Shri Suresh G. Sheth, Dahod V. The ACIT,(OSD), Panchmahal Range, Godhra

ITA 2910/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0064 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-12-2013
• 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

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2910/AHD/2013 ( / ASSESSMENT YEAR : 2010-11) SURESH G. SHETH SARDAR COLONY STATIUON ROAD DAHOD 389 151 / VS. THE ASST.CIT (OSD) PANCHMAHAL RANGE, GODHRA # ./ ./ PAN/GIR NO. : AHZPS 6474 N ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI SAKAR SHARMA, AR &#%(' / RESPONDENT BY : SHRI JAMES KURIAN, DR )*(+ / DATE OF HEARING 11/11/2016 ,-./(+ / DATE OF PRONOUNCEMENT 16/11/2016 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA [CIT (A) IN SHORT] DATED 10/09/2013 FOR THE ASSESSMENT YEAR (AY) 2010- 11. 2. IN THE PRESENT APPEAL, THE ASSESSEE HAS ASSAILED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.36,04,019/- MADE BY ASSESSING ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 2 - OFFICER (AO) BY INVOKING THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ). 3. BRIEFLY STATED, FACTS CONCERNING THE ISSUE ARE T HAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM LONG TERM CAPITAL G AINS (LTCGS), INTEREST AND DIVIDEND, ETC. THE ASSESSEE FILED RET URN OF INCOME FOR AY 2010-11 DECLARING TOTAL INCOME OF RS.26,44,760/-. THE AO WHILE MAKING THE SCRUTINY ASSESSMENT INVOKED PROVISIONS OF SECTI ON 50C OF THE ACT AND MADE AN ADDITION OF RS.36,04,019/- BEING THE DIFFER ENCE BETWEEN THE SALE CONSIDERATION DECLARED IN THE REGISTRATION DOCUMENT AND THE VALUE OF LAND AS PER GOVERNMENT NOTIFIED CIRCLE RATE (IN LOCAL PA RLANCE JANTRI RATE). THE AO HAS DEALT WITH THE ISSUE IN THE FOLLOWING MA NNER:- IT IS FOUND THAT THE ASSESSEE HAS SHOWN SALE VALUE OF RS.28,39,997/- OF THE ABOVE MENTIONED ASSETS SOLD, WHICH THE SUB- REGISTRAR, DAHODS LETTER NO.ACIT/VS/436/12 DTD 22. 11.2012 MARKET VALUE GIVEN ON RS. 61,44,016/- AND STAMP DUT Y ALSO RECOVERED ON THE VALUE OF RS. 64,44,016/- AT AMOUNT OF RS. 4,09,792/-. THUS, IT IS CLEAR THAT THE FAIR MARKET RATE OF THE ASSETS WAS RS. 64,44,016/-. ON THE BASIS OF FAIR MARKET VALUE OF RS. 64,44,016/ - DETERMINED BY THE SUB-REGISTRAR, DAHOD OF THE ABOVE IMMOVABLE PRO PERTIES, THE LONG TERM CAPITAL GAIN WORKS OUT AT RS. 58,79,141 /- (64,44016/- MINUS 564875/-) WHEREAS THE ASSESSEE HAS SHOWN LTCG OF RS. 22,75,122/-. THUS, THERE IS A SHORT FALL OF LONG TE RM CAPITAL GAIN OF RS. 36,04,019/-. THE ASSESSEE WAS SHOW CAUSE VID E THIS OFFICE LETTER NO. ACIT/PC/S.C /SGS/2012-13 DATED 23.11.201 2 ISSUED, AS TO WHY LONG TERM CAPITAL GAIN SHOULD NOT BE ASSESSE D ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 3 - AT RS.58,79,141/- AS AGAINST DISCLOSED BY THE ASSES SEE AT RS. 22,75,122/-. THE SHOW CAUSE NOTICE ISSUED WHICH REP RODUCES AS IS UNDER: DURING THE ASSESSMENT PROCEEDINGS, IT WAS FOUND THA T YOU HAVE SHOWN LONG TERM CAPITAL GAIN OF RS. 22,75,122/ - IN RESPECT OF SALE OF 12 (TWELVE) IMMOVABLE PROPERTIES I.E. LAND SURVEY NO. 15/16 CITY SURVEY NO. 6517 PLOT NO. 1, LAND SURVEY NO. 15 /16 CITY SURVEY NO. 6517 PLOT NO. 10, LAND SURVEY NO. 704 CI TY SURVEY NO. 8677, LAND CITY SURVEY NO. 5864 CITY SURVEY NO. 958/8 FOR WHICH SALE DOCUMENTS REGISTERED NO. 839, 840, 1076, 1077, 1075, 496, 3495, 2529, 1646, 1009, 1010 & 1011 WITH THE SUB-RE GISTRAR, DAHOD. FOR THE SAID PROPERTIES YOU HAVE SHOWN SALE CONSIDERATION OF RS.28,39,997/-. TO ARRIVE AT ACTUAL MARKET VALUE , A REFERENCE WAS MADE TO THE SUB REGISTRAR, DAHOD TO INTIMATE TH E ACTUAL MARKET VALUE I.E. JANTRI RATE OF THE IMMOVABLE PROP ERTIES SOLD BY YOU. VIDE LETTER NO. VHT/VS/436/12 DATED 22.11.2012 THE SUB REGISTRAR, DAHD HAS GIVEN THE ACTUAL MARKET VALUE I .E. JANTRI RATE AS UNDER: SR .N O. DOCUMENT NO, /R.S. NO. JANTRI RATE / MARKET VALUE STAMP DUTY PAID 1 839/15 RS. 17,65,775 RS. 86,525 2 840/15 RS. 15,78,940 RS. 77,371 3 1076/704 RS. 6,86,520 RS. 33,644 4 1077/704 RS. 7,00,500 RS. 34,325 5 1076/704 RS. 7,55,520 RS. 37,025 TOTAL RS. 54,87,255 RS. 2,68,890 6 3496 / REVENUE SURVEY N. 958/2/A RS. 2,97,000 RS. 14,553 7 3495 /REVENUE SURVEY NO. 958/B RS. 2,97,000 RS. 14,553 ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 4 - 8 2529 /R.S. NO. 958/B RS. 5,94,000 RS. 29, 120 9 1646 /R.S. NO. 958/B RS. 4,82,625 RS. 23,653 1 0 1009 /R.S. 958/B RS. 4,03,755 RS. 20,000 1 1 1010 /R.S. 958/B RS. 4,68,930 RS. 23,000 1 2 1011 /R.S. NO. 958/B RS. 3,26,975 RS. 16,023 TOTAL RS. 28,70,285 (1/3* SHARE RS. 9,56,761/- RS. 1,40,902 SALE CONSIDERATION WORKS OUT AT RS. 54,87,255 (IN Y OUR PERSONAL NAME) + RS. 9,56,781 (1/3* SHARE) = RS. 64,44,016/-. IN VIEW OF THE PROVISION OF SECTION 50C OF THE I. T. ACT- 'WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSETS, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER I N THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED (OR ASSESSABLE) SHALL FOR THE P URPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER.' 4. CONSIDERING -THE ABOVE STATED FACTS, I INTEND T O ADOPT THE SALE CONSIDERATION OF THE ABOVE PROPERTIES AT RS. 64,44, 016/-. IN THE CIRCUMSTANCES, THE LONG TERM CAPITAL GAIN WILL BE RS. 58,79,141/-,(RS. 64,44,016- RS. 5,64,875/- COST INDEXED.) ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 5 - 5. THEREFORE, YOU ARE HEREBY (REQUIRED TO) SHOW CA USE AS TO WHY LONG TERM CAPITAL GAIN SHOULD NOT BE ASSESSED AT R S. 58,79,141/- AS AGAINST DISCLOSED BY YOU AT RS. 22,75,122/-. YOU ARE, THEREFORE, REQUESTED TO PLEASE SUBMIT YOUR REPLY TO THE UNDERSIGNED ON OR BEFORE 30.11.2012, FAILING WHICH IT WILL BE PRESUMED THAT YOU HAVE NOTHING TO SAY IN THE MATTER AND THE ASSESSMENT WILL BE FINALIZED ACCORDINGLY. ASSESSEE'S REPLY WAS GONE THROUGH BUT NOT FOUND SA TISFACTORY. ASSESSEE'S ARGUMENTS THAT THE LAW WAS AMENDED W.E.F . 01.10.2010 PROSPECTIVELY & NOT RETROSPECTIVELY & THE A O HAS COVERED ALL TRANSACTION OF SALE OF LAND FROM 01.04.2010 IS NOT ACCEPTABLE AS SECTION 50C OF THE ACT WAS INCORPORATED W.E.F. 01.0 4.2003 & W.E.F. 01.10.2009 ONE WORD WAS ADDED ....... ......... ONE MORE OPPORTUNITY WAS PROVIDED TO THE ASSESSES VIDE LETTER DATED 03.12.2012. RELEVANT PART OF THE LETTE R IS REPRODUCED AS UNDER: IN THIS CONNECTION, I HAVE TO INFORM YOU THAT I HAV E GONE THROUGH THE SUBMISSION MADE BY YOU IN RESPECT OF VARIOUS IM MOVABLE PROPERTIES SOLD BY YOU. IT IS TO BE INFORM YOU THAT PROVISION OF SECTION 50C OF THE I. T. ACT HAS BEEN INSERTED BY T HE FINANCE ACT, 2002 W.E.F. 01.04.2003 AS PER THE PROVISION, IT IS CLEAR THAT WHERE THE CONSIDERATION AS A RESULT OF TRANSFER BY AS ASS ESSEE OF CAPITAL ASSETS, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY BY THE STATE GOVERNMENT FOR THE PAYMENT OF STAMP DU TY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED S HALL FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VAL UE OF THE CONSIDERATION RECEIVED AS A RESULT OF SUCH TRANSFER. CONSIDERATION OF THE ABOVE PROVISION, I INTEND TO A DOPT THE SALE CONSIDERATION OF THE IMMOVABLE PROPERTIES SOLD BY YOU AT RS. 64,44,016/- AND THE LONG TERM CAPITAL GAIN WILL BE RS. 58,79,141/- AS PER THIS OFFICE LETTER NO. ACIT/PC/S .C/SGS/2012-13 ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 6 - DATED 23.11.2012. IF YOU HAVE ANY OBJECTION YOU MAY SUBMIT YOUR REPLY ON OR BEFORE 10.12.2012 AT 11.00 AM TO THE UN DERSIGNED. IN RESPONSE TO THE SECOND LETTER DATED 03.12.2012, NO REPLY WAS FILED BY THE ASSESSEE. HOWEVER, I HAVE GONE THR OUGH TO THE 3 RD PARA OF THE ASSESSEE'S SUBMISSION DATED 30.11.2012. ASSESSEE'S PLEA THAT JANTRI RATE OF RS. 64,44,016/- IS FOR THE PURPOSE OF LEVY OF STAMP DUTY & IT IS COMMON RATE OF THE PROPERTY IN T HE WHOLE AREA BUT THE NET REALIZABLE VALUE WAS ONLY RS. 28,39,997 /- I.E. THE SALE CONSIDERATION AS PER THE DEED IS NOT ACCEPTABLE. IT IS ALSO ARGUED THAT TO ARRIVE NET REALIZATION VALUE OF LAND THE FA CTORS LIKE SITUATION / LOCATION, SURFACE POSITION OF LANDS, SOIL QUALITY , FRONTAGE / INFERIORITY ETC. ARE CONSIDERED WHEREAS IN JANTRI R ATE THE SAID FACTORS ARE OVERLOOKED IS ALSO FAR FROM SATISFACTOR Y. IT MAY BE STATED THAT THE STATE GOVERNMENT HAS AFFIXED THE JA NTRI RATE AFTER CONSIDERING ALL ASPECTS & IT IS ALMOST THE FAIR MAR KET VALUE OF THE PROPERTY. IT ALSO TRUE THAT FAIR MARKET VALUE OR RA TE FOR STAMP DUTY PURPOSE IS BEING DECIDED BY THE STATE GOVT. AFTER P ROPER SURVEY OF THE AREA, LOCATION, STATUS & SCOPE OF THE GROWTH OF THE LOCATION OF THE PROPERTY. THE ASSESSEE ALSO FAILED TO JUSTIFY H OW THE SALE CONSIDERATION RECEIVED BY HIM WAS ACCEPTABLE AS PER PARAMETER FIXED BY THE STATE GOVT. TO ARRIVE FAIR MARKET VALU E OR JANTRI PRICE FOR LEVY OF STAMP DUTY. IT MAY ALSO BE STATED THAT THE ASSESSEE HAS NOT AVAILED THE OPPORTUNITY PROVIDED TO HIM VIDE 2 ND LETTER DATED 03.12.212 LOOKING TO THE FACTS NARRATED ABOVE, OF T HE ASSESSEE. AS PER THE PROVISIONS WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF CAPITAL ASSETS IS LESS THAT THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF T HE STATE GOVT., OR STAMP VALUATION AUTHORITY FOR THE PURPOSE PAYMEN T OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOP TED OR ASSESSEE SHALL, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESU LT OF SUCH TRANSFER. THEREFORE, THE SALE CONSIDERATION OF THE PROPERTIES UNDER REFERENCE IS ADOPTED AT RS. 64,44,016/- AS AGAINST THE SALE ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 7 - CONSIDERATION OF RS. 28,39,997/- SHOWN BY THE ASSESSES. LONG TERM CAPITAL GAIN IS CALCULATED AS UNDER: SATE CONSIDERATION ADOPTED AS PER ABOVE 64,44,016 LESS.' COST OF THE PROPERTY AS PER INDEXATION & SHOWN BY THE ASSESSEE 5,64,875 LONG TERM CAPITAL GAIN 58,79,141 AS CALCULATED ABOVE THE LONG TERM CAPITAL GAIN IS A SSESSED AT RS. 58,79,141/- AS AGAINST RS. 22,75,122/- DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. THEREFORE, AN AMOUNT OF RS.36,04,019/- IS ADDED TO THE RETURNED INCOME OF T HE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN.' 4. THE CIT(A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE ASSESSEE HAS FAILED TO RESPOND THE VARIOUS NOTICES ISSUED IN THE FIRST APPELLATE PROCEEDINGS AND NO MATERIAL HAS BEEN ADDU CED TO SUPPORT HIS CLAIM THAT THE AO HAS COMMITTED ERROR IN INVOKING T HE PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(A) ACCORDINGLY DIS MISSED THE CLAIM OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 8 - 6. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE CI T(A) HAS NOT GRANTED PROPER OPPORTUNITY OF BEING HEARD AND THERE FORE THE ISSUE HAS BEEN DECIDED EX-PARTE . THE LD.AR SIMULTANEOUSLY POINTED OUT THAT THE ASSESSEE HAD CHALLENGED CIRCLE/JANTRI RATE BEFORE T HE AO AS CAN BE SEEN FROM PAGE NO.7 OF THE ASSESSMENT ORDER. THE LD.AR OBSERVED THAT PLEA OF THE ASSESSEE THAT JANTRI RATE FOR THE PURPOSE OF LEVY OF STAMP DUTY IS A COMMON RATE OF PROPERTY IN THE WHOLE AREA BUT THE NET RATE IN THE INSTANT CASE WAS MUCH LOWER ON ACCOUNT OF VARIOUS FACTORS AS SUBMITTED BEFORE THE AO. THE LD.AR THEREFORE SUBMITTED THAT IN THE LIGHT OF THE SUBMISSIONS BEFORE THE AO, THE AO OUGHT TO HAVE REF ERRED THE MATTER TO THE VALUATION OFFICER U/S.50C(2) OF THE ACT TO DETE RMINE THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER. THU S, THE ACTION OF AO IN INVOKING S.50C STRAIGHT-AWAY IS NOT JUSTIFIED. 7. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF THE AO AND SUBMITTED THAT SEVERAL OPPORTUNITIES WERE GRANTED T O THE ASSESSEE BEFORE THE CIT(A) ALSO WHERE THE ASSESSEE FAILED TO PROSEC UTE ITS APPEAL PROPERLY AND THEREFORE NO FURTHER OPPORTUNITY TO SUCH DELINQ UENT ASSESSEE IS CALLED FOR. 8. WE HAVE HEARD THE RIVAL PARTIES. ON PERUSAL OF THE ORDERS OF THE AO AND THE CIT(A), WE FIND THAT ALTHOUGH SOME NOTIC ES WERE ISSUED BY THE CIT(A), THE HEARING WAS FIXED IN A VERY SHORT I NTERVAL OF 3 TO 7 DAYS ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 9 - TIME. THUS, THE OPPORTUNITY GIVEN, IN OUR VIEW, WAS INADEQUATE AND SOMEWHAT ILLUSORY. WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT FAIR MARKET VALUE OF THE PROPERTY OUGHT TO HAVE BEE N DETERMINED BY MAKING REFERENCE TO THE VALUATION OFFICER FOR THE V ALUATION OF THE CAPITAL ASSET IN CONSIDERATION. THUS, IN OUR CONSIDERED VI EW, ASSESSEE DESERVES MEANINGFUL AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO DEFEND ITS CASE. WE THUS CONSIDER IT EXPEDIENT TO SET ASIDE THE ISSU E AND REMAND THE MATTER TO THE FILE OF AO FOR PROPER APPRAISAL OF THE FAIR MARKET VALUE OWING TO THE DISPUTE RAISED BY THE ASSESSEE ON THE FAIR MARK ET VALUE. NEEDLESS TO SAY, PROPER OPPORTUNITY OF BEING HEARD SHALL BE GIV EN TO THE ASSESSEE WHILE DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, THE MATTER IS SET ASIDE AND REMITTED BACK TO THE FI LE OF AO IN THE TERMS AS NARRATED ABOVE. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 /11/2016 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 11 /2016 3..),.)../ T.C. NAIR, SR. PS ITA NO.2910/AHD /2013 SURESH G. SHETH VS. ACIT ASST.YEAR 2010-11 - 10 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-VI, BARODA 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.11.16 (DICTATION-PAD 10 + PAGES ATTACHED AT THE END OF THIS APPEAL- FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15.11.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 16.11.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.11.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER