Shri Ashok Manikrao Khopade, Dhule V. ACIT, Cir.-3(1), Dhule

ITA 224/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9756 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Search and seizure; Fair market value; Reason to believe
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 224/PN/2011 (ASSTT. YEARD : 2007-08) SHRI. ASHOK MANIKRAO KHOPADE ... APPELLANT SHOP NO.33, RADHAKRISHNAN SHOPPING COMPLEX, DHULE 424001 PAN: AATPK0933F V. ASST. COMMISSIONER OF INCOME TAX RESPONDENT CIRCLE 3(1), DHULE APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 31/7/12 DATE OF PRONOUNCEMENT : 09-8-12 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD CIT(A)-I, NASHIK DATED 13/12/2010 FOR THE A.Y. 2007-08 SUSTAINING ADDITION TO THE EXTENT OF 1.02% IN RESPECT OF THE DIFFERENC E IN THE VALUATION MADE BY THE DVO AND VALUATION DECLARED BY THE ASSESSEE . THE ASSESS HAS TAKEN THE FOLLOWING EFFECTIVE GROUND : 1. IN THE FACTS AND CIRCUMSTANCES LEARNED COMMISSIO NER OF INCOME TAX APPEALS-I ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 1,94,000/- ON ACCOUNT OF DIFFERENCE IN VALUATION AS PER VALUE DETERMINED BY VALUATION OFFICER AND VALUE SHOWN BY TH E APPELLANT, WHICH IS LESS THAN 15%. 2. FACTS PERTAINING TO THE ISSUE ARE IN A NARROW COMPAS S. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PETROL, DIESEL, OIL AND OTHER ITE MS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD 2 AGRICULTURA L LAND BEARING GAT NO. 49/1/1 AND 42/1 SITUATED AT ANANDVALLI, NASHIK, ADMEASU RING 1 HECT & 3R AND 1HECT. RESPECTIVELY. AGRICULTURAL LAND BEING GAT NO. 49/1/1 WA S SOLD FOR RS. 1,10,000,00/- BUT MARKET VALUE AS PER THE STAMP D UTY VALUATION WAS TAKEN AT RS.1,82,40,000/-. THE ANOTHER AGRICULTURAL LAND B EARING GAT NO. ITA NO. 224/PN/2011 SHRI ASHOK MANIKRAO KHOPADE A.Y.2007-08 PAGE OF 5 2 42/1 WAS SOLD FOR RS.80,00,000/- BUT FAIR MARKET VALUE AS P ER THE STAMP DUTY VALUATION WAS MADE AT RS. 1,63,20,000/-. AS THERE WA S A DIFFERENCE IN THE ACTUAL SALE CONSIDERATION DECLARED IN THE CONVEYANCE DEED AND THE VALUATION MADE FOR THE PURPOSE OF PAYMENT OF THE STAMP D UTY, THE A.O EVOKED SEC. 50C OF THE ACT. THE ASSESSEE REQUESTED TH E A.O. TO MAKE THE REFERENCE U/S. 50C(2) OF THE I.T. ACT TO THE DVO FOR THE DETERMINATION OF THE FAIR MARKET VALUE. THE A.O REFERRED THE MATTER TO THE D VO, THANE, AND DVO THANE DETERMINED THE FAIR MARKET VALUE OF THOSE TWO LANDS VIDE HIS REPORT DATED 18.12.2009 AT RS. 2,10,95,000/-, ARRIVING AT A DIFFERENCE OF RS. 20,95,000/- WHICH WORKED OUT TO 11.02%. 3. THE CONTENTION OF THE ASSESSEE IS THAT THE DIFFERENCE OF RS. 20,94,000/- I.E. AS PER THE VALUATION MADE BY THE DVO AND THE SALE CONSIDERATION DECLARED BY THE ASSESSEE IN THE SALE DEE DS/AGREEMENT, WHICH WAS ONLY TO THE EXTENT OF 11.02% AND AS THE DIFFERENCE IS LESS THAN 15%, THE ADDITION OF RS. 20,94,000/- MADE BY THE A.O IS NOT JUSTIFIED A T ALL. BEFORE THE LD CIT(A), THE ASSESSEE PLACED THE RELIANCE ON THE DE CISION IN THE CASE OF RAHUL CONSTRUCTION VS. DCIT, 38 DTR (PUNE) ITAT 19. THE ASSESSEE PLEADED BEFORE THE CIT(A) BY FILING THE WRITTEN SUBMISSION T HAT FAIR MARKET VALUE ESTIMATED BY THE DVO IS LESS THAN 15% I.E. ACTUAL DIFFE RENCE IS 11.02% AND HENCE, CONSIDERING THE DECISION OF THE HONBLE HIGH COURT OF PATNA IN THE CASE OF BIMLA SINGH VS. CIT, 18 D.T.R (PAT.) 283, NO ADDITION IS REQUIRED TO BE MADE U/S. 50C OF THE ACT. THE LD CIT(A) C ONSIDERED THE DECISION OF THE ITAT, PUNE IN THE CASE OF RAHUL CONSTRUCTI ON (SUPRA) AND HELD THAT TO THE EXTENT OF THE 10% OF THE DIFFERENCE IN T HE VALUATION MADE BY THE DVO AND THE ACTUAL SALE CONSIDERATION DECLARED BY TH E ASSESSEE, IS TO BE IGNORED AND DIFFERENCE OF 1.02% WHICH COMES TO RS.1,94,000/- ONLY DESE RVES TO BE UPHELD. IN SHORT, HE SUSTAINED THE ADDITION TO THE EXTENT OF RS. 1,94,000/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE ONLY CONTENTION OF THE LD COUNSEL IS THAT T HE ASSESSEES CASE IS ITA NO. 224/PN/2011 SHRI ASHOK MANIKRAO KHOPADE A.Y.2007-08 PAGE OF 5 3 COVERED BY THE DECISION IN THE CASE OF BIMLA SINGH (SUPRA) AS THE DIFFERENCE BETWEEN VALUATION MADE BY THE A.O AND THE SALE CONSIDERA TION RECEIVED BY THE ASSESSEE IS LESS THAN 15%, EVEN ADDITION SUSTAIN TO THE EXTENT OF 1.02% IS NOT JUSTIFIED. WE HAVE ALSO HEARD THE LD D.R. 5. WE HAVE TO CONSIDER THE DECISION IN THE CASE OF BIMLA SIN GH (SUPRA). IN THE SAID CASE, SEARCH AND SEIZURE OPERATION U/S. 1 32(1) OF THE ACT WAS CONDUCTED AGAINST THE SAID ASSESSEE ON 31 AUGUST 1996 . DURING THE SEARCH, IT WAS FOUND THAT THE SAID ASSESSEE HAS MADE HU GE INVESTMENT IN THE HOUSE PROPERTY IN THE PATNA TOWN. THE ASSESSEE C ONTENDED THAT THE TOTAL INVESTMENT WAS TO THE TUNE OF RS. 11,15,000/- IN CON STRUCTION OF THE HOUSE, BUT ACCORDING TO THE REPORT OF THE VALUER, THE CO ST OF CONSTRUCTION WAS RS. 12,99,700/-. THEIR LORDSHIPS REFERRED SUB-SECTION (2) OF SEC. 52 AND ALSO THE DECISION OF HONBLE SUPREME COURT IN THE CAS E IF K.P. VARGHESE VS. ITO, 131 ITR 597 AND HELD THAT AS THE DIFFERENCE WAS LESS THAN 15%, BETWEEN THE VALUATION MADE BY THE VALUER AND THE VALUE OF INVESTMENT DECLARED BY THE ASSESSEE, THERE WAS NO JUSTIFICATION TO MAKE THE A DDITION. 6. SECTION 52(2), BEFORE ITS OMISSION BY THE FINANCE ACT (1987 ) W.E.F. 1.4.1988 STOOD AS UNDER : S.52. CONSIDERATION FOR TRANSFER IN CASES OF UNDER STATEMENT. . 2WHERE THE PERSON WHO ACQUIRES A CAPITAL ASSET FROM AN ASSESSEE IS DIRECTLY OR INDIRECTLY CONNECTED WITH THE ASSESSEE A ND THE INCOME-TAX OFFICER HAS REASON TO BELIEVE THAT THE TRANSFER WA S EFFECTED WITH THE OBJECT OF AVOIDANCE OR REDUCTION OF THE LIABILITY OF THE ASSESSEE UNDER SECTION 45, THE FULL VALUE OF THE CONSIDERATION FOR THE TRANSFER SHALL, WITH THE PREVIOUS APPROVAL OF THE INSPECTING ASSISTANT CO MMISSIONER, BE TAKEN TO THE FAIR MARKET VALUE OF THE CAPITAL ASSET O N THE DATE OF THE TRANSFER. (2)WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1), IF IN THE OPINION OF THE INCOME-TAX OFFICER THE FAIR MARKET VALUE OF A CAPITAL ASSET TRANSFERRED BY AN ASSESSEE AS ON THE DATE OF THE TR ANSFER EXCEEDS THE FULL VALUE OF THE CONSIDERATION DECLARED BY THE ASSESSEE IN RE SPECT OF THE TRANSFER OF SUCH CAPITAL ASSET BY AN AMOUNT OF NOT LES S THAN FIFTEEN PER CENT OF THE VALUE SO DECLARED, THE FULL VALUE OF THE CONSIDERATIO N FOR SUCH ITA NO. 224/PN/2011 SHRI ASHOK MANIKRAO KHOPADE A.Y.2007-08 PAGE OF 5 4 CAPITAL ASSET SHALL, WITH THE PREVIOUS APPROVAL OF THE IN SPECTING ASSISTANT COMMISSIONER, BE TAKEN TO BE ITS FAIR MARK ET VALUE ON THE DATE OF ITS TRANSFER : PROVIDED THAT THIS SUB-SECTION SHALL NOT APPLY IN ANY CASE (A) WHERE THE CAPITAL ASSET IS TRANSFERRED TO THE GOVERNMENT , OR (B) WHERE THE FULL VALUE OF THE CONSIDERATION FOR THE TRAN SFER OF THE CAPITAL ASSET IS DETERMINED OR APPROVED BY THE CENTRA L GOVERNMENT OR THE RESERVE BANK OF INDIA. 7. SO FAR AS SECTION 52 IS CONCERNED, THE PARLIAMENT HAS S PECIFICALLY PROVIDED THAT IN THE CASES OF THE UNDERSTATEMENT IF FULL VA LUE OF THE CONSIDERATION DECLARED BY THE ASSESSEE IN RESPECT OF TH E TRANSFER OF ANY CAPITAL ASSET FOR AMOUNT NOT LESS THAN 15% OF THE VALUE S O DECLARED, THEN THE A.O WAS EMPOWERED TO TAKE THE FAIR MARKET VALUE (FM V) AS THE FULL VALUE OF THE CONSIDERATION, SAVE THE TWO EXCEPTIONS PROVID ED IN THE PROVISO. SECTION 50C HAS BEEN BROUGHT ON THE STATUTE BOOK ALS O TO DEAL WITH THE CASES OF THE UNDERSTATEMENT W.E.F. 1.4.2003 BY THE FINANCE ACT 2002. AS PER THE SCHEME OF SEC. 50C, IF THE ASSESSEE OBJECT BEFOR E THE A.O. TAKING CONTENTION THAT SALE CONSIDERATION DECLARED IN SALE DEED IS CORRECT AS VALUATION ADOPTED FOR PAYMENT OF STAMP DUTY IS AT HIGHER SIDE, THEN THE A.O HAS TO MAKE REFERENCE TO DVO FOR DETERMINING FAIR MARKET VALUE. PRIOR TO INSERTION OF SEC. 50C, THERE WAS NO PROVISION IN THE STATUT E TO DEAL WITH THE CASES WHERE THE SALE CONSIDERATION IS UNDERSTATED. AS PER THE SCHEME OF SEC. 50C, THE PROVISIONS OF WEALTH TAX ACT ARE MADE APPLI CABLE WHEN THE REFERENCE IS MADE TO THE VALUATION OFFICER FOR VALUATION OF CA PITAL ASSET. IN OUR OPINION, THE DECISION RELIED ON BY THE LD COUNSEL CANNO T BE APPLIED AFTER THE INSERTION OF SECTION 50C. ACCORDINGLY, THE GROUN D TAKEN BY THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ITA NO. 224/PN/2011 SHRI ASHOK MANIKRAO KHOPADE A.Y.2007-08 PAGE OF 5 5 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH AUGUST 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 9TH AUGUST, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I, NASHIK 4. THE CIT(A)-I, NASHIK 5. THE D.R. A BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE