Shri Ambalal Somabhai (Kumbhar) Prajapati, Ahmedabad V. The Income Tax Officer, Ward-7(1)(2), Ahmedabad

ITA 1880/AHD/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9147 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: PF JAIN
• Keywords: Value adopted by valuation officer; Capital asset; Fair market value; Valuation report
• Section: 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI MAHAVIR PRASAD, JUDICIAL MEMBE R) ITA. NO: 1880/AHD/2017 (ASSESSMENT YEAR: 2010-11) AMBALAL SOMABHAI (KUMBHAR) PRAJAPATI, 1, DEVI ANNAPURNA SOCIETY, NEAR GURUDWARA, B/H. WEST & PARK, THALTEJ, BODAKDEV, AHMEDABAD- 380058 V/S INCOME TAX OFFICER, WARD- 7 (1)(2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ABGPK5078B APPELLANT BY : SHRI P. F. JAIN, AR RESPONDENT BY : SHRI S. K. DEV, SR. D.R. ( )/ ORDER DATE OF HEARING : 16 -11-201 8 DATE OF PRONOUNCEMENT : 17-12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-7, AHMEDABAD DATED 12.06.2017 PERTAINING TO A.Y. 2010- 11. ITA NO1880/A HD/2017 . A.Y. 2010-11 2 2. IN THIS CASE, AN APPLICATION FOR EARLY HEARING WAS FILED ON BEHALF OF THE ASSESSEE. AS TRIBUNAL HAS ALREADY GRANTED RELIEF IN THE QUANT UM PROCEEDING AND THIS APPEAL IS PERTAINS TO PENALTY PROCEEDING U/S. 271(1 )(C). 3. IN THE CASE OF THE ASSESSEE NOTICE U/S. 148 DATED 2 9/08/2013 WAS ISSUED BY THE THEN ITO WARD - 15(1) , AHMEDABAD , THE ASSESSEE RE PLIED TO NOTICE AND AS PER REASONS GIVEN , IT HAS BEEN ISSUED ON ACCOUNT OF NO N OFFERING OF LONG TERM CAPITAL GAIN ON SALE OF AGRICULTURE LAND. THE ASSES SEE POINTED OUT THAT HIS LAND BEING AGRICULTURE LAND AND BEING AWAY FROM LIMITS O F AMC AS ON 06/01/1994 , FOR MORE THAN 8 KM. AND HENCE AS PER SECTION 2(14)( III) IT WAS NOT LIABLE TO TAX AT PROVIDED IN THE SECTION. MEANWHILE THE A.O. MADE REFERENCE TO VALUATION OFFICER U/S. 55A FOR ASCERTAINING COST AS ON 01/04/ 1981 WHICH WAS CHALLENGED BEING WITHOUT JURISDICTION AND AGAINST THE DECISION OF GUJARAT HIGH COURT. ON ACCOUNT OF CHANGE OF A.O. SHE REFERRED THE MATTER T O JT. CIT. U/S. 144A TO HELD THAT THE NOTIFICATION OF THE GOVERNMENT IS NOT APPL ICABLE TO THE FACTS OF THE ASSESSEE AND THE DECISION OF GUJARAT HIGH COURT IS ALSO NOT APPLICABLE ON ACCOUNT OF SUBSEQUENT AMENDMENT TO THE SECTION 55 A . THE OBJECTION OF THE ASSESSEE HAS NOT BEEN ACCEPTED AND RELYING UPON THE VALUATION REPORT , THE LONG TERM CAPITAL GAIN HAS BEEN ASSESSED AT RS.76,69,731 /-. 4. THE CIT(APPEALS) BY ORDER DATED 11/12/2015 DISMISSE D THE APPEAL OF THE ASSESSEE AGAINST WHICH APPEAL HAS BEEN FILED BEFORE ITAT ON 08/02/2016 VIDE ITA NO. 315/AHD/2016 WHICH IS PENDING ADJUDICATION. AS PER PARA 9 & 11 OF ASSESSMENT ORDER PENALTY U/S. 271(1)(C ) HAS BEEN I NITIATED WHEREAS IN THE NOTICE OF PENALTY ISSUED WITH ASSESSMENT ORDER DATE MENTIONED IS 11/03/2014 AND IT HAS BEEN MENTIONED AS UNDER. ' HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME ' ITA NO1880/A HD/2017 . A.Y. 2010-11 3 5. THE A.O. AGAIN ISSUED NOTICE OF PENALTY ON 30/05/20 16. THE ASSESSEE BY REPLY LETTER DATED 02/03/2016 SUBMITTED ON 03/03/2016 REQ UESTED FOR KEEPING THE PENALTY PROCEEDINGS IN ABEYANCE AS IT WILL GET TIME BARRED ON 31/03/2017 AS APPEAL HAS BEEN FILED BEFORE ITAT AND THE COPY OF A PPEAL MEMO WAS ALSO FURNISHED. BUT IN SPITE OF THESE FACTS SHE LEVIED P ENALTY COMPUTED @ 100% OF RS. 15,79,966/-. BEING AGGRIEVED BY THIS PENALTY, A PPEAL IS PREFERRED. 6. NOW APPELLANT IS BEFORE US. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER AND WITH THE CONSENT OF THE BOTH THE PARTIES. APPEAL IS HEARD ON MERIT AND WE WOULD LIKE TO DISPOSE OF IT ALONG WITH APPLICATION FOR EARLY HEAR ING. 8. AS WE CAN SEE IN QUANTUM PROCEEDING, CO-ORDINATE BE NCH ALREADY GRANTED RELIEF TO THE ASSESSEE IN QUANTUM PROCEEDING AND OPERATIVE PARA OF THE CO-ORDINATE BENCH ORDER IN ITA NO. 315/AHD/2016 FOR ASSESSMENT YEAR 2010-11 DATED 18/09/2008 IS REPRODUCED: '5. WE HAVE HEARD LEARNED ADVOCATES FOR BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. WHILE DECIDING THE APPEAL, THE TRIBUNAL IN PARAGRAPH NO.6 OF ITS ORDER OBSERVED AS UNDER:- '6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS. A REFERENCE TO THE VALUATION OFFICER IS TO BE MADE UNDER SECTION 55A O F THE ACT. CLAUSE(A) OF SECTION 55A HAS A BEARING ON MAKING SUCH A REFERENC E. IT READS AS UNDER: '55.A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER: ITA NO1880/A HD/2017 . A.Y. 2010-11 4 (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF T HE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE; THE PROVISION SPECIFICALLY PROVIDES THAT IF THE ASS ESSING OFFICER IS OF THE OPINION THAT THE VALUE DISCLOSED BY THE ASSESSEE IS LESS THAN TH E FAIR MARKET VALUE ONLY, THEN HE CAN MAKE A REFERENCE TO THE DVO. NOW THE MOOT QUESTION IS AS TO HOW THE OPINION IS TO BE FORMED BY THE ASSESSING OFFICER. WHETHER THIS OP INION IS SUBJECTIVE OR GUIDED BY SOME JUDICIOUS ACTIONS. THE FORMATION OF OPINION SH OULD HAVE RATIONAL CONNECTION WITH THE MATERIAL BROUGHT ON RECORD. IT SHOULD NOT BE BA SED ON EXTRANEOUS OR IRRELEVANT REASONS. IN THE PRESENT CASE, THE ASSESSING OFFICER BEFORE MAKING A REFERENCE TO THE VALUATION OFFICER HAS NOT BROUGHT ANYTHING ON THE R ECORD INDICATING THAT THE ASSESSEE HAS DISCLOSED LESSER SALE PRICE. THERE IS NOTHING O N THE RECORD WHICH CAN SUGGEST TO IGNORE THE REPORT OF THE REGISTERED VALUER AND TO A DOPT THE REPORT OF THE VALUATION OFFICER. BOTH THESE ITA NO.315/AHD/2016 PERSONS ARE TECHNICAL PERSONS AND BEFORE ACCEPTING THE EVIDENCE OF AN EXPERT, THERE S HOULD BE CORROBORATION OF SOME OTHER MATERIAL. TAKING INTO CONSIDERATION THE OVERALL FAC TS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ID. ASSESSING OFFICER O UGHT TO HAVE NOT MADE A REFERENCE TO THE DVO FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPERTY IN DISPUTE. THE REPORT OF THE DVO ALONE IS NOT SUFFICIENT FOR ESTIM ATING THE CAPITAL GAINS AT RS. 12,28,907/-.' 6. IN VIEW OF THE ABOVE, WE ARE IN COMPLETE AGREEME NT WITH THE VIEW TAKEN BY THE TRIBUNAL. THE TRIBUNAL HAS GIVEN COGENT AND CONVINC ING REASONS IN ARRIVING AT THE CONCLUSION. THEREFORE, THE PRESENT APPEAL IS DISMIS SED. ACCORDINGLY, THE QUESTION POSED IN THIS APPEAL IS ANSWERED IN FAVOUR OF THE ASSESSE E AND AGAINST THE REVENUE.' 11. SINCE THE VALUE DISCLOSED BY THE ASSESSEE WAS M ORE THAN THE FMV AS ON 1.4.1981, REFERENCE IS BAD IN LAW. IN THE ABSENCE O F REFERENCE, IT HAS TO COMPUTE CAPITAL GAIN ON THE BASIS OF VALUE ADOPTED BY THE ASSESSEE. IN OTHER WORDS, THE VALUE OF THE PROPERTY OUGHT TO BE TAKEN AT RS.39,36,290/- AS ON 1.4.1981 AFTER GIVING BENEFIT OF INDEXATION, WHICH VALUE WOULD COME TO RS.2,48,77,35 3/- AND CAPITAL GAIN COME IN THE SHARE OF THE ASSESSEE WOULD BE ONLY RS.40,880/- . APART FROM THE ABOVE, WE HAVE BEEN APPRAISED OURSELVES WITH THE LATEST ORDER OF T HE AO COMPUTING THE CAPITAL GAIN IN THE HANDS OF A CO-SHARER. THIS RELEVANT PART OF THE ORDER READS AS UNDER: ITA NO1880/A HD/2017 . A.Y. 2010-11 5 'SINCE IT HAS BEEN ESTABLISHED THAT THE LAND IN QUE STION WAS CAPITAL ASSET WHICH LULL WITHIN THE 8 KMS OF MUNICIPAL LIMIT THE ASSESSEE'S REQUEST FOR INDEXATION CAN HP CONSIDERED. THE ASSESSEE HAS FURN ISHED VALUATION REPORT DATED 03.11.2012 OBTAINED FROM B.H. PATEL. REGISTER ED VALUER. AS PER HIS REPORT THE VALUE OF THE PROPERTY IN QUESTION AS ON 01.04.1981 IS AT RS.39,36,290/-. ACCORDINGLY, CAPITAL GAIN CHARGEABL E TO TAX IS WORKED AS UNDER: SALE CONSIDERATION OF THE PROPERTY RS. 2,49,99,993/ - ASSESSEES SHARE-1/3 RD RS. 83,33,331/- INDEXED COST OF THE PROPERTY 3936290X632+100 RS. 2,48,77,353/- ASSESSEES SHARE ON INDEXED COST RS.82,92,451/- TAXABLE CAPITAL GAIN [A)-(B) RS. 40.880 /- CONSIDERING THE ABOVE WORKING OF THE CAPITAL GAIN T HE TOTAL INCOME OF THE ASSESSEE IS RE-COMPUTED AS UNDER: TOTAL INCOME AS PER ORDER GIVING APPEAL EFFECT DATED 02/09/2014 RS.84,78,290/- ASSESSEE' S SHARE- 1/3 ' OF INDEXED COST. RS. 82, 92,4 5 1/- REVISED TOTAL ON RECTIFICATION I.E. TOTAL INCOME RETURNED + TAXABLE CAPITAL GAIN (144960-140880) RS. 1,85,8401- RECTIFIED U/S. 154 R.W.S. 250 OF THE IT ACT. GIVE C REDIT FOR TAXES PAID IF ANY. AFTER DUE VERIFICATION. ISSUE DEMAND NOTICE/CH ALLAN/REFUND ORDER ACCORDINGLY.' ITA NO1880/A HD/2017 . A.Y. 2010-11 6 12. TWO CO-OWNERS CANNOT BE TREATED DIFFERENTLY FOR THE SAME TRANSACTION. THEREFORE, WE ARE OF THE VIEW THAT ADDITION MADE BY THE AO IN THE HANDS OF THE ASSESSEE IS NOT SUSTAINABLE. WE ALLOW THE APPEAL OF THE ASSESSEE PA RTLY AND DIRECT THE AO TO TAKE TAXABLE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE A T RS.40,880/- EQUIVALENT TO THE ONE ASSESSED IN THE HANDS ITA NO.315/AHD/2016 OF SHRI D ASHRATHBHAI SOMABHAI PRAJAPATI, THE OTHER CO-SHARER. IN VIEW OF THE ABOV E DISCUSSION, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 9. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN QUANTUM PROCEEDING, WE DELETE THE PENALTY IMPOSED ON THE AS SESSEE. 10. IN THE RESULT, APPLICATIONS FOR EARLY HEARING AS WE LL AS APPEAL FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 17- 12- 2018 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) VICE PRESIDENT TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 17/12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD