Gangadharayya G Narendramath , Hubli V. Income TAx Officer Ward-3(2), Hubli

ITA 2155/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5678 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL ANAND
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Fair market value
• Section: 143(3); 50C; 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2155 / BANG/201 7 ASSESSMENT YEAR : 20 06 - 07 SHRI GANGADHARAYYA G NARENDRAMATH, SIDDIVINAYAK COMPLEX, JAVALI SAL, HUBLI. PAN: AAAHG 6951H VS. THE INCOME TAX OFFICER, WARD 3 (2), HUBLI. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI VIMAL ANAND, ADDL. CIT (DR) DATE OF HEARING : 1 7 .01.2018 DATE OF PRONOUNCEMENT : 19 .0 1 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A), HUBLI DATED 03.07.2017 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. GENERAL GROUND 1. THE ORDER PASSED BY THE LEARNED CIT(A) TO THE EX TENT PREJUDICIAL TO THE APPELLANT ISBAD IN LAW AND LIABLE TO BE QUASHED . REASSESSMENT IS BAD IN LAW 2. THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTIO N OF ID. AO IN PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R EAD WITH SECTION 147 OF THE ACT. 3. THE ID. CIT(A) HAS ERRED IN NOT APPRECIATING THA T THE REASSESSMENT WAS MADE TO MAKE ADDITION UNDER SECTION 50C IN RESP ECT OF THE STAMP DUTY VALUE BEING HIGHER THAN THE SALE PRICE OF LAND , ON THE BASIS OF A COPY OF THE SALE DEED WHICH HAD BEEN ENCLOSED ALONG WITH THE RETURN OF INCOME. 4. THE ID. CIT(A) HAS ERRED IN NOT APPRECIATING THA T REASSESSMENT CANNOT BE MADE ON THE BASIS OF AN ALREADY EXISTING MATERIAL AVAILABLE WITH THE REVENUE AUTHORITIES EVEN IN A CASE WHERE T HE RETURN OF INCOME ITA NO.2155/BANG/2017 PAGE 2 OF 5 IS PROCESSED UNDER SECTION 143(1). 5. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW A PPLICABLE, ORDER PASSED UNDER SECTION143(3) READ WITH SECTION 147 IS BAD IN LAW AND LIABLE TO BE QUASHED. ADDITION UNDER SECTION 50C IS BAD IN LAW 6. THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTIO N OF THE ID. AO IN MAKING ADDITION OF RS. 23,59,000 UNDER SECTION 50C OF THE IT ACT, 1961. 7. WITHOUT PREJUDICE, THE ID. AO AND THE ID. CIT(A) HAS ERRED IN NOT APPRECIATING THAT AS ENTIRE CAPITAL GAINS WAS CLAIM ED AS EXEMPTION UNDER SECTION 54EC, THERE WAS NO INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' AND CONSEQUENTLY SECTION 50C WAS AL SO NOT APPLICABLE. 8. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW A PPLICABLE, ADDITION OF RS. 23,59,000UNDER SECTION 50C IS INCOR RECT, BAD IN LAW AND LIABLE TO BE DELETED. REDUCTION OF FAIR MARKET VALUE AS ON 1.4.1981 9. THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTIO N OF THE ID. AO IN REDUCING THE FAIR MARKET VALUE OF THE LAND (AS ON 1 .4.1981) WHICH WAS SOLD DURING THE YEAR FROM RS. 7.38,324 TO RS. 4,34, 307. 10. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, REDUCTION OF FMV OF LAND SOLD FROM RS. 7,38,324 TO RS. 4,34,307 IS INCORRECT, CONTRARY TO FACTS, BAD IN LAW AND LIABLE TO BE QUASHED. LEVY OF INTEREST U/S 234B 11. THE ID. CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LA W APPLICABLE, INTEREST UNDER SECTION 234B IS NOT LEVIABLE. THE AP PELLANT DENIES ITS LIABILITY TO PAY INTEREST UNDER SECTION 234B. PRAYER 12. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE AD DUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE ORDER OF T HE ID. AO BE QUASHED OR IN THE ALTERNATIVE, THE ADDITION AND VARIATION T O INCOME RETURNED BE DELETED. THE APPELLANT PRAYS ACCORDINGLY. 3. THIS APPEAL WAS FILED BY THE ASSESSEE ON 10.11.2 017 AND AS PER THE ACKNOWLEDGMENT CUM NOTICE ISSUED BY THE REGISTRY AT THE TIME OF FILING OF THE APPEAL, THE DATE OF HEARING WAS FIXED ON 17.01.2018 . IN SPITE OF THIS, NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEARING AND THERE IS NO REQUEST FOR ADJOURNMENT AND HENCE, THE APPEAL WAS HEARD EX-PARTE QUA THE ASSESSEE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). ITA NO.2155/BANG/2017 PAGE 3 OF 5 4. AT THIS JUNCTURE, IT WAS POINTED OUT BY THE BENC H THAT AS PER THE JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF SUNIL KUMAR AGARWAL VS. CIT AS REPORTED IN 372 ITR 83 (CAL), IT WAS HELD TH AT EVEN IN A CASE WHERE NO PRAYER IS MADE BY THE ASSESSEE TO REFER THE MATTER TO DVO U/S. 50C (2) OF THE IT ACT, THE AO, DISCHARGING A QUASI JUDICIAL FUNCTI ON, HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING H IM AN OPTION TO FOLLOW THE COURSE PROVIDED BY LAW I.E. VALUATION BY THE DVO AN D IN THE PRESENT CASE, THE AO HAS NOT REFERRED THE MATTER TO DVO AND IT IS HEL D BY CIT(A) IN PARA NO. 7 OF THE IMPUGNED ORDER THAT AS PER THE ASSESSMENT ORDER , THE ASSESSEE NEVER OBJECTED TO AOS PROPOSAL TO ADOPT 50C VALUE FOR CO MPUTATION OF CAPITAL GAINS NOR DID THE ASSESSEE ASK FOR REFERENCE TO VALUATION CELL OF THE DEPARTMENT AND THEREFORE, THE JUDGMENT BEING TRIBUNAL ORDER RENDER ED IN THE CASE OF JITENDRA MOHAN SAXENA VS. ITO AS REPORTED IN 305 ITR 62(AT) (LUCK-TRIB) IS NOT RELEVANT. THE BENCH POINTED OUT THAT IN VIEW OF TH IS JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT, THE AO SHOULD HAVE REFERRED TH E MATTER TO DVO EVEN IN THE ABSENCE OF ANY REQUEST BY THE ASSESSEE. IN REP LY, THE LD. DR OF REVENUE HAD NOTHING TO SAY. 5. I HAVE CONSIDERED THE FACTS OF THE PRESENT CASE AND I FIND THAT A PER PARA NO. 7 OF THE IMPUGNED ORDER, IT IS HELD BY CIT(A) THAT SI NCE ASSESSEE NEVER OBJECTED TO AOS PROPOSAL TO ADOPT 50C VALUE FOR COMPUTATION OF CAPITAL GAINS NOR DID THE ASSESSEE ASK FOR REFERENCE TO VALUATION CELL OF THE DEPARTMENT, THE TRIBUNAL ORDER CITED BY LD. AR OF ASSESSEE RENDERED IN THE C ASE OF JITENDRA MOHAN SAXENA VS. ITO (SUPRA) IS NOT RELEVANT. BUT AS PER THE JUDGEMENT OF HONBLE CALCUTTA HIGH COURT RENDERED INTHE CASE OF SUNIL KU MAR AGARWAL VS. CIT (SUPRA), IT WAS HELD THAT EVEN IN A CASE WHERE NO P RAYER IS MADE BY THE ASSESSEE TO REFER THE MATTER TO DVO U/S. 50C (2) OF THE IT ACT, THE AO, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUN DEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FO LLOW THE COURSE PROVIDED BY LAW I.E. REFERRING THE MATTER TO DVO. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HONBLE CALCUTTA HIGH COURT, I SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION AF TER OBTAINING REPORT OF DVO AS ITA NO.2155/BANG/2017 PAGE 4 OF 5 PROVIDED IN SUB SECTION 2 OF SECTION 50C AND THEREA FTER PASS NECESSARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 6. REGARDING THE SECOND ASPECT OF THE MATTER I.E. F AIR MARKET VALUE OF THE PROPERTY AS ON 01.4.1981 ALSO, I DIRECT THE AO TO D ECIDE THE ISSUE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO AS SESSEE. I FIND THAT IN PARA NO. 11 OF THE IMPUGNED ORDER, IT IS NOTED BY CIT(A) THAT SINCE THE ASSESSEE WAS NOT HAVING THE ORIGINAL DOCUMENT OF THE PROPERTY IN RESPECT OF ACQUISITION, THE ASSESSEE SUBMITTED A REPORT FROM AN APPROVED VALUER WHO HAD ARRIVED AT THE COST OF THE PROPERTY AT RS. 7,38,324/- BASED ON THE CIRCULAR OF SPECIAL DEPUTY COMMISSIONER, DHARWAD. BUT THE AO REJECTED THE VAL UE AS PER THE APPROVED VALUER AND ADOPTED ANOTHER VALUE OF RS. 4,34,307/- AS COST OF ACQUISITION FOR THE PURPOSE OF INDEXATION AND DETERMINED THE CAPITAL GA INS AND THERE IS NO FURTHER ARGUMENT MENTIONED ABOUT THIS IN THE WRITTEN SUBMIS SIONS. IN MY CONSIDERED OPINION, WHEN THE MATTER IS GOING BACK TO THE FILE OF AO FOR FRESH DECISION REGARDING VALUE OF THE PROPERTY SOLD U/S. 50C(2), T HIS ASPECT OF THE MATTER REGARDING COST OF ACQUISITION BEING MARKET VALUE AS ON 01.04.1981 SHOULD ALSO BE DECIDED AFRESH IN THE INTEREST OF JUSTICE AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE AND THE AO SHOULD PASS A SPEAKING AND REASONED ORDER AS TO WHY THE REPORT OF THE APPROVED VALUER I S NOT BEING ADOPTED AND WHY AND HOW A DIFFERENT VALUE OF COST OF ACQUISITION AS ON 01.04.1981 WAS ADOPTED BY HIM AT RS. 4,34,307/- AS AGAINST RS. 7,38,324/- AS PER THE REPORT OF THE APPROVED VALUER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH JANUARY, 2018. /MS/ ITA NO.2155/BANG/2017 PAGE 5 OF 5 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.