The ITO, Ward-5(2), Surat V. Smt. Hetal Rakeshbhai Desai, Surat

ITA 2883/AHD/2012

• Counselvise Citation: 288320514 RSA 2012
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-10-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 26-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: MEHUL R SHAH A R
• Keywords: Fair market value; Corroborative evidences; Valuation report
• Section: 5(2); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD , , , , BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ! ! ! ITA NO. 2883/AHD/2012 ASSESSMENT YEAR :2004-05 INCOME TAX OFFICER WARD 5 (2), ROOM NO. 314 3 RD FLOOR, AAYKAR BHAVAN, MAJURA GATE, SURAT V/S . SMT. HETAL RAKESHBHAI DESAI AT & POST- UMBHEL, DESAI FALIA, TALUKA- KAMREJ, SURAT - 394325 PAN NO. AMJPD3869P (APPELLANT) .. (RESPONDENT) C.O. NO. 39/AHD/2013 ASSESSMENT YEARS : 2004-05 SMT. HETAL RAKESHBHAI DESAI AT & POST- UMBHEL, DESAI FALIA, TALUKA- KAMREJ, SURAT - 394325 V/S . INCOME TAX OFFICER WARD 5 (2), ROOM NO. 314 3 RD FLOOR, AAYKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) .. (RESPONDENT) '# $ % BY REVENUE SHRI P. L. KUREEL, SR. D.R. # $ % /BY ASSESSEE SHRI MEHUL R. SHAH, A.R. &'#( $ ) /DATE OF HEARING 01.11.2013 *+, $ ) /DATE OF PRONOUNCEMENT 10.01.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL AT THE BEHEST OF REVENUE AND C.O. AT TH E BEHEST OF ASSESSEE FILED, WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-I, SURAT, DATED ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 2 10.10.2012 FOR A.Y. 04-05. BOTH WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONV ENIENCE. 2. THE EFFECTIVE GROUNDS OF REVENUES APPEAL AND A SSESSEES C.O. ARE AS UNDER: GROUNDS OF ITA NO. 2596/AHD/2012 (A.Y. 08-09) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .37,37,860/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN INTERPRETATION OF SECTION 5 5(A)(A) [NEWLY INSERT AND W.E.F. 01.07.2012], AS THE A.O. HAS REFE R THE MATTER TO THE VALUATION OFFICER, AS PER OLD PROVISION OF SECTION 55(A)(A) OF THE ACT, AS THE SAME IS APPLICABLE IN THIS CASE. GROUNDS OF C.O. NO. 39/AHD/2013 1. WITH OUT PREJUDICE TO ANY OTHER CONTENTION RAIS ED DURING THE COURSE OF THE APPEAL THE MAIN GROUNDS OF APPEAL ARE AS UND ER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL AND DIRECTED THE ITO TO RE-WORK THE LONG TERM CAPITAL GAIN ON THE BASIS OF COST OF ACQU ISITION CLAIMED BY THE RESPONDENT (ASSESSEE) AS PER THE VALUATION R EPORT OF THE REGISTERED VALUER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE G ROUND NO. 1 TAKEN BY THE ITO WARD 5(2) (APPELLANT) IN APPEAL TO THE T RIBUNAL BE NOT CONSIDERED AS GENUINE. 4. THE GROUND NO. TAKEN BY THE ITO 5(2) IN RESPECT OF INTERPRETATION OF SECTION 5(A)(A) AS THE CIT(A) HAS RIGHTLY INTERPRET ED THE RELEVANT SECTION CONSIDERING THE JUDGMENT OF KRISHNABAI TINGRE OF PUNE BENCH AND CHATRABHUJ VALLABHDAS (HUF) OF MUMBAI BENCH. 3. BOTH THE GROUNDS OF REVENUES APPEAL ARE INTERLI NKED AND AGAINST DELETING THE ADDITION OF RS.37,37,860/- MADE ON ACC OUNT OF LONG TERM CAPITAL ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 3 GAIN AND ASSESSEES C.O. IS IN SUPPORT OF HER CLAIM . THE A.O. OBSERVED THAT THE ASSESSEE HAD SHOWN ANCESTRAL PROPERTY AT BLOCK 42 AND 559B AT MOTA VARACHHA, TAL. CHORIYASI, DIST. SURAT, OWNED BY LAT E SHRI DINKARBHAI M. DESAI AND HIS SON LATER RAKESHBHAI D. DESAI. AS PER SATA KHAT DATED 22.11.2003 MADE BETWEEN ASSESSEE AND SHRI KARSHANBHAI D. KAKAD IA FOR THE SALE OF PROPERTY AT BLOCK NO.42 AND 559B FOR CONSIDERATION OF RS.1,61,00,000/-. AS PER SATAKHAT, THE ASSESSEE HAD RECEIVED RS.50,00,00 0/- IN CASH AS ADVANCE AND THE BALANCE OF RS.61,00,000/- WAS TO BE PAID ON 12.01.2004 AND RS.50,00,000/- ON 22.05.2004. AS PER AFFIDAVIT DATE D 23.11.2007 FILED BY THE ASSESSEE, SHE ADMITTED THAT SHE ENTERED INTO THE AG REEMENT FOR THE SALE WITH SHRI KARSHANBHAI D. KAKADIA FOR THE SAID LAND. SHE ALSO ADMITTED THAT SHE HAD RECEIVED ADVANCE OF RS.50,00,000/- FROM THE BUY ER. AS PER THE ASSESSEES AFFIDAVIT, THE BLOCK NO. 559A WAS ALREAD Y SOLD AND HOUSE NO.316 WAS NOT IN HER POSSESSION. THEREFORE, IT WAS STATE D BY HER THAT SHRI KARSANBHAI WANTED TO CANCEL THE AGREEMENT. THE ASS ESSEE FURTHER STATED THAT ONE SHRI BABUBHAI GAJER INTERVENED AND THE SAL E WAS AGREED TO BE EXECUTED FOR THE LAND AT BLOCK NO.559B & 42 ONLY FO R RS.38,00,000/- (AS ON MONEY). THE ASSESSEE ALSO STATED THAT SHE HAD RETU RNED THE BALANCE OF RS.12 LACS TO SHRI KARSANBHAI. OUT OF THIS (RS. 38 LACS) SHE PAID A COMMISSION OF RS.3 LACS TO SHRI BABUBHAI GAHERA. F URTHER, DURING A.Y. 04- 05, THE DETAILS OF PROPERTIES SOLD ARE AS UNDER: 1. THE SALE DEED FOR PROPERTY NO.42 SURVEY NO.51 (3 315 SQ.MT.) REGISTERED ON 15.03.2004 BETWEEN THE ASSESSE E AND SHRI KARSHANBHAI D. KAKADIA FOR RS.1,48,725/- AND STAMP DUTY OF ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 4 RS.16,700/- PAID AT 11.2% ON RS.1,48,725/-THE ADDIT IONAL STAMP DUTY WAS CHARGED AT RS.48,830/-. THE TOTAL STAMP DU TY PAID FOR BLOCK 42 WAS RS.55,530/-. 2. THE SALE DEED FOR THE PROPERTY FOR 559B, SURVEY NO.51 FOR LAND MEASURING 31859 SQ.MT. WAS REGISTERED ON 15.03.2004 FOR RS.4,78,035/- BETWEEN THE ASSESSEE AND SHRI KARSHAN BHAI D. KAKADIA. STAMP DUTY OF RS.53,600/- WAS PAID AND ADD ITIONAL DUTY WAS PAID OF RS.1,24,875/-. THEREFORE THE, TOTAL STA MP DUTY PAID WAS RS.1,78,475/-. THE VALUE ADOPTED AS PER STAMP DUTY WAS RS.15,93,450/-. THE A.O. AFTER RECORDING THE REASONS U/S.147, ISSUE D NOTICE U/S.148 OF THE IT ACT. THE ASSESSEE FILED RETURN ON 25.07.2011 SHOWI NG LONG TERM CAPITAL LOSS OF RS.26,90,717/-. THE CASE WAS SCRUTINIZED U /S. 143(2) OF THE IT ACT. THE ASSESSEE WAS ALSO ALLOWED REASONABLE OPPORTUNIT Y OF BEING HEARD, WHICH WAS AVAILED BY HER. THE DEPUTY DIRECTOR OF INCOME TAX INVESTIGATION, UNIT-II, HAD ISSUED SUMMONS U/S. 131 TO INVESTIGATE THE ISSU E ON 06.09.2007 AND IT WAS TRANSPIRED DURING INVESTIGATION THAT THE ASSESS EE HAD ENTERED INTO AN AGREEMENT TO SALE AND OF AGRICULTURE LAND BEARING N O. 559A, 559B, 42 AND ONE RESIDENTIAL PROPERTY BEARING NO.316 FOR AN AMOUNT O F RS.1,61,00,000/-. IT IS FURTHER CONCLUDED BY THE A.O. THAT THE AGREEMENT WH ICH WAS MADE BETWEEN THE PARTIES WAS REVISED ON ACCOUNT OF DISPUTE ARISE BETWEEN THE FAMILY MEMBERS OF THE ASSESSEE AND ALSO WITH THE PURCHASER . OUT OF TOTAL PROPERTIES SHOWN IN THE AGREEMENT, LAND BEARING NO.559-A WAS S OLD OUT BY THE FATHER IN LAW OF THE APPELLANT. REMAINING TWO PLOTS OF LAND, THE APPELLANT WAS NOT IN A POSITION TO EXECUTE THE DEED IN FAVOUR OF THE PURCH ASER AS THE NAME OF BROTHERS AND SISTERS WERE ENROLLED IN PLACE OF LATE FATHER-IN-LAW. AS AT THE TIME ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 5 OF DIVISION/PARTITION NAME OF THE FATHER-IN-LAW WAS COMMON IN ALL THE PROPERTIES BELONG TO HUF. SIMILARLY THE HOUSE IN QUESTION IS ALSO IN THE POSSESSION OF THE BROTHER OF LATE HUSBAND. THEREFORE, THE ASSESS EE WAS NOT IN A POSITION TO GIVE PEACEFUL POSSESSION TO PURCHASER. THEREFORE, THE PURCHASER WAS FORCING THE ASSESSEE TO EXECUTE THE DEED OR TO CANCEL THE A GREEMENT FOR REFUND OF THE PAYMENT WITH INTEREST, WHICH WAS PAID AS EARNEST MO NEY. THE ASSESSEE WAS COMPELLED TO REVISE AGREEMENT FOR AN AMOUNT OF RS.3 8 LACS FOR LAND ONLY THROUGH INTERMEDIATE SHRI CHANDUBHAI GAJERA. FOR S ETTLEMENT OF THE CASE, THE ASSESSEE HAD PAID RS.3 LACS TO CHANDUBHAI GAJERA AS A COMMISSION/BROKERAGE. THUS, THE ASSESSEE HAD RECEI VED NET CONSIDERATION OF RS.35LACS AGAINST THE SALE OF PROPERTY I.E. LAND ON LY. AS PROPERTY WAS ANCESTRAL FOR COMPUTATION OF CAPITAL GAIN, THE COST OF THE LAND IS TO BE DETERMINED AS ON 01.04.1981. THE ASSESSEE HAS SHOW N CAPITAL LOSS AFTER CONSIDERING THE INDEXATION ON COST OF LAND. THE LD . A.O. MADE REFERENCE TO THE VALUATION OFFICER U/S. 142(A) OF THE IT ACT FOR DET ERMINATION OF FAIR MARKET VALUE OF IMMOVABLE PROPERTY SITUATED AS ABOVE, AS O N 01.04.1981 AND 15.03.2004. THE VALUATION OFFICER DETERMINED THE V ALUE AS UNDER: SR. NO. DESCRIPTION OF THE PROPERTIES DATE OF VALUATION DECLARED VALUE EXCLUDING STAMP DUTY AND OTHER CHARGES (RS.) ASSESSED VALUE EXCLUDING STAMP DUTY AND OTHER CHARGES (RS.) 1 AGG. LAND AT S. NO.51, BLOCK NO.559B, MOTA VARACHHA, SURAT 01/04/1981 10,19,808 64,000 -DO- 15.03.2004 (AS ON DATE OF SALE) 4,78,035 19,12,000 2 AGG. LAND AT S. NO.51, 01/04/1981 -- 20,000 ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 6 BLOCK NO.42, MOTA VARACHHA, SURAT 15.03.2004 (AS ON DATE OF SALE) 1,48,725 5,95,000 THE LD. A.O. GAVE AGAIN SHOW CAUSE NOTICE, AFTER CO NSIDERING THE VALUATION REPORT. AFTER CONSIDERING THE ASSESSEES OBJECTION , THE A.O. HELD AS UNDER: 4.5 THE OBJECTION RAISED BY THE AR IN RESPECT OF VALUATION REPORT SUBMITTED BY THE AVO IS NOT ACCEPTABLE AS AT THE TI ME OF INSPECTION THE AR OF THE ASSESSEE HAS PERSONALLY BEEN ATTENDED. MO REOVER, ON DETERMINING THE VALUATION OF BOTH THE PROPERTY, THE AVO HAS CATEGORICALLY GIVEN COMPARABLE SALE INSTANCES OF THREE LAND TRANS ACTIONS CONSIDERING ALL THE FACTORS WHICH AFFECT THE LAND RATES SUCH AS SIZ E, SHAPE, SITUATION, LOCATION, SPECIFICATION, TIME LAG OF THE SALE INSTA NCE PROPERTIES WITH RESPECT TO PUC AND MAKE IT COMPARABLE BY ADJUSTING ALL ADVA NTAGEOUS AND DISADVANTAGEOUS OF THE SALE INSTANCES WITH T HE PUC WHEREAS ASSESSEE'S VALUATION REPORT HAS NOT BEEN PROVIDED A NY SALE INSTANCES BUT ONLY RELIED UPON THE GOLD PRICE DURING THE PERIOD F ROM 01.04.1981 TO 31.03.2002 AND CONSIDERED TO BE FAIR AND REASONABLE TRANSACTIONS FOR FIXING/ESTIMATING THE LAND RATE HAS BEEN TAKEN INTO CONSIDERATION. IN MY OPINION, VALUATION ADOPTED BY THE ASSTT. VALUATION OFFICER IS MORE RELIABLE AS IT HAS BEEN TAKEN WITH THE COMPARABLE SALE INSTA NCES WITH SUPPORTING EVIDENCE. HENCE, TO THAT EXTENT, THE VALUE AS ON 01 .04.1981 IS ACCEPTED AND CONSIDERED AS AN INDEXATION COST DURING THE SAL E INSTANCES IN THIS CASE. AFTER CONSIDERING THE ASSESSEES REPLY, THE A.O. CA LCULATED CAPITAL GAIN AT RS.40,37,860/-. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD ALLOWED THE APPEAL BY CONSIDERING THE ASSESSEES SUBMISSION AND HELD THAT SECTION 142(A) DOESNT DEAL WITH REFERENCE OF SECTION 48 & 49 OF THE IT ACT. IN FAC T, SECTION 55A OF THE IT ACT ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 7 DEALS WITH THE REFERENCE TO THE VALUATION OFFICER F OR THE PURPOSE OF CAPITAL GAIN. AS PER SECTION 55(A)(A), WHEN THE ESTIMATE O F FAIR MARKET VALUE HAS BEEN MADE ON THE BASIS OF REPORT OF THE REGISTERED VALUER, REFERENCE CAN BE MADE ONLY, IF THE ASSESSING OFFICER IS OF THE OPINI ON THAT THE VALUE CLAIMED IS LESS THAN THE FAIR MARKET VALUE. A REFERENCE CANNO T BE MADE WHEN THE ASSESSING OFFICER FEELS THAT THE VALUATION IS MORE THAN THE FAIR MARKET VALUE. THIS VIEW HAS BEEN TAKEN BY THE JUDGMENT RELIED UPO N BY THE APPELLANT IN CASE OF SMT. KRISHNABHAI TINGRE VS ITO, 101 ITD 317 (PUNE). THIS VIEW HAS BEEN CONFIRMED BY THE HONBLE ITAT, MUMBAI, IN ANOTHER J UDGMENT DATED 20.12.2010 FOR A.Y. 2004-05 IN CASE OF CHATURBHUJ VALLABHDAS (HUF), 139 TTJ 29 (MUM). HE FURTHER HELD THAT SECTION 55(A)(A) HAS AMENDED WITH WORD VARIANCE WITH THE FAIR MARKET VALUE IS LESS THAN THE FAIR MARKET VALUE BY FINANCE ACT, 2012 W.E.F. 01.07.2012. THEREFORE, RE FERENCE TO THE VALUATION OFFICER WAS NOT AS PER LAW AND A.O. HAD EXCEEDED HI S JURISDICTION. THUS, HE ALLOWED THE APPEAL. 5. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. HAS DRAWN OUR ATTENTION ON PAGE NO.7 WHERE A.O. HAD MADE COMPARISON WITH VALUA TION REPORT OF DVO WITH REGISTERED VALUER REPORT AND POINTED OUT THE D EFECTS THAT THE REGISTERED VALUER EVEN HAD NOT CONSIDERED ANY COMPARABLE CASE OF LAND FOR DETERMINING THE COST OF ASSETS AS ON 01.04.1981. HE HAS CONSID ERED GOLD PRICE FIXED BY THE R.B.I. FOR VALUATION OF COST AS ON 01.04.1981. THUS, REGISTERED VALUER CANNOT BE ACCEPTED AT ALL, WHICH IS TECHNICALLY DEF AULTED WHEREAS, REGISTERED VALUER HAD CONSIDERED THE COMPARABLE CASE FOR DETER MINING THE VALUE OF THE ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 8 COST OF LAND AS ON 01.04.1981 AS WELL AS ON DATE OF SALE. THUS, THE ORDER OF THE CIT(A) WAS NOT IN ACCORDANCE WITH LAW. FURTHER , HE ALSO HAS DRAWN OUR ATTENTION ON RECENTLY HONBLE DELHI HIGH COURT DECI SION IN CASE OF ACC LTD. VS. DVO, ORDER DATED 21 ST MAY, 2012 IN W.P. NO. (C) 3795 OF 2011 , HAS CONSIDERED THIS ISSUE WHETHER U/S.50A BEFORE CHANGE IN SECTION I.E. VARIANCE WITH HAS CONSIDERED THIS ISSUE WHETHER THE A.O. CA N REFER THE ISSUE TO DETERMINE THE COST AS ON 01.04.1981 UNDER THE OLD P ROVISION, HELD YES. THUS, HE REQUESTED TO CONFIRM THE ADDITION. AT THE OUTSET, LD. A.R. SUPPORTED THE ORDER OF THE CIT(A) AND ARGUED THAT NO REFERENC E CAN BE MADE U/S. 55A OF THE IT ACT ON 01.04.1981. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE REGISTERED VALUERS REPORT SUBMITTED B Y THE ASSESSEE HAS MAJOR DEFECT THAT NO COMPARABLE CASE OF LAND HAS BEEN GIV EN. IT IS NOT POSSIBLE THAT THERE WAS NO SALE IN SURROUNDING AREA OF LAND. THE A.O. HAS RIGHTLY REFERRED THE CASE TO THE DVO FOR DETERMINING THE COST AS ON 01.04.1981 AS WELL AS ON DATE OF SALE. THE HONBLE DELHI HIGH COURT IN CASE OF ACC LTD. VS. DVO (SUPRA), HAD RECENTLY DECIDED THIS ISSUE IN FAVOUR OF THE REVENUE AND HELD THAT EVEN UNDER OLD PROVISION, THE A.O. CAN REFER THE PR OPERTY FOR VALUATION AS ON 01.04.1981. THE CO-ORDINATE MUMBAI F BENCH IN CA SE OF VIJAY P. KARNIK VS. ITO IN [2013] 37 TAXMANN.COM 48 (MUM.) HAS CONSIDER ED THIS ISSUE AND HELD THAT REFERENCE MADE BY THE A.O. TO THE DVO ON THE F ACT OF THE CASE IS JUSTIFIED. IT WAS FURTHER HELD THAT EVEN REFERENCE MADE BY THE A.O. TO THE DVO WAS NOT IN ACCORDANCE WITH LAW OR ILLEGAL, THE VALUATION RE PORT OBTAINED IN PURSUANCE OF ITA NO. 2883/AHD/12 & C.O. NO. 39/AHD/13, FOR A.Y. 04-05 PAGE 9 SUCH A REFERENCE WILL BE RELEVANT AND ADMISSIBLE EV IDENCE WHICH CAN BE USED BY THE REVENUE AUTHORITY IN THE INCOME TAX PROCEEDI NG. THIS IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN CASE OF POORANM MAL VS. DIRECTOR OF INSPECTION [1974] 93 ITR 05. THE SAME VIEWS HAVE BEEN TAKEN BY THE TRIBUNAL IN CASE OF DCIT VS. CHATURBHUJ VALLABHDAS HUF [2011] 130 ITD 230/9 TAXMANN.COM 96. THUS, WE REVERSE THE ORDER O F THE CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED A ND ASSESSEES C.O. IS DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 10.01.2014 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA - - - - $ $$ $ .)/ .)/ .)/ .)/ 0/,) 0/,) 0/,) 0/,) / COPY OF ORDER FORWARDED TO:- 1. '# / REVENUE 2. # / ASSESSEE 3. 44 ) &5 / CONCERNED CIT 4. &5- / CIT (A) 5. /#9 .)' , , / DR, ITAT, AHMEDABAD 6. ; <= / GUARD FILE. BY ORDER/ - , >/ 4' , !