Ajantha Farms Private Limited, Hyderabad, Hyderabad V. ITO, Ward-1(1), Hyderabad, Hyderabad

ITA 298/HYD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4804 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 31-07-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYA PRASHANT PINISETTY
• Assessee Lawyers: MD AFZAL
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Valuation report
• Section: 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 298/HYD/2017 ASSESSMENT YEAR: 2008-09 M/S.AJANTHA FARMS PVT. LTD., HYDERABAD [PAN: AACCA9421C] VS THE INCOME TAX OFFICER, WARD-1(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MD. AFZAL, AR FOR REVENUE : SHRI SATYA PRASHANT PINISETTY, DR DATE OF HEARING : 31-07-2019 DATE OF PRONOUNCEMENT : 09-08-2019 O R D E R PER S. RIFAUR RAHMAN, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)1, HYDERABAD, DATED 17-11-2016, FOR THE AY.2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-COMPANY FI LED ITS RETURN OF INCOME ON 29-09-2008 ADMITTING TOTAL INCOME OF RS.70,120/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE OF THE INCOME TAX ACT [ACT] ON 21-05-2009. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND A NOTICE U/S.148 OF THE ACT WAS ISSUED ON 26-03-2014 AND THE SAME WAS SERVED ON 28- 03- ITA NO. 298/HYD/2017 :- 2 -: 2014. SUBSEQUENTLY, NOTICES U/S.142(1) AND 143(2) OF THE ACT WERE ISSUED AND SERVED ON ASSESSEE. IN RESPONSE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED RELEVAN T INFORMATION AS CALLED-FOR. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE SOLD LAND AND POUL TRY SHED TO M/S.JABALPUR HATCHERIES PVT. LTD., GORAKHPUR, MADHYA PRADESH FOR A TOTAL CONSIDERATION OF RS.19,10,000/- O N 05-02-2008. SUBSEQUENTLY, ON 10-09-2009 SRO, NARASIMHAGADH HAS ISSUED A NOTICE FOR PAYMENT OF STAMP DUTY IN RESPECT OF THE ABOVE TRANSACTION BY FIXING THE MARKET VALUE OF THE PROPERTY AT RS.1,40,78,000/-. ACCORDINGLY, ASS ESSEE WAS ASKED TO FURNISH THE RELEVANT INFORMATION ABOUT THE ABOVE TRANSACTION AND ACCORDING TO THE AO, THE PROVISIONS OF SECTION 50C OF THE ACT ARE ATTRACTED. IN RESPONSE TO THE FINAL S HOW CAUSE LETTER, ASSESSEE FILED A LETTER, EXPLAINING THAT THE POULTRY SHED, AND OTHER INFRASTRUCTURE WAS DEVELOPED DURING TH E FINANCIAL YEAR 1989-90 BY SPENDING APPROXIMATELY RS .11.88 LAKHS. ASSESSEE FILED RETURN OF INCOME, INCORPORATING THE ABOVE INVESTMENT IN THE RETURN OF INCOME FILED FOR THE AY.1990- 91 AND CLAIMED DEPRECIATION ON THE ABOVE ASSET. FURTHE R, HE SUBMITTED THAT EVEN THOUGH THE PROPERTY WAS SOLD FOR RS.19,10,000/- FOR THE PURPOSE OF STAMP DUTY, IT WAS V ALUED AT RS.1.75 CRORES AGAINST WHICH THE ASSESSEE AND M/S.JAB ALPUR HATCHERIES PVT. LTD., APPEALED AGAINST THE ORDER BEFORE THE COLLECTOR OF STAMPS, RAJGARGH (BYAVRA). IT WAS HELD THA T THE AGGREGATE VALUE OF THE PROPERTY FIXED AT RS.1,40,78,0 00/-, WHICH INCLUDES THE VALUE ATTRIBUTABLE TO BUILDING/STRUCTU RE FOR ITA NO. 298/HYD/2017 :- 3 -: RS.1,31,39,054/-, RS.7,48,176/- FOR LAND AND OTHER A SSETS LIKE TUBE WELL AT RS.1,90,000/-. HE SUBMITTED THAT THE VALUE OF THE STRUCTURE IN THE BOOKS ARE VERY NEGLIGIBLE AFTER CLAI MING DEPRECIATION, WHEREAS THE COURT OF THE COLLECTOR OF THE S TAMP DUTY VALUED THE SAME AT RS.1,31,39,054/-. ACCORDING TO THE ASSESSEE, THERE IS A HUGE DIFFERENCE IN RESPECT OF TH E VALUE ADOPTED FOR BUILDING / STRUCTURES. ACCORDINGLY, THE AU THORIZED REPRESENTATIVE REQUESTED FOR REFERRING THE ISSUE TO THE DEPARTMENTAL VALUATION OFFICER (DVO). BUT ACCORDING TO T HE AO, ASSESSEE HAS NOT RESPONDED TO ANY OF THE NOTICES IS SUED IN RESPONSE TO REOPENING ASSESSMENT AND AT THE TIME BARRING ASSESSMENT, ASSESSEE MADE A REQUEST TO REFER THE SAME TO DVO AT THE LAST MOMENT IN ORDER TO TAKE UNDUE ADVANTAGE, IS NO T ACCEPTABLE. ACCORDINGLY, AO MADE THE ADDITION U/S.50 C OF THE ACT. 3.1. AGGRIEVED WITH THE ABOVE ORDER OF AO, ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). IN TURN, RELYING ON THE FINDINGS OF AO, LD.CIT(A) REJECTED THE CONTENTIONS OF ASSESSEE. 3.2. AGGRIEVED WITH THE ABOVE ORDER OF LD.CIT(A), ASS ESSEE PREFERRED AN APPEAL BEFORE US, BY RAISING THE FOLLOW ING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITI ES OF CASE. 2. THE ASSESSING OFFICER WAS HAVING MANAGING DIRECT OR'S ADDRESS ON THE RECORD, THEREFORE, THE NOTICE U/S 148 SHOULD HA VE BEEN SERVED ON THE MANAGING DIRECTOR AND THEREFORE, THE LEARNED CI T ERRED IN STATING THE SERVICE BY AFFIXTURE IS A VALID SERVICE. ITA NO. 298/HYD/2017 :- 4 -: 3. THE LEARNED COMMISSIONER ERRED IN ASSUMING THAT NOTICE U/S 148 DT: 26.03.2014, WAS RECEIVED BY THE MANAGING DIRECT OR ON 28.03.2014. 4. THE LEARNED COMMISSIONER OUGHT TO HAVE DECLARED THE ASSESSMENT AS NULL AND VOID AS NOTICE U/S 148 WAS NOT VALIDLY SERVED. 5. WITHOUT PREJUDICE TO THE GROUND NO. 2, 3 & 4, TH E LEARNED COMMISSIONER ,OUGHT TO HAVE APPRECIATED THE FACT TH AT THE ASSESSING OFFICER HAS NOT FOLLOWED THE PROCEDURE LAID DOWN IN SECTION 50C OF THE IT ACT, IN RESPECT OF REFERENCE TO DEPARTMENTAL VAL UER WITH REGARD TO VALUE OF POULTRY SHED. 6. WITHOUT PREJUDICE TO THE GROUND NO. 2, 3 & 4, TH E LEARNED COMMISSIONER OUGHT TO HAVE APPRECIATED THAT THE VAL UE OF THE SHED, AS PER THE DEPRECIATION STATEMENT FOR THE YEAR END 31.03.1990 IS ONLY AT RS.7,85,734/-, WHEREAS, AS PER THE COLLECTOR OF STAMPS ORDER THE VALUE IS DETERMINED AT RS.1,31,39,054/- FOR THE PUR POSE OF STAMP DUTY, THEREFORE, THE CASE OF THE ASSESSEE IN RESPEC T OF VALUATION OF SHED DESERVES TO BE REFERRED TO VALUATION OFFICER. 7. WITHOUT PREJUDICE TO THE GROUND NO. 2, 3 & 4, TH E LEARNED COMMISSIONER ERRED IN ASSUMING THAT ONCE THE PROPER TY IS VALUED BY COLLECTOR OF STAMPS, THERE IS NO NEED FOR VALUATION OF THE SHED SEPARATELY. 8. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED COMMISSIONER OUGHT TO HAVE APPRECIATED THAT THE POULTRY SHED IS A DEPRECIABLE ASSET, THEREFORE, THE SAME SHOULD HAVE BEEN CHARGED U/S 50 OF THE IT ACT. 9. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 4. AT THE TIME OF HEARING, LD.AR OF THE ASSESSEE SUBMITTE D THAT ASSESSEE DID NOT PRESS GROUND NOS.2, 3 AND 4. ACCORDINGLY, THE SAME ARE DISMISSED AS NOT PRESSED. S INCE GROUND NOS.1 AND 9 ARE GENERAL IN NATURE, THEY NEED N OT BE ADJUDICATED. AS FAR AS GROUND NOS.5, 6, 7 & 8 ARE CO NCERNED, ITA NO. 298/HYD/2017 :- 5 -: THEY RELATE TO ADDITION U/S.50C OF THE ACT. THE SAME ARE ADJUDICATED BELOW. 5. BEFORE US, LD.AR BROUGHT TO OUR NOTICE THE FACTS OF THIS CASE AND SUBMITTED THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IS FAR HIGH AND AO SHOULD HAVE R EFERRED THE MATTER TO DVO AS PER THE REQUEST MADE BY ASSESSEE AND FURTHER HE SUBMITTED THAT LD.CIT(A) IN HER ORDER OPINED THAT THE NEED FOR DEPARTMENTAL VALUER WILL ARISE ONLY WHEN THERE IS NO MARKET RATE AVAILABLE OR SRO VALUE IS NOT AVAILABL E. IN THIS CASE, THE MAGISTRATE OF STAMPS HIMSELF HAS PASSED THE O RDER IN EXISTENCE OF PROPER DOCUMENTS IN ASSESSEES OWN CASE BEFORE THE COLLECTOR OF STAMP DUTY RAJGARGH (BYAVRA) IN CASE NO.40/B-105/2007-08 IN THE COURT OF COLLECTOR OF STAMP DUTY RAJGARGH (BYAVRA) VIDE ORDER DT.07-09-2009, THERE IS NO NEED FOR SEPARATE VALUATION FROM THE MARKET, ACCORDINGLY, S HE REJECTED THE CONTENTION OF ASSESSEE TO REFER THE MATTER TO DVO. HE SUBMITTED THAT THE VALUE DETERMINED BY THE COLLECTOR OF STAMP DUTY IS NOT FINAL, IT IS APPEALABLE BEFORE THE HI GHER APPELLATE FORUM. THEREFORE, IT IS NOT FINAL AND AO/CI T(A) SHOULD HAVE ACCEPTED THE CONTENTIONS OF ASSESSEE TO REF ER THE MATTER TO DVO. 6. ON THE OTHER HAND, LD.DR SUBMITTED THAT ASSESSEE HAS NOT RESPONDED TO VARIOUS NOTICES ISSUED BY AO AND THE P LEA OF REFERRING THE MATTER TO DVO WAS TAKEN AT THE FAG END OF THE ASSESSMENT. AO WAS FORCED TO COMPLETE THE ASSESSMENT SI NCE IT IS BEING A TIME BARRING ASSESSMENT AND THIS FACT WAS KNOWN ITA NO. 298/HYD/2017 :- 6 -: TO THE ASSESSEE AND NOW ASSESSEE CANNOT TAKE ADVANTAGE A ND HE SUPPORTED THE ORDERS OF CIT(A). 7. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTICED THAT ASSESSEE HAS SOLD PROPERTY FOR THE SALE CONSIDERATION OF RS.19,10,000/- AND SUBSEQUENTLY, THE SUB- REGISTRAR HAS VALUED THE PROPERTY FOR THE STAMP DUTY, F IXING THE MARKET VALUE AT RS.1.4 CRORES. LOOKING AT THE BREAK- UP OF THE ABOVE VALUATION, THE PROPERTY SOLD BY THE ASSESSEE CONSISTS OF LAND, FACTORY, SHED AND SOME OTHER ASSETS LIKE TUBE -WELL AND THE STAMP AUTHORITIES VALUED THE LAND AT RS.7,48,176/- AN D OTHER ASSETS AT RS.1,90,000/- AND WITH REGARD TO FACTORY SHED, THEY HAVE VALUED THE PROPERTY AT RS.1,31,39,054/-, WH ERE AS THE ACTUAL VALUE IN THE BOOKS OF ASSESSEE IS MUCH LESS . ACCORDING TO ASSESSEE, THE VALUE DETERMINED BY THE STA MP VALUER IS TOO HIGH THEREFORE, THEY REQUESTED THE AO TO R EFER THIS ISSUE TO THE DVO. EVEN THOUGH THE ABOVE REQUEST WAS MADE AT THE FAG END OF THE ASSESSMENT, STILL THE ASSESSEE HAS A MERIT ON THE REQUEST. THE AO MAY NOT HAVE JURISDICTION TO EXTEND TH E DATE OF ASSESSMENT, BUT THE CIT COULD HAVE REFERRED TH E MATTER TO THE DVO. CONSIDERING THE PECULIAR FACTS OF THE CASE, WE DO AGREE WITH THE LD.AR THAT THE VALUE DETERMINED BY THE MAGISTRATE OR STAMP AUTHORITIES ARE SUBJECT TO REVIEW IN THE APPELLATE COURTS. IN OUR CONSIDERED VIEW AND FOR THE SAKE OF JUSTICE, WE ARE DIRECTING THE AO TO REFER THE VALUATION OF FACTORY SHED TO THE DVO AND AFTER CONSIDERING VALUATION FROM DV O, ASSESSMENT MAY BE COMPLETED IN ACCORDANCE WITH THE VALUATION REPORT OF DVO, AFTER GIVING PROPER OPPORTUN ITY OF ITA NO. 298/HYD/2017 :- 7 -: BEING HEARD TO ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE S. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH AUGUST, 2019 SD/- SD/- (P. MADHAVI DEVI) (S. RIFA UR RAHMAN) JUDICIAL MEMBER ACCOUNTANT M EMBER HYDERABAD, DATED 9 TH AUGUST, 2019 TNMM ITA NO. 298/HYD/2017 :- 8 -: COPY TO : 1. M/S.AJANTHA FARMS PVT. LTD., C/O. MOHD. AFZAL, ADVOCATE, 11-5-465, SHERSONS RESIDENCY, FLAT NO.40 2, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1(1), HYDERABAD. 3. CIT(APPEALS)-1, HYDERABAD. 4. PR.CIT(1), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.