The ITO, Ward-6(1), Surat V. Shri Babubhai Haribhai Patel, Surat

ITA 257/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6916 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Ignorance of law
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO . 257 / AHD/ 201 1 [ [ / ASSESSMENT YEAR : 20 0 7 - 0 8 INCOME TAX OFFICER, WARD 6(1) SURAT VS SHRI BABUBHAI HARIBHAI PATEL, A - 19, KRUSHNA KUNJ SOCI., DAHIMA NAGAR CO - OP. SOC., JAHANGIRPURA, SURAT PAN : AAGPJ 8438 D / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI B.L. YADAV, SR. DR. ASSESSEE(S) BY : NONE / DATE OF HEARING : 1 5 / 1 2 /2014 / DATE OF PRONOUNCEMENT: 19 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - IV , SURAT DATED 19 . 10 .2010 FOR ASSESSMENT YEAR 200 7 - 0 8 . 2. NOTICE WAS SENT BY REGISTERED POST WITH THE ACKNOWLEDGEMENT DUE AS WELL AS THROUGH THE DEPARTMENTAL REPRESENTATIVE. THE SAME HAS NOT BEEN RETURNED UNSERVED . WHEN THE CASE WAS CALLED FOR HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE A ND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. T HEREFORE, WE PROCEEDED TO HEAR THE APP EAL EX - PARTE QUA THE RESPONDENT - ASSESSEE AND TO DECIDE THE APPEAL ITA NO. 257/AHD/2011 SHRI BABUBHAI HARIBHAI PATEL FOR AY 2007 - 08 2 AFTER TAKING INTO CONSIDERING THE SUBMISSIONS OF THE DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AV AILABLE ON RECORD. 3. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE OF UNDISCLOSED LONG TERM CAPITAL GAIN OF THE RS.10,53,601/ - AS 1/3 RD SHARE ON ACCOUNT OF REDUCTION OF TOTAL SALE CONSIDERATION OF PROPERTY FROM RS.81,02,000/ - TO RS.61,61,000/ - . 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE ITS DETAILS, THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAD SOLD A PLOT OF LAND SITUATED AT SURVEY NO.93/1, BLOCK NO.221, T.P. SCHEME 42, JAHAGIRABAD, SURAT. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE RECORDS OF SUB - REGISTRAR SHOWED VALUATION OF THE LAND AT RS. 88,02,000/ - AND THE ASSESSEE S ONE THIRD SHARE AT RS.29,34,000/ - . THE ASSESSEE HAD NOT SHOWN ANY CAPITAL GAIN IN HIS RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE COPY OF SALE DEED AND REASONS FOR NOT DISCLOSING CAPITAL GAIN IN RETURN OF INCO ME. THE ASSESSEE PRODUCED THE COPY OF SALE DEED AND ALSO SUBMITTED AS UNDER: - FIRSTLY THE ASSESSEE WAS OF THE FIRM BELIEF THAT AS THE LAND WAS AGRICULTURAL LAND THE SAME IS NOT CHARGEABLE TO TAX AS AGRICULTURAL INCOME IS EXEMPT UNDER INCOME TAX ACT, 1961. SECONDLY ASSESSEE HAS INVESTED THE MONEY FROM SALE OF LAND, IN PROPERTY HE W AS OF THE BELIEF THAT HE GETS EXEMPTION UNDER THE INCOME TAX ACT, 1961, HENCE THE SAME IS NOT SHOWN IN RETURN OF INCOME FILED BY HIM. SIR, AS THE ASSESSEE IS NOT HAVING THROUGH KNOWLEDGE OF THE INCOME TAX PROVISIONS THE DETAILS OF THE SAME IS NOT SHOWN IN RETURN OF INCOME FILED BY HIM. 5 . THE ASSESSING OFFICER, AFTER CONSIDERING THE REPLY OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAS NOT GIVEN ANY COGENT REASON FOR NOT DISCLOSING CAPITAL GAIN IN THE RETURN OF INCOME. HE OBSERVED THAT THE MATTER WAS PERTAINING TO ASSESSMENT YEAR 2007 - 08 AND IT IS IN THE ITA NO. 257/AHD/2011 SHRI BABUBHAI HARIBHAI PATEL FOR AY 2007 - 08 3 SCRUTINY PROCEEDINGS THE FACT HAS COME TO THE KNOWLEDGE OF THE REVENUE. WITH REGARD TO THE CONTENTION OF THE ASSESSEE THAT HE WAS NOT AWARE WITH THE PROVISIONS OF INCOME - TAX, THE ASSESSING OFFICER OBSE RVED THAT IT WAS NOT TENABLE AS IGNORANCE OF LAW OF LAND WAS NO EXCUSE AND EVERY CITIZEN WAS BOUND TO ABIDE BY THE PREVAILING LAWS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE ENTERED INTO LAND TRANSACTION AND IT WAS THE LEGAL PRACTITIONERS WHO HAD P REPARED THE DEED AND OTHER LEGAL DOCUMENTS. THE ASSESSEE COULD HAVE TAKEN HELP OF PROFESSIONAL FOR THESE MATTERS ALSO. THE DEED PRODUCED BY THE ASSESSEE SHOWS RECEIPT OF RS.61,61,000/ - ; HOWEVER, VALUATION OF L OCAL S TAMP D UTY AUTHORITY WAS DERIVED AT RS. 88,02,000/ - . THEREFORE, BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, THE LONG TERM CAPITAL GAIN OF THE ASSESSEE WAS CALCULATED AS ONE THIRD SHARE OF RS.88,02,000/ - , WHICH AMOUNTED TO RS.29,34,000/ - , AND THE SAME WAS ADDED TO THE INCOME OF THE ASSE SSEE. 6 . ON APPEAL, THE CIT(A) HELD AS UNDER: - 3.2.4. I HAVE GONE THROUGH THE FACTS OF THE CASE. THE A.O. HAS INVOKED SECTION 50C OF THE ACT BECAUSE THE STAMP VALUATION AUTHORITY HAD VALUED THE ASSET AT A RATE HIGHER THAN THE TRANSACTED VALUE AND THE A PPELLANT HAD NOT OBJECTED TO THE HIGHER VALUATION. THE A.O. DID NOT CONSIDER THE FACT THAT PART OF THE PLOT WAS RESERVED FOR SCHOOL, PLAYGROUND ETC. UNDER THE TOWN PLANNING SCHEME AND WAS OF NO VALUE TO EITHER PARTY TO THE TRANSACTION. THE A.O. DID NOT CON SIDER THE SALE AGREEMENT WHICH CLEARLY STATES THAT BENEFIT OF ANY CHANGE IN THE TOWN PLANNING SCHEME WOULD ACCRUE TO THE ORIGINAL OWNER. THE A.O. ALSO DID NOT REFER THE MATTER FOR VALUATION THOUGH THE VALUATION MADE BY THE STAMP DUTY AUTHORITY WAS OBJECTED TO BY THE APPELLANT. FROM THE FACTS AS HAVE BEEN BROUGHT OUT BY THE APPELLANT, IT IS SEEN THAT THE DIFFERENCE IN VALUATION AROSE NOT BECAUSE OF THE RATE BUT BECAUSE OF DIFFERENCE IN AREA CONSIDERED. AS FAR AS RATES ARE CONCERNED BOTH THE STAMP DUTY AUTHO RITY AN D THE SALE HAS BEEN MADE AT RS. 1,000 / - PER SQ.MT. THEREFORE ISSUE ASSETS IN DISPUTE IS THE QUANTUM OF LAND SOLD. IT IS COMMON PRINCIPLE THAT A PERSON CA NN OT PASS ON MORE THAN WHAT HE HAS. HERE, PART OF THE LAND WAS RESERVED FOR PUBLIC AMENITIES UNDER THE TOWN PLANNING SCHEME ITA NO. 257/AHD/2011 SHRI BABUBHAI HARIBHAI PATEL FOR AY 2007 - 08 4 AND THEREFORE ASSESSEE HAD NO RIGHT OVER IT. TH I S FACT ALSO F INDS MENTIONS IN THE DEED [ REFER LAST PARA ON PAGE - 8 OF THE 'ENGLISH' TRA NSLATION OF THE DEED] WHICH READS AS FOLLOWS : - 'THAT T.P. SCHEME NO . 42 (JAHANGIRABAD) APPLIED IN THE AREA OF JAHANGIRABAD. UNDER T.P. SCHEME ORIGINAL PLOT NO.221 AL L OTTED TO ORIGINAL LAND AND FINAL PLOT NO.81 ADMEASURES 6161 SQ.MTR. HAS BEEN ALLOTTED IN P LACE OF IT. T.P. SCHEME IS AT DRAFT STAGE AND THERE IS A POSSIBILITY OF CHANGES. WE HAVE SOLD IS 6161 SQ.MT. LAND OF FINAL PLOT. HENCE, IN FU T U RE, UNDER THE T.P. SCHEME WHATEVER FINAL PLOT WILL RECEIVE AND AREA OF IT WILL BE MORE THAN 6161 SQ.MT. AND OUT O F THAT 6161 SQ.MT. LAND WILL BE CONSIDERED AS OWNERSHIP OF YOUR AND ADDITIONAL LAND WILL BE CONS I DERED OF OUR OW N ERSHIP. ADVANTAGE - DISADVANTAGE UNDER T.P. SCHEME WILL BE OF OURS PERSONALLY. IF ANY BETTERMENT CHARGE OR CONTRIBUTION CHARGES UNDER T.P. SCHEME WILL BE REQUIRED TO PAY, THEN YOU HAVE TO PAY FOR 6161 SQ. MT. LAND, WITH ABOVE CLARIFICATI ON, THIS SALE DEED IS EXECUTED. ' FROM THIS, IT IS CLEAR THAT THE LAND SOLD WAS ONLY TO THE EXTENT OF 6161 SQ.MTS. AND ANY BENEFIT ARISING OUT OF THE REMAINING PORTION EARMARKED UNDER TOWN PLANNING WOULD BE OF THE APPELLANT AND H IS CO - OWNERS AND NOT THE BUYER. HENCE THE ASSET TO THIS EXTENT IS NOT TRANSFERRED OR SOLD AT ALL AND THEREFORE COMPUTATION OF CAPITAL GAINS ONLY ON ACCOUNT OF VALUATION OF STAMP DUTY AUT HORITY WILL BE ABSURD. IN ANY CASE, THERE IS NO DIFFERENCE IN RATE BETWEEN STAMP DUTY AUTHORITY AND THE RECORDED TRANSACTION . THE ONLY DISPUTE IS REGARDING THE QUANTITY OF ASSET SOLD WHICH FACTS SHOW IS ONLY 6161 SQ.MTS. AND NOT 8802 SQ.MTS. AND THEREFORE VALUATION FOR CAPITAL GAIN PURPOSES HAVE TO BE TAKEN ONLY FOR THIS AREA. THE BENEFIT FOR THE REMAINING PORTION LOCKED IN APPEAL BEFORE TOWN PLANNING AUTHORITIES HAS NOT BEEN TRANSFERRED AND THEREFORE SHOULD NOT BE CONSIDERED FOR COMPUTATION OF CAPITAL GAIN S. THE APPEAL BEFORE THE AUTHORITIES FOR REDUCTION IN AREA OF RESERVATION WAS DISMISSED AND FINAL AREA WAS DETERMINED AT ONLY 6161 SQ.MTS AS CAN BE SEEN FROM THE ADDITIONAL EVIDENCE FILED DURING THE APPEAL PROCEEDINGS AND FORWARDED TO THE A.O. FOR HIS COMM ENTS. SINCE THERE IS NO DISPUTE IN THE VALUATION, I.E. RATE BETWEEN STAMP DUTY AUTHORITY AND TRANSACTED RATE AND THE AMOUNT OF LAND TRANSFERRED IS ONLY 6161 SQ.MTS THE TRANSACTED VALUE SHOULD HAVE BEEN CONSIDERED FOR COMPUTATION OF CAPITAL GAINS. THE A.O. IS THEREFORE DIRECTED TO COMPUTE CAPITAL GAINS TAKING THE TRANSACTED VALUE OF RS.61,61,000 / - AS THE SALE CONSIDERATION AND THEN COMPUTE THE SHARE OF THE APPELLANT. ITA NO. 257/AHD/2011 SHRI BABUBHAI HARIBHAI PATEL FOR AY 2007 - 08 5 7 . THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8 . WE FIND THAT IN THE INSTANT CASE THE ONLY DISPUTE IS THAT AS PER CIT(A), THE STAMP DUTY VALUE OF 6161 SQ. MTS. O F PLOT WAS RS.61,61,000/ - ; WHEREAS, ACCORDING TO THE ASSESSING OFFICER THE STAMP DUTY VALUE WAS RS.88,02,000/ - . ACCORDING TO THE CIT(A), THE EN TIRE PLOT WAS 8802 SQ. MTS AND OUT OF WHICH 6161 SQ. MTS WAS TRANSFERRED BY THE ASSESSEE VIDE SALE DEED UNDER CONSIDERATION. IN ABSENCE OF THE RELEVANT SALE DEED PRODUCED BEFORE US, WE ARE NOT IN A POSITION TO ADJUDICATE THE ISSUE COMPLETELY. IN THE CIRCUM STANCES, IN OUR CONSIDERED VIEW, IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE TH IS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATION OF THE STAMP DUTY VALUE OF 6161 SQ. MTS WHICH WAS ONLY TRANSFERRED BY THE ASSESSEE. IN THE INSTA NT CASE, THE CAPITAL GAIN IS TO BE CALCULATED ON THE BASIS OF STAMP DUTY VALUE OF 6161 SQ. MTS. OF PLOT WHICH ALONE WAS TRANSFERRED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO REFRAME TH E ASSESSMENT AFTER PROPER VERIFICATION IN LIGHT O F THE DISCUSSION MADE ABOVE. NEEDLESS TO MENTION THAT HE SHALL ALLOW REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 9 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 9 /1 2 /2014 BIJU T., PS ITA NO. 257/AHD/2011 SHRI BABUBHAI HARIBHAI PATEL FOR AY 2007 - 08 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - IV, SURAT 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD