ManjeetSinghMokha, V. Assistant Commissioner of Income Tax Circle- 2(1),

ITA 182/JAB/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5653 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D R LATHORIYA
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Fair market value
• Section: 143(3); 50C; 37

Judgement Text

1 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BEFORE S/SHRI N.S. SAINI (AM) N. K. CHOUDHRY (JM ) I.T.A. NO.182 /JAB/2014 (ASSESSMENT YEAR :2004-05) MANJEET SINGH MOKHA, ARPIT APARTMENT, SWAMI DAYANAND SARASWATI WARD, NAPIER TOWN, JABALPUR VS. ACIT, CIRCLE 2 (1), JABALPUR PAN/GIR NO. : AFXPM 8250 J ( APPELLANT ) .. ( RESPONDENT ) I.T.A. NO.183 /JAB/2014 (ASSESSMENT YEAR :2004-05) SMT. GURUCHARAN KAUR KOKHA, ARPIT APARTMENT, SWAMI DAYANAND SARASWATI WARD, NAPIER TOWN, JABALPUR VS. ACIT, CIRCLE 2 (1), JABALPUR PAN/GIR NO. : AGHPM 5565 B ( APPELLANT ) .. ( RESPONDENT ) I.T.A. NO.184 /JAB/2014 (ASSESSMENT YEAR :2004-05) SARABJEET SINGH MOKHA, ARPIT APARTMENT, SWAMI DAYANAND SARASWATI WARD, NAPIER TOWN, JABALPUR VS. ACIT, CIRCLE 2 (1), JABALPUR PAN/GIR NO. : AFXPM 8245 F ( APPELLANT ) .. ( RESPONDENT ) 2 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) I.T.A. NO.185 /JAB/2014 (ASSESSMENT YEAR :2004-05) SMT. JASMEET KAUR MOKHA, B-1, ANUMIT ENCLAVE, PACHPEDI, SOUTH CIVIL LINES, JABALPUR VS. ACIT, CIRCLE 2 (1), JABALPUR PAN/GIR NO. : AGIPM 7585 N ( APPELLANT ) .. ( RESPONDENT ) APPELLANTS BY : SH. RAHUL BARDIA RESPONDENTS BY : SH. D.R.LATHORIYA DATE OF HEARING : 06-04-2016 DATE OF PRONOUNCEMENT : 06-04. 2016 O R D E R PER NARENDRA KUMAR CHOUDHRY, JM THESE ARE APPEALS FILED BY DIFFERENT ASSESSES AGAINST SEPAR ATE ORDERS OF THE LD CIT(A)-1, JABALPUR ALL DATED 1 ST AUGUST, 2014, IN THE MATTER OF ASSESSMENT UNDER SECTIO N 143(3) OF THE I.T.ACT, 1961, FOR THE ASSESSMENT YEAR 20 04-05. 2. IN ALL THESE APPEALS, COMMON GROUNDS ARE RAISED, WHICH ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN SUSTAINING THE ADDITION OF RS 3,08,172 MADE BY THE AO O N ACCOUNT OF LONG TERM CAPITAL GAIN AS PER PROVISION OF SECTION 50C, WHERE AS THE ASSESSEE CLAIMED THAT SINCE THE LAND WAS DISPUTED UNDER URBAN LA ND CEILING ACT AND OWNER FOUGHT COURT CASE FOR SEVERAL YEARS AND THEREFOR E ITS MARKET RATE WAS LESSER THAN THE PRESCRIBED STAMP VALUE RATES. THE ASSESSEE THEREFORE CLAIMED TO ACCEPT THE TRANSACTION RATE INSTEA D OF STAMP VALUE AUTHORITY RATES. THE ADDITION MADE DESERVE TO BE DELE TED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CI T (A) ERRED IN SUSTAINING THE ADDITION OF RS 3,08,172 MADE BY THE AO O N ACCOUNT OF LONG 3 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) TERM CAPITAL GAIN U/S 50C, WITHOUT REFERRING THE MATT ER TO THE DVO, WHICH WAS REQUESTED BY THE ASSESSEE DURING ASSESSMENT AND ALSO D URING APPEAL. THE ASSESSEE CLAIMED IN THE RETURN OF INCOME ITSEL F THAT THE RATE ADOPTED FOR STAMP VALUATION IS HIGHER AND THEREFORE ASSE SSEE OFFERED TAX AS PER THE TRANSACTION RATE. THE AO ADDED THE CAPITAL GAIN WITHOUT REFERRING THE MATTER TO THE DVO (WHICH IS COMPULSORY AS DECIDED IN .K. NAG LTD VS ADDL CIT (2013)49 (II) ITCL 101 (PUNE 'A'- TRIB) AND THEREFORE THE ADDITION MADE DESERVE TO BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CI T (A) ERRED IN SUSTAINING THE ADDITION OF RS 75.000/- MADE BY THE AO A GAINST NON PRODUCTION OF AGRICULTURAL EXPENSES VOUCHERS. THE ASSESSEE EXPLA INED THAT IT WAS NOT OBLIGED TO MAINTAIN BOOKS AND VOUCHERS U /S 44AA AND THEREFORE THE ADHOC ADDITION MADE DESERVES TO BE DELET ED. 3. SINCE FACTS AND ISSUES ARE SIMILAR IDENTICAL IN ALL TH ESE APPEALS, THEREFORE, CLUBBED TOGETHER AND ARE BEING DISPOSED OFF BY THIS COM MON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. LET US TO CLARIFY THAT THE I SSUE OF CALCULATION OF LONG TERM GAIN IS COMMON TO ALL THE FOUR APPEALS AND THE ISSUE OF AGRICU LTURAL INCOME IS COMMON TO THREE APPEALS EXCEPT ITA NO.185/JAB/2014(SMT. JASMEET KAUR MOKHA). 4. FIRST WE TAKE UP THE APPEAL IN ITA NO.184/JAB/2014 FIRST AND THE DECISION WILL APPLY MUTATIS-MUTANDIS TO OTHER APPEALS. 5. FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUA L AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOWING TOTAL INCOME OF RS.16,55,639/- AND AGRICULTURAL INCOME OF RS.3,50,000/-. THE ASSESSEE H AS ALSO SHOWN INCOME FROM LONG TERM CAPITAL GAIN AT RS.7,02,979/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE ALONGWITH OT HER THREE PERSONS HAVE SOLD ADJACENT PROPERTIES. THE FACTS LEADING TO CALCULAT ION OF LONG TERM CAPITAL GAIN BY 4 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) THE REVENUE AUTHORITIES ARE DISCUSSED BY THE AO AND AL SO REPRODUCED BY LD CIT(A) IN THE IMPUGNED ORDER ARE AS UNDER: THE ASSESSEE HAS SHOWN FOLLOWING SALE CONSIDERATION OF LA ND. 1. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE BLOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3835 SQ.FT.) TEHSIL & DI STRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 11,71,8277- AS PER SALE DEED DT. 20.11.2003. 2. REGARDING MOHALLA CIVIL STATION PERMANENT LE ASE BLOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3835 SQ.FT.) TEHSIL & DI STRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 11,71,8277- AS PER SALE DEED DT. 08.10.2003. 3. REGARDING MOHALLA CIVIL STATION PERMANENT LE ASE BLOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3730 SQ.FT.) TEHSIL & DI STRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 11,40,156/- AS PER SALE DEED DT. 08.10.2003. 4. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE BL OCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 6600 SQ.FT.) TEHSIL & DISTRI CT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 34,00,0007- AS PER SALE DEED DT. 30.08,2003. AS PER COLLECTOR GUIDELINE FOR THE PURPOSE OF FAIR MARKE T RATE AT LALA LAJPAT WARD, SOUGH CIVIL LINE, JABALPUR ---(ANNEXURE 1 ENCLOSE D) RESIDENTIAL PERSQ, METER COMMERCIAL PER SQ. METER MAIN ROAD SIDE ROAD MAIN ROAD SIDE ROAD 6994=00 3497=00 12912=00 6994=00 10% RATE APPLIED EXTRA FOR CORNER PLOT. AS REFERRED ABOVE, SINCE SVA VALUE FOR THE SAID PROPERTI ES WAS MORE, THE AO PROPOSED TO, AND APPLIED, THE FOLLOWING CALCULATION AND RATES: 1. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE B LOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3835 SQ.FT.) TEHSIL & D ISTRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 11,71,827/- AS PER SALE DEE D DT. 20.11.2003. 5 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) TOTAL AREA SQ.FT. = 3835 X 324.99 (RATE PER SQ.FT. ANNEXURE 1 ENCLOSED) = 12,46,500/-(ROUNDED OFF) 2. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE B LOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3835 SQ.FT.) TEHSIL & D ISTRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 11,71,827/- AS PER SALE DEE D DT. 08.10.2003. TOTAL AREA SQ.FT. = 3835 X 324.99 (RATE PER SQ.FT. ANNEXURE 1 ENCLOSED) = 12,46,5007- (ROUNDED OFF) 3. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE BLOCK NO, 38, PART OF NAZUL PLOT NO. 5/10 (AREA 3730 SQ.FT.) TEHSIL & DISTRICT JABALPUR, THE LAND AS THEN SOLD FOR RS. 11,40,156/- AS PER SALE DEED DT. 08.10.2003. TOTAL AREA SQ.FT. = 3730 X 324.99 + 32.49*(RATE PER SQ.FT. ANNEXURE 1 ENCLOSED )=13,33,500/- (ROUNDED OFF) 10% RATE APPLIED EXTRA FOR CORNER PLOT ---(ANNEXURE 2 BY RED COLOUR IN THE MAP ENCLOSED) 4. REGARDING MOHALLA CIVIL STATION PERMANENT LEASE B LOCK NO. 38, PART OF NAZUL PLOT NO. 5/10 (AREA 6600 SQ.FT.) TEHSIL & D ISTRICT JABALPUR, THE LAND WAS THEN SOLD FOR RS. 34,00,000/- AS PER SALE DEE D DT. 30.08.2003. TOTAL AREA SQ.FT. = 6600 X 650*(RATE PER SQ.FT. = 699 4710.76 ANNEXURE 1 ENCLOSED) = 42,90,000/- *THE SOLD PROPERTY IS BOUNDED AS UNDER AND MORE WHICH SH OWN BY RED COLOUR IN THE MAP ENCLOSED ANNEXURE 3 HEREWITH, WHICH SH OWN ON THE NORTH SIDE OF LAND, MAIN ROAD. THEREFORE THE RATE WI LL APPLY 6994 PER SQ. METER. 5. THEREFORE THE TOTAL SALE CONSIDERATION WI LL BE CALCULATED AT RS. 81,16,5007- U/S 50C OF THE I.T. ACT. STATEMENT OF LONG TERM CAPITAL GAIN U7S 50C THE CAPITAL GAIN WILL THEN BE COMPUTED AS FOLLOWS- TOTAL SALE CONSIDERATION AS PER MARKET VALUE LESS: RS. 81,1 6,500/- TOTAL PURCHASE VALUE INCLUDING BROKERAGE; COST OF IMPROVEMENT THERETO: RS.40,71,894/- 6 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) LONG TERM CAPITAL GAIN HAVING L/4 TH SHARE = 40,44,606/4 = RS.10,11,151/- TAX @ 20% RS. 2,02,230/- THEREAFTER, ASSESSEES SHARE WHICH IS 1/4 TH WAS CALCULATED AT RS.10,11,151/-. 6. THE ASSESSING OFFICER HAS ALSO ADDED RS.1,25,000/- AS OUT OF UNEXPLAINED AGRICULTURAL INCOME. 7. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A). WHEN THE ABOVE CALCULATION WAS CONFRONTED TO THE ASSESSEE BY THE LD CIT(A) , IT WAS SUBMITTED BY THE ASSESSEE THAT THE PLOT WAS IN BAD SHAPE AND IT WAS ALLEGED LY SUBJECT TO ENCROACHMENT AND ILLEGAL POSSESSION. FURTHER THE PROPERTY WAS UNDER CE ILING LAW. SOME OF THE PARTIES WERE RESIDING IN CALCUTTA DUE TO WHICH SALE WAS MADE IN DISTRESS CIRCUMSTANCES AND ALSO DUE TO CEILING LAW, THE ISSUE WAS DISPUTED IN COURT . IT WAS FURTHER SUBMITTED THAT THE AO WAS BOUND TO REFER THE ISSUE TO DVO BECAUSE THESE CIRCU MSTANCES WERE BROUGHT TO HIS KNOWLEDGE. THE ASSESSEE HAS ALSO RELIED ON SEVERAL CASE AUTHORITIES FOR THIS PROPOSITION. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND THE CALCULATION MADE BY THE AO, THE LD CIT(A) UPHELD THE ACTION OF THE AO, INTER ALIA, OBSERVED AS UNDER: I HAVE CAREFULLY CONSIDERED ALL THE FACTUAL SUBMISSIONS AND CASE AUTHORITIES SUBMITTED BY THE ASSESSEE. I FIND THAT TH E MAIN ISSUE IN THIS CASE IS THAT THE ASSESSEE IS OF THE OPINI ON THAT REFERENCE TO DVO IS A COMPULSION ON THE AO WHETHER OR NOT, A SPECIFIC REQUEST TO THAT AFFECT IS MADE BY THE ASSESSEE. THE PROPERTY WAS ALLEGEDLY DISPUTED IN URBAN LAND CEILING ACT. THIS DISPUTE ACCORDING TO ASSESSEE AFFECTED THE MARKET RATE AND THEREFORE SHOULD HAVE AFFE CTED THE VALUATION OF SVA ALSO. HOWEVER IN THE COURSE OF HEA RING ON 18.07.2014, IT TRANSPIRED THAT THIS WAS THE SITUATI ON AT THE TIME OF ACQUISITION OF THE PROPERTY. BY THE TIME THE SAL E HAPPENED, THE URBAN LAND CEILING ACT WAS ADMITTEDLY 7 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) REPEALED. HENCE, THE ARGUMENT OF THE ASSESSEE HAS NO LEG AL FORCE. NONETHELESS, THE ASSESSEE CONTINUES TO CONTEST THAT THE MARKET VALUE WAS AFFECTED. I FURTHER FIND THAT THE DISPUTE AT THE TIME OF ACQUISITION AS REFERRED IS GIVEN ON PAG E 3, PARA 2 OF DEED DATED 05.02.2001. HOWEVER THE SALE RE SULTING IN TRANSACTION UNDER QUESTION AND GIVING RISE TO THE PR ESENT DISPUTE IS DATED 19.11.2003. IT IS AN ADMITTED AND CON CEDED FACT AS NOTED ON 18.07.2014 ORDER SHEET N-2 OF THE APPELLATE PROCEEDINGS THAT THERE WAS NO CHALLENGE OR REFERENCE REQUEST FOR DVO MADE BY THE ASSESSEE. THIS POINT NEEDS EMPHASIS. THERE WAS NO CHALLENGE TO SVA VALUATION BY ASSESSEE BEFORE AO. AT BEST THE ASSESSEE TRIED TO EXPLAIN HIS OWN VALUATION.' IT IS LABELLED AS CLARIF ICATION BEFORE AO. WHAT WAS REQUIRED WAS A SPECIFIC CHALLENGE THAT SVA IS ABOVE FMV UNDER GIVEN SET OF FACTS AND CIRCUMSTANCES. THE LANGUAGE OF SECTION 50C(2) IS CLEAR - TH E ASSESSEE HAS TO CLAIM BEFORE AO THAT SVA IS GREATER THAN FMV AS ON DATE OF TRANSFER (NOT ON DATE OF PURCHASE AS IS DONE BY ASSESSEE - WHICH IS A FULLY IRRELEVANT CONSIDERATION - AND THAT TOO IS NOT A CLAIM BUT MERELY AN EXPLANATION)- IT IS THE-POINT OF SALE WHICH IS RELEVANT HERE. AND SECONDLY THE SVA VALUE IS NOT LEGALLY CONTESTED. THE CIRCUMSTANCES ENUMERATED ARE FOR CIRCA 26.11.1998 TO 05.02.2001 - P ERIOD OF PURCHASE BY ASSESSEE - BUT THE RELEVANT DATES FOR S.50C(2)(A) ARE 20.11.2003, 30.08.2003 AND 08.10.2003 AS REF. BY AO IN PAGE 3. WAS EVEN AN EXPLANATION OFFERED FOR THIS SALE? THE ASSESSEE IS NOT REQUIRED TO JUSTIFY COST OF ACQUISITION BUT CONSIDERATION FOR SALE. AND THE FORMER FAILS ALSO BECAUSE THE SVA/CEILING DISPUTE WAS PENDING IN COURT. THE GOLDEN RULE FOR INTERPRETATION OF STATUTE IS THE LITERAL RULE (REFER 201 ITR 729(ORI),173 ITR 479(SCX2SZFTK444(SC)).HARDSHIP OR INCONVENIENCE CANNOT ALTER -CIT VS CALCUTTA KNITWEARS(2014)362 ITR 673(SC) .THE GOT THOROUGHLY CONFUSED ON THIS - AND THE CONFUSION HAS BEEN BY LD AR IN APPELLATE PROCEEDINGS WITHOUT APPRECITING THE PROVISIONS OF LAW. THE ISSUE NOW ARISES AS TO WHETHER THE AO WAS OBLIGED TO REFER THE PROPERTY FOR VALUATION TO DVO EVEN IF NO CHA LLENGE WAS MOUNTED FOR THE SAME. I FIND THAT THE CLAIM OF T HE ASSESSEE SQUARELY DESERVES TO FAIL ON ACCOUNT OF EXPRESS PROVISION GIVEN IN SECTION 50C(2) WHERE THE ASSESSEE HAS TO MOUNT A SPECIFIC CHALLENGE BEFORE THE AO THAT THE VALUE ADOPTED BY THE SVA UNDER SUBSECTION 1 FOR THE PURPOSE OF 8 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) STAMP DUTY EXCEEDS THE FMV AS ON THE DATE OF TRANSFER. AL L THE CIRCUMSTANCES WHICH HAVE BEEN ENUMERATED RELATE TO PURCHASE OF PROPERTY AND NOT ITS SALE. FURTHER, THERE IS NO REFERENCE TO SVA IN THE CIRCUMSTANCES ENUMERATED BOTH BEFORE THE AO AND THE UNDERSIGNED. ALSO FT IS CLEAR THAT THERE WAS COURT DISPUTE REGARDING THE VALUATION OF TH E PROPERTY EVEN IF ARGUMENT OF THE ASSESSEE IS ACCEPTED. IN SUCH CIRCUMSTANCES, PROVISION OF SECTION 50C(2)(B) SHALL COME INTO PLAY WHICH BAR THE REFERENCE TO DVO IF THE VAL UE OF THE PROPERTY AS PER SVA IS DISPUTED IN ANY APPEAL/REVISION/REFERENCE MADE BEFORE ANY OTHER AUTHORITY/COURT/HIGH COURT. BE THAT AS IT MAY, THE C ASE OF THE ASSESSEE SQUARELY FAILS AT THE FIRST HURDLE ITSELF WHICH IS RELATING TO COMPULSION BEFORE THE AO FOR REFERENCE TO DVO. THE RELEVANT PROVISION OF LAW, ITS BACKGROUND AND THE RELEVANT CASE AUTHORITIES WHICH DETERMINE THE ISSUE ARE GIVEN AS UNDER : 1.SHAH YARN TEXTILE PVT LTD VS ACIT(2009)-TIOL-4L4- ITAT-MAD [ITA NO 695.AY 04-05.DATED 6.5.09] 2.AMBATTUR CLOTHING CO.LTD. VS AC1T(2009)221 CTR 196(MAD) . : .: ]'-'- 3. MOHD.SHOIB VS DCIT{2010)127TTJ459(LKO) THESE AUTHORITIES DULY TAKE INTO CONSIDERATION ISSUES RAISED IN VARIOUS JUDGEMENTS WHICH HAVE BEEN FILED BEFORE ME, EACH OF WHICH TURN ON THEIR OWN FACTS AND DO NOT CREATE ANY RATIO DECIDENDI AGAINST THE REVENUE. THE CASE AUTHORITI ES ARE TOO NUMEROUS TO MENTION. HOWEVER SUFFICE IT SHOULD TO SA Y THAT THE GOVERNING LAW AS REFERRED ABOVE DEFINES AND DETERMINES HOW SECTION 50C{2)(A) SHOULD BE CONSTITUTED. THERE IS A KEY ENQUIRY WHICH HAS BEEN MADE BY AO (WITHIN THE KNOWLEDGE OF THE ASSESSEE) WHICH IS RELATING TO FIXAT ION OF RATES BY THE SVA, THE DOCUMENT OF WHICH IS REPRODUCE D IN THE IMPUGNED ORDER. THE AO HAS DULY CONSIDERED THE ABOVE AND VALUED PROPERTY AFTER DULY CONFIRMING THE ASSESSEE WITH TH E SAME. THE AO HAS NOT MERELY APPLIED SVA RATES IN GENERAL BUT TAKING INTO CONSIDERATION SUBMISSION OF ASSESSEE, HAS CONDUCTED A DETAILED ENQUIRY, FOLLOWE D PRINCIPLE OF NATURAL JUSTICE AND HAS PASSED A SPEAK ING ORDER WHICH IS VINDICATED BY POSITION OF LAW AND RE LEVANT JUDICIAL PRONOUNCEMENTS. EVEN BEFORE ME IN APPELLA TE PROCEEDINGS THIS DOCUMENT OF SVA IS UNCHALLENGED. 9 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) ACCORDINGLY, IT IS HELD THAT THE AO HAS RIGHTLY CALCULATED THE CAPITAL GAIN AFTER APPLYING SECTION 50C(1) AND THE ADDITION MADE IN THIS REGARD IS HEREBY UPHE LD.? 8. AGGRIEVED BY THE DECISION OF LD CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 9. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROPERT Y WAS SOLD FOR RS.68,83,810/- AND THE RATE AS ADOPTED BY SVA IS RS.81 ,16,500/-. THEREFORE, THERE IS DIFFERENCE OF RS.12,32,690/- AND THE 1/4 TH DIFFERENCE THEREOF IS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE AND ALSO OTHER THREE FAMILY MEMBE RS. HE SUBMITTED THAT THE PROPERTY WAS IN DISPUTE AND THE ASSESSEE SOLD THE SAME BE LOW THE VALUATION ADOPTED BY SVA SINCE THE BANK WAS NOT READY TO FINANCE THE PURCHASERS. THESE FACTS WERE DULY BROUGHT TO THE KNOWLEDGE OF THE AUTHORITIES BELOW. 10. THE SOLE GRIEVANCE OF THE ASSESSEE BEFORE US IS THAT THE ASSESSING OFFICER HAS PROCEEDED TO ADOPT THE VALUATION OF THE PROPERTY WIT HOUT REFERRING THE VALUATION TO THE DVO. LD COUNSEL FOR THE ASSESSEE REFERRING TO SECTION 50C(2)(A) OF THE ACT, SUBMITTED THAT IF THE VALUE ADOPTED BY STAMP VALUATION AUTHOR ITY EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY AS ON DATE OF SALE, THE ASSESSING OFFICER I S REQUIRED TO REFER THE MATTER TO THE VALUATION OFFICER TO ASCERTAIN THE VALUATION AND THEREAFTER, PROCEED IN THE MANNER AS CONTAINED IN SECTION 50C(2)(A) OF THE ACT. LD COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION AS PER SALE DEED AND NOT AS PER VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY. LD COUNSE L FOR THE ASSESSEE ALSO REFERRED VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT HIS CLAIM AS UNDER: I) SHRI NIKUNJ KUMAR H JARIWALA VS ITO (ITA NO.2402/ AHD/2011) 10 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) II) MASUD AHMED QURESHI VS ITO (ITA NO.143/PN/2014) 11. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS O F LOWER AUTHORITIES AND SUBMITTED THAT IT IS NOT MANDATORY OR COMPULSION FOR THE ASSESSING OFFICER TO REFER THE MATTER FOR VALUATION OF THE PROPERTY TO VALUATION O FFICER AS THE WORD MAY HAVE BEEN USED IN THE ACT. 12. WE HAVE GIVEN CAREFUL THOUGHTS TO THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD OF THE CASE. WE OBSERVE THAT THE GRIEVANCE OF THE ASSE SSEE TO REFER THE MATTER TO THE VALUATION OFFICER WAS NOT ACCEDED BY THE REVENUE AUTHOR ITIES. THE CONTENTION OF THE ASSESSEE THAT UNDER THE PREVAILING COMPELLING SITUATION, THE PROPERTY WAS SOLD AT A LOWER RATE THAN THE RATE ADOPTED BY THE SVA. WE OBSERVE T HAT THE AO HAS MADE THE ADDITION ON THE BASIS OF THE DIFFERENCE IN THE VALUE OF THE PR OPERTY DECLARED BY THE ASSESSEE AS SALE CONSIDERATION OF THE PLOT AND THE RATE ADOPTED BY THE SVA. SECTION 50C(2) READS AS UNDER: 'SECTION 50C(2):- WITHOUT PREJUDICE TO THE PROVISIONS OF SUB- SECTION (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED [OR ASSESSED OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED [OR ASSESSED OR ASSESSABLE] BY THE ST AMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DI SPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, 11 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPIT A) ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENC E IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AN D (6) OF SECTION 16A, CLAUSE ()) OF SUB-SECTION (1) AND SUB-SECTION S (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SEC TION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY I N RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1 ) OF SECTION 16A OF THAT ACT. EXPLANATION. : [1] FOR THE PURPOSES OF THIS SECTION, 'V ALUATION 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 STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORI TY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.]' 13. LET US EXAMINE WHETHER AS PER MANDATE OF SECTION 50C(2)(A), THE ASSESSING OFFICER IS REQUIRED TO REFER THE MATTER TO THE VALUA TION OFFICER ON THE BASIS OF THE CLAIM/ REQUEST OF THE ASSESSEE. IT IS EVIDENT FROM RECORD THA T THE ASSESSES SPECIFICALLY MENTIONED THE STATUS OF PROPERTY AS WELL AS ASKED FOR V ALUATION FROM DVO. WE FIND THAT ON SIMILAR ISSUE THE ITAT PUNE BENCH IN THE CASE OF K.K .NAG LTD. VS ACIT, (ITA NOS.1298, 1304 & 1305/PN/2010) CLEARLY HELD THAT THE AO OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER FOR ASCERTAINING THE VALUE OF THE CAPITAL ASSET IN QUESTION BY ADOPTING THE COURSE IN SECTION 50C(2)(A) OF THE ACT AND THEREAFTER PROCEED TO DETERMINE CAPITAL GAIN ON SALE OF LAND AND BUILDING. THE OPERATIVE PART IN PARA 5 OF ORDER IS REPRODUCED HEREUNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL STANDS AND FIND THAT THE PLEA O F THE ASSESSEE IS QUITE JUSTIFIED. SECTION 50C OF THE ACT PRESCR IBES FOR ADOPTION OF 12 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) FULL VALUE OF CONSIDERATION IN CERTAIN CASES. IT IS PROVIDED THAT W HERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER O F A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED BY AN AUTHORI TY OF THE STATE GOVERNMENT FOR THE PURPOSES OF PAYMENT OF STAMP DUTY I N RESPECT OF SUCH TRANSFER, THEN THE VALUE SO ADOPTED BY THE STATE GOVERNMENT AU THORITY SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE SAID PROVISIONS OF SUB-SECTION (1 ) OF SECTION 50C ARE FURTHER CIRCUMSCRIBED BY SUB-SECTION (2) OF SECTION 50C. IN TERMS OF CLAUSE (A) OF SUB-SECTION (2) OF SECTION 50C, IT IS PROVIDED THAT WHER E AN ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED OR A SSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKE T VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THEN THE ASSESSI NG OFFICER MAY REFER VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. IN THIS CA SE, FACTUALLY IT IS EVIDENT THAT THE ASSESSEE HAD CLAIMED IN THE RETURN OF INCOME I TSELF THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER AS PROVIDED IN SECTION 50C(2)(A) OF T HE ACT. IN OUR VIEW, UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER INSTEAD OF STRAIGHTAW AY DEEMING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONSIDERATION. THE POINT MADE OUT BY THE REVENUE THAT IT IS ONLY DISCRETIONARY ON THE PART OF THE ASSESSING OFFICER TO REF ER THE MATTER TO THE VALUATION OFFICER, IN OUR VIEW, IS QUITE UNTENABLE. THE DI SCRETION VESTED IN THE ASSESSING OFFICER, IN OUR CONSIDERED OPINION, IN SUC H A SITUATION IS REQUIRED TO BE USED IN A JUDICIOUS MANNER. SECTION 50C OF THE A CT IS A DEEMING PROVISION AND OSTENSIBLY INVOLVE CREATION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THEREFORE, NOTWITHSTANDING T HE PRESENCE OF THE EXPRESSION 'MAY' IN SECTION 50C(2)(A), IN OUR VIEW, THE A SSESSING OFFICER IN THIS CASE OUGHT TO HAVE REFERRED THE MATTER TO THE VALUAT ION OFFICER FOR ASCERTAINING THE VALUE OF THE CAPITAL ASSET IN QUESTION. THEREFORE, IN THIS VIEW OF THE NATTER WITHOUT GOING INTO FURTHER MERITS OF THE DISPUTE, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIR ECT THE ASSESSING OFFICER TO ADOPT THE COURSE MENTIONED IN SECTI ON 50C(2)(A) OF THE ACT AND THEREAFTER PROCEED TO DETERMINE CAPITAL GAIN ON SALE OF LAND AND BUILDING. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THIS REGARD AND ADJUDICATE THE ISSUE AFRESH. THUS, ON THIS GROUND THE ASSESSEE SUCC EEDS FOR STATISTICAL PURPOSES. 14. WE ALSO OBSERVE THAT THE ITAT AHMEDABAD IN THE CASE OF SHRI NIKUNJ KUMAR H JARIWALA (SUPRA) HAVE TAKEN SIMILAR VIEW. THE OBSERVATI ON OF THE BENCH IS AS UNDER: 13 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 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 AUTHO RITY' WITHOUT REFERRING TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY. THEREFORE, THE ORDERS OF THE AUTHORITIES BEL OW ON THIS ISSUE ARE HEREBY SET ASIDE AND THE ADDITIONAL GROUND RAISED BY TH E ASSESSEE IS RESTORED BACK TO THE FILE OF AO TO DECIDE THE SAME IN ACCO RDANCE WITH LAW. NEEDLESS TO SAY THAT THE AO WOULD AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE ORDER. TH US, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURP OSES . 15. SINCE THE ISSUE AT HAND IS SIMILAR TO THE DECISIONS BY THE ITAT CITED (SUPRA), WE, RESPECTFULLY FOLLOWING THE SAME, HOLD THAT THE AO WAS N OT JUSTIFIED IN ADOPTING THE VALUE OF THE PROPERTY AS ADOPTED BY THE STAMP VALUATION AUTHORITY WITHOUT REFERRING THE MATTER TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY AND WAS SUPPOSED TO ACT WITHOUT PREJUDICED WITH JUDICIAL APPROACH, WHICH THE AO LACKS IN THIS CASE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE BACK THE INSTANT ISSUE TO THE FILE OF THE AO TO REFER THE MATTER TO TH E DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. HENCE, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 16. SINCE WE HAVE RESTORED THE ISSUE TO THE FILE OF THE AO, ON SIMILAR FINDINGS, WE ALSO REMAND THE APPEALS OF OTHER CO- ASSESSES TO THE AO WI TH THE DIRECTION TO REFER THE MATTER TO DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AND THEREAFTER TO DECIDE THE ISSUES ON MERITS. 17. THE NEXT ISSUE IS WITH REGARD THE ADDITION OF AGRI CULTURAL INCOME OF RS.1,25,000/- ON ACCOUNT OF UNEXPLAINED AGRICULTURAL EXPENDITURE. 14 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) 18. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.3,50,000/ - AND EXPENDITURE OF RS.1,75,000/- TO EARN THE INCOME. SINCE BEFORE THE AO , THE ASSESSEE COULD NOT PRODUCE THE SUPPORTING VOUCHERS, THE AO ATTRIBUTED THE UNEXPLAINED EXPENDITURE AT RS.1,25,000/- MADE ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE, WHICH WAS CONFIRMED IN APPEAL BY THE LD CIT(A). 19. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS LAND HOLDING OF 18.38 ACRES AND HAS SHOWN AGRICULT URAL INCOME OF RS.3,50,000/- IN THE RETURN OF INCOME. SINCE THE AGRICULTURAL INCOME IS EXEMPT, THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. HE SUBMITTED THAT THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IS ACCEPTED IN THE PRECEDING ASSESSMENT YEARS, H ENCE, NO DISALLOWANCE IS CALLED FOR IN THE YEAR UNDER CONSIDERATION. 20. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 21. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE HAS SHOWN AGRICULTURAL IN COME OF RS.3,50,000/- OUT OF 18.38 ACRES OF LAND OWNED BY HIM, WHICH IS NOT DISPUTED BY THE DEPARTMENT. THE ASSESSEE IS CLAIMING THAT SINCE AGRICULTURAL INCOME IS EXEMPT , HE HAS NOT MAINTAINED BOOKS OF ACCOUNT FOR THE SAME. THE DEPARTMENT HAS MADE T HE ESTIMATED ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED ANY SUPPORT ING BILLS AND VOUCHERS FOR 15 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) THE SAME. THE CONTENTION OF THE ASSESSEE THAT THE AGRI CULTURAL INCOME WAS ALSO ACCEPTED IN THE PRECEDING YEARS AND NEVER DISPUTED BY T HE DEPARTMENT. THEREFORE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE TH E ADDITION OF RS.1,25,000/- MADE ON ADHOC BASIS. 22. IN GROUND NO.2 TAKEN BY THE ASSESSES IN ITA NO.182/ JAB/.14 AND ITA NO.183/JAB/14, THE ASSESSES ARE AGGRIEVED BY THE ADHOC DI SALLOWANCE WITH REGARD TO AGRICULTURAL INCOME. 23. IN LINE WITH OUR DECISION IN ITA NO.184/JAB/14, WE DELETE THE ADHOC ADDITION MADE IN BOTH THE APPEALS. 24. IN THE RESULT, APPEALS FILED BY THE ASSESSES IN ITA NOS.182, 183 & 184/JAB/2014 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 185/JAB/.2014 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06/4/2016 . SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER JABALPUR, DATED 06 / 4/2016 PARIDA , SR. PS 16 I.T.A. NOS.182 TO185 /JAB/2014 (ASSESSMENT YEAR :2004-05) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT S: MANJEET SINGH MOKHA/SARABJEET SINGH MOKHA/GURU CHARAN KAUR MOKHA ARPIT APARTMENT, SWAMI DAYANAND SARASWATI WARD, NAPIER TOWN, JABALPUR SMT. JASMEET KAUR MOKHA, B-1, ANUMIT ENCLAVE, PACHPEDI, SOUTH CIVIL LINES, JABALPUR 2. THE RESPONDENT: ACIT, CIRCLE 2(1), JABALPUR 3. THE CIT(A). JABALPUR 4. CIT . JABALPUR 5. DR, ITAT, JABALPUR 6. GUARD FILE. BY ORDER, //TRUE COPY// SR. PS, ITA T, CAMP: JABALP UR