Pawan Kumar Agarwal, Kanpur V. ACIT, Kanpur

ITA 278/LKW/2010

• Counselvise Citation: 27823714 RSA 2010
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Fair market value
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.278/LKW/2010 ASSESSMENT YEAR:2007-08 PAWAN KUMAR AGARWAL 51/47, NAYA GANJ KAN P UR V. ACIT-II KANPUR PAN:AAMPA5836E ( A PP ELLANT ) ( RES P ONDENT ) APPELLANT BY: SHRI. YOGE SH AGRAWAL, ADVOCATE RES P ONDENT B Y : SMT. RANU BISWAS, D.R. DATE OF HEARING: 30.05.2013 DATE OF PRONOU NCEMENT: 07.08.2013 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY TH E ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS, BUT THEY ALL RELATE TO THE CONFIRMATION OF ADDITIONS MADE ON ACCOUNT OF CAPITAL GAIN MADE BY THE ASSESSING OFFICER AFTER INVOKING THE PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE PREVIOUS YEAR CORRESPONDING TO A SSESSMENT YEAR 2007-08, THE ASSESSEE HAS SOLD TWO PROPERTIES ONE AT CITY CE NTRE (THE MALL, KANPUR) AND THE OTHER AT NAYA GANJ, KAN PUR. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AND COMPUTED THE CAPITAL GAINS ACCORDINGLY HAVING :-2-: REJECTED THE REQUEST OF THE ASSESSEE FOR MAKING REFERENCE TO THE DVO FOR VALUATION OF THE PROPERTY ON THE GROUND THAT THE ASSESSEE HAS DISPUTED THE VALUATION DETERMINED BY THE STAMP VA LUATION AUTHORITY. WHILE DENYING REFERENCE TO THE DVO, THE ASSESSING OFFICER HAS ALSO OBSERVED THAT IN THE LIGHT OF PROVISIONS OF SECTION 50C(2) OF THE ACT, A REFE RENCE TO THE DVO CANNOT BE MADE WHERE THE ASSESSEE HAS DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY AND TH E ASSESSEE HAS ADMITTEDLY DISPUTED THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS OBJECTED THE VALUATION ADOPTED BY THE ASSESSING OFFICER ON THE BASIS OF THE VALUATION DETERMINED BY THE STAMP VALUATION AUTHORITY AND MADE A REQUEST FOR REFERENCE TO THE DVO FOR DETERMINATION OF THE VALUE OF THE PROPERTY AS ITS MARKET VALU E IS LESSER THAN THE VALUE ADOPTED BY THE STAMP VALU ATION AUTHORITY FOR THE PURPOSE OF REGISTRATION. BUT HE DID NOT FIND FAVOUR WITH THE ASSESSEE. WHILE ADJUDICATING THE ISSUE, THE LD. CIT(A) HAS PUT EMPHASIS ON CLAUSE (2) OF SECTION 50C OF THE ACT WITH THE OBSERV ATION THAT THE ASSESSEE HAS DISPUTED THE VALUATION ADOPTED BY THE STAMP VALUATION AUTH ORITY AND ONCE HE HAS RAISED A DISPUTE TO THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY, REFERENCE CANNOT BE MADE TO THE DVO IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTIO N 50C OF THE ACT. WHILE HOLDING SO, THE LD. CIT(A) HAS PLACED RELIANCE UPON TH E ORDER OF THE TRIBUNAL IN THE CASE OF MOHD. SHOIB VS. DCIT, 29 DTR (LUCK (TRIB.) 306. 4. AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMI SSION THAT THE LD. CIT(A) HAS RECORDED INCORRECT FINDINGS. THE ASSESSEE HAS NOT MADE ANY SPECIFIC ST ATEMENT BEFORE THE LD. CIT(A) THAT HE HAS DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY BEFORE THE CONCERNED AUTHORITY. BUT THE LD. CIT(A) HAS MADE A REFERENCE OF THIS ARGUMENT AS RAISED BEFO RE THE ASSESSING OFFICER, :-3-: WHEREAS THE ASSESSEE HAS FILED AN AFFI DAVIT BEFORE THE LD. CIT(A) DEPOSING THEREIN THAT HE MADE AN ORAL STATEMENT BEFORE THE ASSESSING OFFICER ON THE BASIS OF THE VERBAL INFORMATION OF THE ASSESSEES CIVIL COUNSEL. BUT WHENEVER ASSESSEE WAS ASKED TO FI LE DOCUMENTARY EVIDENCE BY THE ASSESSING OFFICER, THE ASSESSEE COUL D NOT FILE THE DOCUMENTS AS THE ASSESSEE DID NOT HAVE IT. HE HAS MADE DECLARATION OF THIS FACT THROUGH HIS AFFIDAVIT BEFORE THE LD. CIT(A). INSTEA D OF VERIFYING THESE FACTS STATED ON OATH BY THE ASSESSEE BEFORE THE LD. CI T(A), THE LD. CIT(A) HAS ADJUDICATED THE ISSUE ON THE PR EMISE THAT THE ASSESSEE HAS DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY AND ACCORDINGLY REJECTED THE CLAIM OF THE ASSESSEE HAVI NG PLACED RELIANCE UPON TH E ORDER OF THE TRIBUNAL IN THE CASE OF MOHD. SHOIB VS. DCIT (S UPRA). HE HAS ALSO REQUESTED THE LD. CIT(A) THAT IF THE ASSESSING O FFICER HAS NOT MADE REFERENCE FOR DETERMINATION OF THE MARK ET VALUE IN THE LIGHT OF PROVISIONS OF SECTION 50C(2) OF THE ACT, THE LD. CIT(A) IS COMPETENT TO ISSUE NECESSARY DIRECTION TO THE ASSESSING OFFICER TO DO SO. COPY OF THE AFFIDAVIT F ILED BEFORE THE LD. CIT(A) IS ALSO FILED BEFORE US AND IS AVAILABLE AT PAGES 41 AND 42 OF THE COMPILATION OF THE ASSESSEE. THE LD . COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS BEEN CONTENDING SINCE BE GINNING THAT THE MARKET VALUE OF THE PROPERTY IS LESSE R THAN THE VALUE SO ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPO SE OF PAYMENT OF STAMP DUTY, ON ACCOUNT OF ITS LOCATION AND QUALITY OF CONSTRUCTION. 5. THE LD. D.R., ON THE OTHER HAND, HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE LD. CIT(A) WITH THE S UBMISSION THAT AS PER CLAUSE (B) OF SUB-SECTION (2) OF SECTION 50C OF THE AC T, A REFERENCE TO THE DVO CANNOT BE MADE IF THE ASSESSEE HAS DISPUTED THE VALUE SO ADOP TED BY THE STAMP VALUATION AUTHORITY BY FILING AN OBJECTIO N IN APPEAL OR REVISION OR REFERENCE BEFORE ANY OTHER AUTHORITY, COURT OR TH E HIGH COURT. IN THE INSTANT CASE, THE ASSESSEE HAS CONTENDED BEFORE THE ASSESSING OFFICER TH AT HE HAS FILED :-4-: OBJECTION TO THE VALUATION SO ADOPTED BY THE STAMP VALUAT ION AUTHORITY. THEREFORE, REFERENCE TO TH E DVO CANNOT BE MADE AS PER SUB-SECTION (2) OF SECTION 50C OF THE ACT. 6. HAVING HEARD THE RIVAL SUBMISSION S AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES A ND THE DOCUMENTS PLACED ON RECORD, WE FIND THAT THOUGH THE ASSESSEE HAS TA KEN A STAND BEFORE THE ASSESSING OFFICER THAT HE HAS DISPUTED THE VALUATION SO ADOP TED BY THE STAMP VALUATION AUTHORITY, BUT HE COULD NOT FILE ANY EVIDENCE IN THIS REGARD. BEFORE THE LD. CIT(A), THE ASSESSEE HA S FILED AN AFFIDAVIT DEPOSING THEREIN THAT HE HAS MADE A STAT EMENT BEFORE THE ASSESSING OFFICER THAT HE HAS DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY BY FILING OBJECTIONS ON THE BASIS OF VERBAL INFORMATION FROM ON E OF THE STAFF OF HIS CIVIL COUNSEL (MUNSHI) BUT IN FA CT THE ADVOCATE HAS NOT FILED ANY OBJECTION BEFORE ANY AUTHORITY IN THIS REGARD ON ACCOUNT OF NON-PAYMENT OF FEES. THE ASSESSEE HAS CLARIFIED ALL THESE FACTS BEFORE THE LD. CIT(A) BY FILING AN AFFIDAVIT BUT THE LD. CIT(A) DID NOT TAKE ANY COGNIZANCE OF THESE FACTS. FOR THE SAKE OF REFERENCE, WE EXTRACT PARA NOS 3 TO 5 OF THE AFFIDAVIT OF THE ASSESSEE FILED BEFORE THE LD. CIT(A) AS UNDER:- 3. THAT IT IS ALSO ADMITTED FACT THAT THE DEPONENT HAS STATED BEFORE THE A.O, RANGE-2, KANPUR THAT HE HAS CHALLENGED THE VALUATION DETERMINED BY THE ST AMP VALUATION AUTHORITY. THIS INFORMATION FURNISHED TO THE A.O BASED ON VERBAL INFORMATION OF DEPONENT'S CIVIL COUNSEL. THAT IS WHY ON BEING ASKE D BY THE A.O AT KANPUR TO FURNISH DOCUMENTARY EVID ENCE, ALSO FILING OF PETITION BEFORE THE STAMP VALUAT ION AUTHORITY THE DEPONENT HAS SLATED THAT HE DOES NOT HAVE ANY DOCUMENT OF FILING OF PETITION BEFORE THE STAMP VALUATION AUTHORITY AND THAT IS WHY EXCEPT SUBMISSION, NO EVIDENCE WAS FILED BEFORE A.O, THE REASONS FOR THE SAME WAS ALSO :-5-: STATED VIDE REPLY DATED 17-11-2009 IN THE INSTANT CASE, BECAUSE IT WAS RELIABLY LEARNED FROM THE OFFICE STAFF OF CIVIL COUNSEL (MUNSHI) THAT BECAUSE OF NON-PAYMENT OF FE ES TO ADVOCATE HE HAS NOT FILED ANY LETTER DOCUMENT TO AUTHORITY OF STAMP. THERE IS NO EVIDENCE ON RECORD OF A.O THAT THE DEPARTMENT HAS FILED PETITION BEFORE THE STAMP VALUATION AUTHORITY CHALLENGING THE VALUATION. THE A.O HAS NOT MADE ANY ENQUIRY FROM THE CO URT OF STAMP VALUATION AUTHORITY AND WITHOUT CONFIRMING THE SAME FR OM THE COURT THE A.O HAS HELD THAT REFERENCE REQUEST FOR REFERENCE TO VALUATION CELL TO DETERMINE THE FAIR MARKET VALUE OF THE PR OPERTY IN QUESTION CANNOT BE ENTERTAINED. 4. THAT IT IS A ADMITTED FACT TH AT THE DEPONENT HAS MADE REQUEST TO MAKE A REFERENCE TO VALUATION CE LL IN ORDER TO DETERMINE THE FAIR MARKET VALUE OF THE PR OPERTY, BUT WITHOUT ACCEPTING THE DEPONENT'S REQUEST, THE A.Q HAS ADOPTED CONS IDERATION DETERMINED BY THE D.M FOR STAMP DUTY PURPOSE. 5. THAT THE DEPONENT VIDE WRI TTEN SUBMISSION HAS BROUGHT ON RECORD THAT IF THE A.O HAS NOT MADE REFERENCE FOR DETERMINATION OF FAIR MARKET VALUE IN VIEW OF PR OVISION OF SECTION 50C(2), YOUR HONOUR IS LEGALLY EMPOW ERED AND JUSTIFIED IN DIRECTING THE A.O TO FIRST REFER THE PROPERTY TO VALUATIO N CELL AND THEN DECIDE DO SO IN VIEW OF PROVISION OF SECTIO N 50C(2) AND VARIOUS JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS B EEN HELD THAT WORD 'MAY' IN SECTION 50(2) HAS TO BE READ AS 'SHO ULD', SO THAT THE PROVISION IS NOT REDUNDANT. IN CASE, YOUR HONOUR, DESIRE, THE A.O MAY BE DIRECTED TO MAKE LOCAL ENQUIRY FROM DIST RICT COURT AS TO WHETHER THE DEPONENT HAS FILED ANY PETITION FOR CHALLENGING THE VALUATION DETERMINED BY THE STAMP VALU ATION AUTHORITY FOR ASSESSMENT :-6-: PURPOSE OR NOT. IT THEREFORE PR AYED THAT A.O MAY BE DIRECTED TO REFER THE MATTER TO VALUATION CELL. 7. SO FAR AS THE LEGAL POSITION AS PROPOUNDED BY THE LD. CIT(A) HAVING RELIED UPON THE ORDER OF THE TRI BUNAL IN THE CASE OF MOHD. SHOIB VS. DCIT (SUPRA) IS CONCERNED, WE HAVE NO DISPUTE IN THAT REGARD AS THERE IS NO AMBIGUITY IN THE PROVISIONS OF SECTION 50C OF THE ACT. WE, HOWEVER, FOR THE SAKE OF REFERENCE, REPRODUCE SE CTION 50C OF THE ACT AS UNDER:- 50C. (1) WHERE THE CONSIDERATION RECE IVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CA PITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE AD OPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERN MENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATIO N AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSAB LE] SHALL, FOR TH E 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 PROVIS IONS OF SUB-SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSE SSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXC EEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER ; (B) THE VALUE SO ADOPTED OR A SSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHOR ITY 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 AN Y 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 SU B-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND :-7-: SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SU CH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECT ION 16A OF THAT ACT. 8. AS PER SUB-SECTION (2) (A) OF SECT ION 50C OF THE ACT, THE ASSESSEE CAN CLAIM FOR A REFERENCE TO THE VALU ATION OFFICER WHERE THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AU THORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. BU T THIS REFERENCE IS SUBJECT TO CLAUSE (B) OF SUB-SECTION (2) OF SECTIO N 50C OF THE ACT, ACCORDING TO WHICH WHERE THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY IS DISPUTED IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE REFERENCE TO THE VALUATION OFFICER CANNOT BE MADE BY THE ASSESSING O FFICER. THE PURPOSE OR INTENTION BEYOND THIS CLAUSE IS TO AVOID CLAS H OF JUDGMENT OR OPINION OF THE TWO INDEPENDENT AUTHORITIES. IF CLAUSE (B) OF SUB-SECT ION (2) OF SECTION 50C OF THE ACT IS NOT AVAILABLE ON THE STATUTE, THERE MAY BE POSSIBILITY OF DIFFERENT OPINIONS BY DIFFERENT AUTHORITIES WITH REGARD TO THE VALUATION OF THE PROPERTY. THEN, THERE WOULD BE DISPUTE AS TO WHICH AU THORITY IS CORRECT IN ASSESSING THE CORRECT VALUATION OF THE PROPERTY. IN OR DER TO AVOID THIS SITUATION, CLAUSE (B) WAS PROVIDED IN SUB-SECT ION (2) OF SECTION 50C OF THE ACT. BUT IN THE INSTANT CASE, THE ASSESSING OFFICER AN D THE LD. CIT(A) HAVE PLACED HEAVY RELIANCE UPON THE FACT THAT THE ASSESS EE HAS OBJECTED TO THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHOR ITY BY FILING AN OBJECTION, BUT THE ASSESSEE HAS CLARIFIED THE FACTS BEFORE THE LD. CIT(A) BY FILING AN AFFIDAVIT THAT THE STATEMENT WAS MADE BEFORE TH E ASSESSING OFFICER ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFI CE OF THE CIVIL COUNSEL (ADVOCATE WHO WAS LOOKING AFTER HIS CIVIL MATTERS), BUT THE LD. CIT(A) DID NOT PAY ANY HEED TO THIS CONTENTION OF THE ASSESSEE AND HAS HELD THAT SINCE THE ASSESSEE HAS DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VALUATION AUTHORITY, REFERENCE TO THE DVO CANNOT BE MADE. :-8-: 9. TO OUR MIND, THE LD. CIT(A) HAS NO T ADJUDICATED THE ISSUE PROPERLY IN THE LIGHT OF CORRECT FACTS. HE SHOU LD HAVE LOOKED INTO THE CONTENTIONS OF THE ASSESSEE RAISED THROUGH HIS AFFIDA VIT CLARIFYING THE FA CTS AND THEN ASK THE ASSESSEE TO FILE SOME EVIDENCE ON THE BASIS OF WHICH HE DISPUTED THE VALUATION SO ADOPTED BY THE STAMP VA LUATION AUTHORITY FO R THE PURPOSE OF PAYMENT OF STAMP DUTY IN RE SPECT OF SUCH TRANSFER. BUT THE LD. CIT(A) HAS NOT DONE SO. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE WAS NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES AND REQUIRES A FRESH ADJUDICATION. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMIN E THE OBJECTION OF THE ASSESSEE WITH REGARD TO THE FAIR MARKET VALUE OF TH E PROPERTY IN THE LIGHT OF THE DOCUMENTARY EVIDENCE TO BE FILED BY THE ASSESSEE AND IF THE ASSESSING OFFICER IS SATISF IED THAT THERE IS FORCE IN THE CONTENTIONS OF THE ASSESSEE, HE MAY REFER FOR VALUATION OF THE PROPERTY TO THE VALUATION OFFICER IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (2) OF SECTION 50C OF THE ACT. ACCORDINGLY, THE ORDER OF THE LD . CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF TH E ASSESSING OFFICER WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN TERMS INDICATED ABOVE. 10. IN THE RESULT, APPEAL OF THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN TH E OPEN COURT ON 7.8.2013. SD/- SD/- [PRAMOD KUMAR] [S UNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:7.8.2013 JJ:0907 :-9-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR