The ITO, Ward-1(1), Bhavnagar V. M/s. Radheshyam Builders, Bhavnagar

ITA 2918/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50830 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 23-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: M J SHAH
• Keywords: Fair market value
• Section: 144

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND A. L. GEHLOT, AM INCOME-TAX OFFICER, WARD 1(1), BHAVNAGAR. VS. M/S RADHESHYAM BUILDERS, PLT NO.498, RAJNIDEEP SHISHUVIHAR CIRCLE, BHAVNAGAR. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. K. MEENA, SR.DR RESPONDENT BY:- SHRI M. J. SHAH, AR DATE OF HEARING : 11/10/2011 DATE OF PRONOUNCEMENT :14.10.2011 O R D E R PER A.L. GEHLOT, ACCOUNTANT MEMBER . THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 15.07.2009. THE SOLE GROUND RAISED IN THE APPEAL IS IN RESPECT OF DELETION OF ADDITION OF RS.29,92,124/- M ADE BY THE AO ON ACCOUNT OF SUPPRESSED SALE PRICE OF LAND. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND LAND DEVELOPMENT . IN THE FIRST ROUND OF LITIGATION, THE TRIBUNAL VIDE ITA NO.1076/RJT/2004 ORDER DATED 23 RD AUGUST, 2005 SENT BACK THE MATTER TO THE FILE OF AO AND DIRECTED THE AO ITA NO.2918/AHD/2009 ASST. YEAR :2000-01 ITA NO.2918/AHD/2009 ASST. YEAR 2000-01 2 TO BRING COGENT MATERIAL ON RECORD IN RESPECT OF SA LE PRICE ESTIMATED BY THE DVO. IN COMPLIANCE WITH THE DIRECTION OF THE TR IBUNAL, THE AO ISSUED SHOW CAUSE LETTER TO THE ASSESSEE ASKING CLARIFICAT ION/EXPLANATION IN RESPECT OF THE IMPUGNED PROPERTY. AFTER CONSIDERING ASSESSEES SUBMISSIONS THE AO STATED THAT THE DVO HAS GIVEN SU FFICIENT TIME TO SUBMIT DOCUMENTS BUT THE ASSESSEE HAS FAILED TO SUB MIT THE DOCUMENTS. THE COST OF THE LAND IS PREVAILING RATE OF THE AREA TAKEN FROM THE DISTRICT REGISTRAR OFFICE, AS STATED BY THE DVO. ON THE BASI S OF DVOS REPORT THE AO NOTED THAT THE DETAILS ARE MENTIONED IN SHEETS S HOWING COMPARABLE SALE INSTANCES. THE DVO HAS TAKEN SUFFICIENT PAINS TO COMPARE SALE INSTANCES OBTAINED FROM THE LOCAL REGISTRARS OFFIC E. THE AO HAS ALSO SENT EARLIER ALL DETAILS TO THE ASSESSEE TO EXPLAIN IT B UT THE ASSESSEE DID NOT UTILIZE PROPERLY. THE AO WITH THE ABOVE OBSERVATION OF THE EARLIER DVOS REPORT REPEATED THE ADDITION ON THE GROUND THAT THE ASSESSEE DID NOT BRING ANY FACT IN SPITE OF OPPORTUNITY GIVEN TO HIM BY TH E EARLIER AO AS WELL AS THE DVO. 3. THE CIT(A) DELETED THE SAID ADDITION OBSERVING T HAT THE AO HAS REPEATED THE ADDITION ON ACCOUNT OF SUPPRESSED SALE PRICE OF RS.29,92,124/- WHOLLY RELYING ON THE REPORT OF DVO WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD IN SUPPORT OF HIS SAID FI NDING AS DIRECTED BY THE TRIBUNAL. THE CIT(A) HAS ALSO OBSERVED THAT DVO WHI LE GIVING HIS REPORT IN 2003 AND AT THAT TIME THE OLD STRUCTURE WAS ALRE ADY DEMOLISHED AND SOLD. THE DVO HAS GIVEN HIS REPORT ONLY FOR THE LAN D AND NOT FOR THE STRUCTURE WHICH WAS DEMOLISHED AND SOLD, THE SALE P ROCEEDS OF THE STRUCTURE WHICH WAS SOLD, HAS NOT BEEN CONSIDERED B Y THE AO WHILE FINALIZING THE ASSESSMENT. THE AO HAS ALSO FAILED T O TAKE INTO CONSIDERATION THE SCRAP VALUE OF RS.23 LACS OF WOOD EN STRUCTURES DOORS, WINDOWS ETC. THE CIT(A) FURTHER NOTICED THAT THE AO HAS IGNORED THE ITA NO.2918/AHD/2009 ASST. YEAR 2000-01 3 SPECIFIC DIRECTION GIVEN BY THE TRIBUNAL WHILE FRAM ING THE ASSESSMENT AS THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SU PPORT HIS FINDING. WHILE DISCUSSING THE ISSUE ON MERIT THE CIT(A) OBSE RVED THAT THE DVO HAS VALUED THE LAND AS ON 31 ST MARCH, 2000 AND ESTIMATED THE FAIR MARKET VALUE BY IGNORING THE FACTS AND COGENT EVIDENCES. T HE COMPARABLE CASES POINTED OUT IN DVOS REPORT ARE HAVING CONSTRUCTION THEREON AND ARE BEING USED FOR COMMERCIAL PURPOSES WHEREAS THE ASSE SSEE HAS SOLD PLOTS HAVING NO CONSTRUCTION THEREON FOR RESIDENTIAL PURP OSES. THE PROPERTIES COMPARED BY THE DVO ARE ALSO VERY FAR FROM THE PROP ERTY OF THE ASSESSEE AND ARE SITUATED IN PRIME LOCATION WHILE THE ASSESS EES LAND IS SITUATED AT THE END OF THE ROAD. ALL THE INSTANCES OF COMPARABL E CASES REFERRED BY THE DVO ARE HAVING FAR BETTER LOCATION IN COMPARISON TO THAT OPEN LAND SOLD BY THE ASSESSEE. THE CIT(A) FURTHER NOTICED THAT IN FACT THE ASSESSEE DID NOT SELL THE PROPERTY FOR LOWER RATE. THE ASSESSEE ACTUALLY EARNED A PROFIT OF RS.40,882/- WHICH HAS NOT BEEN CONSIDERED BY THE AO WHILE STATING THAT THE ASSESSEE HAD MADE LOSS OF RS.18,56,079/- I N THE PROJECT. WHILE ESTIMATING THE ABOVE LOSS THE AO HAS NOT GIVEN HIS FINDING OR HAS NOT BROUGHT ON RECORD HIS FINDING FOR ESTIMATING THE VA LUE OF DVO. THE AO HAS ALSO FAILED TO TAKE INTO CONSIDERATION THAT THE PURCHASE AMOUNT OF RS.56,03,059/- INCLUDED NOT ONLY THE VALUE OF LAND BUT ALSO INCLUDED THE VALUE OF STRUCTURE. THE AO WHILE ASSESSING THE VALU E OF TRANSACTION HAS ONLY TAKEN INTO CONSIDERATION THE SALE PROCEEDS OF LAND OF RS.33,43,921/- AND IGNORED THE SALE PROCEEDS OF STRUCTURE OF RS.25 ,50,740/- WHICH WERE AVAILABLE ON RECORD. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORD. IN THE FIRST ROUND OF LITIGATION THE TRIBUN AL HAD SENT BACK THE MATTER BACK TO THE FILE OF AO VIDE ITS ORDER IN ITA NO.1076/RJT/2004 DATED 23 RD AUGUST, 2005 BY OBSERVING AS UNDER :- ITA NO.2918/AHD/2009 ASST. YEAR 2000-01 4 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FIND F ROM THE RECORD THAT THE AO HAS MADE THE ADDITION ON THE BASIS OF DVOS REPORT WITH RESPECT TO THE LAND SOLD BY HIM. HOWEVER, NO OTHER COGENT M ATERIAL HAS BEEN BROUGHT ON RECORD IN SUPPORT OF THE DVOS ACTION FO R PRESUMING THE RATE OF LAND. WE ALSO FIND THAT THE CIT(A) HAS DIRECTED FOR COMPLETING THE ASSESSMENT U/S 144 WITHIN THE MEANING OF SEC.145(3) . IN VIEW OF THE ABOVE AND IN THE INTERESTS OF JUSTICE, WE SET ASIDE THE O RDERS OF BOTH THE LOWER AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AND THE AO IS ALSO DIRECTED TO BRING COGENT MATERIAL ON RECORD IN SUPPORT OF THE SALE PRICE ESTIMATED BY THE DVO. ON PERUSAL OF THE ORDER OF AO WE FIND THAT THE AO H AS FAILED TO CARRY OUT THE DIRECTIONS GIVEN BY THE TRIBUNAL, AS THE AO FAI LED TO BRING ON RECORD ANY COGENT MATERIAL IN SUPPORT OF THE SALE PRICE ES TIMATED BY THE DVO. CONTRARY, THE AO SHIFTED THE ONUS ON THE ASSESSEE T HAT THE ASSESSEE DID NOT FURNISH THE COGENT MATERIAL. THE ACTION OF THE AO IS CONTRARY TO THE DIRECTION OF THE ITAT. THE AO HAS REPEATED THE ADDI TION WITHOUT BRINGING COGENT MATERIAL ON RECORD IN SUPPORT OF THE SALE PR ICE ESTIMATED BY THE DVO, WHICH HAS ALREADY BEEN SET ASIDE BY THE ITAT I N THE FIRST ROUND OF LITIGATION. THE CIT(A) HAS ALSO MADE THE DETAILED D ISCUSSION ON VARIOUS ASPECTS OF MERIT OF THE CASE BEFORE DELETING THE AD DITION. THE CIT(A) HELD THAT THE AO AND THE DVO HAVE FAILED TO CONSIDER THE FACT THAT THE OLD STRUCTURE WAS ALREADY DEMOLISHED AND SOLD. THIS FAC T HAS NOT BEEN CONSIDERED EITHER BY THE DVO OR BY THE AO. THE CIT( A) HAS ALSO NOTED THAT THE AO WHILE ASSESSING THE VALUE OF THE TRANSA CTION HAS ONLY TAKEN INTO CONSIDERATION THE SALE PROCEEDS OF THE LAND AN D IGNORED THE SALE PROCEEDS OF THE STRUCTURE WHEREAS THE FACTS WERE AV AILABLE ON RECORD. IT IS ALSO THE FINDING OF THE CIT(A) THAT THE AO HAS IGNO RED THE SPECIFIC DIRECTION GIVEN BY THE TRIBUNAL. WHILE FRAMING THE FRESH ASSESSMENT AS HE DID NOT BRING ANY RECORD OR ANY MATERIAL TO SUPPORT HIS FINDING. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ORDER OF CIT(A) IS TO BE UPHELD ON HIS SOLE FINDING THAT THE AO HAS ITA NO.2918/AHD/2009 ASST. YEAR 2000-01 5 IGNORED THE SPECIFIC DIRECTION GIVEN BY THE TRIBUNA L APART FROM THE MERIT OF THE CASE. THE ORDER OF CIT(A) IS ACCORDINGLY CON FIRMED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 14/10/2011 SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 11/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 12/10/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER ..