SHRI MOHAMMED YASEEN, CHENNAI V. ITO, NCW - 10 (3), CHENNAI

ITA 3290/CHNY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3795 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Principle of natural justice; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 50C; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ ITA NO.3290/CHNY/2019 /ASSESSMENT YEAR: 2008-09 SHRI MOHAMMED YASEEN, NO.5, INDIRA GANDHI STREET, KILPAUK, GARDEN ROAD, CHENNAI 600 010. [PAN: AKBPY 9593P] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD-10(3), CHENNAI. ( /APPELLANT) ( &'( /RESPONDENT) ( / APPELLANT BY : MR. S. SRIDHAR, ADVOCATE &'( /RESPONDENT BY : MR. ARV SREENIVASAN, ADDL. CIT /DATE OF HEARING : 05.10.2021 / DATE OF PRONOUNCEMENT : 08.10.2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-12 , CHENNAI IN I.T.A NO.22/CIT(A)-12/14-15 DATED 30.09.2019 RELEVA NT TO THE ASSESSMENT YEAR 2008-09. I.T.A NO.3290/CHNY/2019 :- 2 -: 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AR E REPRODUCED AS UNDER: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) -12, CHENNAI DATED 30.09.2019 IN I.T.A.NO.22/CIT(A)-12/1 4-15 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW , FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE ASSUMP TION OF JURISDICTION U/S 147 OF THE ACT BY THE ASSESSING OF FICER AND CONSEQUENTLY ERRED IN SUSTAINING THE RE-ASSESSMENT COMPLETED U/S 143(3) READ WITH SECTION 147 OF THE ACT J WITHOUT A SSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ORDER OF RE- ASSESSMENT PASSED WAS PASSED OUT OF TIME, INVALID, PASSED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 4. THE CIT (APPEALS) ERRED IN PARTLY SUSTAINING THE RE-COMPUTATION OF LONG TERM CAPITAL GAINS BY ADOPTING RS.45,20,000/- AS SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING LONG TER M CAPITAL GAINS WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 50C HAD. NO APPLICATION TO THE FACTS OF THE PRESENT CASE AND FURTHER OUGHT TO HAVE APPRECIATED THAT HAVING NOTIC ED THE FACT OF DISTRESS SALE COUPLED WITH THE VARIOUS FACTORS/OBJE CTIONS PLACED BEFORE THE VALUATION CELL, THE ACTION TO ADOPT A VA LUE HIGHER THAN THE ACTUAL CONSIDERATION RECEIVED WAS WHOLLY UNJUSTIFIE D AND NOT SUSTAINABLE IN LAW. 6. THE CIT (APPEALS) FAILED TO APPRECIATE THE JUDGM ENT OF THE JURISDICTIONAL HIGH COURT RELIED ON IN TCA NO.142/2 019 IN PROPER PERSPECTIVE WHILE MECHANICALLY AFFIRMING THE VALUAT ION REPORT IN DIRECT CONTRADICTION TO THE RATIO LAID DOWN BY THE HIGH CO URT THUS VITIATING HIS ACTION IN THAT REGARD. 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT IN A NY EVENT THE ASSESSMENT OF INCOME ARISING FROM TRANSFER OF LAND UNDER THE HEAD LONG TERM CAPITAL GAINS OVERLOOKING THE ACQUISITION ORDER OF THE GOVERNMENT OF TAMILNADU UNDER URBAN LAND CEILING AC T IN 1976 ITSELF WAS ERRONEOUS AND INCORRECT. 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE CONSEQUENTIAL ASSESSMENT OF LONG TERM CAPITAL GAINS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WAS WRONG, ERRONEOUS, UNJ USTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW. I.T.A NO.3290/CHNY/2019 :- 3 -: 9. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED OR DER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTICE WOULD BE NULLITY IN LAW. 10. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS/ARGUMENTS AT THE TIME OF HEARING. 3. GROUNDS OF APPEAL NO.1 TO 3 ARE RELATING TO REOP ENING OF ASSESSMENT. GROUNDS OF APPEAL NO.4 TO 9 ARE RELATI NG TO ADDITION IN RESPECT OF RS. 45,20,000/-. GROUNDS OF APPEAL NO.1 0 IS GENERAL IN NATURE, NO ADJUDICATION IS REQUIRED HENCE, DISMISSE D. 4. IN SO FAR AS GROUNDS OF APPEAL NO.1 TO 3 RELATIN G TO REOPENING IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS REL IED ON THE GROUNDS AND THE LD. D.R HAS STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE REOPENING MAY BE UPHELD. 5. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E ORDER PASSED BY THE LD. CIT(A) AND ALSO THE REASONS FOR R EOPENING, WE FIND THAT THE A.O IN THIS CASE HAS CORRECTLY REOPENED TH E ASSESSMENT BY FOLLOWING DUE PROCEDURE AND WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, GROUNDS OF APPEAL NO.1 TO 3 RAISED BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, GROUNDS OF APPEAL NO.1 TO 3 RAISE D BY THE ASSESSEE ARE DISMISSED. I.T.A NO.3290/CHNY/2019 :- 4 -: 7. IN SO FAR AS THE ADDITION IN RESPECT OF RS. 45,2 0,000/-, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIV IDUAL, FILED RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED BY THE A.O U/S. 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER AS THE ACT) AND ADMITTED AN AMOUNT OF RS. 7,00,000/- AS A SALE CONSIDERATION FO R THE PROPERTY SOLD. THE A.O HAS COMPLETED THE ASSESSMENT U/S. 143(3) R/ W S. 147 OF THE ACT ON 25.03.2014 DETERMINING TOTAL INCOME OF RS. 6 6,92,250/-. IN THE ASSESSMENT ORDER, THE A.O HAS NOTED THAT THE ASSESS EE HAS RECORDED SALE CONSIDERATION FROM SALE OF A PROPERTY AT RS. 7 ,00,000/-, WHEREAS MARKET VALUE OF THE PROPERTY AS PER SUB-REGISTRAR A T RS. 68,77,000/-. THE A.O HAS ASKED THE ASSESSEE TO EXPLAIN THE REASO NS FOR THE SALE OF PROPERTY FOR A LESSER VALUE THAN THE MARKET VALUE A S PER SUB-REGISTRAR. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O IS THAT THE LAND WAS PURCHASED FOR RS. 31,345/- ON 26.10.1983 ALONG WITH THREE OTHERS AND LATER THEY GAVE UP THE JOINT OWNERSHIP IN SETTLEMEN T OF RS. 30,000/-, THE ORIGINAL SELLER SHRI DORAISAMY CONTINUED TO STAY ON THE LAND AND HIS SON SHRI D. GOPAL TOOK THE CONTROL OF THE LAND AND SUBM ITTED THAT HE SOLD THE PROPERTY FOR A LESSER PRICE. THE A.O HAS ASKED THE ASSESSEE TO SUBMIT ENCUMBRANCE CERTIFICATE (EC) AND AS PER E.C, THE PURCHASER HAD SUBSEQUENTLY PARTITIONED THE LAND AND SOLD IT T O VARIOUS INDIVIDUALS DURING 2008 TO 2012 AND EARNED SUBSTANTIAL INCOME. THE A.O HAS ASKED THE ASSESSEE TO EXPLAIN THE SAME, THE ASSESSE E HAS FURTHER I.T.A NO.3290/CHNY/2019 :- 5 -: SUBMITTED THAT THE ASSISTANT COMMISSIONER, URBAN LA ND TAX DEPARTMENT IN RESPONSE TO A QUERY MADE BY SHRI D. G OPAL ON 25.10.2013 THAT THE LAND TO AN EXTENT OF 4600 SQ. M ETERS (AROUND 1 ACRE AND 14 CENTS) HAS ALREADY BEING APPROPRIATED B Y THE GOVT. OF TAMIL NADU UNDER THE URBAN LAND CEILING ACT IN 1976 ITSELF. ONLY THE LAND MEASURING TO AN EXTENT OF 500 SQ. METERS (AROU ND 12 CENTS) WAS AVAILABLE TO THE ASSESSEE FOR HIS USE AND SUBMITTED THAT THE SALE OF LAND ITSELF IS NOT VALID TRANSACTION. THE A.O AFTER CAR EFUL CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE HE HAS OBSERVED THAT SH RI DORAISAMY ORIGINALLY SOLD THIS PROPERTY TO THE ASSESSEE AND S UBSEQUENTLY THE ASSESSEE SOLD THE LAND TO SHRI D. GOPAL, SON OF DOR AISAMY, AND FURTHER, SHRI D. GOPAL SOLD IT TO VARIOUS PARTIES. ALL THES E TRANSACTIONS HAVE BEEN PROPERLY REGISTERED WITH THE SUB-REGISTRAR AND STAMP VALUE HAS BEEN PAID IN ALL THESE TRANSACTIONS. BY CONSIDERI NG ALL THESE FACTS, THE A.O CAME TO THE CONCLUSION THAT THE SALE CONSIDERAT ION RECEIVED BY THE ASSESSEE AS PER S. 50C OF THE ACT AT RS. 66,92,245/ - AND ACCORDINGLY, LONG TERM CAPITAL GAIN (LTCG) WAS CALCULATED. 8. ON APPEAL, THE LD. CIT(A) WAS ASKED THE A.O TO R EFER THE PROPERTY FOR VALUATION BY DISTRICT VALUATION OFFICE R (DVO) AND THE SAME REQUEST WAS ALSO GIVEN BY ASSESSEE. AS PER DVO REP ORT DATED 04.10.2018, HE ESTIMATED THE VALUE AS ON 11.09.2007 AT RS. I.T.A NO.3290/CHNY/2019 :- 6 -: 45,20,000/-. ACCORDINGLY, THE A.O HAS RE-WORKED OU T THE CAPITAL GAINS AT RS. 43,45,245/-. 9. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE TRIBUNAL. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PROPERTY SOLD BY THE ASSESSEE IS A DISTRESS SALE AND THEREFO RE, S. 50C OF THE ACT HAS NO APPLICATION. HE ALSO SUBMITTED THAT THE GOV T. OF TAMIL NADU HAS APPROPRIATED THE PROPERTY UNDER THE URBAN CEILING A CT THEREFORE, THE ENTIRE SALE TRANSACTION IS NOT VALID. HE FURTHER S UBMITTED THAT THE LD. CIT(A) HAS UPHELD THE ORDER OF THE A.O BASED ON THE DVO REPORT WHICH IS NOT CORRECT. 11. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T ONCE THE ISSUE OF VALUATION OF PROPERTY HAS BEEN REFERRED TO DVO A S PER THE REQUEST OF THE ASSESSEE, THE A.O HAS TO FOLLOW THE SAME AND TH EREFORE, HE STRONGLY SUPPORTED THE LTCG CALCULATED BY THE A.O A S PER THE DVO REPORT, CONFIRMED BY THE LD. CIT(A) AND SUBMITTED T HAT THE SAME BE UPHELD. 12. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE HAS SOLD THE PROPERTY FOR RS. 7,00,000/-, WHEREAS THE MARKET I.T.A NO.3290/CHNY/2019 :- 7 -: VALUE AS PER SRO IS AT RS. 68,77,000/-. WHEN THE A .O HAS INITIALLY ASKED, THE ASSESSEE HAS SUBMITTED THAT THE LAND WAS PURCHASED ALONG WITH THREE PERSONS AND THEREAFTER THEY GAVE UP THEI R OWNERSHIP THROUGH A SETTLEMENT. HOWEVER, THE ORIGINAL SELLER SHRI DOR AISAMY SHALL CONTINUED TO STAY ON THE LAND AND HIS SON SHRI D. G OPAL TOOK THE CONTROL OF THE LAND. SO FAR AS THIS FACT IS CONCERNED, THE ASSESSEE HAS NOT PLACED ANY MATERIAL. 13. SUBSEQUENTLY, WHEN THE AO HAS ASKED THE ASSESSE E TO SUBMIT E.C, AS PER E.C THE PERSON WHO PURCHASED THE LAND F ROM THE ASSESSEE SUBSEQUENTLY PARTITIONED THE LAND AND SOLD IT TO VA RIOUS INDIVIDUALS DURING 2008 TO 2012 AND AGAIN THE A.O HAS ASKED EXP LANATION. THE ASSESSEE HAS SUBMITTED THAT THE LAND TO THE EXTENT OF 4600 SQ. METERS APPROPRIATED BY THE GOVT. OF TAMIL NADU UNDER THE U RBAN LAND CEILING ACT ONLY LEFT OVER 12 CENTS. IN THE ASSESSMENT ORD ER, THE A.O HAS NOTED THAT SHRI DORAISAMY HAS SOLD THE PROPERTY TO THE AS SESSEE AND THE ASSESSEE HAS SOLD THE LAND TO SHRI D. GOPAL, SON OF DORAISAMY AND FURTHER, SHRI D GOPAL SOLD IT TO VARIOUS PARTIES. ALL THESE TRANSACTIONS HAVE BEEN PROPERLY REGISTERED WITH THE SUB-REGISTRA R AND STAMP VALUE HAS BEEN PAID IN ALL THESE TRANSACTIONS THEREFORE, THE LAND WAS FORCIBLY TAKEN OVER BY SHRI D. GOPAL AND APPROPRIATED BY THE GOVT. OF TAMIL NADU IS NOT BELIEVED BY THE A.O. WE ARE ALSO FIND THAT THE ASSESSEE I.T.A NO.3290/CHNY/2019 :- 8 -: HAS NOT PLACED ANY EVIDENCE IN RESPECT OF CONTINUOU S POSSESSION OF THE SHRI DORAISAMY AND ALSO LAND WAS FORCIBLY TAKEN AWA Y BY THE DORAISAMY SON D. GOPAL. THESE ARE THE ONLY EXPLANA TIONS GIVEN BY THE ASSESSEE WITHOUT ANY BASIS. THEREFORE, THESE BASEL ESS REASONS GIVEN BY THE ASSESSEE CANNOT BE CONSIDERED. APART FROM T HE ABOVE, AS PER THE ASSESSEE REQUEST, THE ISSUE WAS REFERRED TO THE DISTRICT VALUATION OFFICER, THE DVO VIDE ORDER DATED 15.10.2018 VALUED THE PROPERTY FOR RS. 45,20,000/-. THE A.O BY CONSIDERING THE SAME, R ECOMPUTED THE CAPITAL GAINS AND THE SAME WAS CONFIRMED BY THE LD. CIT(A). FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE OR DER IS EXTRACTED AS UNDER: 10. I HAVE PERUSED THE ABOVE DECISION. IT IS MENTI ONED IN THE DECISION THAT 'IT WOULD BE' AN INSULT TO THE HONEST TAXPAYER TO ADOPT AN ASSUMED HIGHER MARKET VALUE TO IMPOSE CAPITAL GAINS TAX WIT HOUT ALLOWING HIM OR HER AN OPPORTUNITY TO REBUT EVEN THE LEGAL PRESUMPTION UNDER SECTION 50C(1) OF THE ACT, EVEN THOUGH THE LAW ITSELF PROVIDES FOR A FURTHER FACT FINDING EXERCISE TO BE UNDERTAKEN BY REFERENCE TO DVO UNDER SECTION 50C(2) OF THE ACT AND THEREUPON MEETING THE OBJECTIONS OF THE ASS ESSEE AND ALLOWING HIM FULL OPPORTUNITY TO PROVE THAT THE VALUE DECLARED I N SALE DEEDS IS THE TRUE AND FAIR MARKET VALUE OF THE CAPITAL ASSET AND THE ACTUAL CONSIDERATION RECEIVED BY HIM AND, THEREFORE, CAPITAL GAINS TAX C AN BE IMPOSED ONLY ON THAT BASIS'. 11. IT IS SEEN THAT, THE ABOVE DECISION CLEARL Y CALLS FOR REFERENCE TO VALUATION OFFICER, WHEN THERE WAS AN OBJECTION FROM THE ASSESSEE REGARDING THE GUIDELINE VALUE. THE ABOVE DECISION A LSO CONTAINS THE NEED FOR GATHERING FURTHER OBJECTIONS OF THE APPELLANT ON THE VALUATION REPORT. IN THE CASE OF THE APPELLANT, BOTH THE ABOVE HAVE BEEN CARRIED OUT. IN THE FIRST INSTANCE, THE AO OBTAINED THE GUIDE LINE VALUE FROM THE SUB REGISTRAR AND ACCORDINGLY ESTIMATED THE CAPITAL GAINS. THE APPELL ANT AT THAT STAGE DID NOT REQUEST FOR VALUATION. THE AO ALSO DID NOT REFER IT ON HIS OWN. LATER, ON THE DIRECTION DURING THE APPEAL PROCEEDINGS, AND ALSO O N REQUEST MADE BY THE APPELLANT, THE PROPERTY WAS REFERRED FOR VALUATION. AFTER CONSIDERING ALL FACTS AND CIRCUMSTANCES, THE VALUATION OFFICER HAS ESTIMA TED A VALUE OF RS 45,20,000/- AS AGAINST THE VALUE OF SUB REGISTRAR O F RS 68,67,000/-. ACCORDINGLY, IN THE REMAND REPORT, THE AO RECOMP UTED THE LTCG AT RS 43,45,245/- IN PLACE OF ORIGINAL ASSESSMENT OF RS . 66,92,245/-. I.T.A NO.3290/CHNY/2019 :- 9 -: 14. BY CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANC ES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CI T(A). HENCE, THESE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMIS SED. 15. IN THE RESULT, GROUNDS OF APPEAL NOS.4 TO 9 FIL ED BY THE ASSESSEE ARE DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 08 TH OCTOBER, 2021 IN CHENNAI. SD/ - SD/ - ( ) (G. MANJUNATHA) /ACCOUNTANT MEMBER ( ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI, /DATED: 08 TH OCTOBER, 2021 . EDN/- /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF