE MARKET VALUE ADOPTED FOR STAMP DUT Y PURPOSE-WAS RS. 1,64,16,000, ADOPTED MARKET VALUE OF PROPERTIES TAK EN FOR STAMP DUTY PURPOSES FOR WORKING OUT CAPITAL GAINS AND WORKED O UT SAME AT RS. 58,20,917/- ON APPEAL, COMMISSIONER (APPEALS), ON F INDING THAT ASSESSING OFFICER HAD WORKED OUT CAPITAL GAINS BY ADOPTING MA RKET VALUE OF PROPERTY FOR 3 ITA NO. 1130 & 1629/M/2012 BIPINKUMAR V. SHAH STAMP DUTY PURPOSES, DIRECTED ASSESSING OFFICER TO REFER PROPERTIES TO VALUATION CELL OF INCOME-TAX DEPARTMENT FOR PURPOSE OF VALUATION OF PROPERTY AND, THEREAFTER, TO ADOPT VALUATION FOR WORKING OUT THE CAPITAL GAINS IN VIEW OF PROVISIONS OF SECTION 50C(2). 5. AGAIN THE CO-ORDINATE BENCH OF ITAT, JODHPUR IN MEG HRAJ BAID VS. ITO HAS TAKEN THIS IN THE VIEW AS GENUINE. SECTION 50C OF THE INCOME-TAX ACT, 1961 - CAPITAL G AINS - SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES - ASSESSMENT YEAR 2003-04 - DURING RELEVANT ASSESSMENT YEAR, ASSESSEE SOLD A PR OPERTY FOR A CONSIDERATION OF RS. 11.31 LAKHS - HOWEVER, AS PER SALE DEED SUB-REGISTRAR HAD VALUED COST OF SAID PROPERTY FOR PURPOSE OF REG ISTRATION CHARGES AT RS. 14.96 LAKHS - IN RESPONSE TO SHOW CAUSE NOTICE, ASS ESSEE SUBMITTED THAT SINCE A LEGAL SUIT WAS GOING ON WITH REGARD TO THIS LAND AND THERE WAS A NALA ADJACENT TO IT, THAT WAS REASON THAT LAND WAS SOLD BELOW DLC RATE - ASSESSING OFFICER, HOWEVER, APPLYING PROVISIONS OF SECTION 50C(1) CAME TO CONCLUSION THAT VALUE OF SALE CONSIDERATION HAD TO BE TAKEN AT RS. 14.96 LAKHS AND, ACCORDINGLY, MADE ADDITIONS - COMMISSION ER (APPEALS) CONFIRMED ADDITIONS - WHETHER IN VIEW OF PROVISIONS OF SECTIO N 50C, IN CASE ASSESSING OFFICER DOES NOT AGREE WITH EXPLANATION OF ASSESSEE WITH REGARD TO LOWER CONSIDERATION DISCLOSED BY HIM, HE SHOULD REFER MAT TER TO OVA FOR GETTING ITS MARKET RATE ESTABLISHED AS ON DATE OF SALE TO ARRIV E AT CORRECT SALE CONSIDERATION - HELD, YES - WHETHER; THEREFORE, IN INSTANT CASE, MATTER WAS TO BE RESTORED BACK TO FILE OF ASSESSING OFFICER WITH A DIRECTION THAT HE WOULD REFER MATTER OF VALUATION IN LIGHT OF SUB-SECTION ( 2) SECTION 50C TO DVO FOR DETERMINING CORRECT CONSIDERATION OF PLOT SOLD BY A SSESSEE 6. IN THE PRESENT CASE ,AS WE SEEN NO VALUATION REPOR T WAS CALLED FROM VALUATION OFFICER, HENCE RESPECTFULLY FOLLOWING THE JUDGMENT OF CO-ORDINATE BENCH, THE MATTER IS REMANDED TO THE FILE OF AO TO CONSIDER TH E ISSUE AFRESH, IN VIEW OF THE ABOVE DIRECTION IN MANJU RANI JAIN AND MEGHRAJ BAID S CASE. 7. THE NEXT GROUND FOR OUR CONSIDERATION IS IN RESPECT OF RESTRICTING THE COST OF IMPROVEMENT TO RS. 2,00,000/- OUT OF RS. 3,65,000/-, THE LD. CIT(A) WH ILE DEALING WITH THIS ADDITION OBSERVED AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE PERUSED DOC UMENTS. IT IS FOUND THAT OUT OF TOTAL PAYMENT OF ` RS.7,30,000/- TO SHRI KISAN KAMAT, RS. 4 LACS HAVE BEEN PAID THROUGH BANK AND ` RS. 3,30,000/- HAS BEEN PAID THROUGH CASH. SOURCE OF CASH PAYMENT IS SAID TO BE CASH IN HAND A VAILABLE WITH THE ASSESSEE AND HIS WIFE. CONSIDERING THE FACTS, IT IS HEREBY HELD THAT PAYMENT MADE BY CHEQUE I.E. RS. 4 LACS TO SHRI KISAN KAMAT CONTRACTOR IS HELD TO BE COST OF IMPROVEMENT OF THE FLAT. WHEREAS THE PAYMEN T CLAIMED TO HAVE BEEN MADE IN CASH IS DISALLOWED AS CONSIDERATION OF IMPR OVEMENT OF FLAT SINCE NO VERIFIABLE EVIDENCE IS FURNISHED. ACCORDINGLY, 50% OF THE COST OF IMPROVEMENT TO THE APPELLANT RS.2 LACS IS ALLOWED. THIS GROUND IS THUS PARTLY ALLOWED. 8. THE LD. AR OF THE ASSESSEE HAS ARGUED THAT SRI KISA N KAMAT, CIVIL ENGINEER & CONTRACTOR GAVE A CONFIRMATION REPORT ABOUT THE REN OVATION WORK IN PLOT NO. 601/F2 HIGHLAND PARK G.G.S. ROAD MULAND COLONY, DUR ING THE FY 2006-07 AGAINST WHICH THE PAYMENT WERE RECEIVED DURING THE FY 2007-08 AND 2008-09 AND THE VARIOUS DETAILS OF CIVIL WORK UNDERTAKEN BY MR. K. KAMAT. 4 ITA NO. 1130 & 1629/M/2012 BIPINKUMAR V. SHAH 9. WE HAVE SEEN THE COPY OF BANK STATEMENT OF ASSESSEE WHEREIN STATEMENT ACCOUNT OF BANK OF ASSESSEE WHEREIN A SUM OF RS. 1,00,000/- WAS SHOWN TO BE PAID ON 31.07.2007. 10. THE PAYMENT MADE TO CIVIL CONTRACTOR WHO UNDERTAKE THE REPAIR/RENOVATION WORK IN THE PROPERTY OF THE ASSESSEE WAS SHOWN TO THE AO AND THE SAME SHOULD HAVE BEEN ALLOWED BY THE AO AT HIS END AS THE SUFFICIENT EVIDENCE WERE BROUGHT IN HIS NOTICE, HENCE THE ADDITION MADE BY THE AO WHICH WAS RESTRICTED TO RS. 2,00,000/- BY THE CIT(A) ARE ALSO DELETED. 10 IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SINCE THE FACT AND THE GROUNDS IN APPEAL NO. 1629/MUM/12 IS IDENTI CAL AND THE ADDITION MADE U/S 50C OF THE ACT AND EXPENDITURE MADE ON ACCOUNT OF COST OF IMPROVEMENT IN THE FLAT ONE WERE IN RESPECT OF THE SAME FLAT/PROPE RTY, HENCE THIS APPEAL IS ALSO PARTLY ALLOWED WITH THE SAME DIRECTIONS. 11 IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH OCTOBER 2015. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 30/10/2015 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/ /