Smt. N. Saraswathy, CHENNAI V. ITO, CHENNAI

ITA 2093/CHNY/2013

• Counselvise Citation: 209321714 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 21-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2013
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Principle of natural justice; Fair market value; Valuation report
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! ' , # $% BEFORE SHRI N.R.S.GANESAN, JUDICIAL MMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 2093/MDS/2013 / ASSESSMENT YEAR : 2006-07 SMT.N.SARASWATHY, F-28, II AVENUE, ANNA NAGAR EAST, CHENNAI 600 102. PAN ADSPN6330K ( /APPELLANT) VS THE INCOME-TAX OFFICER, WARD-XIV(2), CHENNAI. ( /RESPONDENT) / APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT / DATE OF HEARING : 21.09.2015 ! / DATE OF PRONOUNCEMENT: 09.10.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 13 .9.2013. - - ITA 2093/13 2 2. THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO ADOPTION OF FAIR MARKET VALUE OF CAPITAL ASSET AS ON 1.4.198 1 AND ALSO ADOPTION OF VALUE U/S.50C(2) OF THE ACT FOR COMPUT ATION OF CAPITAL GAINS. 3. THE FACTS OF THE CASE ARE THE ASSESSEE ADMITTED NIL INCOME UNDER THE HEAD CAPITAL GAIN AS PER THE WORKING FURNISHED IN THE RETURN. DURING THE ASSESSM ENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE ADOPTED ` 3,00,000/- PER GROUND AS ON 01.04.1981 TO ARRIVE AT COST OF THE PROPERTY SOLD. BY USING INFLATION INDEX, THE CO ST OF THE PROPERTY SOLD WAS ARRIVED AT ` 2,01,04,271/-. LONG TERM CAPITAL GAIN WAS WORKED OUT AT ` 81,14,521/- (2,82,18,794 - 2,01,04,271). ASSESSEE'S SHARE WORKS OUT TO ` 27,04,840/- (1/3 RD SHARE). SHE INVESTED ` 30,00,000/- IN NABARD BONDS U/S 54EC OF THE ACT AND RETURNED NIL CAPITAL GAIN. NOT SATISFIED WITH THE ABOVE WORKING FURNISHED BY THE A SSESSEE, THE AO FIXED THE COST OF LAND SOLD AT ` 30,000/- PER GROUND AS ON 01.04.1981 BASED ON THE GUIDELINE VALUE FURNI SHED BY THE SUB-REGISTRAR, PURASAWALKAM, CHENNAI. THUS THE AO ARRIVED AT THE CAPITAL GAIN AT ` 2,62,08,368/- BY INVOKING THE - - ITA 2093/13 3 PROVISIONS OF SEC.50C OF THE ACT. ASSESSEE'S SHARE WAS WORKED OUT AT ` 87,36,122/-. AFTER SETTING OF ` 3,00,000/- INVESTED IN NABARD BONDS U/S 54EC OF THE ACT, THE CAPITAL GAIN OF THE ASSESSEE WAS FIXED AT ` 57 F 36,122/- AND THE SAME WAS BROUGHT TO TAX. AGGRIEVED , THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) . 4. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, T HE ASSESSEE FILED A PETITION DATED 12.02.2011, WHEREIN IT WAS CONTENDED THAT THE ASSESSING OFFICER, WITHOUT GIVIN G OPPORTUNITY TO THE ASSESSEE SOUGHT THE OPINION OF T HE SUB-REGISTRAR, PURASAWALKAM, CHENNAI AND WORKED OUT THE VALUE AS ON 1.04.1981 AT ` 30,000/- PER GROUND VIS-A-VIS ` 3,00,000/- PER GROUND AS ADOPTED BY THE ASSESSEE. I T WAS ALSO STATED THAT THE AO ADOPTED THE SALE CONSIDERATION AT THE GUIDELINE VALUE OF ` 2,82,18,792/ - AS PER PROVISIONS OF SEC. 50C OF THE ACT, THOUGH THE ASSES SEE MADE A REQUEST BEFORE THE AO TO SEEK REFERENCE OF VALUATION OF PROPERTY TO A VALUATION OFFICER BUT NO REFERENCE WAS MADE. IT WAS ALSO ARGUED THAT THE ASS ESSEE SOUGHT AN OPPORTUNITY TO FURNISH DETAILS IN THE FOR M OF - - ITA 2093/13 4 COMPARATIVE SALE INSTANCES OF OTHER PROPERTIES IN O RDER TO SUBSTANTIATE HER CLAIM FOR THE SALE CONSIDERATION A T ` 1,20,00,000/- AND THE OPPORTUNITY WAS DENIED BY THE AO. FINALLY, IT WAS PLEADED BEFORE THE CIT(APPEALS) THAT THE ASSESSMENT WAS TAKEN UP AT THE LAST LEG OF LIMI TATION AND NO OPPORTUNITY WAS GRANTED WHICH RESULTED IN GR OSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE TO P ROVE THAT THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY. THER EFORE THE ASSESSEE PRAYED TO THE CIT(A) TO DIRECT THE AO TO REFER THE PROPERTY TO VALUATION OFFICER AND TO GIVE OPPOR TUNITY TO THE ASSESSEE TO PROVE HER CASE. BASED ON THE ABOVE SUBMISSION, THE THEN CIT(A)-XII, CHENNAI IN HIS ORD ER IN ITA NO.102/2008-09 DATED 01.04.2011 DIRECTED THE AO TO REFER THE PROPERTY TO THE VALUATION CELL OF THE DEP ARTMENT AND THEN AFFORD AN OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE AO IN HIS LETTER DATED 20.04.2011 REFERRED THE MATTER TO THE DVO, VALUATION CELL, CHENNAI FOR VALUATION OF THE PROPERTY. THE DVO IN HIS REPORT IN F. NO. DVO/MDS/CG(1)/2011-12 DATED 18.11.2011 FIXED THE FA IR - - ITA 2093/13 5 MARKET VALUE OF THE PROPERTY AT ` 28,45,000/- AS ON 01.04.1981. THE AO GAVE AN OPPORTUNITY OF HEARING T O THE ASSESSEE IN HIS LETTER DATED 19.01.2012 POSTING THE CASE ON 23.01.2012. ON THE APPOINTED DATE, ASESSEE'S AUTHORIZED REPRESENTATIVE APPEARED AND SAID 'NO OBJ ECTION' TO THE VALUATION REPORT. THE ASSESSING OFFICER INTI MATED THE CIT(A)-XII, CHENNAI ACCORDINGLY VIDE HIS LETTER DAT ED 31.01.2012. THE CIT(A)-XII, CHENNAI IN HIS LETTER D ATED 21.06.2012 CALLED FOR A REMAND REPORT FROM THE AO A ND ASKED HIM TO REFER THE MATTER TO THE VALUATION CELL U/S 50C(2) OF THE ACT AND CONDUCT ENQUIRIES AND TO GIVE OPPORTUNITY TO THE ASSESSEE BECAUSE ASSESSEE OBJECT ED TO THE INVOKING OF THE PROVISION OF SEC. 50C OF THE AC T BEFORE HIM. ACCORDINGLY THE AO REQUESTED THE DVO TO DETERM INE THE FAIR MARKET VALUE AS ON 29.04.2005 AND SEND THE REPORT. THE AO IN HIS REMAND REPORT DATED 26.02.201 3 INFORMED THAT THE FAIR MARKET VALUE OF THE PROPERTY WAS ` 2,25,75,000/- AS ON 29.04.2005 AS PER THE VALUATIO N REPORT AND ENCLOSED THE SAME WITH HIS REPORT AND FORWARDED IT TO THE CIT(A) . - - ITA 2093/13 6 4.1 THE CIT(APPEALS) OBSERVED THAT COMPUTATION OF CAPITAL GAIN ON THE SALE OF PROPERTY FURNISHED WITH THE RET URN FILED REVEALS THAT THE ASSESSEE ADOPTED THE VALUE OF ` 2,82,18,792/- FOR COMPUTATION OF CAPITAL GAIN AS PE R SUB- SECTION(1) OF SEC.50C OF THE I.T. ACT. FURTHER, HE OBSERVED THAT A PERUSAL OF THE COPY OF THE SALE DEED EXECUTE D BY THE ASSESSEE AND OTHERS IN FAVOUR OF M/S. TRUE VALU E HOMES INDIA PVT. LIMITED REVEALS THAT THE MARKET VA LUE OF THE PROPERTY WAS MENTIONED ASSESSEES ` 2,82,18,792/-. THE AO FOUND THAT THE VALUE ADOPTED FOR COST INDEXATION WAS HIGH AND REFERRED THE MATTER TO THE REGISTRATION DEPARTMENT TO FIND OUT THE GUIDELINE V ALUE OF THE PROPERTY AS ON 01.04.1981. THE SUB-REGISTRAR, PURASAWALKAM, CHENNAI IN HIS LETTER DATED 13.10.200 8 INFORMED THE AO THE GUIDELINE VALUE/GROUND AT ` 30,000/- AS ON 01.04.1981. THE AO IN HIS LETTER DATED 07.11.200 8 ADDRESSED TO THE ASSESSEE GAVE OPPORTUNITY TO SHOW CAUSE AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED BA SED ON THE GUIDELINE VALUE. AS THERE WAS NO RESPONSE, F URTHER OPPORTUNITIES WERE ALSO GIVEN TO THE ASSESSEE FOR H ER REPLY, - - ITA 2093/13 7 IF ANY. THE ASSESSEE DID NOT RESPOND. THEREFORE, TH E AO WORKED OUT THE CAPITAL GAIN ADOPTING ` 30,000J- PER GROUND TOWARDS COST OF THE LAND SOLD FOR INDEXATION PURPOS E. FURTHER, THE CIT(APPEALS) OBSERVED THAT THE AO DID NOT INTERFERE WITH THE MARKET VALUE ADOPTED BY THE ASSESSEE FOR WORKING OUT CAPITAL GAIN. THEREFORE, THE STATEMENT OF FACTS IS NOT CORRECT IN STATING THAT T HE AO CONCLUDED THAT THE PROVISIONS OF SEC.50C WOULD APPL Y AS PER WHICH THE SALE CONSIDERATION WOULD BE ADOPTED AT ` 2,82,18,792/- AS AGAINST THE ACTUAL SALE PRICE OF ` 1,20,00,000/-. ACCORDING TO THE CIT(APPEALS), THE STATEMENT THAT NO OPPORTUNITY WAS GIVEN TO THE ASSE SSEE REGARDING ADOPTION OF ` 30,000/- AS ON 01.04.1981 FOR COST INDEXATION IS ALSO NOT CORRECT. THE CIT(APPEALS) O BSERVED THAT THE AO GAVE OPPORTUNITY ON 17.11.2008 BUT ASSESSEE SOUGHT TIME TILL 30.11.2008 AND THEN TILL 20.12.200 8. 4.2 THE CIT(APPEALS) FURTHER OBSERVED THAT THE ASSE SSEE'S RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN TH E CASE OF GODHRA ELECTRICITY CO. LTD. VS. CIT (225 ITR 746) I S NOT RELEVANT TO THE FACTS OF THE PRESENT CASE, AS THE S AID CASE - - ITA 2093/13 8 LAW IS ABOUT METHOD OF ACCOUNTING ADOPTED BY THE AS SESSEE. HE ALSO OBSERVED THAT THE CASE LAW RELIED ON BY THE ASSESSEE IN THE CASE OF CIT VS. SMT. RAJ KUMARI VIMLA DEVI A ND ANR. [279 ITR 360] (AII.) IS NOT RELEVANT BECAUSE SECTIO N 50C WAS NOT IN THE STATUTE AT THE RELEVANT PERIOD I.E. DURI NG AY 1981- 82. ACCORDING TO THE CIT(APPEALS), THE CASE LAW RE LIED ON BY THE ASSESSEE IN THE CASE OF CIT V. CHANDNI BUCHAR [ 323 ITR 510](P&H) AND IN THE CASE OF CIT VS. KHOOBSURAT RES ORTS (P.) LTD. [211 TAXMAN 510] (DELHI H.C.) ARE ALSO NO T APPLICABLE BECAUSE IN THOSE CASES THE DIFFERENCE BE TWEEN MARKET VALUE ADOPTED FOR STAMP DUTY AND THE SALE CONSIDERATION RECEIVED WAS SOUGHT TO BE TAXED IN TH E HANDS OF THE BUYER OF THE PROPERTY. THE ISSUE FOR CONSIDE RATION IN THE PRESENT CASE IS DIFFERENT AND CAPITAL GAIN IS B ROUGHT TO TAX HERE IN THE HANDS OF THE SELLER OF THE PROPERTY AS PER THE SPECIFIC PROVISIONS OF SEC. 50C BROUGHT INTO STATUT E FOR THIS PURPOSE ALONE. REGARDING THE APPLICABILITY OF SEC.5 0C(2) OF THE ACT, TWO CONDITIONS ARE TO BE SATISFIED: 1. THE ASSESSEE SHOULD CLAIM BEFORE THE AO THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR - - ITA 2093/13 9 MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. 2.THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IS NOT DISPUTED IN ANY APPEAL, REVISION O R NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR HIGH COURT. 4.3 THE CIT (APPEALS) OBSERVED THAT IN THE PRESENT CASE, THE ASSESSEE HERSELF ADOPTED THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY IN COMPUTING THE CAPITAL GAINS. PERUSAL OF THE MISCELLANEOUS RECORDS FOR AY 2006-07 BY THE CIT(APPALS) REVEALS THAT NO CLAIM WAS MADE BY THE ASSESSEE BEFORE THE AO AT ANY POINT OF TIME BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS. IT IS ONLY DU RING THE APPELLATE PROCEEDINGS, CLAIM WAS MADE TO REFER THE PROPERTY FOR VALUATION WHICH IS AN AFTERTHOUGHT AND DESERVES OUTRIGHT REJECTION. HENCE THE FIRST CONDITION WAS NOT SATISF IED BY THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, THE V ALUATION OFFICER ESTIMATED THE VALUE AT ` 2,25,75,000/- WHICH IS EXCEEDING THE CLAIM OF ` 1,20,00,000/- MADE BY THE ASSESSEE I.E. ALMOST DOUBLE. THEREFORE, HE HELD THA T THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY ADO PTED BY THE ASSESSEE FOR COMPUTING CAPITAL GAINS NEEDS NO - - ITA 2093/13 10 MODIFICATION BECAUSE ASSESSING OFFICER IS BOUND TO FOLLOW THE MANDATE OF LAW, WHERE THE ASSESSEE HAD NOT AVAI LED THE OPPORTUNITY. WHERE NO CLAIM IS MADE AT ALL BY THE ASSESSEE DISPUTING THE SUBSTITUTION OF STAMP DUTY VALUE FOR THE CONSIDERATION DECLARED BY THE AO, THE PROVISION IS BOUND TO BE APPLIED. THE CIT(APPEALS) PLACED RELIAN CE ON THE FOLLOWING CASE LAWS: 1.MOHD SHOIB VS DCIT(2010) 1 ITR (TRIB.) 4 52 (LUCKNOW) 2.AMBATTUR CLOTHING CO.LTD.V ACIT [326 ITR 245] ( MAD.) 4.4 REGARDING OBJECTION OF THE ASSESSEE TO THE ADOP TION OF GUIDELINE VALUE AS ON 01.04.1981 FOR ARRIVING AT TH E COST OF THE PROPERTY SOLD, THE CIT(APPEALS) OBSERVED THAT T HE ASSESSEE'S CONTENTION IS NOT TENABLE. THE ASSESSEE' S VALUATION @ ` 3,00,000/- PER GROUND HAS NO BASIS EITHER IN THE FORM OF COMPARATIVE SALE MADE AT THAT TIME OR V ALUE ASSESSABLE FOR STAMP DUTY PURPOSE. BUT THE ASSESSIN G OFFICER OBTAINED THE GUIDELINE VALUE AS ON 01.04.1981 FROM THE REGISTRATION DEPARTMENT IN ORDER TO BE FAIR. TH ERE IS NO ARBITRARINESS IN ADOPTING THE VALUE OF ` 30,000/- PER GROUND BY THE AO FOR ARRIVING AT INDEXED COST OF ACQUISITI ON AS PER - - ITA 2093/13 11 EXPLANATION (III) TO PROVISO TO SEC.48 OF THE ACT. ACCORDINGLY, HE HELD THAT NO DISTURBANCE IS REQUIRED IN THE COST OF ASSET SOLD ADOPTED BY THE AO. AGAINST THIS, THE ASSESSE E IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE AO ADOPTED THE FAIR M ARKET VALUE OF THE LAND AS ON 1.4.1981 AT ` 30,000/- PER GROUND AS AGAINST ` 3 LAKHS ADOPTED BY THE ASSESSEE, ON THE BASIS OF VALU ATION OF SUB- REGISTRARS OFFICE, WHICH WAS NOT PUT BEFORE THE AS SESSEE FOR COMMENTS. FURTHER, THE AO ADOPTED THE SALE CONSIDE RATION AT THE GUIDELINE VALUE OF ` 2,82,18,792/- AS AGAINST THE VALUE ADMITTED BY THE ASSESSEE AS PER SALE DEED AT ` 1,20,00,000/-, THOUGH THE ASSESSEE OBJECTED THE SAME BY PRODUCING THE VALUATION REPORT FROM THE REGISTERED VALUER. IN OU R OPINION, OBJECTION EXPRESSED BY THE ASSESSEE IS TO BE CONSID ERED IN PROPER PERSPECTIVE. WHENEVER THE AO PLACES RELIANCE ON THE VALUATION REPORT RECEIVED BY THE DVO, THE SAME SHOU LD BE COMMUNICATED TO THE ASSESSEE FOR HER COMMENTS AND D ECIDED THEREUPON. THE ASSESSEE BEFORE US POINTED OUT THAT THERE ARE CERTAIN DISCREPANCIES IN THE VALUATION REPORT, WHIC H IS DETRIMENTAL - - ITA 2093/13 12 TO THE INTEREST OF THE ASSESSEE AND IT IS APPROPRIA TE TO CALL FOR THE COMMENTS AND DETAILS FROM THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT IT IS APPROPRIATE TO REMIT THE ISS UE TO THE FILE OF THE AO. REGARDING FAIR MARKET VALUE OF THE PROPE RTY AS ON 1.4.1981, THE AO SHALL FIND COMPARABLE CASES, WHICH SHALL BE AT THE VICINITY OF THE PROPERTY. ACCORDINGLY, WE REMI T THE ENTIRE ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED ON FRIDAY, THE 9 TH OF OCT., 2015 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 9 TH OCT., 2015. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. CF# G /DR 6. #HI /GF.