Kothari Jayashree, Hyderabad, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 267/HYD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4697 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-09-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J DIVYA
• Assessee Lawyers: S RAMA RAO
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 267/HYD/2017 ASSESSMENT YEAR: 2012-13 JAYASHREE KOTHARI, HYDERABAD [PAN: AFAPK2319B] VS INCOME TAX OFFICER, WARD-8(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT. K.J. DIVYA, DR DATE OF HEARING : 18-09-2018 DATE OF PRONOUNCEMENT : 26-10-2018 O R D E R PER S. RIFAUR RAHMAN, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)2, HYDERABAD, DATED 23-11-2016, FOR THE AY. 2012-13. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING SHARE INCOME FROM THE PARTNERSHI P FIRM BHAGWAN & CO. SHE DID NOT DERIVE TAXABLE INCOME FOR A NY OF THE ASSESSMENT YEARS. DURING THE PREVIOUS YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE ALON GWITH ANOTHER SOLD IMMOVABLE PROPERTY VIDE SALE DEED NO.4 54/2012 AND DERIVED SALE CONSIDERATION OF RS.16 LAKHS TO HER SHARE. ITA NO. 267/HYD/2017 :- 2 -: THE CAPITAL GAIN ARISING ON THE SALE OF PROPERTY WOR KED OUT TO RS. 2,26,250/- AND INCLUDING THE SHARE INCOME FROM PARTNERSHIP OF RS. 6,316/-, THE TOTAL INCOME FOR THE YEA R UNDER CONSIDERATION IS RS. 2,32,566/- WHICH IS BELOW THE TA XABLE LIMIT. THEREFORE, THE ASSESSEE DID NOT FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSES SING OFFICER ISSUED A NOTICE U/S. 148 OF THE INCOME TAX AC T [ACT] ON 03-02-2015 ON THE GROUND THAT THE LONG TERM CAPITAL GA IN ARISING OUT OF THE SAID SALE TRANSACTION ESCAPED ASSESS MENT. ACCORDING TO THE ASSESSING OFFICER, THE PROVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE AND THE SALE CONSIDERATIO N IS TO BE ADOPTED AS PER THE MARKET VALUE FIXED BY THE SUB REG ISTRAR OF RS. 36,29,850/-. THE ASSESSEE SUBMITTED A DETAILED EXPLANATION BEFORE THE ASSESSING OFFICER STATING THE DISADVANTAGES OF THE PROPERTY UNDER CONSIDERATION AND PLEADED THAT THE PROVISIONS OF SECTION 50C OF THE ACT HAVE NO APPLICATION TO THE FACTS OF HER CASE. THE ASSESSING O FFICER DID NOT CONSIDER THE SUBMISSIONS MADE AND PASSED AN ORDER U/S. 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCO ME AT RS. 22,62,566/- INCLUDING LONG TERM CAPITAL GAIN OF RS. 22,56,250/-. AGGRIEVED WITH THE ORDER OF THE ASSESSIN G OFFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). 3. THE LD. CIT(A) CONFIRMED THE ORDER OF AO BY OBSER VING THAT THE ASSESSEE FAILED TO ESTABLISH THAT THE PROPERTY SO LD BY HER WAS AT RS. 16,00,000/- AS AGAINST THE STAMP DUTY V ALUE OF RS. 36,30,000/- AND EVEN DURING THE APPELLATE PROCE EDINGS, ITA NO. 267/HYD/2017 :- 3 -: THE AR OF THE ASSESSEE HAS NOT REBUTTED THE CONCLUSIONS D RAWN BY THE AO WITH ANY COGENT EVIDENCE. 4. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US WITH T HE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN I NITIATING THE PROCEEDINGS U/S. 147 OF THE I.T ACT FOR INVOKING TH E PROVISIONS OF SEC.50C OF THE I.T.ACT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ETERMINING THE SALE CONSIDERATION AT RS.36,30,000/- AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS.16 LAKHS. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE DETAILED EXPLANATION SUBMITTED BEFORE HIM AND OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION AT RS.16 LAKHS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE PROVISIONS OF SEC.50C ARE APPLIE D AND THE SALE CONSIDERATION WAS ADOPTED AT RS.36,30,000/- WI THOUT REFERENCE TO THE VALUATION CELL AND THAT THEREFORE, THE ORDER OF THE ASSESSING OFFICER IS NOT VALIDLY MADE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX: (APPEALS ) ERRED IN CONFIRMING THE DETERMINATION OF THE CAPITAL GAIN AT RS.22,56,250/- AS AGAINST ADMITTED CAPITAL GAIN OF RS.2,26,250/-. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 5. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE, HENCE, NO NEED FOR ADJUDICATION. AT THE TIME OF HEARING, GROUND NO. 2 IS NOT PRESSED, SO THE SAME IS DISMISSED AS NOT PRESSED. ITA NO. 267/HYD/2017 :- 4 -: 6. LD.AR SUBMITTED THAT ASSESSEE HAS SOLD THE PROPERTY AT RS. 16,00,000/- ONLY AND THE SAME WAS BROUGHT TO THE NO TICE OF AO AND THE DEPARTMENT DOES NOT HAVE ANY INFORMATION TO PROVE THAT ASSESSEE HAS RECEIVED MORE THAN THE ACTUAL SA LE CONSIDERATION. THE AO HAS ONLY RELIED ON REGISTERED D OCUMENT AND INVOKED SECTION 50C. EVEN THOUGH ASSESSEE HAS BRO UGHT TO HIS KNOWLEDGE VARIOUS ISSUES/DISCREPANCIES IN THE LAND AND REASONS FOR SELLING THE LAND AT RS. 16 LAKHS. HE SUBM ITTED THAT THE AO SHOULD HAVE REFERRED THE MATTER TO THE VALUATION OF FICER AS PER SECTION 50C(2). IN THIS REGARD, LD.AR RELIED ON THE FOLLOWING CASE LAW: I. M/S. AMARSARIA CONSTRUCTIONS VS. ITO IN ITA NO. 868/HYD/2006, DT.08-08-2008; 7. LD. DR SUBMITTED THAT THE CASE LAW RELIED UPON BY THE LD. AR OF THE ASSESSEE CANNOT BE APPLIED TO THE FACTS OF CAS E AS THE SAME ARE DISTINGUISHABLE AND FURTHER ARGUED THAT ORIG INALLY, THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME. UPON ISSUE OF NOTICE ONLY, ASSESSEE HAS FILED THE RETURN OF INCOME. LD.DR FURTHER ARGUED THAT EVEN THOUGH THERE IS A TAXABLE INCO ME UNDER THE PROVISIONS OF SECTION 50C OF THE ACT, ASSESSE E DID NOT FILE THE RETURN OF INCOME TILL SUCH TIME THE NOTICES A RE ISSUED. 8. IN REPLY, LD.AR CONTENDED THAT WITHOUT CONSIDERING THE CAPITAL GAINS U/S. 50C, THE INCOME IS BELOW THE TAXABLE LIMIT AND ASSESSEE HAS NO TAX LIABILITY. ITA NO. 267/HYD/2017 :- 5 -: 9. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. THE ASSESSEE WORKED OUT THE CAPITAL GAIN ARISING ON THE SALE OF PROPERTY AT RS. 2,26,250/- WHEREAS THE AO DETERMINED THE LONG TERM CAPITAL GAINS AT RS. 22,56,250/- BY INVOKING SECTION 50C. , WHICH WAS CONFIRMED BY THE CIT(A). WE NOTICE THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE CO ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. AMARSARIA CONSTRUCTIONS (SUPRA), ON WHICH RELIANCE PLACED BY THE ASSESSEE, WHEREIN IT WAS HELD AS UNDER: 7. SEC. 50C(2) ENABLES THE ASSESSING OFFICER TO MA KE A REFERENCE TO THE VALUATION OFFICER. WHENEVER A REFE RENCE IS MADE BY THE AO TO THE VALUATION OFFICER, SUCH REFER ENCE HAS TO BE CONSTRUED AS A REFERENCE MADE UNDER SEC. 16A(1) OF THE WEALTH-TAX ACT. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 16A(1) OF THE WEALTH-TAX ACT, WH ICH PROVIDES THE CIRCUMSTANCES UNDER WHICH A PROPERTY HAS TO BE REFERRED TO THE VALUATION OFFICER. SUB-SEC. (2) AND OTHER PROVI SIONS OF SEC. 16A PROVIDE THE MANNER IN WHICH THE PROPERTY HAS TO BE VALUED. WHEN A REFERENCE TO THE VALUATION OFFICER I S TO BE CONSTRUED AS A REFERENCE UNDER SEC. 16A(1) OF THE W EALTH-TAX ACT, THE MANNER LAID DOWN UNDER THE WEALTH-TAX ACT FOR THE PURPOSE OF VALUING IMMOVABLE PROPERTY HAS TO BE ADO PTED. EVEN THOUGH THE LEGISLATURE HAS NOT SPECIFICALLY REFERRE D TO THE VALUATION PROVIDED IN SCHEDULE III OF THE WEALTH-TA X ACT, THERE IS AMPLE INDICATION IN SEC. 50C(2) OF THE INCOME-TAX A CT THAT THE PROPERTY HAS TO BE VALUED UNDER THE WEALTH-TAX ACT SINCE THE REFERENCE WAS TO BE CONSTRUED AS A REFERENCE UNDER SEC. 16A(1) OF THE WEALTH-TAX ACT. IF THE INTENTION OF THE LEGI SLATURE WAS NOT TO APPLY THE PROVISIONS OF THE WEALTH-TAX ACT FOR T HE PURPOSE OF VALUATION, THEN, IN OUR OPINION, THERE WAS NO NEED FOR ANY REFERENCE ABOUT THE PROVISIONS OF THE WEALTH-TAX AC T IN SUB-SEC. (2) OF SEC. 50C OF THE INCOME-TAX ACT. THEREFORE, I N OUR OPINION, THE MANNER LAID DOWN UNDER THE WEALTH-TAX ACT HAS T O BE FOLLOWED FOR THE PURPOSE OF ASCERTAINING THE NOTION AL VALUE OF THE PROPERTY FOR THE PURPOSE OF COMPUTING CAPITAL G AIN AS PROVIDED UNDER SEC. 50C OF THE INCOME-TAX ACT. ITA NO. 267/HYD/2017 :- 6 -: 9.1. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE DI RECT THE AO TO REFER TO THE VALUATION OFFICER TO DETERMINE THE FA IR MARKET VALUE U/S 50C(2). ACCORDINGLY DETERMINE THE CA PITAL GAIN AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THE IMPUGNED ORDER IS SET ASIDE AND AO IS DIRECTED TO REDO ASSESSMENT DE-NOVO. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2018 SD/- SD/- (P. MADHAVI DEVI) (S. RIF AUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT M EMBER HYDERABAD, DATED 26 TH OCTOBER, 2018 TNMM COPY TO : 1. SMT. JAYASHREE KOTHARI, C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD. 3. CIT(APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.