Mr. A.M. Arumugam, CHENNAI V. ACIT, CHENNAI

ITA 2336/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8059 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA PAL
• Assessee Lawyers: J PRABHAKAR
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition; Fair market value
• Section: 143(3); 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.2336/MDS/2016 / ASSESSMENT YEAR : 2012-13 A.M. ARUMUGAM, NO. 14/11, NORTON 3RD STREET, MANDAVELI, CHENNAI - 600 028. [PAN: AAFPA 2758N] VS. ASSISTANT COMMISSIONER OF INCOME TAX, NCC - 11, CHENNAI. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI J. PRABHAKAR , FCA . / RESPONDENT BY : MR. SUPRIYA PAL, JCIT /DATE OF HEARING : 28.09.2016 /DATE OF PRONOUNCEMENT : 21.11.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF CIT(A) ITA NO. 35/CIT/13 FOR THE ASSESSMENT YEAR 2012-13, DATED 18 .05.2016 PASSED U/S. 143(3) AND 250 OF THE ACT AND THE ASSESSEE RAISED T HE FOLLOWING GROUNDS: 1.1 THE CIT(A) IS NOT JUSTIFIED IN OMITTING TO ADJUDICA TE ON THE APPLICATION OF SECTION 50C TO THE FACTS OF THE CASE AND ATTRIBU TING CONTUMACIOUS :-2-: I.T.A. NO. 2336/MDS/2016 CONDUCT ON THE APPELLANT THAT THE VALUE FIXED FOR R EGISTRATION IS SELF- SERVING. 1.2 THE CIT(A) HAS NO BASIS TO CONCLUDE AS TO THE APPLI CATION OF SECTION 50C TO THE FACTS OF THE CASE, IN THE ABSENCE OF ADD ITIONAL STAMP DUTY LEVY UNDER THE PREVENTION OF UNDERVALUATION OF INST RUMENT RULES OF THE STAMP ACT. 1.3 THE CIT(A) IS NOT JUSTIFIED IN OMITTING TO REFER TH E MATTER OF VALUATION CELL AS MANDATED BY SECTION 50 CIT(A), IF THE ALLEG ED VALUE OF RS. 4,500/- PER SQ.FT. IS INDEED REFERRED TO IN THE SAL E DOCUMENT. 1.4 THE CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH FAIR MARKET VALUE AS ON 01.04.1981 OF IMPUGNED PROPERTY AT RS. 1,00,000/- F IXED BY THE ASSESSING OFFICER WHICH HAS NO INDEPENDENT BASIS OR JUSTIFICATION. 1.5 THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE FAIR MARKET VALUE AS ON 01.04.1981 AT RS. 1 LAKH IS BASED ON GUIDE LINE VALUE IN 1981 WHICH ON FACTS IS FARTHER FROM THE TRUTH. 1.6 THE LD. CIT(A) IS NOT JUSTIFIED IN CONFUSING THE IS SUE OF DETERMINING FAIR MARKET VALUE FOR COST PURPOSES AND THE DETERMI NATION OF SALE VALUE ALLEGEDLY U/S. 50C VIDE PAGE 5, PARA 1 OF HIS APPELLATE ORDER. :-3-: I.T.A. NO. 2336/MDS/2016 1.7 THE CIT(A) IS NOT JUSTIFIED IN OMITTING TO GRANT DE DUCTION U/S. 54EC ON FRIVOLOUS REASONS BY ADVERTING THAT CASE LAWS REFER RED UNDER THAT SUBJECT RELATED TO SECTION 54E, WHICH SECTION IS IN PARI-MATERIA WITH SECTION 54EC. 1.8 THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ALLEGE D SALE VALUE OF LAND AT RS. 66,19,500/- AS AGAINST THE CORRECT MARKET VALUE ADOPTED IN TRANSFER DEED AT RS. 34,86,270/- TO WHICH CASE SECTION 50C H AS NO FACTUAL APPLICATION. 1.9 THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ALLEGE D INDEXED COST AT RS. 7,85,000/- WHICH HAS NO DISCERNIBLE BASIS BUT DETER MINED ON AD-HOC OR SPECULATIVE IN NATURE. 1.10 THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE LONG TERM CAPITAL GAIN AT RS. 58,34,500/- AS AGAINST LONG TERM LOSS OF RS. 8, 31,230/- DETERMINED ON CORRECT TRANSACTION VALUE AS REDUCED BY INDEX CO ST OF FAIR MARKET VALUE AS ON 01.04.1981. 1.11 THE CIT(A) IS NOT JUSTIFIED IN ALLEGING CONTUMACIOU S CONDUCT UPON THE APPELLANT AS TO FAILURE TO WORK OUT LONG TERM AND S HORT TERM CAPITAL GAINS SEPARATELY VIDE PARA 1, PAGE 4 OF THE APPELLA TE ORDER. 1.12 THE CIT(A) FAILED TO NOTICE THAT THE CALCULATION OF CAPITAL GAIN ON LONG TERM AND DEEMED SHORT TERM ASSET IS SUBSUMED IN THE COMPUTATION IS :-4-: I.T.A. NO. 2336/MDS/2016 VIEW OF THE EXEMPTION AVAILABLE U/S. 54EC OF THE AC T AND THE ARTIFICIAL SPLITTING BY THE FIRST APPELLATE AUTHORITY IN THIS REGARD IS ACADEMIC. 1.13 IN ANY EVENT THE ORDER OF THE CIT(A) IS ILLEGAL, AR BITRARY AND DEVOID OF COGENT REASONS AND DECIDED WITHOUT ANY REGARD TO TH E FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW APPLICABLE TH ERETO. 1.14 YOUR APPELLANT CRAVES INDULGENCE OF THE HON'BLE INC OME TAX APPELLATE TRIBUNAL TO SUPPLEMENT THE FACTS ON RECORD BY FILIN G ADDITIONAL GROUNDS DEPENDING UPON THE EXIGENCIES IN THE APPEAL. 2. AT THE TIME OF HEARING, THE LD. AR FILED THE PET ITION OF ADDITIONAL EVIDENCE IN RESPECT OF AMENDMENT TO VALUATION REPOR T FOR FAIR MARKET VALUE AS ON 01.04.1981 THE LD. DR HAS OPPOSED FOR THE ADMISSION OF EVIDENCE, WE CONSIDERING THE PETITION AND ARGUMENT REJECTED THE ADDITIONAL EVIDENCE AND HEARD THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE IS ENGAGED IN BUSINESS OF TEXTILE EXPORT AND RUNNING, BOARDING AND LODGING AN D MARRIAGE HALL AND BAR AND FILED RETURN OF INCOME ON 22.09.2012 WITH TOTAL INC OME OF RS. 31,54,954/- AND THE RETURN OF INCOME WAS PROCESSED UNDER 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTIC E U/S. 143(2) WAS ISSUED. IN :-5-: I.T.A. NO. 2336/MDS/2016 COMPLIANCE TO THE NOTICE LD. AR APPEARED AND PRODUC E INFORMATION PERTAINING TO BANK ACCOUNT STATEMENTS, DETAILS OF LAND SOLD AND E VIDENCE FOR DEDUCTION CLAIMED UNDER CHAPTER VI A AND OTHER DETAILS. 4. THE LD. AO VERIFIED THE DOCUMENTS AND FOUND THA T THE ASSESSEE HAS SOLD BUSINESS ASSET IN THE FINANCIAL YEAR 2011-2012 FOR RS. 1,25,00,000/- AND THE PROPERTY/ASSET COMPRISES OF LAND AND BUILDING USED AS A BUSINESS ASSET IN EARLIER YEARS AND THE LAND WAS VALUED FOR SALE AT RS. 34,86 ,270/- AND RS. 90,13,730/- TOWARDS THE BUILDING WITH FIXTURES ETC. THE ASSESS EE DEDUCTED WRITTEN DOWN VALUE OF THE BUILDING AND INDEXED COST OF LAND FROM THE TOTAL SALE CONSIDERATION AND CLAIMED EXEMPTION U/S. 54EC OF THE ACT ON INVES TMENT IN CAPITAL GAINS BONDS AND WORKED OUT TAXABLE CAPITAL GAINS OF RS. 6,74,81 1/-. THE LD. AO FOUND THAT THE ASSESSEE HAS NOT CONSIDERED THE PROPERTY VALUE AS PER THE PROVISIONS OF SECTION 50C OF THE ACT BEING THE GUIDELINE VALUE OF LAND AT RS. 4500/- PER SQ.FT. AND WORKED OUT AT RS. 66,19,500/- AS AGAINST RS. 34 ,86,270/- DETERMINED BY THE ASSESSEE. THE ASSESSEE CONSIDERED COST OF ACQUISIT ION OF LAND AS PER VALUER CERTIFICATE AT RS. 5,50,000/- WHICH IS ON HIGHER SI DE AND CLAIMING INDEXATION IS NOT REASONABLE. THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE SOLD THE BUSINESS ASSET AND THE GAINS ARE IN THE NATURE OF SHORT TERM CAPITAL GAINS AND CALCULATED THE DIFFERENCE IN THE INDEX COST OF ACQUISITION AND THE SALE VALUE FOR LAND APPLYING THE PROVISIONS OF 50C OF THE ACT AND MADE ADDITION OF RS. 66,65,730/- AS SHORT TERM CAPITAL GAINS AND ALLOWED DEDUCTION U/S. 54EC OF THE ACT TO THE EXTENT OF 50 LAKHS ONLY AND PASSED THE ASSESSMENT ORDER DATED 31 .03.2015. AGGRIEVED BY :-6-: I.T.A. NO. 2336/MDS/2016 THE ORDER, ASSESSEE FILED AN APPEAL WITH THE CIT(A) . IN THE APPELLANT PROCEEDING THE LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND T HE REITERATED THE SUBMISSIONS MADE IN THE ASSESSMENT PROCEEDINGS. TH E LD. CIT(A) CONSIDERED THE FINDINGS AND VIEWS EXPRESSED BY THE ASSESSING O FFICER ON SALE OF LAND AND BUILDING AS A BUSINESS ASSET AND CONFIRMED THE ADDI TION AND RELIED ON THE JUDICIAL DECISIONS. AGGRIEVED BY THE ORDER, ASSESSEE HAS FI LED AN APPEAL. 5. BEFORE US THE LD. AR OF THE ASSESSEE ARGUED THA T CIT(A) HAS ENDORSED THE FINDINGS OF THE ASSESSING OFFICER ON APPLICABIL ITY OF PROVISIONS OF SECTION 50C OF THE ACT AND UPHELD THE SALE VALUE OF LAND RS. 66 ,19,500/- AS AGAINST SALE VALUE OF RS. 34,86,270/- AND RESTRICTED THE INDEXED COST OF ACQUISITION TO RS. 78,500/-, FURTHER THE LD. CIT(A) HAS NOT CALLED FOR ANY COMME NTS ON REMAND REPORT FROM THE ASSESSING OFFICER. THE LD. AR FILED PAPER BOOK CONSISTING OF DETAILS OF CORRESPONDENCE WITH INCOME TAX DEPARTMENT AND REGIS TERED LAND DOCUMENTS AND FURTHER REFERRED TO PAGE 8 WERE E-MAIL SENT BY INCOME TAX DEPARTMENT ON 28.03.2015 CALLING FOR DETAILED INFORMATION AND ALS O NATURE OF TRANSACTION OF VIJAY PARK. IN COMPLIANCE THE ASSESSEE HAS FURNISHED REPL Y ON 30.03.2015 AND THE ASSESSMENT WAS COMPLETED 31.03.2015. THE LD. AR EM PHASIZED THAT THE NO PROPER OPPORTUNITY WAS PROVIDED TO EXPLAIN THE FACT S WITH EVIDENCE AS THE E-MAIL WAS SENT TWO DAYS BEFORE THE PASSING OF THE ASSESSM ENT ORDER AND PRAYED FOR ALLOWING THE ASSESSEE'S APPEAL. CONTRA, THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND OPPOSED THE GROUNDS. :-7-: I.T.A. NO. 2336/MDS/2016 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE LD. AR CONTENTION THAT THE PROVISIONS OF SECTIO N 50C OF THE ACT ARE NOT APPLICABLE AND THE ASSESSING OFFICER WAS NOT JUSTIF IED IN OVERLOOKING THE FACTS AND HAS CALCULATED THE SHORT TERM CAPITAL GAINS BY SPLI TTING THE SALE TRANSACTION AND APPLIED THE GUIDELINE VALUE WHICH IS NOT ACCEPTABLE IN THE EYES OF LAW. THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFF ICER. THE NOTICE ISSUED BY REVENUE THOUGH E-MAIL AND CALLING FOR INFORMATION T O BE SUBMITTED POSITIVELY ON 30.03.2015 WAS A HURRIED ACTION. THE ASSESSEE DOES NOT HAVE SUFFICIENT TIME TO EXPLAIN THE FACTS AND COMPLIED WITH AVAILABLE SUBMI SSIONS THROUGH LETTER DATED 30.03.2015. THE LD. AR DREW OUR ATTENTION TO PAPER BOOK PAGE NO. 10 TO 34 WERE DETAILS SUBMITTED INCLUDING CERTIFICATE OF VAL UE ON FAIR MARKET VALUE AS ON 01.04.1981. WE FOUND THAT THE ASSESSING OFFICER SH OULD HAVE PROVIDED ADEQUATE OPPORTUNITY AND HAS ISSUED E-MAIL ONLY TWO DAYS BEF ORE PASSING OF THE ORDER AND WANTED THE INFORMATION IN VERY SHORT TIME PERIOD. WE CONSIDERED DISPUTED FACTS AND APPLICABILITY OF PROVISIONS OF SECTION 50C OF T HE ACT AND THE ADDITIONAL EVIDENCE PRODUCED WAS REJECTED AS THE SAME WAS NOT AVAILABLE TO THE ASSESSING OFFICER FOR VERIFICATION IN FRAMING THE ASSESSMENT ORDER AND RESTRICTED TIME FACTOR FOR FILING THE REPLY WERE THE ASSESSMENT ORDER DATE D 31.03.2015 WAS PASSED WITHIN ONE DAY OF FILING THE INFORMATION CALLED FOR THROUGH E-MAIL. WE, IN THE INTEREST OF JUSTICE, ARE OF THE OPINION THAT THE AS SESSEE SHOULD BE PROVIDED WITH REASONABLE TIME TO DEFEND THE CASE ON MERITS. HENC E, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE ENTIRE ISSUE TO THE FILE O F ASSESSING OFFICER TO DECIDE THE ISSUE ON MERITS AFTER PROVIDING ADEQUATE OPPORTUNIT Y OF HEARING AND ASSESSEE :-8-: I.T.A. NO. 2336/MDS/2016 SHALL FILE ALL THE NECESSARY / RELEVANT DOCUMENTS A ND SHALL CO-OPERATE IN ASSESSMENT PROCEEDINGS. THE GROUNDS OF THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 21ST DAY OF NOVEMBE R, 2016 AT CHENNAI. SD/- ( ) (ABRAHAM P GEORGE) / ACCOUNTANT MEMBER SD/- ( . . . . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, /DATED: 21ST NOVEMBER, 2016 JPV /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF.