Smt. Fatema Abdulhusein Gandhi, Surat V. The ACIT.,Circle-3, Surat

ITA 2810/AHD/2009

• Counselvise Citation: 281020514 RSA 2009
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Opportunity of being heard; Fair market value
• Section: 143(3); 50C; 37

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , , , , !' !' !' !', , , , #$ #$ #$ #$ %&' ( %&' ( %&' ( %&' (, , , , ) ) ) ) & ' & ' & ' & ' BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.2810/AHD/2009 [ASSTT.YEAR : 2006-07] SMT.FATEMA ABDULHUSEIN C/O. HAIDER SAIFUDDIN KINKHABWALA 1-A, RATNA NILAM APARTMENT N/H. SARDA YATAN HIGH SCHOOL PIPLOD, SURAT. PAN : ABDPG 4634 J /VS. ACIT, CIRCLE-3 SURAT. ( (( (+, +, +, +, / APPELLANT) ( (( (-.+, -.+, -.+, -.+, / RESPONDENT) /0 1 2 &/ ASSESSEE BY : SHRI M.K. PATEL ) 1 2 &/ REVENUE BY : SHRI VINOD TANWANI 45 1 06/ DATE OF HEARING : 28 TH SEPTEMBER, 2011 789 1 06/ DATE OF PRONOUNCEMENT : 14 TH OCTOBER, 2011 &' / O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-V DATED 17.08.2009 ARISING OUT OF THE ORDER OF THE ASSESSIN G OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE GROUND NO.1 AND 2 OF THE ASSESSEES APPEAL R EAD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LD. ACIT, SURAT ERRED IN APPLYI NG PROVISIONS OF SECTION 50C OF THE ACT WITHOUT CONSIDERING THE FACT S OF THE CASE AND REPLY FAVOURABLY. ITA NO.2810/AHD/2009 -2- 2. HE OUGHT TO HAVE REFERRED THE MATTER TO THE DVO. , TO ARRIVE AT THE CORRECT VALUE. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE AO MADE ADDITION BY APPLYING THE SECTION 50C WI THOUT CONSIDERING THE OBJECTION OF THE ASSESSEE. THAT THE ASSESSEE HAD E NTERED INTO AN AGREEMENT IN THE YEAR 2000-2001 WHILE REGISTRATION TOOK PLACE DU RING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . STAMP DUTY VALUATION WAS ON THE DATE OF THE REGISTRATION, BUT THE ASSESSEE G OT THE AMOUNT AS PER THE AGREEMENT BETWEEN THE PARTIES DURING THE YEAR 2000- 2001. THAT THE ASSESSEE OBJECTED TO THE ADDITION PROPOSED BY THE AO AS PER SECTION 50C OF THE ACT, HOWEVER, THE AO WITHOUT REFERRING THE MATTER TO THE DVO MADE THE ADDITION. THAT THE ACTION OF THE AO IS IN VIOLATION OF SUB-SE CTION (2) OF SECTION 50C. HE THEREFORE SUBMITTED THAT THE ORDER OF THE AO SHOULD BE SET ASIDE AND HE SHOULD BE DIRECTED TO REFER THE MATTER TO THE DVO AS REQUI RED UNDER SUB-SECTION 2 OF SECTION 50C. IN SUPPORT OF HIS CONTENTION, HE RE LIED UPON THE DECISION OF THE ITAT, JODHPUR BENCH IN THE CASE OF MANJULA SINGHAL VS. ITO, (2011) 10 TAXMAN.COM 45 (JODH). THE LEARNED DR, ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SUB-SECTIO N (2) OF SECTION 50C READS AS UNDER: (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFIC ER THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS T HE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER ; ITA NO.2810/AHD/2009 -3- (B) THE VALUE SO ADOPTED OR ASSESSED OR ASSESSED O R 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 TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTI ON 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 MODIF ICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATIO N TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF S ECTION 16A OF THAT ACT. FROM THE ABOVE, IT IS EVIDENT THAT AS PER SUB-SECTI ON (2) OF SECTION 50C IF THE ASSESSEES CLAIM BEFORE THE AO THAT THE VALUE ADOPT ED OR ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDS FAIR MARKET VALUE OF TH E PROPERTY, AS ON THE DATE OF TRANSFER, THE AO MAY REFER THE VALUATION OF THE CAP ITAL ASSETS TO THE VALUATION OFFICER. IN THIS CASE, ADMITTEDLY, THE ASSESSEE CL AIMED BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IS E XCESSIVE VIDE HIS LETTER DATED 4-9-2008. THE AO HAS REPRODUCED THE LETTER AT PAGE NO.3 OF THE ASSESSMENT ORDER. HOWEVER, THEREAFTER, HE WITHOUT CONSIDERING THE PROVISION OF SUB-SECTION (2) OF SECTION 50C ADOPTED THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY AS PER SUB-SECTION (1) OF SECTION 50(C). WE FIND THAT THE JODHPUR BENCH OF THE ITAT IN THE CASE OF MANJULA SINGHAL (S UPRA) HAS CONSIDERED THE IDENTICAL CASE WHEREIN IT IS HELD AS UNDER: THE MAIN ISSUE CAME UP OR CONSIDERATION WAS THAT IF THE ASSESSEE DISPUTES THE VALUATION AS PER STAMP VALUATION AUTH ORITY BEFORE THE ASSESSING OFFICER THEN WHETHER THE ASSESSING OFFICE R IS BOUND TO REFER THE MATTER TO THE DVO OR NOT, IMPLIEDLY WHETHER THE TERM USED 'MAY' IS TO BE READ AS 'SHALL' OR NOT. IN SUB-SECTION (2), AN E XCEPTION HAS BEEN CARVED OUT TO THE ADOPTION OF VALUATION AS PER STAM P VALUATION AUTHORITY AND IF THE CONDITIONS LAID DOWN IN THE SUB-SECTION ARE FULFILLED THEN THE CLAIM OF THE ASSESSEE THAT THE VALUATION AS PER STA MP VALUATION AUTHORITY IS MORE THAN THE FAIR MARKET VALUE, CANNOT BE REJEC TED BY THE ASSESSING OFFICER WITHOUT COMPLYING WITH THE PROCEDURE LAID D OWN IN THE SAID SUB- ITA NO.2810/AHD/2009 -4- SECTION. THE DISCRETION OF THE ASSESSING OFFICER IS CIRCUMSCRIBED BY THE FULLFILMENT OF CONDITIONS AS CONTEMPLATED IN SUB-SE CTION (2). EVERY QUASI- JUDICIAL AUTHORITY HAS TO EXERCISE ITS DISCRETION J UDICIOUSLY AND NOT ARBITRARILY. THE DISCRETION HAS BEEN CONTROLLED BY THE CONDITIONS CONTEMPLATED IN THE SECTION ITSELF. THEREFORE, THE TERM 'MAY' USED IN SUB- SECTION (2) OF SECTION 50C IS TO BE READ AS 'SHALL' AND IF THE STAMP VALUATION ADOPTED HR THE STAMP VALUATION AUTHORITY IS DISPUTED BEFORE THE ASSESSING OFFICER, THEN HE HAS TO REFER THE MAT TER TO THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY. THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DVO, THEREFORE, HE WAS BOUND TO ACCEPT THE REGISTER ED VALUER'S REPORT SUBMITTED BY THE ASSESSEE. THE SAID CONTENTION OF T HE ASSESSEE COULD NOT BE ACCEPTED FOR THE SIMPLE REASON THAT NOWHERE IN S ECTION 5OC, SUCH A CONDITION HAS BEEN CONTEMPLATED. IN VIEW OF AFORESA ID, THE MATTER WAS TO BE REMANDED TO THE ASSESSING OFFICER WITH THE DIREC TION TO REFER THE VALUATION OF THE PROPERTY TO VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE AND THEREAFTER DECIDING THE ISSUE DE N OVO IN ACCORDANCE WITH LAW. FROM THE ABOVE, IT IS EVIDENT THAT THE ITAT, JODHPU R BENCH HELD THAT THE TERM MAY USED IN SUB-SECTION (2) OF SECTION 50C IS TO BE READ AS SHALL AND IF THE STAMP VALUATION ADOPTED BY THE STAMP VALUATION AUTH ORITY IS DISPUTED BY THE ASSESSEE, THEN THE AO HAS TO REFER THE MATTER TO TH E DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY. NO CONTRARY DEC ISION IS BROUGHT TO OUR KNOWLEDGE. IN VIEW OF THE ABOVE, WE RESPECTFULLY F OLLOWING THE DECISION OF THE ITAT OF JODHPUR BENCH (SUPRA), SET ASIDE THE ORDER OF THE CIT(A) ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT HIM TO REFER THE MATTER TO THE VALUATION OFFICER AS PROVIDED IN SUB- SECTION (2) OF SECTION 50C AND THEREAFTER RE-ADJUDICATE THE MATTER IN ACCORDANCE W ITH LAW, OF COURSE, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 4. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UN DER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LD.ACIT ERRED IN TREATING THE S HORT TERM CAPITAL GAINS ON SHARES AS BUSINESS INCOME WITHOUT CONSIDERING TH E TRUE AND REAL FACTS OF THE CASE. ITA NO.2810/AHD/2009 -5- 5. BY WAY OF GROUND NO.3, THE ASSESSEE HAS DISPUTED THE FINDING OF THE AO WITH REGARD TO HEAD OF THE INCOME UNDER WHICH THE P ROFIT FROM SALE OF SHARES SHOULD BE ASSESSED. THE ASSESSEE HAS SHOWN THE PRO FIT FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN WHILE THE DEPARTMENT HAS TR EATED IT AS BUSINESS PROFIT FROM TRADING IN SHARES. HOWEVER, AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, WE FIND THAT THE RELEVANT DETAILS ARE NOT PROVIDED BEFORE US. THE AO HAS DISCUSSED T HE LEGAL ISSUE AT LENGTH, BUT HE HAS NOT DISCUSSED THE ACTUAL DATE OF PURCHASE AN D SALE OF SHARES. HE HAS ALSO NOT DISCUSSED WHAT WAS THE POSITION IN THE PRECEDIN G AS WELL AS SUBSEQUENT YEARS, HOW THE ACCOUNTING ENTRIES WERE MADE IN THE BALANCE-SHEET. IT ALSO NOT KNOWN WHETHER ANY BORROWED MONEY WAS UTILISED ? IN VIEW OF THE ABOVE, WE DEEM IT PROPER TO SET ASIDE THE ORDERS OF THE AUTHO RITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE DIRECT THE AO TO ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . WE ALSO DIRECT THE ASSESSEE TO PRODUCE THE RELEVANT DETAILS/EXPLANATIO N BEFORE THE AO. THEREAFTER, THE AO WILL RE-ADJUDICATE THE ISSUE IN ACCORDANCE W ITH LAW AFTER CONSIDERING THE RELEVANT DETAILS AND EXPLANATION AS MAY BE FURNISHE D BY THE ASSESSEE BEFORE HIM. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DEEMED T O BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' ( %&' ( %&' ( %&' ( /BHAVNESH SAINI ) ) ) ) ) /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT