ITO Non Corporate Ward 14(1), CHENNAI V. Neelamanikandan, CHENNAI

ITA 1988/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3922 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Condonation of delay
• Section: 50C; 148; 132

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 1988/CHNY/2018 / ASSESSMENT YEAR :2012-13 THE INCOME TAX OFFICER, NON CORPORATE WARD 14(1), CHENNAI. VS. SHRI NEELAMANIKANDAN, NO. 68/1,1 ST FLOOR, VELLALAR STREET, ADAMBAKKAM, CHENNAI 600 088. [PAN:AHPPN6975R] ( APPELLANT ) ( RESPONDENT) / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT / RESPONDENT BY : NONE / DATE OF HEARING : 30.10.2018 /DATE OF PRONOUNCEMENT : 31.10.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 14, CHENNAI DATED 26.03.2018 RELEVANT TO THE ASSESSMENT YEAR 2012-13. IN THIS APPEAL, BESIDES CHALLENGING CONDONATION OF DELAY, THE REVENUE ALSO CHALLENGED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF LONG TERM CAPITAL GAINS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 27.12.2013 ADMITTING A TOTAL INCOME OF .15,11,830/-. THE RETURN WAS I.T.A. NO. 1988/CHNY/18 2 PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] ON 03.07.2014. THE ASSESSEE ALONG WITH 63 OTHERS SOLD THE PROPERTY AT DOOR NO. 71, LB ROAD, THIRUVANMIYUR, CHENNAI FOR A TOTAL CONSIDERATION OF .32 CRORES. THE GUIDELINE VALUE FOR THE PROPERTY AS MENTIONED IN THE SALE DEED WAS .100.04 CRORES. AS THE ASSESSEE HAS NOT ADMITTED THE 50C VALUE AND THERE WAS ESCAPEMENT OF INCOME, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. 2.1 A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF SHRI N. PALANISAMY AND HIS GROUP OF COMPANIES. DURING THE SEARCH PROCEEDINGS, IT IS FOUND THAT M/S. PEE & DEE LANDS HOLDINGS PVT. LTD. HAS BOUGHT A PROPERTY AT D.NO. 71/1, L.B. ROAD, THIRVANMIYUR VILLAGE, CHENNAI ON 07.10.2011 ADMEASURING 4 ACRES AND 11 CENTS FROM 64 SELLERS FOR A SALE CONSIDERATION OF .32 CRORES. HOWEVER, THE GUIDELINE VALUE OF THE PROPERTY, AS MENTIONED IN THE REGISTERED SALE DEED ITSELF, IS ABOUT .100.04 CRORES. THE ASSESSEE IS ONE OF THE SELLER AND RECEIVED THE SALE CONSIDERATION AT .74,90,920/- FROM THE SALE OF THE ABOVE PROPERTY. THE ASSESSING OFFICER OBSERVED THAT AS PER THE PROVISIONS OF SECTION 50C OF THE ACT, WHEN THE ADMITTED SALE CONSIDERATION IS LESS THAN THE GUIDELINE VALUE OF THE PROPERTY ADOPTED BY THE STAMP VALUE AUTHORITY, GUIDELINE VALUE OF THE PROPERTY IS TO BE ADOPTED AS THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAIN. AS THERE WAS WIDE VARIATION BETWEEN THE SALE VALUE AND I.T.A. NO. 1988/CHNY/18 3 GUIDELINE VALUE, THE CASE WAS REFERRED TO VALUATION CELL FOR VALUATION OF THE PROPERTY ON 08.03.2016. PENDING RECEIPT OF VALUATION REPORT, THE ASSESSING OFFICER ADOPTED THE 50C GUIDELINE VALUE AS SALE CONSIDERATION FOR WORKING OUT THE LONG TERM CAPITAL GAIN AND DETERMINED THE LONG TERM CAPITAL GAIN OF THE ASSESSEE AT .2,33,83,580/- AND BROUGHT TO TAX. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE AND BY ACCEPTING THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME, THE LD. CIT(A) DELETED THE ADDITION. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. BY REFERRING TO THE GROUNDS OF APPEAL, THE LD. DR SUBMITTED THAT THE LD. CIT(A) WRONGLY ASSUMED THE SALE CONSIDERATION RETURNED BY THE ASSESSEE AT .52.66 CRORES, WHEREAS, IT WAS ONLY .32 CRORES AS MENTIONED IN THE SALE DEED DATED 07.10.2011 AND THEREFORE, WRONGLY CONCLUDED THAT THE VALUATION ADOPTED BY THE DVO OF .48.91 CRORES WAS LESS THAN THE SALE CONSIDERATION RETURNED BY THE ASSESSEE. SINCE THE DVO VALUE OF .48.91 CRORES IS MORE THAN THE SALE CONSIDERATION OF .32 CRORES SHOWN IN THE SALE DEED, THE LD. DR HAS PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SET ASIDE AND DIRECTED THE ASSESSING OFFICER TO ADOPTED THE DVO VALUE AND SALE CONSIDERATION AND RE- COMPUTE THE LONG TERM CAPITAL GAIN. DESPITE SERVICE OF NOTICE, RPAD ON I.T.A. NO. 1988/CHNY/18 4 RECORD, NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROCEED TO DECIDE THE APPEAL ON MERITS AFTER HEARING THE LD. DR. 5. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AFORESAID LAND WAS SOLD BY THE DESCENDANTS/ LEGAL HEIRS OF LATE DR. T. KUPPUSAMY NAICKER BY A SALE DEED DATED 07.10.2011 TO M/S PEE DEE LAND HOLDING PVT. LTD. THE TOTAL SALE CONSIDERATION AS PER THE SALE DEED WAS .52.66 CRORES. AFTER CLAIMING A DEDUCTION OF . 20.78 CRORES FOR SETTLEMENT OF ENCROACHERS, ADVOCATES, AGENTS ETC., TOTALLING 64 PERSONS, THE LAND OWNER ADMITTED TO HAVE RECEIVED A NET SALE CONSIDERATION OF . 31.88 CRORES AND OFFERED LONG TERM CAPITAL GAIN AS PER THEIR INDIVIDUAL SHARE IN THE SAID PROPERTY. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ADOPTED GUIDELINE VALUE OF THE LAND AT .100.04 CRORES AND ASSESSED LONG TERM CAPITAL GAIN UNDER SECTION 50C OF THE ACT. ALTHOUGH THE PROPERTY WAS REFERRED BY THE ASSESSING OFFICER TO THE VALUATION CELL, THE VALUATION REPORT WAS AWAITED AT THE TIME OF COMPLETION OF ASSESSMENT. SUBSEQUENT TO THE ASSESSMENT, THE DISTRICT VALUATION OFFICER (DVO) FORWARDED THE VALUATION REPORT DATED 02.11.2017 ESTIMATING THE FAIR MARKET VALUE (FMV) ON THE DATE OF SALE AT . 48.99 CRORES. THE DVOS REPORT WAS FORWARDED TO THE ASSESSING OFFICER FOR COMMENTS. IN HIS REMAND REPORT, THE ADDL. CIT HAS CONCLUDED TO ADOPT THE DVO VALUE AS FAIR MARKET I.T.A. NO. 1988/CHNY/18 5 VALUE INSTEAD OF ADOPTING GUIDELINE VALUE FIXED BY THE ASSESSING OFFICER UNDER SECTION 50C OF THE ACT FOR DETERMINING THE LONG TERM CAPITAL GAINS. 5.1 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ADOPTED GUIDELINE VALUE OF THE PROPERTY AT .100.04 CRORES AND ASSESSED THE LONG TERM CAPITAL GAIN UNDER SECTION 50C OF THE ACT PENDING RECEIPT OF DVO VALUE. BEFORE THE LD. CIT(A), THE ASSESSEE HAS RAISED A SPECIFIC GROUND THAT THE ASSESSING OFFICER SHOULD TAKE THE VALUE FIXED BY THE VALUATION CELL OF IT DEPARTMENT AND REWORK THE LONG TERM CAPITAL GAIN OF THE CO-OWNERS. HOWEVER, WE FIND THAT THE LD. CIT(A) HAS ERRONEOUSLY TAKEN THE SALE CONSIDERATION AT .52.66 CRORES AND WRONGLY CONCLUDED THAT THE VALUATION ADOPTED BY THE DVO OF .48.99 CORES WAS LESS THAN THE SALE CONSIDERATION RETURNED BY THE ASSESSEE AND ACCORDINGLY DIRECTED TO ACCEPT THE RETURNED INCOME. SINCE THE DVO VALUE OF .48.99 CRORES IS MORE THAN THE SALE CONSIDERATION OF .32 CRORES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ADOPT THE DVO VALUE OF .48.99 CRORES AS SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. THUS, THE GROUND RAISED BY THE REVENUE IS ALLOWED. 6. IN THE GROUNDS OF APPEAL, THE REVENUE HAS CHALLENGED WITH REGARD TO THE CONDONATION OF DELAY IN FILING THE APPEAL BY THE ASSESSEE OF 275 DAYS WITHOUT PASSING A SPEAKING ORDER. HOWEVER, DURING THE COURSE OF HEARING, I.T.A. NO. 1988/CHNY/18 6 THE LD. DR HAS NOT ADVANCED ANY ARGUMENT ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 31 ST OCTOBER, 2018 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 31.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.