P.Sachidananda, Hyderabad V. DCIT, CENTRAL CIRCLE-2, Visakhapatnam

ITA 334/VIZ/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6697 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 334 / VIZ /201 3 (ASST. YEAR : 2009 - 10 ) P. SACHIDANANDA, 37 - 11 - 2010, PATTABHIREDDY GARDENS, INDUSTRIAL ESTATES, VISAKHAPATNAM. V S . D CIT, CENTRAL CIRCLE - 2 , VISAKHAPATNAM. PAN NO. AGCCP 5329 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI R . GOVINDA RAJAN CIT DR DATE OF HEARING : 25 / 0 7 /201 7 . DATE OF PRONOUNCEMENT : 15 / 0 9 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD.CIT(A) - 1, HYDERABAD , DATED 28/02/2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS DERIVING INCOME FROM BUSINESS OF TRAVELS IN THE NAME OF COAST LINE TRAVELS, BESIDES CARRYING OUT COMPUTER JOB WORKS . DURING THE COURSE OF SEARCH AND SEIZURE ACTION CONDUCTED IN THE AISWARYA DEVELOPERS GROUP ON 22/08/2008, CERTAIN DOCUMENTS WERE FOUND AND SEIZED FROM THE RES I DE N TIAL PREMISES OF SHRI JASTI VIJAY SHANKAR, VISAKHAPATNAM. FROM 2 ITA NO. 334VIZ/2013 ( P. SACHIDANANDA ) ANNEXURE A/JVS/RES/2, IT WAS NO TED THAT THE ASSESSEE HAD PURCHASED LAND ADMEASURING 2.09 ACRES AT BAMBHIRAM VILLAGE THROUGH GPA FROM SHRI SIVA KOTI BHANOJI RAO AND OTHERS ON 28/08/2007 FOR 25 LAKHS . THE SAID LAND WAS SOLD TO SHRI TIPPALA NAGIREDDY AND OTHERS ON 20/05/2008. DURING THE COURSE OF SEARCH, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCES FOR THE SAID PURCHASE AND INCOME FROM SHORT TERM CAPITAL GAIN ON THE SAID TRANSACTION. IT WAS STATED TH A T THE PROPERTY WAS PUR CHASED FOR 25,52,150/ - , INCLUDING REGISTRATION CHARGES AND ALSO EXPLAINED TO THE TUNE OF 20 LAKHS AND THE BALANCE AMOUNT OF 5 LAKHS , HE OFFERED AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2007 - 08. WITH REGARD TO THE SHORT TERM CAPITAL GAIN, IT WAS STATED THAT THE LAND WAS SOLD FOR 40 LAKHS, RECEIVED GAIN OF 15 LAKHS. HE ALSO OFFERED TO PAY TAX ON SUCH GAINS IN HIS STATEMENTS RECORDED UNDER SECTION 133 ON 18/09/2008 . ACCORDING TO THE STATEMENT GIVEN BY THE ASSESSEE, HE HAD FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 , ADMITTING TOTAL INCOME OF 14,59,528/ - INCLUDING SHORT TERM CAPITAL GAIN OF 13,97,750/ - , AFTER DEDUCTING THE COST OF ACQUISITIO N AND THE RELATED EXPENSES OF 26,02,250/ - FROM THE SALE CONSIDERATION OF 40 LAKHS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED THE ASSESSEE THAT AS PER THE REGIST R ATION DEPARTMENT , FOR THE PURPOSE OF STAMP DUTY, THE VAL U E O F THE PROPERTY WAS OF 1,18,50,500/ - AND THEREFORE, THE ASSESSING OFFICER WAS PROPOSED TO ADOPT THE VALUE OF THE PROPERTY AS PER SECTION 50C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT'). IN RESPONSE TO THAT, THE 3 ITA NO. 334VIZ/2013 ( P. SACHIDANANDA ) ASSESSEE HA D FILED A LETTER DATED 30/11/2010 AND SUBMITTED THAT HE HAS SOLD THE PROPERTY FOR 40 LAKHS BECAUSE THERE ARE SOME DISPUTES AND MORTGAGE AGAINST THE SAID LAND MADE BY THE VENDORS , BY DISCLOSING ALL THE DEFICIENCIES TO THE BUYERS, THE LAND WAS SOLD FOR 40 LAK H S ONLY. HE FURTHER SUBMITTED THAT THE SRO RATES ARE NOT APPLICABLE TO THE IMPUG N ED PROPERTY FOR WANT OF CLEAR TITLE AND REQUESTED THE ASSESSING OFFICER TO ADOPT THE VALUE OF 40 LAKHS. THE ASSESSING OFFICER AFTER RECEIVING REPLY, HE WAS OF THE OPINION THA T THE DISPUTES HAD ARISEN ONLY AFTER THE SALE OF PROPERTY , T HEREFORE, THE E X PLANATION GIVEN BY THE ASSESSEE WAS REJECTED AND ADOPTED SRO S VALUE OF 1,18,50,500/ - AND ASSESSMENT IS COMPLETED. 3 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT ONCE THE ASSESSEE IS OBJECTED FOR SROS VALUE, IT IS THE MANDATORY ON THE PARTY OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION CELL TO ASCERTAIN THE VALUE O F THE PROPERTY AND SUBMITTED THAT THE MATTER MAY BE REFERRED TO THE VALUATION CELL. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, HE WAS OF THE OPINION THAT THOUGH ASSESSEE HAS OBJECTED FOR ADOPTION OF SROS VALUE AND SUCH OBJECTI ON WAS NOT BASED ON ANY SPECIFIC EVIDENCE, SUCH AS , APPROVED VALUERS REPORT ETC. AND IN THE ABSENCE OF VALUATION REPORT, THE ASSESSING OFFICER WAS NOT REQUIRED TO CONSIDER THAT THE OBJECTION WAS REAL AND N O T BASED ON THE OPINION OF ANY EXPORT AND DISMISSE D THE APPEAL OF THE ASSESSEE. 4 ITA NO. 334VIZ/2013 ( P. SACHIDANANDA ) 4 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONCE THE ASSESSEE HAS OBJECTED FOR ADOPTION OF SROS VALUE , IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER UNDER SECTION 50C(2) OF THE ACT TO ASCERTAIN THE MARKET VALUE. FOR THAT, HE RELIED ON THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF APPADURA I VIJAYARAGHAVAN VS. JCIT [ 369 ITR 486 (MAD.)] . 6 . ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE HAS HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . THE ONLY ISSUE FOR CONSIDERATION BEFORE US IS ONCE THE ASSESSEE OBJECTED FOR ADOPTION OF SROS VALUE, WHETHER IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER UNDER SECTION 50C(2) OF THE ACT OR NOT. IN THIS CASE, THE ASSESSEE HAS PURCHASED A PROPERTY ON 28/08/2007 FOR 25 LAKHS, THE SAME WAS SOLD ON 20/05/2008 FOR 40 LAKHS. ACCORDINGLY, THE ASSESSEE FILED RETURN OF INCOME BY ADMITTING SHORT TERM CAPITAL GAIN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS AS K ED THE ASSESSEE AS PER THE STAMP DUTY AUTHORITIES, VALUE O F THE PROPERTY WAS 1,18,50,500/ - AND PROPOSED TO ADOPT THE SAME VALUE AS AGAINST THE VALUE SHOWN BY THE ASSESSEE OF 40 LAKHS . IN RESPONSE TO THAT, THE ASSESSEE BY LETTER DATED 30/11/2010 OBJECTED TH E VALUATION OF SRO , WHICH IS NOT APPLICABLE TO THE IMPUGNED PROPERTY FOR WANT OF CLEAR TITLE AND ALSO THERE ARE MANY DISPUTES AND THE PROPERTY IS ALSO MORTGAGED BY 5 ITA NO. 334VIZ/2013 ( P. SACHIDANANDA ) THE VENDORS . HOWEVER, THE ASSESSING OFFICER WITHOUT REFERRING THE MATTER TO THE VALUATION OFFICER, HE ADOPTED THE VA L UE AS PER SRO RECORDS UNDER SECTION 50C OF THE ACT. O N APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 8 . IN THIS CONTEXT, THE HON'BLE MADRAS HIGH COURT IN THE CASE OF APPADURAI VIJAYARAGHAVAN (SUPRA) HAS HELD THAT WHERE ASSESSEE MAD E AN OBJECTION WITH REGARD TO ADOPTION OF MARKET VALUE UNDER SECTION 50C(1), THE ASSESSING OFFICER SHOULD HAVE TO REFER THE MATTER TO THE VALUATION OFFICER UNDER SECTION 50C(2) OF THE ACT. KEEPING IN VIEW OF THE ABOVE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT AND ALSO CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ONCE ASSESSEE HAS OBJECTED FOR ADOPTION OF SROS VALUE, IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER TO ASCERTAIN THE CORRECT VALUE. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE AND DIRECTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION CELL TO ASCERTAIN THE CORRECT VALUE OF THE IM PUGNED PROPERTY. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 5 T H DAY OF SEP . , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 5 T H SEPTEMBER , 201 7 . VR/ - 6 ITA NO. 334VIZ/2013 ( P. SACHIDANANDA ) COPY TO: 1. THE ASSESSEE - P. SACHIDANANDA, 37 - 11 - 2010, PATTABHIREDDY GARDENS, INDUSTRIAL ESTATES, VISAKHAPATNAM. 2. THE REVENUE DCIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM. 3. THE CIT(CENTRAL), HYDERABAD. 4. THE CIT(A) - 1, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.