VIKRAM SHAH, PUNE V. DCIT, CIRCLE-2, PUNE

ITA 24/PUN/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0806 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 05-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.24/PUN/2020 नधा रण वष / Assessment Year : 2006-07 Vikram Shah, 232, Nanapeth, Pune 411 002 Maharashtra PAN : ACEPS2379E Vs. DCIT, Circle-2, Pune (Appellant) (Respondent) आदेश / ORDER PER S.S. GODARA, JM : This assessee’s appeal for AY 2006-07 arises against the CIT(A)-4, Pune’s order dated 29-10-2019 passed in case No. PN/CIT(A)-4/DCIT, Circle-2, Pune/803/2008-09 involving proceedings under Section 143(3) of the Income Tax Act, 1961 in short the Act. Case called twice. None appears at assessee’s behest. He is accordingly proceeded ex parte. Case file perused. 2. The assessee pleaded the following substantive grounds in the instant appeal : “On facts and circumstances prevailing in the case and as per provisions of law and scheme of the Act, it be held that the assessment framed by the AO pending report of DVO is improper, Appellant by None Respondent by Shri Arvind Desai Date of hearing 26-05-2022 Date of pronouncement 30-05-2022 ITA No. 24/PUN/2020 Vikram Shah 2 unjustified and contrary to the provisions of law. The assessment so framed by the ld. AO be set aside. The appellant be granted just and proper relief in this respect. On the facts and in the circumstances prevailing in the case and as per the scheme and provisions of the act, it be held that the act of Ld. AO and that upheld by the Hon’ble CIT(A), in not considering the provisions of Section 50C(2) of the Act and the procedure laid there under is improper, unjust and unwarranted. The appellant be granted just and proper relief in this respect. On the facts and in the circumstances prevailing in the case and as per the provisions and scheme of the Act, the appellant be granted consequential relief, if any.” 3. Learned departmental representative invited my attention to the CIT(A)’s detailed discussion granting relief to the assessee as per the DVO’s valuation as follows : “9.3 DECISION; The observations of the AO, submissions of the appellant and the material on record have been considered. 9.3.1 In the assessment order, it was seen that the appellant, along with his father, had sold a property at Aundh on 30.12.2005 for Rs. 30,00,000/- whereas the Stamp Duty Valuation of the said property was Rs. 46,13,000/-. The AO asked the appellant as to why provisions of Section 50C(1) of the Act should not be applied to him for computing capital gain to which the appellant replied that the plot was under reservation and its value was low. Thereafter, the AO referred the matter to the DVO for determining the FMV of the said property on 17.12.2008. Since the report of the DVO was not received before completion of the assessment on 30.12.2008, the AO adopted the Stamp Duty Value of Rs. 46,13,000/- and made addition of Rs. 8,06,500/- which was the appellant's share of Long Term Capital Gain. 9.3.2 The appellant has raised the ground that the assessment order dated 30.12.2008 was invalid because the AO did not have jurisdiction to adopt valuation of the property other than what the DVO would recommend and therefore the assessment order was null and void. He also contended that applying the provisions of Section 50C(1) of the Act was contrary to the provisions and ITA No. 24/PUN/2020 Vikram Shah 3 scheme of the Act and the facts prevailing in the case because once the valuation is referred to the DVO, then the AO cannot make valuation of the property on his own. The appellant also submitted that as per the provisions of Section 50C(2) of the Act, the DVO report is binding on the AO. The appellant relied on the decision in the case of S. Muthuraja Vs. CIT 37 Taxmann.com 352 (Mad). In the same breath, the appellant also contended that once the assessment order was passed pending the receipt of the DVO report, the reference to DVO became invalid. For this, he relied on the decision of Reliance Jute and Industries Ltd. 150 ITR 643 (Kol) and decision of Hon'ble Mumbai ITAT in the case of DCIT Vs. Vida D'Lima IT A No. 5976/Mum/2011 and the case of Eula D'Souza IT A No. 5969/Mum/2011. He contended that the returned income of Rs. 15,09,930/- should be taken as the assessed income as against Rs. 23,16,430/- determined by the AO. 9.3.3 Section 50C(1) of the Act states that where the consideration received or accruing as a result of transfer by the appellant of a capital asset is less than the value adopted or assessed by the Stamp Valuation Authority, the value so adopted by the Stamp Valuation Authority shall for the purposes of Section 48 be deemed to be the full value of the consideration received or accruing as a result of such transfer. Section 50C(2) of the Act states that without prejudice to the provisions of Section 50C(1) of the Act, where the appellant claims before any AO that the value adopted or assessed by the Stamp Valuation Authority u/s 50C(1) of the Act exceeds the FMV of the property as on the date of transfer, the AO may refer the valuation of the capital asset to the DVO. The DVO's report is binding on the AO. 9.3.4 On perusal of the assessment order, it is very clear that the AO, on the basis of the facts of the case and the submissions of the appellant, was of the considered opinion that the property needed to be referred to the DVO for valuation of its FMV u/s 50C of the Act. Since, the report of the DVO had not been received upto the end of December, 2008, the AO had passed the assessment order making an addition of Rs. 8,06,500/- in the appellant's case. The AO is well within his rights in referring the matter to the DVO as per the provisions of Section 50C of the Act as the value of the asset as reflected by the appellant was lower than the Stamp Duty Valuation of the same. Therefore, the appellant has no grouse when the valuation as per the DVO report is adopted in this order as he himself has been emphasizing time and again in his submissions that the valuation of the DVO is to be adopted and ITA No. 24/PUN/2020 Vikram Shah 4 not that of the Stamp Valuation Authority. He has also reiterated that the DVO report was sacrosanct and had to be adhered to by the AO. Now since the DVO's report has been received, the appeal is being decided after giving due opportunity to the appellant during the appellate stage and considering the submissions that he has given thereafter to this office. 9.3.6 In light of the above facts, it is held the FMV of Rs. 22,01,000/- as on 3.01.2006, vide the report of the DVO dated 23.04.2009 takes precedence once it has been received. Thus, the contentions of the appellant that the valuation determined by the DVO is to be adopted and not the Stamp Duty Valuation as adopted by the AO in the assessment order is acceptable. Simultaneously, the appellant's contention that the DVO's report is binding on the AO as per the provisions of Section 50C(2) of the Act and the AO cannot make addition u/s 50C(1) of the Act based on the Stamp Duty Valuation is also acceptable. However, the appellant's contention that the DVO report becomes invalid once assessment order is passed is not acceptable in view of the discussions above. The decisions relied upon by the appellant, in connection with the submission that the DVO report becomes invalid once the assessment order is passed, are not relevant to the facts of the appellant's case. 9.3.7 The DVO after due consideration, has determined the FMV of the said property at Rs. 22,01,000/-. The appellant has not submitted any objection before the DVO. In view of the facts above, the DVO has correctly adopted the FMV of the property under consideration at Rs. 22,01,000/- and I have no reason to differ with the same. Therefore, in light of the above, the AO has rightly made the addition in the case of the appellant. However, in view of the discussions above, the addition is restricted to Rs. 22,01,000/- and the addition of Rs. 7,01,000/- (Rs. 22,01,000/- less Rs. 15,00,000/-) is sustained. The addition made by the AO is partly upheld. Therefore, Ground of Appeal Nos. 1 & 2 and Additional Ground of Appeal No. 2, filed by the appellant, are PARTLY ALLOWED.” 4. It is therefore clear that the assessee has already succeeded on the very issue before the CIT(A) and also he has not challenged the DVO’s valuation of the relevant capital ITA No. 24/PUN/2020 Vikram Shah 5 asset. That being the case, I find no merit n the assessee’s pleadings. The same stand rejected. 5. This assessee’s appeal is dismissed. Order pronounced in the Open Court on 30 th May, 2022. Sd/- (S.S.GODARA) JUDICIAL MEMBER प ु णे Pune; दनांक Dated : 30 th May, 2022 Satish आदेश क त ल प अ े षत / Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. 4. 5. The CIT(A)-4, Pune The Pr.CIT-3, Pune वभागीय त न ध, आयकर अपील!य अ धकरण, प ु णे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No. 24/PUN/2020 Vikram Shah 6 Date 1. Draft dictated on 26-05-2022 Sr.PS 2. Draft placed before author 30-05-2022 Sr.PS 3. Draft proposed & placed before the second member -- JM 4. Draft discussed/approved by Second Member. -- JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.