M/s. Super Cones India Pvt. Ltd., Ghaziabad V. ACIT, Ghaziabad

ITA 3412/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91392 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Principle of natural justice; Additional evidence; Fair market value; Valuation report
• Section: 143(3); 50C; 37

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3412 /DEL/201 4 A.Y. : 2006 - 07 M/S SUPER CONES INDIA PVT LTD., VS. ACIT, CIRCLE - 2, C/O AKHILESH KUMAR, ADVOCATE, GHAZIABAD CHAMBER NO. 206 - 207, ANSAL SATYAM, RDC RAJ NAGAR, GHAZIABAD (PAN : AACCS0163K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AKHILESH KUMAR, ADV. DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR . DATE OF HEARING : 6 - 7 - 2015 DATE OF ORDER : 8 - 7 - 2015 PER H.S. SIDHU, JM O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS), MUZAFFARNAGAR DATED 24 . 2 .201 4 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - I) BECAUSE, THE ORDER OF THE LEARNED LOWER AUTHORITY IS BADE IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE IN SUSTAINING THE ADDITION MADE BY THE AO ON THE BASIS OF CIRCLE RATE U/S. 50C BUT IN WHOLE DIS REGARD OF EXPLANATION AND EVIDENCES PLACED ON THE RECORD BY ASSESSEE. 2 (II) BECAUSE, ON ONE SIDE LD. CIT(A) FAILED TO CONSIDER THE SPECIFIC INSTANCES PLACED BY THE ASSESSEE IN SUPPORT OF MARKET RATE BEING LOWER THAN CIRCLE RATE AND ON THE OTHER HAND FAIL ED TO ADMIT THE VALUATION REPORT IN TERMS OF RULE 46A, HENCE ORDER IS ARBITRARY. (III) BECAUSE, LD. CIT(A) GROSSLY ERRED IN HOLDING THAT, IT IS NOT MANDATORY FOR AO REFER THE MATTER (DISPUTE ABOUT MARKET VALUE) TO DVO IN TERMS OF SECTION 50C(2) OF THE A CT AND THE SAME COULD HAVE BEEN SO REFERRED ONLY WHEN ASSESSEE WOULD HAVE FILED VALUER S REPORT, HENCE, ACTION OF AO IS NOT REFERRING THE MATTER TO DVO IS ILLEGALLY UPHELD. (IV) BECAUSE, LD. CIT(A) FAILED TO EXERCISE HIS DISCRETION TO REFER THE MATTER OF MARKET VALUE OF DVO IN TERMS OF SECTION 50C(2) OR TO DIRECT TO DO THE SAME TO AO. IT IS, THEREFORE HUMBLY PRAYED THAT IN THE INTEREST OF JUSTICE, TOTAL ADDITION MAY KINDLY BE QUASHED AND IN THE ALTERNATIVE IT IS ALSO PRAYED THAT ASSESSMENT AS UPHELD BY THE CIT(A) BE SET ASIDE WITH THE DIRECTIONS AS DEEMED FIT BY YOUR HONORS TO AO TO REFER MATTER TO THE DVO WITH PROPER OPPORTUNITY OF BEING HEARD TO ASSESSEE. 3. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.9.2008 DECLARING NIL INCOME. THE AO SELECTED THE CASE OF ASSESSEE FOR SCRUTINY. NOTICE UNDER SECTION 143(2) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED THE ACT ) WAS ISSUED ON 18.9.2009 WHICH WAS SERVED UPON THE ASSESSEE. HOWEVER, NOTICE U/S. 143(2)1/42(1) OF THE ACT WERE ISSUED TO THE ASSESSEE AND IN COMPLIANCE OF THE SAME, AUTHORISED REPRESENTATIVE OF 3 THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED BILLS AND VOUCEHRS AND OTHER RELEVANT DOCUMENTS ALONGWITH BOOKS OF ACCOUNTS OF THE ASSESSEE. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE COMPANY HAS SOLD VARIOUS PLOTS. THE AO ASKED TO PROVIDE THE DETAILS OF SALE CONSIDERATION TO VERIFY THAT THE PLOTS WERE SOLD AT THE MARKET VALUE OR BELOW THAN THE MARKET VALUE. THE AR OF THE ASSESSEE FURNISHED THE INFORMATION REQUIRED BY THE AO AND ALSO ACCEPTED THAT THE COMPANY HAS SOLD VARIOUS PLOTS FOR A SALE CONSIDERATION OF RS. 20,01,800/ - , BUT THE CIRCLE RATE OF THE PLOT WAS RS. 35,68,000/ - . THE AO ASKED THE ASSESSEE WHEY SECTION 50C OF THE I.T. ACT SHOULD NOT BE APPLIE D IN THE CASE OF THE PLOTS SOLD BY THE ASSESSEE COMPANY IN THE YEAR UNDER CONSIDERATION. IN RESPONSE TO THE SAME, THE ASSESSEE FILED REPLY DATED 20.12.2010 AND STATED THAT THE RATE ADOPTED BY THE AO IS HIGHER THAN THE PREVAILING MARKET RATE IN THE AREA. A S A PROOF OF PREVAILING MARKET RATE, ASSESSEE HAS FILED CERTIFIED COPIES OF SOME OF THE DEEDS EXECUTED BY OTHER PARTIES. ASSESSEE REQUESTED THE AO THAT PREVAILING FAIR MARKET VALUE OF THE PROPERTY SOLD ON LOWER THAN THE CIRCLE RATE DECLARED BY THE REGISTR ATION AUTHORITY AND THEREFORE, THE SALE CONSIDERATION SO RECEIVED HAS BEEN ADOPTED BY THE ASSESSEE FOR TAXATION PURPOSES. THE PROVISIONS OF SECTION 50C SHOULD NOT BE APPLIED IN THE CASE OF THE ASSESSEE, AS PER THE PROVISIONS OF SECTION 50C(2) OF THE I. T. ACT, 1961. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND APPLIED THE PROVISIONS OF SECTION 50C OF THE I.T. ACT IN THE CASE OF THE ASSESSEE AND ADDED RS. 15,66,220/ - THE DIFFERENCE IN CONSIDERATION ACCRUING, AS A RESULT OF TRANSFER OF CAP ITAL ASSETS AND THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY TO BE THE FULL CONSIDERATION RECEIVED BY THE ASSESSEE AS A RESULT SUCH TRANSFER AS 4 INCOME OF THE ASSESSEE VIDE ORDER DATED 30.12.2010 PASSED U/S. 143(3) OF THE I.T. ACT. 4. AGGRIEVED W ITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 24.2.2014 UPHELD THE ASSESSMENT ORDER DATED 30.12.2010 AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSESSEE DRAW MY ATTENTION TOWARDS THE PROVISIONS OF SECTION 50 AND 50C(2) OF THE I.T. ACT, ALONGWITH RULE 46A OF INCOME TAX RULES, 1962. HE STATED THAT IT IS MANDATORY FOR THE AO TO REFER THE MATTER TO THE DVO IN TERMS OF SECTION 50C(2) OF THE I.T. ACT, BECAUSE THE ASSESSEE HAVE FILED VALUATION REPORT BEFORE THE AO AND THE AO HAS PASSED THE ASSESSMENT ORDER CONTRARY TO THE PROVISIONS OF LAW. SIMILARLY, LD. CIT(A) HAD ALSO UPHELD THE SAME BY DISMISSING THE APPEAL FILED BY THE ASSESSEE. HE REQUESTED THAT THE MATTER MAY BE SENT BACK TO THE AO WITH THE DIRECTION TO REFER THE MATTER FOR VALUATION TO THE DVO AND THEREAFTER DECIDE THE ISSUE IN DISPUTE DENOVO AND PASS A SPEAKING ORDER. IN SUPPORT OF HIS CONTENTION, HE C ITED THE FOLLOWING JUDGMENTS.: - (A) ANIL KUMAR JAIN VS. ITO (2013) 143 ITD 659 : 34 TAXMANN.COM 259 (DEL) (B) SARWAN KUMAR VS. ITO (2014) 150 ITD 289 : 45 TAXMANN.COM 16 (DEL) (C) APPADURAL VIJAYARAGHWAN VS. JCIT (2014) 369 ITR 486 TAXMANN.COM (MADRAS) 5 7. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES AND STATED THAT THE REVENUE AUTHORITIES HAVE PASSED THE WELL REASONED ORDER, AS PER THE PROVISIONS OF TH E LAW, THEREFORE, HE STRONGLY OPPOSED THE REQUEST OF THE ASSESSEE. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS AVAILABLE WITH ME, ESPECIALLY THE PROVISIONS OF SECTION 50C AND 50C(2) OF THE I.T. ACT, 1961. I HAVE ALSO PERUSED THE COPIES OF THE JUDGMENTS RELIED BY THE ASSESSEE S COUNSEL REFERRED MENTIONED IN PARA 6 OF THIS ORDER AS AFORESAID. 8.1 FOR THE SAKE OF CONVENIENCE, THE RELEVANT PROVISIONS OF SECTION 50C AND 50C(2) OF THE INCOME TAX ACT, 1961 ARE REPRODUCED AS UNDER: - 50C(1) WH ERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB0SECTION (1) WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY AO THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY 6 UNDER SUB - SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB - SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB - SECTIONS(2), (3), (4), (5) AND (6) OF SEC TION 16A CLAUSE (I) OF SUB - SECTION (1) AND SUB - SECTIONS (6) AND (7) OF SECTION 23A, SUB - SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH TAX ACT, 1957 (27 OF 1957), SHALL WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SU CH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE AO UNDER SUB - SECTION (1) OF SECTION 16A OF THAT ACT. 8.2 KEEPING IN VIEW OF THE AFORESAID PROVISIONS OF LAW, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS DISPUTE BEFORE THE AO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY. IN VIEW OF THE AFORESAID PROVISIONS OF SECTION 50C(2) OF THE I.T. ACT AS WELL AS THE FOLLOWING CITATIONS RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE MENTIONED AT PARA 6.3 OF THE THIS ORDER, I AM OF T HE CONSIDERED OPINION THAT WHERE THE ASSESSEE HAS CLAIMED BEFORE THE AO THAT THE VALUE OF THE LAND AND THE BUILDING ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY, THEN IN TERMS OF SECTION 50C(2), THE AO OUGHT TO H AVE REFERRED THE MATTER TO THE VALUATION OFFICER INSTEAD OF STRAIGHTWAY DEEMING THE VALUE ADOPTED BY 7 THE STAMP VALUATION AUTHORITY AS FULL VALUE OF CONSIDERATION. IN THE PRESENT CASE IT IS NOT DISPUTED THAT ASSESSEE HAS RAISED OBJECTION BEFORE THE AO REGA RDING THE FAIR MARKET VALUE OF THE PROPERTY SOLD ON LOWER THAN THE CIRCLE RATE DECLARED BY THE REGISTRATION AUTHORITY AND ALSO MENTIONED THAT THE SALE CONSIDERATION SO RECEIVED HAS BEEN ADOPTED BY THE ASSESSEE FOR TAXATION PURPOSE FOR WHICH PROVISIONS O F SECTION 50C SHOULD NOT BE ADOPTED IN THE CASE OF THE ASSESSEE, AS PER THE PROVISIONS OF SECTION 50C(2) OF THE I.T. ACT. BUT THE AO HAS REJECTED THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITIONS ON THE BASIS BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. SIMILARLY, BEFORE THE LD. CIT(A) ASSESSEE HAS ALSO FURNISHED THE REPORT OF THE APPROVED VALUER AND PLEADED TO ADMIT THE SAME UNDER RULE 46A OF THE I.T. RULES, 1962 AS MENTIONED BY THE LD. CIT(A) AT PAGE NO. 4 OF THE IMPUGNED ORDER. LD. CIT(A) HAS ALSO SOUGHT THE REMAND REPORT FROM THE AO AND DID NOT ADMIT THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BY STATING THAT THE ASSESSEE DID NOT PRODUCE THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN MY OPINION, THIS IS CONTRARY TO THE PRIN CIPLES OF NATURAL JUSTICE AND THE PROVISIONS OF RULE 46A OF THE I.T. RULES, 1962. THE EVIDENCE FILED BY THE ASSESSEE IS VERY MUCH RELEVANT FOR THE PROPER DECISION ON THE ISSUE IN DISPUTE. SECONDLY, AS PER THE PROVISIONS OF SECTION 50C(2) OF THE I.T. A CT, AS REPRODUCED ABOVE, WHEN THE ASSESSEE MADE CLAIM BEFORE THE AO THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY WAS HIGHER THAN THE FAIR MARKET VALUE OF THE PROPERTY AND THIS IS ALSO NOT DISPUTED BY THE ASSESSEE IN APPEAL OR SHOULD HAVE BEEN OR OTHERWISE TO ANY OTHER AUTHORITY OR COURT AS REFERRED TO SECTION 50C(2) OF THE I.T. ACT. IT IS THE DUTY OF THE AO TO REFER THE MATTER FOR VALUATION TO THE VALUATION OFFICER AS PROVIDED IN SECTION 50C(2) OF THE I.T. ACT WHICH HAS NOT BEEN DO NE 8 BY THE AO . THE ACTION OF THE AO HAS WRONGLY BEEN UPHELD BY THE LD. CIT(A). THIS VIEW IS SUPPORTED BY THE VARIOUS DECISION OF THE TRIBUNAL INCLUDING THE (A) ANIL KUMAR JAIN VS. ITO (2013) 143 ITD 659 : 34 TAXMANN.COM 259 (DEL); (B) SARWAN KUMAR VS. IT O (2014) 150 ITD 289 : 45 TAXMANN.COM 16 (DEL) AND (C) APPADURAL VIJAYARAGHWAN VS. JCIT (2014) 369 ITR 486 TAXMANN.COM (MADRAS). 8.3 IN MY CONSIDERED OPINION, THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ATTRACTS THE PROVISIONS OF SECTION 50C(2) OF THE I.T. ACT, 1961, BECAUSE THE ASSESSEE HAS MADE THE OBJECTION FOR INVOKING THE PROVISIONS OF SECTION 50C(1) OF THE ACT AND THE AO HAD NOT REFERRED THE VALUATION REPORT TO THE DVO, AS PER PROVISIONS OF SECTION 50C(2) OF THE I.T. ACT, 1961 AND WITHOUT D OING SO, THE AO HAD MADE THE ADDITION IN DISPUTE WHICH WAS WRONGLY BEEN UPHELD BY THE LD. CIT(A). 9. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABOVE, I AM OF THE VIEW THAT THE ASSESSEE HAS MADE OUT HIS CASE FOR CONSIDERATION AS CLAIMED IN TERMS OF PROVISION O F SECTION 50C(2) OF THE I.T. ACT, 1961 WHICH HAS NOT BEEN DONE BY THE REVENUE AUTHORITIES. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF THE TRIBUNAL INCLUDING THE HON BLE MADRAS HIGH COURT JUDGMENT IN THE CASE OF APPADURAL VIJAYARAGHWAN VS. JCIT (2014) 369 ITR 486 TAXMANN.COM (MADRAS), I SET ASIDE THE MATTER IN DISPUTE TO THE FILE OF THE AO TO WORK OUT THE CAPITAL GAIN BY INVOKING THE PROVISIONS OF 9 SECTION 50C(2) OF THE I.T. ACT., AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 /7/201 5 . SD/ - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 8 /7/201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES