Sri Shaik Salman Siddiqui , Bangalore V. The Income Tax Officer Ward-5(2)(3), Bangalore

ITA 2140/BANG/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9803 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value; Set aside
• Section: 50C; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO. 2140/BANG/2018 ASSESSMENT YEAR : 2015 - 16 SRI SHAIK SALMAN SIDDIQUI, 10, CHURCH ROAD, BASAVANAGUDI, BENGALURU 560 004. P AN: CXXPS 3887H VS. THE INCOME TAX OFFICER, WARD 5(2)(3), BENGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI RAJENDRA CHANDEKAR, JT.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 21 .0 8 .2018 DATE OF PRONOUNCEMENT : 14 .09. 2018 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30.04.2018 OF THE CIT(APPEALS)-5, BENGALURU RELATIN G TO ASSESSMENT YEAR 2015-16. 2. THE ONLY GRIEVANCE IN THIS APPEAL OF THE ASSESSE E IS WITH REGARD TO ADDITION OF RS.16,48,600/- MADE U/S. 56(2)(VII) OF THE INCOME-TAX ACT, 1961 [THE ACT]. THE ASSESSEE ALONG WITH TWO OTHERS P URCHASED A PROPERTY UNDER A REGISTERED SALE DEED DATED 28.05.2014 FOR A SALE CONSIDERATION OF RS.3,38,49,200. AS PER THE VALUATION BY THE SUB-RE GISTRAR OF ASSURANCES FOR THE PURPOSE OF LEVY OF STAMP DUTY AND REGISTRAT ION CHARGES, THE PROPERTY WAS VALUED AT A SUM OF RS.3,87,95,000. THE DIFFERE NCE BETWEEN THE SALE CONSIDERATION AS PER THE SALE DEED AND THE VALUATIO N BY THE SUB-REGISTRAR ITA NO.2140/BANG/2018 PAGE 2 OF 7 OF ASSURANCES WAS A SUM OF RS.49,45,800. 1/3 RD SHARE OF THE ASSESSEE AS A PURCHASER WAS A SUM OF RS.16,48,600. THE PROVISI ONS OF SECTION 56(2)(VII) READS AS FOLLOWS:- 56. (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EX CLUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IF IT I S NOT CHARGEABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPE CIFIED IN SECTION 14, ITEMS A TO E. (2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GEN ERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOME S, SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FRO M OTHER SOURCES', NAMELY : (VII) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAMI LY RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF OCTOBER, 2009 5[BUT BEFORE THE 1ST DAY OF AP RIL, 2017], . (B) ANY IMMOVABLE PROPERTY, (I) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY; (II) FOR A CONSIDERATION WHICH IS LESS THAN THE STA MP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH C ONSIDERATION: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXIN G THE AMOUNT OF CONSIDERATION FOR THE TRANSFER OF IMMOVABLE PROP ERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DU TY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF THIS SUB- CLAUSE: PROVIDED FURTHER THAT THE SAID PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THERE IN, OR A PART THEREOF, HAS BEEN PAID BY ANY MODE OTHER THAN CASH ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFER OF SUCH IMMOVABLE PROPERTY; ITA NO.2140/BANG/2018 PAGE 3 OF 7 (C) ANY PROPERTY, OTHER THAN IMMOVABLE PROPERTY, (I) WITHOUT CONSIDERATION, THE AGGREGATE FAIR MARKE T VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE WHOLE OF T HE AGGREGATE FAIR MARKET VALUE OF SUCH PROPERTY; (II) FOR A CONSIDERATION WHICH IS LESS THAN THE AGG REGATE FAIR MARKET VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE AGGREGATE FAIR MARKET VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION : PROVIDED THAT WHERE THE STAMP DUTY VALUE OF IMMOVAB LE PROPERTY AS REFERRED TO IN SUB-CLAUSE (B) IS DISPUTED BY THE ASSESSEE ON GROUNDS MENTIONED IN SUB-SECTION (2) OF SECTION 50C , THE ASSESSING OFFICER MAY REFER THE VALUATION OF SUCH P ROPERTY TO A VALUATION OFFICER, AND THE PROVISIONS OF SECTION 50 C AND SUB- SECTION (15) OF SECTION 155 SHALL, AS FAR AS MAY BE , APPLY IN RELATION TO THE STAMP DUTY VALUE OF SUCH PROPERTY F OR THE PURPOSE OF SUB-CLAUSE (B) AS THEY APPLY FOR VALUATION OF CA PITAL ASSET UNDER THOSE SECTIONS : 3. IN RESPONSE TO A SHOW CAUSE NOTICE BY THE AO TO THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS AS TO WHY ADDITION U/S.56(2)(VII) OF THE ACT SHOULD NOT BE MADE, THE ASSESSEE SUBMITTED VIDE HIS LETTER DATED 4.12.17 THAT THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY WAS INCORRECT BECAUSE THE SIZE OF THE PROPERTY WAS ODD AND SIZE OF THE ROAD WAS ALSO SMALL COMPARED TO NORMAL ROADS AND BECAUSE OF THESE FEATURES THE SELLER SOLD THE PROPERTY AT A LESSER PRICE THAN THE MARKET PRICE. THIS SUBMISSION DID NOT FIND FAVOUR WITH THE AO AND HE P ROCEEDED TO TREAT A SUM OF RS.16,48,600 AS INCOME OF THE ASSESSEE U/S. 56(2 )(VII) OF THE ACT. 4. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONF IRMED THE ORDER OF THE AO. ACCORDING TO THE CIT(A), THERE WAS NO EVID ENCE TO SHOW THAT HE ASSESSEE HAS CHALLENGED THE VALUATION ADOPTED BY TH E REGISTRATION AUTHORITIES AND IN SUCH CIRCUMSTANCES THERE WAS NO OTHER OPTION BUT TO MAKE ADDITION U/S. 56(2)(VII) OF THE ACT. AGGRIEVE D BY THE ORDER OF CIT(A), THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFOR E THE TRIBUNAL. ITA NO.2140/BANG/2018 PAGE 4 OF 7 5. I HAVE HEARD THE RIVAL SUBMISSIONS. THE ASSESSE E HAS FILED AN AFFIDAVIT BEFORE US WHEREIN HE HAS BROUGHT CERTAIN FACTS WITH REGARD TO GUIDELINE VALUATION ADOPTED BY THE SUB-REGISTRAR FO R THE PURPOSE OF LEVY OF STAMP DUTY WITH REFERENCE TO THE PROPERTY IN QUEST ION IN PARA 5 TO 9 OF THE AFFIDAVIT, WHICH ARE AS FOLLOWS:- 5. THAT, THE SUB-REGISTRAR HAD FIXED THE GUIDELIN E VALUE FOR REGISTRATION OF THE AFORESAID SALE DEED DATED 2 5/08/2014 AT RS.3,87,94,000/- BASED ON THE NOTIFICATION DATED 7/ 8/2013 ISSUED BY THE DEPARTMENT OF STAMPS AND REGISTRATION WHERE THE PRESCRIBED RATE FOR JAYAMAHAL EXTENSION AND MAIN RO AD WAS RS.10,000/- PER SQ.FT, INSTEAD OF ADOPTING THE RATE PRESCRIBED FOR OTHER AREAS OF RS. 7000 PER SQ.FT AND COPY OF THE R ELEVANT NOTIFICATION DATED 7/8/2013 IN VERNACULAR AND A FRE E ENGLISH TRANSLATION THEREOF IS ENCLOSED AT PAGES 29 TO 38 O F THIS AFFIDAVIT AND MARKED AS ANNEXURE-2A & 2B. 6. THAT, THE DEPARTMENT OF STAMPS AND REGISTRATION HAS PUBLISHED ANOTHER NOTIFICATION DATED 27/10/2014 WHE REIN THE GUIDELINE VALUE/RATES HAVE ALSO BEEN MENTIONED SEPA RATELY FOR THE SEVERAL CROSS ROADS OF JAYAMAHAL EXTENSION AND AS P ER THE SAID NOTIFICATION DATED 27/10/2014, THE CORRECT GUIDELIN E VALUE WOULD HAVE BEEN RS. 2,73,15,800/- [SINCE THE PROPERTY PUR CHASED BY ME AND OTHER CO-OWNERS WAS LOCATED ON 7TH CROSS ROAD F OR WHICH A SEPARATE RATE OF RS. 7000/- PER SQ.FT WAS PUBLISHED IN THE LATEST NOTIFICATION DATED 27/10/2014] AND COPY OF THE RELE VANT NOTIFICATION DATED 27/10/2014 IN VERNACULAR AND A F REE ENGLISH TRANSLATION THEREOF IS ENCLOSED HEREWITH AT PAGES 3 9 TO 48 OF THIS AFFIDAVIT AND MARKED AS ANNEXURE-3A & 3B. 7. THAT, I HAVE ALONG WITH THE OTHER CO-OWNERS HAVE ALSO PURCHASED ADJACENT PROPERTY BEARING NO.2 [OLD NO.96 ], 7TH CROSS, NANDIDURG ROAD EXTENSION, BANGALORE - 560 04 6 ON 19/12/2016 ADMEASURING 1,382 SQ.FT FOR A TOTAL CONS IDERATION OF RS.1,26,93,500/-, WHICH WORKS OUT TO RS. 9,184.08 P ER SQ.FT AND THE AFORESAID CONSIDERATION PAID BY US WAS HIGHER T HAN THE GUIDELINE VALUE [WHICH AT THE RELEVANT POINT OF TIM E WAS ALSO RS. 7,000/-PER SQ.FT] AS PER THE NOTIFICATION DATED 27/ 10/2014 AND THUS, THERE WAS NO UNDERVALUATION IN RESPECT OF THI S PROPERTY PURCHASED BY ME ALONG WITH THE OTHER CO-OWNERS AND COPY OF THE ITA NO.2140/BANG/2018 PAGE 5 OF 7 SALE DEED DATED 19/12/2016 IS ENCLOSED HEREWITH AT PAGES 49 TO 61 OF THIS AFFIDAVIT AND MARKED AS ANNEXURE-4. 8. THAT, THE KHATA CERTIFICATE AND EXTRACT OF BOTH THE PROPERTIES MENTIONED ABOVE I.E., PROPERTY AT NO.001 [OLD NO.97], 7TH CROSS, NANDIDURG ROAD EXTENSION, BANGALORE - 56 0 046 AND NO.2 [OLD NO.96], 7TH CROSS, NANDIDURG ROAD EXT ENSION, BANGALORE - 560 046 IS ENCLOSED HEREWITH AT PAGES 6 2 TO 65 OF THIS AFFIDAVIT AND MARKED AS ANNEXURE-5A AND 5B. 9. THAT, I AM ALSO ENCLOSING HEREWITH A SKETCH SHOW ING THE LOCATION OF THE AFORESAID 2 PROPERTIES THAT ARE LOC ATED NEXT TO EACH OTHER AND ACQUIRED SHORTLY AFTER EACH OTHER AS MENT IONED ABOVE, AT PAGE 66 OF THIS AFFIDAVIT AND MARKED AS ANNEXURE-6. 6. THE ASSESSEE HAS ALSO SUBMITTED THAT DUE TO LA CK OF PROPER OPPORTUNITY, THESE FACTS COULD NOT BE EXPLAINED BEF ORE THE AO AS WELL AS THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS P RAYED FOR A REMAND OF THE ISSUE TO THE AO TO CONSIDER ALL THE ABOVE FACTS BY MAKING A REFERENCE TO THE DVO AND DIRECTING THE DVO TO CONSIDER THE OBJEC TIONS OF THE ASSESSEE AND DETERMINE THE VALUATION OF THE PROPERTY TO BE A DOPTED. OUR ATTENTION WAS ALSO DRAWN TO THE PROVISIONS OF SECTION 50C(2)( V) WHICH LAYS DOWN THAT EVEN IF THE VALUATION IS NOT DISPUTED BEFORE THE RE GISTERING AUTHORITY OR THE STAMP DUTY LEVYING AUTHORITY, STILL THE AO CAN MAKE A REFERENCE TO THE DVO FOR THE PURPOSE OF DETERMINATION OF THE MARKET VALU E OF THE PROPERTY AS ON THE DATE OF TRANSFER. OUR ATTENTION WAS ALSO DRA WN TO THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL V. CIT, 372 ITR 83 (CAL) WHEREIN THE HONBLE HIGH COURT TOOK THE FOLLOWING VIEW:- WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APPEARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRESUMABLY, THE CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILING PRICE IN THE MARKE T. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT S UB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENCE CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTH ING TO DO IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER . IT WAS FOR ITA NO.2140/BANG/2018 PAGE 6 OF 7 THE PURCHASER TO EITHER ACCEPT IT OR DISPUTE IT. TH E ASSESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB-REG ISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LAKHS WHICH, ACCORDING TO THE ASSESSEE, WAS T HE HIGHEST PREVAILING MARKET PRICE. IT WOULD FOLLOW AUTOMATICA LLY THAT HIS CASE WAS THAT THE FAIR MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS ASSESSED BY THE DISTRICT SUB REGISTR AR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, IN FAIRNE SS, HAVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MAD E BY THE DEPARTMENTAL VALUATION OFFICER CONTEMPLATED UNDER S ECTION 50C. AS A MATTER OF COURSE, IN ALL SUCH CASES THE A SSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSESSEE TO HA VE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICE R. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CO NTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INTEND THAT THE CAPITAL GAI N SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LE GISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSES SEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSES SING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUN DEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM A N OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. (EMPH ASIS SUPPLIED) 7. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEAL S). 8. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVA L SUBMISSIONS AND I AM OF THE VIEW THAT THE PRAYER MADE ON BEHALF OF TH E ASSESSEE SHOULD BE ACCEPTED. IN THE LIGHT OF THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL (SUPRA) , IN MATTERS OF VALUATION IT IS ALWAYS BETTER TO MAKE A REFERENCE TO THE DVO TO ASCERTAIN THE PROPER MARKET VALUE. AS FAR AS THE EXPLANATION IN THE AFFIDAVIT BY THE ASSESSEE IS CONCERNED, IT WOULD BE IN THE FAIRNESS OF THINGS TO SET ASIDE THE ORDER OF THE ITA NO.2140/BANG/2018 PAGE 7 OF 7 CIT(APPEALS) AND REMAND THE QUESTION OF DETERMINATI ON OF FAIR MARKET VALUE TO THE AO FOR FRESH CONSIDERATION IN THE LIGH T OF AVERMENTS MADE IN THE AFFIDAVIT FILED BEFORE THE TRIBUNAL BY THE ASSE SSEE. I ACCORDINGLY SET ASIDE THE ORDER OF CIT(APPEALS) AND REMAND FOR CONS IDERATION BY THE AO AFRESH THE QUESTION OF MAKING AN ADDITION U/S. 56(2 )(VII) OF THE ACT. THE AO WILL MAKE A REFERENCE TO THE DVO AND ASCERTAIN THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER AND AFTER AFFOR DING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, DECIDE THE QUESTION OF ADDIT ION TO BE MADE U/S. 56(2)(VII) OF THE ACT AFRESH IN ACCORDANCE WITH THE LAW. I ALLOW THE APPEAL FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPTEMBER, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 14 TH SEPTEMBER, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.