Ajay Kumar Gupta, Fatehpur V. CIT(A), NFAC, Delhi (AO:ITO-2(4),Fatehpur, Fatehpur

ITA 19/ALLD/2023

AI Insights

The case involves Mr. Ajay Kumar Gupta, who appealed against the order of the CIT(A) confirming the additions made by the AO under Section 50C of the Income Tax Act, 1961, for the assessment year 2017-18. The AO had assessed the capital gains on the stamp duty value of the property sold by the assessee, which was significantly higher than the sale consideration declared by the assessee. The CIT(A) partly confirmed these additions but directed the AO to correct some calculation errors. The assessee argued that the market value of the property was lower than the stamp duty value, supported by two comparable sale deeds, which were not considered by the lower authorities. The ITAT found merit in the assessee's arguments and restored the matter to the AO for a fresh assessment, emphasizing the need for a fair valuation process and adherence to procedural requirements under Section 50C(2).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108360 (ITAT-ALLAHABAD)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 20-02-2023
• Other Referred Cases: CIT Versus Simon cares Ltd. [1976] 105 ITR 212(SC), Indore Malwa United Mills Ltd. versus State of Madhya Pradesh [1966] 60 ITR 41 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV KUMAR AGRAWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Fair market value; Assessment record; Set aside; Capital Gains
• Section: 154; 143(3); 50C; 142(1); 143(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Vrindaban House, G.T. Road, Khaga, Fatehpur- 212655, U.P. v. The ITO -2(4) Fatehpur, U.P. PAN:AHCPG3595K (Appellant) (Respondent) Appellant by: Shri Rajeev Kumar Agrawal, Advocate Respondent by: Shri A.K. Singh ,Sr. D.R. Date of hearing: 20.03.2023 Date of pronouncement: 20 .03.2023 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No.19/Alld./2023, is directed against an appellate order dated 26.12.2022 in Appeal No.CIT(A), Allahabad/10606/2019-20 (DIN& Order No. ITBA/NFAC/S/250/2022-23/1048239383(1)) passed by learned Commissioner of Income Tax (Appeals), NFAC, New Delhi( hereinafter called "the CIT(A)"),for assessment year(ay):2017-18, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 28 th December, 2019 passed by learned Assessing Officer (hereinafter called "the AO") under Section 143(3) of the Income-tax Act,1961(hereinafter called “ the Act”) .We have heard this appeal through physical hearing mode in Open Court proceedings . 2. The grounds of appeal raised by assessee in ITA No. 19/Alld./2023 for assessment year 2017-18, in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench, Allahabad(hereinafter called “ the tribunal”) , reads as under:- ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 2 “1.That the Commissioner Income Tax (Appeals) erred not to deliver his judgment or decision on each point of grounds of appeal, Statement of fact & written submissions filed by the assessee appellant. 2. That the Commissioner Income Tax (Appeals) erred not to consider that the learned assessing officer not consider the reply and its annexure filed on 12.01.19 in response to notice under section 142(1) dated 07.01.19. 3. That the Commissioner Income Tax (Appeals) erred not to consider that the assessment order passed on 28.12.19 after 11 months 16 days of reply dated 12.01.19 and the assessing officer neither refer the case to valuation officer nor raised any query about the dispute which shows that the assessing officer was satisfied with the value declared but he suddenly changed his mind and assessed the capital gain on stamp duty value which is totally arbitrary and against law and fact. 4. That the Commissioner Income Tax (Appeals) erred not to consider that the learned assessing officer erred not to consider the reply dated 05.11.19 in response to notice dated 01.11.19 under section 142(1). 5. That the Commissioner Income Tax (Appeals) erred not to consider that the Learned assessing officer erred not applied Sub section (2) of section 50C of the Income Tax Act, 1961. 6. That the Commissioner Income Tax (Appeals) erred not to consider the copies of two sale deeds of land (same located Land-submitted as example) regarding market value of the land sold. 7. That the Commissioner Income Tax (Appeals) erred not to consider the statement of fact and grounds of the appeal. 8. That the Commissioner Income Tax (Appeals) erred not to consider the law of natural justice and equity as quasi-judicial officer. 9. That the orders passed by the Income Tax Authorities are against Law & Facts.” 3. The brief facts of the case are that the assessee filed return of income with AO declaring total income of Rs. 4,78,720/-. The case was selected by Revenue under limited scrutiny through CASS, and the reason for framing limited scrutiny assessment was for examination of capital gain/loss on sale of property. During the course of assessment proceedings conducted by AO, notices under Section 143(2) and 142(1) were issued by the AO. The assessee participated in assessment proceedings. The AO made additions to the income of the assessee to the tune of Rs. 14,61,600/- by invoking provisions of Section 50C, on account of differential between the value adopted by government authorities for levy of stamp duly on transfer of property which was Rs. 15,78,000/- as ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 3 against sale consideration of Rs. 5,00,000/- shown by the assessee, vide assessment order dated 28.12.2019 passed by AO u/s 143(3) of the 1961 Act. This is the solitary issue in dispute. 4. Aggrieved by assessment framed by the AO, the assessee filed first appeal with ld. CIT(A), and made following submissions before Learned CIT(A):- “6. CONTENTION OF THE APPELLANT: 6.1 During the course of appellate proceedings, with regard to above issue, the appellant submitted as under: Reason of selection for Scrutiny- The assessee appellant filed his income tax return by e-filing mode on 12.02.18 declaring total income of Rs. 4,78,720.00 and the case was selected for limited scrutiny to examine "CAPITAL GAINS/LOSS ON SALE OF PROPERTY". Point wise Submissions/arguments- 1- In response to the Ist Notice No. ITBA/AST/S/143(2)/2018- 19/1011650739(1) Dated 20.08.2018(Date Fixed for response was 05-09- 18), the assessee appellant was unable to furnish his reply online electronically through "E-Proceeding" because E- Proceeding facility was not activated up to date 05.09.2018 fixed to response. The Assessee appellant filed a prayer to activate the "E-filling/Proceeding window of the Income Tax portal by using "e-nivaran" on 04.09.2018 vide Acknowledgment No. 100000001143224 and also posted an e-mail ([e-mail]) to the Assessing Officer on same date at ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 4 01.06 p.m. requesting activation for "e-filling/proceeding window". After activation of the above said "e-filling/proceeding window" of the portal on 01 st October 2018, the assessee appellant filed a response of the Notice vide Acknowledgment No. 01101810464409 (Copies are enclosed herewith for ready reference). But the Learned assessing officer denied the compliance made by assessee appellant on 01.10.18 of the said notice. Hence the response filed by the assessee appellant was not considered by the learned assessing officer ignoring the fact that a manual copy of said e-response along with annexures and e- response acknowledgment receipt was also given to him which was placed on official record by the learned assessing officer before the assessee appellant, which shows the high-handiness of Learned assessing officer in performing his duties as quasi-judicial authority 2- In response to the IInd Notice No. ITBA/AST/F/142(1)/2018- 19/1014711329(1) Dated 07.01.2019 (Date Fixed for response was 17-01- 19), the assessee appellant filed his point wise reply online electronically through "E-Proceeding" on 12.01.2019 vide Acknowledgment No. 12011911093224 enclosing written reply, Computation of tax, Copy of Registered Purchase deed dated 21.10.1999 (1.335 Sq. Meters) & Copy of Registered Sales Deeds of the Land dated 11.01.2017 (0.5260 Sq. Meters) and (for example) two Registered sale deeds- Ist- dated 28.02.2017(0.3480Sq. Meters, Sold for Rs. 2,00,000.00 @ 95.00 per Sq. Meters) and IInd- dated 03.12.2016 (0.2266Sq. Meters, Sold for Rs. 2,40,000.00 @ 90.02 per Sq. Meters) All are of the same area Village Hardon, Khaga, Fatehpur (Copies are enclosed herewith for ready reference). ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 5 Copy of e-response along with its attachment and copy of e-response acknowledgment receipt and its annexures was manually submitted before the Learned assessing officer and it was placed on official record by Learned assessing officer. 3. In response to the IIIrd Notice No. ITBA/AST/F/142(1)/2019- 20/1019675742(1) Dated 01.11.2019 (Date Fixed for response was 08-11- 19) repeating contends of IInd Notice again, the assessee appellant filed his supplementary reply online electronically through "E-Proceeding" on 05.11.2019 vide Acknowledgment No. 15111911989006 enclosing written reply, Vakalatnama of Mr. Rajeev Kumar Agrawal, Advocate, Statement of Bank A/c No. 30722183944 (State Bank of India, Khaga), Statement of Bank A/c No. 081401504446 (ICICI Bank, Khaga) (Copies are enclosed herewith for ready reference). Copy of e-acknowledgement along with annexures and e-acknowledgment receipt was manually submitted before the Learned assessing officer. The Learned assessing officer in assessment order did not mention the issue of notice dated 01.11.19 and compliances made by assessee appellant on 05.11.19 which shows the negligence of Learned assessing officer in performing his duties and wilfully passed an arbitrary order against the laws and facts. 4. That the hard Copies of all above said documents was also handed over to the Learned Assessing Officer at the time of assessment proceedings by Assessee Appellant. ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 6 5. That the assessee appellant sold a land of 0.5260 hectare out of total purchased land of 1.335 hectare situated at Hardon, Khaga, Fatehpur on 11.01.17 for a consideration of Rs. 5, 00,000.00 at the rate of Rs. 95 per square meter. The stamp duty value of Rs. 15,78,000.00 of the land sold was much higher than the market value of the land. The assessee appellant attached two other sale deeds as an example to strengthen the reasonableness of the market value adopted by the Learned Assessing Officer with e-response acknowledgment no. 12011911093224, the first sale deed submitted as example dated 28.02.17 for sale of 0.3480 hectare of land situated at nearby location in Hardon. Khaga. Fatehpur, for a consideration Rs. 2,00,000.00 only, @ Rs. 57.47 per square meter and second sale deed submitted as example dated 03.12.16 for sale of 0.2666 hectare of land at nearby location in Hardon, Khaga, Fatehpur for consideration Rs. 2,40,000.00 only @ Rs. 90.02 per square meter, were neither considered nor mentioned by the assessing officer in the assessment order passed on 28.12.19 i.e. after 11 months 16 days of the reply made on 12.01.19. The learned Assessing officer didn't refer the case to the valuation officer which shows that the assessing officer was satisfied with the value declared by the assessee appellant, however he suddenly changed his opinion and assessed the capital gain on stamp duty value which is totally arbitrary and against the law and fact. 6- That the assessee appellant attached the copies of both, the sale deed of purchase of land of 1.335 hectare dated 21.10.99 and sale deed of sale of land of 0.5260 hectare out of 1.335 hectare dated 11.01.17, along with the reply filed on ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 7 12.01.19 and it shows that the assessee appellant purchased the above said land measuring 1.335-hectare land for Rs. 2,80,000.00 on 21.10.99 and sold only 0.5260 hectare for Rs. 5,00,000.00 on 11.01.17. On the above said fact the cost of land sold without indexation of 5,260 square meter comes to Rs. 1,10,322.10 only and indexation should be applied on this amount, however the assessing officer miscalculated that and wrongly calculated the cost of land and indexed cost without reading the purchase deed of the land and thus the assessing officer wrongly calculated the long-term capital gain Rs. 14,61,600.00. It clearly shows that the assessing officer passed the assessment order without considering the law and fact of the case to harass the assessee appellant on his arbitrary will. 7- That the said Land of Araji no. 537 was of 3.658 Hectares. Out of which the Assessee appellant purchased only 1.335 Hectare's on 21.10.1999 for Rs. 2,80,000,00 and the assessee appellant sold only .5260 Hectare's on 11.01.2017 for Rs. 5,00,000.00 only. It is evident from the Purchase and Sale deeds already placed on the assessment record (Both, Physical and electronic modes), after rectifying the measurement of the PURCHASED LAND 1.335 instead off 3.658 (wrongly mentioned in the Assessment order, ignoring the real fact and the evidence) the calculation comes as under: RECTIFIED CALCULATION OF LONG TERM CAPITAL GAINS- (i) Sales Consideration - Rs. 5,00,000.00 (ii) Stamp Duty Valuation - Rs. 15,78,000.00 (iii) Cost of Acquisition- .5260x2,80,000/1.3350-Rs.1,10,332.00 (iv) Indexed Cost of Acquisition( 2001-02) =1,10332x426/389- Rs.1,20,815.00 (v) As per New calculation of Indexed Cost- 1,20.815x264/100= Rs. 3,18,953.00 (vi) LONG TERM CAPITALGAINS-5 00,000(-) 3,18,953= Rs. 1,81,047.00 ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 8 8- That being the quasi-judicial Officer, the Learned Assessing officer erred to follow the rules of Natural Justice and Equity, not deliberately ignored the evidences duly placed on assessment Records: 9. That a rectification application under section 154 of the Income Tax Act 1961 filed on 28/01/2020 is pending before the Learned Assessing Officer. 10-That the Learned Assessing Officer dropped the penalty proceedings accepting the above said facts duly narrated in the reply of the penalty Notice, on 10.06.2020. 11- That the assessment order passes under section 143(3) dated 28.12.2019 is (an arbitrary order against the laws and facts) bad in law and facts and the demand to be quashed (made in consequence of it). "The taxing authorities have quasi-judicial powers and so they must act in a fair and not a partisan manner" CIT Versus Simon cares Ltd. [1976] 105 ITR 212(SC) "Where the Assessee has produced all his records, it is not open to the Assessing Officer to pick & choose those which more favourable to the revenue, without considering the explanations of the assessee with regard to discrepancies in others" Indore Malwa United Mills Ltd. versus State of Madhya Pradesh [1966] 60 ITR 41 (SC) CBDT Circular on Assessee's Rights There is an old Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955. It states: "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 9 every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although. therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law officers should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other. (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." The above circular has been judicially noted and approved in many judgments and has been relied upon in support of the Assessees claim. Hence your honour be pleased to allowed the appeal by quashing the addition or any other relief which may deem fit in the eye of Law & facts be given to the appellant and oblige. 4b. The ld. CIT(A) confirmed the additions partly, by holding as under: “DECISION: 7.1 I have carefully considered the submissions, documentary evidences furnished by the appellant and the assessment order. ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 10 7.2 On perusal of the assessment order, it is observed that the appellant has purchased the land measuring 1.335 Hectares out of total land measuring 3.658 Hectares. The appellant has sold 0.5260 Hectares out of 1.335 Hectares for Rs. 5,00,000/- But the stamp duty valuation of the property was Rs. 15,78,000/-. Since the Stamp Duty valuation of property was more than the actual sale consideration, the Assessing Officer took the Stamp Duty valuation of the property for calculation of Long Term Capital gain and accordingly calculated the Long term capital gain. 7.3 During the course of appellate proceedings, the appellant submitted the documentary evidences like purchase deed, sale deed, bank statement etc. On perusal of the same it is observed that the appellant has purchased land measuring 1.335 Hectares and out of the same 0.5260 Hectares was sold for Rs. 5,00,000/-. But the stamp duty valuation of the property for the said land is Rs. 15,78,000/-. As per the provisions of Income Tax Act, if the sale consideration declared by the assesse (seller) is less than the Stamp duty value, then the stamp duty value shall become deemed sale consideration for the purpose of calculating capital gain tax. However, it is seen that the AO has grossly erred in determining the Indexed cost of acquisition. Prima Facie, the appellant has sold only 0.5260 hectares. Hence, the Indexed cost of acquisition should invariably be to the extent of 0.5260 and not on the entire land purchased by the appellant i.e., 1.335. 7.4 In view of the above facts, the AO is directed to re-compute the Indexed cost of acquisition and accordingly determine the Long Term Capital Gain. Hence, the grounds of appeal raised by the appellant are partly allowed. 8. In the result, the appeal filed by the appellant is Partly Allowed.” ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 11 5. Now, the assessee being aggrieved by appellate order passed by ld. CIT(A) filed second appeal with Tribunal . The ld. Counsel for the assessee submitted before the Bench that the sale consideration of the property sold by the assessee was lower than rate adopted by government authorities for the purposes of levy of stamp duty on transfer/sale of the said property . It was submitted that the assessee has given two instances of sales made during the same period in the nearby area in vicinity to demonstrate that the market value of the property was much lower than the value adopted by government authorities for levy of stamp duty on sale/transfer, but both the authorities below viz. AO and ld. CIT(A) did not consider the sale instances submitted by the assessee. It was also submitted by ld. Counsel for the assessee that both the authorities below viz. AO and ld. CIT(A), failed to refer the matter to DVO , as is required u/s 50C(2) despite specifically the assessee challenged the stamp duty valuation adopted by authorities. It was submitted that additions were made by taking differential between the sale consideration and value adopted by government authorities for levy of stamp duty, by invoking provisions of Section 50C. It was submitted by ld. Counsel for the assessee that matter can be set aside and restored to the file of the AO for denovo assessment . The Ld. Sr. DR fairly submitted that the matter can go back to AO for denovo assessment . 6. We have considered rival contentions and perused the material on record. We have observed that the assessee filed his return of income declaring total income of Rs. 4,78,720/- , for the impugned assessment year. The case was selected by Revenue for framing limited scrutiny through CASS , and the reason for selection of the case for framing limited scrutiny assessment was to examine the capital gain/ loss on sale of ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 12 property. It is observed that the assessee sold agriculture land for Rs. 5,00,000/- , but value adopted by government authorities for levy of stamp duty on transfer of said property was 15,78,000/-. The AO made additions by invoking provisions of Section 50C, and ld. CIT(A) partly confirmed the additions but as there was some calculation error, and the ld. CIT(A) directed AO to correct the said error. On his part, the assessee brought on record two comparative sale-deeds adjoining the area nearby in the vicinity to the land sold by the assessee during the same period , to justify his stand that the market value of land was infact lower than the value adopted by government authorities for levy of stamp duty on transfer of said land , but both the authorities below viz. the AO as well ld. CIT(A) did not consider said sale deeds nor referred the matter to the DVO to identify the fair market value on the date of transfer as is required u/s. 50C(2) despite assessee raising specific contentions for referring the matter to DVO as is provided u/s 50C(2). Under these circumstances and in the interest of justice and fair play to both the parties, the matter need to be restored back to the file of the AO for denovo assessment , after giving opportunity of being heard to the assessee. The assessee has filed two comparable of sale deeds which are claimed to be in vicinity and within the same time period when assessee sold his land, which requires verification by the authorities below . Since the assessee is disputing the value adopted by government authorities for levy of stamp duty on transfer of land, Section 50C(2) shall come into play and the matter may be required to be referred to DVO as is provided u/s 50C(2). The orders of the authorities below are set aside and the matter is restored to the file of the AO for framing denovo assessment on merit in accordance with law , after giving opportunity of being heard to the assessee. ITA No.19/Alld./2023 Assessment Year: 2017-18 Mr. Ajay Kumar Gupta, Fatehpur, U.P. v. CIT(A), NFAC, Delhi 13 The appeal of the assessee is allowed for statistical purposes. We clarify that we have not commented on the merits of the additions. We order accordingly. 7. In the result, appeal filed by assessee in ITA No. 19/Alld/2023 for ay: 2017-18 is allowed for statistical purposes. The order pronounced on 20.03.2023 at Allahabad, U.P. on conclusion of hearing in open Court in the presence of both the parties.- Sd/-Sd/-/- Sd/- Sd/-Sd/-/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20 .03.2023 KD Azmi Copy forwarded to: 1. Appellant – Mr. Ajay Kumar Gupta, Vrindavan House, G T Road, Khaga, Fatehpur - 212655, U.P. 2. The ITO, Ward 2(4), Fatehpur, U.P. 2. The CIT, Allahabad, U.P. 3. The ld. Sr. DR. ,ITAT, Allahabad, U.P. 4. The Guard File By Order P.S.