ACIT, CHENNAI V. M/s. Nandhi Brick Works, CHENNAI

ITA 311/CHNY/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1247 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 14-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Valuation report; Capital Gains
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B BEFORE DR.O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NOS. 1728/MDS/2006 ASSESSMENT YEARS : 2001- 02 M/S NANDHI BRICK WORKS NO. 29, SOUTH MADA STREET CHENNAI 600 107. VS. THE A.C.I.T BUSINESS CIRCLE IV CHENNAI 34 (PAN : AAAFN 0434 D) (APPELLANT) (RESPONDENT) I.T.A. NO. 311/MDS/2008] ASSESSMENT YEARS : 2001- 02 THE A.C.I.T BUSINESS CIRCLE IV CHENNAI 34 VS. M/S NANDHI BRICK WORKS NO. 29, SOUTH MADA STREET CHENNAI 600 107. (PAN : AAAFN 0434 D) ( APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI P.B. SEKARAN CROSS-OBJECTOR BY : SHRI PHILIP GEORGE ITA NO. 1728/MDS/06 & ITA NO. 31/MDS/08 :- 2 -: O R D E R PER DR. O.K.NARAYANAN. VICE-PRESIDENT : THE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY. THE RELEVANT ASSESSMENT YEAR IS 2001 -02. THE APPEAL OF THE ASSESSEE IN ITA NO. 1728/MDS/2006 IS DIRECTED AGAINST THE ORDER OF THE CI.T(APPEALS)-VII, AT CHEN NAI DATED 15.3.2005 AND ARISES OUT OF THE ASSESSMENT COMPLETE D UNDER SEC.143(3) OF THE I.T. ACT, 1961. THE APPEAL OF THE REVENUE IN ITA NO. 311/MDS/2008 IS DIRECTED AGAINST THE ORDER OF T HE CI.T(APPEALS)-VIII, AT CHENNAI DATED 31.10.2007 AND ARISES OUT OF THE PENALTY ORDER PASSED UNDER SEC. 271(1)(C) OF TH E I.T. ACT, 1961. 2. AS FAR AS THE APPEAL FILED BY THE ASSESSEE IS CO NCERNED, THE ONLY DISPUTE IS REGARDING THE FIXATION OF THE FAIR MARKET VALUE [FMV, FOR SHORT] AS ON 1.4.1981 FOR THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAINS, TAXABLE IN THE HANDS OF TH E ASSESSEE. INITIALLY, IT WAS THE CLAIM OF THE ASSESSEE THAT TH E FMV SHOULD BE ADOPTED AT ` 6,000/- PER CENT. WHEN THE MATTER WAS REFERRED FO R ITA NO. 1728/MDS/06 & ITA NO. 31/MDS/08 :- 3 -: VALUATION, THE DEPARTMENTAL VALUATION OFFICER [DVO, FOR SHORT] FIXED THE FMV AT ` 3,000/- PER CENT. IN THE BACK-DROP OF THE SAID VALUATION REPORT, THE ASSESSEE VOLUNTEERED TO BRING DOWN HIS CLAIM TO ` 3,750/- PER CENT. THE ASSESSING OFFICER DID COMPU TE THE LONG TERM CAPITAL GAIN ON A FMV OF ` 3,000/- PER CENT. THIS POSITION HAS BEEN CONFIRMED IN THE FIRST APPEAL. 3. THEREFORE, THE ISSUE TO BE CONSIDERED IN THE PRE SENT APPEAL IS AS TO WHETHER THE FMV AS ON 1.4.1981 OF THE PROP ERTY SOLD BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR UNDER APPEAL IS ` 3,750/- OR ` 3,000/- PER CENT. 4. WE CONSIDERED THE ISSUE. THE PROPERTY IS SITUAT ED IN POONAMALLEE VILLAGE. THE PROPERTY WAS SOLD BY THE A SSESSEE IN THE FINANCIAL YEAR 2000-01. WHEN WE EXAMINE THE SA LE VALUE, THE FMV OF THE PROPERTY ABOUT A PERIOD OF 19 YEARS BACK , COULD BE REASONABLY CONSTRUED AT ` 3,000/- PER CENT. IN THESE CIRCUMSTANCES, WE FIND THAT THE FMV ADOPTED BY THE ASSESSING OFFICER IS JUSTIFIED. NO INTERFERENCE IS CALLED FO R. ITA NO. 1728/MDS/06 & ITA NO. 31/MDS/08 :- 4 -: 5. THE APPEAL FILED BY THE ASSESSEE FAILS. 6. REGARDING THE PENALTY APPEAL FILED BY THE REVENU E, ITS CASE IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN DELETING THE PENALTY. THE PENALTY HAS BEEN LEVIED ON THE GROUND OF VARIATION IN THE FMV, DISCUSSED ABOVE, WHILE DIS POSING THE APPEAL FILED BY THE ASSESSEE. ASSESSEE HAS COME TO A FMV OF ` 3,750/- PER CENT WHEREAS THE REVENUE HAS ADOPTED A FMV OF ` 3,000/- PER CENT. THE DVO HAS NOT MADE THE VALUATI ON ON ANY EXACT PARAMETERS. THE COMPARABLE CASES MENTIONED B Y THE DVO IN HIS REPORT WERE NOT EXACTLY COMPARABLE, BUT TO B E DISCOUNTED FOR VARIOUS FACTORS. EVEN OTHERWISE, VALUATION IS NOT AN EXACT SCIENCE. THERE IS BOUND TO BE GENUINE DIFFERENCES, AND SUCH DIFFERENCES COULD NOT BE TREATED AS VALID GROUND FO R IMPOSING PENALTY. 7. IN THE PRESENT CASE, THERE IS NO CASE OF ANY CON CEALMENT OF INCOME OR ANY CASE OF FURNISHING OF INACCURATE PART ICULARS. THEREFORE, WE FIND THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) IS JUSTIFIED IN DELETING THE PENALTY. ITA NO. 1728/MDS/06 & ITA NO. 31/MDS/08 :- 5 -: 8. THE REVENUE FAILS IN ITS APPEAL. 9. IN RESULT, THE APPEAL FILED BY THE REVENUE AND T HE APPEAL FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 11 TH DAY OF JANUARY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER ( DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI : 11 TH JANUARY, 2011. VL. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR