Shri Harilal R.Jariwala, Surat V. The Income tax Officer,Ward-2(3), Surat

ITA 177/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89571 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIDINESH SINGH
• Assessee Lawyers: D K PARIKH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Revised return
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA. NO. 177/AHD/2012 (ASSESSMENT YEAR:2008-09) SHRIHARILAL R. JARIWALA 3/2246, SALABATPURA, BALABHAI STREET, SURAT-395002 APPELLANT VS. ITO, WARD-2(3), SURAT RESPONDENT PAN: AAQPJ6789H / BY ASSESSEE : SHRI D. K. PARIKH, A.R. / BY REVENUE :SHRIDINESH SINGH, SR.D.R. /DATE OF HEARING :14.05.2015 /DATE OF PRONOUNCEMENT : 05 .06.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEEAGAINST THE O RDER OFCIT(A)-II, SURAT, DATED 14.11.2011 FOR THE ASSESS MENT YEAR 2008-09 ON FOLLOWING GROUNDS: ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 2 1. THE CIT(A) ERRED IN NOT CONSIDERING THE REVISED RETURN FILED PRIOR TO THE DATE OF RECEIPT OF ASSESSMENT OR DER. 2. THE CIT(A) ERRED IN NOT CONSIDERING & ADMITTING THE REVISED RETURN FILED, AS ADDITIONAL GROUND VIDE RUL E 46A(1)(A) & 46A(1)(C). 3. THE CIT(A) ERRED IN NOT CONSIDERING THE CONTENTS OF AFFIDAVIT FILED. THE ASSESSE CANNOT BE PRESUMED TO BE AWARE OF THE DATE OF PASSING THE ASSESSMENT ORDER. 4. THE CIT(A) ERRED IN NOT APPRECIATING VALUATION R EPORT VALUING THE PROPERTY AS ON 01/04/1981 FILED WITH TH E REVISED RETURN. 5. THAT THE ORDERS OF AUTHORITIES BELOW VIZ. CIT(A) & A.O. MAY KINDLY BE SET ASIDE & THE MATTER MAY KINDLY BE RESTORED BACK TO THE FILE OF A.O. WITH NECESSARY DIRECTIONS TO RECOMPUTED THE LONG TERM CAPITAL GAIN WORKING AS PER REVISED RETURN FILED. 6. THE CIT(A) ERRED IN NOT GIVING DEDUCTION OF SECT ION 50EC FOR RS.1,00,000 INVESTED. ITA NO. 179/AHD/2012 FOR A.Y. 2008-09 IN CASE OF SH RI AJAY HASMUKHLALJARIWALA. 3. ASSESSEE OWNED 14 PROPERTIES WITH 17 OTHER CO-OW NERS AND HIS SHARE IN PROPERTY WAS 1/18 TH . THE DOCUMENT VALUE OF PROPERTIES SOLD WAS RS.2,37,34,750/-. ASSESSEES S HARE IN SALE PROCEEDS WAS RS.13,18,595/-. HE CLAIMED COST OF AC QUISITION AT RS.2,70,258/- (FMV AT 01.04.1981) WHICH GAVE IND EX COST OF ACQUISITION OF RS.14,89,122/-. LONG TERM CAPITAL L OSS OF ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 3 RS.1,83,713/- WAS CLAIMED. ASSESSING OFFICER OBTAI NED INFORMATION U/S.133(6) FROM SUB-REGISTRAR, NAVAGAM, SURAT-3, ACCORDING TO WHICH, THE VALUE OF PLOT OF LAND SOLD AS PER STAMP DUTY VALUATION WAS RS.4,48,50,675/-. AS PER SECTIO N 50C, VALUE ADOPTED FOR STAMP DUTY PURPOSE WAS TO BE DEEM ED AS FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RE SULT OF TRANSFER. THE SHARE OF ASSESSE AS PER PROVISIONS O F SECTION 50C WORKED OUT TO RS.24,91,704/- AND LONG TERM CAPITAL GAIN ACCRUING TO ASSESSE WORKED OUT TO RS.9,89,396/-. A SSESSING OFFICER ISSUED SHOW CAUSE TO ASSESSE ASKING HIM TO EXPLAIN WHY LONG TERM CAPITAL GAIN INCOME NOT BE TAKEN AS RS.9,89,396/-. IN RESPONSE TO SAME, ASSESSE SUBMIT TED THAT HE HAD COME TO KNOW THAT LAND IN THE SAME LOCALITY HAD BEEN SOLD FOR RS.5,000/- PER SQ.MT. ONE YEAR AGO AND THE REFORE IN THEIR OPINION THE SALE RATE OF RS.10,000/- PER SQ.M T. BY ASSESSE WAS TRUE AND FAIR MARKET VALUE. IT WAS SUBMITTED T HAT PURCHASER HAD PAID STAMP DUTY AT RS.18500/- PER SQ. MT. WITHOUT THEIR KNOWLEDGE. IT WAS SUBMITTED THAT CAS E BE REFERRED TO DISTRICT VALUATION OFFICER, SURAT. EXP LANATION WAS NOT ACCEPTED BY ASSESSING OFFICER AS SUBMISSION THA T LAND HAD BEEN SOLD AT RS.5,000/- PER SQ.MT. ONE YEAR AGO WAS NOT SUPPORTED BY ANY EVIDENCE. AS NEITHER THE SELLER I .E. ASSESSEE NOR PURCHASER OF PROPERTY HAD MADE ANY REPRESENTATI ON OR DISPUTED THE VALUATION ADOPTED BY THE STATE AUTHORI TY, THE VALUATION WAS FINAL AND REQUIRED TO BE ADOPTED FOR SECTION 50C. IN ABSENCE OF ANY EVIDENCE THAT RATES ADOPTED WERE HIGH, THE ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 4 REQUEST FOR REFERENCE TO DISTRICT VALUATION OFFICER , WAS REJECTED. ASSESSING OFFICER APPLYING SECTION 50C ADOPTED THE FULL VALUE OF CONSIDERATION OF ASSESSEES 1/18THSHARE AS RS.24 ,91,704/- AND WORKED OUT THE LONG TERM CAPITAL GAIN AT RS.9,8 9,396/- AS AGAINST LOSS OF RS.1,83,713/- WORKED OUT BY ASSESSE . 4. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) UPHELD THE OR DER OF ASSESSING OFFICER. BEFORE US, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT ASSESSING OFFICER SHO ULD HAVE REFER THE MATTER TO DISTRICT VALUATION OFFICER IN V IEW OF OBJECTION TAKEN BY ASSESSEE AND ALSO FULFILLING THE CONDITION OF SECTION 50C. LEARNED AUTHORIZED REPRESENTATIVE POI NTED OUT THAT ITAT C BENCH ON IDENTICAL ISSUE IN CASE OF O NE OF THE CO- OWNER SHRINIKUNJKUMAR H. JARIWALA VS. ITO IN ITA NO . 2404/AHD/2011 HAS CONSIDERED THE FACTS AND SET ASID E THE MATTER TO ASSESSING OFFICER TO MAKE ASSESSMENT IN A CCORDANCE WITH VALUATION AS PER DISTRICT VALUATION OFFICER BY OBSERVING AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE INSTANT CASE, THE AO HAS MADE ADDITION ON THE BASIS OF THE DIFFERENCE IN THE VALUE OF THE PROPERTY DECLARED BY THE ASSESSE AS SA LE CONSIDERATION AND ADOPTED BY THE STAMP VALUATION AUTHORITY. THE CONTENTION OF THE LD. COUNSEL FOR TH E ASSESSE IS THAT IN TERMS OF THE PROVISIONS OF SECTION50C(1) OF THE ACT, WHERE THE AO FINDS THAT THE CONSIDERATION RECEIVED OR ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 5 ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY ANY AU THORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOP TED OR ASSESSED (OR ASSESSABLE) SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERA TION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO A DOPTED THE FULL VALUE OF THE CONSIDERATION AS ADOPTED BY T HE 'STAMP VALUATION AUTHORITY'. HOWEVER, THE AO FAILED TO TAK E NOTE OF THE MANDATE OF SUB-SECTION(2) OF SECTION 50C OF THE ACT. AT THIS JUNCTURE, IT WOULD BE APPROPRIATE TO REPRODUCE HEREUNDER THE SECTION 50C(2) OF THE ACT FOR THE BET TER APPRECIATION OF THE SUBMISSION OF LD.COUNSEL FOR TH E ASSESSEE. 'SECTION 50C(2):- WITHOUT PREJUDICE TO THE PROVISIO NS OF SUB- SECTION (1), WHERE- (A) THEASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED [OR ASSESSED OR ASSESSABLE] BY THE ST AMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS T HE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRAN SFER; (B) THE VALUE SO ADOPTED [OR ASSESSED OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFER ENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REF ERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND S UB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECT ION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEAL TH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIF ICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY I N RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB- SECTION (1) OF SECTION 16A OF THAT ACT. ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 6 EXPLANATION.: [1] FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). [EXPLANATION 2 : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE S TAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANY THING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.]' 5.1. THE LD.COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS PARA-6 OF THE ASSESSMENT ORDER IN SUPPORT O F THE CONTENTION THAT BEFORE THE AO A REQUEST WAS MADE TO REFER THE CASE TO DVO FOR SEEKING HIS REPORT ON THE FAIR MARKET VALUE OF THE PROPERTY. PARA-6 OF THE ASSESSMENT ORD ER IS REPRODUCED HEREINBELOW:- '6. THE REPLY OF THE ASSESSEE DATED 10.12.2010 IS REPRODUCED AS UNDER:- 'WE JUST COME TO KNOW THAT ONE OPEN LAND IN THE SAM E LOCALITY WAS SOLD AT 5,000/- PER SQ.MT. BEFORE ONE YEAR AGO, WE ARE IN THE OPINION THAT WHAT WE GOT AMOUNT @ 10,000/- PER SQ.MT. IS TRUE & FAIR MARKET VALUE. SECONDLY, WE ARE OF THE OPINION TO REFER THE CASE T O THE D.V.O., SURAT TO JUSTIFY THE CASE. THERE ARE CASES OF JUDGEMENT OF: > NEW KALINDIKAMAVATI CO-OP. HOUSING SOCIETY LTD. VS. STATE OF GUJARAT &ORS. 2006(2) GUJ.LR.VOL.XLVII(2). > DINESHKUMAR MITTAL VS. ITO 193 ITR 770 (ALL.) > HINDUSTAN MOTORS LTD. VS. MEMBERS APPROPRIATE AUTHORITY(2001) 249 ITR 424 (MAD.) ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 7 > K.R. PALANISAMYVS. UOI 306 ITR 61 (MAD.). IN WHICH THE JUNTRY VALUE IS A GUIDELINE & NOT INSTRUMENT LA LAY DOWN ON THE ASSESSEE'. 5.2. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTIO N 50C(2) OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIFIED IN ADOPTING THE VALUE OF THE PROPERTY AS ADOPTED BY THE 'STAMP VALUATION AUTHORITY' WITHOUT REFERRING T O THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE P ROPERTY. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ON T HIS ISSUE ARE HEREBY SET ASIDE AND THE ADDITIONAL GROUND RAIS ED BY THE ASSESSEE IS RESTORED BACK TO THE FILE OF AO TO DECI DE THE SAME IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT T HE AO WOULD AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE ORDER. THUS, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FAC TS BEING SIMILAR, SO FOLLOWING SAME REASONING, WE HOLD THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN ADOPTING VALUE OF PROP ERTY AS ADOPTED BY STAMP VALUATION AUTHORITY WITHOUT REFERR ING TO DISTRICT VALUATION OFFICER FOR ASCERTAIN FAIR MARKE T VALUE OF THE PROPERTY. THEREFORE, FOLLOWING THE REASONING OF SHRINIKUNJKUMAR H. JARIWALA, WE SET ASIDE THE ORDER OF AUTHORITIES BELOW ON THE ISSUE AND ISSUE RAISED BY WAY OF ADDITIONAL GROUND BY ASSESSE IS RESTORED BACK TO TH E FILE OF ASSESSING OFFICER WITH DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO ASSESSEE. ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 8 5. IN RESULT, ASSESSEES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS THE 5 TH DAY OF JUNE, 2015. SD/- SD/- (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 05/06/2015 S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ! / CONCERNED CIT 4. !- $%&' / CIT (A) 5. )*+& ,--, $%&' $, $/0 / DR, ITAT, AHMEDABAD 6. +23 45' / GUARD FILE. BY ORDER / 6 , 7%// % & $%&' $,$/0 9 STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION AS PER ITA NO. 179 / AHD / 2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 14.05.2015 4) DATE OF CORRECTION 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON ITA NOS. 177/AHD/12 A.Y. 08-09 (SHRI HARILAL R.JARIWALAVS. ITO) PAGE 9