Shri Vishvamitra Sharma L/R Late Damyanti Sharma, Bhopal V. The ITO 3(2), Bhopal

ITA 2/IND/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54011 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Reason to believe; Reassessment proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ANNPS7216C I.T.A.NO. 02/IND/2011 A.Y. : 2005-06 VISHWAMITRA SHARMA ITO, L/R LATE DAMYANTI SHARMA VS 3(2) BHOPAL. BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI ANIL KHABYA, CA RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 31.10.2011 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 29.10.2010 FOR THE ASSESSMENT YEAR 2005-06, IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFI CER U/S 143(3)/148 DATED 22 ND DECEMBER, 2009. -: 2: - 2 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 1. THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ORD ER OF ASSESSMENT WAS BAD IN LAW AND PROCEEDINGS UNDERTAKEN BY THE ASSESSING OFFICER WERE WITHOUT JURISDICTION AND BARRED BY LIMITATION. 2. THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE AO SHOULD HAVE DROPPED THE PROCEEDINGS IN VIEW OF PROVISIONS OF SECTION 152(2) OF THE INCOME-TAX ACT. 3. THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE REFERENCE MADE TO THE DVO BY THE ASSESSING OFFICER TO DETERMINE FAIR MARKET VALUE AS AT 1.4.1981 WAS NOT BAD IN LAW. 4. THAT THE LD. CIT(A) ERRED IN MAINTAINING ACTION OF AO IN ADOPTING FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS. 2,45,000/- INSTEAD OF FAIR MARKET VALUE ADOPTED BY THE APPELLANT AT RS. 6,98,107/- ON THE BASIS OF VALUATION MADE BY THE REGISTERED VALUE R. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE HAD FILED RETURN OF INCOME ON 21.8.2006 DECLARING AN INCOME O F RS. -: 3: - 3 24,530/-. THE RETURN OF THE ASSESSEE WAS PROCESSED U/S 143(1). THEREAFTER, A NOTICE U/S 148 WAS ISSUED BY THE ASSESSING OFFICER ON 5.9.2008 ALONGWITH REASON FOR REOPENING OF ASSESSMENT. THE ASSESSEE HAD SUBMITTED REPLY VID E LETTER DATED 3.10.2008 IN RESPONSE TO NOTICE U/S 148 AND O BJECTED TO REOPENING OF ASSESSMENT. THE AO HAD REOPENED THE ASSESSMENT ON 5.9.2008 BECAUSE HE WAS OF THE VIEW T HAT THE ASSESSEE CANNOT BE ALLOWED DEDUCTION OF STAMP DUTY CHARGES OF RS. 7,20,000/- WHILE COMPUTING THE CAPITAL GAIN. 4. THE ASSESSEE HAS DECLARED CAPITAL GAIN ON THE SALE OF PROPERTY AS UNDER :- INCOME FROM CAPITAL GAINS : DETAILS OF PROPERTY SOLD : COMMERCIAL CUM RESIDENTIAL PLOT NO.06 AT WEST OF GURUBUX KI TALLAIYA, NEAR RAM MANDIR, INSIDE OF MANOHAR DAIRY, HAMIDIA ROAD, BHOPAL AS PER REGISTERED SALE DEED DATED 28.3.2005. (MARKET VALUE AMOUNTING TO RS. 68,29,500/- TAKEN FOR COMPUTATION OF CAPITAL GAIN IN PLACE OF SALE CONSIDERATION AMOUNTING TO RS. 46,00,000/-) -: 4: - 4 RS. 68,29,500 LESS : PAID FOR STAMP DUTY 7,20,000/ - 6109500 LESS: INDEXED COST OF ACQUISITION DATE PARTICULARS AMOUNT INDEX INDEXED COST 1.4.1981 AS PER VALUATION CERTIFICATE 698107 480/100 3350913 3350913 LONG TERM CAPITAL GAIN 27588587 LESS: NADARD CAPITAL GAIN BOND PURCHASES PURCHASED ON 11.4.2005 10000000X3 PURCHASED ON 22.8.2005 400000X1 3400000 TAXABLE LONG TERM CAPITAL GAIN 0 5. THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT READS AS UNDER :- ON GONG THROUGH THE RETURN OF INCOME, IT HAS COME T O NOTICE THAT THE ASSESSEE HAS ADOPTED THE MARKET VALUE OF PROPERTY AT RS. 68,29,500/- AS AGAINST THE SALE CONSIDERATION OF RS. 46,00,000/- REFLECTS IN S ALE DEED. FOR THE PURPOSE OF WORKING OF CAPITAL GAIN, -: 5: - 5 SHE HAS REDUCED THE AMOUNT OF STAMP DUTY OF RS. 7,20,000/- FROM THE MARKET VALUE OF THE PROPERTY SO ADOPTED BY HER WHICH THE ASSESSEE HAS CLAIMED PAID AS PER THE MUTUAL AGREEMENT BETWEEN ASSESSEE AND PURCHASER AS REFLECTED IN THE SALE DEED. WHATEVER AGREEMENT MADE THERE BETWEEN THE SELLER & PURCHASER WILL NOT AT ALL AFFECT THE MARKE T VALUE OF THE PROPERTY FOR THE PURPOSE OF WORKING LO NG TERM CAPITAL GAIN. THE PROVISIONS OF THE INCOME-TAX ACT DO NOT PERMIT SUCH CLAIMS. AS SUCH, THE ASSESSE E HAS UNDER ASSESSED THE LONG TERM CAPITAL GAIN BY RS. 7,20,000/-. FURTHER THE MARKET VALUE OF RS. 68,29,500/- ADOPTED BY THE ASSESSEE IS NOT MATCHING WITH THE MARKET VALUE ADOPTED BY THE REGISTERING AUTHORITY FOR LEVY OF STAMP DUTY. AS SUCH, MARKET VALUE OF TH E PROPERTY ADOPTED BY THE ASSESSEE NOT CORRECT AND NEEDS VERIFICATION. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT THE ASSESSEES INCOME CHARGEABLE TO TAX TO THE -: 6: - 6 ABOVE EXTENT FOR THE ASSESSMENT YEAR 2005-06 HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY HER INCOME WIT HIN THE MEANING OF SECTION 147. AS SUCH, NOTICE U/S 148 IS ISSUED. 6. IN THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO IGNORED THE VALUATION OF THE PROPERTY TAKEN BY THE SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY, WHICH WAS ALSO TAKEN BY THE ASSESSEE WHILE COMPUTING CAPITAL GAIN U/S 50 C INSTEAD THE AO HAS TAKEN MARKET VALUE OF THE PROPERTY AT RS . 1,02,44,250/-. THE AO HAS ALSO NOT ACCEPTED THE DED UCTION ON ACCOUNT OF STAMP DUTY PAID BY THE ASSESSEE AND ALSO THE INDEX COST OF ACQUISITION OFFERED BY THE ASSESSEE AS ON 1 .4.1981. AGAINST THE ABOVE ORDER, THE ASSESSEE APPROACHED TO THE CIT(A). BASIC GRIEVANCE OF THE ASSESSEE WAS WITH RE GARD TO THE REOPENING OF THE ASSESSMENT, WHICH WAS HELD TO BE V ALID BY THE LD. CIT(A). HOWEVER, THE CIT(A) ALLOWED ASSESSEES CLAIM FOR DEDUCTION OF STAMP DUTY AMOUNTING TO RS. 7.20 LAKHS AND ALSO DIRECTED THE AO TO TAKE THE FAIR MARKET VALUE AS TA KEN BY THE -: 7: - 7 SUB REGISTRAR, WHILE CLAIMING THE STAMP DUTY ON SUC H SALE TRANSACTION. HOWEVER, THE CIT(A) CONFIRMED THE ACTI ON OF THE AO WITH REGARD TO COMPUTATION OF INDEX COST AS ON 1 .4.1951 ON THE BASIS OF DVOS REPORT. AGAINST THE DELETION OF ADDITION ON ACCOUNT OF STAMP DUTY AND SALE CONSIDERATION TAKEN BY THE ASSESSEE, THE REVENUE IS NOT IN APPEAL BEFORE US. T HE ASSESSEE IS AGGRIEVED BY THE DECISION OF CIT(A) FOR HOLDING THE REOPENING AS VALID AND ALSO FOR ACCEPTING THE INDEX COST OF A CQUISITION AS COMPUTED BY THE ASSESSING OFFICER ON THE BASIS OF D VOS REPORT. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D THE OTHER MATERIALS PLACED BEFORE US. FROM THE RECORD, WE FOU ND THAT IN THE COMPUTATION OF CAPITAL GAINS AS OFFERED IN THE RETURN OF INCOME, THE ASSESSEE HAS TAKEN THE SALE VALUE OF PR OPERTY AS DETERMINED BY THE SUB REGISTRAR FOR THE PURPOSE OF LEVY OF STAMP DUTY AT RS. 68,29,500/- IN PLACE OF ACTUAL SA LE CONSIDERATION OF RS. 46 LAKHS AS REFLECTED IN THE S ALE DEED. THE ASSESSEE HAS CLAIMED DEDUCTION OF STAMP DUTY OF RS. 7.20 LAKHS PAID BY HER WHICH WAS AS PER THE TERMS OF THE SALE DEED. -: 8: - 8 IN THE REASONS SO RECORDED, THE AO OBSERVED THAT TH E ASSESSEE HAS ADOPTED MARKET VALUE OF THE PROPERTY AT RS. 68, 29,500/-, WHICH IS NOT MATCHING WITH THE MARKET VALUE ADOPTED BY THE REGISTERING AUTHORITIES FOR LEVY OF STAMP DUTY, AS SUCH MARKET VALUE OF PROPERTY ADOPTED BY THE ASSESSEE IS NOT CO RRECT AND NEEDS VERIFICATION. THE AO ALSO OBSERVED IN THE REA SONS SO RECORDED FOR REOPENING THAT AGREEMENT BETWEEN SELLE R AND PURCHASER WILL NOT COME IN THE WAY TO ALLOW STAMP D UTY ON RS. 7.20 LAKHS PAID BY THE ASSESSEE. ACCORDINGLY, AS PE R AO THE ASSESSEE HAS OFFERED LONG TERM CAPITAL GAIN SHORT B Y RS. 7.20 LAKHS. 8. IT IS CLEAR FROM THE REASONS SO RECORDED THAT THE B ASIS FOR REOPENING WAS FIRST, THE VALUATION ADOPTED BY THE ASSESSEE AT RS. 68,29,500/-, SECOND, THE CLAIM OF E XPENDITURE ON ACCOUNT OF STAMP DUTY OF RS. 7.20 LAKHS PAID BY THE ASSESSEE. FROM THE RECORD, WE FOUND THAT IN THE COM PUTATION OF CAPITAL GAIN FILED WITH THE RETURN, THE ASSESSEE HAS OFFERED SALE VALUE AT THE SAME PRICE, WHICH WAS ADOPTED BY SUB REGISTRAR, FOR THE PURPOSE OF LEVY OF STAMP DUTY AS AGAINST ACTUAL SALE CONSIDERATION OF RS. 46 LAKHS SHOWN BY THE -: 9: - 9 ASSESSEE. AS PER OUR CONSIDERED VIEW, THE ASSESSEE HAS TAKEN CORRECT SALE VALUE U/S 50C, WHEREIN THE ASSESSEE IS REQUIRED TO TAKE THE SALE VALUE AT A PRICE ADOPTED BY SUB REGIS TRAR FOR STAMP DUTY PURPOSES AS AGAINST THE SALE CONSIDERATI ON SHOWN BY HIM IN THE SALE DEED. ACCORDINGLY, THERE WAS NO FAULT ON THE PART OF THE ASSESSEE FOR ADOPTING THE MARKET VALUE OF THE PROPERTY AT THE PRICE ADOPTED BY SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. SIMILARLY, WHILE COMPUTING THE CAPIT AL GAINS, THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION ON ACCOUNT OF ANY EXPENDITURE INCURRED FOR THE PURPOSE OF EFFECTI NG THE SALE. THE CONDITION FOR PAYMENT OF STAMP DUTY WAS DULY INCORPORATED IN THE SALE DEED, THEREFORE, NO FAULT CAN BE FOUND ON THE PART OF THE ASSESSEE FOR CLAIMING THE SAME W HILE COMPUTING CAPITAL GAINS. EVEN THE CIT(A) IN HIS ORD ER HAS ACCEPTED BOTH THESE CONTENTIONS OF THE ASSESSEE WIT H REGARD TO DECLARATION OF THE FAIR MARKET VALUE AS WELL AS CLA IM OF DEDUCTION OF STAMP DUTY. THE REVENUE IS NOT IN APPE AL BEFORE US AGAINST THE ADDITIONS DELETED BY THE LD. CIT(A). 9. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR REOPENING THE ASS ESSMENT. -: 10: - 10 10. AS THE ASSESSEE HAS ALSO ARGUED ON MERIT OF THE ADDITION RETAINED BY THE LD. CIT(A) WITH RESPECT TO INDEX COST OF ACQUISITION AS ON 1.4.1981. ON MERITS, WE FOUND THA T THE ASSESSEE HAS TAKEN THE FAIR MARKET VALUE AS ON 1.4. 1981 AT RS. 6,98,107/- AS PER THE REGISTERED VALUERS REPORT, W HEREAS THE DEPARTMENTAL VALUATION OFFICER HAS ESTIMATED THE FA IR MARKET VALUE AT RS. 2,45,000/-. NEITHER THE AO HAS POINTED OUT ANY DEFECT IN THE REGISTERED VALUERS REPORT NOR THE AS SESSEE HAS BROUGHT ON RECORD ANYTHING AGAINST VALUATION ARRIVE D BY THE DEPARTMENTAL VALUATION OFFICER. KEEPING IN VIEW THE LOCATION OF THE PROPERTY, WHICH WAS COMMERCIAL AND ALL OTHER FA CTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED BY THE DVO A S WELL AS REGISTERED VALUER IN THE RESPECTIVE REPORT, WE THIN K IT APPROPRIATE TO TAKE THE FAIR MARKET VALUE AS ON 1.4 .1981 AT RS. 5 LAKHS. WE DIRECT ACCORDINGLY. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2011. CPU* 2131