Ashutosh Agarwal, Ghaziabad V. ITO, Ward- 1(1), Ghaziabad

ITA 1861/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0826 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value; Procedural lapse
• Section: 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER ITA NO. 1861 /DEL/201 8 [ASSESSMENT YEAR: 2 0 12 - 1 3 ] SHRI ASHOTOSH AGARWAL VS. THE I . T . O SD - 263, SHAHSTRI NAGAR WARD 1 ( 1 ) GHAZIABAD GHAZIABAD PAN : AAACH 3404 J [APPELLANT] [RESPONDENT] DATE OF HEARING : 0 5 . 0 9 .201 8 DATE OF PRONOUNCEMENT : 1 4 .0 9 .2018 ASSESSEE BY : SHRI VINOD KUMAR BINDAL, CA . MS. SWEETY KOTHARI, CA MS. RINKKY SHARMA, CA REVENUE BY : S HRI ANIL KUMAR SHARMA, SR. DR ORDER PER N .K. BILLAIYA, ACCOUNTANT MEMBER: WITH T HIS APPEAL , THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] GHAZIABAD DATED 3 1 . 0 8 .201 7 PERTAINING TO ASSESSMENT YEAR 20 12 - 13 . 2 2. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER: THE APPELLATE AUTHORITY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADOPTION OF STAMP DUTY VALUATION RS. 19,74,000/ - U/S 50C BY THE AO FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN INSTEAD OF SALE CONSIDERATION OF RS. 11,00,000/ - DECLARED BY THE APPELLANT WITHOUT REFERRING THE SAME TO DVO IN TERMS OF SECTIO N 50C(II) OF THE ACT THOUGH SPECIFICALLY ASKED BY THE APPELLANT. THUS, THE VALUATION SO ENHANCED WITHOUT THE AUTHORITY OF LAW MUST BE REVERSED AND ADDITION SO MADE SHOULD BE DELETED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS SOLD PROPERTY ON 24.02.2012 FOR RS. 11 LAKHS, WHICH HAS BEEN ASSESSED AT RS. 19.74 LAKHS BY THE SAID AUTHORITIES FOR STAMP DUTY PURPOSES. 4. VIDE QUERY LETTER DATED 14.10.2014, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY PROVISIONS OF SECTION 50C OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] SHOULD NOT BE APPLIED AND 3 WHY MARKET VALUE OF RS. 19.74 LAKHS SHOULD NOT BE TAKEN AS FULL VALUE OF CONS IDERATION. IN ITS REPLY, THE ASSESSEE STATED IN MOST OF THE CASES, COMMERCIAL PROPERTIES VALUE ADOPTED BY STAMP VALUATION AUTHORITIES IS GENERALLY MUCH HIGHER PRICE T HAN THE FAIR MARKET PRICE. IT WAS EXPLAINED THAT THE STAMP DUTY VALUE HAS BEEN TAKEN ON THE BASIS OF FAIR RENTAL VALUE IN THE LOCALITY AND NOT ON THE BASIS OF STAMP VALUE APPLICABLE FOR COMMERCIAL LAND AND BUILDING. THE ASSESSEE ASKED THE ASSESSING OFFICER TO REFER THE MATTER TO THE DEPARTMENT VALUATION OFFICER [DVO] AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSING OFFICER DECLINED THE REQUEST OF THE ASSESSEE AND COMPLETED ASSESSMENT BY TAKING STAMP DUTY VALUE AT RS. 19.74 LAKHS AS FULL VALUE OF SALE CONSIDERATION AND COMPUTED CAPITAL GAINS TAX LIABILITY ACCORDINGLY. 5. THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. AR VEHEMENTLY STATED THAT BY NOT FOLLOWING THE PROCEDURE LAID DOWN IN SECTION, THE ASSESSING OFFICER HAS GROSSLY ERRED AND HENCE THE ASSESSMENT ORDER DESERVES TO BE ANNULLED. IN SUPPORT, 4 THE LD. AR STRONGLY RELIED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S ADITYA NARAIN VERMA IN ITA NO. 4166/DEL/2013. THE LD. AR FURTHER RELIED ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF DR SHA SHI KANT GARG VS. CIT REPORTED IN 285 ITR 158. IT IS THE SAY OF THE COUNSEL THAT SUCH PROCEDURAL LAPSES CANNOT BE CURED BY GIVING SECOND INNINGS TO THE DEPARTMENT AND THE ONLY WAY IS TO ANNUL THE ASSESSMENT. 7. PER CONTRA, THE LD. DR STRONGLY SUPPORTED T HE FINDINGS OF THE ASSESSING OFFICER. IT IS THE SAY OF THE LD. DR THAT IF THE ASSESSING OFFICER HAS NOT REFERRED THE MATTER TO THE DVO, HE MAY BE DIRECTED TO DO SO. 8. I HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. I HAVE A LSO CONSIDERED CAREFULLY THE JUDICIAL DECISIONS RELIED UPON BY THE LD. AR. IT IS TRUE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS ITSELF THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER OF VALUATION TO THE DVO. IT I S EQUALLY TRUE THAT THE ASSESSING OFFICER DECLINED THE REQUEST. THE UNDISPUTED FACT IS THAT THE ASSESSING OFFICER COMPUTED THE CAPITAL 5 GAINS TAX LIABILITY BY ADOPTING THE ASSESSED VALUE AS FULL VALUE OF CONSIDERATION WHICH IS IN LINE WITH THE PROVISIONS O F SECTION 50C OF THE A C T . NO DOUBT, THE PROVISION ALSO PROVIDES FOR REFERENCE TO THE DVO IF THE ASSESSEE ASKS SO. IN MY CONSIDERED OPINION, BY NOT REFERRING THE MATTER TO THE DVO ON THE REQUEST OF THE ASSESSEE, THE ASSESSING OFFICER MAY HAVE ERRED. BUT SUCH ERROR CANNOT BE SO FATAL SO AS TO MAKE THE ASSESSMENT ANNULLED. IN MY CONSIDERED VIEW, SUCH ERRORS CAN BE CURED BY SETTING ASIDE THE MATTER WITH A DIRECTION TO REFER THE ISSUE OF VALUATION TO THE DVO AND THEN DECIDE THE ISSUE AFRESH. 9. I FIND THAT THE COUNSEL HAS HEAVILY RELIED UPON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ADITYA NARAIN [SUPRA]. I FIND THAT THE REASON FOR CHALLENGING THE ASSESSED VALUE BY THE STAMP DUTY AUTHORITY WAS THAT THE LAND WAS SUBJECT TO FOLLOWING DIS TRESSING CIRCUMSTANCES: I. THE IMPUGNED LAND IS SITUATED IN RIVER SIDE AND IS COVERED ON THREE SIDES BY THE RIVER; II . THE LAND IS FULLY COVERED BY OVER FLOW OF DIRTY RAINY WATER WHICH HAS LED TO CREATION OF H IGH LAND MOUNDS; 6 III . THE AFORESAID FACTS HAVE BEEN AFFIDAVIT FROM LEKHPAL ON BEHALF OF THE BEFORE THE ALLAHABAD HIGH COURT IN PERTAINING TO THE SAID LAND; IV . THE POSITION OF LAND IS NON - SYMMETRICAL; V . FURTHER THE LAND IS AN ALLUVIAL LAND I.E. INFERTILE LAND ON A RIVER BED; VI . LAND HAS BEEN SUBJECT TO CONTINUOUS LITIGATION UNDER THE UP IMPOSITION OF CEILINGS ON LAND HOLDINGS ACT, 1960; VII . IN VIEW OF THE ABOVE CIRCUMSTANCES THE PURCHASER WITH THE CONDITION THAT IF IN FUTURE PURCHASER HAS TO VACATE THE LAND DUE TO ANY ORDER OF THE COURT OR ANY OTHER LEGAL PROCEEDINGS EVEN THEN THE ASSESSEE WILL NOT BE REQUIRED TO REFUND THE SALES PRICE RECEIVED. THIS HAS LED TO A FURTHER REDUCTION IN THE SALE PRICE. LAND I MPUGNED LAND IS SITUATED IN RIVER SIDE AND IS COVERED ON THREE SIDES BY T HE RIVER; APART FROM THE ABOVE THE ASSESSEE HAS SUBMITTED CERTIFICATES FROM VARIOUS INDEPENDENT PURCHASERS AS NOTED IN PAGES 18 - 21 OF CIT (A) ORDER IN THE CASE OF CO - OWNER OF PROPERTY WHO HAD SOLD HIS SHARE OF LAND. THE SAID CERTIFICATES CLEARLY PROVIDE T HAT A LESSER SALE CONSIDERATION HAS BEEN PAID IN VIEW OF THE FOREGOING REASONS; 7 IN VIEW OF THE ABOVE CATEGORICAL REASONS THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS FROM SALE OF LAND ON THE/ BASIS OF ACTUAL SALE CON SIDERATION ONLY AND NOT ON THE BASIS OF CONSIDERATION AS PER THE STAMP VALUATION. 10. I FURTHER FIND THAT IN THAT CASE, THE ASSESSEE HAS SERIOUSLY DISPUTED THE VALUE ADOPTED FOR THE PURPOSE OF STAMP VALUATION WHICH DOES NOT AT ALL REFLECT THE FAIR MARKET VALUE OF THE IMPUGNED LAND IN VIEW OF SEVERAL DISTRESSING CIRCUMSTANCES MENTIONED HEREINABOVE. IN SPITE OF THE GLARING CIRCUMSTANCES, THE ASSESSING OFFICER DID NOT CONSIDER IT FIT TO REFER THE MATTER TO THE DVO AND, THEREFORE, ASSESSMENT WAS ANNULLED. 1 1. THE FACTS OF THE CASE ARE CLEARLY DISTINGUISHABLE, IN AS MUCH AS, IN THE CASE IN HAND, NO DISTURBING CIRCUMSTANCES HAVE BEEN BROUGHT ON RECORD NOT IS THE CASE OF THE ASSESSEE THAT THE IMPUGNED SALE WAS DISTRESSED SALE. THEREFORE, ASSESSMENT CANNOT BE A NNULLED MERELY BECAUSE THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DVO, WHICH DEFECT CAN BE EASILY CURED BY SETTING ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. 8 12. SIMILARLY, THE JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD IN THE C ASE OF SHASHI KANT GARG [SUPRA] IS ON A DIFFERENT CONTEXT FOR WHICH THE HON'BLE HIGH COURT HELD THAT WHEN THE PROVISIONS OF THE ACT REQUIRE ANY AUTHORITY TO EXERCISE POWER OR TO DO AN ACT IN A PARTICULAR MANNER, THEN THAT POWER HAS TO BE EXERCISED AND THE ACT HAS TO BE PERFORMED IN THAT MANNER ALONE AND NOT IN ANY OTHER MANNER. IN MY CONSIDERED VIEW, THIS JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD WAS TOTALLY ON A DIFFERENT CONTEXT AND NOT RELATED TO THE FACTS OF THE CASE IN HAND. 13. THE LD. AR HAS E MPHATICALLY STATED THAT NO SECOND INNINGS SHOULD BE GIVEN TO THE ASSESSING OFFICER WHICH IN MY CONSIDERED OPINION IS NOT CORRECT ON THE FACTS OF THE CASE IN HAND. BY SETTING ASIDE THE ISSUES TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REFER T HE MATTER TO THE DVO DOES NOT AMOUNT TO GIVING SECOND INNINGS TO THE ASSESSING OFFICER AS VALUATION BY THE DVO WOULD BE BINDING ON THE ASSESSING OFFICER. 14. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, I DEEM IT FIT TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO REFER THE ISSUE RELATING TO VALUATION TO THE DVO AND DECIDE THE ISSUE AFRESH AFTER GIVING A REASONABLE AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9 15. IN THE RESULT, THE APPEAL FILED B Y THE ASSESSEE IN ITA NO. 1861 /DEL/201 8 IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 4 . 0 9 .2018 . S D / - [N.K. BILLAIYA] ACCOUNTANT MEMBER DATED: 1 4 T H SEPTEMBER , 2018 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) ASST. REGISTRAR, 5. DR ITAT, NEW DELHI 10 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER