The ACIT, Circle-9, Surat V. Smt. Pushpaben Hiralal Mali, Surat

ITA 1735/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9930 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SITA RAM MEENA
• Assessee Lawyers: R N VEPARI
• Keywords: Opportunity of being heard; Fair market value; Valuation report

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER REVENUE BY : SHRI SITA RAM MEENA, SR DR ASSESSEE BY : SHRI R.N. VEPARI, AR / DATE OF HEARING : 15/11/2016 / DATE OF PRONOUNCEMENT: 17/11/2016 / O R D E R PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NOS. 1734/AHD/2011, 2862/AHD/2011, 1496/AHD/20 12, 1735/AHD/2011 AND 2863/AHD/2011 ARE APPEALS BY THE REVENUE PREFERRED AGAINST SEPARATE ORDERS OF THE CIT(A)-V, SURAT PERT AINING TO THREE DIFFERENT ASSESSEES FOR AY 2008-09. 2. ITA NOS. 1734/AHD/2011, 1496/AHD/2012 AND 1735/A HD/2011 ARE APPEALS AGAINST THE DELETION OF THE QUANTUM ADDITIO N MADE BY THE AO AND SN ITA NO. AY APPELLANT RESPONDENT 1 1734/AHD/2011 2008-09 ACIT, CIRCLE-9, SURAT SHRI PRAVINCHANDRA HIRALAL MALI (HUF), 11/922, SUPARI GALI, CHOWK BAZAR, SURAT PAN : AACHP 5162 L 2 2862/AHD/2011 2008-09 DCIT, CIRCLE-9, SURAT SHRI PRAVINCHANDRA HIRALAL MALI (HUF), 11/922, SUPARI GALI, CHOWK BAZAR, SURAT PAN : AACHP 5162 L 3 1735/AHD/2011 2008-09 ACIT, CIRCLE-9, SURAT SMT. PUSHPABEN H. MALI, 4/922, SUPARI GALI, CHOWK BAZAR, SURAT PAN : ABFPM 0084 N 4 2863/AHD/2011 2008-09 DCIT, CIRCLE-9, SURAT SMT. PUSHPABEN H. MALI, 4/922, SUPARI GALI, CHOWK BAZAR, SURAT PAN : ABFPM 0084 N 5 1496/AHD/2012 2008-09 ACIT, CIRCLE-9, SURAT SHRI JAYANTILAL HIRALAL MALI (HUF), 21-B, SMITSAGAR SOCIETY, HONEY PARK ROAD, SURAT PAN : AABHJ 2663 R ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 2 ITA NO.2862/AHD/2011 AND 2863/AHD/2011 ARE AGAINST THE DELETION OF THE PENALTY IMPOSED ON THE BASIS OF THE QUANTUM ADDITIO N. 3. SINCE THE QUANTUM ADDITION HAS BEEN MADE IN ALL THE IMPUGNED APPEALS ON THE SAME SET OF FACTS, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE. 4. THE COMMON GRIEVANCE IN ALL THESE APPEALS TAKEN BY THE REVENUE RELATES TO THE DELETION OF THE ADDITION MADE BY THE AO ON ACCOUNT OF RE- COMPUTATION OF LONG TERM CAPITAL GAIN. 5. AS MENTIONED ELSEWHERE, SINCE THE ISSUES ARE COM MON IN ALL THESE APPEALS, WE HEARD THE FACTS OF ITA NO.1734/AHD/2011 AND ON THE BASIS OF THOSE FACTS, REPRESENTATIVES OF BOTH THE SIDES AGRE ED THAT ALL THE APPEALS MAY BE DECIDED THOUGH QUANTUM MAY DIFFER. 6. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO FOUND THAT THE ASSESSEE HAS SHOWN INCOME FROM CAPITAL GAINS ON SAL E OF AGRICULTURAL LAND. ON FURTHER VERIFICATION, THE AO NOTICED THAT THE CO ST OF ACQUISITION AS ON 01.04.1981 IN RESPECT OF IMPUGNED AGRICULTURAL LAND HAS BEEN TAKEN BY THE ASSESSEE @ RS.150/- PER SQ. MTR. 7. THE AO WAS OF THE FIRM BELIEF THAT THE RATE OF R S.150/- PER SQ. MTR. WAS EXCESSIVE AND UNREASONABLE AND ACCORDINGLY ASKE D THE ASSESSEE TO JUSTIFY ITS CLAIM. IN HIS SUBMISSION, THE ASSESSEE HEAVILY RELIED UPON TWO DOCUMENTS. FIRSTLY, AN AGREEMENT TO SALE THE IMPUG NED AGRICULTURAL LAND ON 02.11.1981, WHICH WAS AGREED TO BE SOLD @ RS.146/- PER SQ. MTR; AND SECONDLY, RELIANCE WAS PLACED ON THE VALUATION REPO RT OF A GOVT. APPROVED ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 3 VALUER WHO HAS ADOPTED IN HIS VALUATION REPORT THE RATE OF RS.140/- PER SQ. MTR. 8. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAV OUR WITH THE AO WHO RECOMPUTED THE CAPITAL GAINS BY ADOPTING THE FAIR M ARKET VALUE OF THE IMPUGNED AGRICULTURAL LAND AS ON 01.04.1981 AT RS.5 5/- PER SQ. MTR. 9. THE RE-COMPUTATION OF THE CAPITAL GAINS WAS STRO NGLY AGITATED BEFORE THE CIT(A) WHO, AFTER CONSIDERING THE FACTS AND SUB MISSIONS, HELD AS UNDER:- 6. I HAVE CONSIDERED THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. I AM OF THE VIEW THAT THE RATE OF COST OF THE LAND @ RS.55/- SQ. MTR. ADOPTED BY THE AO IS NOT PROPER AND CANNOT BE SUSTA INED DUE TO THE FOLLOWING REASONS: I. THE AO HAS FAILED TO CONSIDER THE APPELLANTS CONTE NTIONS THAT THE LAND IN QUESTION IS VERY FAR FROM THE LAND FOR WHICH THE RATE OF RS.55/- SQ. MTR IS GIVEN BY THE REGISTRAR. HENCE, THE RATE OF COST OF THIS LAND CANNOT BE COMPARED WITH THE RATE OF LAND SUPPLIED BY THE REGI STRAR. THEREFORE, THE VALUE ADOPTED BY THE AO IS NOT PROPER. DURING THE APPELLATE PROCEEDINGS, THE MAP OF JAHANGIRPUR AREA WAS PRODUC ED BEFORE ME IN SUPPORT OF THIS CLAIM WHICH I FOUND SATISFACTORY. II. HE HAS ALSO NOT CONSIDERED THE VALUATION REPORT OF THE GOVT. APPROVED VALUER. III. I AM INCLINED TO AGREE WITH THE AR THAT IT WAS A FU TILE EXERCISE ON THE PART OF THE AO IN ASKING THE ADDRESS OF THE PURCHAS ER OF THE LAND WHILE HE WAS HAVING THE AGREEMENT TO SALE IN WHICH PURCHASER S ADDRESS WAS PROPERLY REFLECTED. IV. THE VARIOUS COURTS DECISIONS SUBMITTED BY THE APPE LLANT ARE IN HIS FAVOUR. IN VIEW OF THE ABOVE, THE ADDITION MADE IS HEREBY D ELETED AND THE GROUND OF APPEAL IS ALLOWED. 10. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 4 11. WE HEARD THE RIVAL CONTENTIONS AT LENGTH AND HA VE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WITH THE ASSI STANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENC E BROUGHT ON RECORD IN THE LIGHT OF RULE 18(6) OF THE INCOME-TAX (APPEL LATE TRIBUNAL) RULES. 12. A PERUSAL OF THE FINDINGS OF THE CIT(A) MENTIO NED ELSEWHERE CLEARLY SHOWS THAT THE DECISION OF THE FIRST APPELLATE AUTH ORITY IS NEITHER HERE NOR THERE. AS MENTIONED ELSEWHERE, THE ENTIRE CLAIM O F THE ASSESSEE DEPENDS UPON TWO PILLARS. FIRSTLY, AN AGREEMENT TO SALE THE IMPUGNED AGRICULTURAL LAND ON 02.11.1981, WHEREIN THE ASSESSEE AGREED TO SELL THE LAND AT RS.146/- PER SQ. MTR. WE FIND THAT THE CIT(A) GROSSLY ERRED IN IGNORING THIS FACT. WHEN THE LAND RATE WAS AGREED AT RS.146/- PER SQ. M TR. IN NOVEMBER, 1981, HOW COULD THE SAME PIECE OF LAND CAN HAVE A FAIR MA RKET VALUE OF RS.150/- PER SQ. MTR. ON 01.04.1981? WE FURTHER FIND THAT T HE FIRST APPELLATE AUTHORITY GROSSLY ERRED IN IGNORING THE FACT WHICH THE AO HAS MENTIONED ON PAGE NO.8 OF THE ASSESSMENT ORDER, WHEREIN HE HAS S TATED THAT THE LAND WHICH WAS AGREED TO BE SOLD IS DIFFERENT FROM THE L AND WHICH WAS ACTUALLY SOLD. 13. THE SECOND DOCUMENT HEAVILY RELIED UPON BY THE ASSESSEE IS THE GOVT. APPROVED VALUATION REPORT. ONCE AGAIN THE FIRST AP PELLATE AUTHORITY GROSSLY ERRED IN IGNORING THE FACT THAT THE GOVT. A PPROVED VALUER HAS ADOPTED LAND RATE OF RS.140/- PER SQ. MTR.; WHEREAS , THE ASSESSEE HAS TAKEN THE FMV AS ON 01.04.1981 AT RS.150/- PER SQ. MTR. THE FIRST APPELLATE AUTHORITY FURTHER ERRED IN IGNORING QUESTION NO.38 OF THE VALUATION REPORT AND THE REPLY GIVEN BY THE GOVT. APPROVED VALUER WH ICH READS AS UNDER:- 38 GIVE INSTANCES OF SALES OF IMMOVABLE PROPERTY IN THE LOCALITY ON A SEPARATE SHEET, AS DISCUSSED IN PART- II VALUATION ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 5 INDICATING THE NAME AND ADDRESS OF THE PROPERTY REGISTRATION NO. SALE PRICE AND AREA OF LAND SOLD 39. LAND THE RATE ADOPTED IN THIS VALUATION. RS. 14 0/- PER S. MT. 40. IF SALE INSTANCES ARE NOT AVAILABLE OR NOT RELIED UPON, THE BASIS OF ARRIVING AT THE RATE. LOOKING TO THE SIZE AND SITUATION OF LAND, ITS SURROUNDING LOCATION IN THIRD FIELD FROM ASHRAM ROAD, AND MARKET TREND IN GENERAL. COST OF CONSTRUCTION : 41. YEAR OF COMMENCEMENT OF CONSTRUCTION AND YEAR OF COMPLETION. NOT APPLICABLE 42. WHAT WAS THE METHOD OF CONSTRUCTION BY CONTRACT/BY EMPLOYING LABOUR DIRECTLY BOTH? 43. FOR ITEMS OF WORK DONE ON CONTRACT, PRODUCE COPIES OF AGREEMENTS. 44. FOR ITEMS OF WORK DONE BY ENGAGING LABOUR DIRECTLY, GIVE BASIC RATES OF MATERIALS AND LABOUR SUPPORTED BY DOCUMENTARY PROOF. PART II VALUATION THE VALUATION IS REQUIRED FOR THE CAPITAL GAIN TAX PURPOSE AS ON DT. 01-04-1981 OF THE PROPERTY UNDER REFERENCE. THE PROPERTY COMPRISES OF 8,195 S.MTS. OPEN LAND. T HE LAND WAS UTILIZED FOR AGRICULTURAL PURPOSE. THE SURROUNDING AREA IS OF AGRICULTURAL FIELDS. FROM VARIAV ROAD I.E. ASHRAM ROAD, THE LAND UNDER REFERENCE IS SITUATED AS THIRD FIELD. IT IS A SAMTAL FERTILE LAN D. THE LAND THOUGH, IN AGRICULTURAL USE WITH AGRICULTU RAL TITLE, WAS FALLING IN URBAN AGGLOMERATION OF SURAT CITY, IT I S A CITY LAND WITH RESIDENTIAL ZONE IN SUDA. IN THE PERIOD OF 1981 A.D., THE SURAT CITY STARTED FLOURISHING DUE TO TEXTILE INDUSTRY AND DIAMOND INDUSTRY. THE SURROUND ING LAND OF CITY BOUNDARY, DRAW THE ATTENTION OF ALL INVESTORS. CONS IDERING AGRICULTURAL POTENTIALITY, ITS INCOME WAS COMPARATIVELY LOW, BEC AUSE AT THAT TIME THE VALUE OF AGRICULTURAL PRODUCTS WAS LOW. BUT CONSIDE RING URBANISATION AND ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 6 INCLUSION IN URBAN AGGLOMERATIONS, VARIOUS ASHRAMS ON THE ROAD, NEARBY RIVER BANK, I VALUE THIS LAND AT RS. 140/-PER S. MT . THEREFORE, LAND VALUE WORKS OUT TO 8195 S.MTS. X RS . 140/- PER S. MT. = RS. 11,47,300/- ................................. ...............(A) (RUPEES ELEVEN LACS FORTY SEVEN THOUSAND & THREE HU NDRED ONLY) THE OWNER SOLD THE PROPERTY ON DT. 01-06-2007 BY RE GISTERED SALE DEED. THE COST INDEX FOR F.Y. 2007-08, WAS DECLARED AT 551 %. THEREFORE, THE INDEX VALUE OF THE PROPERTY ON DATE OF SALE, WORKS OUT TO RS. 11,47,300/- X 551/100 =RS.63,21,623/- (RUPEES SIXTY THREE LACS TW ENTY ONE THOUSAND SIX HUNDRED & TWENTY THREE ONLY). 14. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THE V ALUER HAS NOT GIVEN ANY SALES INSTANCES OF IMMOVABLE PROPERTY IN THE LOCALI TY. THUS, EVEN THE VALUATION REPORT IS DEVOID OF ANY COMPARABLE CASE. 15. WE HAVE EXHIBITED THE FINDINGS OF THE CIT(A) EL SEWHERE. IN OUR CONSIDERED OPINION, THE FIRST APPELLATE AUTHORITY H AS GROSSLY ERRED IN NOT APPRECIATING THE GLARING FACTS EMANATING FROM THE A SSESSMENT RECORDS AND FROM THE SUBMISSIONS MADE BY THE ASSESSEE, THEREBY MAKING HIS ORDER ERRONEOUS. 16. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE FI ND IT FIT TO RESTORE THE ISSUES TO THE FILES OF THE CIT(A). THE CIT(A) IS D IRECTED TO RE-DECIDE THE ISSUES AFRESH AFTER CONSIDERING THE FACTS MENTIONED HEREINABOVE AND ALSO AFTER CONSIDERING THE FACTS HIGHLIGHTED BY THE AO I N HIS ASSESSMENT ORDER. THE CIT(A) IS FURTHER DIRECTED TO COLLECT THE SALES INSTANCES IN THE LOCALITY AS ON 01.04.1981 OR NEAR ABOUT. THE FIRST APPELLATE A UTHORITY WILL RE- ADJUDICATE THE MATTER AFTER GIVING A REASONABLE AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO AFTER CONFRONT ING ALL THE EVIDENCES COLLECTED BY HIM/AO NECESSARY FOR THE ADJUDICATION. 17. IN THE RESULT, ALL THE QUANTUM APPEALS ARE TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1734, 2682, 1496, 1735 & 2863/AHD/2011 SHRI PRAVINCHANDRA HIRALAL MALI & OTHERS AY : 2008-09 7 18. SINCE WE HAVE RESTORED THE QUANTUM APPEALS TO T HE FILES OF THE FIRST APPELLATE AUTHORITY, WE DEEM IT FIT TO RESTORE THE PENALTY APPEALS ALSO TO THE FILES OF THE CIT(A) TO BE DECIDED AFRESH AFTER DECI DING THE QUANTUM APPEALS. 19. IN THE RESULT, THE PENALTY APPEALS ARE ALSO TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 17 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER (N.K. BILLAIYA) ACCOUNTANT MEMBER AHMEDABAD; DATED 17/11/2016 BIJU T., SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A ) 5. $ '' , , / D R, ITAT, AHMEDABAD 6. - / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD