Shri O. Pradeep Kumar, CHENNAI V. ITO, CHENNAI

ITA 2351/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3992 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: M KARANAKARAN
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.2351/MDS/2016 / ASSESSMENT YEAR : 2009-2010 SHRI. O. PRADEEP KUMAR, C/O. SUNIL TRADING COMPANY, SHOP NO.12, NO.49, ELLIS ROAD, IST FLOOR, CHENNAI 600 002. [ PAN AALPP 2821R ] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 12(3) (IX)(3), CHENNAI 600 034. ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. M. KARANAKARAN, ADVOCATE /RESPONDENT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. /DATE OF HEARING : 16.11.2016 ! /DATE OF PRONOUNCEMENT : 23.11.2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST A N ORDER DATED 27.01.2016 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 13, CHENNAI. ITA NO.2351/MDS/2016 :- 2 -: 2. ASSESSEE HAS FILED THIS APPEAL WITH A DELAY OF NIN ETY DAYS. CONDONATION PETITION HAS BEEN FILED. REASONS SHOWN FOR THE DELAY SEEMS TO BE JUSTIFIED. LD. DEPARTMENTAL REPRESENTAT IVE DID NOT RAISE ANY SERIOUS OBJECTIONS. DELAY IS CONDONED. APPEAL IS ADMITTED. 3. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HIS RETUR N FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF C4,25, 450/-. LD. ASSESSING OFFICER WAS HAVING ANNUAL INFORMATION REP ORT (AIR) WHICH REFLECTED SALE OF A PROPERTY SITUATED AT OLD NO.5, NEW NO.9, NORTH GOPALAPURAM SECOND STREET, CHENNAI 600 086. AS PER ASSESSING OFFICER GROUND FLOOR OF THE BUILDING WAS SOLD FOR C 1.06 CRORES WHEREAS FIRST FLOOR WAS SOLD FOR A MUCH LOWER FIGURES BE C5 3 LAKHS. LD. ASSESSING OFFICER REQUIRED ASSESSEE TO SHOW CAUSE WHY THE CAPITAL GAINS ARISING FROM THE SALE OF FIRST FLOOR, CONSIDE RING ITS SALE PRICE AS C1.06 CRORES, SHOULD NOT BE TAXED. REPLY OF THE AS SESSEE WAS THAT GROUND FLOOR OF THE BUILDING BELONGED TO HIS PARENT S AND WAS SOLD BY HIS PARENTS AND HE HAD NO RIGHT OVER THAT. AS PER THE ASSESSEE, THE FIRST FLOOR WAS JOINTLY HELD BY THE HIM WITH HIS B ROTHER. AS PER ASSESSEE, SALE OF FIRST FLOOR FETCHED HIM ONLY C51. 50 LAKHS, DESPITE THE COST OF LAND, PLINTH AREAS OF THE GROUND FLOOR AND FIRST FLOOR AND AGE OF THE BUILDING ALL BEING SAME. REPLY OF THE ASSESSEE ON THIS ISSUE IS REPRODUCED HEREUNDER:- ITA NO.2351/MDS/2016 :- 3 -: THE DIFFERENCE IN THE SALE CONSIDERATION BETWEEN THE TWO FLATS MENTIONED ABOVE, NAMELY GROUND FLOOR AND FIRST FLOOR, IT IS SUBMITTED THAT THE FIRST FLOOR W AS VIOLENTLY ATTACKED BY TERMITES & WHITE ANTS WITH THE RESULT A LL THE WOOD WORK WERE DESTROYED TOTALLY AND HAD NOT ANY VALUE AT ALL. ACCORDING TO VASTU EXPERTISE THE PRE MISES, WAS DEFECTIVE REGARDING THE POSITION OF KITCHEN, BA TH ROOM ETC., WAS NOT IN PROPER PLACE IN ACCORDANCE IN VASTU SCIENCE. THE SUB-REGISTRAR ALSO INSPECTED TH E PROPERTY AND WAS CONVINCE THAT THE CONSIDERATION WA S FAIR AND REASONABLE AND NO ADDITIONAL STAMP DUTY WA S CHARGED FROM THE PURCHASER. APART FROM THIS THE PROPERTY WAS IN THE STAGE OF BEING AUCTIONED BY VIS ALAM CHIT FUNDS LTD FOR THE DUES. THEREFORE THE SAME SOL D C51,50,000/-. 4. HOWEVER, LD. ASSESSING OFFICER DID NOT ACCEPT THE A BOVE REPLY. ACCORDING TO HIM, LAND VALUE SHOWN BY HIM IN THE SALE DEED WAS C37,01,100/- WHEREAS FOR THE VERY SAME LAND THE VA LUE SHOWN IN THE SALE DEED FOR THE GROUND FLOOR WAS C51,24,600/-. FURTHER, AS PER LD. ASSESSING OFFICER VALUE OF THE FIRST FLOOR BUILDING WAS GIVEN AS C14,48,900/- IN THE SALE DEED, WHEREAS SIMILAR VALU E FOR GROUND FLOOR WAS SHOWN AT C54,75,400/-. AS PER THE LD. ASSESSIN G OFFICER NO PRUDENT PERSON WOULD SELL THE FIRST FLOOR AT A P RICE LESS THAN 50% OF THE GROUND FLOOR. THOUGH ASSESSEE MADE A FURTHER SUBMISSION THAT FIRST FLOOR WAS UNDER VIOLENT ATTACK OF TERMITES AN D WHITE ANTS, LD. ASSESSING OFFICER DID NOT ACCEPT THIS, FOR WANT OF EVIDENCE. HE ALSO MENTIONED THAT IT WAS NOT PROBABLE FOR SUCH A PEST ATTACK IN FIRST FLOOR ALONE, LEAVING THE GROUND FLOOR. HE REWORKED CAPI TAL GAINS FOR SALE OF ITA NO.2351/MDS/2016 :- 4 -: FIRST FLOOR SUBSTITUTING THE SALE PRICE OF RS.1.06 CRORES AGAINST C51.50 LAKHS SHOWN BY THE ASSESSEE 5. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER NOTING THAT ASSESSEE COULD NOT FURNISH ANY EVIDENCE FOR DISTRESS SALE AND COULD NOT SHOW ANY VALID REASON FOR SELLIN G THE FIRST FLOOR AT PRICE MUCH LOWER THAN THE GROUND FLOOR, WHEN BOTH THE SALES WERE SPACED IN CLOSE PROXIMITY TO EACH OTHER. 6. NOW BEFORE US, THE LD. AUTHORISED REPRESENTATIVE S TRONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT ASSESSEE COULD NOT BE HELD LIABLE FOR HIGHER PRICE REALIZED BY HIS PARENTS FOR THE SALE OF THE GROUND FLOOR. ACCORDING TO HIM, OFFICE OF THE SUB-REGISTRAR HAD ACCEPTED THE VALUES MENTIONED IN THE SALE DEED. ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT SALE WAS EFF ECTED AT FAIR MARKET PRICE AND SEC. 50C OF THE INCOME TAX ACT, 1961 HAD NO APPLICATION. JUST BECAUSE GROUND FLOOR REALIZED MUCH MORE AMOUNT WHEN SOLD WOULD NOT BE A REASON, AS PER LD. AUTHORISED REPRES ENTATIVE, TO SUBSTITUTE THE FAIR MARKET VALUE SHOWN BY THE ASSES SEE BY A FICTITIOUS AMOUNT. ITA NO.2351/MDS/2016 :- 5 -: 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE S TRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. LD. ASSESSING OFFICER HAS GIVEN A CLEAR FINDING THA T AREA OF THE FIRST FLOOR WHICH WAS SOLD BY THE ASSESSEE, AND THE GROU ND FLOOR WHICH WAS SOLD BY HIS PARENTS WERE THE VERY SAME. NEVERTHELES S, LD. ASSESSING OFFICER DID NOT MAKE A DETAILED ANALYSIS OF THE SAL E DEED OF THE GROUND FLOOR, PRICE OF WHICH WAS ADOPTED BY HIM FOR COMPUT ING THE CAPITAL GAINS OF THE ASSESSEE. NO DOUBT ASSESSEES CLAIM THAT THERE WAS A VIOLENT ATTACK OF TERMITES AND WHITE ANTS IN THE FI RST FLOOR ALONE LEAVING GROUND FLOOR INTACT IS AGAINST PREPONDERANCE OF PRO BABILITY. HOWEVER, THE LD. ASSESSING OFFICER IN OUR OPINION OUGHT HAV E EXAMINED THE PURCHASER OF THE FIRST FLOOR OF THE PROPERTY TO ASC ERTAIN WHETHER ANY CONSIDERATION IN EXCESS OF WHAT WAS MENTIONED IN TH E SALE DEED WAS PAID. CONSIDERING ALL THESE ASPECTS, WE ARE OF THE OPINION THAT MATTER REQUIRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING COMPUTATION OF LONG TERM CAPITAL GAINS BACK TO THE FILE OF THE ASSESSING ITA NO.2351/MDS/2016 :- 6 -: OFFICER FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD DAY OF NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 23RD NOVEMBER, 2016 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF