Mrs Brij Mohini Behl, New Delhi V. ITO, New Delhi

ITA 2278/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90864 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL SENIOR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Additional evidence; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.2278/DEL./2013 (ASSESSMENT YEAR : 2008-09) MRS. BRIJ MOHINI BEHL, VS. ITO, WARD 2 (2), 34 / 60, WEST PUNJABI BAGH, NEW DELHI. NEW DELHI 110 026. (PAN : AAMPB2509H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGGARWAL, ADVOCATE AND SHRI SHAILESH GUPTA, CA REVENUE BY : SHRI K.K. JAISWAL, SENIOR DR DATE OF HEARING : 16.04.2015 DATE OF PRONOUNCEMENT : 20.04.2015 O R D E R PER GEORGE GEORGE K., JM : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE CIT (A)-V, NEW DELHI DATED 13.08.2012. THE RELEVANT ASSESSMENT YEAR IS 2008-09. 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN HER MEM ORANDUM OF APPEAL. HOWEVER, THE CRUX OF THE ISSUE IS WHETHER THE INCOME-TAX AUTHORITIES WERE JUSTIFIED IN ADOPTING THE CIRCLE R ATE U/S 50C INSTEAD OF ITA NO.2278/DEL./2013 2 DOCUMENTED PRICE IN SALE DEED FOR THE PURPOSES OF C APITAL GAINS COMPUTATION 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS FOL LOWS. THE ASSESSEE IS AN INDIVIDUAL WHO HAD TRANSFERRED A PLOT OF LAND VIDE SALE DEED DATED 03.04.2007. THE DECLARED CONSIDERATION IN THE SALE DEED WAS RS.23,00,000/-. IN THE RETURN OF INCOME FILED, WHI LE COMPUTING THE CAPITAL GAINS THE COST OF LAND WAS DECLARED AT RS.22,35,087 /-, WHICH INCLUDED THE COST OF IMPROVEMENT OF RS.1,29,805/-. THE SHORT TE RM CAPITAL GAINS OF RS.64,913/- WAS DECLARED. HOWEVER, THE STAMP VALUA TION AUTHORITY ADOPTED THE VALUE OF THE LAND AT RS.57,58,750/- FOR THE PUR POSES OF PAYMENT OF STAMP DUTY. IN THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE AS TO WHY SECTION 5 0C SHOULD NOT BE INVOKED IN HER CASE. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE FAIR MARKET VALUE OF THE IMPUGNED PROPERTY WAS BELOW THE CIRCLE RATES AND HENCE, THE SALE DEED PRICE OUGHT TO BE TA KEN FOR COMPUTATION OF CAPITAL GAINS. IT WAS FURTHER SUBMITTED THAT THE C ONTRACT FOR SALE WAS EXECUTED MUCH PRIOR TO THE DATE OF TRANSFER AND THE CIRCLE RATES OF THE LAND IN THE AREA WERE CHANGED FROM 01.04.2007 ONWARDS FR OM RS.10,00,000/- TO RS.22,00,000/- PER ACRE. THE ASSESSING OFFICER CO MPLETED THE ASSESSMENT REJECTING THE OBJECTIONS RAISED BY THE ASSESSEE AND ADOPTED THE VALUE OF LAND AT RS.57,58,750/-. THUS, THE SHORT TERM CAPIT AL GAINS WAS COMPUTED AT RS.35,53,663/-, ITA NO.2278/DEL./2013 3 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY. BEFORE FIRST APPELLATE AUTHORITY, THE A SSESSEE FILED AN APPLICATION UNDER RULE 46A OF THE INCOME-TAX RULES, 1962 REQUES TING FOR ADMISSION OF ADDITIONAL EVIDENCE FOR THE REASON THAT THE ASSESSE E COULD NOT PRODUCE THE SAME IN THE COURSE OF ASSESSMENT PROCEEDINGS, SINCE ASSESSING OFFICER COMPLETED THE ASSESSMENT WITHOUT GRANTING ASSESSEE PROPER OPPORTUNITY TO PRESENT HER CASE. THE ADDITIONAL EVIDENCES SOUGHT TO BE PLACED ON RECORD WERE THAT (I) AFFIDAVIT OF THE ASSESSEE THAT THE CO NTRACT OF SALE FOR THE IMPUGNED LAND WAS ENTERED MUCH PRIOR TO 01.04.2007; AND (II) VALUATION REPORT ISSUED BY CAPTAIN SURESH DUTT & ASSOCIATES. THE CIT (A) DID NOT ACCEPT THE ADDITIONAL EVIDENCES. THE REASONING OF THE CIT (A) WAS THAT THE UNDATED VALUATION REPORT WAS MADE ON 31.03.2007 I.E . MUCH PRIOR TO PASSING OF THE ASSESSMENT ORDER (ASSESSMENT ORDER W AS PASSED ON 30.11.2010) AND THERE WAS NO REASON FOR THE ASSESSE E, NOT PRODUCING THE VALUATION REPORT, DURING THE COURSE OF ASSESSMENT. THE CIT (A) REJECTED THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE A PPEAL. THE RELEVANT FINDING OF THE CIT (A) READS AS FOLLOWS:- THE APPELLANT'S CASE DOES NOT FALLS UNDER ANY OF THE CONDITIONS MENTIONED UNDER RULE 46A. THEREFORE THE APPLICATION MADE BY THE APPELLANT IS REJECTED. IT I S REITERATED THAT THE VALUATION AS PER THE UNDATED VALUATION REP ORT WAS MADE ON 31.3.2007, AND THE ASSESSMENT ORDER U/S 143 (3) WAS PASSED ON 30.11.2010; THE AO HAD RAISED THE QUERY O N 15.9.2010 AND THE APPELLANT HAS SUBMITTED ITS REPLY ON 25.11.2010 BEFORE THE AO; THE APPELLANT HAD SUFFICI ENT OPPORTUNITY TO PRODUCE THE VALUATION REPORT AND THE AFFIDAVIT ITA NO.2278/DEL./2013 4 BEFORE THE AO. IN VIEW OF THE AFORESAID, THE ACTION OF THE AO IN WORKING OUT THE SHORT TERM CAPITAL GAIN AT RS.35 ,53,663/- IS CONFIRMED AND THE APPEAL IS DISMISSED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE INCOME-TAX AUTHORITIES. IT WAS FURTHER SUBMITT ED THAT U/S 50C(2) OF THE ACT, IF THE ASSESSEE CLAIMS THAT THE FAIR MARKET VA LUE OR THE SALE DEED PRICE IS BELOW THE CIRCLE RATE, THEN IT IS MANDATORY FOR THE ASSESSING OFFICER TO REFER THE IMPUGNED PROPERTY FOR VALUATION TO THE DV O. FOR THE ABOVE PROPOSITION, THE LD. AR RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SARWAN KUMAR VS. ITO, WARD 26 (3), NEW DELHI REPORT ED IN 150 ITD 289. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FURN ISHED HER OBJECTIONS BEFORE THE ASSESSING AUTHORITY AND ASSESSING OFFICE R HAD COMPLETED THE ASSESSMENT IN HASTE WITHOUT GIVING AN OPPORTUNITY T O THE ASSESSEE TO PUT FORWARD HER CASE. 7. LD. DR STRONGLY SUPPORTED THE ORDERS OF THE INCO ME-TAX AUTHORITIES. IT WAS SUBMITTED THAT THE ASSESSEE HAS FILED A FALS E AFFIDAVIT AND HAS CONCOCTED THE VALUATION REPORT SOUGHT TO BE FILED A S ADDITIONAL EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN THE CASE OF SARWAN KUMAR VS. ITO (S UPRA) HAVE HELD WHERE AN ASSESSEE HAD CLAIMED BEFORE THE ASSESSING OFFICER THAT THE VALUE OF LAND AND BUILDING ASSESSED BY THE STAMP DUTY VAL UATION AUTHORITY ITA NO.2278/DEL./2013 5 EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY, THEN IN TERMS OF SECTION 50C(2)(A), THE ASSESSING OFFICER OUGHT TO HAVE REFE RRED THE MATTER TO THE VALUATION OFFICER INSTEAD OF STRAIGHTWAY DEEMING VA LUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY AS THE FULL VALUE OF THE CONSIDERATION. THE TRIBUNAL, AFTER CONSIDERING THE PRECEDENTS ON THE S UBJECT, HAD HELD AS FOLLOWS :- 6. HAVING GONE THROUGH THE DECISIONS RELIED UPON B Y THE LD. AR WE FIND THAT IT IS NOW AN ESTABLISHED PROPOS ITION OF LAW THAT WHERE AN ASSESSEE HAD CLAIMED BEFORE THE A O THAT VALUE OF LAND AND BUILDING ASSESSED BY STAMP VALUAT ION AUTHORITY EXCEEDED FAIR MARKET VALUE OF PROPERTY , THEN IN TERMS OF SECTION 50C(2) (A) THE AO OUGHT TO HAVE RE FERRED MATTER TO VALUATION OFFICER INSTEAD OF STRAIGHTAWAY DEEMING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS FULL ITA NOS. 4379/DEL/09 & 2373/DEL/2012 5 VALUE OF CONSIDERATION. SIMILAR ARE THE FACTS IN THE CITED C ASE OF PUNE BENCH IN THE MATTER OF K.K. NAG LTD. VS. ACIT (SUPR A) WHEREIN THE AO APPLYING PROVISIONS OF SECTION 50C, ADOPTED STAMP DUTY VALUE OF LAND AND BUILDING AS TOTAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPI TAL GAIN. THE ASSESSEE RAISED THE OBJECTION THAT SINCE IT HAD CLAIMED THAT THE VALUE ASSESSED BY THE STAMP VALUATION AUTH ORITY EXCEEDED THE FAIR MARKET VALUE, THE AO OUGHT TO HAV E REFERRED THE MATTER TO THE VALUATION OFFICER TO ASCERTAIN TH E VALUATION. FOR A READY REFERENCE THE MATTER TRAVEL TO THE TRIB UNAL AND THE TRIBUNAL HAS HELD AS UNDER :- SECTION 50C PRESCRIBES FOR ADOPTION OF FULL VALUE OF CONSIDERATION IN CERTAIN CASES. IT IS PROVIDED THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET BEING LAN D OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED BY AN AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSES OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THEN THE VALUE SO ADOPTED BY THE STATE GOVERNMENT AUTHORITY SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH ITA NO.2278/DEL./2013 6 TRANSFER. THE SAID PROVISIONS OF SUB-SECTION (1) OF SECTION 50C ARE FURTHER CIRCUMSCRIBED BY SUB-SECTIO N (2) OF SECTION 50C. IN TERMS OF CLAUSE (A) OF SUB-S ECTION (2) OF SECTION 50C, IT IS PROVIDED THAT WHERE AN ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT T HE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MA RKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, T HEN THE ASSESSING OFFICER MAY REFER VALUATION OF THE CA PITAL ASSET TO THE VALUATION OFFICER. IN INSTANT CASE, FA CTUALLY IT IS EVIDENT THAT THE ASSESSEE HAD CLAIMED IN THE RETURN OF INCOME ITSELF THAT THE VALUE ADOPTED BY THE STAM P VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER AS PROVIDED IN SECTION 50C(2)(A). UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER INSTEAD OF STRAIGHTAWAY DEEMING T HE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS T HE FULL VALUE OF CONSIDERATION. THE POINT MADE OUT BY THE REVENUE THAT IT IS ONLY DISCRETIONARY ON THE PART O F THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUAT ION OFFICER, IS QUITE UNTENABLE. THE DISCRETION VESTED IN THE ASSESSING OFFICER IN SUCH A SITUATION IS REQUIRED T O BE USED IN A JUDICIOUS MANNER. SECTION 50C IS A DEEMIN G PROVISION AND OSTENSIBLY INVOLVE CREATION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THERE FORE, NOTWITHSTANDING THE PRESENCE OF THE EXPRESSION MAY IN SECTION 50C (2)(A), THE ASSESSING OFFICER IN THI S CASE OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER FOR ASCERTAINING THE VALUE OF THE CAPITAL A SSET IN QUESTION. THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) IS TO BE SET ASIDE AND THE ASSESSING OFFI CER IS TO BE DIRECTED TO ADOPT THE COURSE MENTIONED IN SEC TION 50C(2)(A) AND THEREAFTER, PROCEED TO DETERMINE CAPI TAL GAIN ON SALE OF LAND AND BUILDING. 7. THE DELHI BENCH OF THE TRIBUNAL IN THE ABOVE CIT ED CASE OF ITO VS. SMT. MANJU RANI JAIN (SUPRA) HAS EX PRESSED A SIMILAR VIEW WHEREIN THE ACTION OF LD. CIT(A) HAS B EEN UPHELD. THE LD. CIT(A) ON FINDING THAT AO HAD WORKE D OUT CAPITAL GAIN BY ADOPTING MARKET VALUE OF PROPERTY F OR STAMP DUTY PURPOSES, HAD DIRECTED AO TO REFER PROPERTIES TO VALUATION SALE OF THE DEPARTMENT FOR PURPOSE OF VAL UATION OF ITA NO.2278/DEL./2013 7 PROPERTIES AND THEREAFTER TO ADOPT VALUATION FOR WO RKING OUT THE CAPITAL GAINS IN VIEW OF THE PROVISIONS OF SECT ION 50C(2) OF THE ACT. SIMILAR ARE THE FACTS OF THE PRESENT CA SE BEFORE US WHEREIN BEFORE THE AO THE ASSESSEE HAD CLAIMED THAT VALUE OF LAND AND BUILDING ASSESSED BY STAMP VALUATION AUTHO RITY EXCEEDED FAIR MARKET VALUE OF PROPERTY BUT THE AO H AD DENIED THE REFERENCE U/S 50C TO THE VALUATION OFFIC ER WITH THIS FINDING ALSO, IT IS HELD THERE IS NO NEED TO REFER THE MATTER TO DEPARTMENTAL VALUATION OFFICER AS STIPULA TED IN SECTION 50C(2). THE SECTION 50C(S) USES THE WORD MA Y AND NOT SHALL REFER THE MATTER TO THE VALUATION OFFICER DEFINED U/S 2 OF THE W.T. ACT 1957. SUFFICIENT EVIDENCE HAS NO T BEEN PRODUCED BEFORE THE UNDERSIGNED TO ENABLE HER TO MA KE REFERENCE TO THE VALUATION CELL UNDER CLAUSE 50C(2) (B). THE LD. CIT(A) HAS UPHELD THIS ACTION OF THE AO. THUS T HE POINT MADE OUT BY THE REVENUE WAS THAT IT IS ONLY DISCRET ION ON THE PART OF THE AO TO REFER THE MATTER TO THE VALUATION OFFICER TO WHICH WE IN VIEW OF THE PROVISIONS LAID DOWN U/S 50 (C) OF THE ACT DO NOT CONCUR WITH. THE PUNE BENCH OF THE TRIBU NAL IN THE CASE OF K.K. NAG LTD. VS. ACIT (SUPRA) AFTER DE TAILED DISCUSSION OF THE PROVISIONS LAID DOWN U/S 50C OF T HE ACT HAS HELD THAT THE DISCRETION GRANTED IN SUCH A SITUATIO N IS REQUIRED TO USE IN A JUDICIOUS MANNER. SECTION 50C IS A DEEMING PROVISION AND OSTENSIBLY INVOLVE CREATION O F AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THERE FORE, NOTWITHSTANDING THE PRESENCE OF THE EXPRESSION MAY IN SECTION 50C(2)(A), THE AO IN THIS CASE OUGHT TO HAV E REFERRED THE MATTER TO THE VALUATION OFFICER FOR ASCERTAININ G THE VALUE OF THE CAPITAL ASSET IN QUESTION. THE ORDER OF THE COMMISSIONER (APPEALS) WAS THUS HELD TO BE SET ASID E AND THE AO WAS DIRECTED TO ADOPT THE COURSE MENTIONED I N SECTION 50C(2)(A) AND THEREAFTER PROCEED TO DETERMINE CAPIT AL GAIN ON SALE OF LAND AND BUILDING. RESPECTFULLY FOLLOWIN G THIS DECISION OF PUNE BENCH ON AN IDENTICAL ISSUE UNDER ALMOST SIMILAR FACTS, WE WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE DIRECT THE AO TO ADO PT THE COURSE MENTIONED IN SECTION 50C(2)(A) AND THEREAFTE R, PROCEED TO DETERMINE CAPITAL GAIN ON SALE OF THE PR OPERTIES IN QUESTION AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS ARE THUS ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.2278/DEL./2013 8 9. IN THE INSTANT CASE, THE ASSESSEE HAD RAISED A P LEA THAT THE FAIR MARKET VALUE OF THE IMPUGNED PROPERTY IS BELOW THE CIRCLE RATE. MOREOVER, WE FIND THAT THE ASSESSEE HAD TAKEN UP A SPECIFIC GROUND BE FORE THE CIT (A) THAT THE IMPUGNED PROPERTY SOLD OUGHT TO HAVE BEEN REFERRED FOR VALUATION SINCE THE FAIR MARKET VALUE WAS LESS THAN THE CIRCLE RATE. I N THE INSTANT CASE, SINCE SPECIFIC CLAIM WAS RAISED BY THE ASSESSEE AS REGARD S FAIR MARKET VALUE BEING LESS THAN THE CIRCLE RATE, GOING BY THE DICTUM LAID DOWN BY THE TRIBUNAL IN THE CASE OF SARWAN KUMAR VS. ITO (SUPRA), THE ASSES SING OFFICER OUGHT TO HAVE REFERRED THE MATTER TO THE DVO FOR VALUATION O F THE IMPUGNED PROPERTY. THEREFORE, THIS ISSUE IS RESTORED TO ASS ESSING OFFICER FOR THE PURPOSE OF REFERRING THE IMPUGNED PROPERTY FOR VALU ATION U/S 50C(2) OF THE ACT AND THEREAFTER PROCEED TO DETERMINE THE CAPITAL GAINS ON THE PROPERTY IN QUESTION. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 20 TH DAY OF APRIL, 2015. SD/- SD/- (T.S. KAPOOR) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 20 TH DAY OF APRIL, 2015 TS ITA NO.2278/DEL./2013 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-V, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.