P.Z. PATEL HUF, MUMBAI V. ITO - 24(1)(4), MUMBAI

ITA 2565/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRIKANT NAMDEO
• Keywords: Sale consideration of property below Jantri Value; Right to appeal
• Section: 50C; 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 2565/MUM/2013 (ASSESSMENT YEAR: 2006-07) P.Z. P ATEL (HUF) GROUND FLOOR SADHNA INDUSTRIAL ESTATE S.V. ROAD, OSHIVARA BRIDGE OSHIVARA (W) MUMBAI-400 012. VS. INCOME TAX OFFICER WARD 24(10)(4) C 13 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI. (APPELLANT) (RESPONDENT) P ERMANENT ACCOUNT N O. : AAIHP 8058 N ASSESSEE BY : SHRI KIRAN MEHTA REVENUE BY : SHRI SRIKANT NAMDEO DATE OF HEARING : 08/07/2014 DATE OF PRONOUNCEMENT : 16/07/2014 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28/01/2013 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-0 7.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE LEARNED CIT(A) GRAVELY ERRED IN NOT CONSIDE RING THE APPEAL OF THE APPELLANT ON MERITS AND DISMISSING THE SAME ON THE FOOTING THAT THE LEARNED CIT HAD SUBSEQUENT TO THE ASSESSME NT PASSED AN ORDER U/S 263 ON AN ISSUE WHICH WAS NOT IN APPEAL. 2. IT IS RESPECTFULLY SUBMITTED THAT THE ACTION OF THE LEARNED CIT(A) IS GROSSLY UNFAIR AND UNTENABLE AND SUCH DISMISSAL COMPLETELY DEPRIVES THE APPELLANT OF THE RIGHT TO APPEAL AGAIN ST THE IMPUGNED ASSESSMENT. ITA NO.2565/M/13 AY:06-07 2 3. THE LEARNED CIT(A)) ERRED IN CONFIRMING THE ADDI TION OF RS.1,08,07,639 MADE U/S 50C AND NOT DEALING WITH TH IS GROUNDS ON MERITS . 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THAT REAS SESSMENT MADE U/S 147 WAS A VALID ASSESSMENT AND NOT DEALING WITH THIS GROUND ON MERITS. 5. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSMENT IN APPEAL BEFORE HIM WAS AN ILLEGAL ASSE SSMENT. 6. THE LEARNED CIT(A) ERRED IN NOT DEALING WITH THE GROUND OF THE APPELLANT THAT THE INTEREST LEVIED U/S. 234A/234B/2 34C WAS NOT SO LEVIABLE. 2. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3 ) R.W.S.147 ON 16/12/2010. THE AO INVOKED THE PROVISIONS OF SECTIO N 50C OF THE INCOME TAX ACT AND COMPUTED CAPITAL GAIN BASED ON THE VALU E COMPUTED FROM STAMP VALUATION AUTHORITIES AT RS.4,51,38,000/- AS AGAINST ACTUAL SALE CONSIDERATION RECEIVED RS.3,24,00,300/-. ACCORDINGL Y AO ASSESSED LONG TERM CAPITAL GAIN OF RS.1,08,07,639/- . WHILE COMPU TING CAPITAL GAIN. THE AO HAS REDUCED RS.61,50,000/- TOWARDS SHARE OF ONE SHRI C.P. PATEL. THE ASSESSEE CHALLENGED THE ACTION OF AO BEFORE CIT (A) AND RAISED SIX GROUNDS INCLUDING THE VALIDITY OF RE-OPENING AND IN VOKING THE PROVISIONS OF SECTION 50C. CIT(A) DID NOT ADJUDICATE THE APPEA L OF THE ASSESSEE ON MERITS AND DISMISSED THE SAME ON THE GROUND THAT IN VIEW OF THE REVISION ORDER BY CIT UNDER SECTION 263 THE APPEAL OF THE AS SESSEE BECOMES INFRUCTUOUS. 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS IT IS CLEAR FROM TH E IMPUGNED ORDER OF CIT(A) THAT THE ASSESSEE RAISED SIX GROUNDS BEFORE CIT(A) WHICH ARE REPRODUCED IN PARA-2 OF THE IMPUGNED ORDER AS UNDER :- I) THE LEARNED ASSESSING OFFICER ERRED IN MAKING A N ADDITION OF RS.1,08,07,639 BY DETERMINING LONG TERM CAPITAL GAI N IN REFERENCE AT RS.1,08,07,639/- AS AGAINST NIL LONG TERM CAPIT AL GAIN DECLARED BY THE APPELLANT. ITA NO.2565/M/13 AY:06-07 3 II) THE LEARNED ASSESSING OFFICER ERRED IN MAKING T HE IMPUGNED ADDITION U/S.50C. III) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ASSESSMENT IS BAD IN LAW IN AS MUCH AS ASS UMPTION OF JURISDICTION U/S.147 IS BAD IN LAW. IV) THE LEARNED ASSESSING OFFICER ERRED IN UNILATER ALLY CHANGING THE STATUS OF APPELLANT WHICH IT IS SUBMITTED WOULD REN DER THE ASSESSMENT A NULLITY. V) THE LEARNED ASSESSING OFFICER ERRED IN LEVYING I NTEREST U/S.234, 2348 AND 234C IN THAT NO SUCH INTEREST COULD BE LEV IED IN AN ASSESSMENT MADE U/S.147. VI) THE APPELLANT CRAVES YOUR HONOR'S LEAVE TO ADD TO, MODIFY OR WITHDRAW ANY OF THE ABOVE GROUNDS AT OR BEFORE THE FINAL HEARING.' 4. APPEAL OF THE ASSESSEE WAS DISMISSED IN LIMINE O N THE GROUND THAT IT BECAME INFRUCTUOUS IN VIEW OF THE REVISION ORDER PASSED BY THE CIT UNDER SECTION 263. IT IS PERTINENT TO NOTE THAT THE REVISION ORDER PASSED UNDER SECTION 263 WOULD NOT RENDER THE ISSUE PENDI NG BEFORE CIT(A) AS INFRUCTUOUS RATHER THE JURISDICTION OF THE CIT UNDE R SECTION 263 IS NOT EXTENDED ON THE ISSUE WHICH IS SUBJECT MATTER OF AP PEAL AS PER CLAUSE (C) OF EXPLANATION TO SECTION 263 WHICH READS AS UNDER :- SECTION 263(1)...... EXPLANATION.. (A)... (I)... (II).. (B)... (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER O F ANY APPEAL, FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 19 88 THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEN D AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS A S HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. 5. WE FURTHER NOTE THAT HE MAIN ISSUE INVOLVED IN T HE ASSESSEES APPEAL IS REGARDING ADDITION MADE BY THE AO BY INVO KING PROVISIONS OF ITA NO.2565/M/13 AY:06-07 4 SECTION 50C OF THE INCOME TAX ACT. THE ASSESSEE OBJ ECTED THE ADOPTION OF STAMP DUTY VALUATION AS THE FULL VALUE CONSIDERATIO N UNDER SECTION 50C IN THE ASSESSMENT PROCEEDINGS. THEREFORE, THE AO WA S BOUND TO REFER THE ISSUE OF VALUATION TO THE DVO AS PER SUB SECTION (2 ) OF SECTION 50C. THE LD. AR FOR THE ASSESSEE HAS REFERRED AND RELIED UPO N THE DECISION OF HON'BLE CALCUTTA HIGH COURT DATED 13/03/2014 IN ITA NO.221 OF 2013 IN THE CASE OF SUNIL KUMAR AGARWAL VS. CIT WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER :- FOR THE AFORESAID REASONS, WE ARE OF THE OPINION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CO NTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INTEND THAT THE CAPITAL GAIN SH OULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LE GISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSES SEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSES SING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUN DEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM A N OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. FOR THE AFORESAID REASONS, THE ORDER UNDER CHALLENG E IS SET ASIDE. THE IMPUGNED ORDER INCLUDING ORDERS PASSED BY THE C IT(A) AND THE ASSESSING OFFICER ARE ALL SET ASIDE. THE MATTER IS REMANDED TO THE ASSESSING OFFICER. HE SHALL REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER IN ACCORDANCE WITH LAW. AFTER SUC H VALUATION IS MADE, THE ASSESSMENT SHALL BE MADE DE NOVO IN ACCOR DANCE WITH LAW. 5.1 IN VIEW OF THE FACTS AND CIRCUMSTANCES WHEN CIT (A) HAS NOT ADJUDICATED THE APPEAL OF THE ASSESSEE ON MERITS AN D FURTHER IN VIEW OF THE DECISION OF HON'BLE CALCUTTA HIGH COURT (SUPRA) , WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMAND THIS MATTER TO THE RECORD OF THE AO FOR REFERENCE TO BE MADE TO THE DVO UNDER SECTIO N 50C(2) OF THE ACT ITA NO.2565/M/13 AY:06-07 5 AND THEN DECIDE THE SAME AFTER GIVING AN OPPORTUNIT Y TO THE ASSESSEE. THE LEGAL ISSUE OF VALIDITY OF RE-OPENING IS KEPT O PEN. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2014. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (VIJAY PAL RAO ) JUDICIAL MEMBER MUMBAI, DATED: 16/07/2014. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.