N.V.R.K.Subba Rao, Vizianagaram V. The ITO., Vizianagaram

ITA 283/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5151 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 11-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C DAS
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 283 / VIZ /201 7 (ASST. YEAR : 20 1 0 - 11 ) N.V.R.K. SUBBA RAO, D.NO. 8 - 1 - 49, M.G. ROAD, VIZIANAGARAM. V S . ITO, WARD - 2, VIZIANAGARAM. PAN NO. AAQPN 2873 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI K.C. DAS SR. DR DATE OF HEARING : 17 / 0 7 /201 8 . DATE OF PRONOUNCEMENT : 20 / 0 7 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM , DATED 15 /0 3 /201 7 FOR ASSESSMENT YEAR 20 1 0 - 11 . 2. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE, THEREFORE, NO ADJUDICATION IS REQUIRED . GROUND NOS. 2 & 3 ARE REQUIRED TO BE ADJUDICATED, THE SAME ARE REPRODUCED AS UNDER: - 2. THE LD. CIT(A) OUGHT TO H A VE HELD THAT TH E NOTICE ISSUED UNDER SECTION 148 IS NOT IN ACCORDANCE WITH LAW AND IS LI A BLE TO BE QUASHED AS ILLEGAL AND CONSEQUENTLY THE REASSESSMENT PROCEEDINGS ARE VOID AUTHORITIES BELOW INITIO. 2 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) 3. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 26,87,000/ - MADE BY THE ASSESSING OFFICER BY ADOPTING THE SRO VALUE OF RS. 80,61,000/ - AS THE DEEMED CONSIDERATION IN TERMS OF SECTION 50C OF THE ACT AS AGAINST THE ACTUAL CONSIDERATION OF RS. 53,74,000/ - . 3 . GROUND NO.2 RAISED BY THE ASSESSEE RELATING TO REOPENING OF ASSESSMENT. THE ASSESSEE FILED A RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 4,13,117/ - . THE ASSESSEE ADMITTED RS. 6,95,134/ - FROM CAPITAL GAINS AFTER SET OFF OF LOSS OF CURRENT YEAR OF RS.2,82,017/ - . ON VERIFICATION OF THE SALE DEED AND OTHER DOCUMENTS FOUND DURING THE COURSE OF SURVEY OPERATION CONDUCTED UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') IN THE PR EMISES OF M/S. RADHA KRISHNA JEWEL PARADISE AND M/S. VSR JEWELERS , IT IS LEARNT THAT THE ASSESSEE HAS NOT TAKEN INTO CONSIDERATION THE PROVISIONS OF SECTION 50C WHILE COMPUTING CAPITAL GAINS FROM THE SALE OF PROPERTY. IN THE SALE DEED VIDE DOCUMENT NO. 944/2010 , THE SALE CONSIDERATION FOR THE PURPOSE OF STAMP DUTY WAS MENTIONED AT RS. 80,61,000/ - AS AGAINST SALE CONSIDERATION RECEIVED BY THE ASSESSEE AT RS.53,74,000/ - . THERE IS A DIFFERENCE OF RS. 26,87,000/ - AND THEREFORE, THE ASSES SING OFFICER HAS ISSUE D A NOTICE UNDER SECTION 148 OF THE ACT , WHICH WAS SERVED ON THE ASSESSEE. BEFOR E THE ASSESSING OFFICER , IT WAS SUBMITTED THAT THE REOPENING OF THE 3 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) IMPUGNED ASSESSMENT ITSELF IS ILL - FOUNDED , IS NOT CORRECT. HOWEVER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 4 . ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE NOTED THAT A PERUSAL OF THE SALE DEED DATED 19/04/2010 CLEARLY STATES THAT IN THE TITLE ITSELF , THE MARKET VALUE OF THE SUBJECT PROPERTY WAS AT RS. 80,61,000/ - AGAINST DOCUMENT CONSIDERATION OF RS. 53,74,000/ - . THE MARKET VALUE DECLARED IN THE D OCUMENT WAS AT RS. 11.25 LAKHS PER ACRE . THEREFORE, PRIMA - FACIE THE ASSESSING OFFICER HAD SUFFICIENT REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IN VIEW OF THE PROVISIONS OF SECTION 50C OF THE ACT. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER FOR INVOKING THE PROVISIONS OF SECTION 148 IS UPHELD BY THE LD. CIT(A). 5. NOW, BEFORE US THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING O FFICER HAS CONSIDERED THE DOCUMENT DATED 19/04/2010 AND PASSED THE ASSESSMENT ORDER. THEREFORE, ISSUANCE OF NOTICE UNDER SECTION 148 IS CHANGE OF OPINION, WHICH IS NOT CORRECT IN THE EYES OF LAW . 4 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 OF THE ACT AND ALSO THE REASONS RECORDED AND THE ORDER PASSED BY THE LD. CIT(A) ON THIS COUNT. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ASSESSING OFFICER HAS BEEN RECORDED THE REASONS AND VIDE LETTER DATED 29/06/2018, THE SAME HAS BEEN COMMUNICATED TO THE ASSESSEE. T HE REASONS RECORDED ARE AS UNDER: - THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 ADMITTING TOTAL INCOME OF RS.4,13,117/ - . THE ASSESSEE ADMITTED RS. 6 ,95,134/ - FROM CAPITAL GAINS FROM OUT OF WHICH AN AMOUNT OF RS.2,82,017/ - WAS CLAIMED AS LOSSES OF CURRENT YEAR SET OFF AGAINST TH E GROSS TOTAL INCOME AND AN AMOUNT OF RS.4,13,117/ - WAS ARRIVED AT AS TOTAL INCOME BY THE ASSESSEE. ON VERIFICATION OF SALE DEED AND OTHER DOCUMENTS FOUND DURING THE COURSE OF SURVEY OPERATION CONDUCTED U/S.133A OF INCO ME TAX ACT IN THE PREMISES OF M/ S. RADHA KRISHNA JEWEL P ARADISE AND M/S.V.S.R JEWELLERS IT IS LEARNT THAT THE ASSESSEE HAS NOT TAKEN INTO CONSIDERATION THE PROVISIONS OF SECTION 50 C WHILE COMPUTING CAPITAL GAINS FROM SALE OF PROPERTY. IN THE SALE DEED VIDE DOCUMENT NO 944/2010, SALE CONS IDERATION FOR THE PURPOSE OF STAMP DUTY IS MENTIONED AT RS.80,61,000/ - AS AGAINST CONSIDERATION RECEIVED BY THE ASSESSEE IS MENTIONE D AT RS.53,74,000/ - . THERE I S DIFFERENCE OF RS.2 6 ,87,000/ - BETWEEN THE TWO AMOUNTS. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO THE TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF I .T. ACT, 1951 AS THE ASSESSEE FAILED TO TAKE INTO ACCOUNT PROVISIONS OF SECTION 50 C OF I .T.ACT, 1961 WHICH RESULTED IN UNDER STATEMENT OF INCOME FROM S ALE OF PROPERTY LIABLE FOR CAPITAL GAINS'. 5 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) 9. FROM THE ABOVE, WE FIND THAT REASONS HAVE BEEN RECORDED BY THE ASSESSING OFFICER ARE SHOWS PRIMA - FACIE THERE IS AN ESCAPEMENT OF INCOME AND WE HOLD THAT REOPENING OF ASSESSMENT IS JUSTIFIED IN THIS CASE. ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 10 . GROUND NO.3 RAISED BY THE ASSESSEE RELATING TO VALUE OF PROPERTY AS PER SECTION 50C . 11. FACTS OF THE CASE RELATING TO THIS ISSUE IN BRIEF ARE THAT ASSESSEE SOLD AGRICULTURAL LAND ADMEASURING 7.16 ACRES SITUATED AT HAJEESAOHEBPETA, ADITYA NAGAR, VIZIANAGARAM FOR RS. 53,74,000/ - ON 23/02/2010 VIDE SALE DEED NO. 944/2010 TO M/S. SURAJ REAL EASTATES , VIZIANAGARAM . IN THE VERY SAME SALE DEED, THE MARKET VALUE OF THE SUBJECT PROPERTY WAS MENTIONED AT RS. 80,61,000/ - . TH E REFORE , THE ASSESSING OFFICER HAS NOTED THAT AS PER THE SALE DEED DATED 23/02/2010 , IT IS CLEARLY MENTIONED THAT CONSIDERATION VALUE OF RS. 53,74,000/ - AND MARKET VALUE OF RS. 80,61,000/ - . THE ASSESSEE DULY SIGNED THE SALE DEED , WHICH IS A REGISTERED DOCUMENT. AS PER SECTION 50C OF THE ACT, THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES HAS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS ARISING ON TRANSFER OF LAND OR BUILDING OR BOTH AND CALLED THE ASSESSEE TO EXPLAIN WHY SECTION 50C SHOULD NOT BE INVOKED IN THIS CASE. THE ASSESSEE HAS 6 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) SUBMITTED BEFORE THE ASSESSING OFFICER THAT HE HAS RECEIVED ONLY CONSIDERATION OF RS. 53 ,74,000/ - AND WHY THE PURCHASE PRICE ENHANCED WAS NOT KNOWN TO HIM . THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT MARKET VALUE AS PER SRO FROM 18/01/2007 TO 31/03/2010 IS OF RS. 6,50,000/ - PER ACRE AND SALE CONSIDERATION IS MUCH MORE THAN THE SRO VALUE AND SUBMITTED THAT THE SAME MAY BE CONSIDERED. THE ASSESSEE HAS ALSO FILED ANNEXURE - II ISSUED BY THE SRO, DATED 12/04/2007, WHICH IS PLACED AT PAGE NO. 26 OF THE PAPER BOOK . THE ASSESSING OFFICER HAS NOT CONSIDERED THE CERTI FICATE ISSUED BY THE SRO . B Y CONSIDERING THE SALE DEED DATED 23/02/2010 , THE MARKET VALUE OF THE SUBJECT PROPERTY HAS BEEN CONSIDERED AS PER SECTION 50C OF THE ACT OF RS. 80,61,000/ - AND ACCORDINGLY ASSESSMENT IS COMPLETED . O N APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 5 .1 THE NEXT ISSUE FOR CONSIDERATION IS AS TO WHAT IS THE MARKET VALUE OF THE PROPERTY IN TERMS OF SEC 50 C. THE ASSESSEE HAD PLEADED THAT EVEN AS PER PROVISIONS OF SEC. 50 C THE MARKET VALUE OF TH E PROPERTY WAS ONLY RS.53 , 74,000/ - AND THAT THE GUIDELINE VA LUE FOR STAMP DUTY PURPOSE WAS O NLY RS65 L AKHS PER ACRE . A COPY OF CERTIFICATE OF REGISTERING AUTHORITY STATING THAT THE MARKET VALUE AS PER BASIC REGISTER IN THE ABOVE SURVEY NO WAS RS. 6 .5 L AKH S PER ACRE AS ON 18 . 1 . 2007 TO 31 . 3 . 2010 WAS FILED AND RELIED ON . I HAVE CONSIDERED THE DETAILS . THE SUBJECT PROPERTY HAS BEEN REGISTERED AND SPECIFICALLY ASSESSED FOR STAMP DUTY PURPOSE AT RS.80,61,000/ - (RS. 1 1 . 25 L AKHS PER ACRE). WHEN SUCH A SPECIFIC ASSESSMENT HAS BEEN MADE AND NOT CHALLENGED, A VAGUE CERTIFICATE GIVING INFORMATION AS TO BASIC REGISTER VALUE CANNOT BE A GROUND TO IMPEACH THE VALIDITY OF THE REGISTERED DOCUMENT. THE PLEA THAT THE BUYER FOR UNKNOWN REASON HAS ADOPTED A HIGHER VALUE IS ALSO NOT 7 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) ACCEPTABLE AS BOTH THE PARTIES ARE SIGNATORY TO THE DOCUMENT. IN VIEW OF THE FACTUAL SCENARIO, I DO NOT FIND MERIT IN THE ASSESSEES PLEA AND FOUND TO BE RIGHTLY REJECTED BY THE AO. 12. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 13. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THE SALE DEED DATED 23/02/2010, THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE CLEARLY MENTIONED AT RS. 53,74,000/ - , BUT THE MARKET VALUE OF THE PROPERTY WAS MEN T I O NED AT RS. 80,61,000/ - . THOUGH, THE MARKET VALUE IS MUCH HIGHER THAN THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE, THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF CAPITAL GAI NS . HE FURTHER SUBMITTED THAT AS PER THE CERTIFICATE ISSUED BY THE STAMP REGISTRATION AUTHORITY, THE VALUE OF THE PROPERTY FROM 18/01/2007 TO 31/03/2010 IS AT RS. 6,50,000/ - PER ACRE . THE MARKET VALUE ADOPTED BY THE ASSESSING OFFICER OF RS. 80,61,000/ - , WHICH IS NOT CORRECT AND SUBMITTED THAT SALE CONSIDERATION RECEIVED BY THE ASSESSEE OF RS. 53,74,000/ - SHOULD BE CONSIDERED. 14. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT IN THE SALE DEED CLEARLY MENTIONED ABOUT THE MARKET VALUE OF THE SUBJECT PROPERTY AT RS. 80,61,000/ - . AS PER 8 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) SECTION 50C, THE ASSESSING OFFICER HAS TO ADOPT THE MARKET VALUE AND NOT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE. HE STRONGLY SUPPORTED T HE ORDERS PASSED BY THE AUTHORITIES BELOW. 15. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 16. IN THE INSTANT CASE, THE ASSESSEE SOLD THE PROPERTY THROUGH REGISTERED SALE DEED DATED 23/02/2010 VIDE DOCUMENT NO. 944/2010 AND RECEIVED SALE CONSIDERATION OF RS. 53,74,000/ - . IN THE VERY SAME DOCUMENT, THE MARKET VALUE OF THE PROPERTY WAS MENTIONED AT RS. 80,61,000/ - . WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE WHY THE MARKET VALUE WAS MENTIONED AT RS.80,61,000/ - , IT IS SUBMITTED BEFORE THE ASSESSING OFFICER THAT PURCHASER HAS ENHANCED THE PRICE AND GOT IT REGISTERED THE SALE DEED, FOR WHICH ASSE SSEE IS NOT CONCERNED . THE ASSESSEE ALSO SUBMITTED A CERTIFICATE ISSUED BY THE REGISTR ATION AUTHORIT Y DATED 12/04/2007 , WHEREIN IT HAS BEEN MENTIONED THAT MARKET VALUE AS PER BASIC REGISTER FROM 18/01/2007 TO 31/03/2010 IS AT RS.6,50,000/ - PER ACRE. THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS MUCH MORE THAN THE SROS VALUE , HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE AND ALSO NOT CONSIDERED THE CERTIFICATE ISSUED BY THE REGISTRATION AUTHORITY DATED 12/04/2007 AND INVOKED THE 9 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) PROVISIONS OF SECTION 50C OF THE ACT. ACCORDINGLY, CALCULATED THE CAPITAL GAINS BY CONSIDERING THE MARKET VALUE MENTIONED IN THE DOCUMENT. ON APPEAL , LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT IN THE SALE DEED DATED 23/02/2010 VIDE DOCUMENT NO. 944/2010, THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE HAS BEEN CLEARLY MENTIONED AT RS. 53,74,000/ - AND IT HAS ALSO BEEN CLEARLY MENTIONED ABOUT THE MARKET VALUE OF THE PROPERTY AT RS. 80,61,000/ - . THEREFORE, THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 50C BY CONSIDERING THE MARKET VALUE MENTIONED IN THE SALE DEED. WHEN THE ASSESSEE HAS DISPUTED THE MARKET VALUE OF THE PROPERTY BY PRODUCING THE CERTIFICATE ISSUED BY THE REGISTRATION AUTHORITY, THE ASSESSING OFFICER OUGHT TO HAVE BEEN REFERRED THE MATTER TO THE DVO AS PER SUB - CLAUSE (2) TO SECTION 50C . THE ASSESSING OFFICER AS WELL AS LD.CIT(A) FAILED TO CONSIDER THE ISSUE IN A PERSPECTIVE MANNER . IN OUR OPINION, THE ASSESSING OFFICER OUGHT TO HAVE BEEN REFERRED THE MATTER TO THE DVO TO ASCERTAIN THE CORRECT VALUE OF THE PROPERTY. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LD.CIT(A) ON THIS ISSUE AND REMAND THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, WHO IN TURN REFER THE MATTER TO THE DVO TO ASCERTAIN THE CORRECT VALUE OF THE PROPERTY AND DECIDE THE ISSUE 10 ITA NO. 283/VIZ/2017 ( N.V.R.K. SUBBA RAO ) DENOVO IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 0 T H DAY OF JULY , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 0 T H JULY , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE N.V.R.K. SUBBA RAO, D.NO. 8 - 1 - 49, M.G. ROAD, VIZIANAGARAM. 2. THE REVENUE ITO, WARD - 2, VIZIANAGARAM. 3. THE PR. CIT - 1, VISAKHAPATNAM. 4. THE CIT(A) - 1, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.