Jain Prakash Mangilal, Pune V. Income tax officer,

ITA 2645/PUN/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6585 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDER
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Cost of acquisition; Fair market value; Valuation report; Set aside; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 2645/PUN/2016 / ASSESSMENT YEAR : 2011-12 MR. JAIN PRAKASH MANGILAL, H. NO. 29, NANGARGAON LONAVALA, TAL. MAVAL, PUNE-410 401 PAN : AAOPJ2236P .... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD-8(2), AKURDI, PUNE. / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ABHIJIT HALDER / DATE OF HEARING : 25.02.2019 / DATE OF PRONOUNCEMENT : 26.02.2019 ! / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-9, PUNE DATED 31.08.2016 FOR THE ASSESSMENT YEAR 2011-12 AS PER GROUNDS OF APPEAL ON RECORD. 2. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE APP RAISED THE BENCH THAT PRINCIPLE OF NATURAL JUSTICE WAS NOT FOLLOWED BY THE AS SESSING OFFICER WHILE 2 ITA NO. 2645/PUN/2016 A.Y.2011-12 PASSING THE ASSESSMENT ORDER SINCE REGARDING ACTUAL MAR KET RATE OF THE LAND, THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DIST RICT VALUATION OFFICER (DVO) IRRESPECTIVE OF PRAYER MADE BY THE ASSESSEE. THAT A MONGST ALL THE GROUNDS RAISED IN APPEAL BEFORE US, GROUND NO. 5 IS LEGAL GR OUND WHEREBY THE LD. AR PRAYED BEFORE US THAT THE MATTER MAY BE RESTOR ED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT DVOS REPORT MAY BE CALLED FOR TO ASCERTAIN THE TRUE AND FAIR MARKET RATE OF THE LAND IN THE CONCERNED AREA. 3. THE BRIEF FACTS IN THIS CASE ARE THAT THE LAND IN QUES TION WAS PURCHASED BY THE ASSESSEE ON 24.12.2007 WHICH WAS REGISTERED WITH SUB-REGISTRAR ON 27.12.2007. THE ASSESSEE HAD SOLD THE SAID LAND ON 20.12.2 010 WHICH WAS TRANSFERRED VIDE CONVEYANCE DEED DATED 20.12.2010. THUS, THE ASSESSEE HAS HELD THE LAND FOR LESS THAN THREE YEARS AND ACCORDINGLY IT WAS A SHORT TERM CAPITAL ASSET. THE LAND WAS SOLD FOR SALE CONSIDERATION OF RS .71,00,000/-, HOWEVER, THE MARKET VALUE OF THE PROPERTY AS PER INDEX II WAS RS.1,17,07,500/-. THE ASSESSING OFFICER HAS TAKEN THE FULL VALUE OF CONSIDERA TION AT RS.1,17,07,500/- AS PER PROVISIONS OF SECTION 50C(1) OF I.T.ACT AND AFTER ALLOWING COST OF ACQUISITION OF RS.5,00,000/- THE ASSESSING OFFICE R HAS ASSESSED SHORT TERM CAPITAL GAINS ON THE ABOVE CAPITAL ASSET AT R S.1,12,07,500/-. FOR THIS, HE HAS RELIED UPON A LETTER DATED 10.03.2014 FILED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF HEARING ON 10.03 .2014 AS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN PARA 14. ACCORDING TO THE SAID LETTER THE ABOVE FACTS ARE CONFIRMED. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS THE AS SESSEE HAS FILED SUBMISSIONS VIDE LETTER DATED 22.08.2016 WHICH IS REPRODUCED IN PARA 7.2 OF THE APPELLATE ORDER. IN THE SAID SUBMISSIONS THE ASSESSEE HAS CONTENDED THAT THE LAND IS LOCATED IN HILLY AREA AN D AT STEEP SLOP AND ALSO 3 ITA NO. 2645/PUN/2016 A.Y.2011-12 HIGH TENSION ELECTRIC WIRES ARE CROSSING FROM THE O PEN PLOT OF LAND AND THEREFORE THE SALE CONSIDERATION PAID WAS THE VALUE OF THE ASSET I.E. RS. 71,00,000/- AND MARKET VALUE WAS NOT AT RS. 1.17 CRORES WHICH WAS TAKEN FOR STAMP DUTY PURPOSES. HOWEVER, THE ASSESSE E HAS NOT SUBMITTED ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE ACTUA L MARKET VALUE WAS LESS THAN THE MARKET VALUE TAKEN FOR STAMP VALUATION PUR POSES, IN THE FORM OF ANY VALUATION REPORT OF THE LAND OR ANY OTHER FORM. THE LD.CIT(APPEALS) PRIMARILY UPHELD THE ORDER OF ASSESSING OFFICER ON THE BASIS THAT NO EVIDENCES HAS BEEN FURNISHED BY THE ASSESSEE FOR TH E CLAIM THAT THE VALUE OF ASSET IS RS.71,00,000/- AND NOT RS.1,17,07,500/- WHICH HAS BEEN TAKEN FOR STAMP DUTY PURPOSES. 5. PER CONTRA, LD. DR PRIMA-FACIE OBJECTED TO THE P RAYER MADE BY THE ASSESSEE FOR RESTORING THE MATTER TO THE FILE OF AS SESSING OFFICER FOR REFERENCE TO DVO FOR ASCERTAINING TRUE AND FAIR MAR KET VALUE OF THE LAND IN QUESTION. 6. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS AND ANALYZED THE FACTS AND CIRCUMSTANCES IN THIS CA SE. THAT ON PERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THERE HAS BEEN NO REFERENCE TO THE DVO WHEREAS, THE LD. AR OF THE ASSESSEE AT THE TIME OF HEARING BEFORE US INVITED OUR ATTENTION TO THE ORDER OF THE PUNE BENC H OF THE TRIBUNAL IN THE CASE OF M/S. ANJALI BHARAT KABRA VS. ITO, WARD 2(2) , JALGAON FOR THE ASSESSMENT YEAR 2009-10, WHEREIN, IT WAS HELD THAT IN A CASE WHERE ASSESSEE RAISES ANY OBJECTION AGAINST VALUATION ADO PTED BY STAMP VALUATION AUTHORITY BEFORE ASSESSING OFFICER BUT HA S NOT FILED ANY APPEAL OR ANY PROCEEDINGS BEFORE STAMP VALUATION AUTHORITY THEN STATUTE REQUIRES ASSESSING OFFICER TO REFER MATTER TO DVO TO DETERMI NE MARKET VALUE OF THE 4 ITA NO. 2645/PUN/2016 A.Y.2011-12 PROPERTY AS ON THE DATE OF SALE AND DUTY OF DVO IS TO PROVIDE AN OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE FINAL IZING VALUATION OF PROPERTY. THE MATTER WAS REMANDED BACK FOR REFERENC E TO THE DVO ON THE ISSUE. THEREFORE, AS ON DATE IN CASE OF DISPUTE ARI SING ON THE VALUE OF STAMP DUTY ADOPTED BY STAMP VALUATION AUTHORITY, RE FERENCE TO THE DVO HAS TO BE MADE BY CONCERNED AUTHORITY WHICH IN THIS CASE HAS NOT BEEN DONE. THE PRAYER OF THE LD. AR IS TO REMAND THE MATTER T O THE FILE OF ASSESSING OFFICER SO THAT THE REFERENCE TO THE DVO CAN BE MADE. EVEN THOUGH THE LD. DR HAS OBJECTED FOR SECOND INNINGS B UT ON THE LEGAL PARAMETERS AS HELD BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, PUNE, REFERENCE TO THE DVO IS MANDATED BY LAW AND THEREFO RE, THE MATTER HAS TO BE REMANDED BACK TO THE FILE OF ASSESSING OFFICER. FURTHERMORE, WE OBSERVE THAT BEFORE THE LD. CIT(APPEALS), IT WAS SU BMITTED BY THE ASSESSEE THAT THE LAND IS LOCATED IN HILLY AREA AND AT STEEP SLOP AND ALSO HIGH TENSION ELECTRIC WIRES ARE CROSSED FROM THE OPEN PL OT OF LAND AND THEREFORE, THE SALE CONSIDERATION PAID WAS OF RS.71,00,000/- A ND MARKET VALUE WAS NOT AT RS.1,17,07,500/-. THIS FACT HAS NOT BEEN ACC EPTED BY THE LD. CIT(APPEALS) SINCE NO EVIDENCE WITH REGARD TO THIS STATEMENT WAS FURNISHED BY THE ASSESSEE. NONETHELESS, WE FAIL TO UNDERSTAND WHILE ADJUDICATING THE ISSUE AS TO WHY THE LD. CIT(A) HAV ING ALL MACHINERY DID NOT MAKE ANY ENQUIRY OR PHYSICAL VERIFICATION BY AN Y INSPECTOR AND OBTAIN ANY INSPECTORS REPORT TO ASCERTAINING THE FACTS. W HEN THESE ARE THE SHORTCOMINGS, IN ORDER TO UPHOLD THE PRINCIPLE OF N ATURAL JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND REMAND THE MATTER BACK TO THE FILE OF ASSESSING OFFICER DIRECTING HIM TO MAKE REF ERENCE FOR TRUE AND FAIR MARKET VALUE OF THE LAND BEFORE DVO. THE ASSESSING OFFICER SHALL GRANT 5 ITA NO. 2645/PUN/2016 A.Y.2011-12 REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26 TH DAY OF FEBRUARY, 2019. SD/- SD/- ANIL CHATURVEDI PA RTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 26 TH FEBRUARY, 2019. SB !'#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-9, PUNE. 4. THE PR. CIT-5, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 2645/PUN/2016 A.Y.2011-12 DATE 1 DRAFT DICTATED ON 25 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER