RANJIT SHIVRAM RAUT, MUMBAI V. ITO , WARD-3, , PALGHAR

ITA 1902/MUM/2020

AI Insights

The case involves Ranjit Shivram Raut, who appealed against the order of the Commissioner of Income-tax (Appeals) confirming the addition of Rs.1,16,51,000 to his income under section 56(2)(vii)(b)(i) of the Income Tax Act, 1961. This addition was due to the difference between the purchase consideration of three non-agricultural plots of land and their market value as per the stamp valuation authorities. The assessee contended that the lands were not capital assets and thus the addition was unjustified. The ITAT heard the appeal, considered the arguments and evidence presented, including the valuation report by the Departmental Valuation Officer and the assessee's counter-evidence, and decided to restore the matter to the Assessing Officer for further verification regarding the valuation and the nature of the plots.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123327 (ITAT-MUMBAI)
• Duration Of Justice: 13 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 05-09-2022
• Assessment Year: misc
• Appeal Filed On: 04-06-2009
• Other Referred Cases: CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 132; 56(2)(vii)(b); 143(3); 56(2); 205

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1902/MUM/2020 Assessment Year: 2014-15 Ranjit Shivram Raut, B-301, Dasrath Singh Nagar, Devashi Road, Bhaji Market, Palghar-401404 Vs. ITO, Ward 3, Aayakar Bhavan, BIDCO Road, Palghar (W), Tal. & Dist. Palghar-401404. PAN No. AJHPR 0430 R Appellant Respondent Assessee by : Mr. Subodh Ratnaparkhi, AR Revenue by : Smt. Mahita Nair, CIT- DR Mr. T. Shankar, CIT-DR Date of Hearing : 06/09/2022 Date of pronouncement : 16/11/2022 ORDER PER OM PRAKASH KANT, AM This appeal by assessee is directed against order dated 02/03/2020 passed by the Learned Commissioner of Income-tax (Appeals)-3, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds: 1. The Hon. CIT(A) erred in confirming the addition to the extent of Rs.1,16,51,000/-made W/s 56(2)(vii)(b)(i) of the I. T. Act 1961, due to differenc purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar and market value as per stamp valuation authorities, not appreciating that the lands purchased were not capital assets and therefor attracted and the addition was not justified. 2. The Hon. CIT(A) erred in confirming the addition to the extent of Rs.1,16.51,000% T. Act 1961, due to difference between purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar, by adopting the value determined by the Asst. Valuation officer, Thane, vide order dt. 31.10.2017, which substantially ignored the various consideration and therefore the addition was not justified. 3. The Hon. CIT(A) erred in not considering the sum of Rs.66,00,000/ village Navghar, Taluka Vasai, Dist. Palghar, as p actual purchase consideration for working out the addition us 56(2)(vi)(b(i) of the I.T. Act 1961 and therefore the addition to that extent was not appropriate. 2. Briefly stated fact was engaged in the business of undertaking small civil construction work. For the year under consideration, the assessee filed return of income on 16/11/2015, declaring total income of Ld. CIT(A) has noted that the assessee had shown to T. Act 1961, due to difference between the actual purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar and market value as per stamp valuation authorities, not appreciating that the lands purchased were not capital assets and therefore the provisions of section 56(2)(vii)(b)(i) were not attracted and the addition was not justified. The Hon. CIT(A) erred in confirming the addition to the extent of Rs.1,16.51,000%-made u/s 56(2)(vii)(b)(i) of the I. T. Act 1961, due to difference between purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar, by adopting the value determined by the Asst. Valuation officer, Thane, vide order dt. 31.10.2017, which substantially ignored the various reasons. determining the actual purchase consideration and therefore the addition was not justified. The Hon. CIT(A) erred in not considering the sum of Rs.66,00,000/- paid in cash for purchase of plots at village Navghar, Taluka Vasai, Dist. Palghar, as p actual purchase consideration for working out the addition us 56(2)(vi)(b(i) of the I.T. Act 1961 and therefore the addition to that extent was not appropriate. stated facts of the case that the assessee, an individual was engaged in the business of undertaking small civil construction work. For the year under consideration, the assessee filed return of income on 16/11/2015, declaring total income of ₹11,43, Ld. CIT(A) has noted that the assessee had shown to Ranjit Shivram Raut ITA No. 1902/M/2020 2 e between the actual purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar and market value as per stamp valuation authorities, not appreciating that the lands purchased were not capital assets and e the provisions of section 56(2)(vii)(b)(i) were not The Hon. CIT(A) erred in confirming the addition to the made u/s 56(2)(vii)(b)(i) of the I. the actual purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar, by adopting the value determined by the Asst. Valuation officer, Thane, vide order dt. 31.10.2017, which substantially ignored the reasons. determining the actual purchase consideration and therefore the addition was not justified. The Hon. CIT(A) erred in not considering the sum of paid in cash for purchase of plots at village Navghar, Taluka Vasai, Dist. Palghar, as part of actual purchase consideration for working out the addition us 56(2)(vi)(b(i) of the I.T. Act 1961 and therefore the s of the case that the assessee, an individual, was engaged in the business of undertaking small civil construction work. For the year under consideration, the assessee filed return of 11,43,220/-. The Ld. CIT(A) has noted that the assessee had shown to have income from salary and income from house property. The return of income filed by the assessee was selecte statutory notices under the Income were issued and complied with. During assessm Ld. Assessing Officer observed that as per Return (AIR) filed by t assessee purchased District Vasai (Maharashtra lakh for each plot) against the fair market value of (₹56,97,000/- for each plot difference amount of 56(2)(vii)(b) of the Act 56(2)(vii)(b) of the Act were not capital asset, was rejected by the Assessing Officer. The Assessing Officer also rejected the contention of the assessee that payments of ₹66 lakh was paid by of the property i.e. M/s United in cash payment made in cash by the assess However, on the request of the assessee, the Assessing Officer ma from salary and income from house property. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short were issued and complied with. During assessment proceeding, the Assessing Officer observed that as per the Annual Information (AIR) filed by the office of the Sub-Registrar three plots of land, at Navghar, Talika Vasai Maharashtra) for total consideration of lakh for each plot) against the fair market value of for each plot). According to the Assessing Officer difference amount of ₹1,61,91,000/- was taxable under section Act. The contention of the assessee that Section Act was not applicable being plots purchased were not capital asset, was rejected by the Assessing Officer. The Assessing Officer also rejected the contention of the assessee that 66 lakh was paid by one Sh Rajeev Patil to the seller operty i.e. M/s United in cash, should be considered as payment made in cash by the assessee for purchase of the property. , on the request of the assessee, the Assessing Officer ma Ranjit Shivram Raut ITA No. 1902/M/2020 3 from salary and income from house property. The return of income d for scrutiny assessment and in short ‘the Act’) ent proceeding, the Annual Information Registrar, Vasai, the land, at Navghar, Talika Vasai, consideration of ₹9 lakh (₹3 lakh for each plot) against the fair market value of ₹1,70,91,000/- ording to the Assessing Officer, the was taxable under section . The contention of the assessee that Section was not applicable being plots purchased were not capital asset, was rejected by the Assessing Officer. The Assessing Officer also rejected the contention of the assessee that one Sh Rajeev Patil to the seller , should be considered as ee for purchase of the property. , on the request of the assessee, the Assessing Officer made a reference to the Departmental Valuation Officer the fair market value of t 56(2)(vii)(b) of the Act valuation report was not received from the Officer and therefore the difference between the value of the properties as per stamp duty authorities and value declared by the assessee in the registered agreement, amounting to 23/12/2016, passed under se CIT(A) the assessee contested the addition made under section 56(2)(vii)(b) of the Act It was submitted by the assessee that unauthorized encroachment on the plot of land therefore market value of the plots was lower and did not take those factors into market value of the three plots at reiterated before the Ld. CIT(A) to give credit of cash by Sh Rajeev Patil to the seller. The Ld. CIT(A), after calling for the remand report from the Assessing Officer rejected the Departmental Valuation Officer the fair market value of the properties as per the provis Act. Till the finalization of the assessment, valuation report was not received from the Departmental Valuation and therefore the Ld. Assessing Officer assessed the difference between the value of the properties as per stamp duty authorities and value declared by the assessee in the registered agreement, amounting to ₹1,61,91,000/- in assessment order dated 23/12/2016, passed under section 143(3) of the Act. Before CIT(A) the assessee contested the addition made under section Act and also challenged the merit of the addition. It was submitted by the assessee that there were a lot of ed encroachment on the plot of land therefore market value of the plots was lower and Ld. Departmental Valuation Officer did not take those factors into account while determining the f market value of the three plots at ₹1,25,51,000/ reiterated before the Ld. CIT(A) to give credit of ₹66 lakh paid in cash by Sh Rajeev Patil to the seller. The Ld. CIT(A), after calling for the remand report from the Assessing Officer rejected the Ranjit Shivram Raut ITA No. 1902/M/2020 4 Departmental Valuation Officer for ascertaining he properties as per the proviso to section ation of the assessment, mental Valuation Assessing Officer assessed the difference between the value of the properties as per stamp duty authorities and value declared by the assessee in the registered ment order dated ction 143(3) of the Act. Before, the Ld. CIT(A) the assessee contested the addition made under section nged the merit of the addition. there were a lot of ed encroachment on the plot of land therefore market Departmental Valuation Officer account while determining the fair 000/-. It was also 66 lakh paid in cash by Sh Rajeev Patil to the seller. The Ld. CIT(A), after calling for the remand report from the Assessing Officer rejected the contention of the assessee of n of the Act. The Ld. CIT(A) considered the fair market value of the plots determined by the ₹1,25,51,000/- and after subtracting the value of by the assessee in the registered agreement, sustain difference amount of of the Act. The contention of giving credit of determining addition under section 56(2)(vii)(b) was also rejected by the Ld. CIT(A). Aggrieved, the assessee is in appeal before the Income-tax Appellate Tribunal (ITAT), raising the grounds as reproduced above. 3. Before us the assessee filed a paper book containing pages 1 to 205 inter alia, copy of submissions filed before the Ld. C copy of remand report, copy of purchase deed etc. 4. We have heard rival submission dispute and perused the relevant material on record. contention of the assessee of non-applicability of section 56(2)(vii)(b) . The Ld. CIT(A) considered the fair market value of the plots determined by the Departmental Valuation Officer and after subtracting the value of ₹ in the registered agreement, sustain difference amount of ₹1,16,51,000/- as a addition u/s 56(2)(vii)(b) . The contention of giving credit of ₹66 lakhs while determining addition under section 56(2)(vii)(b) was also rejected by A). Aggrieved, the assessee is in appeal before the tax Appellate Tribunal (ITAT), raising the grounds as Before us the assessee filed a paper book containing pages 1 , copy of submissions filed before the Ld. C copy of remand report, copy of purchase deed etc. have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. Ranjit Shivram Raut ITA No. 1902/M/2020 5 applicability of section 56(2)(vii)(b) . The Ld. CIT(A) considered the fair market value of the Departmental Valuation Officer (DVO) at ₹9 lakh declared in the registered agreement, sustained the as a addition u/s 56(2)(vii)(b) 66 lakhs while determining addition under section 56(2)(vii)(b) was also rejected by A). Aggrieved, the assessee is in appeal before the tax Appellate Tribunal (ITAT), raising the grounds as Before us the assessee filed a paper book containing pages 1 , copy of submissions filed before the Ld. CIT(A), of the parties on the issue in dispute and perused the relevant material on record. 4.1 In ground No. 1 section 56(2)(vii)(b) applicable because the three slum occupied plots were purchase therefore such plots were held as applicable on capital asset only. deeming the difference of and consideration paid/payable of individual or Hindu the stamp duty value of the property “property” has been further defined in explanation below the section 56(2)(vii)(b) of the Act “Explanation.- For the purpose o (a) (b) (c) In ground No. 1, the assessee has challenged applicability of of the Act, claiming that provision is not applicable because the three slum occupied Non-agriculture plots were purchased for the purpose of subsequent sale and were held as stock in trade and section 56(2) is applicable on capital asset only. The section 56(2)(vii)(b) refers to difference of stamp duty value of immovable property and consideration paid/payable of any immovable property by any individual or Hindu Undivided Family (HUF) as income where stamp duty value of the property exceeds ₹50,000/ “property” has been further defined in explanation below the section Act, which reads as under: For the purpose of this clause- Ranjit Shivram Raut ITA No. 1902/M/2020 6 , the assessee has challenged applicability of , claiming that provision is not agriculture (NA) purpose of subsequent sale and stock in trade and section 56(2) is The section 56(2)(vii)(b) refers to stamp duty value of immovable property any immovable property by any as income wherever 50,000/-. The term “property” has been further defined in explanation below the section (d) “property” means the following capital asset of the assessee, namely :- (i) immovable property being land or building or both; (ii) to (ix) ...................................................” 4.2 Thus, according to the provisions of the 56(2)(vii)(b) is applicable where the property is capital asset in the hand of the recipient. Finance Act, 2010 issued by the CBDT by way of circular No. 01/2011 also explained “property” for the 56(2)(vii)(b) of the Act hands of the recipient. The relevant part of the reproduced as under : “13.4 The provisions of section 56(2) (vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extend the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profit which are taxable under specific head of income. Therefore. the definition of property has been amended to provide that section 56(2vii) will have application to the property' which is in the nature “property” means the following capital asset of the assessee, (i) immovable property being land or building or both; (ii) to (ix) ...................................................” according to the provisions of the Act 56(2)(vii)(b) is applicable where the property is capital asset in the hand of the recipient. The explanatory notes to the provisions of the , 2010 issued by the CBDT by way of circular No. 01/2011 also explained “property” for the purpose of the section Act should be in the nature of capital asset in the hands of the recipient. The relevant part of the Circular reproduced as under : The provisions of section 56(2) (vii) were introduced as a ter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extend the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profit which are taxable under specific head of income. Therefore. the definition of property has been amended to provide that section 56(2vii) will have application to the property' which is in the nature Ranjit Shivram Raut ITA No. 1902/M/2020 7 “property” means the following capital asset of the assessee, (i) immovable property being land or building or both; Act the section 56(2)(vii)(b) is applicable where the property is capital asset in the e provisions of the , 2010 issued by the CBDT by way of circular No. purpose of the section should be in the nature of capital asset in the Circular (supra) is The provisions of section 56(2) (vii) were introduced as a ter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extend the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profits of which are taxable under specific head of income. Therefore. the definition of property has been amended to provide that section 56(2vii) will have application to the property' which is in the nature of a capital asset of the recipient and therefore wo stock-in-trade, raw material and consumable stores of any business of such recipient. 4.3 The Ld. CIT(A) has also concurred assessee that provision of section 56(2)(vii)(b) of the applicable on transfer the recipient, however, the Ld. CIT(A) assessee that the 3 NA plots received by the assessee trade and thus upheld the action of Assessing Officer being capital asset in the hands of the assessee 4.4 Before us, though the assessee contested that plots were purchased for further sale to Sh Rajeev Y were stock in trade in the hands of case of the assessee purchase, he was never engaged in trading of plots of land. was an isolated transaction of purchase of sale (purchase) will fall under the head business of profession or under the overall appreciation of of a capital asset of the recipient and therefore would not apply to trade, raw material and consumable stores of any business of such recipient.” The Ld. CIT(A) has also concurred with the contention of the assessee that provision of section 56(2)(vii)(b) of the applicable on transfer of property being capital asset in the hand of the recipient, however, the Ld. CIT(A) rejected the contention of the the 3 NA plots received by the assessee and thus upheld the action of Assessing Officer g capital asset in the hands of the assessee. Before us, though the assessee contested that plots were purchased for further sale to Sh Rajeev Y Patil, and therefore same stock in trade in the hands of the assessee. The facts of the ssessee, shows that prior to this transaction of purchase, he was never engaged in trading of plots of land. ted transaction of purchase. Whether any transaction will fall under the head ‘profit and gains business of profession or under the head ‘capital gain overall appreciation of multiple factors including intention Ranjit Shivram Raut ITA No. 1902/M/2020 8 uld not apply to trade, raw material and consumable stores of any business the contention of the assessee that provision of section 56(2)(vii)(b) of the Act are of property being capital asset in the hand of rejected the contention of the the 3 NA plots received by the assessee were stock in and thus upheld the action of Assessing Officer of property Before us, though the assessee contested that plots were , and therefore same the assessee. The facts of the shows that prior to this transaction of purchase, he was never engaged in trading of plots of land. This Whether any transaction profit and gains’ of the capital gain’, depends on multiple factors including intention of holding, frequency of transactions, volume of transactions, treatment in books of accounts the case of CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586) whether a particular holding of shares is by way of investment or forms part of the stock the assessee, when holds the share and it should, in normal circumstances, be in position to produce evidence from its record as to whether it has maintained any distinction between those shares which are its stock- investment. The assessee has not demonstrated before us that whether he fulfils the criteria for treating the purchase of three plots as a stock in trade of his business. Merely presumption by the assessee that those three plots were therefore those were proved by way of evidences, which the assessee has failed, therefore, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute , frequency of transactions, volume of transactions, treatment in books of accounts etc. The Hon’ble Supreme CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586) whether a particular holding of shares is by way of investment or forms part of the stock-in-trade, is a matter within the knowle the assessee, when holds the share and it should, in normal circumstances, be in position to produce evidence from its record as to whether it has maintained any distinction between those shares -in-trade and those which are held The assessee has not demonstrated before us that fulfils the criteria for treating the purchase of three plots as a stock in trade of his business. Merely presumption by the assessee that those three plots were intended for further sale and therefore those were stock in trade, is not sufficient and it has proved by way of evidences, which the assessee has failed, therefore, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute in upholding the applicability Ranjit Shivram Raut ITA No. 1902/M/2020 9 , frequency of transactions, volume of transactions, etc. The Hon’ble Supreme Court in CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586) observed that whether a particular holding of shares is by way of investment or trade, is a matter within the knowledge of the assessee, when holds the share and it should, in normal circumstances, be in position to produce evidence from its record as to whether it has maintained any distinction between those shares trade and those which are held by way of The assessee has not demonstrated before us that fulfils the criteria for treating the purchase of three plots as a stock in trade of his business. Merely presumption by the further sale and is not sufficient and it has to be proved by way of evidences, which the assessee has failed, therefore, we do not find any error in the order of the Ld. CIT(A) on bility of section 56(2)(vii)(b) of the Act in the case of the assessee dismiss the ground No. 5. The Ground No. Departmental Valuation Officer 6. Brief facts qua the issue in dispute are that the Assessing Officer referred the valuation of the plots purchase Departmental Valuation Officer order dated 31/10/2017, as under: Sr. No. Date of Transaction/ Registration No. F.Y. Description of the property (i.e. land at Navghar) 1. 21.01.2014 440/2014 2013-14 S. No. 17A/4, plot Area 392.89 sq. Mtrs. (1/3 2. 28.01.2014 618/2014 2013-14 S. No. 17A/4, No. 17A/5 Area 392.89 sq. Mtrs. (1/3 3. 04.02.2014 784/2014 2013-14 S. No. 17A/4, No. 17A/5 Area 392.89 sq. Mtrs. (1/3 6.1 The assessee filed copy of valuation report by registered valuer M/s Apte associates, Virar (a copy of which has been placed on paper book page 183 to 199. The Ld. CIT(A) adopted the value of the property for the purpose of section 56(2)(vii)(b) as determined 56(2)(vii)(b) of the Act in the case of the assessee. Accordingly, we dismiss the ground No. 1 of the appeal of the assessee. No. 2 in respect of challenge to valuation report of Departmental Valuation Officer. ief facts qua the issue in dispute are that the Assessing Officer referred the valuation of the plots purchase Departmental Valuation Officer, who valued the properties order dated 31/10/2017, as under: Description of the property (i.e. land at Navghar) Name of the Vendor Amount Paid as per agreement (₹) S. No. 17A/4, plot No. 34, Area 392.89 sq. Mtrs. (1/3 rd share) M/s Maa United 3,00,000/- S. No. 17A/4, S. 17B, S. No. 17A/5 plot No. 34, Area 392.89 sq. Mtrs. (1/3 rd share) M/s Maa United 3,00,000/- S. No. 17A/4, S. 17B, S. No. 17A/5 plot No. 34, Area 392.89 sq. Mtrs. (1/3 rd share) M/s Maa United 3,00,000/- Total assessee filed copy of valuation report by registered valuer M/s Apte associates, Virar (a copy of which has been placed on paper book page 183 to 199. The Ld. CIT(A) adopted the value of the property for the purpose of section 56(2)(vii)(b) as determined Ranjit Shivram Raut ITA No. 1902/M/2020 10 . Accordingly, we of the appeal of the assessee. in respect of challenge to valuation report of ief facts qua the issue in dispute are that the Assessing Officer referred the valuation of the plots purchased to the , who valued the properties vide Market Value as per stamp valuation authoritie s Value determined by Valuation Officer, Thane 56,97,00 0/- 41,70,000/- 56,97,00 0/- 41,70,000/- 56,97,00 0/- 41,70,000/- 1,25,10,000/- assessee filed copy of valuation report by registered valuer M/s Apte associates, Virar (a copy of which has been placed on paper book page 183 to 199. The Ld. CIT(A) adopted the value of the property for the purpose of section 56(2)(vii)(b) as determined by the departmental valuer as against the stamp duty value adopted by the Assessing Officer and reduced the amount of addition accordingly. 7. Before us the Ld. counsel instances relied upon by the determining the fair market value of plots following: (a) the plot in reference were encroached by slum dwellers and unauthorized ‘ land including a “ unauthorised encroacher and demolishing the illegal construction of ‘chawls’, the assessee would be required to incur substantial expenditure, and therefore valuation based on sale instances acquired by the ass (b) The concerned plots had incumb Vartak’, whose n of the 7/12 extracts, which forms part of the registered departmental valuer as against the stamp duty value adopted by the Assessing Officer and reduced the amount of addition Ld. counsel of the assessee assailed that the sale instances relied upon by the Ld. Departmental V the fair market value of plots are not correct, the plot in reference were encroached by slum dwellers and unauthorized ‘chawls’ ( hutments) were constr land including a “Sulabh Toilet” and for vacati unauthorised encroacher and demolishing the illegal construction of ‘chawls’, the assessee would be required to incur substantial expenditure, and therefore valuation based on sale instances are not comparable with the lands acquired by the assessee. The concerned plots had incumberance of one , whose name is recorded in the column ‘ of the 7/12 extracts, which forms part of the registered Ranjit Shivram Raut ITA No. 1902/M/2020 11 departmental valuer as against the stamp duty value adopted by the Assessing Officer and reduced the amount of addition of the assessee assailed that the sale Departmental Valuer for are not correct, in view of the plot in reference were encroached by slum dwellers and ( hutments) were constructed on the Sulabh Toilet” and for vacating of those unauthorised encroacher and demolishing the illegal construction of ‘chawls’, the assessee would be required to incur substantial expenditure, and therefore valuation are not comparable with the lands erance of one ‘Juhi Vikas ame is recorded in the column ‘other rights’ of the 7/12 extracts, which forms part of the registered purchase agreement, but the Officer did not take into consideration this the property. (c) The stamp duty ready recknor rates does not denote the correct market value of the area because the ready recknor rates of the plots in reference have gone up more than twice from calendar has changed from 711 in 2011 to 939 in 2014. 7.1 The Ld. counsel contested the valuation report of the Report before the Ld. CIT(A) but he did submission of the assessee. 7.2 Before us the assessee has filed an application dated 06/09/2022 for admitting following documents as additional evidences, to show the existence of unauthoriz the plot of the land: i. Photography of the plots (4) showing construction of unauthorised chawls on the plots. purchase agreement, but the Departmental Valuation did not take into consideration this incumb the property. The stamp duty ready recknor rates does not denote the correct market value of the area because the ready recknor rates of the plots in reference have gone up more than twice from calendar year 2011 to 2014 whereas capital gain index has changed from 711 in 2011 to 939 in 2014. Ld. counsel of the assessee submitted that the assessee contested the valuation report of the Departmental Valuation before the Ld. CIT(A) but he did not any cognizance to those submission of the assessee. Before us the assessee has filed an application dated 06/09/2022 for admitting following documents as additional show the existence of unauthorized encroachment on Photography of the plots (4) showing construction of unauthorised chawls on the plots. Ranjit Shivram Raut ITA No. 1902/M/2020 12 Departmental Valuation incumberance of The stamp duty ready recknor rates does not denote the correct market value of the area because the ready recknor rates of the plots in reference have gone up more than twice year 2011 to 2014 whereas capital gain index has changed from 711 in 2011 to 939 in 2014. of the assessee submitted that the assessee Departmental Valuation cognizance to those Before us the assessee has filed an application dated 06/09/2022 for admitting following documents as additional ed encroachment on Photography of the plots (4) showing construction of ii. Colour print of Google Map (1) showing existence of structures on the plots. iii. Response letter dt 25.08.2022 from appropriate authority of Vasai constructed on the concerned plots is unauthorised. Copies of application and response to information sought under the Right to Information Act, 2005 in Marathi and its English Translation thereof are submitted at pg. no 7.3 The Ld. counsel gathered only after completion of the assessment proceedings and therefore could not be placed before the authorities. 8. The Ld. DR on the other hand objected to t Ld. counsel of the assessee on the ground that no such objections were raised before the proceedings. He also referred to the relevant part of purchase deed (PB-117) where description of the prop submitted that the land had been shown encumbrance. Therefore assessee should not be allowed delay adjudication on Colour print of Google Map (1) showing existence of structures on the plots. Response letter dt 25.08.2022 from appropriate authority of Vasai - Virar Municipal Corporation, stating that the chawl constructed on the concerned plots is unauthorised. Copies of application and response to information sought under the Right to Information Act, 2005 in Marathi and its English Translation thereof are submitted at pg. no's 206 to 209. Ld. counsel submitted that above evidences er completion of the assessment proceedings and therefore could not be placed before the on the other hand objected to the arguments of the of the assessee on the ground that no such objections were raised before the Ld. Departmental Valuer during valuation proceedings. He also referred to the relevant part of purchase deed 117) where description of the property is mentioned and submitted that the land had been shown as without any . Therefore assessee should not be allowed delay adjudication on the issue in dispute. Ranjit Shivram Raut ITA No. 1902/M/2020 13 Colour print of Google Map (1) showing existence of structures Response letter dt 25.08.2022 from appropriate authority of Corporation, stating that the chawl constructed on the concerned plots is unauthorised. Copies of application and response to information sought under the Right to Information Act, 2005 in Marathi and its English 's 206 to 209. submitted that above evidences could be er completion of the assessment/appellate proceedings and therefore could not be placed before the lower he arguments of the of the assessee on the ground that no such objections during valuation proceedings. He also referred to the relevant part of purchase deed erty is mentioned and as without any . Therefore assessee should not be allowed to further 9. We have heard rival submission of the party on the issue in dispute and perused the relevant material on record. On perusal Departmental Valuation Report book pages 177 to 182, we find that consideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the property under description, which reads as under: “3.3. Specification 9.1 The Ld. Departmental Valuer sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those lands were not subjected We have heard rival submission of the party on the issue in dispute and perused the relevant material on record. On perusal Departmental Valuation Report, a copy of which is placed on paper book pages 177 to 182, we find that Ld. DVO ideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the property under description, which reads as under: All the three properties are situated at Mauje Dist. Palghar about 3KM away from Vasai Road Railway station. Chawls are constructed on the entire plot. There is no boundary wall defining the actual position of the subject property. The subject property is surrounded by Flats and Buildings i.e. Eastern side by Vartak College and Andy Burger building. Western side by Vartak Engineering College. Northern side by Sulabh toilet etc. and Southern side by Engineering College road. All requisite amenities are available in the vicinity of the subject property and is located in developed location. Departmental Valuer has relied on for instances of sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those lands were not subjected to encroachment, then he is required to Ranjit Shivram Raut ITA No. 1902/M/2020 14 We have heard rival submission of the party on the issue in dispute and perused the relevant material on record. On perusal of , a copy of which is placed on paper has taken into ideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the All the three properties are situated at Mauje- Navghar. t. Palghar about 3KM away from Vasai Road Railway station. Chawls are constructed on the entire plot. There is no boundary wall defining the actual position of the subject property. The subject property is surrounded by e by Vartak College and Andy Burger building. Western side by Vartak Engineering College. Northern side by Sulabh toilet etc. and Southern side by Engineering College road. All requisite amenities are available in the vicinity of the s located in developed location.” has relied on for instances of the sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those to encroachment, then he is required to consider impact of adverse possession by the encroacher land of the assessee property. During the course of the hearing, the expressed his inability circumstances, we feel it appropriate to restore this issue back to the file of the Ld. Assessing Officer for verification from the Departmental Valuation Officer encroachment on t valuation report dated 31/10/2017. The ground of the appeal of the assessee is accordingly allowed for the statistical purposes. 10. The Ground No. as paid in cash by Sh Rajeev Y Patil towards the consideration for purchase of property. 11. The Ld. counsel three plots for recorded consideration of duty and registration charges one Mr. Rajeev Y Patil. He submitted that during the course of search action under section 132 of the consider impact of adverse possession by the encroacher land of the assessee and corresponding impact on the value of the property. During the course of the hearing, the expressed his inability to verify or confirm this fact readily. In the circumstances, we feel it appropriate to restore this issue back to Assessing Officer for verification from the Departmental Valuation Officer and consider the impact of encroachment on the land, if not already considered in the valuation report dated 31/10/2017. The ground of the appeal of the accordingly allowed for the statistical purposes. No. 3 relates to considering amount of s paid in cash by Sh Rajeev Y Patil towards the consideration for purchase of property. Ld. counsel submitted that the assessee purchased those three plots for recorded consideration of ₹9 lakh excluding duty and registration charges, out of funds directly received from Rajeev Y Patil. He submitted that during the course of action under section 132 of the Act at the premises of Mr Ranjit Shivram Raut ITA No. 1902/M/2020 15 consider impact of adverse possession by the encroacher on the and corresponding impact on the value of the property. During the course of the hearing, the Ld. DR also verify or confirm this fact readily. In the circumstances, we feel it appropriate to restore this issue back to Assessing Officer for verification from the Ld. and consider the impact of he land, if not already considered in the valuation report dated 31/10/2017. The ground of the appeal of the accordingly allowed for the statistical purposes. relates to considering amount of ₹ 66 lakh s paid in cash by Sh Rajeev Y Patil towards the consideration for submitted that the assessee purchased those excluding stamp funds directly received from Rajeev Y Patil. He submitted that during the course of at the premises of Mr. Rajeev Y Patil, it was by cheque, he paid ₹ land. He submitted that evidences in this regard were vouchers of ₹22 lakh each plot, which have Rajeev Y Patil along with relevant purchase agreements. Accordingly, the Ld. counsel towards plots of the land should be taken NA Plots acquired from M/s Maa United (i) Agreement Value as well as stamp duty and registration charges for 3 plots (ii) Amount paid in 12. We find that the Ld. CIT(A) rejected the similar contention of the assessee before him observing as under: “9.1 I have perused the facts of the case. I find that the appellant is asking for payment of cash of the land. However, there is no specific documentary evidence to authenticate contention that the cash paid by Shri Rajeev Patil is for and on behalf of the appellant. In appellate proceedings, nothing ha brought on record to establish that cash has been paid on behalf of the appellant. Therefore, this contention of the appellant deserves to be rejected. The Third Ground of Appeal is therefore dismissed. , it was revealed that apart from ₹ 3.50 ₹22 lakh in cash for purchase of each plot of land. He submitted that evidences in this regard were vouchers of , which have been seized from the premises of Sh along with relevant purchase agreements. Ld. counsel submitted that total consideration towards plots of the land should be taken at ₹76,43,800/ NA Plots acquired from M/s Maa United Agreement Value as well as stamp duty and registration charges for 3 ₹10,43,800/ Amount paid in cash ₹66,00,000/ Total ₹76,43,800/ find that the Ld. CIT(A) rejected the similar contention of the assessee before him observing as under: 9.1 I have perused the facts of the case. I find that the appellant is asking for payment of cash of Rs.66 lacs by one Shri Rajeev Patil to the seller of the land. However, there is no specific documentary evidence to authenticate contention that the cash paid by Shri Rajeev Patil is for and on behalf of the appellant. In appellate proceedings, nothing ha brought on record to establish that cash has been paid on behalf of the appellant. Therefore, this contention of the appellant deserves to be rejected. The Third Ground of Appeal is therefore dismissed.” Ranjit Shivram Raut ITA No. 1902/M/2020 16 .50 lakhs per plot in cash for purchase of each plot of land. He submitted that evidences in this regard were vouchers of been seized from the premises of Sh along with relevant purchase agreements. submitted that total consideration 800/- as under: 10,43,800/- 66,00,000/- 76,43,800/- find that the Ld. CIT(A) rejected the similar contention of 9.1 I have perused the facts of the case. I find that the appellant is asking Rs.66 lacs by one Shri Rajeev Patil to the seller of the land. However, there is no specific documentary evidence to authenticate contention that the cash paid by Shri Rajeev Patil is for and on behalf of the appellant. In appellate proceedings, nothing has been brought on record to establish that cash has been paid on behalf of the appellant. Therefore, this contention of the appellant deserves to be ” 13. Before us also the substantiate whether those payment been made to the seller of the land assessee did not produce Mr Rajeev Y before the lower authorities cash amounts were circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly The Ground of the appeal of the assessee 14. In the result, the appeal of the assessee is partly allowed for the statistical purposes. Order pronounced in the open Sd/- (AMIT SHUKLA JUDICIAL MEMBER Mumbai; Dated:16/11/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- us also the Ld. counsel of the ass substantiate whether those payments made by Rajeev Y been made to the seller of the land on behalf of the assessee. The assessee did not produce Mr Rajeev Y Patil or the seller of the land before the lower authorities to support his contention that those were paid on behalf of the assessee circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. of the appeal of the assessee is accordingly dismissed. In the result, the appeal of the assessee is partly allowed for the statistical purposes. ounced in the open Court in 16/1 Sd/ AMIT SHUKLA) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : Ranjit Shivram Raut ITA No. 1902/M/2020 17 of the assessee failed to made by Rajeev Y Patil have on behalf of the assessee. The or the seller of the land his contention that those paid on behalf of the assessee. In such circumstances, we do not find any error in the order of the Ld. we uphold the same. accordingly dismissed. In the result, the appeal of the assessee is partly allowed for /11/2022. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// DR, ITAT, Mumbai BY ORDER, (Sr. Private ITAT, Mumbai Ranjit Shivram Raut ITA No. 1902/M/2020 18 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai