Rupakula Srinivas, Hyderabad V. ITO, Ward-1(1), Hyderabad

ITA 1859/HYD/2012

• Counselvise Citation: 185922514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 26-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: I RAMA RAO
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Tangible material; Fair market value; Corroborative evidences; Valuation report; Reason to believe; Reassessment proceedings
• Section: 50C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1859/HYD/2012 ASSESSMENT YEAR : 2007-08 RUPAKULA SRINIVAS, HYDERABAD PAN AICPR 8808B INCOME-TAX, WARD 1(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI I. RAMA RAO REVENUE BY SHRI R. MOHAN REDDY DATE OF HEARING 23-06-2014 DATE OF PRONOUNCEMENT 13-08-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18/10/12 OF THE CIT(A)-II, HYDERABAD, PERTAINING TO THE AY 2007-08. 2. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL IS A DIRECTOR IN BAY DATA.COM SOLUTIONS LTD. FOR THE AY UNDER DISPUTE, H E FILED HIS RETURN OF INCOME ON 26/12/2007 DECLARING TOTAL INCOME AT R S. 3,45,683/-. THE SOURCE OF INCOME BEING COMMISSION INCOME AND SHORT TERM CAPITAL GAIN FROM SALE OF RESIDENTIAL HOUSE. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 08/12/2010 AND INTIMATION WAS ISSUED RAISING DEMAND OF RS. 47,910/- DUE TO MISMATCH OF TDS. SUBS EQUENTLY, INFORMATION CAME TO THE POSSESSION OF THE AO THAT W HILE THE ASSESSEE HAD WORKED OUT CAPITAL GAIN ON THE SALE CONSIDERATI ON OF RS. 90,5000/- AS MENTIONED IN THE REGISTERED SALE DEED, THE VALUE 2 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. ADOPTED BY THE SRO FOR STAMP DUTY PURPOSE WAS RS. 1 ,87,36,000/-. THE AO BEING OF THE OPINION THAT THERE IS UNDER VAL UATION OF SALE CONSIDERATION IN TERMS OF SECTION 50C(1) OF THE ACT , REOPENED THE ASSESSMENT U/S 147 OF THE ACT AFTER RECORDING REASO NS AND ISSUED A NOTICE U/S 148 OF THE ACT ON 06/12/2010. IN RESPONS E TO THE SAID NOTICE, ASSESSEE FILED A RETURN OF INCOME ON 04/01/ 2011 REVISING THE TOTAL INCOME TO RS. 3,94,100/- AFTER INCLUDING INTE REST EARNED ON SAVINGS BANK ACCOUNT. DURING REASSESSMENT PROCEEDIN G, THE AO ON THE BASIS OF INFORMATION AVAILABLE WITH HIM NOTICED THAT THE ASSESSEE HAD PURCHASED A PROPERTY COMPRISING OF HOUSE AND LA ND APPURTENANT THERETO BEARING MCH NO. 8/8-2-93/82/JI/PLOY 509/, A T ROAD NO 83, JUBILEE HILLS, HYDERABAD ON THE SITE ADMEASURING 62 3 SQ.YARD ON 29/12/2005 AT HYDERABAD DATED 29/09/2006 FOR SALE C ONSIDERATION OF RS. 90,50,000/-, THOUGH, THE SRO FOR STAMP DUTY PUR POSES HAS ADOPTED THE FAIR MARKET VALUE OF RS. 1,87,36,000/-. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE VALUE A DOPTED BY THE SRO FOR STAMP DUTY PURPOSES SHOULD NOT BE CONSIDERE D AS THE AMOUNT DEEMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. ASSESSEE, IN RESPONSE, OBJECTED TO THE ADOPTION OF SRO VALUE BY RAISING TH E FOLLOWING ISSUES: 1. EXTENT OF LAND AS PER THE DOCUMENT THOUGH IS 623 SQ.YARDS, BUT, PHYSICAL AVAILABILITY OF LAND WAS 580 SQ.YARD S WITH A SHORTAGE OF 48 SQ.YARDS. 2. DUE TO SEVERE VAASTU DEFECT, AREA OF 125 SQ.YDS WAS NOT USABLE FOR CONSTRUCTION PURPOSES. 3. VENDEE HAD PAID THE CONSIDERATION AFTER DEDUCTIN G THE AMOUNTS TOWARDS ABOVE DEFECTS. IN VIEW OF THE OBJECTION RAISED BY THE ASSESSEE IN RESPECT OF VALUATION MADE BY THE SRO, AO IN TERMS WITH SECTION 50C(2) OF THE ACT, MADE A REFERENCE TO THE DVO FOR ASCERTAINING FAIR MARKET V ALUE OF THE PROPERTY. THE DVO CALLED FOR THE OBJECTIONS OF THE ASSESSEE AND AFTER CONSIDERING THE SAME, DETERMINED THE FAIR MARKET VA LUE OF THE 3 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. PROPERTY AT RS. 1,75,32,364/- VIDE HIS VALUATION RE PORT DATED 29/12/2011. THOUGH, THE ASSESSEE OBJECTED TO THE FA IR MARKET VALUE DETERMINED BY THE DVO, BUT, THE AO REJECTING OBJECT IONS OF THE ASSESSEE, ADOPTED THE FAIR MARKET VALUE DETERMINED BY THE DVO AT RS. 1,75,32,364/- AS THE DEEMED SALE CONSIDERATION RECEIVED BY THE ASSESSEE AND, ACCORDINGLY, COMPUTED THE SHORT TERM CAPITAL GAIN AT RS. 78,58,884/-, AS A RESULT OF WHICH, THE TOTAL IN COME WAS DETERMINED AT RS. 78,68,220/-. BEING AGGRIEVED OF THE ASSESSME NT ORDER, SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A). THE CIT(A) ALSO REJECTED ALL CONTENTIONS RAISED BY THE ASSESS EE AND CONFIRMED THE ASSESSMENT ORDER PASSED BY THE AO. 3. BEING AGGRIEVED OF THE ORDER PASSED BY THE CIT(A ), ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. THE CIT(A) HAS ERRED IN CONSIDERING THE MARKET V ALUE OF LAND AS RS. 1,75,32,364 ESTIMATED BY THE DEPARTMENT VALU ATION OFFICER. 2. THE CIT(A) HAS ERRED IN CONSIDERING THE MARKET V ALUE AS ESTIMATED BY THE DEPARTMENT VALUATION OFFICER WITHO UT TAKING COGNIZANCE OF ASSESSEES PLEA THAT THE PHYSICAL AVA ILABILITY OF LAND WAS 580 SQ.YDS AS AGAINST THE AREA OF 628 SQ.Y DS. MENTIONED IN DOCUMENT. 3. THE CIT(A) ERRED IN NOT CONSIDERING THE ASSESSEE S SUBMISSION OF EXISTENCE OF SEVERE VAASTU DEFECT REN DERING THE AREA 125 SQ.YDS AS NOT USABLE. 4. THE CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT OF SLOPING TOPOGRAPHY OF THE LAND. THE BUYER REDUCED SALE CONS IDERATION AS HE HAD TO INVEST SUBSTANTIAL MONIES TO MAKE THE LAND FIT FOR CONSTRUCTION OF HOUSE. 5. THE CIT(A) HAS ERRED IN IGNORING THE FACT THAT T HE GOVERNMENT OF ANDHRA PRADESH HAS SUBSTANTIALLY INCR EASED THE FAIR MARKET VALUE OF THE PROPERTY FOR LEVY OF STAMP DUTY FROM RS. 12000 PER YARD TO RS. 30000 PER YARD I.E. 150% INCR EASED IN THE VALUE WITHIN A SHORT SPAN OF 9 MONTHS WITHOUT C ONSIDERING THE MARKET CONDITIONS PREVAILING AT THAT TIME. THE REVISED FAIR MARKET VALUE DOES NOT CORRECTLY REFLECT THE VALUE O F THE PROPERTY WITH SO MANY DEFICIENCIES/DEFECTS MENTIONED ABOVE. 4. IN ADDITION TO THE AFORESAID MAIN GROUND, ASSESS EE RAISED THE FOLLOWING ADDITIONAL GROUNDS BEFORE THE TRIBUNAL AN D REQUESTED FOR ADJUDICATING THE SAME. 4 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. 1. THE LEARNED AO OUGHT NOT TO HAVE EXERCISED THE J URISDICTION U/S 147 OF THE IT ACT, 1961 INASMUCH AS THERE ARE N O REASONS TO BELIEVE THAT THE INCOME GOT ESCAPED ASSESSMENT FROM TAX, INASMUCH AS, THE PROVISIONS OF SECTION 50COF THE IT ACT, 1961 HAD ENACTED ONLY REBUTTABLE PRESUMPTION AND IT CAN ONLY BE A STARTING POINT OF AN ENQUIRY, BUT CANNOT BE THE SOL E CONCLUDING REASON TO HOLD THAT THERE WAS UNDERSTATEMENT OF SAL E CONSIDERATION. 2. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE LEARN ED CIT(A) OUGHT NOT TO HAVE APPLIED THE PROVISIONS OF SECTION 50C OF THE IT ACT, 1961 IN VIEW OF THE EXPLANATION FURNISHED B Y THE APPELLANT THAT THE ACTUAL CONSIDERATION RECEIVED WA S LESS THAN THE STAMP DUTY VALUE FOR THE REASONS THAT THE PLOT SOLD HAD SEVERE VASTHU DEFECTS AND ON THE PHYSICAL MEASURE MENT, THE AREA OF THE PLOT WAS SHORT BY 43 SQ.YARDS. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE METHOD OF VALUATION DONE BY THE DVO IS NOT ACCEPTAB LE AND CANNOT BE TAKEN AS EVIDENCE. 5. AS CAN BE SEEN FROM THE ADDITIONAL GROUND, GROUN D NO. 1 IS CHALLENGING THE VALIDITY OF PROCEEDING U/S 147 OF T HE ACT, WHEREAS, GROUND NOS. 2 & 3 ARE MORE OR LESS OFF-SHOOTS OF THE MAIN GROUND. THEREFORE, GROUND NOS. 2 & 3 OF ADDITIONAL GROUNDS CAN BE CONSIDERED ALONG WITH THE MAIN GROUNDS. 6. SO FAR AS ADDITIONAL GROUND NO. 1 IS CONCERNED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE NEITHER AT TH E STAGE OF ASSESSMENT NOR BEFORE THE CIT(A) HAS RAISED ANY IS SUE WITH REGARD TO VALIDITY OF PROCEEDING INITIATED U/S 147 OF THE ACT. HOWEVER, CONSIDERING THE FACT THAT THE ISSUE BEING RAISED IN THE AFORESAID GROUND IS A PURELY LEGAL AND JURISDICTIONAL ISSUE G OING TO THE ROOT OF THE MATTER AND CAN BE DECIDED ON THE BASIS OF FACTS AVAILABLE ON RECORD, WE ADMIT THE SAME BY FOLLOWING THE RATIO LA ID DOWN BY THE HONBLE APEX COURT IN CASE OF NTPC VS. CIT, 229 ITR 383 AND PROPOSE TO ADJUDICATE THE SAME AT THE FIRST INSTANC E. 7. AS CAN BE SEEN FROM THE FACTS AND MATERIALS ON R ECORD, IN COURSE OF ASSESSMENT PROCEEDING, FOR THE SUBSEQUENT ASSESSMENT 5 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. YEAR I.E. 2008-09, THE AO CAME INTO POSSESSION OF T HE SALE DEED FOR SALE OF PROPERTY AT JUBILEE HILLS AND ON EXAMINING THE SAME, AO NOTICED THAT THOUGH THE SALE CONSIDERATION WAS MENT IONED AS RS. 90,50,000/-, BUT, THE SRO WITHOUT ACCEPTING IT HAS ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE AT RS. 1,87,36,000/-. AS THE ASSESSEE IN THE RETURN OF INC OME FILED FOR THE IMPUGNED ASSESSMENT YEAR HAD COMPUTED THE SHORT TER M CAPITAL GAIN BY ADOPTING SALE CONSIDERATION AT RS. 90,50,000/- W HEREAS AS PER SECTION 50C(1) OF THE ACT, THE VALUE ADOPTED BY THE SRO SHOULD BE CONSIDERED AS DEEMED SALE CONSIDERATION, THE AO HAD REASON TO BELIEVE THAT INCOME TO THAT EXTENT HAS ESCAPED ASSE SSMENT AND, ACCORDINGLY, REOPENED THE ASSESSMENT BY RECORDING R EASONS. 8. THE LEARNED AR CHALLENGING THE EXERCISE OF POWER BY THE AO U/S 147 OF THE ACT, BROADLY STATED AS UNDER: 1. THE AO HAS REOPENED THE ASSESSMENT SOLELY ON THE BASIS OF THE REGISTERED SALE DEED FILED IN COURSE OF THE AS SESSMENT PROCEEDING FOR THE SUBSEQUENT ASSESSMENT YEAR. 2. AO HAD NO TANGIBLE MATERIAL AVAILABLE WITH HIM O N THE BASIS OF WHICH HE COULD HAVE FORMED A REASON TO BELIEVE T HAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. FOR THIS PROPOSITION, HE RELIED ON THE FOLLOWING DECISIONS: I) CIT VS. ORIENT CRAFT LTD., [2013] 354 ITR 536 ( DEL.) II) RATNA TRAYI REALITY SERVICES P. LTD., V. ITO [2 013] 356 ITR 493 (GUJ.) III) INDUCTOTHERM (INDIA) PVT. LTD. V. M. GOPALAM, DCIT [2013] 356 ITR 481 (GUJ.) IV) INDIVEST PTE LTD. VS. ADDL. DIT [2013] 350 ITR 120 V) MOHAN GUPTA (HUF) V. CIT-XI AND ANR. W.P.(C) 7660/2012, DATED 28/01/14 DELHI HIGH COURT. 3) SECTION 50C(1) IS NOT AN ABSOLUTE PROVISION FOR MAKING ADDITION SIMPLY BECAUSE THE RECORDED CONSIDERATION IS LOWER 6 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. THAN THE VALUE ADOPTED FOR STAMP DUTY PURPOSES BY T HE SRO. SUB-SECTION (2) & (3) OF SECTION 50C PROVIDE EXCEPT IONS. SINCE EXCEPTIONS ARE PROVIDED, THERE CANNOT BE ANY ABSOLU TE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE PROVISION CONTAINED U/S 50C(1) CAN GIVE RAISE FOR A REASON TO SUSPECT, BUT, NOT REASON TO BELIEVE. ASSESSMENT CANNOT BE R EOPENED ON REASON TO SUSPECT. IN THIS CONTEXT, LEARNED AR REFE RRED TO THE DECISIONS IN CASE OF INDIAN OIL CORPORATION, 159 IT R 956 AND 103 ITR 437 9. IT WAS SUBMITTED, THE PROVISION CONTAINED U/S 50 C CAN BE THE STARTING POINT OF AN ENQUIRY BUT CANNOT BE THE SOLE CONCLUDING REASON TO HOLD THAT THERE WAS UNDERSTATEMENT OF SALE CONSI DERATION WHICH CAN LEAD AO TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. FOR SUCH PROPOSITION, LEARNED AR RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT, DELHI-II VS. KHOOBHSURAT RESORTS PVT. LTD., 211 TAXMAN 510 (DELHI) 10. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT PROVISION CONTAINED U/S 50C(1) IS A DEEMING PROVISION. SINCE THE AO WAS IN POSSESSION OF INFORMATION TO SHOW THAT FAIR MARKET VALUE ADOPTED BY THE SRO FOR STAMP DUTY PURPOSES WAS MUCH MORE THAN THE REGISTERED SALE CONSIDERATION THERE IS ESCAPEMENT OF ASSESSMEN T IN TERMS WITH SECTION 147, HENCE, EXERCISE OF POWER U/S 147 IS VA LID. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE DECISIONS CI TED. THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT IS AS UNDER: IT IS FOUND DURING THE COURSE OF SCRUTINY PROCEEDIN GS THAT DURING THE FY 07-08, THE A HAS SOLD A PROPERTY VIDE SALE DEED DT. 29.9.06 FOR A CONSIDERATION OF RS. 90.50 LAKHS AND THE PURCHASE CONSIDERATION AS PER DEED DT. 29/12/05 IS RS. 74.76 LAKHS. 7 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. AS PER THE COMPUTATION FILED FOR THE AY 07-08, THE CONSIDERATION SHOWN IS RS. 90.50 LAKHS AND COST IS SHOWN ON RS. 7 4.76 LAKHS, CLAIMING SOME EXP., CAPITAL GAIN OF RS. 3.84 LAKHS IS SHOWN. AS SEEN FROM THE SALE DEED DOCUMENT, THE VALUE OF T HE SALE DEED AS PER THE SUB-REGISTRAR IS RS. 1,27,36,000/-. AS PER SECTION 50C, THE A SHOULD HAVE TAKEN RS. 1,27,36,000/- AS SALE CONSIDERATION. AS I HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED, THE ASSESSMENT IS BEING REOPENED BY IS SUE OF NOTICE U/S 148 FOR THE AY 2007-08. 12. AS CAN BE SEEN FROM THE REASONS RECORDED, IN CO URSE OF SCRUTINY ASSESSMENT PROCEEDING FOR THE SUBSEQUENT ASSESSMENT YEAR I.E. AY 2008-09, ASSESSEE SUBMITTED A COPY OF THE REGISTERE D SALE DEED FOR SALE OF PROPERTY AT BANJARA HILLS. ON EXAMINING THE SAME, AO NOTICED THAT THOUGH THE SALE CONSIDERATION AS MENTIONED IN SALE DEED IS RS. 90,50,000/-, BUT THE SRO FOR STAMP DUTY PURPOSES AD OPTED THE FAIR MARKET VALUE AT RS. 1,87,36,000/- ( IN THE REASONS RECORDED, AO HAS WRONGLY MENTIONED AS RS. 1,27,36,000/-). SINCE ASSE SSEE HAS COMPUTED CAPITAL GAIN FOR THE IMPUGNED ASSESSMENT Y EAR BY ADOPTING REGISTERED SALE CONSIDERATION OF RS. 90,50,000/-, A O WAS OF THE VIEW THAT THERE IS AN UNDERSTATEMENT OF INCOME IN TERMS WITH SECTION 50C(1) OF THE ACT. IN OUR VIEW, ON THE BASIS OF THE AFORESAID FACTS, IT CAN BE CONCLUDED THAT THERE IS ESCAPEMENT/UNDERSTAT EMENT OF INCOME IN TERMS WITH SECTION 147 OF THE ACT, ENABLING THE AO TO EXERCISE HIS JURISDICTION FOR REOPENING THE ASSESSMENT. THE CONT ENTION OF THE LEARNED AR THAT SECTION 50C(1) IS NOT ABSOLUTE PROV ISION FOR MAKING THE ADDITION AS SUB-SECTION (2) & (3) OF SECTION OF SECTION 50C, IN OUR VIEW, IS DEVOID OF MERIT. THERE IS NO DISPUTE TO THE FACT THAT SECTION 50C(1) IS A DEEMING PROVISION, WHICH, MANDATES THAT IF THE FAIR MARKET VALUE ADOPTED BY THE SRO FOR STAMP DUTY PURPOSES IS MORE THAN THE SALE CONSIDERATION DISCLOSED BY THE ASSESSEE, FAIR MARKET VALUE ADOPTED BY THE SRO FOR STAMP DUTY PURPOSES SHOULD B E DEEMED TO BE SALE CONSIDERATION. THOUGH, THE ASSESSEE IN TERMS W ITH SECTION 50C(2) CAN OBJECT TO ADOPTION OF SUCH VALUE, IT CAN NOT BE DENIED THAT 8 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. UNDERSTATEMENT IN SALE VALUE IN TERMS WITH SECTION 50C(1) OF THE ACT IS PRIMA-FACIE ESTABLISHED. IN THAT VIEW OF THE MAT TER, THE AO WAS JUSTIFIED IN FORMING BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IN TERMS WITH SECTION 147 OF THE ACT. IT IS NEITHER N ECESSARY NOR MANDATORY THAT AT THE TIME OF RECORDING OF REASONS ITSELF THE AO SHOULD COME TO A CONCLUSION THAT THERE WILL BE ADDI TION OF THE ESCAPED INCOME AS PER THE REASONS RECORDED. THE ONLY REQUIR EMENT IN LAW IS, THE AO PRIMA FACIE MUST HAVE REASON TO BELIEVE, ON THE BASIS OF MATERIAL IN HIS POSSESSION, THAT INCOME HAS ESCAPED ASSESSMENT. IN THE FACTS OF THE PRESENT CASE, THE FAIR MARKET VALU E ADOPTED BY THE SRO FOR STAMP DUTY PURPOSES WAS NEITHER DISCLOSED B Y THE ASSESSEE IN THE RETURN FILED FOR THE IMPUGNED ASSESSMENT YEA R NOR WAS AVAILABLE BEFORE THE AO WHEN THE RETURN WAS PROCESS ED. UNDISPUTEDLY, THIS INFORMATION CAME TO THE POSSESSI ON OF THE AO SUBSEQUENTLY IN THE COURSE OF THE SCRUTINY ASSESSME NT PROCEEDING FOR AY 2008-09 WHEN HE EXAMINED THE REGISTERED SALE DEE D. IN THAT VIEW OF THE MATTER, SINCE THERE WAS A FRESH MATERIAL WHI CH CAME TO THE POSSESSION OF THE AO, SUBSEQUENTLY, WHICH REVEALED UNDERSTATEMENT OF SALE VALUE, THE AO IS EMPOWERED UNDER THE ACT TO REOPEN THE ASSESSMENT U/S 147. FURTHER, THE ASSESSMENT IN THE PRESENT CASE HAS ALSO BEEN REOPENED WITHIN 4 YEARS AND THAT TOO FOR AY 2007-08 THERE WAS NO SCRUTINY ASSESSMENT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT REOPENING OF ASSESSMENT U/S 147 OF THE AC T IS VALID. THE DECISIONS RELIED UPON BY THE LEARNED AR, ON CAREFUL EXAMINATION, WERE FOUND TO BE NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. ACCORDINGLY, WE DISMISS THE GROUND RAISED BY THE AS SESSEE. 13. SO FAR AS THE MERITS OF THE ISSUE AS RAISED IN THE MAIN GROUNDS AS WELL AS GROUND NO. 2 & 3 OF THE ADDITIONAL GROU NDS RELATING TO VALUE DETERMINED BY THE DVO AND ADOPTED BY THE AO, THE LEARNED AR SUBMITTED BEFORE US THAT THE METHODOLOGY ADOPTED BY THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY I S CONTRARY TO THE PROVISIONS CONTAINED U/S 2(22B) OF THE ACT. 9 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. 14. IT WAS SUBMITTED THAT AS PER SECTION 2(22B), CL AUSE (1), THE FAIR MARKET VALUE SHOULD BE THE VALUE WHICH THE ASSET WO ULD ORDINARILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DA TE. IT WAS SUBMITTED THAT WHILE DETERMINING THE VALUE OF THE P ROPERTY, THE DVO HAS CONSIDERED THIS COMPARABLE INSTANCES OF SALE WH ICH TOOK PLACE AFTER MORE THAN SEVEN MONTHS FROM THE DATE OF SALE OF PROPERTY BY THE ASSESSEE. IT WAS, THEREFORE, CONTENDED THAT CLAUSE (1) OF SECTION 2(22B) WAS NOT COMPLIED. FURTHER, IT WAS SUBMITTED THAT DVO HAS BASED HIS OPINION ON THE BASIS OF THE VALUE ASSESSE D BY THE SRO FOR REGISTRATION PURPOSES. IT WAS SUBMITTED THAT DVO HA S CHOSEN COMPARABLE INSTANCES OF SALE WHICH ARE NOT PROXIMAT E EITHER FROM TIME ANGLE OR FROM SITUATION ANGLE OF THE SUBJECT P ROPERTY. IT WAS SUBMITTED THAT THOUGH THE ASSESSEE HAD RAISED SPECI FIC OBJECTIONS WITH REGARD TO ADVERSE FACTORS WHICH CONTRIBUTED FO R CONSIDERABLE REDUCTION IN VALUE OF THE PROPERTY, SUCH, AS VAASTU DEFECTS, LEVELING OF LAND AND ON ACCOUNT OF SHORTAGE OF AREA BUT THE DVO HAD NOT AT ALL CONSIDERED THEM IN PROPER PERSPECTIVE. IT WAS SUBMI TTED THAT THOUGH THESE SPECIFIC OBJECTIONS WERE RAISED AT ALL STAGES BY THE ASSESSEE, NEITHER THE DVO NOR THE AO OR CIT(A) CONSIDERED THE M IN A PROPER MANNER. THE LEARNED AR SUBMITTED THAT ADOPTION OF A VERAGE VALUE OF LAND ON THE BASIS OF SRO VALUE, CANNOT BE CONSIDER ED AS FAIR MARKET VALUE. IT WAS SUBMITTED THAT THE CONCEPT OF FAIR MA RKET VALUE ENVISAGES OF HYPOTHETICAL SELLER AND HYPOTHETICAL B UYER IN HYPOTHETICAL MARKET, THEREFORE, DETERMINATION OF FA IR MARKET VALUE OF A CAPITAL ASSET COULD ALWAYS INVOLVE AN ELEMENT OF ES TIMATION BASED ON RELEVANT FACTORS. IT WAS SUBMITTED, THE VALUATION REPORT BASED ON THE VALUE REGISTER MAINTAINED BY SRO FOR STAMP DUTY CAN NOT BE TAKEN AS A BASIS FOR THE PURPOSE OF VALUING FAIR MARKET VALU E. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR RELIED UPON A NUMB ER OF DECISIONS AS MENTIONED IN HIS WRITTEN SUBMISSIONS. IT WAS SU BMITTED THAT THOUGH THE ASSESSEE IN COURSE OF PROCEEDING BEFORE THE DV O AS WELL AS SUBSEQUENTLY BEFORE THE DEPARTMENTAL AUTHORITIES PO INTED OUT VARIOUS 10 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. DEFECTS AND DEFICIENCIES IN THE REPORT OF THE DVO A ND RAISED SPECIFIC ISSUES ON DISCOUNT TO BE GIVEN ON VARIOUS COUNTS, THE DVO HAS GIVEN DISCOUNT OF 5% ONLY, WHICH WAS SUSTAINED BY THE AO AND CIT(A) WITHOUT PROPER APPLICATION OF MIND. REITERATING TH E SUBMISSIONS MADE BEFORE DEPARTMENTAL AUTHORITIES, IT WAS SUBMITTED T HAT BUYER HAD INCURRED NEARLY RS. 30 LAKHS TOWARDS LEVELING OF TH E LAND AND DUE TO SHORTAGE OF LAND AND VAASTU DEFECTS LAND TO THE EXT ENT OF ABOUT 168 SQ.YDS. COULD NOT BE USED WHICH CONSIDERABLY REDUCE D THE SALE CONSIDERATION. IN THIS CONTEXT, LEARNED AR REFERRE D TO THE LETTER OF THE BUYER CONFIRMING THESE FACTS. IT WAS, THEREFORE, CO NTENDED THAT AS THE DVO HAS NOT GIVEN DISCOUNTS ON ALL THESE FACTORS, T HE VALUE DETERMINED BY THE DVO CANNOT BE ADOPTED AS THE FAIR MARKET VALUE. 15. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT ONCE THE AO REFERS THE VALUATION TO THE DVO IN TERMS WITH SECTI ON 50C(2) OF THE ACT, HE HAD NOT OTHER OPTION BUT TO ADOPT THE VALUE DETERMINED BY THE DVO. HOWEVER, THE LEARNED DR SUBMITTED THAT IF THE BENCH FEELS THAT OBJECTIONS RAISED BY THE ASSESSEE WITH REGARD TO VA LUATION MADE BY THE DVO NEEDS CONSIDERATION, THEN, THE DVO MUST BE GIVEN AN OPPORTUNITY TO EXPLAIN THE METHOD ADOPTED BY HIM FO R VALUATION OF THE PROPERTY. IN SUPPORT OF SUCH SUBMISSION, THE LEARN ED DR RELIED ON THE DECISION IN THE CASE OF CIT VS. PRABHU STEEL INDUST RIES LTD., 36 TAXMAN.COM 393 (BOM.) 16. IN THE REJOINDER, THE LEARNED AR SUBMITTED THAT AO CANNOT BE GIVEN A SECOND OPPORTUNITY TO JUSTIFY VALUATION. IN SUPPORT OF SUCH CONTENTION, HE RELIED ON THE DECISION IN CASE OF Z UARI LEASING AND FINANCE LTD. VS. ITO, [2008] 112 ITD 205. 17. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES, PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS OF THE REVE NUE AUTHORITIES. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISI ONS CITED BY THE PARTIES. AS CAN BE SEEN FROM THE FACTS ON RECORD FR OM THE STAGE OF 11 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. REASSESSMENT PROCEEDINGS, THE ASSESSEE HAS TRIED TO JUSTIFY SALE CONSIDERATION MENTIONED IN THE SALE DEED BY STATING THAT THOUGH THE AREA OF LAND AS PER THE DOCUMENT WAS 623 SQ.YDS. BU T LAND PHYSICALLY AVAILABLE WAS ONLY 580 SQ.YDS. IT IS THE FURTHER CO NTENTION THAT DUE TO SEVERE VAASTU DEFECT AREA OF 125 SQ.YDS. WAS NOT US ABLE FOR CONSTRUCTION PURPOSES AND THE BUYER HAS ALSO SPENT AN AMOUNT OF RS. 30 LAKHS TOWARDS LEVELING AND CONSTRUCTION OF RETEN TION WALL. IT IS SEEN THAT, THOUGH THE DVO HAS ACCEPTED CERTAIN SPECIFIC ISSUES RAISED BY THE ASSESSEE IN THIS REGARD, HE HAS NOT PROPERLY GI VEN DISCOUNT TOWARDS THE SAME. FURTHER, AS CAN BE SEEN FROM THE ANNEXURE II OF THE VALUATION REPORT, WHICH CONTAINS SALE INSTANCES CONSIDERED BY THE DVO FOR COMPARABILITY PURPOSE, IN ALL THESE CASES S ALES WERE EFFECTED STARTING FROM THE PERIOD 02/05/2007 TO 02/11/2007 I .E. IN F.Y. 2007- 08, WHEREAS ASSESSEE HAS SOLD THE PROPERTY ON 19/09 /2006 IN FY 2006-07 RELEVANT TO AY 2007-08. AS CAN BE SEEN FROM THE FACTS ON RECORD, ASSESSEE HAS PURCHASED THE PROPERTY ON 29/1 2/2005 AND SOLD IT ON 29/09/2006 WITHIN A PERIOD OF 9 MONTHS FROM THE DATE OF PURCHASE. THEREFORE, IF THE VALUE OF THE PROPERTY C AN APPRECIATE BY 150% I.E. FROM PURCHASE VALUE OF RS. 12,000/- PER S Q. YARD TO DEEMED SALE VALUE OF RS. 30,000/- PER SQ. YARD AS PER SRO, THEN, THE SAME LOGIC WILL ALSO APPLY TO THE COMPARABLE SALE INSTAN CES CONSIDERED BY THE DVO, WHICH ARE IN THE FY 2007-08 I.E. MORE THAN SEVEN MONTHS AFTER THE SALE OF PROPERTY BY THE ASSESSEE. THEREFO RE, THE VALUE OF THE PROPERTY ON THE DATE OF SALE OF COMPARABLE CASES CA NNOT BE APPLIED TO THE ASSESSEES PROPERTY, WHICH WAS SOLD ON 29/09/20 06. IN THIS REGARD, WE ARE OF THE VIEW, ASSESSEES OBJECTION I S VALID. IF AT ALL THE DVO IS TO CONSIDER COMPARABLE SALE INSTANCES, THEN, HE HAS TO CONSIDER THE SALE INSTANCES OF THE RELEVANT DATE WH EN THE ASSESSEE SOLD PROPERTY OR DATES PROXIMATE TO THAT DATE. HE C ANNOT TAKE COMPARABLE INSTANCES OF SALE WHICH HAPPENED 7/8 MO NTHS AFTER THE DATE OF SALE OF PROPERTY BY THE ASSESSEE. FURTHER, CONSIDERING THE APPRECIATION IN VALUE OF THE PROPERTY AS PER THE SR O GUIDE LINE THE DISCOUNT GIVEN BY THE DVO ON BACKWARD CALCULATION, IN OUR VIEW, IS 12 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. NOT FAIR. IN THE AFORESAID VIEW OF THE MATTER, IN O UR OPINION, THE VALUE DETERMINED BY THE DVO CANNOT BE TREATED AS THE FAIR MARKET VALUE OF THE PROPERTY. AT THE SAME TIME, WE ALSO CANNOT ACC EPT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IN ABSENCE OF A DEQUATE EVIDENCE. THOUGH, THE ASSESSEE HAS CONTENDED THAT T HE ACTUAL EXTENT OF LAND AS PHYSICALLY AVAILABLE IS LESS THAN WHAT I S MENTIONED IN DOCUMENT, BUT, THE SAME NEEDS TO BE SUBSTANTIATED B Y PRODUCING SUPPORTING EVIDENCE. AS IT APPEARS NEITHER ANY PHY SICAL VERIFICATION HAS BEEN DONE AT ANY STAGE TO ASCERTAIN THE EXACT E XTENT OF LAND NOR ANY CONCLUSIVE EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH SUCH CLAIM. . SO, SIMPLY RELYING UPON THE CONFIRMAT ION OF THE BUYER, ASSESSEES CLAIM OF SHORTAGE OF LAND CANNOT BE ACCE PTED WHEN THE REGISTERED SALE DEED CLEARLY MENTIONS THE AREA OF L AND AT 623 SQ.YARDS. SIMILARLY, IT IS A FACT ON RECORD THAT WH ILE ASSESSEE HAS MENTIONED THE SALE CONSIDERATION AT RS. 90,50,000/- , THE SRO ADOPTED FAIR MARKET VALUE FOR STAMP DUTY PURPOSES A T RS. 1,87,36,000/- AND THE DVO HAS ADOPTED FMV AT RS. 1, 75,32,000/-. ASSESSEE ON HIS PART HAS NOT SUBMITTED ANY REPORT F ROM A REGISTERED VALUER TO SUBSTANTIATE THAT SALE CONSIDERATION SHOW N BY HIM IS THE ACTUAL FAIR MARKET VALUE. NO OTHER EVIDENCE HAS ALS O BEEN PRODUCED BY THE ASSESSEE IN THE NATURE OF COMPARATIVE INSTAN CES OF SALE IN THE SAME LOCALITY ON RELEVANT DATE TO SHOW THAT SALE CO NSIDERATION MENTIONED IN THE REGISTERED SALE DEED IS THE ACTUAL FAIR MARKET VALUE ON THE RELEVANT DATE. THEREFORE, IN THE ABSENCE OF ALL THESE EVIDENCES, ASSESSEES CLAIM ALSO CANNOT BE ACCEPTED IN TOTO. LEARNED AR HAS RELIED UPON A NUMBER OF DECISIONS TO JUSTIFY HIS CONTENTION AND ALSO FOR THE PROPOSITION THAT MATTER SHOULD NOT BE REMITTED TO THE AO. THOUGH THERE CANNOT BE ANY DISPUTE REGARDING THE PR INCIPLES LAID DOWN IN THESE DECISIONS, HOWEVER, RATIO DECIDED THE REIN ARE IN THE CONTEXT OF THE FACTS INVOLVED IN THOSE CASES. HENCE , THEY CANNOT BE MADE APPLICABLE UNIFORMALLY TO ALL CASES IRRESPECT IVE OF THE FACTUAL DIFFERENCES. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO REMI T THE MATER BACK TO 13 ITA NO. 1859/HYD/2012 RUPAKULA SRINIVAS. THE FILE OF THE AO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE. AO/DVO MUST CONDUCT NECESSA RY ENQUIRY TO FIND OUT COMPARATIVE INSTANCES OF SALE ON THE RELEV ANT DATE OR NEAR BY DATE IN THE SAME LOCALITY OR NEAR BY LOCALITY TO HA VE FAIR ESTIMATION OF THE VALUE OF THE PROPERTY. IT IS ALSO OPEN FOR THE ASSESSEE TO ESTABLISH SALE CONSIDERATION ADOPTED BY HIM BY PRODUCING NECE SSARY DOCUMENTARY EVIDENCES. AO ALSO SHOULD CONSIDER ASSE SSEES CONTENTION WITH REGARD TO THE ISSUES WHICH ACCORDIN G TO THE ASSESSEE HAS A BEARING IN REDUCING THE VALUE OF THE PROPERTY , SUCH AS SHORTAGE IN LAND, VAASTU DEFECTS ETC. AND ALLOW NECESSARY DI SCOUNT IN THAT RESPECT. AO MUST AFFORD REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE IN THE MATTER AND DECIDE THE ISSUE THEREAF TER ON CONSIDERING THE FACTS AND MATERIALS ON RECORD AND IN ACCORDANCE WITH LAW. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13/08/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 13 TH AUGUST, 2014 KV COPY TO:- 1) RUPAKULA SRINIVAS, FLAT NO. 103, C-BLOCK, TRENDS ET DURGA APTS., ROAD NO. 6, BANJARA HILLS, HYDERABAD. 2) ITO, WARD 1(1), HYDERABAD. 3) CIT(A)-II, HYDERABAD. 4) CIT-I, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.