Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 9236 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-07-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
04-07-2019
Assessment Year
2012-2013
Appeal Filed On
16-11-2017
Judgement Text
- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.2536/AHD/2017 / ASSTT. YEAR: 2012-13 KANTILAL MANILAL PATEL 172, PATEL VAS KHADAKI CHANDLODIA AHMEDABAD 382 481 PAN : AICPP 1839 Q VS. ITO, WARD-4(2)(2) AHMEDABAD. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI S.K. DEV, SR.DR ! '#$ % &' / DATE OF HEARING : 04/07/2019 ()* % &' / DATE OF PRONOUNCEMENT: 08 /07/2019 ,- / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-4, AHMEDABAD DATED 8.5.2017 PASSED FOR TH E ASSTT.YEAR 2012-13. 2. REGISTRY HAS POINTED OUT THAT APPEAL FILED BY TH E ASSESSEE IS TIME BARRED BY THREE DAYS. ASSESSEE HAS FILED AN A PPLICATION FOR CONDONATION OF DELAY, IN WHICH IT IS PLEADED THAT O N ACCOUNT OF MEDICAL REASONS APPEAL COULD NOT BE FILED WELL IN T IME. CERTIFICATE FROM SAMATA HOSPITAL IS BEING ANNEXED WITH THE APPL ICATION. AFTER ITA NO.2536/AHD/2017 2 CONSIDERING THE APPLICATION, WE ARE SATISFIED THAT THE ASSESSEE HAS BEEN PREVENTED BY REASONABLE CAUSE FOR NOT PRESENTI NG THE APPEAL IN TIME, AND THEREFORE, WE CONDONE THE DELAY OF THR EE DAYS, AND PROCEED TO DECIDE THE APPEAL ON MERIT. 3. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 18.12.2012 DECLARING TOTAL INCOME AT R S.11,93,640/- . THIS RETURN WAS PROCESSED UNDER SECTION 143(1). THEREAFTER, THE LD.AO HAS REOPENED THE ASSESSMENT ON GROUND THA T DIT(INVESTIGATION) RECEIVED AN INFORMATION THAT THE ASSESSEE HAD SOLD A LAND BEARING SURVEY NO.132 & 133 AT VILLAGE RANIP. THE LAND WAS SOLD FOR A CONSIDERATION OF RS.9.57 CRORES , AND ASSESSEE HAD RECEIVED A SUM OF RS.1.59 CRORE AS A SHARE. TH E AO HARBOURED A BELIEF THAT THE ASSESSEE HAS NOT DISCLO SED CAPITAL GAIN. THEREFORE, HE RECORDED REASONS AND REOPENED THE ASSESSMENT. COPY OF THE REASONS IS BEING PLACED ON PAGE NO.13 OF THE PAPER BOOK WHICH READS AS UNDER: AS PER INFORMATION RECEIVED FROM DY.DIT(INV.), AIU , UNIT-II, AHMEDABAD, THAT A SEARCH WAS CARRIED OUT IN THE OFF ICE OF GAJANAND CORPORATION WHEREIN A COPY OF SALE DEED FOR SURVEY NO. 132 & 133 AT VILLAGE RANIP, FINAL PLOT NO.75, T.P.SCHEME NO.66, WAS FOUN D. AS PER THE SALE DEED, KANTILAL MANILAL PATEL IS ONE OF THE SELLER OF THE LAND ADMEASURING 7649 SQ MTR. FOR A TOTAL CONSIDERATION FOR RS.9,57,00,000/-. AS PER THE SALE DEED, THE ASSESSEE HAD RECEIVED RS.159.50 LACS DURING F.Y. 20 11-12. THEREFORE, HE IS LIABLE TO CAPITAL GAIN. ON VERIFICATION OF RECORDS IT IS OBSERVED THAT THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION BUT HAS SHOWN CAPITAL GAIN JUST FOR RS.2,54,566/-. I HAVE THEREFORE, REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED WITHIN THE MEANING OF SECTION 147 OF TH E I.T.ACT, 1961. DATE : 14/10/2014 SD/- PLACE: AHMEDABAD (PRITA M. MENON) INCOME TAX OFFICER ITA NO.2536/AHD/2017 3 WARD-6(5), AHMEDABAD. 5. THE LD.AO THEREAFTER OBSERVED THAT THE ASSESSEE CALCULATED THE LONG TERM CAPITAL GAIN BY ADOPTING COST OF ACQU ISITION AT RS.14,87,267/- AS ON 1.4.1981 ON THE BASIS OF REGIS TERED VALUERS REPORT. HE MADE REFERENCE UNDER SECTION 55A OF THE DVO WHO DETERMINED COST OF ACQUISITION AT RS.2,35,413/-. O N THE BASIS OF DVOS REPORT, THE LD.AO HAS CALCULATED CAPITAL GAIN ASSESSABLE IN THE HANDS OF THE ASSESSEE. HE WORKED OUT SUCH CAPI TAL GAIN AT RS.99,29,384/- AND MADE ADDITION. THE WORKING OF T HE AO READS AS UNDER: RATE ADAPTED BY THE DVO 110.8 REVISED COST OF ACQUISITION AS PER DVO VALUATION 235413 REVISED INDEXED COST OF ACQUISITION AS PER DVO VALUATION 1847993 LTCG AS PER ROI(BEFORE DEDUCTION) 4274957 LTCG AFTER GIVING EFFECT TO DVO'S REPORT 14102007 DEDUCTION CLAIMED U/S 54EC 4067847 REVISED LTCG AFTER DEDUCTION 10034160 LTCG AS DECLARED IN ROI 204776 * ADDITION ON ACCOUNT OF SUPPRESSED LTCG 9829384 10. IN VIEW OF THE ABOVE, THE AMOUNT OF RS.98,29,38 4/- IS ADDED TO THE TOTAL INCOME BEING LOW LONG TERM CAPITAL GAIN DECLARED BY WAY OF INFLATING THE COST OF ACQUISITION. ITA NO.2536/AHD/2017 4 6. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 7. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTEN DED THAT THE AO HAS NOT RECORDED A SATISFACTION THAT INCOME HAS ESCAPED THE ASSESSMENT. HE HAS NOT VERIFIED THE RECORD. HE HA S ONLY EXPRESSED HIS APPREHENSION AND SUSPICION THAT HOW A N ASSESSEE CAN SHOW A CAPITAL GAIN OF RS.2,54,566/- . FOR EL IMINATING THIS APPREHENSION, HE REOPENED THE ASSESSMENT WHICH IS N OT IN ACCORDANCE WITH LAW. HE POINTED OUT THAT THE ASSES SEE HAS FILED THE RETURN WHEREIN HE HAS DISCLOSED ALL THESE DETAI LS AND CAPITAL GAIN OF MORE THAN RS.56 LAKHS. RETURN WHICH HAS BE EN UPLOADED IN THE NET HAS BEEN PLACED ON PAGE NO.53 OF THE PAP ER BOOK. HE DREW OUR ATTENTION TOWARDS THE FOLLOWING WORKING: LONG TERM CAPITAL GAIN. 1 ASSET IN CASE OF NON-RESIDENT TO WHICH FIRST PROVIS O TO SECTION 48 IS APPLICABLE 2 ASSET IN THE CASE OF OTHERS WHERE PROVISO UNDER SEC TION 112(1) IS NOT EXERCISED A FULL VALUE OF CONSIDERATION 2A 196 1666 B DEDUCTIONS UNDER SECTION 48 I COST OF ACQUISITION AFTER INDEXATION BI 14364966 II COST OF IMPROVEMENT AFTER INDEXATION BII 0 III EXPENDITURE ON TRANSFER BIII 0 IV TOTAL (BI + BII +BIII) BIV 14364966 BALANCE (2 A - BIV) 2C 5251701 D DEDUCTION UNDER SECTIONS 54/54B/54D/54EC/54F 54G/54GA 2D E NET BALANCE (2C-2D) 2,51,701 ITA NO.2536/AHD/2017 5 8. ON THE STRENGTH OF THE ABOVE DETAILS, HE SUBMITT ED THAT THERE IS NO COHERENCE BETWEEN FORMATION OF BELIEF VIS--V IS INFORMATION AVAILABLE WITH THE AO. ON THE OTHER HAND, THE LD.D R RELIED UPON THE ORDER OF THE AO. 9. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD. A PERUSAL OF THE VALUATION REPORT FILE D BY THE ASSESSEE WOULD INDICATE THAT HE HAS DISCLOSED FULL VALUE OF CONSIDERATION AND COST OF ACQUISITION AND CAPITAL GAIN ACCRUED TO HIM . THEREAFTER, HE HAS DISCLOSED NET CAPITAL GAIN OF RS.2,51,701/-. I N THE REVISED CAPITAL GAIN FILED IN RESPONSE TO 148-NOTICE HE HAS WORKED THIS CAPITAL GAIN AT RS.2,54,566/-. WHEN WE CONFRONTED THE LD.COUNSEL FOR THE ASSESSEE ABOUT THIS DISCREPANCY, THEN HE EX PRESSED THAT ON ACCOUNT OF INDEXATION THERE MIGHT HAVE MINOR CHA NGE IN THE NET CAPITAL GAIN. IF WE ANALYSIS THIS INFORMATION VIS-A-VIS WITH THE REASONS RECORDED BY THE AO, THEN IT WOULD REVEAL TH AT THE AO HAS NOT REFERRED ANY INFORMATION WHICH HAS GOAD HIM TO FORM A BELIEF THAT THE INCOME HAS ESCAPED THE ASSESSMENT. HE HAS JUST NARRATED DETAILS OF TRANSACTION AND THEREAFTER OBSE RVED THAT THE ASSESSEE SHOWN A CAPITAL GAIN OF JUST RS.2,54,566/- WHICH IN HIS ASSUMPTION FAR LESS ON SUCH TRANSACTION. IN ORDER TO ELIMINATE HIS APPREHENSION OR SUSPICION, HE REOPENED THE ASSESSME NT. BUT HE IS NOT AUTHORIZED TO REOPEN ON SUCH ASSUMPTION. HE HAS TO FORM HIS CONCRETE OPINION DEMONSTRATING THE ESCAPEMENT O F INCOME. HAD HE VISUALIZED THE RETURN FILED BY THE ASSESSEE, PROBABLY HE WOULD NOT HAVE FORMED THE OPINION. THEREFORE, REOP ENING OF THE ASSESSMENT IS NOT IN ACCORDANCE WITH LAW, AND WE QU ASH THE RE- ASSESSMENT. ITA NO.2536/AHD/2017 6 10. AS FAR AS MERIT OF THE ADDITION IS CONCERNED, W E FIND THAT THE ASSESSEE HAS CALCULATED LONG TERM CAPITAL BY TAKING COST OF ACQUISITION AS ON 1.4.1981 ON THE BASIS OF REGISTER ED VALUERS REPORT. HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GAURANGINIBEN S. SHODHAN, INDL., 45 TAXMANN.COM 356 (GUJ) HAS OBSERVED THAT IF VALUE DECLARED BY AN ASSESSEE AS O N 1.4.1981 IS MORE THAN THE FAIR MARKET VALUE ASSUMED BY THE AO F OR MAKING A REFERENCE TO THE DVO, THEN HE CANNOT MAKE A REFEREN CE UNDER SECTION 55A. THE DISCUSSION MADE BY THE HONBLE GU JARAT HIGH COURT IN THIS CONNECTION READS AS UNDER: 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 A LSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT. WE HAVE NOTICED THAT PRIOR TO THE AMENDMENT IN SECTION 55 A WITH EFFECT FROM 1.7.2012 IN A CASE, THE VALUE OF THE AS SET CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE E STIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFF ICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS T HAN ITS FAIR MARKET VALUE AS ON 1.4.1981. IT WOULD NOT BE THE CA SE OF THE ASSESSING OFFICER THAT THE VALUE OF THE ASSET SHOWN AS ON 1.4.1981 WAS LESS THAN THE FAIR MARKET VALUE. SUCH CLAUSE, 'THEREFORE, AS IT STOOD AT THE RELEVANT TIME, HAD N O APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS THAT WITH EFFECT FROM 1.7.2012, THE EXPRE SSION NOW USED IN CLAUSE (A) OF SECTION 55A IS 'IS AT VARIANC E WITH ITS FAIR MARKET VALUE'. THE SITUATION MAY, THEREFORE, B E DIFFERENT AFTER 1.7.2012. WE ARE, HOWEVER, CONCERNED WITH THE PERIOD PRIOR THERETO. CLAUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAIMED BY THE ASSESSEE B Y MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET SO C LAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN TH IS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY S O TO DO. SUB-CLAUSE(I) OF CLAUSE (B) ALSO FOR THE SAME REASO NS RECORDED ABOVE, WOULD HAVE NO BEARING ON THE FAIR M ARKET VALUE AS EN 1.4.1981. THE ASSESSING OFFICER HAD NOT RESORTED ITA NO.2536/AHD/2017 7 TO SUB-CLAUSE(II) OF CLAUSE (B). IN ANY CASE, CLAUS E (B) WOULD APPLY WHERE CLAUSE(A) DOES NOT APPLY SINCE IT START S WITH THE EXPRESSION 'IN ANY OTHER CASE'. IN OTHER WORDS IF A SSESSEE HAS RELIED UPON A REGISTERED VALUER'S REPORT, ASSES SING OFFICER CAN PROCEED ONLY UNDER CLAUSE (A) AND CLAUS E (B) WOULD NOT BE APPLICABLE. 16. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE HA D RELIED ON THE ESTIMATE MADE BY THE REGISTERED VALUER FOR T HE PURPOSE OF SUPPORTING ITS VALUE OF THE ASSET. ANY S UCH SITUATION WOULD BE GOVERNED BY CLAUSE (A) OF SECTIO N 55A OF THE ACT AND THE ASSESSING OFFICER COULD NOT HAVE RE SORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVISION BENCH OF THIS COURT IN THE CASE OF HIABEN JAYANTILAL SHAH V. 1TO [20091 310 ITR31/181 TAXMAN 191 (GUJ.) IN THE SAID DECISION, I T WAS HELD AND OBSERVED AS UNDER: '10. UNDER CLAUSE(A) OF SEC. 55A OF THE ACT UNDER TH E ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE W ITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVIDED UNDER CLAUSE(B) OF SEC. 55 A OF T HE ACT, THE ASSESSING OFFICER HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THA N SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NAT URE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT I S NECESSARY TO MAKE SUCH A REFERENCE.' 17. IN THE RESULT, WE SEE NO REASON TO INTERFERE. H OWEVER, WE HAVE GIVEN OUR INDEPENDENT REASONS AND SHOULD NOT B E SEEN TO HAVE CONFIRMED THE REASONINGS ADOPTED BY THE TRI BUNAL IN THE IMPUGNED JUDGMENT. 11. IN THE PRESENT CASE, WITH HELP OF DVOS REPORT, THE LD.AO WANTS TO REDUCE THE COST OF ACQUISITION WHICH HE CA NNOT DO. THE SECOND ASPECT WHICH PROBABLY MAY ARISE IS THAT SECT ION 55A HAS BEEN AMENDED W.E.F. 1.7.2012 AND THE ASSESSMENT PRO CEEDINGS ITA NO.2536/AHD/2017 8 WAS IN SEISIN WHEN THIS AMENDMENT CAME. REPORT OF THE DVO WAS OF JULY 17, 2016. THEREFORE, ITS COGNIZANCE CAN BE TAKEN, BUT THIS ASPECT HAS ALSO BEEN CONSIDERED BY THE ITAT, AHMEDA BAD BENCH ON SIMILAR ISSUE IN THE CASE OF SHRI BABULAL S. SOLA NKI VS. ITO, ITA NO.727/AHD/2016 WHEREIN BY RELYING UPON THE JUDGMEN T OF HONBLE BOMBAY HIGH COURT, IT HAS BEEN HELD THAT THI S ASPECT IS APPLICABLE ON THE TRANSACTION WHICH HAS TAKEN PLACE AFTER 1.7.2012. IN THE PRESENT CASE, THE ASSESSEE HAS TR ANSFERRED HIS LAND ON 8.7.2011. THE DISCUSSION MADE BY THE ITAT IN THIS CONNECTION READS AS UNDER: 10. WE HAVE CONSIDERED THIS DECISION IN ITA NO.2027/AHD/2015 IN THE CASE OF SHRI DEVENDRA RASIK LAL SHAH VS. DCIT (SUPRA) WHEREIN PARA-8 OF THE BOMBAY H IGH COURT DECISION HAS BEEN REPRODUCED, WHICH READS ASU NDER: 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF T HE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS 'IS LESS THEN THE FAIR MARKET VALUE ' IS SUBSTITUTED BY THE WORDS ' 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONL Y FROM 1 JULY 2012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, T HE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EXISTING DURING THE PERIOD REL EVANT TO THE ASSESSMENT YEAR 2006-07. AT THE RELEVANT TIM E, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTA L VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSESSING OFFICER LES S THAN ITS FAIR MARKET VALUE. 11. THEREFORE, RESPECTFULLY FOLLOWING DECISION OF H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GA URANGINIBEN S. SHODHAN, 45 TAXMANN.COM 356 (GUJ) AS WELL BOMBAY HIGH COURT JUDGMENT (SUPRA), WE ARE OF THE VIEW THA T IN THE PRESENT YEAR NEITHER WITH HELP OF AMENDED PROVISO O F SECTION 55A A REFERENCE CAN BE MADE NOR UNDER THE OLD PROVI SO, ITA NO.2536/AHD/2017 9 BECAUSE VALUE DECLARED BY THE ASSESSEE AS ON 1.4.19 81 IS FAR MORE THAN FAIR MARKET VALUE. THE LD.AO IS THEREFOR E DIRECTED TO RE-COMPUTE CAPITAL BY ADOPTING FAIR MARKET VALUE ADOPTED BY THE ASSESSEE AS ON 1.4.1981 ON THE BASIS OF REGI STERED VALUERS REPORT. THIS GROUND OF APPEAL IS ALLOWED. 12. SINCE THE ASSESSEE HAS TRANSFERRED HIS LAND PRI OR TO 1.7.2012, EVEN THE AMENDED PROVISO IS NOT APPLICABL E ON MERIT ALSO. ADDITION BY REDUCING THE COST OF ACQUISITION ON THE BASIS OF DVOS REPORT CANNOT BE MADE. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE R E-ASSESSMENT ORDER. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 8 TH JULY, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER
