Dwaraka Industrial Products, CHENNAI V. ITO, CHENNAI

ITA 1993/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8928 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 21-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 22-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Valuation report
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1993/MDS./2014 / ASSESSMENT YEAR : 2005-06 M/S.DWARAKA INDUSTRIAL PRODUCTS , NO.22/11,SHARANALAYA, PRITHIVI AVENUE, CHENNAI -18. VS. THE INCOME TAX OFFICER, BUSINESS WARD XV(2), CHENNAI. [PAN AADFD 8712 F] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR.DURAI PANIDAN, ADD., CIT DR / DATE OF HEARING : 21 - 06 - 201 6 !' / DATE OF PRONOUNCEMENT : 06 - 0 7 - 2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, CHENNAI DAT ED 07.05.2014 PERTAINING TO ASSESSMENT YEAR 2005-06. ITA NO.1993/MDS./2014 :- 2 -: 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO REOPENING OF ASSESSMENT FOR THE PURPOSE OF APPLICATION OF PROVIS IONS OF THE SECTION 50C OF THE ACT I.E. ADOPTING GUIDELINE VALUE FOR RE GISTRATION OF THE PROPERTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A FIRM, FILED ITS RETURN OF INCOME ON 31.01.2005 FOR ASSESSMENT Y EAR 2005-06. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE AC T. SUBSEQUENTLY, IT WAS SEEN FROM THE AIR THAT THE ASSESSEE SOLD AN IMM OVABLE PROPERTY FOR A SALE CONSIDERATION OF ` 40,86,800/-. SINCE NO DOCUMENTARY PROOF WAS AVAILABLE ON THE RECORDS TO VERIFY THE APPLICAB ILITY OF SEC.50C OF THE ACT, THIS CASE WAS REOPENED AND A NOTICE U/S.148 WA S ISSUED. THE ASSESSMENT HAS BEEN FRAMED BY THE AO ON 08.03.2013 U/S.143(3) R.W.S.147 OF THE ACT. IN THE ASSESSMENT ORDER, THE AO HAD ASSESSED THE CAPITAL GAIN ARISING ON THE SALE OF THE IMMOVAB LE PROPERTY OF ` 29,48,099/-. WHILE FRAMING THE ASSESSMENT ORDER, TH E AO HAD ADOPTED HE SALE CONSIDERATION IN RESPECT OF THE SAL E OF THE PROPERTY AT ` 40,86,800/- ADOPTING THE STAMP DUTY VALUATION BY IN VOKING THE PROVISIONS OF THE SECTION 50C WHEREAS THE ACTUAL SA LE CONSIDERATION BY THE ASSESSEE WAS ONLY ` 29,50,000/-. ITA NO.1993/MDS./2014 :- 3 -: 3.1 ON PERUSAL OF SALE DEED, THE AO FOUND THAT THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY AT 173, SIDCO, INDUSTRIA L ESTATE, AMBATTUR, CHENNAI FOR A SALE CONSIDERATION OF ` 40,86,800/- I.E. (FOR LAND ` 38,36,800/- AND FOR THE WORK SHED ` 2,50,000/-). HOWEVER, THE ASSESSEE HAD CONSIDERED THE NET CONSIDERATION OF ` 31,00,000/- I.E. (LAND 8800 SQ.FT FOR A SALE CONSIDERATION OF 28,50, 000/-, SALE CONSIDERATION OF 1,00,000 FOR THE WORK SHED MEASURI NG 2500 SQ.FT. AND SALE CONSIDERATION OF 1,50,000/- TOWARDS ELECTRICIT Y DEPOSIT WITH TNEB) FOR CAPITAL GAIN PURPOSE AND ACCORDINGLY, THE LONG TERM CAPITAL GAINS WAS COMPUTED AT 18,11,299/- AND THE ASSESSEE PAID T HE TAX THEREOF. WHEN THE ASSESSEE WAS ASKED ABOUT THE APPLICABILITY OF SEC.50C FOR CAPITAL GAINS PURPOSE, THE ASSESSEE MADE A REQUEST TO THE AO TO REFER THE MATTER TO THE VALUATION OFFICER FOR DETERMINING THE MARKET VALUE OF THE PROPERTY. AS REQUESTED BY THE ASSESSEE, THE MAT TER HAS BEEN REFERRED TO THE VALUATION OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE COMPLETION OF ORIGINAL ASSES SMENT WAS GETTING TIME BARRED, THE AO COMPLETED THE ASSESSMENT U/S.14 3(3) RWS 147 OF THE ACT ON 08.03.2013 BY ADOPTING THE VALUE OF THE PROPERTY AS PER STAMP DUTY AUTHORITY VALUATION. THE LD.A.R EMPHAISE D THAT THE AO CANNOT PASS THE ORDER ADOPTING STAMP DUTY VALUE AND HE HAS TO WAIT TILL THE VALUATION OFFICERS REPORT BEFORE FINALIZI NG THE ASSESSMENT ORDER AN LD.A.R PLACED RELIANCE IN THE CASE OF N.MEENAKSH I VS. CIT REPORTED ITA NO.1993/MDS./2014 :- 4 -: IN 326 ITR 229 WHEREIN HELD THAT AN ORDER PASSED BY INVOKING THE PROVISIONS OF THE SECTION 50C OF THE ACT WITHOUT RE FERRING TO THE VALUATION CELL FOR OBTAINING VALUATION REPORT, IS N OT VALID ORDER. AGAINST THIS, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD .CIT(A). 3.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E VALUATION OFFICER HAS GIVEN A REPORT DATED 29.11.2013 THAT THE VALUAT ION OF THE PROPERTY AS ON 15.12.2004 WAS AT ` 40,66,000/- (VALUED THE LAND AT ` 34,53,000/- AND BUILDING AT ` 6,13,000/-). THE LD.CIT(A) OBSERVED THAT IN THE CAS E OF ASSESSEE, THE AO HAS TO ADOPT THE VALUE GIVEN BY THE VALUATION OFFICER AT ` 40,66,000/- AS ON 15.12.2004, ACCORDINGLY AO IS DIR ECTED TO ADOPT THE VALUATION OFFICER VALUE. THE LD.CIT(A) O BSERVED THAT REGARDING REOPENING OF ASSESSMENT, THE AO HAS REOPE NED THE ASSESSMENT AS PER AIR INFORMATION TO VERIFY THE AP PLICABILITY OF SEC.50C OF THE ACT, SINCE NO DOCUMENTARY PROOF WAS AVAILABLE ON RECORD. HENCE, LD.CIT(A) OBSERVED THAT REOPENING OF ASSESSMENT U/S.148 IS VALID. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.A.R SUBMITTED THAT THAT THE REOPENING OF ASSESSMENT IN THIS CASE IS BAD IN LAW, AS IT IS ONLY BASED FOR TH E PURPOSE OF CONSIDERING THE APPLICATION OF SEC.50C OF THE ACT I .E. ADOPTION OF GUIDELINE VALUE FOR REGISTRATION. ITA NO.1993/MDS./2014 :- 5 -: 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, ORIGINALLY THERE IS NO ASSESS MENT U/S.143(3) OF THE ACT. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT ON 16.03.2007. THE ASSESSMENT WAS REOPENED U/S.147 OF THE ACT BY I SSUING NOTICE U/S.148 OF THE ACT ON 31.03.2012 I.E. AFTER FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, HOWEVER, WITHIN 6 YEA RS FROM THE END OF RELEVANT ASSESSMENT YEAR. SINCE THERE WAS NO ORIGI NAL ASSESSMENT U/S.143(3) OF THE ACT, REOPENED AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND WITHIN 6 YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR FOR THE PURPOSE OF APPLYIN G SEC.50C CANNOT BE INVALID. THE VALUATION OF THE STAMP VALUATION AU THORITY CONSTITUTES SUFFICIENT MATERIAL EVIDENCE AVAILABLE ON RECORD LE ADING TO THE REASONABLE INTERFERENCE THAT VALUE OF ASSET IS MORE THAN SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME. ON ACCOUNT OF DI RECT DEPENDENCE ON SEC.50C OF THE ACT ON STAMP VALUATION, IT CANNOT BE ARGUED THAT THE VALUATION MADE BY THE SUB REGISTRAR IS MERELY AND O NLY RESTRICTED PURPOSE OF STAMP DUTY. ACCORDINGLY, WE DISMISS THE GROUNDS RELATING TO THE REOPENING OF ASSESSMENT. 6. THE NEXT GROUND BY THE ASSESSEE IS WITH REGARD TO ADOPTION OF VALUATION REPORT SUBMITTED BY THE DVO. ACCORDING TO LD.A.R, THE VALUATION REPORT SUBMITTED BY THE DVO SUFFERS FROM INHERENT DEFECTS ITA NO.1993/MDS./2014 :- 6 -: AND METHODOLOGY FOLLOWED BY THE DVO IS NOT APPROPRI ATE AND HE PRAYED FOR AN OPPORTUNITY TO COMMENT ON DVO REPORT, WHICH WAS NOT GIVEN TO HIM BY LOWER AUTHORITIES. THE AO, THOUGH HE REFERRED THE MATTER TO ASCERTAIN THE VALUATION TO DVO, IT WAS NO T RECEIVED IN TIME AND HE ADOPTED THE GUIDELINE VALUE U/S.50C OF THE A CT AND FINALLY, THE ASSESSMENT PROCEEDINGS AS PER PROVISIONS OF SEC.50C OF THE ACT WAS FRAMED. THE CIT(A) OBSERVED THAT SINCE VALUE OF THE DVO COINCIDED WITH THE VALUE AS PER SEC.50C OF THE ACT GUIDELINE VALUE, CIT(A) REJECTED THE CLAIM OF ASSESSEE REGARDING TO FURNISH THE COMMENTS ON DVO REPORT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, PROVISIONS OF THE SECTION 5 0C(2) IF FOR THE BENEFIT OF THE ASSESSEE, WHENEVER THE ASSESSEE IS H AVING GRIEVANCE REGARDING GUIDELINE VALUE FOR THE PURPOSE OF SEC.50 C(1) OF THE ACT, HE CAN REQUEST THE AO TO REFER THE MATTER TO DVO FOR V ALUATION U/S.50C(2) OF THE ACT. ONCE THE AO RECEIVED THE REPORT FROM TH E DVO, HE SHALL PUT IT TO ASSESSEE FOR HIS COMMENTS. THIS METHODOLOGY IS NOT FOLLOWED BY THE AO. HENCE, WE REMIT THE ISSUE TO THE FILE OF A O TO GIVE A COPY OF DVO REPORT TO ASSESSEE AND CALL FOR ASSESSEES COMM ENT. THEREAFTER, AO DECIDES THE ISSUE IN ACCORDANCE WITH LAW. WITH THIS OBSERVATION, WE REMIT THE ISSUE TO THE FILE OF AO FOR FRESH CONS IDERATION. ITA NO.1993/MDS./2014 :- 7 -: 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 06 TH JULY, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 06 TH JULY, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF