NOORUDDIN B. GILANI, MUMBAI V. ITO WD 13(3)(2), MUMBAI

ITA 3239/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48642 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 19-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RK GUPTA
• Assessee Lawyers: H S RAHEJA
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.S. SYAL R.S. SYAL R.S. SYAL R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 3239/MUM/2010 ASSESSMENT YEAR-2005-06 MR. NOORUDDIN B. GILANI, MODERN SWEETS, 160-162 E.M. MERCHANT ROAD, NEAR MINERVA MASJID, MUMBAI-400 003 PAN-AAEPG 0085H VS. THE ITO, WARD 13(3)(2), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.S. RAHEJA RESPONDENT BY: SHRI R.K. GUPTA O R D E R O R D E R O R D E R O R D E R PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10.3.2010 PASSED BY THE LD. CIT(A)-24 FOR THE ASSESSMENT YEAR 2005-06. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS CARRYING HIS BUSINESS IN PROPRIETORSHIP. THE ASSESSEE HAS FILED HIS ORIGIN AL RETURN OF INCOME DECLARING TOTAL INCOME OF `. 2,50,215/- FOR A.Y. 2005-06. THE RETURN WAS NEITHER PROCESSED U/S. 143(1) NOR SCRUTINIZED U/S. 143(3) OF THE I.T. ACT. SUBSEQUENTLY, NOTICE U/S. 148 WAS ISSUED. IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE HAS FILED RETURN OF INCOME ON 31.10.2008 DECLARING TOTAL INCOME OF `. 2,50,215/-. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE AC T ASSESSING INCOME AT `. 11,55,715/-. ITA NO.3239/M/10 2 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD HIS SHOP AT KANDIVLI FOR `. 12,00,000/-. ON SALE OF THE SHOP THE ASSESSEE HAS DISCLOSED LONG TERM GAIN AMOUNTING TO `. 8,50,000/ - AND PAID THE TAX ACCORDINGLY. SINCE THE PURCHASE OF SHOP AT ABOUT 20 YEARS BACK IT WAS ALWAYS UNDER LOCK AND KEY. THE ASSESSEE HAS NEITHER UTILIZED IT FOR ANY PURPOSE NOR WAS GIVEN IT ON RENT. DUE TO NON-UTI LIZATION OF SHOP FOR LONG PERIOD ITS CONDITION AT THE TIME OF SALE WAS BAD AND DIFFERENT THAN THE ONE REGULARLY USED AND MAINTAINED. HOWEVER THE ASSESSING OFFICER HAS COMPARED IT WITH OTHER MARKETABLE PROPERTY AND E NHANCED THE LONG TERM CAPITAL ON SALE OF SHOP BY `. 9,05,000/- BY APPLYING PROVISIONS OF SEC. 50C OF THE ACT. 4. THE AR CHALLENGED THAT THE ASSESSMENT COMPLETED U/S. 143(3) R.W.S. 148 OF I.T. ACT ON THE GROUND THAT THE ASSESSEE H AD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT `. 2,50, 215/- AND THE RETURN WAS NEITHER PROCESSED U/S. 143(1) NOR SCRUTINIZED U/S. 14 3(3) OF THE I.T. ACT. SUBSEQUENTLY, NOTICE U/S. 148 WAS ISSUED IN RESPONSE TO WHICH THE ASSESSEE FILED THE RETURN OF INCOME ON 31.10.2008 DECLA RING THE TOTAL INCOME AT `. 2,50,215/- AND THE ASSESSING OFFICER COMPL ETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 ASSESSING THE INCOME AT `. 11,55,715/- 5. BEFORE THE LD. CIT(A) THE AR ALSO STATED THAT THE ADOPTION OF RATES U/S. 50C WAS NOT JUSTIFIED AND THEREFORE THE CONSI DERATION OF `. 12,00,000/- RECEIVED BY THE ASSESSEE ON SALE OF SHOPS SHOU LD BE ACCEPTED AND THE ADDITION DELETED. 6. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AND IN THIS CASE IT IS SEEN THAT THE ASSESSING OFFICER IN PARA 2 OF THE ASSESSMENT ORDER HAS STATED THAT THE RETURN WAS PROCESSED U/ S. ITA NO.3239/M/10 3 143(1) OF I.T. ACT AND THEREAFTER THE CASE WAS SELECTE D FOR SCRUTINY AND FURTHER IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS STATED ON PAGE 2 THAT THE APPELLANT HAD SU PPRESSED THE LONG TERM CAPITAL GAIN OF `. 9,05,500/- (I.E. ` . 21,05,500 `. 12,00,000/-) AND THEREFORE, THE CASE WAS REOPENED U/S. 147 TO BRING TO TAX THIS ESCAPED INCOME. THUS THE OBJECTION OF THE ASSESSEE TO THE REOPENING IS NOT VALID AS THE ASSESSING OFFIC ER HAS VERY CLEARLY STATED ON PAGE 2 OF THE ASSESSMENT ORDER THAT THERE WAS A SUPPRESSION OF THE LTCG BY THE APPELLANT AN D THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 7. THE LD. CIT(A) FURTHER HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL BUT IN THIS CASE IT IS SEEN THAT THE APPELLANT HAS SOLD THE SHOP FOR `. 12,00,000/- ON 24.12.2004 AND THE VALUATION AS PE R STAMP DUTY AUTHORITY IS `. 21,05,500/- AND THEREFORE , AS PER PROVISIONS OF SEC. 50C, THE VALUE IS TO BE TAKEN A T `. 21,05,500/- AND THERE IS NO ERROR ON THE PART OF THE ASSESSING OFFICER IN ADOPTING THE RATES AS STATED U/S. 50C OF THE I.T. ACT. THEREFORE, THIS GROUND OF APPEAL I S DISMISSED. 8. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE I S IN APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE SHRI H.S. RAHEJA SUBM ITTED THAT HE HAD RAISED SPECIFIC OBJECTION IN THE STATEMENT OF F ACTS BEFORE THE LD. CIT(A) AS FOLLOWS: DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD HIS SHOP AT KANDIVLI FOR `. 12,00,000/-. ON SALE OF THE SHOP THE ASSESSEE HAS DISCLOSED LONG TERM GAIN AMOUNTING TO `. 8,50,000/- AND PAID THE TAX ACCORDINGLY. SINCE THE PURCHASE OF SHOP AT ABOUT 20 YEARS BACK IT WAS ALWAYS UNDER LOCK AN D KEY. THE ASSESSEE HAS NEITHER UTILIZED IT FOR ANY PURPOSE NOR WAS GIVEN IT ON RENT. DUE TO NON-UTILIZATION OF SHOP FO R LONG PERIOD ITS CONDITION AT THE TIME OF SALE WAS BAD AND DIFFERENT T HAN THE ONE REGULARLY USED AND MAINTAINED. HOWEVER THE ASSESSING OF FICER HAS COMPARE IT WITH OTHER MARKETABLE PROPERTY AND EN HANCED THE LONG TERM CAPITAL ON SALE OF SHOP BY `. 9,05,000/- BY APPLYING PROVISIONS OF SEC. 50C OF THE ACT. ITA NO.3239/M/10 4 9. THE LD. COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED T HAT THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER TO TH E DVO AS THE ASSESSEE HAS OBJECTED TO THE VALUATION. 10. THE ASSESSEE HAD OBJECTED TO THE ADOPTION OF VALUE TAKEN FOR DETERMINING THE STAMP DUTY THE AO OUGHT TO HAVE REFE RRED TO THE VALUATION OFFICER AS REQUIRED U/S. 50C(2). THE JODHP UR TRIBUNAL OF ITAT IN THE CASE OF MEGHRAJ BAID VS. ITO (2008 114 TTJ 841 ) HAS HELD THAT WHEN THE AO DOES NOT AGREE WITH THE EXPLANATION OF ASSESSEE WITH REGARD TO LOWER SALE CONSIDERATION THAN THE VALUE ADO PTED BY THE STAMP VALUATION AUTHORITY, HE SHOULD REFER THE MATTER TO DVO UNDER SUB-SECTION 2 OF SEC.50C. THE WORD MAY IN SEC 50C(2) HAS TO BE READ AS SHOULD SO THAT THE PROVISION IS NOT RENDERED REDUND ANT. IN THAT CASE THE TRIBUNAL REMANDED THE MATTER BACK TO AO TO PROCEED ACCORDINGLY. ON THIS GROUND THE MATTER REQUIRES TO GO BACK TO AO. 11. IN THE CIRCUMSTANCES WE REMIT THE MATTER BACK TO THE AO, WHO WILL REFER THE VALUATION TO THE DEPARTMENTAL VALUAT ION CELL AND ALSO GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO SUBMIT HIS CASE A ND THEREAFTER THE ASSESSING OFFICER SHALL DECIDE THE ISSUE IN ACCORDANC E WITH LAW. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 27 TH APRIL, 2011 RJ ITA NO.3239/M/10 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO.3239/M/10 6 DATE INITIALS 1 DRAFT DICTATED ON: 21 .0 4. 2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 25 .0 4 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______