SHRI NARENDRA KANAHIYALAL PARREKH, KHAMGAON V. THE DEPUTY COMMISSIONER OF INCOME TAX, AKOLA

ITA 313/NAG/2017

AI Insights

This case involves an appeal by Shri Narendra Kanahiyalal Parrekh against the order of the Commissioner of Income Tax (Appeals)-1, Nagpur, which confirmed the addition of capital gains to the assessee's income for the assessment year 2010-11. The capital gains were derived from the sale of two plots of land. The primary legal contention was the application of section 50C of the Income Tax Act, 1961, which pertains to the valuation of property for the purpose of calculating capital gains. The assessee argued that the sale deed for one of the plots was executed in a different financial year than the one considered by the Assessing Officer, and for the other plot, the valuation was disputed. The Tribunal found that the lower authorities had not adequately addressed these issues and thus remanded the case for further examination.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 133436 (ITAT-NAGPUR)
• Duration Of Justice: 16 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-11-2022
• Assessment Year: misc
• Appeal Filed On: 08-02-2006
• Other Referred Cases: Sunil Kumar Agarwal vs. CIT, 47 taxmann.com 158 [2014]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE; WE COULD NOT UNDERSTAND THIS
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 143(3); 50C

Judgement Text

आयकर अपीलीय अिधकरण Ɋायपीठ नागपुर मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH : NAGPUR BEFORE S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.313/NAG/2017 िनधाᭅरणवषᭅ / Assessment Year : 2010-11 Shri Narendra Kanahiyalal Parrekh, Prop.M/s.Prem Agencies, Jalamb Naka, Khamgaon, Dist. Buldhana – 444303. PAN: ABSPP 8284 E Vs The Deputy Commissioner of Income Tax, Akola. Appellant/ Assessee Respondent /Revenue Assessee by None. Revenue by Shri G.J.Ninawe- JCIT Date of hearing 15/11/2022 Date of pronouncement 18/11/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeals)-1, Nagpur dated 26.05.2017 emanating from the order under section 143(3) of the Act,1961 dated 30.03.2013 passed by the DCIT, Akola Circle, Akola. The assessee has raised the following grounds of appeal: “1. The order passed is illegal, invalid and bad in law. 2. The Hon’ble Commissioner of Income Tax (Appeals) erred in law and on facts in confirming and justifying the act of the AO for applying the specific provision of section 50C of the Income Tax ITA No.313/NAG/2017 for A.Y.2010-11 Shri Narendra Kanahiyalal Parrekh [A] 2 Act, 1956 and re-computing capital gains amounting to Rs.12,55,690/- and adding to the return income. 3. Any other ground shall be prayed at the time of hearing.” 2. Brief facts of the case: The assessee has filed return of income on 27.09.2010 declaring total income of Rs.41,81,700/-. The case was selected for scrutiny. The assessee was duly represented during the scrutiny proceedings. During the scrutiny proceedings, it was observed that assessee has offered capital gain on sale of land. The details of land sold is as under: S.No. Description of the plot Market value Assessee’s share (1/2) of the sale value Market value Sale value Assessee’s share (1/2) of the sale value Date of sale 1 Plot No.3 New Gat No.70 866.95 sq. 24,27,600/- 12,13,800 24,27,600/- 4,66,000/- 2,33,000/- 18/10/2010 2 Plot No.4 New Gat No.70 866.95 sq. 16,80,000/- 8,40,000 16,80,000/- 11,30,220/- 5,65,110/- 01/02/2010 3. The Assessing Officer(AO) invoked 50C of the Act and calculated the capital gain ignoring the submission of the assessee, specifically with reference to plot no.3, wherein assessee claimed that agreement to sale was entered in F.Y. 2005-06 and due to change of municipal lay out, sale deed was executed in the F.Y. 2009-10. 4. Aggrieved by the addition, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) upheld the addition. Aggrieved by the same, the assessee has filed an appeal before this Tribunal. ITA No.313/NAG/2017 for A.Y.2010-11 Shri Narendra Kanahiyalal Parrekh [A] 3 5. During the assessment proceedings, none appeared for the assessee. The ld.Departmental Representative(ld.DR) for the Revenue was heard and case records was perused. 6. In this case, for the plot no.3, appellant had claimed that agreement to sale was entered in F.Y.2005-06, but the sale deed was entered in F.Y.2009-10. However, neither the AO, nor the ld.CIT(A) has discussed the contents of the agreement to sale which was claimed to have been entered in F.Y. 2005-06. It is not clear from the order of the lower authorities whether the part consideration was received in F.Y.2005-06 or any other year prior to F.Y. 2009-10. This is a crucial fact which is not on record of the lower authorities. Since none has appeared for assessee, we could not understand this fact from the assessee also. The assessee has claimed that part consideration was received prior to F.Y. 2009-10. If the fact mentioned by assessee is correct that agreement to sale was entered in F.Y.2005-06 and if at all part consideration was received prior to F.Y.2009-10, then for the purpose of section 50C, the market value shall be considered of that particular financial year, however, as mentioned that these facts have not been analysed by the lower authorities. Therefore, this issue is set-aside to the file of the AO for re-adjudication after giving proper opportunity to the assessee. The AO may also refer the case to Departmental Valuation Officer(DVO) for valuation. ITA No.313/NAG/2017 for A.Y.2010-11 Shri Narendra Kanahiyalal Parrekh [A] 4 7. With reference to plot no.4, it is observed from the assessment order as well as ld.CIT(A)’s order that assessee had not accepted the 50C valuation. In these facts and circumstances, it was mandatory for the AO to refer the case to DVO for valuation. We derive support from the order of Hon’ble Kolkata High Court in the case of Sunil Kumar Agarwal vs. CIT, 47 taxmann.com 158 [2014]. The relevant portion of Hon’ble Kolkata High Court is reproduced here as under: “8. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.” 8. Accordingly, the AO is directed to obtain valuation report from the DVO, thus, the case is set-aside to the Assessing Officer for this limited purpose as far as plot no.4 is concerned. We have already recorded our directions regarding plot number 3, in para 6. The Assessing Officer shall give opportunity to the assessee. ITA No.313/NAG/2017 for A.Y.2010-11 Shri Narendra Kanahiyalal Parrekh [A] 5 Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose. 9. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 18 th November, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 18 th Nov, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर बᱶच, नागपुर / DR, ITAT, Bench, Nagpur. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.