ARUN KUMAR CHOUDHARY L/H OF LATE SHRI RAM DAYAL PATEL, Jaipur V. ITO, TONK

ITA 268/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5133 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S L PODDAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Tangible material; Fair market value; Reassessment proceedings
• Section: 50C; 148; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH ,-MH- TSU U;KF;D LNL; DS LE{K BEFORE: SHRI A.D. JAIN, JUDICIAL MEMBER VK;DJ VIHY LA- @ ITA NO. 268/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2008-09 ARUN KUMAR CHOUDHARY, LEGAL HEIR OF LATE SHRI RAM DAYAL PATEL, MOHALLA- SHORGARAN, SUBHASH BAZAR, TONK. CUKE VS. INCOME TAX OFFICER, WARD, TONK. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/TAN NO.: AHKPP 5411 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODDAR (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 07/09/2016 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 08/09/2016 VKNS'K@ ORDER PER: A.D. JAIN, J.M. THIS IS ASSESSEES APPEAL FOR A.Y. 2008-09 FILED AG AINST THE ORDER DATED 13/02/2015 PASSED BY THE LD. CIT(A)-III, JAIPU R. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE IN THE APP EAL: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. ASSESSING OFFICER HAS ERRED IN PASSING THE ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 2 ORDER U/S 144/147 WITHOUT GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 10,24,305/- ON ACCOUNT OF LONG TERM CAPITAL GAI N BY INVOKING THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 13,50,000/- ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT. 2. THE FOLLOWING MODIFIED ADDITIONAL GROUND HAS ALSO BEEN RAISED: UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROCEEDING INITIATED U/S 148 OF THE INCOME TAX ACT, 1961 IS VOID AB-INITIO DESERVES TO BE QUASHED BECAUSE THE A CTION HAS BEEN TAKEN ON THE BASIS OF THE PROVISIONS OF SE CTION 50C OF THE IT ACT. 3. THE MODIFIED ADDITIONAL GROUND IS ADMITTED AS IT IS LEGAL IN NATURE AND IT IS MERELY AN EXPANSION OF THE ORIGINAL GROUN D NO. 2. NO FRESH FACTS ARE REQUIRED TO BE GONE INTO FOR THE ADJUDICA TION OF THIS MODIFIED ADDITIONAL GROUND, AS THE RELEVANT MATERIAL WITH REG ARD TO IT ALREADY EXIST ON RECORD. 4. APROPOS THE MERITS OF THE MODIFIED ADDITIONAL GR OUND, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ASS ESSING OFFICER REOPENED THE COMPLETED ASSESSMENT OF THE ASSESSEE O NLY ON HAVING ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 3 COME TO KNOW ABOUT THE SALE OF A PLOT BY THE ASSESSE E ALONGWITH HIS WIFE; THAT IT WAS ON THE BASIS OF THIS INFORMATION, T HAT FORMED OPINION THAT THE ASSESSEE HAD NOT DISCLOSED CAPITAL GAINS WI TH REFERENCE TO THE PROVISIONS OF SECTION 50C OF THE ACT; THAT IN THE C ASE OF INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P) LTD., 61 DTR 37 (JODHPUR), IT HAS BEEN HELD THAT MERELY BECAUSE THE STAMP VALUATI ON AUTHORITY HAS ADOPTED A CERTAIN VALUATION FOR PAYMENT OF STAMP DU TY ON THE PROPERTY PURCHASED BY THE ASSESSEE, THE SAME CANNOT BE A BAS IS TO CONCLUDE THAT THE ASSESSEES INCOME HAS ESCAPED ASSESSMENT, PARTICULARLY WHEN NO TANGIBLE MATERIAL HAS BEEN BROUGHT ON RECORD TO SUGGEST ESCAPEMENT OF INCOME, EXCEPT THE INSPECTORS REPORT , WHICH COULD NOT BE RELIED ON TO ASCERTAIN THE VALUE OF THE PROPERTY ; THAT IT WAS ON THIS BASIS THAT THE LD. CIT(A)S ACTION OF ANNULLING THE REASSESSMENT PROCEEDINGS WAS UPHELD BY THE HONBLE TRIBUNAL IN TH E CASE OF INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P) LTD., (S UPRA); THAT THE DECISION IN INCOME TAX OFFICER V.S SHIV SHAKTI BUIL D HOME (P) LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE PRESENT CASE AND HEREIN ALSO, THE REASSESSMENT PROCEEDINGS HAVE WRONGLY BEEN INITIATED ; AND THAT AS SUCH, THE REASSESSMENT PROCEEDINGS BE QUASHED. ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 4 5. ON THE OTHER HAND, THE LD DR HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT IT HAS N OWHERE BEEN DISPUTED, AS CORRECTLY OBSERVED BY THE LD. CIT(A), T HAT AS PER THE SALE DEED, THE PROPERTY WAS SOLD BY THE ASSESSEE IN JOINT OWNERSHIP WITH HIS WIFE, FOR RS. 2,00,000/-, WHEREAS THE STAMP VALUATIO N AUTHORITY DETERMINED THE FAIR MARKET VALUE AT RS. 38,69,115/- (RS. 19,34,557/- ATTRIBUTABLE TO THE ASSESSEE); THAT MOREOVER, THE A SSESSEE DID NOT DISPUTE THE FAIR MARKET VALUE BEFORE THE LD. ASSESS ING OFFICER; THAT AS SUCH, THE LD ASSESSING OFFICER CORRECTLY TREATED TH E SALE VALUE TO BE THAT AS DETERMINED BY THE STAMP VALUATION AUTHORITY; AND THAT, THEREFORE, THERE BEING NO MERIT IN THE MODIFIED ADDITIONAL GRO UND, THE SAME BE REJECTED. 6. HAVING HEARD THE RIVAL CONTENTIONS ON THIS ISSUE , I FIND THAT IN THIS CASE, THE LD ASSESSING OFFICER GOT INFORMATION THAT THE ASSESSEE HAD SOLD A PLOT OF LAND ALONGWITH HIS WIFE, FOR AN A PPARENT CONSIDERATION OF RS. 10.00 LACS, WHEREAS THE SUB-RE GISTRAR HAD TAKEN THE VALUE OF THE PLOT FOR STAMP DUTY PURPOSES, AT R S. 38,69,115/-. IT WAS ON THE BASIS OF THIS INFORMATION THAT THE COMPLE TED ASSESSMENT OF THE ASSESSEE WAS REOPENED, THE LD. ASSESSING OFFICER HAVING FORMED ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 5 THE OPINION THAT THE ASSESSEE HAD NOT DISCLOSED CAP ITAL GAINS WITH REFERENCE TO THE PROVISIONS OF SECTION 50C OF THE A CT. 7. THE ASSESSEE HAS CHALLENGED THE AFORESAID ACTION OF THE ASSESSING OFFICER, ON THE BASIS OF THE JODHPUR ITAT DECISION IN THE CASE OF INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P ) LTD. (SUPRA). IN INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P) L TD. (SUPRA), IT HAS BEEN HELD THAT THE INSPECTOR HAD ONLY STATED THAT T HOUGH THE ASSESSEE PURCHASED THE PROPERTY @ RS. 250/- PER SQ. FT., THE RATE IN THAT AREA WAS FROM RS. 500/- TO 600/- PER SQ. FT.; THAT NO DET AILS OR ANY OTHER SALE INSTANCES HAD BEEN GIVEN; THAT IN ANY CASE, TH E INSPECTORS REPORT COULD NOT BE THE BASIS FOR FORMATION OF BELIEF OF T HE LD. ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME; THAT THERE HAS TO BE A NEXUS BETWEEN THE FORMATION OF BELIEF AND THE ESCAPEMENT O F INCOME; THAT ONLY VALUATION DONE BY THE STAMP VALUATION AUTHORIT Y AND THE INSPECTORS REPORT HAD BEEN TAKEN AS THE BASIS FOR FORMATION OF BELIEF OF ESCAPEMENT OF INCOME; THAT THERE HAS TO BE A REA SON FOR THE FORMATION OF THE BELIEF OF ESCAPEMENT OF INCOME AND THE REASON SHOULD BE SUCH, AS FROM WHICH, PRIMA FACIE, IT COULD BE INF ERRED THAT THERE IS ESCAPEMENT OF INCOME; THAT EVERY REASON, EVEN IF RE MOTELY CONNECTED ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 6 TO THE ISSUE, CANNOT BE SAID TO BE A SUFFICIENT REA SON FOR FORMATION OF BELIEF OF ESCAPEMENT OF INCOME; THAT THERE HAS TO B E A LIVE NEXUS BETWEEN THE REASON AND THE FORMATION OF THE BELIEF; THAT MERELY BECAUSE THE STAMP VALUATION AUTHORITY HAS ADOPTED A CERTAIN VALUATION FOR PAYMENT OF STAMP DUTY, THE SAME CANNOT BE A BAS IS TO CONCLUDE ESCAPEMENT OF INCOME IN THE HANDS OF THE PURCHASER, PARTICULARLY WHEN NO TANGIBLE MATERIAL HAD BEEN BROUGHT ON RECORD TO SUGGEST THE ESCAPEMENT OF INCOME, EXCEPT THE INSPECTORS REPORT , WHICH COULD NOT BE RELIED ON. THE ITAT RELIED ON THE DECISION IN THE CASE OF CIT VS. D.N. PACHORI (2010) 189 TAXMAN 420 (MP). 8. THE PRESENT CASE IS THE CASE OF A SELLER OF PROPE RTY. HOWEVER, THE DIRECT APPLICABILITY OF INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P) LTD., (SUPRA) TO THE PRESENT CASE CANNOT BE DENIED, AS HAS ALSO NOT BEEN DONE SUCCESSFULLY BEFORE THIS BENCH. SECTION 50C OF THE ACT READS AS FOLLOWS: 50C. SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 7 ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER ; (B) THE VALUE SO ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB- SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 8 EXPLANATION 1. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. 9. EVIDENTLY, THE PROVISIONS OF SECTION 50C ARE DEE MING PROVISIONS, ENACTED SPECIFICALLY FOR THE PURPOSES OF SECTION 48 OF THE ACT. SECTION 50C(1) SPECIFICALLY PROVIDES THAT WHERE THE CONSIDER ATION RECEIVED QUA TRANSFER OF LAND IS LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, THE VALUE SO ADOPTED SHALL, FOR THE PURP OSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESULT OF THE TRANSFER. SECTION 48 OF THE ACT PROVIDES THE MODE OF COMPUTATION OF CAPITAL GAINS. A CONJOINT READING OF SECTIONS 50C AND 48 ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 9 OF THE ACT SHOWS THAT THE DEEMING PROVISIONS OF SECT ION 50C ARE ONLY FOR SUCH COMPUTATION. THAT BEING SO, AS RIGHTLY CONT ENDED, THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY CANNOT, BY ITSELF, BE MADE THE BASIS FOR REOPENING THE CONCLUDED ASSES SMENT. 10. THUS, A MERE ADOPTION OF HIGHER VALUE OF THE PRO PERTY BY THE STAMP VALUATION AUTHORITY CANNOT LEAD TO A FORMATIO N OF BELIEF OF ESCAPEMENT OF INCOME, PARTICULARLY WHEN THE VALUE SO ADOPTED IS ADOPTED FOR STAMP DUTY PURPOSES ONLY. 11. MOREOVER, IT IS NOWHERE THE CASE OF THE DEPARTM ENT THAT THE ASSESSING OFFICER HAD BROUGHT ON RECORD ANY TANGIBL E MATERIAL WHATSOEVER TO SUGGEST ESCAPEMENT OF INCOME, WHICH COU LD HAVE, BESIDES THE INSPECTORS REPORT, LED TO THE FORMATIO N OF BELIEF OF ESCAPEMENT OF INCOME. IT IS TRITE, AS ALSO CONSIDER ED IN THE CASE OF INCOME TAX OFFICER VS. SHIV SHAKTI BUILD HOME (P) L TD., (SUPRA), THAT THERE HAS TO BE A NEXUS BETWEEN THE FORMATION OF THE BELIEF AND THE ALLEGED ESCAPEMENT OF INCOME. IN THE ABSENCE OF ANY POSITIVE MATERIAL BROUGHT ON THE RECORD BY THE ASSESSING OFFICER TO S UGGEST ESCAPEMENT OF INCOME, NO SUCH NEXUS EXISTS HEREIN. THEREFORE, R ESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF INCOME TAX OFF ICER VS. SHIV SHAKTI ITA 268/JP/2015_ ARUN KUMAR CHOUDHARY VS ITO 10 BUILD HOME (P) LTD., (SUPRA), THE GRIEVANCE OF THE ASSESSEE BY WAY OF THE MODIFIED ADDITIONAL GROUND TAKEN IS ACCEPTED AN D THE INITIATION OF THE REASSESSMENT PROCEEDINGS IS QUASHED. 12. AS A CONSEQUENCE, NOTHING FURTHER SURVIVES FOR ADJUDICATION. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/2016. SD/- , - MH TSU (A.D. JAIN) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH SEPTEMBER, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ARUN KUMAR CHOUDHARY, TONK. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD, TONK. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 268/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR