ITO, Ward-3(3)(9), Ahmedabad V. Smt. Rajani Manhar Bhagat, Ahmedabad

ITA 1782/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2189 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 28-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report; Set aside
• Section: 143(3); 50C; 133(6)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER . / I.T.A. NO. 1782/AHD/2017 ( ASSESSMENT YEAR : 2012-13) ITO WARD-3(3)(9), AHMEDABAD / VS. SMT. RAJANI MANHAR BHAGAT 23, CANTONMENT, SHAHIBAUG, AHMEDABAD - 382415 ./ ./ PAN/GIR NO. : ABVPB6670M ( APPELLANT ) .. ( RESPONDENT ) / REVENUE BY : SHRI L. P. JAIN, SR. D.R. / ASSESSEE BY : SHRI S. N. SOPARKAR, SR. ADV. WITH SHRI NISHIT SHAH, A.R. DATE OF HEARING 18/06/2019 ! / DATE OF PRONOUNCEMENT 26/06/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-3, AHMEDABAD (CIT(A) IN SHORT), DATED 2 2.05.2017 ARISING IN THE ASSESSMENT ORDER DATED 18.03.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 (THE ACT) CONCERNING AY 2012-13. ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 2 - 2. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY THE R EVENUE READS AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,09,13,053/- MADE BY THE AO U/S 50C OF THE IT A CT ALLOWING ASSESSEES CLAIM TO HAVE PAYMENT OF RS.1,75,00,000/- TO TRESPA SSER WITHOUT APPRECIATING THE FACT THAT THESE FACTS HAVE NOT BEE N MENTIONED IN THE SALE DEED/DOCUMENT REGISTERED BEFORE THE SUB REGISTRAR W ITHOUT DISPUTING THE STAMP DUTY FOR VALUATION OF THE LAND OF RS.2,60,05, 348/-. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL, SOL D IMMOVABLE PROPERTY LOCATED AT PALDI, AHMEDABAD FOR A CONSIDER ATION OF RS.51 LAKHS VIDE SALE DEED REGISTRATION WITH REGISTERED A UTHORITY ON 19.10.2011. IT WAS FOUND BY THE AO THAT STAMP DUTY OF RS.12,74,440/- WAS COLLECTED ON THE AFORESAID SALE. THE MARKET VA LUE OF THE PROPERTY WAS DETERMINED BY THE REGISTERING AUTHORITY AT RS.2 ,60,05,348/-. THE AO ALSO NOTICED THAT NO INCOME BY WAY OF CAPITAL GA INS WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER S.139 OF THE ACT. IN THE LIGHT OF ALLEGED UNDER VALUATION OF THE PROP ERTY BY RS.2,09,05,348/- AND NON-DECLARATION OF CAPITAL GAI NS, THE CASE OF THE ASSESSEE WAS REOPENED BY INVOKING SECTION 147 OF TH E ACT. IN THE COURSE OF RE-ASSESSMENT, THE ASSESSEE FILED REVISED COMPUTATION OF TOTAL INCOME DECLARING THE AMOUNT OF RS.3,42,036/- AS LONG TERM CAPITAL GAINS ON THE AFORESAID TRANSACTION OF SALE OF LAND. IT WAS CLAIMED BY THE ASSESSEE THAT LAND WAS ACQUIRED PRIO R TO 01.04.1981 AND THE FAIR MARKET VALUE OF THE PROPERTY STANDS AT RS. 6,06,110/- AND CONSEQUENTLY HAVING REGARD TO THE SALE CONSIDERATIO N OF RS.51 LAKHS AND INDEXED COST OF ACQUISITION ON INCOME OF RS.3,4 2,036/- ONLY HAS ACCRUED. THE FAIR MARKET VALUE OF COST OF ACQUISIT ION WAS SUBSEQUENTLY REVISED BUT HOWEVER WE ARE NOT CONCERN ED WITH THIS ASPECT OF ACQUISITION COST. THE AO ESSENTIALLY DIS PUTED THE SALE CONSIDERATION OF RS.51 LAKHS HAVING REGARD TO THE V ALUE ADOPTED BY THE REGISTERING AUTHORITY FOR THE PURPOSES OF PAYME NT OF STAMP DUTIES IN RESPECT OF SUCH SALE IN TUNE WITH SECTION 50C OF THE ACT. IT WAS ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 3 - CONTENDED BEFORE THE AO BY THE ASSESSEE THAT SHE HA S RECEIVED A CONSIDERATION OF RS.51 LAKHS ONLY AND NO MORE AND T HERE IS NO QUESTION OF UNDER VALUATION OF PROPERTY. IT WAS SU BMITTED THAT THE PROPERTY WAS OCCUPIED UNAUTHORIZEDLY BY 17 FAMILIES WHO HAD ALSO TAKEN ELECTRICAL CONNECTION AND WERE ILLEGAL OCCUPI ER OF THE PROPERTY. THE ASSESSEE WAS NOT IN A POSITION TO GET THE VACAN T POSSESSION. THE ASSESSEE SOLD THE PROPERTY AS IT IS TOGETHER WITH E NCROACHMENT AND THEREFORE THE VALUE WAS BOUND TO BE LOWER. IT WAS E SSENTIALLY CONTENDED THAT THE IMPUGNED PLOT AS WELL AS THE ADJ OINING PLOT OF THE NEIGHBOURER WERE ILLEGALLY OCCUPIED AND THEREFORE T HE ASSESSEE HAS NOT GIVEN VACANT POSSESSION OF THE PROPERTY TO THE PURC HASER. THE PURCHASER HAS NEGOTIATED WITH THE ILLEGAL OCCUPIERS AND INCURRED ADDITIONAL COSTS OF RS.1,75,00,000/- TO GET THE PRO PERTY VACATED. THE AO HAS IN FACT MADE INQUIRIES WITH PURCHASERS WHO D ULY CONFIRMED THE COST INCURRED OF RS.1,75,00,000/- TO THE ILLEGAL OC CUPIERS. THE AO HOWEVER WAS NOT CONVINCED WITH THE PLEA OF THE ASSE SSEE FOR ADOPTION OF RS.51LAKHS AS THE SALE CONSIDERATION FOR THE PUR POSES OF SECTION 50C OF THE ACT. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS NOT DISPUTED THE VALUATION ADOPTED BY THE STAMP DUTY AU THORITY AND THEREFORE SECTION 50C OF THE ACT IS CLEARLY APPLICA BLE. IT WAS FURTHER OBSERVED WITH REFERENCE TO THE SALE AGREEMENT THAT THE ASSESSEE HAD HANDED OVER THE VACANT POSSESSION OF THE LAND TO TH E PURCHASER WITHOUT ANY DISPUTE. IT WAS FURTHER NOTED THAT EXPENDITURE INCURRED BY THE PURCHASER DURING FY 2013-14 IS OF NO CONSEQUENCE FO R THE PURPOSES OF APPLICABILITY OF SECTION 50C OF THE ACT. THE AO AC CORDINGLY SUBSTITUTED THE SALE CONSIDERATION OF RS.51 LAKHS B Y THE VALUE ADOPTED BY THE REGISTERING AUTHORITY AT RS.2,60,05,348/- IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ACTION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 4 - 5. THE CIT(A) TOOK NOTE OF THE COPY OF ELECTRICITY BILLS IN THE NAME OF THE ILLEGAL TRESPASSERS, MOU DATED 04.02.2014 BE TWEEN THE PURCHASER AND THE TRESPASSERS FOR VACATING LAND, PH OTOGRAPHS OF THE ILLEGAL OCCUPATION OF LAND BY HUTMENTS AND CAME TO THE CONCLUSION THAT ONLY REAL INCOME IS REQUIRED TO BE TAXED. THE CIT( A) ACCORDINGLY DIRECTED THE AO TO CONSIDER THE CHARGEABLE LONG TER M CAPITAL GAINS AT RS.3,42,036/- AS CLAIMED BY THE ASSESSEE AS AGAINST RS.2,09,13,053/- COMPUTED BY THE AO. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER: 4. DECISION: I HAVE GONE THROUGH THE FACTS MENTION ED IN THE ASSESSMENT ORDER AND THE SUBMISSION FILED BY THE AP PELLANT CAREFULLY. THE ASSESSING OFFICER HAS MENTIONED ABOUT HIS SHOW CAUSE, APPELLANT'S RESPONSE AND NON' ACCEPTANCE OF EXPLANA TION IN PARA 5 ONWARDS ASSESSMENT ORDER. I HAVE PERUSED PP 01-206/ PB IN WHEREIN THE APPELLANT HAS CLEARLY RAISED OBJECTION TO THE P ROPOSED ADDITION, THE APPELLANT HAS TRIED TO DEFEND THROUGH VARIOUS A RGUMENTS. FIRSTLY, IT WAS SUBMITTED THAT THE PLOT OF LAND WAS HAVING I LLEGAL ENCUMBRANCES AND THE APPELLANT FILED MOU DATED 04/0 2/2014/ COPY OF ELECTRICITY BILL OF SUCH ILLEGAL PERSONS AND PHO TOGRAPHS OF LAND OCCUPIED BY ILLEGAL HUTS. IT WAS BROUGHT TO THE NOT ICE THAT THE AO HAD CALLED THE INFORMATION VIDE NOTICE DATED 22/12/2015 U/S. 133(6) FROM THE PURCHASER OF THE LAND AND THE PURCHASER HAD FIL ED INFORMATION VIDE LETTER DATED 28/01/2016 WITH THE AO (PAGE 62 O F PAPERBOOK), THE SAME IS REPRODUCED AS UNDER: 'WITH REFERENCE TO YOUR LETTER DATED 22/12/2015 WE WOULD LIKE TO GIVE DETAILS AS BELOW: 1. COPY OF SALES DEED VIDE DOCUMENT REGISTER NO. 12 118 DATED 19/10/2011 IS ATTACHED HEREWITH. 2. COPY OF LEDGER OF SMT. RAJNI M BHAGAT IS ATTACH ED HEREWITH. 3. WE HAVE PURCHASE SAID PROPERTY OF JUNTRY VALUE RS. 26005348/- IN RS. 5100000/- FROM SMT. RAJNI M BHAGAT. HOWEVER WE HAVE PAID RS. 17500000/- TO LAND TRESS PASSER AND RS. 11 00000/- AS BROKERAGE. SO TOTAL LAND COST TO US IS RS. 25025650 /-. COPY OF LAND ACCOUNT, COPY OF LAND TRESS PASSER A/C WITH AL L DEED ARE ATTACHER HEREWITH FOR YOUR REFERENCE. PLEASE ACKNOW LEDGE THE SAME. FOR PRAVINCHANDRA N MANIAR' THE ASSESSING OFFICER HAS NOT ACCEPTED THE ARGUMENT OF THE THIRD PARTY THAT RS 1,75,00,000/- HAVE BEEN PAID TO THE T RESS PASSERS. THIS INFORMATION WAS COLLECTED U/S 133(6} BY THE AO. HOW EVER, THE DETAILS ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 5 - AS FILED BEFORE AO IS AT PAGE 64 OF PAPER BOOK WHIC H IS REPRODUCED AS UNDER: DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 31-3-2014 TO BHAVESH PRATAPJI THAKOR JOURNAL 67 5,00,000.00 TO SONAL BHAVESHJI & BHAVESHJI SHIVAJI JOURNAL 68 5,00,000.00 TO DAXABEN SANJAYBHAI THAKOR JOURNAL 69 10,00,000.00 TO KALYANJL HIRAJI THAKOR JOURNAL 71 7,00,000.00 TO KAMLABEN SHAKRAJI VAGHELA JOURNAL 72 7,00,000.00 TO KANTABEN KALUJI THAKOR JOURNAL 73 10,00,000.00 TO NATUJI BADAJI THAKOR JOURNAL 78 7,00,000.00 TO SURAJI GALBAJI THAKOR JOURNAL 82 7,00,000.00 TO SURESH CHATURJI THAKOR JOURNAL 83 92,00,000.00 TO VIJAY KALYANJI THAKOR JOURNAL 84 20,00,000.00 TO NATUJI BADAJI THAKOR (EX) JOURNAL 91 5,00,000.00 BY LAND F.P. 12 S.P. 11,12,13,14 &19 95 1,75,00,0000.00 1,75,00,0000.00 1,75,00,0000.00 IT IS ALSO NOTICED THAT PLOT NO. 12 HAS TWO SUB-PLO TS, ONE BEING OF APPELLANT AND ANOTHER BEING OF SHASHANK INDULAL SHA H & OTHERS. I FIND THAT THERE ARE ILLEGAL ENCUMBRANCES IN THE PAR T OF THE SUB-PLOT BELONGING TO SHASHANK INDULAL SHAH & OTHERS AS PER INFORMATION FILED BEFORE AQ. HENCE IT CAN CLEARLY BE CONCLUDED THAT IN ALL LIKELY HOOD, THERE HAVE BEEN ILLEGAL OCCUPANTS OF THE SUB- PLOT BELONGING TO THE APPELLANT. SECONDLY, THE APPELLANT HAS RAISED TECHNICAL INFIRM ITIES OF THE ADDITION SO MADE BY HIGHLIGHTING PROVISIONS OF SUB SECTION (2) OF SECTION 50C. THE SUBMISSION OF THE APPELLANT 11/03/ 2016 HAS BEEN REPRODUCED IN PARA 7 OF ASSESSMENT ORDER. THE RELEV ANT PORTION FROM PAGE 6/7 OF ASSESSMENT ORDER IS REPRODUCED AS UNDER : '5. THE COPY OF REGISTERED AGREEMENT TO SALE DATED 18/08/2011 IN RESPECT OF ADJOINING PLOT IS ENCLOSED HEREWITH. IN SAID DOCUMENT THE ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 6 - RATE PER SQUARE METERS IS RS. 3463.10(RS. 72,00,000 /- DIVIDED BY 2079.01 (RS. 51.00.000/- DIVIDED BY 1465.09 SQUARE METER). THE ASSESSES HAS GOT HIGHER SALE CONSIDERATION. ALL THE PLOT OF SURVEY NO, 309 OF TP SCHEME 6, FINAL PLOT NO. 12 HAVE ILLEGAL OCCUPIERS. THEREFORE THE SALE PRICE RECEIVED BY THE OTHER NEIG HBOURS MAY BE CONSIDERED AS FINAL SALE CONSIDERATION. 6. THE REASON FOR THE LOWER SALE CONSIDERATION IS A S UNDER: THE PROPERTY WHICH WAS SOLD BY ASSESSEE UNAUTHORIZE DLY OCCUPIED BY 17 FAMILIES BEING THE SENIOR CITIZEN LADY AND TAKE OF SUPPORTING MANPOWER AND FINANCE THE ASSESSEE WAS NOT IN A POSI TION TO GET THE VACANT POSSESSION AND THEREFORE DECIDED TO SALE OUT THE PROPERTY AS IT IS AND AT THE VALUE WHICH CAN BE OBTAINED. SUBSEQUE NTLY, AFTER EXECUTION OF THE SALE DEED PURCHASER HAS NEGOTIATED WITH THOSE PERSONS AND CONVINCED THEM TO VACATE THE SAID PROPE RTY AGAINST ARRANGEMENTS OF ALTERNATIVE ACCOMMODATION OF THEIR RESIDENCE. AS INFORMED BY THE PURCHASER HE HAS PAID MONEY TO A LL THE FAMILIES FOR VACATING THE PROPERTY. NO RESIDENTIAL PROPERTY HAS BEEN GIVEN TO THOSE PERSONS. AS STATED IN MOU THE ILLEGAL OCCUPIE R HAD OBTAINED SEPARATE ELECTRIC METER ACCORDING TO THEIR NEEDS. T HE COPY OF ELECTRICITY BILLS AND PHOTOGRAPHS OF OCCUPIED LAND BY HUTS ARE SUBMITTED VIDE OUR LETTER DATED 07/12/2015. THUS THE DATA ON RECORD PROVES THAT THE LAND WAS NO T VACANT AND THE ASSESSEE HAS NOT GIVEN VACANT POSSESSION OF THE LAN D SOLD. THE PURCHASER HAS TAKEN THE LIABILITY TO GET THE LAND V ACATED. ACCORDINGLY, THE PURCHASER HAS PAID LESSER PRICES T HAN THE JANTRY RATE.' IT IS SEEN THAT THE REGISTERED VALUER(DVO) HAS GIVE N VALUATION REPORT DATED 07/02/1986 WHICH IS NOT IN DISPUTE SO FAR AS PURCHASE PRICE IN COMPUTATION OF LTCG IS CONCERNED. IN FACT THE CONTR OVERSY IN THE GROUNDS OF APPEAL NO. 1 TO 5 IS ONLY RELATING TO TH E DIFFERENCE BETWEEN THE SALE CONSIDERATION DISCLOSED BY THE APP ELLANT AND THAT OF JANTRY VALUE ON THE DATE OF TRANSACTION. THE APPELL ANT HAS DISCUSSED THE PROVISIONS OF SECTION 50C (2) AND EMPHASIZED TH AT THE ASSESSING OFFICER OUGHT TO HAVE SENT THE MATTER TO DISTRICT V ALUATION OFFICER IN CASE HE WAS TO SUBSTITUTE THE SALE CONSIDERATION WI TH THAT OF JANTRY VALUE AND SUBMITTED RELEVANT CASE LAWS. THE APPELLA NT HAS ARGUED AND RELIED ON A FEW CASE LAWS AS UNDER: (F) CIT VS. CHANDRNARAIN CHAUDHARI (2013) 86CCH 003 4 ALL HC (G) ITO VS. MS. KUMUDINI VENUGOPAL (2010) 29 CCH 03 27 CHEN TRIB (H) SUNILKUMAR AGARWAL VS. CIT(2014) 88 CCH 0387 KO L HC (I) ANILKUMAR JAIN VS. ITO (2013) 143 ITD 0659 DELH I ITAT (J) SARWANKUMARVS. ITO (2014) 150 ITD 0289 DELHI IT AT I ALSO FIND THE RATIO FAVOURABLE TO THE APPELLANT I N FOLLOWING CASE LAWS: ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 7 - (A) DINESH KUMAR MITTAL VS. ITO (1992) 193 ITR 770 (ALL.), (B) CIT VS. SMT. RAJ KURNAR VIMLA DEVI AND ANOTHER (2005) 279 ITR 360 (ALL.) (C) CIT VS. CHANDANI BHOCHAR (2010) 323 ITR 510 (P H), (D) N. MEENAKSHI 226 CTR 625 (MAD.), (E) MOHD. SHOIB VS. DCIT (2009) 29 DTR 306 (ITAT LK O), (F) MEGHRAJ BAID VS. ITO (2008} 114 TTJ 841 (JODH.) , (G) AJMAL FRAGRANCES & FASHIONS (P) LTD. VS. CIT (2 009) 34 SOT 57 (MUM.), (H) (H)NANDITA KHOSLA 11 TAXMANN.COM 344, (I) SHAIK MOHIDDEN VS, ITO (2009) 123 TTJ 411(CHENN AI), (J) ITAT DELHI IN CASE OF ITO VS. MANJU RANI JANI 2 4 SOT 24, (K) ITAT LUCKNOW IN CASE OF JITENDRA MOJHAN SAXENA 117 TTJ 974 (TRIB. LUCK.) AND (L) ITAT MUMBAI IN CASE OF KALPATARU INDUSTRIES VS. ITO-ITA NO. 5540/MUM/07 DATED 24-08-2009, I HAVE GONE THROUGH THE JUDGEMENTS RELIED BY THE AP PELLANT. HON'BLE CALCUTTA HIGH COURT DECISION IN THE CASE OF SUNIL K UMAR AGRAWAL VS. CIT-372 ITR 83 (CAL.), HAS HELD THAT REFERENCE TO D VO WAS MANDATORY AND THE RELEVANT PORTIONS OF JUDGMENT IS REPRODUCED HEREUNDER: '7. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APPEARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSES WAS RELYING. PRESUMABLY, THE CASE OF THE ASSESSES WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILING PRICE 'IN THE MARK ET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT THE ASSESSES HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT S UB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFE RENCE CAN BE MADE AS AGAINST THE ASSESSES BECAUSE HE HAD NOTHING TO D O IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER ACCEPT IT OR DISPUTE IT. THE ASSESSES COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB-REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LAK HS WHICH, ACCORDING TO THE ASSESSES, WAS THE HIGHEST PREVAILI NG MARKET PRICE. IT WOULD FOLLOW AUTOMATICALLY THAT HIS CASE WAS THAT T HE FAIR MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS A SSESSED BY THE DISTRICT SUB REGISTRAR. IN A CASE OF THIS NATURE TH E ASSESSING OFFICER SHOULD, IN FAIRNESS, HAVE GIVEN AN OPTION TO THE AS SESSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICE R CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COURSE, IN ALL SU CH CASES THE ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSE SSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICE R. /- 8. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. T HE LEGISLATURE DID NOT INTEND THAT THE CAPITAL GAIN SHOULD BE FIXED ME RELY NOT EH BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT SUB REGIST RAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CA RE TO PROVIDE ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 8 - ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY TH E LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD B E REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING IN LAW, THE ASSESSING OFFICER, DISCHAR GING A QUASI JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIR LY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW TH E COURSE PROVIDED BY LAW.' IN ADDITION TO ABOVE, THE RATIO LAID DOWN IN UNDERM ENTIONED CASE LAWS CLEARLY MAKE OUT A CASE FOR THE APPELLANT. - AJMAL FRAGRANCE & FASHIONS P. LTD. VS ACIT, CIR.1 3(1) - ITAT [2009] 34 SOT 57 MUM.) - SMT. T.V. NAGASENA VS. ITO - IATA NO.296 (BANG.) - ITO VS. M/S. ONKARMAL KAJARIA FAMILY TRUST - ITA NO.1065 (KOL.) IT IS UNDERSTOOD THAT THE APPELLANT RAISED OBJECTIO NS TO CONSIDERING THE STAMP DUTY VALUATION AS TOTAL SALE CONSIDERATIO N AND THE AO FAILED TO SEND THE MATTER FOR VALUATION TO DVO AS P ER PROVISIONS OF SECTION 50C(2). TO MY MIND THE AO OVERBURDENED HIMS ELF WITH AVOIDABLE RESPONSIBILITY BY NOT SENDING THE ISSUE F OR EXPERT OPINION TO THE DVO AS PER SPECIFIC PROVISIONS OF SUB SECTIO N 2 OF SECTION 500 OF IT ACT, 1961. THE APPELLANT HAS MADE OUT A STRON G CASE FOR HERSELF BOTH ON FACTS AND ON LEGAL STANCE. THEREFORE I AM C ONVINCED THAT APPELLANT INCOME CANNOT BE TAXED HIGHER THAN THE AM OUNT WHICH HAS BEEN DISCLOSED IN RETURN OF INCOME. IT NEED TO BE C LARIFJED THAT THE APPELLANT HAS CONSIDERED SALE CONSIDERATION OF RS. 51,00,000/- OF THE PLOT OF LAND INVOLVED AND DECLARED TOTAL INCOME OF RS. 3,42,036/- AND PAID TAXES OF RS.78,404/- DURING THE ASSESSEMENT PR OCEEDINGS BEFORE THE AO. THE APPELLANT'S LETTER DATEDL9/10/2015 ADDR ESSED TO ITO WARD-3(3)(9) IS PLACED ON RECORD. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SHANKAR KHANDSARI SUGAR MILLS VS. CIT 1 93 ITR 669 (KAR.) HAS OBSERVED THAT 'IN THE ABSENCE OF ANY PRE JUDICE TO THE REVENUE, AND THE BASIS OF THE TAX UNDER THE ACT BEI NG TO LEVY TAX, AS FAR AS POSSIBLE, ON THE REAL INCOME, THE APPROACH S HOULD BE LIBERAL IN APPLYING THE PROCEDURAL PROVISIONS OF THE ACT. AN A PPEAL IS BUT A CONTINUATION OF THE ORIGINAL PROCEEDING AND WHAT TH E INCOME-TAX OFFICER COULD HAVE DONE, THE APPELLATE AUTHORITY AL SO COULD DO.' HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. PRABH AVATI S. SHAH 231 ITR 1, (BOM.) HAS OBSERVED THAT UCIT(A) IS EMPO WERED U/S.250(4) TO MAKE SUCH FURTHER INQUIRY AS HE THINK S FIT AND SUCH POWER BEING QUASI JUDICIAL POWER, IT WAS INCUMBENT ON HIM TO EXERCISE THE SAME IF THE FACTS AND CIRCUMSTANCES JU STIFY. IT FURTHER HELD THAT IF THE FIRST APPELLATE AUTHORITY FAILED T O EXERCISE HIS DISCRETION JUDICIALLY AND ARBITRARILY REFUSED TO MA KE INQUIRY IN A CASE WHERE THE FACTS AND CIRCUMSTANCES SO DEMAND, H IS ACTION WOULD BE OPEN FOR CORRECTION BY A HIGHER AUTHORITY. IN OT HER WORDS, THE MESSAGE FROM THE BOMBAY HIGH COURT IS THAT IF PRIMA FACIE AN INFORMATION EVIDENCE IS NECESSARY TO EXAMINE THE CL AIM OF THE ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 9 - ASSESSEE, THE CIT(A) SHOULD CONSIDER THE NECESSARY EVIDENCE IN EXERCISE OF POWER U/S.250(4) EVEN IF THE CASE OF TH E ASSESSES DOES NOT FALL WITHIN THE FOUR CORNERS OF THE CIRCUMSTANCES E NUMERATED IN RULE 46A(1).' IN SUCH CIRCUMSTANCES, AND AS PER RATIO LA ID DOWN AT 187 ITR 688 (SC) IN THE CASE OF JUTE CORPORATION OF IND IA LTD., I AM CONSTRAINED TO ACCEPT THE FIGURES OF INCOME MENTION ED IN APPELLANT'S LETTER DATED 19/10/2015. THE REAL INCOME IS TO BE T AXED. THE APEX COURT IN THE CASE OF CIT VS. BRITISH PAINTS INDIA L TD. HAS HELD, 'IT IS DUTY OF A.O. TO CORRECTLY DEDUCE THE INCOME, NO PRI NCIPLE OF ESTOPPELS, A.O. IS NOT BOUND BY THE METHOD FOLLOWED IN EARLIER YEARS.' IN VIEW OF ABOVE FACTS AND THE RATIO LAID D OWN BY VARIOUS COURTS (SUPRA) AND ITATS, THE ADDITION OF RS.2,09,1 3,053/ MADE U/S.50C OF IT ACT, 1961 IS HEREBY DELETED. HOWEVER, THE INCOME TO BE TAXED AT RS.3,42,036/-. THE ARGUMENT OF THE APPELLA NT TO REPLACE RS.2,60,05,348/- AT PAGE NO. 10 OF ASSESSMENT ORDER WITH RS. 51,00,000/- IS HEREBY REJECTED AS INCONSISTENCY IN THE ARGUMENT IS NOTICED. THIS ORDER IS NOT TO BE ISSUED TO ISSUE RE FUND OF THE AMOUNT WHICH HAS ALREADY BEEN PAID DURING ASSESSMENT PROCE EDINGS. THE GROUND NO.1 TO 5 ARE PARTLY ALLOWED. THE CIT(A) THUS ESSENTIALLY ACCEPTED THE SALE CONSI DERATION AT RS.51 LAKHS AS CLAIMED BY THE ASSESSEE. 6. AGGRIEVED BY THE SUBSTANTIAL RELIEF GRANTED BY T HE CIT(A) TOWARDS SALE CONSIDERATION, THE REVENUE PREFERRED A PPEAL BEFORE THE TRIBUNAL. 6.1 THE LEARNED DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO AND SUBMITTED IN FURTHERANCE THAT PROVISIONS OF SEC TION 50C OF THE ACT IS PLAIN AND UNAMBIGUOUS. THE ASSESSEE HAS ADMITTE DLY DECLARED LOWER CONSIDERATION AT RS.51LAKHS AS AGAINST THE MARKET V ALUE IN TERMS OF SECTION 50C OF THE ACT DETERMINED BY REGISTERING AU THORITY AT RS.2,60,05,349/-. THE CONTRACTUAL AGREEMENT BY WAY OF SALE DEED BETWEEN THE ASSESSEE AND THE PURCHASER CLEARLY SUGG ESTS THAT THE POSSESSION OF THE PROPERTY GIVEN TO THE PURCHASER W AS VACANT AND PEACEFUL WITHOUT ANY REFERENCE TO THE ALLEGED ENCRO ACHMENT AND OTHER TITLE DEFECTS. THE LEARNED DR ACCORDINGLY SUBMITTE D THAT IN VIEW OF THE EXPRESS PROVISION OF SECTION 50C OF THE ACT, TH E DEEMED VALUE OF ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 10 - SALE CONSIDERATION IS REQUIRED TO BE REPLACED BY TH E SO CALLED ACTUAL PRICE FIXED ON SALE OF PROPERTY, MORE SO, WHERE THE ASSESSEE HAS NOT DISPUTED THE STAMP DUTY VALUATION AT ANY STAGE. TH E LEARNED DR ACCORDINGLY SUBMITTED THAT THE ACTION OF THE CIT(A) IS NOT IN CONSONANCE WITH THE PROVISIONS OF SECTION 50C OF TH E ACT AND THEREFORE REQUIRES TO BE SET ASIDE AND THE ORDER OF THE AO REQUIRES TO BE RESTORED. 6.2 THE LEARNED AR FOR THE ASSESSEE, ON THE OTHER H AND, STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED T HAT THE ASSESSEE HAS CLEARLY DEMONSTRATED THE FACT OF ENCUMBRANCE AN D ILLEGAL TRESPASSING AND UNAUTHORIZED OCCUPANT OF THE LAND I N SALE. IN SUPPORT OF THE ENCROACHMENT OF THE LAND IN SALE, THE LEARNE D AR ALSO REFERRED TO THE ELECTRIC BILLS IN THE NAME OF THE ILLEGAL HU TMENT OWNERS AND THE FACT OF PAYMENT TO THE TRESPASSERS AGGREGATING TO R S.1,75,00,000/- AS WELL AS MOU DATED 04.02.2014 IN THIS REGARD. THE S ALE DEED OF ADJOINING LAND BY NEIGBOURER WAS ALSO REFERRED WHER EIN THE PHOTOGRAPHS FORMING PART OF THE AGREEMENT POINTS OU T THE EXISTENCE OF HUTMENT. THE LEARNED AR POINTED OUT THAT THE PURC HASER DEMONSTRATED BY WAY OF MOU THAT THE ARRANGEMENT WAS ULTIMATELY E NTERED INTO WITH THE ILLEGAL OCCUPANTS FOR VACATING THE PROPERTY AFT ER ITS PURCHASE FOR WHICH A VERY LARGE AMOUNT OF RS.1,75,00,000/- WERE INCURRED BY THE PURCHASER. SUCH COST IS NOTHING BUT THE COST OF IM PROVEMENT TO CURE THE DEFECT IN THE TITLE OF THE PROPERTY TO ENABLE T HE SELLER TO HAND OVER VACANT AND PEACEFUL POSSESSION TO THE PERSPECTIVE B UYER. SUCH COST REQUIRES TO BE FACTORED FOR THE PURPOSES OF COMPUTA TION OF CAPITAL GAINS AS THUS CONTENDED. THE LEARNED AR FURTHER PO INTED OUT THAT THE PURCHASER HAS ALSO INCURRED STAMP DUTY OF RS.12,74, 4000/- FOR PURCHASE OF PROPERTY. THE LEARNED AR THUS SUBMITTE D THAT IT WAS INCUMBENT UPON THE AO TO TAKE NOTE OF THESE FACTS W HILE ASCERTAINING THE DEEMED SALE CONSIDERATION. THE LEARNED AR ALSO SUBMITTED THAT ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 11 - THE APPLICATION OF SECTION 50C OF THE ACT IS NOT AU TOMATIC AND THE AO CAN TAKE COGNIZANCE OF SUCH CIRCUMSTANCES FOR DEPAR TURE IN THE SALE CONSIDERATION AGGREGATE UPON. THE LEARNED AR THUS SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SUBSTITUTION OF THE ACTUAL SALE PRICE OF THE PROPER TY BY DEEMED SALE CONSIDERATION AS PER THE VALUATION ADOPTED BY THE R EGISTERING AUTHORITY UNDER S.50C IS IN CONTROVERSY. IT IS THE CASE OF T HE REVENUE THAT THE ASSESSEE IS CHARGEABLE TO LONG TERM CAPITAL GAINS O F RS.2,09,13,053/- WHEN COMPUTED WITH REFERENCE TO JANTRI VALUE ADOPTE D BY THE REGISTERING AUTHORITY. THE ASSESSEE, ON THE OTHER HAND, PLEADS FOR CHARGEABILITY OF CAPITAL GAINS AT RS.3,42,036/-. H AVING REGARD TO THE ACTUAL SALE CONSIDERATION RECEIVED ON SALE OF THE P ROPERTY. IT IS PRIMARILY THE CASE OF THE ASSESSEE THAT THE LOWER C ONSIDERATION RECEIVED ON SALE OF PROPERTY IS ATTRIBUTABLE TO THE ENCUMBRANCES, ENCROACHMENT AND DEFECT IN VACANT POSSESSION OF THE PROPERTY. THE ASSESSEE HAS DEMONSTRATED THE ENCROACHMENT BY ILLEG AL OCCUPIERS WITH REFERENCE TO ELECTRICITY BILLS IN THE NAME OF THE I LLEGAL OCCUPIERS AND SUBSTANTIAL PAYMENT OF RS.1,75,00,000/- IN AGGREGAT E TO VARIOUS SUCH OCCUPIERS BY THE PURCHASER IN THE SUBSEQUENT YEARS. THIS FACT OF PAYMENT TOWARDS ENCROACHMENT HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, THERE IS NO REASON TO EXCLUDE SUCH AMOUN T FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS. THUS, THE PURCHAS E CONSIDERATION TOGETHER WITH COSTS TOWARDS OBTAINING VACANT PROPER TY SHOULD STAND AT RS.2,26,00,000/-. THE ASSESSEE HOWEVER HAS FAILED TO EXPLAIN AS TO WHY THE DIFFERENCE BETWEEN DEEMED SALE CONSIDERATIO N OF RS.2,60,05,348/- ADJUSTED PURCHASE COSTS AND RS.2,2 6,00,000/- BEING RS.34,05,348/- SHOULD NOT BE SUBJECTED TO CAPITAL G AIN TAX IN THE LIGHT OF SECTION 50C OF THE ACT. THE BROKERAGE COSTS INC URRED ON SALE CONSIDERATION BY THE PURCHASER CANNOT BE TAKEN INTO ACCOUNT FOR THE ITA NO. 1782/AHD/17 [ITO VS. SMT. RAJANI MANHAR BHAGAT] A.Y. 2012-13 - 12 - PURPOSES OF SECTION 50C OF THE ACT. THE CIT(A) HAS THUS FAILED TO TAKE COGNIZANCE OF APPLICABILITY OF SECTION 50C OF THE ACT TO THE EXTENT OF RS.34,05,348/-. HENCE, THE ORDER OF THE CIT(A) REQUIRES TO BE MODIFIED TO THE AFORESAID EXTENT AND THE CHARGEA BLE CAPITAL GAIN REQUIRES TO BE INCREASED BY RS.34,05,348/-. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 26/06/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- $. / REVENUE 2. / ASSESSEE &. '() * / CONCERNED CIT 4. *- / CIT (A) -. ./0 122()3 ()!3 45' / DR, ITAT, AHMEDABAD 6. 078 9 / GUARD FILE. BY ORDER / 3 /4 ()!3 45' THIS ORDER PRONOUNCED IN OPEN COURT ON 26/06/201 9