Amrishbhai Prahladbhai Patel, Gandhiagar V. The ITO, Ward-4, Mehsana

ITA 1883/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6312 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 14-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH B SHAH
• Keywords: Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 1883/AHD/2017 (ASSESSMENT YEAR : 2013-14) AMRISHBHAI PRAHALADBHAI PATEL, 59, SANSKRUTI BUNGLOWS, NR. HOLY CHILD SCHOOL, KALOL, DIST. GANDHINAGAR 382 721. VS. INCOME TAX OFFICER, WARD 4, MEHSANA. [PAN NO. BJEPP 1074 K] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI ASHISH B. SHAH, A.R. RESPONDENT BY : SHRI VINOD TANWANI, SR. D.R. DATE OF HEARING 05/08/2019 DATE OF PRONOUNCEMENT 18/10/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 12.06.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - GANDHINAGAR ARISING OUT OF THE ORDER DATED 30.03.2016 PASSED BY THE LEA RNED ITO, WARD-4, MEHSANA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR 2013-14. 2. THE SHORT POINT INVOLVED IN THIS PARTICULAR MATT ER IS THIS THAT AS TO WHETHER WITHOUT OBTAINING A VALUATION REPORT FROM THE DVO THE CAPIT AL GAIN OF A PARTICULAR PROPERTY CAN BE DETERMINED BY THE AUTHORITIES BELOW REJECTING THE V ALUATION DONE BY THE REGISTERED VALUER AS RELIED UPON BY THE ASSESSEE. - 2 - ITA NO.1883/AHD/2017 AMIRSHBHAI PRAHALADBHAI PATEL VS. ITO ASST.YEAR 2013-14 DURING THE COURSE OF ASSESSMENT PROCEEDING, INFORM ATION REGARDING SALE OF LAND BY THE ASSESSEE WAS NOTICED BY THE LEARNED AO WHEREUPO N DETAILS REGARDING SUCH SALE OF LAND IN QUESTION WAS ASKED FOR. PURSUANT TO THAT TH E ASSESSEE SUBMITTED THE DETAILS ALONG WITH WORKING OF LONG TERM CAPITAL GAIN. THE SAME WA S ALSO SUPPORTED BY THE VALUATION REPORT PREPARED BY THE REGISTERED VALUER WHEREBY AN D WHEREUNDER THE VALUE OF THE PROPERTY (3 LANDS) WAS DETERMINED AT RS.11,63,955/- AS ON 01.04.1981 BY TAKING THE RATE OF RS.65/- PER SQUARE METER FOR LAND WHICH WAS ULTI MATELY DISPUTED BY THE LEARNED AO AND THE ASSESSMENT PROCEEDING WAS FINALIZED UPON DE TERMINING THE VALUATION AT THE RATE OF RS.1.07 SQ. MTS.; RESULTANTLY, LONG TERM CAPITAL GA IN WAS ASSESSED AT RS.1,03,23,919/-. SINCE THE ASSESSEE HAD SHOWN THE LONG TERM CAPITAL GAIN OF RS.28,75,411/- IN ITS RETURN OF INCOME, THE BALANCE AMOUNT OF RS.74,48,508/- WAS AD DED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR, WHICH WA S, IN TURN CONFIRMED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT WHEN THE VALU ATION WAS REJECTED BY THE LEARNED AO THE VALUATION MADE BY THE SUB-REGISTRAR OFFICE OF T HE PLOT RELATED TO THE LAND HAS BEEN ADOPTED INSTEAD OF OBTAINING THE REPORT OF A TECHNI CAL PERSON BEING THE DVO AS THE PRACTICE FOLLOWED BY THE AUTHORITIES BELOW IN TERMS OF THE PROVISION OF LAW. IN SUPPORT OF HIS CONTENTION, THE LEARNED AR RELIED UPON THE JUDG MENT PASSED BY THE CO-ORDINATE BENCH IN THE MATTER OF SMT. PRAMILA M. DESAI, HUF-V S-DCIT IN ITA NO.04/AHD/2012 FOR A.Y. 2008-09. HE, THEREFORE, PRAYED FOR SETTING ASIDE THE ISSUE TO THE FILE OF THE LEARNED AO TO DECIDE THE ISSUE AFRESH UPON OBTAININ G A COPY FROM THE CONCERNED DVO. THE LEARNED DR, HOWEVER, HAS RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE CO-ORDI NATE BENCH. IT APPEARS THAT ADMITTEDLY THE LEARNED AO REJECTED THE VALUATION MADE BY THE R EGISTERED VALUER AS RELIED UPON BY THE - 3 - ITA NO.1883/AHD/2017 AMIRSHBHAI PRAHALADBHAI PATEL VS. ITO ASST.YEAR 2013-14 ASSESSEE BUT HAS FAILED TO DECIDE THE ISSUE UPON OB TAINING A COPY FROM THE DVO REGARDING THE VALUATION OF THAT PARTICULAR PROPERTY WHICH IS NOW A SETTLED LEGAL POSITION IN VIEW OF THE SEVERAL JUDICIAL PRONOUNCEMENTS INCLUDING THE O RDER PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT AS RELIED UPON BY THE CO- ORDINATE BENCH. WHILE DECIDING THE ISSUE THE CO-ORDINATE BENCH OBSERVED AS FOLLOWS: 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FI ND THAT THERE ARE THREE ASPECTS TO BE DECIDED BY US. THE FIRST ASPECT IS REGARDING FAIR M ARKET VALUE AS ON 01.04.1981 OF THE ASSESSEES LAND. IN 5 I.T.A.NO04./AHD/2012 THIS REG ARD, THE CLAIM OF THE ASSESSEE IS THAT THE RATES ADOPTED BY THE REGISTERED VALUER SHOULD B E APPLIED AND NOT THE RATES ADOPTED BY THE A.O. ON THE BASIS OF SINGLE INSTANCE OF A LAND WHICH IS SITUATED AT FAR AWAY PLACE. THE SECOND ASPECT IS WHETHER THE QUANTITY OF LAND REDUC ED BY LD. CIT(A) TO THE EXTENT OF 10% FOR COMMON PLOT AND 25% FOR INTERNAL ROADS/OTHER DE VELOPMENT COST IS JUSTIFIED OR NOT. THE 3RD ASPECT IS WHETHER THE COST OF ACQUISITION A S ON 01.04.1981 OF THE ASSESSEE SHOULD BE 18.10% OF THE TOTAL COST BEING THE SHARE OF THE ASSESSEE IN THE TOTAL LAND OR WHETHER IT SHOULD BE ONLY 12.65% OF THE TOTAL COST AS HAS BEEN ADOPTED BY LD. CIT(A) ON THE BASIS OF NET SALE VALUE OF THE ASSESSEE OF RS.421.52 LACS CO MPARED TO RS.3333.16 LACS BEING THE TOTAL SALE VALUE. - REGARDING THE FIRST ASPECT AS TO WHAT IS THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981, WE FIND THAT THE REGISTERED VALUER HAD APPLIED THE RATE OF RS.295.81 PER SQ. MTR. ON THE BASIS OF AVERAGE RATE OF 4 DIFFERENT PL OTS OF LAND. THE A.O. HAS APPLIED THE RATE OF RS.86.10 PER SQ. MTR. ON THE BASIS OF A SIN GLE SALE INSTANCE COLLECTED FORM SUB- REGISTRAR OFFICE BY THE A.O. LD. CIT(A) HAS ADOPTED THE RATES OF RS.156.50 PER SQ. MTR BY IGNORING TWO SALES INSTANCES ADOPTED BY THE REGISTE RED VALUER I.E. OF RS.538.20 PER SQ. MTR. BEING THE FIRST SALE INSTANCE AND RS.253.60 PE R SQ. MTR. BEING THE 3RD SALE INSTANCE. THESE TWO SALES INSTANCES WERE IGNORED BY THE LD. C IT(A) ON THIS BASIS THAT IN BOTH THESE CASES, OPEN PLOT OF LAND WAS NOT SOLD BUT PARTIALLY CONSTRUCTED AREA WAS SOLD AND IF THE SAID RATE IS ADOPTED AFTER REDUCING THE COST OF CON STRUCTION ALREADY MADE BEFORE SALE THEN IT WILL BE VERY LOW IN THE CASE OF 1ST INSTANCE AND 3RD INSTANCE. FOR 3RD SALES INSTANCE, IT IS ALSO NOTED BY LD. CIT(A) THAT THE DATE OF SALE I S AUGUST 1982 BEING MORE THAN ONE YEAR AFTER THE DATE OF 01.04.1981. HE HAS IGNORED THESE TWO SALES INSTANCES ADOPTED BY THE REGISTERED VALUER AND BY TAKING AVERAGE SALE PRICE OF THE REMAINING TWO SALES INSTANCES ADOPTED BY THE REGISTERED VALUER AND THE ONE SALE I NSTANCE ADOPTED BY THE 6 I.T.A.NO04./AHD/2012 A.O., HE HAS WORKED OUT AVERAG E MARKET VALUE OF THE LAND AS ON 01.04.1981 AT RS.156.50 PER SQ. MTR. BEFORE US, IT WAS SUBMITTED THAT WHEN THE ASSESSEE HAS SUBMITTED A REPORT OF REGISTERED VALUER, THE SA ME CANNOT BE IGNORED OR VARIED OR SUBSTITUTED WITHOUT OBTAINING VALUATION REPORT FORM DVO. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE TRIBUNAL DECISION RENDER ED IN THE CASE OF SHRI RAJENDRA H SETH VS ACIT IN I.T.A.NO. 1495/AHD/2007 DATED 11.11 .2011 AND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA 10.1 OF THIS TRIBUNAL O RDER WHICH HAS BEEN REPRODUCED BY THE ASSESSEE IN THE WRITTEN SUBMISSION. WE FIND THA T ADMITTEDLY, NO REPORT OF THE DVO WAS OBTAINED AND THE A.O. OBTAINED ONE SALE INSTANCE FR OM SUB-REGISTRAR OFFICE BUT REGARDING - 4 - ITA NO.1883/AHD/2017 AMIRSHBHAI PRAHALADBHAI PATEL VS. ITO ASST.YEAR 2013-14 THIS SALE INSTANCE, IT IS THE SUBMISSION OF THE ASS ESSEE BEFORE US THAT THIS SALE INSTANCE IS OF A FAR AWAY PLACE WHEREAS, THE SALE INSTANCE NOTE D BY THE REGISTERED VALUER IS NEARER TO THE LAND IN QUESTION. THIS CONTENTION OF THE LD. A. R. COULD NOT BE CONTROVERTED BY THE LD. D.R. AND HENCE, IN OUR OPINION, THIS SALE INSTANCE OBTAINED BY THE A.O. FROM SUB-REGISTRAR OFFICE CANNOT BE ADOPTED BECAUSE IT IS RELATED TO A LAND SITUATED AT FAR AWAY PLACE AND MOREOVER, WHEN THE ASSESSEE HAS SUBMITTED THE REPOR T OF THE REGISTERED VALUER, THE SAME CANNOT BE IGNORED OR SUBSTITUTED WITHOUT OBTAINING THE REPORT OF A TECHNICAL PERSON VIZ. DVO OR SOME OTHER TECHNICAL EXPERT. THE TRIBUNAL OR DER CITED BY THE LD. A.R. RENDERED IN THE CASE OF RAJENDRA H SETH (SUPRA) SUPPORTS THE ASSESSEE ON THIS ASPECT. RELEVANT PARA OF THIS TRIBUNAL ORDER I.E. PARA 10.1 IS REPRO DUCED BELOW: 10.1. AS REGARDS VALUATION OF FLAT AS ON 1.4.1981, THE ADMITTED FACTS OF THE CASE ARE THAT THE VALUE DECLARED BY THE ASSESSEE IS SUPP ORTED BY VALUATION REPORT OF A REGISTERED VALUER. THE A.O. HAS TAKEN A DIFFERENT V ALUATION WITHOUT OBTAINING VALUATION REPORT FROM THE DVO. THE AO HAS TAKEN VAL UE AS ON 1.4.1981 ON OTHER BASIS. WE ARE OF THE VIEW THAT ASSESSEE'S VALUATION AS ON 1.04.1981 IS SUPPORTED BY VALUATION BY A TECHNICAL PERSON IE. REPORT OF RE GISTERED VALUER AND CONTRARY TO THAT NO SUCH MATERIAL OR 7 I.T.A.NO 04./AHD/2012 DE PARTMENTAL VALUATION REPORT IS AVAILABLE ON RECORD. MERELY ON THE BASIS OF OTHE R GENERAL ENQUIRIES THE VALUATION DECLARED BY THE REGISTERED VALUER CANNOT BE SUBSTITUTED. WE THEREFORE SET ASIDE THE ORDERS OF REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO ADOPT THE VALUATION OF THE FLATS AS ON 1.4.1981 AS DECLARED BY THE ASSESSEE.' REFERENCE IS ALSO INVITED TO DECISION OF ITAT IN IT O VS SMT USHA RAMESH 133 1TD 67 (CHENNAI) (TM) BUT SINCE IN THE CASE OF APPE LLANT, REGISTERED VALUER'S REPORT WAS FURNISHED, THERE WAS NO JUSTIFICATION IN RELYING ON IRRELEVANT SALE INSTANCES FROM SUBREGISTRAR'S OFFICE AND THEREBY RE JECTING THE VALUE AS ON 1ST APRIL, 1981 COMPUTED BY REGISTERED VALUER. - REGARDING THE ACTION OF LD. CIT(A) OF EXCLUDING T WO SALE INSTANCES ADOPTED BY THE REGISTERED VALUER ON THIS BASIS THAT THESE SALE INS TANCES ARE IN RESPECT OF PARTLY CONSTRUCTED PLOT, WE ARE OF THE CONSIDERED OPINION THAT GENERALLY, NO BUYER PAY ANY PRICE FOR A PART CONSTRUCTION ON A PLOT UNLESS IT IS SEEN THAT SUCH PART CONSTRUCTION IS USEFUL TO THE BUYER BECAUSE IF THE PART CONSTRUCTION IS NOT U SEFUL TO THE BUYER AND HE WANTS TO CONSTRUCT AS PER HIS OWN DESIGN AND REQUIREMENT THE N SUCH PART CONSTRUCTION BUILT BY THE SELLER IS OF NO VALUE TO THE BUYER AND GENERALLY, H E DOES NOT PAY ANY PRICE FOR THE SAME BECAUSE IN SUCH A CASE, HE HAS TO DEMOLISH SUCH PAR T CONSTRUCTION AND REBUILD THE WHOLE THING AND THIS IS NOT BROUGHT ON RECORD BY THE AUTH ORITIES BELOW OR BY LD. D.R. THAT SUCH PART CONSTRUCTION WAS USEFUL TO THE BUYER AND THE V ALUE OF THE SAME WAS CONSIDERED FOR THE VALUATION OF THE PROPERTY IN THOSE TWO INSTANCE S. IN THE ABSENCE OF ANY SUCH FINDING ON THIS ASPECT, THE ORDER OF LD. CIT(A) TO IGNORE THOS E TWO SALE INSTANCES IS NOT PROPER. REGARDING THE ACTION OF LD. CIT(A) ALSO, THE SAME T RIBUNAL DECISION RENDERED IN THE CASE OF RAJENDRA H SETH (SUPRA), SUPPORTS THE CASE OF TH E ASSESSEE BECAUSE AS PER THIS TRIBUNAL DECISION, THE REPORT OF REGISTERED VALUER BEING A T ECHNICAL PERSON, CANNOT BE SUBSTITUTED WITHOUT OBTAINING ANY DVOS REPORT OR ANY OTHER REP ORT OF A TECHNICAL PERSON. IN THE PRESENT CASE, NO SUCH REPORT OF ANY TECHNICAL PERSO N HAS 8 I.T.A.NO04./AHD/2012 BEEN OBTAINED BY THE AUTHORITIES BELOW AND, THEREFORE, F OR THIS REASON ALSO, THE ACTION OF LD. - 5 - ITA NO.1883/AHD/2017 AMIRSHBHAI PRAHALADBHAI PATEL VS. ITO ASST.YEAR 2013-14 CIT(A) CANNOT BE SUSTAINED. UNDER THESE FACTS, WE A RE OF THE CONSIDERED OPINION THAT THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AS ON 01.04.1981 AS DECLARED BY THE ASSESSEE ON THE BASIS OF A REPORT OF THE REGISTERED VALUER, CANNOT BE DISTURBED AND THE SAME HAS TO BE ACCEPTED. WE HOLD ACCORDINGLY. THE F IRST ASPECT IS DECIDED IN FAVOUR OF THE ASSESSEE. TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER, WE FIND THAT LEARNED AO HAS FAILED TO OBTAIN THE DVOS REPORT WHICH OUGHT T O HAVE BEEN DONE BY THE AUTHORITIES BELOW. SURPRISINGLY, THE LEARNED CIT(A) IS ALSO FAI LED TO PERFORM SUCH STATUTORY DUTIES CONFERRED UPON HIM. HENCE, WE FIND THE DECISION MAD E BY THE LEARNED AO, CONFIRMED BY THE LEARNED CIT(A) IS NOT IN COHERENCE ADHERE TO TH E PRINCIPLE LAID DOWN BY THE DIFFERENT JUDICIAL PRONOUNCEMENT AND HAVING NO OTHER ALTERNAT IVE, WE QUASH THE IMPUGNED ORDER FOR THE REASON AS DISCUSSED ABOVE. HOWEVER, WE FIND IT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE LEARNED AO TO DECIDE THE MATTER AFRESH UPON OBTAINING A COPY FROM THE DVO TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AS ON 01.04.1981 AND ALSO UPON GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TO TAKE INTO CONSIDERATION ANY EVIDENCE THAT THE ASSESSEE MAY CH OOSE TO FILE AT THE TIME OF HEARING OF THE MATTER. HENCE, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/10/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/10/2019 PRITI YADAV, SR.PS - 6 - ITA NO.1883/AHD/2017 AMIRSHBHAI PRAHALADBHAI PATEL VS. ITO ASST.YEAR 2013-14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-GANDHINAGAR. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 06.08.2019 (DICTATION PAGES 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.08.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 17.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER