Shri Gundmi Venkataramana , Bangalore V. Income Tax Officer Ward-6(1)(4), Bangalore

ITA 2410/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9911 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 20-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Valuation report; Set aside; Capital Gains
• Section: 50C; 54F; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO . 2409 /BANG/201 8 ASSESSMENT YEAR : 20 1 5 - 1 6 SMT. UMA VENKAT, # 295, 1 ST MAIN ROAD, BSK 3 RD STAGE, 3 RD PHASE, CHANNAMANAKERE, ACHUKATTU, BANGALORE 560 085. PAN: ACGPV8934L VS. THE INCOME TAX OFFICER, WARD 6 (1) (4), BANGALORE. APPELLANT RESPONDENT ITA NO. 2410/BANG/2018 ASSESSMENT YEAR : 20 15 - 16 SHRI GUNDMI VENKATARAMANA, # 295, 1 ST MAIN ROAD, BSK 3 RD STAGE, 3 RD PHASE, CHANNAMANAKERE, ACHUKATTU, BANGALORE 560 085. PAN : AAKPV2470M VS. THE INCOME TAX OFFICER, WARD 6 (1) (4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.R. SURESH, CA RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 0 4 . 1 2 .2018 DATE OF PRONOUNCEMENT : 07 . 1 2 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY TWO DIFFERENT BUT C ONNECTED ASSESSEES AND THESE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)- 6, BANGALORE BOTH DATED 25.04.2018 FOR THE SAME ASSESSMENT YEAR I.E. ASSESS MENT YEAR 2015-16. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 2409 & 2410/BANG/2018 PAGE 2 OF 6 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 24 09/BANG/2018 ARE AS UNDER. 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-6, BANG ALORE, HAS ERRED IN SUSTAINING THE ORDER OF THE ASSESSING AUTH ORITY TO THE EXTENT OF RS.10,36,500/- BEING THE ADDITION MADE U/S 50C OF T HE INCOME TAX ACT, 1961. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-6 HAS E RRED IN NOT CONSIDERING DETAILED SUBMISSION IN SUPPORT OF GROUN DS OF APPEAL AND SUSTAINING THE ORDER OF AO WHICH IS OPPOSED TO FACT S, CIRCUMSTANCES AND NATURAL JUSTICE OF THE CASE. 3. THE CIT(A)-6 HAS ERRED IN NOT ADJUDICATING THE A DDITIONAL GROUNDS OF APPEAL FILED BY THE APPELLANT. 4. THE AO OUGHT TO HAVE CONSIDERED THE EXPLANATION OF THE APPELLANT FILED VIDE SUBMISSION DATED 22/11/2017 WITH REGARD TO DEFECTIVE TITLE OF THE PROPERTY AND HAD TO SELL TO AVOID TOTAL LOSS, R ESULTING IN DISTRESS SALE FOR A PRICE BELOW THE NOTIFIED BY REGISTRATION AUTHORITY FOR STAMP DUTY REVENUE PURPOSE. 5. THE AO IN POSSESSION OF SUBMISSION OF APPELLANT WITH REGARD TO DEFECTIVE TITLE TO THE PROPERTY OUGHT TO HAVE REFER RED FOR VALUATION OF PROPERTY. THE AO OUGHT TO HAVE FOLLOWED OF JUDGMENT OF HON'BLE ITAT CHENNAI IN THE CASE OF ACIT V ROYAL STITCHES PRIVAT E LIMITED (2010) WHEREIN IT HAS BEEN HELD THAT- 'IT IS DUTY BOUND TO GIVE AN OPPORTUNITY TO THE ASS ESSEE TO PRESENT ITS CASE FOR VALUATION OF THE ASSET IF THE ASSESSEE IS ABLE TO SHOW THAT THE TITLE WAS DEFECTIVE'. 6. THE AO BEFORE MAKING ADDITION TO THE ADMITTED IN COME UNDER LONG TERM CAPITAL GAIN HAS FAILED TO DEMONSTRATE, THE AP PELLANT IN REALITY HAS RECEIVED THE CONSIDERATION EQUIVALENT TO GUIDAN CE VALUE WHICH IS OVER AND ABOVE THE ACTUAL SALE CONSIDERATION STATED IN SALE DEED. 7. THE AO OUGHT TO HAVE APPLIED THE PROVISIONS OF S ECTION 50C TO ASSESS THE APPELLANT'S LONG TERM CAPITAL GAIN MORE THAN THE REAL INCOME IGNORING THE FACT THAT APPELLANT TITLE OVER THE PROPERTY WAS DEFECTIVE THEREBY UNDER COMPELLING SITUATION TO SEL L THE PROPERTY FOR A DISTRESS PRICE. 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT ADDITION MADE BY THE ASSG. AUTHORITY AND SUSTAINED BY THE COMMISSIONER OF INCOME TAX (AP PEALS)-6, BE DELETED AND THE APPEAL BE ALLOWED. THE APPELLANT PRAYS FOR LEAVE, TO ADD, DELETE OR AM END THE GROUNDS OF APPEAL AT THE TIME OF HEARING. ITA NOS. 2409 & 2410/BANG/2018 PAGE 3 OF 6 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 24 10/BANG/2018 ARE AS UNDER. 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-6, BANG ALORE, HAS ERRED IN SUSTAINING THE ORDER OF THE ASSESSING AUTH ORITY TO THE EXTENT OF RS.10,36,500/- BEING THE ADDITION MADE U/S 50C OF T HE INCOME TAX ACT, 1961. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-6 HAS E RRED IN NOT CONSIDERING DETAILED SUBMISSION IN SUPPORT OF GROUN DS OF APPEAL AND SUSTAINING THE ORDER OF AO WHICH IS OPPOSED TO FACT S, CIRCUMSTANCES AND NATURAL JUSTICE OF THE CASE. 3. THE CIT(A)-6 HAS ERRED IN NOT ADJUDICATING THE A DDITIONAL GROUNDS OF APPEAL FILED BY THE APPELLANT. 4. THE AO OUGHT TO HAVE CONSIDERED THE EXPLANATION OF THE APPELLANT FILED VIDE SUBMISSION DATED 22/11/2017 WITH REGARD TO DEFECTIVE TITLE OF THE PROPERTY AND HAD TO SELL TO AVOID TOTAL LOSS, R ESULTING IN DISTRESS SALE FOR A PRICE BELOW THE NOTIFIED BY REGISTRATION AUTHORITY FOR STAMP DUTY REVENUE PURPOSE. 5. THE AO IN POSSESSION OF SUBMISSION OF APPELLANT WITH REGARD TO DEFECTIVE TITLE TO THE PROPERTY OUGHT TO HAVE REFER RED FOR VALUATION OF PROPERTY. THE AO OUGHT TO HAVE FOLLOWED OF JUDGMENT OF HON'BLE ITAT CHENNAI IN THE CASE OF ACIT V ROYAL STITCHES PRIVAT E LIMITED (2010) WHEREIN IT HAS BEEN HELD THAT- 'IT IS DUTY BOUND TO GIVE AN OPPORTUNITY TO THE ASS ESSEE TO PRESENT ITS CASE FOR VALUATION OF THE ASSET IF THE ASSESSEE IS ABLE TO SHOW THAT THE TITLE WAS DEFECTIVE'. 6. THE AO BEFORE MAKING ADDITION TO THE ADMITTED IN COME UNDER LONG TERM CAPITAL GAIN HAS FAILED TO DEMONSTRATE, THE AP PELLANT IN REALITY HAS RECEIVED THE CONSIDERATION EQUIVALENT TO GUIDAN CE VALUE WHICH IS OVER AND ABOVE THE ACTUAL SALE CONSIDERATION STATED IN SALE DEED. 7. THE AO OUGHT TO HAVE APPLIED THE PROVISIONS OF S ECTION 50C TO ASSESS THE APPELLANT'S LONG TERM CAPITAL GAIN MORE THAN THE REAL INCOME IGNORING THE FACT THAT APPELLANT TITLE OVER THE PROPERTY WAS DEFECTIVE THEREBY UNDER COMPELLING SITUATION TO SEL L THE PROPERTY FOR A DISTRESS PRICE. 8. THE AO HAVING ASSESSED THE LONG TERM CAPITAL GAI N INCOME HIGHER THAN THE ADMITTED INCOME OUGHT TO HAVE GIVEN EXEMPT ION UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 FOR INVESTM ENT IN CONSTRUCTION OF RESIDENTIAL APARTMENT AT A TOTAL CO ST OF RS.70,24,500/-, RS. 1,16,16,440/- AND RS.10,00,000/- AGGREGATING TO RS. 1,96,40,940/- INVESTED DURING ASSESSMENT YEARS 2016-17 , 2017-18 AND 2018-19 RESPECTIVELY. ITA NOS. 2409 & 2410/BANG/2018 PAGE 4 OF 6 9. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT ADDITION MADE BY THE ASSG. AUTHORITY AND SUSTAINED BY THE COMMISSIONER OF INCOME TAX (AP PEALS)-6, BE DELETED AND THE APPEAL BE ALLOWED. THE APPELLANT PRAYS FOR LEAVE, TO ADD, DELETE OR AM END THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT THE FACTS IN DISPUTE IN BOTH THE CASES ARE IDENTICAL. HE SUBMIT TED THAT THE AO INVOKED THE PROVISIONS OF SECTION 50C OF IT ACT TO ASSESS T HE CAPITAL GAIN OF THE ASSESSEE IN RESPECT OF SALE OF PROPERTY ALTHOUGH TH E TITLE IN PROPERTY IS DEFECTIVE. HE SUBMITTED THAT THE AO SHOULD HAVE OB TAINED THE VALUATION REPORT FROM THE DVO AS PER SECTION 50C (2) OF IT AC T AND SINCE, THIS HAS NOT BEEN DONE BY THE AO, THE MATTER SHOULD BE RESTORED BACK TO AO FOR FRESH DECISION AFTER OBTAINING VALUATION REPORT FROM THE DVO. HE ALSO SUBMITTED THAT ISSUE IN RESPECT OF ALLOWABILITY OF DEDUCTION U/S. 54F SHOULD ALSO BE RESTORED BACK FOR FRESH DECISION AFTER CORRECTLY DE TERMINING THE AMOUNT OF INCOME IN RESPECT OF LONG TERM CAPITAL GAINS IN THE CASE OF BOTH THE ASSESSEES. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF SHRI K M RAJENDRAN VS . ITO AS REPORTED IN TS- 5002-ITAT-2015(BANGALORE)-O COPY AVAILABLE ON PAGES 31 TO 34 OF PAPER BOOK. THE LD. DR OF REVENUE SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, I REPRODUCE PARA NO. 5 OF THIS TRIBUNAL ORDER CITED BY LD. AR OF ASSESSEE FROM PAGES 33 AND 34 OF PAPER BOOK. 05. IT WAS CONTENDED BEFORE US THAT THE ASSESSING O FFICER FAILED TO CARRY OUT THE EXERCISE U/S.50C(2)(B) OF THE ACT. TH E CIT(A) HAS REJECTED THIS CONTENTION OF THE ASSESSEE ON THE GRO UND THAT ASSESSEE HAS NOT MADE A SPECIFIC PRAYER TO THIS EXTENT BEFOR E THE ASSESSING OFFICER. SHE REPRODUCED THE LETTER OF THE ASSESSEE DT 13.12.2011 AT PAGE 7 OF HER ORDER. IN OUR OPINION THE APPROACH AD OPTED BY THE C1T (A) IS NOT IN CONSONANCE WITH THE POSITION OF LAW. WAY BACK IN 1955, THE BOARD HAD ISSUED A CIRCULAR BEARING NO. 14(XI-3 5) OF 11TH APRIL, 1955, IN WHICH THE BOARD HAS APPRAISED ITS OFFICERS TO ASSIST THE TAX PAPERS IN EVERY REASONABLE WAY FOR ASSESSING THE CO RRECT INCOME. WHEN ASSESSEE HAS POINTED OUT TO THE ASSESSING OFFI CER THAT PROPERTY WAS SOLD AT A LOWER RATE BECAUSE OF THE DISPUTE ON THE PROPERTY, THEN IT WAS THE DUTY OF THE ASSESSING OFFICER TO FIND OUT T HE EXACT VALUE. THE ASSESSING OFFICER HIMSELF NOTICED ABOUT THIS PLEA O F THE ASSESSEE IN ITA NOS. 2409 & 2410/BANG/2018 PAGE 5 OF 6 RESPECT OF DISPUTE (EXTRACTED SUPRA). APART FROM TH IS ASPECT, THE APPELLATE AUTHORITY HAS DOUBTED ABOUT THE NATURE OF THE DISPUTE, TO OUR MIND, WITHOUT CONDUCTING ANY ENQUIRY, IT IS DIFFICU LT TO FIND OUT THE ENCUMBRANCE OVER THE PROPERTY. THIS ASPECT CAN ONLY BE EXAMINED BY THE VALUATION O FFICER BECAUSE HE HAS TO EVALUATE THE PROPERTY AS PER THE PROVISIONS OF WEALTH TAX ACT WHERE FULL PROCEDURE HAS BEEN PROVIDED. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE ARE OF THE VIEW THAT THE ORDERS O F THE REVENUE AUTHORITIES ARE NOT SUSTAINABLE. WE SET ASIDE BOTH THE ORDERS AND REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READ JUDICATION. THE ASSESSING OFFICER SHALL CALL FOR A REPORT FROM THE DVO AND THEREAFTER DETERMINE THE GAIN, IF ANY, ACCRUING TO THE ASSESSE E ON SALE OF THE PROPERTY. 6. IN THE PRESENT CASE, I FIND THAT AS PER THE ASSE SSMENT ORDER, THE AO HAS NOTED THAT THE ASSESSEE HAS SOLD THE PROPERTY HELD BY HIM JOINTLY WITH HIS WIFE SMT. UMA VENKAT AND COMPUTED THE CAPITAL GAIN ON THE BASIS OF SALE CONSIDERATION AS NOTED IN THE SALE DEED BUT SINCE T HE VALUE OF STAMP DUTY WAS HIGHER, THE AO INVOKED THE PROVISIONS OF SECTIO N 50C AND COMPUTED THE CAPITAL GAIN ON HIGHER SIDE. IT DOES NOT COME OUT FROM THE ASSESSMENT ORDER THAT ANY OPPORTUNITY WAS PROVIDED BY AO TO ASSESSEE TO MAKE OUT THE CASE AS TO HOW THE SALE VALUE DECLARED BY THE ASSESSEE F OR COMPUTATION OF CAPITAL GAIN IS CORRECT. UNDER THESE FACTS AND BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER CITED BY LD. AR OF ASSESSEE, I FEEL IT PROPER TO RESTORE BACK THE MATTER TO THE FILE OF AO FOR FRESH DECISION AFT ER OBTAINING VALUATION REPORT FROM THE DVO AS PROVIDED IN SECTION 50C (2) OF IT A CT. ACCORDINGLY, I SET ASIDE THE ORDER OF CIT(A) IN BOTH THE CASES AND RES TORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION IN VIEW OF ABOVE DISCUSSION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 07 TH DECEMBER, 2018. /MS/ ITA NOS. 2409 & 2410/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.