Shri Ravi Shankar Saraf , Kolkata V. ITO, Ward - 45(1) , Kolkata

ITA 2311/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2263 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-06-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR HALKER
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report; Reason to believe
• Section: 50C; 250; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 2311/KOL/2018 ASSESSMENT YEAR: 2008-09 SHRI RAVI SHANKAR SARAF...........APPELLANT C/O D.J. SHAH & CO. KALYAN BHAWAN 2, ELGIN ROAD KOLKATA 700 020 [PAN : ALJPS 0240 A] INCOME TAX OFFICER, WARD-45(1), KOLKATA............................RESPONDENT APPEARANCES BY: SHRI MIRAJ D. SHAH, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SHRI SANKAR HALKER, JCIT SR. D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JUNE 19 TH , 2019 DATE OF PRONOUNCING THE ORDER : JUNE 21 ST , 2019 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 13, KOLKATA, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 20/09/2018, FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS AN INDIVIDUAL. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ALONGWITH SIX OTHER PERSONS (CO-OWNERS) ENTERED INTO AN AGREEMENT WITH BUILDER M/S. SARAF REAL ESTATES LTD. AND CONSTRUCTED AND JOINTLY SOLD FLATS WITH THE OTHER CO-OWNERS. THE ASSESSING OFFICER REOPENED THE ASSESSMENT BASED ON A DVO REPORT, OBTAINED IN THE CASE OF ONE OF THE CO-OWNERS MR. SANJAY SARAF, DURING THE ASSESSMENT PROCEEDINGS DURING THE ASSESSMENT YEAR 2012-13 ON THE GROUND THAT THE VALUE OF THE PROPERTY AS ON 01/04/1981 WAS WRONGLY STATED THAT IF THE VALUE AS GIVEN BY THE DVO IS CONSIDERED, THEN THERE WOULD BE HUGE LONG TERM CAPITAL GAIN. 2.1. BEFORE US, THE SOLE ISSUE THAT THE ARGUED IS AS TO WHETHER THE REOPENING IN QUESTION U/S 147 OF THE ACT IS VALID OR NOT. 2 I.T.A. NO. 2311/KOL/2018 ASSESSMENT YEAR: 2008-09 SHRI RAVI SHANKAR SARAF 3. I HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS:- 4. THE REASONS OF REOPENING ARE STATED AT PAGE 7 OF THE ORDER OF THE LD. CIT(A):- THE ASSESSEE HAS ENTERED INTO THE AGREEMENT WITH A BUILDER M/S. SARAF REAL ESTATE LTD. WITH A PROFIT SHARING RATIO OF 40:60 AND CONSTRUCTED AND JOINTLY SOLD FLATS AT DIVINE BLISS, 2/3 JUDGES COURT ROAD KOL-27 FROM AY 2008-09 TO 2011-12 ALONG WITH OTHER CO-OWNERS. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR AY 2012-13 IN THE CASE OF SRI SANJAY SARAF, ONE OF THE CO-OWNERS, THE MATTER WAS REFERRED TO OVA, INCOME TAX DEPARTMENT FOR VALUATION OF COST OF ACQUISITION OF PROPERTY AS ON 01-04-1981 AND THE OVA IN HIS REPORT FILE NO.40/CG/DVO/ITD/KOL/2014-15, 499 DATED 16-03-2015 HAS DETERMINED THE COST OF ACQUISITION AS ON 01-04-1981 AT RS.95,50,971/- OF 1,40,174 SQ FT AGAINST THE COST OF ACQUISITION AS ON 01-04-1981 TAKEN BY THE ASSESSEE AT RS.1,54,73,000/-. THEREFORE, THERE WOULD BE HUGE LTCG ON THE ACCOUNTS OF VALE OF COST OF ACQUISITION AS ON 01-04-1981 AS DETERMINED BY THE DVO. THE SHARE OF PROFIT OF THE ASSESSEE AMONG THE EO-OWNERS FOR THE AY 2008-09 BASED ON OVA REPORT IS AS UNDER:- SHARE OF CO - OWNERS NAME OF CO - OWNERS % OF PROFIT AMOUNT OF PROFIT RAM AVATAR SARAF 33.33 26,66,938.75 S S SARAF 5.56 4,44,889.87 SANJAY SARAF 25.00 20,00,404.1 RAVI S SARAF 5.55 4,44,089.71 ADITYA SARAF 5.56 4,44,889.87 ESTATE OF R S SARAF 16.67 13,33,869.45 VINITA SARAF 8.33 6,66,534.65 TOTAL 100 80,01,616.4 AS THE ASSESSEE HAS NOT PAID LTCG ON THE SALE OF FLATS AS PER SECTION 50C I HAVE REASON TO BELIEVE THAT AN INCOME TO TUNE OF RS.4,44,089.71 HAS ESCAPED ASSESSMENT FOR THE AY 2008-09 5. A PERUSAL OF THE SAME DEMONSTRATES THAT THE ASSESSING OFFICER WAS RELYING ON AN INFORMATION OF THE DVO FOR THE PURPOSE OF VALUING THE COST OF ACQUISITION OF THE PROPERTY ON 01/04/1981. REFERENCE TO THE DVO CANNOT BE MADE FOR THE PURPOSE OF DETERMINATION OF THE VALUE OF THE COST OF ACQUISITION AS ON 01/04/1981 IF THE ASSESSING OFFICER WAS OF THE OPINION THAT SUCH VALUE IS LESSER THAN THAT WHICH WAS DECLARED BY THE ASSESSEE, PRIOR TO THE AMENDMENT U/S 55A(A) OF THE ACT, WHICH 3 I.T.A. NO. 2311/KOL/2018 ASSESSMENT YEAR: 2008-09 SHRI RAVI SHANKAR SARAF WAS INSERTED W.E.F. 01/07/2012 AS THE IMPUGNED ASSESSMENT YEAR WAS 2008-09. THIS POSITION IS CLEAR FROM THE FOLLOWING DECISIONS:- 5.1. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS [2014] 360 ITR 697 (BOMBAY) , HELD AS FOLLOWS:- SECTION 55A OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - REFERENCE TO VALUATION OFFICER (VALIDITY OF REFERENCE) - ASSESSMENT YEAR 2006-07 - WHETHER WHEN A SPECIFIC PROVISION UNDER WHICH REFERENCE CAN BE MADE TO DEPARTMENTAL VALUATION OFFICER(DVO) IS AVAILABLE, THERE IS NO OCCASION FOR ASSESSING OFFICER TO INVOKE GENERAL POWERS OF ENQUIRY - HELD, YES - ASSESSEE ADOPTED VALUE OF HIS PROPERTY AT RS.35.99 LAKHS AS A FAIR MARKET VALUE AS ON 1-4-1981 ON BASIS OF A VALUATION REPORT - ASSESSING OFFICER WAS OF VIEW THAT VALUE OF PROPERTY AS ADOPTED BY ASSESSEE WAS HIGH - THEREFORE, ASSESSING OFFICER REFERRED ISSUE OF VALUATION TO DVO WHO VALUED PROPERTY AT RS.6.68 LAKH AS ON 1-4-1981 AND INDEXED COST AT RS.33.20 LAKHS - CONSEQUENTLY, ASSESSING OFFICER BY HIS ASSESSMENT ORDER ENHANCED CAPITAL GAIN OF APPELLANT - WHETHER LAW TO BE APPLIED IN INSTANT CASE IS SECTION 55A(A) AS EXISTING DURING PERIOD RELEVANT TO ASSESSMENT YEAR 2006-07 WHEREIN REFERENCE COULD BE MADE TO DVO ONLY IF VALUE DECLARED BY ASSESSEE IS IN OPINION OF ASSESSING OFFICER LESS THAN ITS FAIR MARKET VALUE - HELD, YES - WHETHER WHEN VALUE OF PROPERTY ADOPTED BY ASSESSEE WAS MUCH MORE THAN FAIR MARKET VALUE EVEN AS DETERMINED BY DEPARTMENTAL VALUATION OFFICER, INVOCATION OF SECTION 55A(A) WAS NOT JUSTIFIED - HELD, YES - WHETHER IN FACE OF CLEAR POSITION IN LAW, CBDT CIRCULAR DATED 25-11-1972 CAN HAVE NO APPLICATION AS UNDERSTANDING OF STATUTORY PROVISIONS BY REVENUE AS FOUND IN CIRCULAR ISSUED BY CBDT IS NOT BINDING UPON ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO CONTRARY - HELD, YES [PARAS 7, 10] 5.2. THIS CO-ORDINATE BENCH OF THE TRIBUNAL HAS TAKEN A SIMILAR VIEW IN THE FOLLOWING CASES:- ITO VS. M/S. TOLARAM AND SONS (HUF) IN ITA NO. 974/KOL/2015, ASSESSMENT YEAR 2011-12, ORDER DT. 11/04/2018 M/S. ROYAL CALCUTTA TURF CLUB VS. DCIT IN ITA NO. 231/KOL/2013, ASSESSMENT YEAR 2008-09, ORDER DT. 01/09/2017 6. CONSISTENT WITH THE VIEW TAKEN IN THE ABOVE REFERRED CASE-LAW, I HAVE COME TO A CONCLUSION THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AS THE MATERIAL BASED ON WHICH THE REOPENING IS MADE, THAT IS THE DVO REPORT COULD NOT BE USED FOR THE IMPUGNED ASSESSMENT YEAR AS THE ASSESSING OFFICER HAS NO POWER TO REFER SUCH AN ISSUE TO THE DVO. 4 I.T.A. NO. 2311/KOL/2018 ASSESSMENT YEAR: 2008-09 SHRI RAVI SHANKAR SARAF 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 21 ST DAY OF JUNE, 2019. SD/- [ J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 21.06.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. SHRI RAVI SHANKAR SARAF C/O D.J. SHAH & CO. KALYAN BHAWAN 2, ELGIN ROAD KOLKATA 700 020 2. INCOME TAX OFFICER, WARD-45(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES