Zulfi Ravdjee , Hyderabad V. Asst. Commissioner of Income Tax, Circle-14(1), Hyderabad

ITA 2415/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2461 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 21-08-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 31-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Sale consideration of property below Jantri Value; Period of limitation; Fair market value; Valuation report; Time period of passing order; Set aside
• Section: 144; 143(3); 50C; 142(1); 153A; 143(1); 143(2)

Judgement Text

ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 2415/ HYD/2018 ASSESSMENT YEAR: 2013-14 SHRI ZULFI REVDJEE, HYDERABAD PAN:AEAPA2227H VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 14-1 HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI C.P. RAMASWAMY REVENUE BY : SRI MOHAN KUMAR, DR DATE OF HEARING: 21/08/2019 DATE OF PRONOUNCEMENT: 05/09/2019 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-6, HYDERABAD, DATED 3.9.20 18. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS E-RETURN OF INCOME FOR THE A. Y 2013-14 ON 30.09.2013, ADMITTING TOTAL INCOME OF RS.2,48,03,55 0/-. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE AC T AND SUBSEQUENTLY IT WAS SELECTED FOR SCRUTINY UNDER CAS S. ACCORDINGLY, NOTICES U/S 143(2) AND 142(1) OF THE A CT WERE ISSUED TO THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE HAS SOLD A PROPERTY AT SHANGRILA APARTMENTS FOR RS.1,65,00,000/- AS AGAINS T THE SRO ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 2 OF 8 VALUE OF RS.2,12,73,600/-. THEREFORE, VIDE NOTICE U /S 142(1) OF THE ACT, DATED 6.1.2016, THE ASSESSEE WAS REQUIRED TO E XPLAIN AS TO WHY THE PROVISIONS OF SECTION 50C SHOULD NOT APPLIE D. THE ASSESSEE, VIDE LETTER DATED 28.1.2016 EXPLAINED THA T HE HAD ENTERED INTO AN AGREEMENT OF SALE FOR A CONSIDERATI ON OF RS.1,65,00,000 ON 8.2.2010 AND ALSO SUBMITTED THE C OPY OF THE SALE AGREEMENT AND CLAIMED THAT THE SAME SHOULD BE ADOPTED AS THE SALE CONSIDERATION U/S 50C OF THE ACT. THE AO H OWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION AND OBSERVED T HAT AS ON THE DATE OF THE REGISTERED SALE DEED DATED 3.9.2012, TH E SRO VALUE OF THE PROPERTY WAS AT RS.2,12,73,600/- AND FURTHER TH AT THE AGREEMENT OF SALE IS NOT A REGISTERED DOCUMENT. THE REFORE, HE SOUGHT TO BRING THE DIFFERENCE OF RS.47,73,600/- TO TAX U/S 50C OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT THE SR O VALUE AS ON THE DATE OF THE AGREEMENT OF SALE DATED 8.2.2010 WA S RS.1,65,00,000/- AND THE SAME SHOULD ONLY BE CONSID ERED AS THE SRO VALUE OF THE PROPERTY AND FURTHER SUBMITTED THA T SUBSEQUENTLY ONLY, THE SRO VALUE WAS REVISED TO RS.2,12,73,600/-. SINCE THE ASSESSEE OBJECTED TO TH E ADOPTION OF THE SRO VALUE FOR THE PURPOSE OF COMPUTATION OF LON G TERM CAPITAL GAIN, THE AO, VIDE LETTER DATED 19.6.2016, REFERRED THE MATTER TO THE VALUATION OFFICER, HYDERABAD, FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON 8.2.2010. 3. THE VALUATION OFFICER, HOWEVER, VIDE LETTER DATE D 20.7.2017 SUBMITTED HIS REPORT BY ESTIMATING THE FA IR MARKET VALUE OF THE PROPERTY AS ON 3.9.2012 AT RS.2,55,28, 320/-. THE ASSESSEE WAS AGAIN ISSUED A SHOW CAUSE NOTICE, IN R ESPONSE TO WHICH, THE ASSESSEE SUBMITTED THAT SINCE THE DATE O F AGREEMENT OF ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 3 OF 8 SALE AND THE DATE OF EXECUTION OF THE SALE DEED ARE TWO DIFFERENT DATES, IN VIEW OF THE PROVISO TO SECTION 50C OF THE ACT INSERTED BY THE FINANCE ACT, AS ON 1.4.2017, THE SRO VALUE AS O N THE DATE OF THE AGREEMENT OF SALE SHOULD BE CONSIDERED. IN SUPP ORT OF THIS CONTENTION, HE ALSO PLACED RELIANCE UPON THE DECISI ON OF THE ITAT, VIZAG BENCH IN THE CASE OF SMT. CHALASANI NAGA RATN A KUMARI VS. ITO. THE AO HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION AND ADOPTED THE SRO VALUE OF RS.2,12,73,600/- AS TH E VALUE OF THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATI ON OF CAPITAL GAIN AND ACCORDINGLY BROUGHT THE DIFFERENCE TO TAX. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A), STATING THAT AS PER SECTION 142(1)(VI) OF THE ACT, THE DVO IS REQUIRED TO SUBMIT THE VALUATION REPORT WITHIN SIX MONTHS FROM THE DATE OF THE REFERENCE AND FURTHER THAT THE AO H AS TO COMPLETE THE ASSESSMENT WITHIN TWO MONTHS THEREAFTER, AS PER CLAUSE (IV) OF EXPLANATION 1 TO SECTION 153 OF THE ACT. FURTHER, H E ALSO CHALLENGED THE ADOPTION OF SRO VALUE AS ON THE DATE OF SALE ON 3.9.2012 WHEREAS THE AGREEMENT OF SALE IS DATED 8.2 .2010 PARTICULARLY SINCE THE AO ALSO HAD MADE REFERENCE T O THE DVO TO DETERMINE THE VALUE OF THE PROPERTY AS ON 8.2.2010. THE CIT (A) HOWEVER, DISMISSED THE ASSESSEES APPEAL AND THE AS SESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GR OUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(APPEALS)-6, HYDERA BAD IS AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIE S OF THE CASE. 2.(A) THE LEARNED CIT(A) GROSSLY ERRED IN DISMISSIN G THE ADDITIONAL GROUND RAISED BEFORE HIM THAT THE IMPUGN ED ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 4 OF 8 ASSESSMENT IS BARRED BY LIMITATION IN TERMS OF THE PROVISIONS OF SECTION 153 R/W. SECTION 142A OF THE INCOME TAX ACT, 1961. (B) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E MAXIMUM TIME LIMIT STIPULATED FOR RECEIPT OF VALUAT ION REPORT FROM THE DVO UNDER SUBSECTION (6) OF SECTION 142A IS A PERIOD OF SIX MONTHS FORM THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB-SECTION (1) OF SECTION 142A OF THE INCOME TAX ACT, 1961. CONSEQUEN TLY, HE ERRED IN HOLDING THAT THE IMPUGNED ASSESSMENT IS NOT BARRED BY THE LIMITATION. (C) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT RE FERENCE TO THE VALUATION OFFICER U/S.142A(1) WAS MADE BY LE TTER DATED 19.02.2016 AND CONSEQUENTLY THE VALUATION OFF ICER SHOULD HAVE SENT A COPY OF THE REPORT OF ESTIMATE M ADE UNDER SUB-SECTION (4) OR SUB-SECTION (5) WITHIN A P ERIOD OF 6 MONTHS, I.E., BY END OF AUGUST 2016. WHEREAS THE REPORT WAS SUBMITTED BY HIM ONLY IN JULY 2017 AND CONSEQUENTLY THE IMPUGNED ASSESSMENT IS BARRED BY LIMITATION. 3. WITHOUT PREJUDICE TO GROUND NO.2: (A) THE LEARNE D CIT(A) GROSSLY ERRED IN CONFIRMING THE ADOPTION OF SALE CONSIDERATION AS PER SECTION SOC VALUATION AS ON TH E DATE OF SALE DEED VIZ., 03.09.2012 IGNORING THE APPLICABILITY OF THE FIRST PROVISO AND THE SECOND P ROVISO TO SUB-SECTION (1) OF SECTION 50C. (B) THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED IN TOTO ON THE ABOVE GROUNDS. 4. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECES SARY . 5. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT (A), SUBMITTED THAT SECTION 153 PROVIDES THE TIME LIMIT FOR COMPLE TION OF AN ASSESSMENT OR RE-ASSESSMENT AND RE-COMPUTATION AND THE ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 5 OF 8 EXPLANATION(1) THEREOF, PROVIDES THE PERIOD WHICH I S TO BE EXCLUDED FROM THE LIMITATION PERIOD. HE SUBMITTED THAT SUB-S ECTION (1) OF SECTION 153 PROVIDES FOR THE LIMITATION PERIOD OF 2 1 MONTHS FROM THE END OF THE A.Y IN WHICH THE INCOME WAS ASSESSAB LE, IF THE ASSESSMENT IS TO BE MADE U/S 143 OR 144 OF THE I.T. ACT. HE REFERRED TO CLAUSE (V) OF EXPLANATION 1 TO SECTION 153, WHICH PROVIDES THAT THE PERIOD COMMENCING FROM THE DATE O N WHICH THE AO MAKES A REFERENCE TO THE VALUATION OFFICER UNDER SUB-SECTION 142A AND THAT THE DATE ON WHICH THE REPORT OF THE V ALUATION OFFICER IS RECEIVED BY THE AO IS TO BE CALCULATED F OR CALCULATING THE LIMITATION PERIOD. HE THEREAFTER REFERRED TO SECTIO N 142A(VI) OF THE ACT WHICH PROVIDES THAT THE VALUATION OFFICER SHALL SEND A COPY OF THE REPORT UNDER SUB-SECTION (V), AS THE CASE MAY B E, TO THE AO AND THE ASSESSEE, WITHIN A PERIOD OF SIX MONTHS FRO M THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB-SE CTION (1) OF THE ACT. HE SUBMITTED THAT THE SINCE THE WORDS USED IN THIS CLAUSE IS SHALL, IT IS MANDATORY FOR THE VALUATION OFFIC ER TO FOLLOW THE TIMELINE GIVEN IN THE ACT. HE ALSO REFERRED TO THE OTHER SUB- SECTIONS OF SECTION 142(A), WHERE THE WORDS MAY O R SHALL ARE USED IN DIFFERENT CONTEXTS. IN SUPPORT OF HIS CONTE NTION THAT, WHERE IN THE SAME SECTION BOTH THE WORDS ARE USED, WORD SHALL BE CONSIDERED MANDATORY, HE RELIED ON CENTRAL BOARD OF DIRECT TAXES CIRCULAR REPORTED IN 371 ITR 22 AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. KHANNA & CO. VS UNION OF INDIA AND OTHERS ON 14 SEPTEMBER, 1984( 156 ITR 796 (DEL.). HE SUBMITTED THAT AS PER SECTION 153A OF THE ACT, THE ASSESSMENT ORDER HAS TO BE PASSED ON OR BEFORE 31.03.2016, WHE REAS THE ASSESSMENT ORDER IS PASSED ON 19.09.2017. THEREFORE , HE SOUGHT THE SETTING ASIDE OF THE ASSESSMENT ORDER ON THIS G ROUND ALONE. ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 6 OF 8 ON MERITS ALSO, HE ARGUED THAT THE SRO VALUE AS ON THE DATE OF THE AGREEMENT OF SALE SHOULD BE CONSIDERED AND THOU GH THE AO HAD REFERRED THE VALUATION OF THE PROPERTY AS ON AG REEMENT OF SALE, THE DVO HAS SUBMITTED THE REPORT GIVING THE VALUE A S ON THE DATE OF THE EXECUTION OF THE SALE DEED. THEREFORE, ACCOR DING TO HIM, THE ASSESSMENT ORDER ON THE BASIS OF SUCH AN ERRONEOUS VALUATION REPORT ALSO IS NOT SUSTAINABLE. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT PRIOR TO THE INSERTION OF SUB-SECTION (VI) TO SECTION 142A OF TH E ACT, THERE WAS NO TIME LIMIT FOR THE VALUATION OFFICER TO SUBMIT T HE REPORT AND THE PERIOD TAKEN BY THE VALUATION OFFICER FROM THE DATE OF REFERENCE TO THE SUBMISSION OF THE REPORT, WAS TO BE EXCLUDED WH ILE COMPUTING THE PERIOD OF 21 MONTHS FROM THE END OF THE RELEVAN T A.Y AS PROVIDED UNDER SECTION 153 OF THE ACT. THEREFORE, H E SUBMITTED THAT THE ASSESSMENT ORDER IS TO BE UPHELD. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE RELEVANT A.Y BEFORE US IS A.Y 2013-14 AND THE RETURN OF INCOME WAS FILED ON 30.09.2013. T HEREFORE, 21 MONTHS FROM SUCH DATE WOULD EXPIRE ON 31.3.2016. TH US, THE ASSESSMENT ORDER U/S 143(3) WAS REQUIRED TO BE PASS ED BY 31.03.2016 BUT SINCE THE AO HAS MADE A REFERENCE TO THE VALUATION OFFICER U/S 142A OF THE ACT, VIDE LETTER DATED 19.02.2016, AND THE VALUATION REPORT WAS FILED ON 2 0.7.2017, THE SAID PERIOD WILL HAVE TO BE EXCLUDED FOR DETERMININ G THE TIME LIMIT. HOWEVER, THE QUESTION BEFORE US IS THE PERIOD ALLOW ED TO THE DVO ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 7 OF 8 TO SUBMIT THE REPORT. U/S 142A OF THE ACT, THE VALU ATION REPORT HAS TO BE SUBMITTED WITHIN SIX MONTHS FROM THE DATE OF THE RECEIPT OF THE REFERENCE. ADMITTEDLY, IN THE CASE BEFORE US , THE VALUATION OFFICER HAS SUBMITTED THE REPORT BEYOND A PERIOD OF 15 MONTHS. WHETHER THIS PERIOD CAN BE ENLARGED OR CONDONED IS TO BE SEEN. AS RIGHTLY POINTED BY THE LEARNED COUNSEL FOR THE ASSE SSEE, THE WORD USED IN SUB-SECTION 6 OF SECTION 142A IS SHALL AN D IN OTHER SUB SECTIONS, THE WORD USED IS MAY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. KHANNA & CO. VS UNION OF INDIA AND OTHERS ON 14 SEPTEMBER, 1984 (SUPRA) HAS CLEARLY HELD THAT WH ERE THE WORDS MAY AND SHALL ARE USED IN VARIOUS PROVISIONS O F SAME SECTIONS, THEN BOTH OF THEM CONTAIN DIFFERENT MEANI NG AND THE WORD SHALL SHALL MEAN MANDATORY. AS ARGUED BY T HE LEARNED COUNSEL FOR THE ASSESSEE, THE AO WAS REQUIRED TO CA LL FOR A REPORT FROM THE VALUATION OFFICER WITHIN SIX MONTHS FROM T HE DATE OF THE REFERENCE AND THE VALUATION OFFICER WAS BOUND TO GI VE SUCH A REPORT WITH SUCH PRESCRIBED PERIOD. FURTHER, AS SEE N FROM THE ASSESSMENT ORDER, THE AO HAD DIRECTED THE VALUATION OFFICER TO GIVE THE VALUATION OF THE PROPERTY AS ON 8.2.2010, WHERE AS THE VALUATION OFFICER HAS GIVEN THE REPORT AS ON THE DA TE OF THE EXECUTION OF THE SALE DEED. THEREFORE, THE DVO HAS CLEARLY NOT FOLLOWED THE DIRECTIONS OF THE AO AND ALSO NOT FOLL OWED THE TIMELINE FIXED UNDER THE ACT. WHEN IT IS MANDATORY FOR AN OFFICER TO FOLLOW THE TIMELINE PRESCRIBED UNDER THE ACT, SUCH DELAY CANNOT BE CONDONED. THEREFORE, WE AGREE WITH THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE REPORT OF THE VAL UATION OFFICER HAS TO BE FILED WITHIN THE TIME GIVEN U/S 142A(VI) OF THE ACT AND THEREFORE, THE ASSESSMENT ORDER PASSED ON THE BASIS OF SUCH REPORT OF VALUATION OFFICER BEYOND THE TIME LIMIT I S NOT ITA NO 2415 OF 2018 ZULFI REVDJEE HYDERABAD. PAGE 8 OF 8 SUSTAINABLE. THEREFORE, WE ALLOW THE ASSESSEES APP EAL AND THE ASSESSMENT ORDER IS SET ASIDE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2019. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 5 TH SEPTEMBER, 2019. VINODAN/SPS COPY TO: 1 SHRI ZULFI REVDJEE, 8-2-494/501, ROAD NO.7, BANJA RA HILLS, HYDERABAD 500034 2 ACIT, CIRCLE 14(1) ROOM NO.636, 6 TH FLOOR, C BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 3 CIT (A)-6 HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER