Smt. Ramaben Dhanjibhai Vadgama, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-5(2), RAJKOT-GUJARAT

ITA 210/RJT/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0098 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND N SONTAKKE
• Assessee Lawyers: RANJIT LALCHANDANI
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Cost of acquisition; Valuation report; Reason to believe
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI S.S. GODARA, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SMT. RAMABEN DHANJIBHAI VADGAMA, C/O M/S. SUNIL ENGINEERING WORKS, 7 - BHAKTINAGAR STATION PLOT, OPP. VIRANI COMPLEX, RAJKOT - 360002 PAB: AAS PV0275A (APPELLANT) VS THE ITO, WARD - 5(2), RAJKOT (RESPONDENT) REVENUE BY : S H RI ARVIND N. SONTAKKE , SR. D . R. ASSESSEE BY: S H RI RANJIT LALCHANDANI , A.R. DATE OF HEARING : 05 - 10 - 2 016 DATE OF PRONOUNCEMENT : 25 - 10 - 2 016 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2006 - 07 , AR ISES FROM ORDER OF THE CIT(A) - 3, RAJKOT DATED 20 - 03 - 2015 IN APPEAL NO. CIT(A) - I T A NO . 210 / RJT /20 15 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 2 3 / RJT/0610/13 - 14 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOM E TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS FILED FOLLOWING GROUND S OF APPEAL: - 1. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIRMING THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. THE CONFIRMATION OF THE REOPENING IS NOT J USTIFIED. 2. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIRMING THE ESTIMATION OF THE SALE PRICE @ RS. 858900/ - AND THE CAPITAL GAINS @ RS. 233900/ - . THE ESTIMATION IS NOT JUSTIFIED. GROUND NO. 1. 3. THE RETURN OF INCOME WAS FILED ON 28/12 /2006. THE RETURN OF INCOME WAS PROCESSED U/S. PROCESSED U/S. 143(1) OF THE ACT. NOTICE U/S. 148 WAS ISSUED BY THE ASSESSING OFFICER AS IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSE HAS NOT ADOPTED THE VALUE TAKEN BY THE STAMP DUTY AUTHORITIES AS A RESULT THER E WAS A VIOLATION OF PROVISION OF SEC. 50C OF THE ACT WHICH LED TO ESCAPEMENT OF INCOME. THE ASSESSMENT U/S. 143(3) R.W.S. 147 WAS COMPLETED ON 30/11 /2013 . AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) . THE LD. COMMISSIONER OF INCOME TAX(A) HAS DISMISSED THIS GROUND OF APPEAL OF THE ASSSESSEE. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 3 4.3 I HAVE CAREFULLY CONSIDERED THE CONTEN TION OF THE APPELLANT. THE MOST IMPORTANT POINT TO BE NOTED IS THAT THE RETURN WAS PROCESSED U/S.143(1). IN THE CASE OF KONE ELEVATOR INDIA P. LTD. VS. ITO 340 ITR 454 AND CIT VS. IDEAL GARDEN COMPLEX LTD. 340 ITR 609, THE HON'BLE MADRAS HIGH COURT HAS HEL D WHEN THE RETURN IS PROCESSED U/S.143(1), THE ONLY CONDITION TO BE SATISFIED FOR REOPENING IS TAXABLE INCOME HAS ESCAPED ASSESSMENT AND THE APPELLANT'S CONTENTION THAT NO FRESH MATERIAL BEFORE THE A.O. WARRANTING REOPENING IS NOT RELEVANT. IN THE PRESENT CASE, THE REASONS RECORDED CLEARLY STATE THAT THE SATISFACTION OF A.O. THAT INCOME HAS ESCAPED ASSESSMENT. THIS IS SUFFICIENT FOR REOPENING OF THE CASE. IN THE CASE OF RAYMOND WOOLLEN MILLS VS. ITO 236 ITR 34, THE HON'BLE SUPREME COURT HAS HELD THAT THE BE LIEF OF THE ITO THAT INCOME HAS ESCAPED ASSESSMENT IS PRIMA FACIE SUFFICIENT FOR REOPENING OF THE ASSESSMENT. THE EXISTENCE OF THE REASON IS MATERIAL AND NOT THE SUFFICIENCY OF THE REASON. THUS, IN MY OPINION, THE A.O. HAS CLEARLY MADE OUT A CASE FOR REOPE NING OF THE ASSESSMENT. THE SAME IS HELD TO BE VALID. ALSO, ALL THE CASE LAWS RELIED UPON BY THE APPELLANT ARE IN RESPECT OF ASSESSMENT U/S.143(3) AND REOPENING OF THE CASE AFTER FOUR YEARS. THE RATIOS OF THE DECISIONS ARE NOT APPLICABLE IN THIS CASE. THIS GROUND OF APPEAL IS DISMISSED. 4. BEFORE US THE LD. A.R. OBJECTED THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT BY STATING THAT NOTICE U/S. 148 OF THE ACT WAS ISSUED AFTER FOUR YEARS FROM THE END OF THE F.Y. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A). 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS RECEIVED INFORMATION FROM THE SUB - REGISTRAR OFFICE THA T THE ASSESSEE HAS SOLD THE ABOVE RE FERRED PROPERTY . THEREAFTER, THE ASSESSING OFFICER HAS MADE COMPARISON OF THE SALE VALUE DECLARED BY THE ASSESSEE WITH THE SALE VALUE AS DETERMINED ACCORDING TO STAMP DUTY PAID AND FOUND THAT THE I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 4 DECLARED VALUE OF SALE OF THE PROPERTY WAS LESS THAN THE S A LE VA L U E BASED ON STAMP DUTY PAID. THE SALE VALUE OF THE PROPERTY DECLARED BY THE ASSESSEEE WAS RS. 6,25,0000/ - IN COMPARISON TO VALUE OF RS. 9 , 62 , 157/ - AS PER SALE VALUE DETERMINED ON THE BASIS OF STAMP DUTY PAID . THIS WAS THE REASON TO BELIEVE FOR THE ASSESSING OFFICER TO INITIATE REOPENING PROCEEDI NGS TO DETERMINE THE CORRECT LONG TERM CAPITAL GAIN UNDER THE DEE MED PROVISION OF SEC. 50C OF THE ACT. THERE IS A REASON TO BELIEVE AS CITED ABOVE THAT INCOME CHARGEABLE TO TAX, U/S. 50C HAS ESCAPED ASSESS MENT DURING THE A.Y. 2006 - 07. THE RETURN OF INCOM E OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE ACT AND T HE REASONS RECORDED BY THE A.O. CLEARLY INDICATE THAT THE INCOME HAS ESCAPED ASSESSMENT IN VIEW OF PROVISION OF SEC. 50C OF THE ACT. IN VIEW OF T HE ABOVE STATED FACTS AND FINDINGS, WE UPHOLD THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) ON THIS GROUND OF APPEAL. GROUND NO. 2 6 . THE ASSESSEE HAS FILED RETURN OF INCOME SHOWING INCOME FROM OTHER SOURCES AT RS. 53026/ - UNDER THE HEAD CAPITAL GAIN RS. 190125/ - . ON THE BASIS OF INFORMATION AVAILABLE, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD SOLD ONE PROPERTY AND THE SALE AMOUNT DECLARED BY THE ASSESSEE WAS ON LOWER SIDE IN COMPARISON TO JANTRI VALUE AS PER THE STAMP DUTY. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT U/S. 147 OF THE ACT FOR VIOLATION OF SECTION 50C OF THE ACT. THE ASSESSEE HAS FILED SUBMISSION ALONG WITH COPY I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 5 OF THE VALUATION REPORT OF A REGISTERED VALUER WHEREIN THE PROPERTY WAS VALUED AT RS. 87500/ - AS ON 01 - 04 - 1 998 . THE ASSESSEE HAS ALSO FILED VALUATION REPORT OF THE GOVT. REGISTERED VALUER WHEREIN THE PROPERTY WAS VALUED AT RS. 6 , 22 , 770/ - AS ON 25 TH AUG, 2005 (DATE OF SALE). HOWEVER, THE ASSESSING OFFICER FOUND THAT THE VALUATION OF THE PROPERTY SHOWN BY THE A SSESSEE AT RS. 6 , 22 , 770/ - IS L OWER THAN THE SALE VALUE DETERMINED AT RS. 9 , 62 , 157/ - AS PER THE STAMP DUTY PAID . THE ASSESSING OFFICER HAS REFERRED TO THE VALUATION OFFICER FOR DETERMINATION OF THE FAIR VALUE OF THE PROPERTY AS ON 25 TH AUG, 2005 U/S. 50C OF THE I.T. ACT. THE ASSISTANT VALUATION OFFICER HAS DETERMINED THE VALUE OF THE PROPERTY AT RS. 8 , 58 , 900/ - AS ON 25 TH AUG, 2005 AS AGAINST THE VALUE DETERMINED BY THE ASSESSEE OF RS. 6 , 22 , 770/ - . THERE AFTER , CONSIDERING THE COST OF ACQUISITION AS ON 01 - 04 - 1981 AT RS. 87500/ - AND TAKING INTO CONSIDERATION THE INDEXED COST OF ACQUISITION OF RS. 4 , 34 ,875/ - , T HE ASSESSING OFFICER DETERMINED THAT THE ASSESSEE HAS PROFIT OF RS. 4 , 24 , 025/ - UNDER THE HEAD LONG TERM CAPITAL GAIN. THEREFORE, THE ADDITION OF RS. 2 , 33 , 900/ - WAS MADE IN THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) AGAINST THE ORDER OF THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX(A) HAS SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX(A) HAS DISMISSED THE APPEAL OF THE ASSES SEE AND T HE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 6 5.3 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT AND HAVE GONE THR OUGH THE VALUATION REPORTS FILED BY THE DVO AND THE REGISTERED VALUER. THE DVO HAD ADOPTED THE V ALUE OF THE PROPERTY AT RS.2998/ - PER SQ.M. THE REGISTERED VALUER HAD ADOPTED T HE VALUE AT RS.2125/ - PER SQ.M. IT IS SEEN THAT THE REGISTERED VALUER HAS NOT TAK EN ANY COMPARABLE INSTANCES WHILE THE DVO HAS TAKEN TWO COMPARABLE INSTANCES IN THE SAME LOCALITY WHER EIN THE RATES HAVE BEEN RS.2332/ - PER SQ.M. AND RS.3238/ - PER SQ.M. THE DVO HAS ADOPTED THE RATE OF RS.2998/ - PER SQ.M. WHICH IS HALF - WAY BETWEEN THESE TW O RATES. THE APPELLANT HAS NOT RAISED ANY OBJECTIONS TO THESE FINDINGS OF THE DVO. IT HAS SIMPLY STATED THAT THE HOUSE WAS MADE OF CEMENT SHEETS WHICH WAS DEMOLISHED BY THE PURCHASER AS THE HOUSE WAS IN A DILAPIDATED CONDITION. ON GOING THROUGH THE DVO'S R EPORT, IT IS SEEN THAT HE HAS DESCRIBED THE STRUCTURE TO BE A SINGLE STORIED LOAD BEARING STRUCTURE WITH AC SHEET ROOF. THE DVO HAS ALSO TAKEN THE YEAR OF CONSTRUCTION AT RS.1975/ - CORRECTLY AND PROVIDED FOR NECESSARY DEPRECIATION. IN DEPRECIATION PROVIDED BY THE DVO IS RS.89556/ - AS AGAINST RS.74880/ - AS GIVEN BY THE REGISTERED VALUER. I FIND NO INFIRMITY IN THE VALUE ADOPTED BY THE AND SUBSEQUENTLY BY THE A.O. THE LTCG HAV E BEEN CORRECTLY COMPUTED BY THE A.O. RELYING UPON THE VALUE OF THE PROPERTY AS ASCE RTAINED BY THE DVO. THE SAME IS CONFIRMED. THIS G ROUND OF APPEAL IS DISMISSED. 7 . BEFORE US, THE LEARNED COUNSEL SUBMITTED PAPER BOOK CONTAINING THE SUBMISSION MADE BEFORE THE COMMISSIONER OF INCOME TAX (A) AND COPY OF NOTICE, VALUATION REPORT ETC. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX(A). 8 . WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD AND WE FIND THAT ASSESSING OFFICER HAS CORRECTLY DETERMINED THE LONG TERM GAIN FROM T HE SALE OF PROPERTY ACCORDING TO THE PROVISION OF THE SECTION 50C OF THE I.T . ACT . THEREFORE, W E CONSIDER THAT LD. COMMISSIONER OF INCOME T AX(A) IS JUSTIFIED , IN UPHOLDING THE ORDER OF BY THE ASSESSING O FFICER . I.T.A NO. 210 /RJT /20 15 A.Y. 2006 - 07 PAGE NO SMT. RAMABEN DH ANJIBHAI VADGAMA VS. ITO 7 9 . I N THE RESULT, APPEAL OF THE ASSESSE E IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 25 - 10 - 201 6 SD/ - SD/ - (S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 25 /10 /2016 AK / C OPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT