Bipinchandra Manchhubhai Patel, Surat V. ACIT,Cir3(1), Surat

ITA 224/SRT/2019

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8856 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-10-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 10-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.224/SRT/2019 Ǔनधा[रणवष[/Assessment Year: (2015-16) (Physical Court Hearing) Bipinchandra Manchhubhai Patel, 3, Ranchhod Park, Opp. Subhash Garden, Jahangirabad, Surat. Vs. The ACIT, Circle-3(1), Surat. (Appellant) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ADGPP4128B Assessee by None. Respondent by Shri J. K. Chandnani, Sr. DR Date of Hearing 19/10/2022 Date of Pronouncement 07/11/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3, [in short “the ld. CIT(A)”], in Appeal No. CIT(A),-3/10444/2017-18 dated 21.01.2019 which in turn arises out of an assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 21.12.2017. 2. Grounds of appeal raised by the assessee are as follows: “1. That having regard to facts and circumstances of the case, Ld. Commissioner has considered valuation given by DVO which was not correct. 2. That in any case and in any view of the matter, Ld. Commissioner has not referred the valuation method provided by the approved valuer. 3. That even though assuming the jurisdiction of the case when inquired for the case, had the prejudicial mind to harass the assessee did not consider the information provided. Same line of method used by the approved valuer though Ld. Commissioner has not considered the value. Ld. Commissioner has partly allowed and considered the DVO value which was very unjust.” Page | 2 ITA 224/SRT/2019/AY.2015-16 Bipinchandra M. Patel 3. None appeared on behalf of the assessee, despite issuance of notices of hearing. This appeal has been listed for hearing on several times in the past, however none appeared on behalf of the assessee, therefore we are of the view that assessee is not interested to prosecute this appeal. Therefore, we have heard Learned Departmental Representative (Ld. DR) for the Revenue and perused the material available on record. 4. Brief facts qua the issue are that during the assessment proceedings, it was noticed by Assessing Officer that the assessee had sold two properties during the year and shown Long Term Capital Gains. Agriculture land situated at Block No.155, Jahangirabed Dandi Road in Surat City, for Rs.1,08,81,600/- on 03/12/2014 along with another co-owner wherein assessee has ½ share being Rs.54,40,800/- in sale consideration of the property. However, the jantry value of the said property is Rs.5,41,80,700/- and the assessee has accordingly shown the sale consideration at Rs.2,70,90,350/- in the computation of Long Term Capital Gains as per section 50C of the I.T Act. The assessee has submitted working of capital gain and claimed cost of acquisition of Rs.10,69,955/- as on 01.04.1981 and claimed indexed cost of Rs.1,09,56,339/- against sale consideration of Rs.2,70,90,350/-. Agriculture land situated at Block No.156, Jahangirabed, Dandi Road in Surat City, for Rs.53,20,200/- on 03/12/2014 along with other 2 co-owners wherein assessee has 1/3 rd share of Rs.17,73,400/- in sale consideration of the property. However, the jantry value of the said property is Rs.2,64,89,400/- and the assessee has accordingly shown the sale consideration at Rs.88,29,800/- in the computation of Long Term Capital Gain as per section 50C of the Income Tax Act. The assessee has submitted working of capital gain and claimed cost of acquisition of Rs.3,48,740/- as on 01.04.1981, and claimed indexed cost of Rs.35,71,098/- against sale consideration of Rs.88,29,800/-. The assessee has claimed cost of acquisition as on 01.04.1981 based on valuation report of Shri Ramesh Jain, registered valuer, as the said property was ancestral property. However, on-going through the valuation report it is seen that the said property is valued at the rate of 235.00 per sq. mtr. which appears exorbitant, considering the location as on Page | 3 ITA 224/SRT/2019/AY.2015-16 Bipinchandra M. Patel 01.04.19881. Hence, for verifying the genuineness of the claim of cost of acquisition, the same was referred to the Departmental Valuation Officer, letter dated 01.11.2017. However, the report has not been received from the Valuation Officer, as the assessment was getting time barred on 31.12.2017, therefore Assessing Officer has no option but to finalize the assessment proceedings, based on the material on record. Hence, a show cause letter dated 13.12.2017 was issued to the assessee, by referring to the sale instances quoted by the Registered Valuer. In the interest of revenue, the lowest instances quoted at the rate of 15.26 per sq. mtr. was taken for calculation of the cost of acquisition and long term capital gain was computed by Assessing Officer at Rs.3,49,76,852/-. 5. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has partly allowed the appeal of assessee, observing as follows: “DECISION 6.1.1 I have considered the assessment order as well as the submissions of the appellant. The Grounds of appeal – Grounds No.1 pertains to addition made by not accepting Government approved valuer at the rate of 235 and taking value at the rate of 15.26 and making addition of Rs.3,49,76,852/- is not just and fair and it is unlawful and must be accepted as Government approved valuer at the rate of 235 and addition made must be deleted in full. In this case the AO found that the appellant has sold two properties during the year and has shown LTCG on the sale. The property situated at Block No.155, Jahagirabad, Dandi Road, Surat was sold of Rs.1,08,81,600/- on 03.12.2014 alongwith the co-owner in which the appellant share was 50% i.e.Rs.54,40,800/-. However, as per the Stamp Valuation Authority the value of the property was Rs.5,41,80,700/- and the appellant had accordingly shown sale consideration at Rs.2,70,90,350/- (50%). In the computation of the LTCG, as per section 50C of the Act, the appellant had claimed cost of acquisition of Rs.10,69,955/- as on 01.04.1981 and had claimed indexation cost of Rs.1,09,56,339/- against the sales consideration of Rs.2,70,90,350/-. While the second property situated at Block No.156, Jahangirbad, Dandi road, Surat was sold for Rs.53,20,200/- on 03.12.2014 alongwith two co-owner in which the appellant had accordingly shown sale consideration at Rs.88,29,400/- (1/3 rd ) in the computation of the LTCG as per section 50C of the Act and had claimed cost of acquisition of Rs.3,48,740/- as on 01.04.1981 and had claimed indexation cost of Rs.35,71,098/- against the sales consideration of Rs.88,29,800/-. The appellant claimed cost of acquisition based on the valuation report of Shri Ramesh Jain, Registered Valuer who had valued the property @ 235 per sq. mtr. as on 01.04.1981. The AO referred the property to the DVO but the report of the DVO was not received till the completion of the assessment and therefore the AO calculated the indexation cost of acquisition @15.26 from the sale instances quoted by the Registered Valuer and made the Page | 4 ITA 224/SRT/2019/AY.2015-16 Bipinchandra M. Patel addition of Rs.3,49,76,852/-. The appellant filed a written submission and submitted the copy of the DVO report which was received subsequent to the assessment proceedings. The DVO report dated 30.08.2018 had valued the property @ 50 per sq. mtr. as on 01.04.1981 and the properties was assessed at Rs.4,55,300/- (block No.155) and Rs.2,22,600/- (Block No.156). The appellant submitted that the method adopted by the DVO is incorrect and the registered valuer report should be accepted who has valued the property at Rs.235 per sq. mtr. 6.1.3 On the perusal of the details, it is observed that size of two properties and the comparable instances do no match. The property no. 155 is 9106 sq. mtr, while property no. 156 was 4452 sq. mtr. The 12 sale instances taken by the Registered Valuer ranges from the property size 38.404 sq. mtr. to 130.31 sq. mtr. While the DVO has taken 4 sale instances which ranges from 74.32 sq. mtr. to 12342.80 sq. mtr. The comparable instances taken by the Registered Valuer is absolutely absurd as there are no match to the size of the 2 properties in question and the comparables taken by him as mentioned above. The nearest sale instance as per the size in sq. mtr. has been taken by the DVO of 12342.80 sq. mtr., which is somewhere near comparable to the actual land in question. The Registered Valuer had not based his Valuation Report on any scientific or logical basis but had made general observations to work out the FMV. The Registered Valuer is required to follow the provisions of the Urban Land Ceiling Land Act, Town and Country Planning Act, Chapter XXC of the I.T. Act, Capital Gains under the Income Tax Act and Guidelines referred by the Institute of Valuers and Guidelines from the sub-Registrar’s Office (Col. No.38) wherein the Valuer has to report whether any comparable instances/cases of the sales relied upon to arrive at the value of the land. As per the Central Public Works Department’s Manual, comparable sale instances, are only method for valuation. It is settled law that orange and apple cannot be compared which has been done by the Registered Valuers to arrive at an imaginary rate @ 235 per. Sq. mtr. The DVO has taken the rate @ Rs.50 per sq. mtr., which is based on some scientific analysis and as per the guidelines as the comparable sales instances has been taken. 6.1.4 In view of the above facts and circumstances and various judicial pronouncements, it is clear that the correct computation of capital gains on the basis of the valuation report of the DVO has been made by the Assessing Officer. The AO is being directed to taken the estimated value as per DVO Report instead of the value of the Stamp Authorities to work out the correct computation of capital gains. Hence, the action of the AO is upheld subject to recalculation and the ground of appeal is partly allowed.” 6. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 7. The Ld. DR for the Revenue submitted that order of Assessing Officer should be upheld as he dealt with the issue in accordance with law. 8. We have heard Ld. DR for the Revenue and perused the findings of the order of ld. CIT(A) as noted above. We find that there is no infirmity in the Page | 5 ITA 224/SRT/2019/AY.2015-16 Bipinchandra M. Patel order passed by the ld. CIT(A). The ld. CIT(A) has considered all the facts and legal position applicable to the facts and delivered a reasoned order, therefore we decline to interfere in the order passed by the ld. CIT(A). Hence, the appeal of the assessee is hereby dismissed. 9. In the result, appeal filed by the assessee is dismissed. Order is pronounced on 07/11/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 07/11/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat