M/s Ritz Enterprises Pvt. Ltd., Lucknow V. Astt. Commissioner of Income Tax, Lucknow

ITA 268/LKW/2015

• Counselvise Citation: 26823714 RSA 2015
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PUNEET KUMAR
• Keywords: Principle of natural justice; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.268/LKW/2015 ASSESSMENT YEAR:2004 - 2005 A.C.I.T., RANGE - 1, LUCKNOW VS M/S RITZ ENTERPRISES PVT. LTD., B - 922, SECTOR - B, MAHANAGAR, LUCKNOW. PAN:AABCR8183R (RESPONDENT) (APPELLANT) SHRI P. K. KAPOOR, C.A. APPELLANT BY SHRI PUNEET KUMAR, D. R. RESPONDENT BY 16/06/2015 DATE OF HEARING 17 /07/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 23/01/2015 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE ON A DUE CONSIDERATION THAT ( I ) AS PER REVISED PROCEDURE OF ASSESSMENT AS IS APPLICABLE WITH EFFECT FROM 01.06.1991, THE 'APPELLANT' ALREADY STOOD ASSESSED WITH THE ISSUANCE OF INTIMATION UNDER SECTION 143(1) DATED 22.07.2005 ( II ) REQUISITE CONDITION FOR SELECTION OF CAS E FOR SCRUTINY ASSESSMENT HAVE NOT BEEN SHOWN TO HAVE EXISTED IN TERMS OF CLAUSE (II) OF SUB - SECTION(2) OF SECTION 143(3) OF THE 'ACT' AND ( III ) THE BASIS FOR SELECTION OF THE CASE OF SCRUTINY WAS NOT COMMUNICATED TO THE 'APPELLANT'. LD.'CIT(A)' SHOULD HAVE HE LD THAT THE REGULAR ASSESSMENT ORDER DATED 26.12.2006 WAS BAD IN LAW. 2 WITHOUT PREJUDICE TO THE AFORESAID 2. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION TO THE EXTENT OF RS.8,63,903/ - BY ACCEPTING THE FULL VALUE OF CONSIDERATION AT RS.57,03,623/ - AS DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER. 3. BECAUSE ON A DUE CONSIDERATION OF SUBMISSIONS MADE BY THE 'APPELLANT' BEFORE THE DEPARTMENTAL VALUATION OFFICER [COPIES OF WHICH WERE PLACED BEFORE 'CIT(A)'], THE L D. 'CIT(A)' SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO ACCEPT THE DECLARED SALE CONSIDERATION OF RS.48,39,720/ - AS FULL VALUE OF CONSIDERATION FOR COMPUTING THE LONG TERM CAPITAL GAIN. 4. BECAUSE WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO. 1 & 2, LOOKING TO THE NATURE OF DE - MERITS ATTACHED TO THE IMPUGNED PROPERTY HAVING NO PARKING SPACE AND HAVING A GRAVE YARD ON ONE SIDE OF THE PROPERTY, THE REBATE FOR ADVERSE FEATURES ALLOWED BY THE DEPARTMENTAL VALUATION OFFICER @10% IS TOO LESS AND ON A P ROPER APPRECIATION OF THE NATURE AND EXTENT OF ADVERSE FEATURES OF THE PROPERTY THE L D. 'CIT(A)' SHOULD HAVE CONSIDERED HIGHER REBATE FOR ADVERSE FEATURES. 5. BECAUSE ON A DUE CONSIDERATION OF THE FACT THAT THE SALE CONSIDERATION SHOWN IN SEVERAL INSTANCES OF TRANSFER OF SIMILAR PROPERTIES IN THE SAME VICINITY WAS MUCH LOWER THAN THE SALE CONSIDERATION DECLARED BY THE 'APPELLANT', THE AUTHORITIES BELOW SHOULD HAVE ACCEPTED THE DECLARED SALE CONSIDERATION OF RS.48,39,720/ - . 6. BECAUSE IN ANY CASE, THE L D 'CIT(A)' SHOULD HAVE ALLOWED FURTHER RELIEF OF RS.9,39,998 / - FROM THE FAIR MARKET VALUE OF RS.57,03,623/ - ESTIMATED BY THE DISTRICT VALUATION OFFICER, TOWARDS THE VALUE OF LAND INCLUDED IN THE STAMP VALUE FOR THE REASON THAT AMENDMENT MADE IN UTTAR PRADESH STAMP (VALUATION OF PROPERTY) (FIRST AMENDMENT) RULES, 2005 VIDE NOTIFICATION K.N 5 - 2490/11 - 2005 - 500(87)2001, DATED 30.5.2005 WAS CLARIFICATORY IN NATURE. 7. BECAUSE WITHOUT PREJUDICE TO THE GROUNDS RAISED HEREINFORE, THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY DISTRICT VALUATION OFFICER AND DECLARED BY THE 'APPELLANT' BEING ONLY 15%, (APPROX.) THE SALE CONSIDERATION DECLARED IN THE REGISTERED SALE DEED DESE RVED TO BE ACCEPTED IN VIEW OF THE DECISION OF HON'BLE PATNA 3 HIGH COURT IN THE CASE OF BIMLA SINGH VS. CIT, REPORTED IN (2009) 308 ITR 71 (PAT). 8. BECAUSE RELIANCE PLACED BY THE 'CIT(A)' ON VARIOUS JUDGMENTS IS MIS - PLACED AND THE SAID JUDGMENTS ARE ALSO DISTINGUISHABLE ON FACTS. 9. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE REPORT OF D.V.O. IS AVAILABLE ON PAGES 202 TO 211 OF THE PAPER BOOK AND POINTED OUT THAT THE D.V.O. HAD VALUED THE PROPERTY AT RS.57.036 LAC AS CAN BE SEEN ON PAGE NO. 207 OF THE PAPER BOOK. HE ALSO DRAWN OUR ATTENTION TO PAGE NO. 208 OF THE PAPER BOOK REGARDING THE WORKING OF THIS VALUE OF RS.57.063 LAC. HE POINTED OUT THAT FOR THE STRUCTURE OF COMMERCIAL OFFICE BUILDING, THE D.V.O. HAS APPLIED THE RATE OF RS.21,600/ - PER SQ. MTR. AND FOR WORKING OUT THE COST OF LAND , HE HAS APPLIED THE RATE OF RS.11,286/ - PER SQ. MTR. HE ALSO DRAWN OUR ATTENTION TO PAGE NO. 209 OF THE PAPER BOOK, WHICH CONTAINED THE RATE ANALYSIS DONE BY THE DVO . HE POINTED OUT THAT IT WAS ARGUED BEFORE THE D.V.O. THAT THERE ARE TWO DEMERITS I.E. THERE IS NO PARKING SPACE AND HAVING GRAVEYARD ON ONE SID E AND FOR THIS REASON , THE D.V.O. HAS ALSO ALLOWED REBATE OF 10% OVER AND ABOVE DM CIRCLE RATE FOR WORKING OUT THE RATE OF RCC FRAMED STRUCTURE FOR COMMERCIAL OFFICE BUILDING AT RS.21,600/ - PER SQ. MTR AND FOR WORKING OUT THE VALUE OF LAND RATE AT RS.11,286/ - PER SQ. MTR. HE SUBMITTED THAT THIS SHOW S THAT THE DEMERITS POINTED OUT BY THE ASSESSEE IS ACCEPTED BY THE D.V.O. ALSO BUT THE REBATE ALLOWED BY HIM IS NOT ENOUGH. HE ALSO SUBMITTED THAT ON PAGE NO. 44 TO 47 OF THE PAPER BOOK IS VALUATION REP ORT PREPARED BY REGISTERED VALUER AS PER WHICH THE VALUE WAS WORKED OUT BY HIM AT RS.12.40 LAC EXCLUDING THE COST OF LAND. HE ALSO SUBMITTED THAT THE D.V.O. VALUED THE PROPERTY AT RS.57.036 LAC AND THE ASSESSEE HAD DISCLOSED THE SALE CONSIDERATION AT RS.4 8,39,720/ - . HE SUBMITTED THAT THE DIFFERENCE IS ONLY RS.8.639 LAC, WHICH IS AROUND 15.15% OF THE VALUE AS PER D.V.O. HE PLACED 4 RELIANCE ON A JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. DR. H. RAHMAN [1991] 189 ITR 307 (ALL) I N SUPPORT OF THE CONTENTION THAT AS PER TH IS JUDGMENT, THE CORRECTNESS OF THE VALUATION REPORT MAY BE CHALLENGED IN APPEAL. HE ALSO PLACED RELIANCE ON A TRIBUNAL DECISION IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX, CO. CIRCLE IV(3), CHENNAI VS. M IL INDUSTRIES LTD. [2013] 142 ITD 428 (ITAT [CHEN]) IN SUPPORT OF THIS CONTENTION THAT THE VALUATION REPORT OF D.V.O. IS NOT SACROSANCT. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE PRESENT CASE, THE VALUE DETERMINED BY THE D.V.O. IS RS.57.036 LAC. WE ALSO FIND THAT FOR WORKING OUT THIS VALUE, THE D.V.O. HAS CONSIDERED AND ACCEPTED TWO DEMERITS I.E. AVAILABILITY OF NO PAR KING SPACE AND HAVING GRAVEYARD ON ONE SIDE OF THE PROPERTY AND HAS ALLOWED REBATE OF 10% AS AGAINST DM CIRCLE RATE. HENCE, THIS IS ACCEPTED POSITION THAT TWO DEMERITS IN THE PROPERTY ARE THERE AND TO COVER UP SUCH DEMERITS, HOW MUCH DEDUCTION IS CALLED F OR FROM DM CIRCLE RATE IS THE MATTER OF DECISION. NOW AT THIS JUNCTURE , WE EXAMINE THE APPLICABILITY OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 6. AS PER THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF H. RAHMAN (SUPRA) , IT WAS H ELD THAT THE CORRECTNESS OF VALUATION REPORT MAY BE CHALLENGED IN APPEAL BUT SO FAR WTO IS CONCERNED, HE IS BOUND BY IT. HENCE, WHILE DECIDING THE APPEAL, WE CAN EXAMINE THE CORRECTNESS OF THE D.V.O. S REPORT. SIMILARLY IN THE CASE OF MIL INDUSTRIES LTD. (SUPRA), IT WAS HELD BY THE TRIBUNAL THAT THE VALUATION BY THE D.V.O. IS NOT SACROSANCT AND EQUAL IMPORTANCE HAS TO BE GIVEN TO THE OTHER FINDINGS ARRIVED AT BY THE AUTHORITIES BELOW. IN THE PRESENT CASE, THIS IS ACCEPTED POSITION THAT THERE ARE TWO DEMERIT S IN THE PROPERTY BECAUSE THERE IS NO PARKING SPACE AND GRAVEYARD IS THERE ON ONE SIDE AND AFTER ACCEPTING THESE TWO DEMERITS, THE D.V.O. HAS 5 ALLOWED 10% REBATE FROM DM CIRCLE RATE. THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AT RS.4 9.397 LAC AND AS DETERMINED BY D.V.O. AT RS.57.036 LAC, THE DIFFERENCE IS ONLY RS.8.639 LAC WHICH WORKS OUT TO 15.15%. THIS IS ALSO TO BE NOTED THAT AS PER THE JUDGMENT OF HON'BLE PATNA HIGH COURT RENDERED IN THE CASE OF BIMLA SINGH VS. CIT [2009] 308 ITR 71 (PAT) AVAILABLE ON PAGES 243 TO 246 OF THE PAPER BOOK, IT WAS HELD THAT DIFFERENCE BETWEEN COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND AS DETERMINED BY THE ASSESSING OFFICER BEING LESS THAN 15%, SAME IS T O BE IGNORED FOR THE PURPOSE OF ADDITION. HE NCE, IF IT IS ACCEPTED THAT THE REBATE ALLOWED BY D.V.O. ON ACCOUNT OF DEMERITS IS LESS, SUCH REBATE SHOULD BE 25% AS AGAINST 10% ALLOWED BY THE D.V.O., THERE WILL BE NO DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND VALUE AS PER D.V.O. SINCE T HE REBATE ALLOWED BY D.V.O. IS ESTIMATED REBATE WITHOUT ANY BASIS INDICATED BY D.V.O. IN HIS REPORT, WE FEEL IT PROPER THAT IN THE FACTS OF THE PRESENT CASE, SUCH REBATE SHOULD BE 25% OF DM CIRCLE RATE AND AS A RESULT, THERE IS NO DIFFERENCE BETWEEN THE VA LUE AS PER D.V.O. AND VALUE AS PER THE ASSESSEE AND AS A RESULT, NO ADDITION SURVIVES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 /07/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR