M Mohammed Hanifa, Villupuram V. ITO, Ward-1, Villupuram

ITA 190/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4260 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Bonafide belief; Cost of acquisition; Fair market value; Valuation report; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.190/CHNY/2019 / ASSESSMENT YEAR: 2010-11) SHRI M. MOHAMMED HANIFA, 23-VALLALAR STREET, EB COLONY, COLLEGE NAGAR, POYAPAKKAM, VILLUPURAM 605 602 VS THE INCOME TAX OFFICER, WARD 1, VILLUPURAM PAN: BEHPM6963G ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NO.191/CHNY/2019 / ASSESSMENT YEAR: 2010-11) SMT. A. RAHAMADUNNISA, NO.78, RAJAGOPAL STREET, VILLUPURAM 605 602. VS THE INCOME TAX OFFICER, WARD 1, VILLUPURAM PAN: AQLPR9817M ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NO.195/CHNY/2019 / ASSESSMENT YEAR: 2010-11) SHRI S. SITHIK ALI, NO.78, RAJAGOPAL STREET, VILLUPURAM 605 602. VS THE INCOME TAX OFFICER, WARD 1, VILLUPURAM PAN: CCLPS9628H ( /APPELLANT) ( /RESPONDENT) / APPELLANTS BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 25.04.2019 /DATE OF PRONOUNCEMENT : 10.05.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX 2 ITA NOS . 190,191 & 195/CHNY/2019 (APPEALS)-PUDUCHERRY, ALL DATED 06.09.2018 IN ITA NO. 105/CIT(A)- PDY/2017-18, 106/CIT(A)-PDY/2017-18 & 80/CIT(A)-PDY/2017-18 IN THE CASEOF SHRI M. MOHAMMED HANIFA, SMT. A. RAHAMADUNNISA & SHRI S. SITHIK ALI RESPECTIVELY FOR THE ASSESSMENT YEAR 2010-11 ALL PASSED U/S.250(6) R.W.S. 143(3) R.W.S. 263 OF THE ACT. SINCE THE FACTS AND ISSUES IN ALL THESE APPEALS ARE IDENTICAL, THEY HAVE BEEN TAKEN UP FOR HEARING TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2. THESE APPEALS WERE FILED BY THE ASSESSEES WITH A DELAY OF 80 DAYS. ALL THE ASSESSEES HAVE FILED CONDONATION PETITION STATING THAT THE DELAY HAD OCCURRED SINCE THEY WERE UNDER THE BONAFIDE BELIEF THAT THE APPELLATE ORDERS PASSED BY THE LD.CIT(A) WERE HANDED OVER TO THEIR CHARTERED ACCOUNTANT FOR FILING THE APPEAL. SUBSEQUENTLY IT WAS REALIZED THAT BY OVERSIGHT THE APPELLATE ORDERS WERE NOT HANDED OVER TO THE AUDITOR. ON REALIZING THE SAME THEY IMMEDIATELY GATHERED THE REQUISITE DOCUMENTS AND HANDED OVER THE SAME TO THEIT CHARTERED ACCOUNTANT AND THE APPEALS WERE FILED WITH A DELAY OF 80 DAYS. IT WAS THEREFORE PLEADED THAT THE INADVERTENT LAPSE ON THE PART OF THE ASSESSEES MAY BE CONDONED. THE LD. DR ON THE OTHER HAND STRONGLY OBJECTED TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, THOUGH WE DO NOT APPRECIATE THE LAPSE ON 3 ITA NOS . 190,191 & 195/CHNY/2019 THE PART OF THE ASSESSEES TO FILE THE APPEALS WITHIN THE STIPULATED PERIOD, IN THE INTEREST OF JUSTICE, WE HEREBY CONDONE THE DELAY OF 80 DAYS IN FILING THE APPEAL BY THE ASSESSEES AND PROCEED TO HEAR THE CASES ON MERITS. 3. THE ASSESSEES HAVE RAISED THE FIVE IDENTICAL GROUNDS IN THEIR APPEALS HOWEVER THE CRUXES OF THE ISSUES ARE THAT I. THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD ARRIVED AT THE FAIR MARKET VALUE OF THE IMMOVABLE PROPERTY SOLD BY THE ASSESSEES, AS ON 01.04.1981 AT RS.20 PER SQ.FT., WHILE COMPUTING THE LONG TERM CAPITAL GAIN OF THE ASSESSEES. II. THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD FAILED TO GIVE CREDIT FOR RS.8,27,170/- BEING THE EXPENDITURE INCURRED TOWARDS STAMP DUTY FOR DERIVING THE TITLE OVER THE PROPERTY SOLD BY THE ASSESSEES WHILE COMPUTING THE LONG TERM CAPITAL GAIN OF THE ASSESSEES. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES SHRI M MOHAMMED HANIFA AND SHRI S. SITHIK ALI ARE BROTHERS AND SMT. A. RAHAMADUNNISA THEIR SISTER. INFORMATION WAS RECEIVED BY THE 4 ITA NOS . 190,191 & 195/CHNY/2019 REVENUE THAT ALL THE THREE ASSESSEES HAD SOLD THEIR INHERITED FAMILY PROPERTY FOR A CONSIDERATION OF RS.5,92,62,294/-. THEREAFTER THE LD.AO ISSUED NOTICE U/S.148 OF THE ACT, AGAINST WHICH THE ASSESSEE REPLIED TO TREAT THE RETURN OF INCOME FILED BY THEM ON AN EARLIER DATE AS THE RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S.148 OF THE ACT. THEREAFTER ASSESSMENT PROCEEDINGS WAS COMPLETED U/S.143(3) R.W.S. 147 OF THE ACT ON 19.03.2015 ASSESSING THE LONG TERM CAPITAL GAINS OF THE ASSESSEES. SUBSEQUENTLY THE LD.PCIT SET ASIDE THE ORDER U/S.263 OF THE ACT WITH DIRECTIONS TO THE LD.AO TO REDO THE ASSESSMENT AFRESH. THE LD.AO COMPLIED WITH THE ORDERS OF THE LD.PCIT BY FRAMING FRESH ASSESSMENT ORDER ON 08.12.2017 IN THE CASE OF SHRI SATHIK ALI AND WITH RESPECT TO OTHER TWO ASSESSEES ON 29.12.2017 WHEREIN THE LD.AO ADOPTED THE FAIR MARKET VALUE OF THE IMMOVABLE PROPERTY SOLD BY THE ASSESSEES AS ON 01.04.1981 AT RS.20/- PER SQ.FT., AND FURTHER DENIED THE CLAIM OF EXPENDITURE INCURRED TOWARDS STAMP DUTY ON THE IMMOVABLE PROPERTY SOLD BY THE ASSESSEES WHILE COMPUTING THE LONG TERM CAPITAL GAIN WHICH WAS FURTHER CONFIRMED BY THE LD.CIT(A),. 5 ITA NOS . 190,191 & 195/CHNY/2019 5. GROUND NO.2(I) : VALUATION OF THE PROPERTY AS ON 01.04.1981:- AT THE OUTSET THE LD.AR SUBMITTED BEFORE US THAT THE LD.AO HAD ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AT RS.20 PER SQ.FT., WHILE COMPUTING THE LONG TERM CAPITAL GAIN WITH RESPECT TO THE JOINTLY OWNED PROPERTY SOLD BY ALL THE THREE ASSESSES ON THE BASIS OF THE COMMUNICATION RECEIVED FROM THE JOINT REGISTRERAR-1 VILLUPURAM. THE LD.AR FURTHER PUT FORWARD THAT THE PROPERTY WAS PORTIONED VIDE PARTITION DEED SUBMITTED BEFORE THE SUB-REGISTERAR-1 VILLIUPURAM ON 18/04/1986 AND THE SAME WAS CLASSIFIED AS PENDING DOCUMENT NO. P.40/1986. SUBSEQUENTLY THE PENDING DOCUMENT WAS REGISTERED AS DOCUMENT NO.2671/2007 ON 29/10/2007 WHEREIN THE VALUE OF THE PROPERTY AS ON 18/04/1986 WAS ADOPTED AS RS.340.30 PER SQ.FT., AFTER CONFRONTATION AND DELIBERATION. THE LD.AR FURTHER SUBMITTED THAT HE HAD OBTAINED VALUATION REPORT FROM THE REGISTERED VALUER WHO HAD AFTER ELABORATELY CONSIDERING THE ISSUES INVOLVED VALUED THE PROPERTY AT RS.203/- PER SQ.FT., AS ON 01.04.1981. THE LD.AR FURTHER STATED THAT THE ASSESSEE HAD REQUESTED THE LD.AO AT THE TIME OF ASSESSMENT PROCEEDINGS TO REFER THE MATTER TO THE VALUATION OFFICER TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981, IF HE IS NOT SATISFIED WITH THE VALUATION REPORT SUBMITTED BEFORE HIM, HOWEVER THE LD.AO WITHOUT 6 ITA NOS . 190,191 & 195/CHNY/2019 CONSIDERING THE PRAYER OF THE ASSESSEE JUMPED TO THE CONCLUSION THAT THE VALUE OF THE PROPERTY TO BE RS.20/- PER SQ.FT., AS ON 01.04.1981 AND ADOPTED THE SAME FOR COMPUTING THE LONG TERM CAPITAL GAIN OF THE ASSESSES. THE LD.AR THEREAFTER PLEADED BEFORE US THAT EITHER A REASONABLE VALUE MAY BE ADOPTED KEEPING IN VIEW OF THE ABOVE FACTS OR THE MATTER MAY BE REMITTED BACK TO THE FILE OF LD.AO DIRECTING HIM TO OBTAIN VALUATION REPORT FROM THE DVO AND THEREAFTER DECIDE THE MATTER IN ACCORDANCE WITH LAW AND MERIT. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES AND PLEADED THAT THE SAME MAY BE UPHELD. 5.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. ON PERUSING THE FACTS OF THE CASE, WE FIND THAT THE LD.REVENUE AUTHORITIES HAD ADOPTED THE VALUE OF THE PROPERTY SOLD AS ON 01.04.1981 AT RS.20 PER SQ.FT., BECAUSE THE JOINT SUB-REGISTRAR-1, VILLUPURAM HAD COMMUNICATED TO THE REVENUE THAT THE VALUE OF THE PROPERTY EFFECTIVE FROM 01.04.1981 TO 28.02.1987 IS RS.20 PER SQ.FT., HOWEVER IT IS ALSO REVEALED THAT THE SUB-REGISTRAR HAD DETERMINED THE VALUE OF THE PROPERTY AS ON 18.04.1986 AT RS.340.30 PER SQ.FT., AFTER PROLONGED PROCEEDINGS ON 29.10.2007. FROM THESE FACTS IT IS QUITE OBVIOUS THAT VALUE OF THE PROPERTY CANNOT 7 ITA NOS . 190,191 & 195/CHNY/2019 JUMP FROM RS.20/- PER SQ.FT., TO RS.340/- PER SQ.FT., IN SUCH SHORT SPAN OF TIME. MOREOVER THE REGISTERED VALUER KEEPING IN MIND OF ALL THE FACTORS RELEVANT TO THE MARKER VALUE OF THE PROPERTY HAS REASONABLY VALUED THE PROPERTY AT RS.203/- PER SQ.FT., AS ON 01.04.1981. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE FAIR MARKET VALUE DETERMINED BY THE REGISTERED VALUER IS QUITE APPROPRIATE CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE. HENCE WE HEREBY DIRECT THE LD.AO TO COMPUTE THE LONG TERM CAPITAL GAIN IN THE CASE OF ALL THE THREE ASSESSEES BY ADOPTING RS.203/- PER SQ.FT., AS THE VALUE OF THE PROPERTY SOLD BY THE ASSESSEES AS ON 01.04.1981 AND BY ADHERING TO ALL OTHER PROVISIONS OF THE ACT. IT IS ORDERED ACCORDINGLY. 6. GROUND NO.2(II): THE AMOUNT OF RS.8,27,170/- PAID TOWARDS STAMP DUTY NOT CONSIDERED WHILE COMPUTING THE CAPITAL GAIN:- AT THE OUTSET THE LD.AR SUBMITTED BEFORE US THAT THE LD.AO AS WELL AS THE LD.CIT(A) HAS NOT CONSIDERED THE AMOUNT OF RS.8,27,170/- BEING THE EXPENDITURE INCURRED TOWARDS STAMP DUTY WHILE COMPUTING THE LONG TERM CAPITAL GAIN IN THE CASE OF ALL THE ASSESSEES. ON PERUSING THE FILE WE FIND THAT THE LD.AO AS WELL AS THE LD.CIT(A) HAS NOT ADDRESSED THE ISSUE IN THEIR RESPECTIVE ORDERS. 8 ITA NOS . 190,191 & 195/CHNY/2019 HENCE WE HEREBY REMIT BACK THE MATTER TO THE FILE OF LD.AO WITH DIRECTIONS TO VERIFY THE FACT WHETHER THE ASSESSEES HAS INCURRED THE EXPENDITURE OF RS.8,27,170/- FOR STRENGTHENING THEIR TITLE OVER THE PROPERTY AND IF FOUND SO TREAT IT AS COST OF ACQUISITION OF THE ASSET AND THEREAFTER COMPUTE THE LONG TERM CAPITAL GAIN IN ACCORDANCE WITH LAW AND MERIT. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 10 TH MAY, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 10 TH MAY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF