SURENDRA KUMAR, Jaipur V. ITO, Jaipur

ITA 28/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2001 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Rule of consistency; Fair market value; Corroborative evidences; Valuation report; Revised return
• Section: 143(3); 147

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 HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 28/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SURENDRA KUMAR, J-31, SHARMA COLONY, BAIS GODAM, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD- 6(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACMPK 7503 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/05/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/07/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 26/10/2016 FOR THE A. Y. 2006-07, WHEREIN THE ASSESSEE HAS RAISED SOLE EFFECTIVE GROUND OF AP PEAL, WHICH IS AS UNDER:- 1. THAT THE LD. CIT(A) WENT WRONG IN CONFIRMING THE COST OF PROPERTY AS RS. 45/- PER SQ.FT AS FAIR MARK ET VALUE AS ON 01/04/1981 OF PROPERTY SOLD TAKEN BY THE A.O. WITHOUT ANY COGNATE AND DIRECT MATERIAL INSTEAD OF RS. 200/- SQ.FT TAKEN BY THE ASSESSEE ON ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 2 THE BASIS OF VALUATION ACCEPTED BY THE OTHER A.O. I N THE ASSESSMENT U/S 143(3) IN THE HAND OF ASSESSEES TWO OTHER BROTHERS WHO ARE CO-OWNERS IN THE SAME TRANSACTIONS WHICH IS ARBITRARY BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31/7/2006 DECLARING TOTAL INCOME OF RS . 1,82,030/-. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE ALONGWITH HIS THREE BROTHERS HAD SOLD TEN SHOPS AT S ANGWARA, DISTRICT- DUNGARPUR ON 11/11/2005 FOR TOTAL CONSIDERATION OF RS. 30 LACS WHEREAS THE SUB-REGISTRAR HAD ADOPTED THE VALUE OF THE SHOP S SOLD AT RS. 36,25,000/-. THE ASSESSEE HAD NOT DISCLOSED THE LON G TERM CAPITAL GAIN ON SALE OF THE SHOPS IN HIS RETURN OF INCOME. PROCE EDINGS U/S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE AC T) WAS INITIATED AS INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. TH E ASSESSEE HAD FILED REVISED RETURN ON 13/8/2013. DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE BASIS FOR MAKI NG THE FAIR MARKET VALUE (FMV) OF THE LAND AT RS. 5,00,000/- AS ON 01/ 4/1981 WITH SUPPORTING EVIDENCES, FOR WHICH THE ASSESSEE SUBMIT TED THAT THE LAND IN QUESTION IS SITUATED IN THE HEART OF THE TOWN HAVING GOOD MARKET VALUE, THEREFORE HE HAD ESTIMATED THE MARKET VALUE OF COMM ERCIAL LAND AS ON 01/4/1981 @ 200/- PER SQ.FT. THE ASSESSING OFFICER O BSERVED THAT THE ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 3 RATE OF THE AREA IN 1984 WAS RS. 45/- PER SQ. FT, TH ERE IS NO JUSTIFICATION FOR TAKING THE RATE OF RS. 200/- IN THE YEAR 1981 B Y THE ASSESSEE. DLC RATE OR THE INSTANCES OF SALE FOR THE YEAR 1981 IS NOT AVAILABLE. THEREFORE, THE ASSESSING OFFICER HAD ESTIMATED LONG TERM CAPITAL GAIN AT RS. 8,63,874/- AND THE SAME HAS BEEN ADDED IN THE I NCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS UPHELD THE ORDER OF THE ASSESSING O FFICER BY HOLDING AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ORIGINAL RETURN I N THIS CASE WAS FILED FOR AN INCOME OF RS. 1,82,030/- WHEREIN NO CAPITAL GAINS ON SALE OF SHOPS WAS DISCLOSED. BASED ON THE INFORMATION AVAIL ABLE WITH THE ASSESSING OFFICER REGARDING SALE OF TEN SHOPS AT SA NGWARA, DISTRICT DUNGARPUR BY THE ASSESSEE ALONGWITH HIS THREE BROTH ERS, PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT, 1961 WERE INITIA TED. IN RESPONSE TO THE SAME THE ASSESSEE FILED A RETURN OF INCOME DECL ARING LONG TERM CAPITAL GAIN AT RS.2,66,250/-. AS NOTED IN THE ASSE SSMENT ORDER THIS LAND WAS INHERITED BY THE ASSESSEE AND HIS THREE BR OTHERS FROM THEIR FATHER LATE SHRI BHIKHA BHAI ON 05.06.2002. AFTER D UE APPROVALS TEN SHOPS WERE CONSTRUCTED AND SOLD AT RS.3,00,000/- EA CH WHILE THE VALUE OF THESE SHOPS FOR THE STAMP DUTY PURPOSES WAS TAKE N BY THE REGISTRAR AT RS3,62,500/- PER SHOP. THE ASSESSING OFFICER NOT ED THAT THE ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 4 ASSESSEE WHILE WORKING OUT THE CAPITAL GAINS HAD TA KEN THE FMV OF THE LAND AT RS.5,00,000/- AS ON 01.09.1981 THE BASIS, A S PER ASSESSEE BEING THE PREVAILING MARKET VALUE IN THE AREA AND S AME WAS TAKEN AT RS. 200/- SQ. FEET, WHEN CONFRONTED BY THE ADIT(LNV ESTIGATION), UDAIPUR. THE ASSESSEE HAD BEEN SPECIFICALLY ASKED T O FURNISH EVIDENCE REGARDING THE FMV AND THE ASSESSEE HAD STATED THAT THE VALUE IS THE ESTIMATED MARKET VALUE. HOWEVER, THIS VALUE IS NOT SUPPORTED BY ANY DOCUMENT OR ANY EVIDENCE BY THE ASSESSEE. THE ASSES SEE HAD SUBMITTED A COPY OF THE LETTER OF THE SUB- REGISTRA R SANGWARA, DATED 07.02.1984 IN WHICH THE PREVAILING MARKET RATE OF L AND SITUATED AT SANGWARA IN THE YEAR 1984 WAS SUBMITTED BY HIM TO C OLLECTOR, DUNGARPUR. IN THE CHART ANNEXED WITH THIS LETTER, T HE MARKET RATE OF LAND IN DEVELOPED AREA OF SANGWARA WAS SHOWN AT RS. 45 PER SQ. FEET. THE ASSESSING OFFICER OPINED THAT WHEN IN 1984 THE RATE OF THE AREA WAS RS.45 PER SQ. FEET, THERE WAS NO JUSTIFICATION OF TAKING THE RATE AT RS.200/- PER SQ. FT. IN 1981, AS TAKEN BY THE ASSES SEE. SINCE, DLC RATES OR INSTANCE OF SALE FOR THE YEAR 1981 WAS NOT AVAIL ABLE, THE ASSESSING OFFICER ARRIVED AT THE VALUE BY RESORTING TO REVERS E METHOD BASED ON THE CHART ANNEXED TO SUB-REGISTRARS LETTER AND ARRI VED AT A FIGURE OF RS.34/- SQUARE FEET AND 1 /4 TH SHARE OF THE ASSESSEE WAS ARRIVED AT RS.21,250 AS AGAINST RS. 1,25,000/- SHOWN BY THE AS SESSEE. THE RELEVANT PORTIONS OF THE STATEMENTS, AND THE C HART OF THE SUB- REGISTRAR FOR APPLICABLE RATES IS A PART OF THE ASS ESSMENT ORDER AND NOT BEING REPRODUCED HERE AGAIN. IN THE PRESENT PROCEEDINGS, THE AUTHORIZED REPRESE NTATIVE RELIED HEAVILY ON THE FACT THAT THE SAME CALCULATION OF CA PITAL GAINS AS SHOWN IN THE ASSESSEES CASE HAS BEEN ACCEPTED IN THE ASS ESSMENTS OF THE BROTHERS AND CO-OWNERS, ASSESSMENT ORDER OF SHRI SU DARSHAN KUMAR ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 5 BARWNIYA FOR ASSESSMENT YEAR 2006-07 AND PENALTY OR DER IN THE CASE OF SHRI SURESH KUMAR BARWNIYA FOR ASSESSMENT YEAR 2 006-07 WERE FILED. FURTHER, IT WAS STATED THAT THE ASSESSING OF FICER SHOULD HAVE ACCEPTED THE VALUE OF RS.200/- SQ. FEET AND THE ASS ESSING OFFICER HAS ARBITRARILY TAKEN THE RATE AS PER THE RATE CHART OF TEHSILDAR. THE ASSESSEE HAS ADOPTED THE FMV AT RS.200/- SQ. F EET AND EVEN BEFORE ADIT (INVESTIGATION) HAD AGREED THAT THE SAM E WAS MERELY ON ESTIMATION AND NO BASIS OF SUCH ESTIMATION WAS PROV IDED. SIMILARLY BEFORE THE ASSESSING OFFICER ALSO NO SUPPORTING DOC UMENTS FOR THE VALUE TAKEN WERE FILED. THE ASSESSING OFFICER HAS B ASED HIS ASSESSMENT ON THE CHART FOR THE RATES AVAILABLE IN 1984 OF THE TEHSILDAR DATED 07.02.1984. SINCE, NO COMPARATIVE SALE INSTANCES OR RATES WERE AVAILABLE FOR 01.04.1981, THE ASSESSING OFFICER APP LIED THE REVERSE METHOD AND ARRIVED AT THE VALUE. IN THE ABSENCE OF ANY BASIS FORWARDED BY THE ASSESSEE AS WELL AS ANY VALUATION REPORT SUBMITTED BY THEM, IT IS INCORRECT TO CONTEND THAT ASSESSING OFFICER SHOULD AGREE TO THE VALUE ADOPTED. THE ASSESSING OFFICER HAS ADO PTED THE BEST CRITERIA AVAILABLE IN THE GIVEN CIRCUMSTANCES AND A RRIVED AT A VALUE OF RS.34/- SQ. FEET WHICH HAS A BASIS IN THE DOCUMENTS OF RATE ENUMERATED BY THE STAMP VALUATION AUTHORITIES. IN V IEW OF THE DISCUSSION AS ABOVE, THE RATE ADOPTED BY THE ASSESS ING OFFICER IS UPHELD AND THE FMV OF THE LAND AS ADOPTED BY THE AS SESSING OFFICER AT RS.34/- SQ. FEET AND RS.21,250/- 1/4 TH SHARE OF THE ASSESSING OFFICER IS UPHELD. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. WHI LE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR OF THE ASSESSEE H AS SUBMITTED AS UNDER:- ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 6 (I) THE ID. CIT (A) HAD 'INCORRECTLY OPINED THAT NO INSTANCE WAS AVAILABLE ON RECORDS SHOWING THE FMV OF THE SAID PROPERTY AS ON 1.4.1981. THEREFORE, THE AO WAS JUSTIFIED TO ADOPT THE 'REVERSE METHOD OF VALUATION' TO ARRIVE AT THE FMV OF THE SAID ASSET ON 1.4.1981. ON READING OF THE ASSESSMENT ORDER, IT IS NOTED THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT HAD SPECIFICA LLY AND CATEGORICALLY INFORMED THE FACT OF THE FAIR MARKET VALUE OF THE SAID ASSET AS ACCEPTED BY THE DEPARTMENT IN THE ASSESSMENT ORD ERS PASSED U/S 143(3) OF THE ACT IN THE CASES OF THE BR OTHERS OF THE APPELLANT VIDE LETTER DATED 16.9.2013 (COPY OF TWO LETTERS DATED 16-9- 13 & 17-10-13 PLACED IN PB AT PAGE NO. 1 TO 4 FOR R EADY REFERENCE AND RECORD). THIS FACT IS DULY MENTIONED IN THE BODY OF THE ASSESSMENT ORDER WHICH HAD NEVER BEEN QUESTIONED BY THE DEPART MENT AT ANY STAGE. IN THE CIRCUMSTANCES, THE OBSERVATIONS OF TH E ID. CIT (A) THAT NO INSTANCE OF FMV AS ON 1.4.1981 WAS AVAILABLE IS FAC TUALLY INCORRECT AND DESERVES TO BE QUASHED SUMMARILY. (II) ONCE THE DEPARTMENT HAD ACCEPTED THE FMV IN RE SPECT OF THE SAME ASSET IN THE CASES OF THE BROTHERS OF THE APPELLANT , THEN THERE IS NO REASON FOR THE AUTHORITIES BELOW TO DEVIATE FROM TH E ACCEPTED WORKING OF THE CAPITAL GAIN AS PER RULE OF 'CONSISTENCY'. THUS, THE AUTHORITIES BELOW WERE NOT WITHIN THEIR JURISDICTIO N TO DEVIATE FROM THE ACCEPTED FACTS OF THE CASE. IN SUPPORT OF SUCH CONTENTIONS, THE COPIES OF COMPUTATION SHEETS AS FILED IN THE CASES OF THE BROTHERS OF THE APPELLANT AND IN THE CASE OF THE APPELLANT ALON GWITH COPIES OF ASSESSMENT ORDERS IN THE CASE OF CO-OWNERS, I.E. SH RI SUDARSHAN KUMAR BAMANIYA AND SURESH KUMAR BAMANIYA, BROTHERS OF THE APPELLANT ARE PLACED IN THE PB AT PAGES NO. 5 TO 19 FOR KIND PERUSAL AND RECORD. THE CAPITAL GAIN HAS BEEN WORKED OUT IN ALL THE THREE CASES IN SIMILAR MANNER AND ON THE SAME BASIS AS EV IDENT FROM THE ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 7 COMPUTATION SHEETS PLACED IN THE PB. THE AUTHORITIE S BELOW DID NOT DWELL UPON SUCH FACTS AND HAD INCORRECTLY OBSERVED THAT NO INSTANCE WAS AVAILABLE ON THE RECORDS. THUS THESE OBSERVATIO NS ARE FACTUALLY INCORRECT AND DESERVE TO BE QUASHED SUMMARILY. ON T HE FACE OF SUCH DOCUMENTED DETAILS AND EVIDENCES THE ID. CIT (A) HA D NO VALID AND LOGICAL REASON TO DEVIATE FROM THE WORKING OF THE C APITAL GAIN AS DONE IN THE CASES OF THE APPELLANT'S BROTHERS. (III) THERE WAS NO VALID REASON FOR THE ID. AUTHORI TIES BELOW TO ADOPT THE 'REVERSE METHOD' OF VALUATION TO ARRIVE AT THE FMV OF THE ASSET ON THE BASIS OF THE MARKET RATES IN SUBSEQUENT YEARS I.E. IN THE YEAR 1984 TO ARRIVE AT THE FMV ON 1.4.1981. (IV) BEFORE PARTING WITH, IT WOULD BE IN THE FITNES S OF THINGS TO RELY UPON THE JUDICIAL CITATION OF THE HONORABLE PUNJAB AND & FLA RYANA HIGH COURT IN THE CASE OF JASWANT RAJ VS. CIT (1977) 107 ITR 477 WHEREIN IT WAS HELD 'IT IS TRITE THAT IF DURING THE SAME ASSES SMENT YEAR THE SAME QUANTITY OF WEALTH IN POSSESSION OF ONE CO-SHARER I S SUBJECTED TO A LOWER RATE OF TAXATION, IT WOULD BE HIGHLY IMPROPER TO BURDEN A SIMILARLY SITUATED CO-SHARER WITH A HIGHER RATE OF TAX. IF SUCH AN ACTION ON THE PART OF THE ASSESSING AUTHORITIES IS SANCTIO NED, IT WOULD MILITATE AGAINST THE PRINCIPLES OF EQUALITY OF LAW ENSHRINED IN ART. 14 OF THE CONSTITUTION. THE ASSESSEE, WHO IS ALSO A CO -OWNER OF THE PROPERTY, IS ENTITLED TO THE BENEFIT ENJOYED BY THE OTHER CO-OWNER, WHOSE VALUATION OF THE SAME PROPERTY, AT THE SAME R ATE AS THAT OF ASSESSEE WAS ACCEPTED BY THE CIT AND RECORDED IN TH E ORDER UNDER APPEAL BY THE TRIBUNAL'. THE FACTS OF THE ABOVE CASE HAVE DIRECT BEARING ON THE FACTS OF THE PRESENT CASE. IN THE BACK-GROUND OF ABOVE DISCUSSIO NS, THE ADDITION MADE AND CONFIRMED BY THE AUTHORITIES BELOW ON THE BASIS OF SUCH ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 8 INCORRECT WORKING DOES NOT HOLD GOOD AND THE SAME D ESERVES TO BE DELETED SUMMARILY. 5. ON THE CONTRARY, THE LD DR HAS VEHEMENTLY SUPPOR TED THE ORDER OF THE LD. CIT(A). 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS A TRUE FACT THAT THE ASSESSEE ALONGWITH HIS THREE BROTHERS CONSTRUCTED TE N SHOPS ON THE LAND INHERITED FROM HIS FATHER, WHICH IS SITUATED I N THE MAIN AREA OF SANGWADA. THE ASSESSEE HAD SPECIFICALLY INFORMED THE FACT OF FAIR MARKET VALUE OF THE PROPERTY, WHICH WAS ACCEPTED BY T HE REVENUE. NO ANY INSTANCE WAS AVAILABLE ON RECORDS SHOWING THE FAI R MARKET VALUE OF THE SAID PROPERTY AS ON 01/4/1981. ONCE THE DEPARTM ENT ACCEPTED THE FMV WITH REGARD TO THE ASSET THEN THERE IS NO ANY RE ASON TO DEVIATE FROM THE ACCEPTED WORKING OF THE CAPITAL GAIN AS PER RULE OF CONSISTENCY. THE LD AR RELIED ON THE DECISION OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JASWANT RAJ VS CIT (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IF DURING THE SAME ASSESSMENT YEAR THE SAME QUANTITY OF WEALTH IN POSSESSION OF ON E CO-SHARER IS SUBJECTED TO A LOWER RATE OF TAXATION, IT WOULD BE HI GHLY IMPROPER TO BURDEN A SIMILARLY SITUATED CO-SHARER WITH A HIGHER RATE OF TAX. IF SUCH ITA 28/JP/2017_ SURENDRA KUMAR VS ITO 9 AN ACTION ON THE PART OF THE ASSESSING AUTHORITIES IS SANCTIONED, IT WOULD MILITATE AGAINST THE PRINCIPLES OF EQUALITY OF LAW E NSHRINED IN ART. 14 OF THE CONSTITUTION. THE ASSESSEE, WHO IS ALSO A CO-OWNE R OF THE PROPERTY, IS ENTITLED TO THE BENEFIT ENJOYED BY THE OTHER CO- OWNER, WHOSE VALUATION OF THE SAME PROPERTY, AT THE SAME RATE AS THAT OF ASSESSEE WAS ACCEPTED BY THE CIT. IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES, I ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH JULY, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SURENDRA KUMAR, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD- 6(3), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 28/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR