SREE VISHNU ASSAYERS P LTD, CHENNAI V. ACIT CORPORATE CIRCLE-6(2), CHENNAI

ITA 2021/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9213 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: B S PURUSHOTHAMC A
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Set aside; Capital Gains
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , . , % BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.2021/CHNY/2019 ( / ASSESSMENT YEAR: 2014-15) M/S. SREE VISHNU ASSAYERS P.LTD. 31, JAWAHARLAL NEHRU SALAI, EKKATTUTHANGAL, CHENNAI-600 017. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(2), CHENNAI-34. PAN: AAHCS 6467P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. B.S.PURUSHOTHAM,CA /RESPONDENT BY : MR.G. JOHNSON, ADDL.CIT /DATE OF HEARING : 24.02.2021 /DATE OF PRONOUNCEMENT : 19.03.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED CIT(A)-15, CHENNAI DATED 30.0 4.2019 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IS CONTRARY TO LAW, FACTS OF THE CASE AND MATERIAL ON RECORD. 2. THE COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DECIDING THE APPEAL AGAINST THE APPELL ANT WITHOUT AFFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD. THOUGH THE APPELLANT COULD NOT ATTEND THE APPEAL HE ARINGS DUE TO OTHER PRESSING PRE-OCCUPATIONS, HIS SUBSEQUE NT ATTEMPTS TO MEET THE CIT(A) ON COUPLE OF OCCASIONS TO MAKE 2 ITA NO.2021/CHNY/2019 ORAL/WRITTEN SUBMISSIONS FAIIED DUE TO PRE-OCCUPATI ON OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE CIT(A) CO ULD HAVE BEEN MORE LIBERAL IN AFFORDING ANOTHER OPPORTU NITY BEFORE DECIDING THE APPEAL EX-PARTE. 3. THE COMMISSIONER OF INCOME TAX {APPEALS) HAS ERR ED IN CONFIRMING THE DISALLOWANCE OF SELLING EXPENSES AMOUNTING TO RS.25,61,387/- REPRESENTING DISCOUNT ALLOWED TO CUSTOMERS ON ASSAYING AND HALL MARKING CHARGES WITHOUT APPREC IATING THAT SIMILAR EXPENDITURE WAS CLAIMED AND ALLOWED IN EARLIER YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THERE WAS NO CHANGE IN CIRCUMSTANCE S WARRANTING DIFFERENT TREATMENT TO THE EXPENDITURE C LAIMED. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO REF ER THE VALUATION OF THE PROPERTY TO THE DVO BEFORE ADOPTIN G THE GUIDELINE VALUE U/S 5OC ESPECIALLY WHEN THE APPELLA NT HAD CONTENDED BEFORE THE ASSESSING OFFICER THAT THE G UIDELINE VALUE DID NOT REFLECT THE REALISABLE VALUE. 5. FOR THESE GROUNDS AND SUCH ETHER WOUNDS AS MAY BE ADDUCED EITHER BEFORE OR DURING THE COURSE OF AP PEAL PROCEEDINGS, THE TRIBUNAL MAY BE PLEASED TO DIRECT THE OFFICERS BELOW TO ALLOW THE CLAIM OF EXPENDITURE IN THE NATU RE OF DISCOUNT ON ASSAYING ANTI HALL MARKING CHARGES AND ALSO FOR REFERRING THE VALUATION OF THE PROPERTY TO THE VALU ATION OFFICER FOR THE PURPOSE OF ASSESSING THE GAIN ARISING ON TH E SALE OF LANDED PROPERTY AND ALSO PASS SUCH OTHER ORDER OR O RDERS AS THE TRIBUNAL MAY DEEM FIT AND PROPER AND RENDER JUS TICE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF GOLD ASSAYING AND HALL MARKING FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 30.09.2014 DECLARING TOTAL INCOME OF RS.95,56,606/- . THE CASE 3 ITA NO.2021/CHNY/2019 WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASS ESSEE HAS CLAIMED HUGE EXPENSES UNDER THE HEAD OTHER EXPENSES AND HENCE, CALLED UPON THE ASSESSEE TO FILE NECESSARY D ETAILS OF EXPENDITURE DEBITED UNDER THE HEAD OTHER EXPENSES . IN RESPONSE, THE ASSESSEE HAS FILED DETAILS OF EXPENSE S INCLUDING SELLING EXPENSES, DISCOUNTS ALLOWED TO CUSTOMERS. T HE ASSESSING OFFICER ON THE BASIS DETAILS FILED BY THE ASSESSEE WAS OF THE OPINION THAT EXPENDITURE DEBITED UNDER THE H EAD DISCOUNT ALLOWED TO CUSTOMERS IS NOT SUPPORTED BY NECESSARY EVIDENCES. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER BUREAU OF INDIAN STANDARDS, A FIXED RATE HAS BEEN SPECIFIED PER PIECE OF JEWELLERY CERTIFIED BY THE ASSESSEE AND HENCE, QUES TION OF ALLOWING DISCOUNT TO THE CUSTOMERS DOES NOT ARISE. THEREFORE, HE OPINED THAT EXPENDITURE DEBITED UNDER THE HEAD D ISCOUNT ALLOWED TO CUSTOMERS IS NON-GENUINE AND ACCORDINGLY DISALLOWED DEDUCTION CLAIMED UNDER THE HEAD DISCOUN T ALLOWED TO CUSTOMERS AMOUNTING TO ` 25,61,387/-. SIMILARLY, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS COMP UTED LONG TERM CAPITAL GAIN FROM SALE OF PROPERTY, THEREFORE , CALLED UPON 4 ITA NO.2021/CHNY/2019 THE ASSESSEE TO FILE NECESSARY EVIDENCES INCLUDING COPY OF SALE DEED. THE ASSESSING OFFICER FURTHER NOTED THAT ALTH OUGH, SALE CONSIDERATION WAS MENTIONED AT ` 1.25 CRORES IN THE REGISTERED SALE DEED, BUT MARKET VALUE OF PROPERTY WAS ASSES SED AT ` 1.67 CRORES FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y, THEREFORE, BY APPLYING THE PROVISIONS OF 50C, RECO MPUTED LONG TERM CAPITAL GAIN BY TAKING SALE CONSIDERATION AT ` 1.67 CRORES. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E LEARNED CIT(A), BUT COULD NOT SUCCEED. THE LEARNED CIT(A), FOR THE REASONS STATED IN HIS APPELLATE ORDER, CONFIRMED AD DITIONS MADE TOWARDS DISALLOWANCE OF DISCOUNT ALLOWED TO CUSTOME RS AND RECOMPUTATION OF LONG TERM CAPITAL GAIN BY ADOPTING MARKET VALUE DETERMINED FOR THE PURPOSE OF PAYMENT OF STAM P DUTY AS PER PROVISIONS OF SECTION 50C OF THE ACT. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEF ORE US. 5. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITIONS MA DE TOWARDS DISALLOWANCE OF DISCOUNT ALLOWED TO CUSTOMERS WITH OUT APPRECIATING THE FACT THAT SIMILAR EXPENDITURE WAS CLAIMED AND 5 ITA NO.2021/CHNY/2019 ALLOWED IN EARLIER YEARS AND HENCE, WITHOUT THERE BEING ANY CHANGE IN FACTS, NO DISALLOWANCE CAN BE MADE ON DIS COUNT ALLOWED TO CUSTOMERS. THE AR FURTHER SUBMITTED THAT ASSESSEE HAS FILED ALL EVIDENCES TO PROVE THE EXPENSES, BUT THE AUTHORITIES BELOW HAVE IGNORED ALL EVIDENCES FILED BY THE ASSESSEE. THEREFORE, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS CASE. THE AR FURTHER SUBMI TTED THAT AS REGARDS RECOMPUTATION OF LONG TERM CAPITAL GAIN, IT WAS THE CASE OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT WHEN THERE IS A DIFFERENCE IN SALE CONSIDERATION RECORDED IN REGI STERED SALE DEED AND VALUE DETERMINED FOR THE PURPOSE OF PAYME NT OF STAMP DUTY, THE ASSESSING OFFICER OUGHT TO HAVE REF ERRED VALUATION TO THE DVO FOR DETERMINING CORRECT MARKET VALUE OF THE PROPERTY. IN SPITE OF REQUEST FROM THE ASSESSE, THE ASSESSING OFFICER HAD NOT REFERRED FOR VALUATION T O DVO AND SIMPLY ADOPTED MARKET VALUE, IGNORING SPECIFIC PRO VISIONS PROVIDED UNDER SUB-SECTION (2) OF SECTION 50C OF THE ACT. THEREFORE, THE ISSUE MAY BE SET ASIDE TO THE FILE O F ASSESSING 6 ITA NO.2021/CHNY/2019 OFFICER TO DETERMINE CORRECT MARKET VALUE OF THE PR OPERTY BY REFERRING VALUATION TO THE DVO. 6. THE LEARNED DR, ON THE OTHER HAND, FAIRLY AGREE D THAT APPEAL MAYBE SET ASIDE TO THE FILE OF ASSESSING OFF ICER TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS CASE WITH REFERENCE TO DISALLOWANCE OF DISCOUNT ALLOWED TO CU STOMERS AND DETERMINATION OF MARKET VALUE OF THE PROPERTY FOR C OMPUTATION OF CAPITAL GAIN . 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT BOTH THE COUNSELS FOR THE ASSE SSEE AS WELL AS REVENUE HAVE AGREED FOR SET ASIDE THE APPEAL TO THE FILE OF THE ASSESSING OFFICER TO RECONSIDER THE ISSUE OF DI SALLOWANCE OF DISCOUNT ALLOWED TO CUSTOMERS AND RECOMPUTATION OF LONG TERM CAPITAL GAINS FROM SALE OF PROPERTY BY REFERRING VA LUATION TO THE DVO. THEREFORE, WITHOUT CONSIDERING MERITS OF THE C ASE, WE DEEM IT APPROPRIATE TO SET ASIDE THE APPEAL TO THE FILE OF ASSESSING OFFICER AND DIRECT HIM TO RECONSIDER THE ISSUE OF DISALLOWANCE OF DISCOUNT ALLOWED TO CUSTOMERS IN LI GHT OF CLAIM 7 ITA NO.2021/CHNY/2019 OF THE ASSESSEE THAT IT HAS FURNISHED VARIOUS EVIDE NCES TO JUSTIFY ITS CLAIM. SIMILARLY, THE ISSUE OF RECOMPUTATION O F LONG TERM CAPITAL GAINS HAS ALSO BEEN SET ASIDE TO THE FILE O F ASSESSING OFFICER, WITH A DIRECTION TO THE ASSESSING OFFICER TO DETERMINE CORRECT MARKET VALUE OF THE PROPERTY BY REFERRING V ALUATION TO THE DVO, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5 0C(2) OF THE ACT. NEEDLESS TO SAY, THE ASSESSEE SHALL FURNISH NE CESSARY EVIDENCES BEFORE THE ASSESSING OFFICER TO JUSTIFY I TS CASE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA ) ' % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER ' /CHENNAI, ( / DATED 19 TH MARCH, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .