Ashwani Kumar Malhotra, Meerut V. ITO, Meerut

ITA 2134/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3679 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: GIRISH KUMAR AROROA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Competent authority
• Section: 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SHRI N.K. SAINI , ACCOUNTANT MEMBER I.T.A. NO. 2134 /DEL /201 7 ASSESSMENT YEAR: 2007 - 08 ASHWANI KUMAR MALHOTRA, PAWAN COMPLEX, CHIPPI TANK, OPP. CMC MEERUT. PAN - AHQPM7913F VS. ITO WARD - 1(1 ) MEERUT [APPELLANT] [RESPONDENT] APPELLANT BY: SH. GIRISH KUMAR AROROA, CA RESPONDENT BY: SH. AMRIT LAL, SR. DR DATE OF HEARING: 09 11 2017 DATE OF PRONOUNCEMENT: 31 01 2018 O R D E R N.K. SAINI , A.M: THIS IS AN APP EAL BY THE ASSESSEE AGAINST THE ORDER DATED 20.12.2016 OF THE CIT(A), ALIGARH. FOLLOWING GROUNDS HA VE BEEN RAISED IN THIS APPEAL: - I . THAT UNDER THE FACTS AND CIRCUMSTANCES THE DETERMINATION OF ASSESSABLE INCOME OF RS. 502380/ - AS DETERMINED BY CIT( A) AGAINST RETURNED INCOME OF RS. 141189/ - IS ABSOLUTELY ILLEGAL AND CONTRARY TO FACTS AND FIGURE; AND ADDITION OF RS. 361191/ - ON ACCOUNT OF CAPITAL GAIN WAS WHOLLY UNJUSTIFIED AND ILLEGAL AT ANY RATE WITHOUT PREJUDICE THE APPELLANT DID FILE THE INDEPENDE NT VALUER AND COURT LITIGATION DEPTT. II . THAT UNDER THE FACTS RETURNED INCOME AT INCOME 141189/ - SHOULD HAVE BEEN ACCEPTED. ITA NO. 2134 /DEL/201 7 2 2. VIDE GROUND NO. 1 AND 2 THE GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS. 361191/ - MADE BY THE AO ON ACCO UNT OF CAPITAL GAIN. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO ISSUED THE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) ON 31.3.2014 , ON THE BASIS OF INFORMATION OF HAVING SOLD IMMOVABLE PROPERTY HAVING CIRCLE RATE MORE THAN THE SALE CONSIDERATION AS REFERRED IN SECTION 50C OF THE ACT . IN RESPONSE, THE ASSESSEE FILED THE INCOME TAX RETURN ON 11.6.2014 SHOWING THE SAME INCOME OF RS. 1,41 ,189/ - WHICH WAS SHOWN IN THE ORIGINAL RETURN FILED VIDE ACKNOWLEDGEMENT NO. 13890 DATED 25.02.2008 . THE AO NOTICED THAT THE ASSESEE SOLD AN IMMOVABLE PROPERTY AS PER FOLLOWING DETAILS: - S. NO DATE DESCRIPTION OF PROPERTY REGISTERED SALE PRICE STAMP DUTY VALUE DIFFERENCE 1. 07.08.2006 SHOP NO. 10 & 11 AREA 69.68 SQ. MTR 7,00,000/ - 25,09,000/ - 18,09,000/ - 4 . THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHETHER THE CAPITAL GAIN WAS DECLARED BY HIM AS PER SECTION 50C OF THE ACT VALUE ON SALE OF THE ABOVE SAID PROPERTY AS THE SAME WAS NOT DECLARED IN THE RETURNS OF INCOME FILED ON 25.02.2008 AND 10.06.2014. THE ASSESSEE SUBMITTED AS UNDER: - ACTUAL SALE CONSIDERATION TAKEN OF RS. 7,00,000/ - HOWEVER FOR STAMP DUTY PURPOSE VALUE TAKEN AT RS. 25,09,000/ - , CIRCLE RATE VALUE OF PROPERTY IS NOT THE TRUE VALUE, ASSESSEE IS LEGALLY BOUND TO PAY STAMP DUTY AS PER CIRCLE RATE TO FOLLOW UP GOVT, STAMP RULE & REGULATION. FURTHER IT IS BEING TO YOUR KIND KNOWLEDGE THE PROPERTY UNDER CONSIDERATION IS UNDER LITIGATION. I RECEIVED DIFFERENT NOTICE FROM COMPETENT AUTHORITY (AVAS VIKAS, MEERUT) AND CASE IS PENDING UNDER HIGH COURT, ALLAHABAD SECOND APPEAL /1045/2012 MEERUT, UP AVAS EVAM VIKAS PARISHAD AND OTHERS RESPONDENT DR. AMBEDKAR BLA SUDHAR SIKSHA & SAMITI, MEERUT. ITA NO. 2134 /DEL/201 7 3 5 . THE ASSESSEE ALSO DISPUTED THE VALUE ASSESSED BY STAMP DUTY VALUATION DEPARTMENT , THEREFORE, THE AO REFERRED THE MATTER TO THE VALUATION CELL AND THE GOVERNMENT VALUATION OFFICER DETERMINED THE FAIR MARKET VALUE AT RS. 12,39,400/ - . HOWEVER, T HE AO DID NOT ACCEPT THE VALUATION OF THE PRIVATE ARCHITECTURE FURNISHED BY THE ASSESSEE AND DETERMINED THE CAPITAL GAIN AS UNDER: - SALE CONSIDERATION 12,39,400 (AS PER VALUE ASSESSED BY VALUATION CELL) LESS: COST OF ACQUISITION FOR F.Y. 2000 - 01 6,87,000X519/406= 8,78,209 8,78,209 3,61,191 THE AO MADE THE ADDITION OF RS. 3,61,191/ - . 6 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER: - 4. DURING THE COURSE OF VALUATION BEFORE VALUATION OFFICER INCOME TAX DEPARTMENT. IT IS STATED THAT PROPERTY UNDER CONSIDERATION IS UNDER LITIGATION, AND LETTER SUBMITTED BEFORE HIM DT. 27.02.2015, AND AT THE TIME OF INSPECTION , ASSTT. VALUATION OFFICER OBSERVE THAT SHOP CLOSED A ND HE OBSERVE FROM SURROUNDING LOCATION THAT MARKET IS UNDER LITIGATION AND SAME FACT HE NOTED IN HIS REPORT DT. 27.03.2015 IN POINT NO. 7.3 [5]. THE PROPERTY ADJOINS THE DISPUTED LAND AND INCLUDED IN THE DISPUTED KHASRA OF LAND . 5. THAT VALUATION OFFICE R NOT CONSIDER THIS FACTOR IN VALUING THE SHOPS. 6. AO ALSO NOT CONSIDERED THIS POINT & VALUATION OFFICER REMARK THAT PROPERTY IN LITIGATION; WE RELY ON FOLLOWING JUDGMENT . IN THE CASE OF ITAT KOLKATA BENCH A CHANDRA BHAN AGARWAL VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 31 KOLKATA (2012) 21 TAXMAN.COM 133 (KOLKATA) . IT IS ALSO DECIDED IN ABOVE JUDGMENT THAT: - SECTION 50C OF THE INCOME TAX ACT, 1961, - CAPITAL GAINS SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTA IN CASES - ASSTT. YEAR 2006 - 07. WHETHER WHERE DVO WHILE ESTIMATING FAIR MARKET VALUE OF PROPERTY, DID NOT ITA NO. 2134 /DEL/201 7 4 TAKE INTO CONSIDERATION FACTORS HAVING ANY DEPRESSING OR APPRECIATIVE EFFECT ON VALUE OF PROPERTY AND, HE SIMPLY BASED HIS REPORT ON BASIS OF VALUE MADE BY REGISTRAR FOR STAMP VALUATION PURPOSES, VALUATION SO MADE BY DVO COULD NOT BE ACCEPTED - HELD, YES [IN FAVOUR OF ASSESSEE] SAME WAY IN OUR CASE DVO ACCEPTED THAT PROPERTY IN DISPUTE BUT NOT GIVEN ANY WEIGHTAGE FOR THAT; THAT SHOULD BE GIVEN BY YOUR HONO UR BY ACCEPTING VALUATION REPORT OF ASSESSEE VALUER OF M/S DESIGN EXPRESSION NEW DELHI OF RS. 872394/ - . CALCULATION OF CAPITAL GAIN AS PER ASSESSEE SHOULD BE ACCEPTED COST OF PURCHASE (06 - 07 - 2000) 672000/ - SALE VALUATION (07 - 08 - 2006) 700000/ - CALCULATION OF CAPITAL GAIN ( A ) SALE VALUE (07 - 08 - 2006) 700000/ - LESS: COST OF PURCHASE 672000/ - (06 - 07 - 2000) ADD: COST OF IMPROVEMENT 15000/ - 687000/ - ( B ) INDEX COST (519*687000/406) 878209/ - CAPITAL GAIN (A - B) NIL IF WE ADOPTED VALUATION AS PER M/S DESIGN EXPRESSION NEW DELHI D ATED 30 - 03 - 2015 OF VALUATION OF RS. 872394/ - SALE - CONSIDERATION 872209/ - (AS PER VALUE ASSESSED BY M/S DESIGN EXPRESSION VALUER) LESS: COST OF ACQUISITION 878209/ - CAPITAL GAIN NIL 7 . THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE VALUATION OFFICER HAD GIVEN ALLOWANCE IN THE DISPUTED PROPERTY OF THE LAND BY REDUCING THE BASE RATE BY 25% THUS THERE WAS NO FORCE IN THE ASSESSEE S C ONTENTION THAT THE DVO HAD NOT GIVEN DUE CONSIDERATION TO THE DISPUTE WHILE MAKING THE VALUATION. HE OPINED THAT THE VALUATION MADE BY ITA NO. 2134 /DEL/201 7 5 THE DVO WAS REASONABLE AND FAIR . A CCORDINGLY ADDITION MADE BY THE AO WAS SUSTAINED. 8 . NOW THE ASSESSEE IS IN APPEAL. 9 . THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE PROPERTY IN QUESTION WAS UNDER LITIGATION AND THE CASE WAS PENDING IN THE HON BLE ALLAHABAD HIGH COURT , THEREFORE, THE MAP WA S NOT APPROVED BY THE COMPETENT AUTHORITY AND THIS F ACT WAS DULY INFORMED TO THE AO/ DVO AND LEARNED CIT(A) BUT NO PROPER WEIGHTAGE WAS GIVEN. IT WAS FURTHER SUBMITTED THAT THE VALUATION REPORT OF THE DVO WAS DATED 27.3.2015 WHICH WAS RECEIVED IN THE INCOME TAX DEPARTMENT OFFICE ON 30.3.2015 AND ON THE SAME DAY THE AO PASSED THE ASSESSMENT ORDER IN A VARY HAPHAZARD WAY , WITHOUT GIVING PROPER WEIGHTAGE TO THE VALUATION REPORT AND OTHER DOCUMENTS FURNISHED BY THE ASSESSEE . T HER EFORE THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LEARNED CIT(A) WAS NOT JUSTIFIED. IN HIS RIVAL SUBMISSIONS, THE LEARNED DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFUL LY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE AO WHILE MAKING THE IMPUGNED ADDITION , CONSIDERED THE VALUATION REPORT WHEREIN THE RATE OF THE LAND IN QUESTION WAS DETERMINED AT RS. 12,750/ - PER SQUARE METE R WHILE THE VALUATION DETERMINED BY INDEPENDENT VALUER WAS AT RS. 9,000/ - PER SQUARE METER WHILE T HE VALUATION OFFICER MADE THE ADJUSTMENT @ 15% IN THE CIRCLE RATE CONSIDERING THE DISPUTED NATURE WHILE THE INDEPENDENT VALUER REDUCED 40% ON ACCOUNT OF DISPU TED NATURE. IT IS ALSO NOTICED THAT THE VALUATION REPORT WAS DATED 27.3.2015 AND THE AO PASSED THE ASSESSMENT ORDER ON 30.3.2015. ITA NO. 2134 /DEL/201 7 6 1 1 . THE CONTENTION OF THE ASSESSEE IS THAT PROPER OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED EITHER BY THE AO OR BY THE LEARNED CIT(A) AND THE VALUATION REPORT BY INDEPENDENT VALUER WAS NOT CONSIDERED. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNED UNHEARD . H OWEVER , IN THE PRESENT CASE IT APPEARS THAT THE AO PASSED THE ASSESSMENT ORDER IN HASTE AND HAS NOT PROVIDED PROPER OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE CASE . IT IS ALSO NOT CLEAR AS TO HOW THE DIFFERENCE WAS THERE FOR THE ADJUSTMENT MADE BY THE DVO AND THE IN DEPENDENT VALUER ON ACCOUNT OF DISPUTED NATURE OF THE LAND AND NO INSTANCE OF VALUATION IN THE SAME AREA WAS QUOTED EITHER BY THE DVO OR BY THE INDEPENDENT VALUER . 1 2 . I, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS DEEM IT APPROPRIATE TO SET ASIDE THI S ISSUE BACK TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH THE LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 1 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ( ORDER P RONOUNCE D IN THE OP EN COURT ON 31 . 01.2018. ) SD/ - [ N.K. SAINI ] ACCOUNTANT MEMBER DATED: .01.2018 SH ITA NO. 2134 /DEL/201 7 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR