Laxman Vishwanath Tupe, Pune V. Tax Recovery Officer,

ITA 196/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1534 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 25-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Additional evidence; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 50C; 147

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO.194/PN/2015 ' ' / ASSESSMENT YEAR : 2005-06 SHRI MOHAN VISHWANATH TUPE, SADESATARANALI, HADAPSAR, PUNE 411 028 . / APPELLANT PAN: ACQPT2736F VS. TAX RECOVERY OFFICER, RANGE-1, PUNE . RESPONDENT . / ITA NO.195/PN/2015 ' ' / ASSESSMENT YEAR : 2005-06 SOU. LAXMIBAI VISHWANATH TUPE, SADESATARANALI, HADAPSAR, PUNE 411 028 . / APPELLANT PAN: AEHPT5157N VS. TAX RECOVERY OFFICER, RANGE-1, PUNE . RESPONDENT . / ITA NO.196/PN/2015 ' ' / ASSESSMENT YEAR : 2005-06 SHRI. LAXMAN VISHWANATH TUPE, SADESATARANALI, HADAPSAR, PUNE 411 028 . / APPELLANT PAN: AEGPT9968L VS. TAX RECOVERY OFFICER, RANGE-1, PUNE . RESPONDENT ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 2 / APPELLANT BY : SHRI SUHAS P. BORA / RESPONDENT BY : SHRI P.L. KUREEL, ADDL.CIT DATE OF HEARING : 18.07.2016 / DATE OF PRONOUNCEMENT: 22.07.2016 / ORDER PER SUSHMA CHOWLA, JM: THE ABOVE 3 APPEALS FILED BY THE RESPECTIVE ASSESSE ES ARE AGAINST THE ORDER OF CIT(A)-I, PUNE DATED 30.09.2014 RELATI NG TO ASSESSMENT YEAR 2005-06 AGAINST ORDER PASSED UNDER SECTION 143(3) R EAD WITH SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ISSUE ARISING THE BUNCH OF 3 APPEALS IS SIMI LAR, THEREFORE, I PROCEED TO DECIDE THE SAID APPEALS BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.194/PN/2015 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL : THE APPELLANT COMPANY WOULD LIKE TO OBJECT THE IMP UGNED ORDER OF THE COMMISSIONER OF INCOME TAX APPEAL -I, PUNE ON THE FOL LOWING GROUND WHICH ARE PASSED WITHOUT PREJUDICE TO EACH OTHER ON T HE FACTS AND IN LAW 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASES AND THE ATTENDANT LAW, THE LEARNED INCOME TAX OFFICER, TRO RANGE 1, PUNE H AS ERRED IN MAKING AGGREGATE ADDITIONS OF RS. 22,77,820/ - TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. 2. WITHOUT CONSIDERING FACTS AND CIRCUMSTANCES OF THE C ASES, THE LEARNED INCOME TAX OFFICER, TRO RANGE 1, PUNE HAS ER RED IN MAKING ADDITION OF RS.22,77,820/- BY ALLEGING THAT IT IS ATT RIBUTABLE TO THE TAXABLE LONG TERM CAPITAL GAIN BY MISINTERPRETING TH E PROVISIONS OF INCOME TAX LAW. 3. THE LEARNED INCOME TAX OFFICER, TRO RANGE 1, PUN E HAS ERRED IN WRONGLY APPLYING THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 IN ASSESSEE'S CASE. 4. THE ASSESSMENT ORDER IS NOT IN KEEPING WITH THE PROVI SIONS OF LAW AND NEED TO BE CANCELLED. ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 3 5. THE APPELLANT PRAYS FOR ADMISSION OF ADDITIONAL GRO UNDS ADDITIONAL EVIDENCE IF ANY REQUIRED TO SUPPORT THE C ASE. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUND OR GROUNDS OF APPEAL OR ADD TO THE SAME IF DEEMED NECESSA RY. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE ADDITION OF RS.22,77,820/- MADE BY COMPUTING THE INCOME FROM LO NG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 5. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL WHICH READ AS UNDER : 1. THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN ADOPTING STAMP DUTY VALUATION AS FULL CONSIDERATION BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT. 2. THE LD.CIT(A) WHILE CONFIRMING THE ADDITION HAS E RRED IN HOLDING THAT THE APPELLANT HAS NOT CHALLENGED BEFORE THE AO THAT VALUE ADOPTED OR ASSESSED BY STAMP DUTY VALUATION AUTHORITY UNDER SUB-SE CTION (1) OF THE SECTION 50C EXCEEDS FAIR MARKET VALUE AS ON THE D ATE OF TRANSFER, WHEN THE AO HIMSELF HAD MADE A REFERENCE TO APPROVED VALUER TO DETERMINE THE ACTUAL MARKET VALUE AS ON THE DATE OF TRANSFER. 3. THE APPELLANT PRAYS FOR ADMISSION OF ADDITIONAL GROUNDS/ADDITIONAL EVIDENCE IF ANY REQUIRED TO SUPPOR T THE CASE. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUND OR GROUNDS OF APPEAL OR ADD TO THE SAME IF DEEMED NECESSAR Y. 6. THE ADDITIONAL GROUNDS OF APPEAL BY THE ASSESSEE BEING LEGAL IN NATURE ARE ADMITTED FOR ADJUDICATION. 7. THE ASSESSEE BY WAY OF ADDITIONAL GROUNDS OF APP EAL IS AGGRIEVED BY THE ORDER OF CIT(A) IN HOLDING THAT THE ASSESSEE HA D NOT CHALLENGED BEFORE THE AO THAT THE VALUE ADOPTED OR ASSESSED BY THE ST AMP DUTY VALUATION AUTHORITY U/S.50C (1) OF THE ACT EXCEEDS THE FAIR M ARKET VALUE AS ON THE DATE OF TRANSFER. ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 4 8. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD LAND AT SADESATARANALI, HADA PSAR, PUNE ALONG WITH OTHER FAMILY MEMBERS TO M/S. CITY CORPORATION LTD. FOR THE CONSTRUCTION OF THE AMONORA PROJECT AT HADAPSAR, PUNE. ON THE BASIS OF THE INFORMATION RECEIVED FROM M/S. CITY CORPORATION LTD., THE TRANS FER OF LAND WAS THROUGH A DEVELOPMENT AGREEMENT DATED 02-04-2004 FOR A TOTAL SALE CONSIDERATION OF RS.73,13,580/-. THE ASSESSEES SHARE WORKED OUT TO RS.24,37,860/-. HOWEVER, THE ACTUAL MARKET VALUE MENTIONED IN INDEX NO.II OF THE AGREEMENT OF SALE WAS RS.1,56,47,028/- AS PER WHICH THE ASSES SEES SHARE WORKED OUT TO RS.52,15,676/-. IN LIEU THEREOF THE REASONS WER E RECORDED FOR REOPENING THE ASSESSMENT U/S.147 OF THE ACT AND NOTICE U/S.14 8 OF THE ACT WAS ISSUED. 9. THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S.148 OF THE ACT ON 21-01-2013 IN WHICH HE COMPUTED THE I NCOME FROM LONG TERM CAPITAL GAINS. THE AO NOTED THAT THE ASSESSEE HAD DECLARED THE SALE CONSIDERATION OF RS.73,13,580/- AS AGAINST THE ACTU AL MARKET VALUE WHICH WAS RS.1,56,47,028/- AS PER INDEX NO.II OF THE AGRE EMENT. THE AO MADE A REFERENCE TO THE DVO, SOLAPUR IN THE MONTH OF DECEM BER 2012 TO DETERMINE THE ACTUAL MARKET VALUE ON THE DATE OF TRANSFER AND THE VALUE AS ON 01-04-1981, HOWEVER, THE VALUATION REPORT WAS AWAIT ED. IN THE ABSENCE OF THE SAME, THE AO COMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT AND ALSO WORKED OUT THE COST OF ACQUISITION @RS.15/ - PER SQ.FT. AS ON 01-04- 1981 AS AGAINST THE CLAIM OF THE ASSESSEE @RS.16/- PER SQ.FT. 10. THE CIT(A) ALLOWED THE WORKING OF THE COST OF A CQUISITION @ RS.16/- PER SQ.FT., BUT UPHELD THE ORDER OF AO IN APPLYING SECTION 50C OF THE ACT. THE ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 5 ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) I N COMPUTING THE INCOME FROM LONG TERM CAPITAL GAINS BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT. 11. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT IT HAD OBJECTED TO THE APPLICATION OF THE PROVISIONS O F SECTION 50C OF THE ACT BY MAKING A NOTE IN THE COMPUTATION OF INCOME ITSELF WHICH WAS FILED ALONG WITH THE RETURN OF INCOME. FURTHER, THE AO IN LIEU THER EOF HAD REFERRED THE MATTER FOR VALUATION TO THE DVO WHOSE REPORT HAD NOT COME BEFORE THE CLOSE OF THE ASSESSMENT PROCEEDINGS. HOWEVER, THE CIT(A) IS INC ORRECT IN HOLDING THAT THE ASSESSEE HAD NOT MADE ANY REQUEST U/S.50C OF TH E ACT. 12. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF THE CIT(A). 13. ON THE PERUSAL OF THE RECORD AND AFTER GOING TH ROUGH THE PAPER BOOK FILED BY THE ASSESSEE, IT TRANSPIRES THAT IN RESPON SE TO NOTICE ISSUED U/S.148 OF THE ACT THE ASSESSEE HAD FURNISHED THE COMPUTATI ON OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE BY TAKING THE SALE CONSIDERAT ION AS PER THE DEVELOPMENT AGREEMENT (ASSESSEES SHARE AT RS.24,37 ,860/-). HOWEVER, THE STAMP VALUATION OFFICER HAD ADOPTED A HIGHER FI GURE FOR THE PURPOSE OF STAMP DUTY ON THE SAID TRANSACTION ON TRANSFER OF T HE LAND BY THE ASSESSEE FOR THE DEVELOPMENT OF AMONORA PROJECT. IN THE RET URN OF INCOME ITSELF, A NOTE WAS FURNISHED BY THE ASSESSEE WHICH READS AS U NDER : NOTE - WE HAVE CONSIDER ACTUAL SALE CONSIDERATION AM OUNT AT THE TIME OF CALCULATION OF CAPITAL GAIN AMOUNT & TAX ACCORDI NGLY. BECAUSE THE GOVERNMENT VALUATION RATE WHICH IS CONSIDERED FOR CAL CULATION OF STAMP DUTY IS NOT ACCEPTABLE BY US. ALL FARMERS ARE SOLD T HEIR AGRICULTURAL LAND TO CITY CORPORATION LTD. BY THE SAME RATE WHICH IS TH E EXACT VALUE OF OUR AGRICULTURE TO FULFIL NEEDS OF BOTH THE PARTIES. ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 6 14. UNDER THE PROVISIONS OF SECTION 50C OF THE ACT (1) IT IS PROVIDED THAT WHERE THE CONSIDERATION RECEIVED OR ACCURED AS A RE SULT OF TRANSFER, BY AN ASSESSEE, OF CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STA TE GOVT., I.E. STAMP VALUATION AUTHORITY, FOR THE PURPOSE OF PAYMENT OF STAMP DUTY, IN RESPECT OF SUCH TRANSFER, THEN, THE VALUE SO ADOPTED OR ASSESS ED, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF CONSI DERATION OR ACCRUING AS A RESULT OF SUCH TRANSFER. SUB-SECTION (2) OF THE AC T FURTHER PROVIDES THAT WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1) WHERE, CLAUSE (A) IF THE ASSESSEE CLAIMS BEFORE THE AO THAT THE VALUE ADOPTE D OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1), EX CEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER TH EN THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFIC ER. IT IS FURTHER PROVIDED VIDE CLAUSE (B) TO SECTION 50C (2) OF THE ACT THAT SUCH AN EXERCISE SHALL BE CARRIED OUT BY THE AO WHERE THE VALUE ADOPTED OR ASSESSED B Y THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUT ED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY O THER AUTHORITY, COURT OR THE HIGH COURT. SUB-SECTION (3) TO SECTION 50C OF THE ACT PROVIDES THAT WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) E XCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y, THEN THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKE N AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCURED AS A RESULT OF TH E TRANSFER. 15. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE AT THE FIRST INSTANCE, HAD OBJECTED TO THE ADOPTION OF THE VALUE AS ASSESSED B Y THE STAMP VALUATION OFFICER. THOUGH UNDER THE PROVISIONS OF SECTION 50 C IT IS A MANDATE THAT WHERE ANY TRANSFER OF LAND OR BUILDING OR BOTH HAS TAKEN PLACE AND THE STAMP VALUATION AUTHORITY ADOPTS THE VALUATION OF THE PRO PERTY HIGHER THAN THE VALUE ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 7 DISCLOSED BY THE TRANSFEROR IN THE DOCUMENT OF SALE , THEN SUCH HIGHER VALUE IS TO BE ADOPTED FOR COMPUTING INCOME FROM LONG TERM C APITAL GAINS. HOWEVER, UNDER CLAUSE (2) AN EXCEPTION IS PROVIDED TO THE SA ID SECTION 50C(1) OF THE ACT WHEREIN IT IS PROVIDED THAT IN CASE THE ASSESSE E OBJECTS BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATION OFFIC ER WAS HIGHER, THEN THE COURSE OF ACTION IS TO REFER THE MATTER TO THE VALU ATION OFFICER AND THE SAID REFERENCE IS TO BE MADE BY THE AO ON AN OBJECTION R AISED BY THE ASSESSEE. 16. IN THE FACTS OF THE PRESENT CASE, SUCH AN OBJEC TION WAS RAISED AT THE FIRST INSTANCE. THE AO HAS ALSO MADE A REFERENCE T O THE VALUATION OFFICER, HOWEVER, TILL THE DATE OF COMPLETION OF THE ASSESSM ENT PROCEEDINGS, THE AO HAD NOT RECEIVED ANY REPORT FROM THE DVO. THE ASSE SSEE DURING THE COURSE OF HEARING HAS ALSO POINTED OUT THAT NO SUCH REPORT OF THE DVO HAS BEEN RECEIVED BY HIM TILL DATE. ONCE THE AO HAS ALREADY INITIATED THE PROCEEDINGS BEFORE THE DVO THE SAME SHOULD BE COMPLETED BEFORE AN ADVERSE VIEW IS TAKEN AGAINST THE ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, I FIND THERE IS NO MERIT IN THE ORDE R OF THE CIT(A) IN OBSERVING THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION AGAI NST THE VALUE ADOPTED BY THE STAMP VALUATION OFFICER. IN THE TOTALITY OF TH E FACTS AND CIRCUMSTANCES AND FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, I REMI T THE ISSUE BACK TO THE FILE OF THE AO WHO SHALL OBTAIN A REPORT FROM DVO AND CONFR ONT THE SAME TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LA W. REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASS ESSEE BEFORE ADJUDICATING THE ISSUE. THUS, GROUNDS OF APPEAL RAISED BY THE A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.194 TO 196/PN/2015 MOHAN VISHWANATH TUPE, LAXMIBAI VISHWANATH TUPE AND LAXMAN VISHWANATH TUPE 8 ITA NOS. 195 & 196/PN/2015 - SOU. LAXMIBAI VISHWANA TH TUPE AND SHRI LAXMAN VISHWANATH TUPE : 17. THE FACTS IN ITA NOS. 195 & 196/PN/2015 ARE IDE NTICAL TO THE FACTS IN ITA NO. 194/PN/2015 AND THE DECISION IN ITA NO.194/ PN/2015 SHALL APPLY MUTATIS-MUTANDIS IN ITA NOS.195 & 196/PN/2015. 18. IN THE RESULT, THE APPEALS FILED BY THE RESPECT IVE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 22 ND DAY OF JULY, 2016. SD/- (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 22ND JULY, 2016 . SATISH $ %'( )( / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' () THE CIT(A)-1, PUNE ' THE CIT-1, PUNE % ((), ), , - / DR SMC, ITAT, PUNE; 0 / GUARD FILE. / BY ORDER % ( // TRUE COPY // 23 ( ) / SR. PRIVATE SECRETARY ) , ITAT, PUNE