M/S R. Suhasini, Visakhapatnam V. The DCIT, Visakhapatnam

ITA 351/VIZ/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5311 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 143(3); 50C

Judgement Text

ITA NO.351/VIZ/2011 SMT. R. SUHASINI, BHEEMUNIPATNA M IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 351 /VIZAG/ 20 11 ASSESSMENT YEAR : 2007 - 08 SMT. R. SUHASINI BHEEMUNIPATNAM VS. D CIT , CENTRAL CIRCLE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO. AGFPR 7302D APPELLANT BY: SHRI C. SUBRAHMANYAM, CA RESPONDENT BY: SMT. KOMALI KRISHNA, DR DATE OF HEARING : 02.12.2013 DATE OF PRONOUNCEMENT : 06.12.2013 ORDER PER SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER:- IT IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), VISAKHAPATNAM DATED 28.10.2011. THE ASSESSEE RAISED THE FOLLOWING GROUNDS:- 1.1 THE LD. CIT(A) FAILED TO UNDERSTAND AND FOLLOW THE PROVISIONS OF SECTION 50C(2) IN ACCORDANCE WITH LAW WHEN THE ASSE SSEE OBJECTED TO THE VALUE ADOPTED BY THE STAMP VALUING AUTHORITY BEFORE THE ASSESSING OFFICER. 1.2 THE ADDITIONS MADE BY INVOKING THE PROVISIONS OF SE CTION 50C OF THE IT ACT ARE UNWARRANTED AND AGAINST THE PROVISIO NS OF LAW KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE. 1.3 THE LD. CIT(A) IS NOT CORRECT IN UPHOLDING THE ORDE R PASSED U/S 143(3) R.W.S. 147 WHEN LEGALLY UNDER THE STATUTE TH E ASSESSING OFFICER OUGHT TO HAVE COMPLETED THE ASSESSMENT UNDE R THE PROVISIONS OF SECTION 143(3) OF THE I.T. ACT. 2. IN THE COURSE OF ARGUMENTS, LD. COUNSEL DID NOT PRESS THE GROUND NO.1.3 WITH REFERENCE TO THE ISSUE OF JURISDICTION IN RE-OPENING THE ASSESSMENT U/S 147. ACCORDINGLY, THE ABOVE GROUND IS TREATED AS WITHDRAWN. 3. THE ISSUE WITH REFERENCE TO GROUND NO.1.1 AND 1. 2 IS ABOUT THE ADDITION MADE INVOKING THE PROVISIONS OF SECTION 50 C. THE ASSESSEE, AN ITA NO.351/VIZ/2011 SMT. R. SUHASINI, BHEEMUNIPATNA M 2 INDIVIDUAL, FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.4,55,310/-. DURING THE COURSE OF SEARCH PROCEEDINGS IN CASE OF ANOTHER ASSESSEE, SRI RAPETI GOVIND, IT WAS NOTICED THAT SMT. R. SUHASINI SOLD A PROPERTY TO SRI RAPETI GOVIND FOR A SALE CONSIDERATION OF RS.9,43,8 75/- WHEREAS THE MARKET VALUE AS PER SRO IS RS.30,20,500/-. DURING THE ASS ESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY CAPITAL GAI NS SHOULD NOT BE COMPUTED AS PER THE PROVISIONS OF SECTION 50C. IN RESPONSE, ASSESSEE STATED THAT THE PROPERTY SOLD WAS UNDER DISPUTE AND IN ORD ER TO AVOID LITIGATION AND TO MEET HER IMMEDIATE FINANCIAL COMMITMENTS, SHE SO LD THE PROPERTY FOR A LESSER AMOUNT I.E. RS.9,43,875/-. SHE REQUESTED TH E AO TO TREAT THE SAME AS DISTRESS SALE AND NOT TO INVOKE THE PROVISIONS OF S ECTION 50C. AFTER CONSIDERING THE REPLY, AO TREATED THE MARKET VALUE OF THE PROPERTY AT RS.30,20,500/- AND COMPUTED CAPITAL GAINS ACCORDIN GLY. 4. BEFORE THE LD. CIT(A), THE ASSESSEE CONTESTED TH E ISSUE WITH REFERENCE TO THE INVOCATION OF SECTION 50C AND REQUESTED FOR REFERRING TO VALUATION AS PER PROVISIONS OF SEC 50(2). THE LD. CIT(A) DID NO T AGREE WITH THE ASSESSEES CONTENTION ON THE REASON THAT ASSESSEE HAS NOT FURN ISHED ANY COMPARABLE CASES WHICH HAVE BEEN SOLD FOR LESSER PRICE THAN TH E MARKET VALUE AND DISMISSED THE APPEAL PREFERRED BY THE ASSESSEE. 5. BEFORE US THE LD. COUNSEL SUBMITTED THAT THE AO SHOULD HAVE REFERRED THE MATTER FOR THE VALUATION BY DVO AS IT IS HELD B Y VARIOUS JUDICIAL AUTHORITIES THAT THE WORD MAY IN SECTION 50C(2) SHALL BE CONS IDERED AS SHALL AND A.O. IS DUTY BOUND TO REFER THE MATTER TO THE VALUATION CELL, WHEN ASSESSEE RAISED OBJECTION ABOUT THE VALUATION. THE ASSESSEE RELIED ON THE FOLLOWING CASES:- 1) MEGHRAJ BAID VS. ITO (2008) 4 DTR 509 (JODH) 2) ITO VS. SMT. MANJU RANI JAIN (2008) 24 SOT 24 ( DEL) 3) AJMAL FRAGRANCES & FASHIONS (P) LTD. VS. ACIT (2 009) 34 SOT 57 (MUMBAI) 4) A. SHAIK MOHIDEEN VS. ITO (2009) 24 DTR 63 (CHE) 5) RAVI KANT VS. ITO (2007) 110 TTJ (DEL) 297 6. THE LD.D.R. HOWEVER RELIED ON THE ORDERS OF THE AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND E XAMINED THE RECORD AS PLACED BEFORE US. THERE IS NO DISPUTE WITH REFEREN CE TO RAISING THE OBJECTION ITA NO.351/VIZ/2011 SMT. R. SUHASINI, BHEEMUNIPATNA M 3 BEFORE THE ASSESSING OFFICER ITSELF BY THE ASSESSEE . THE ASSESSING OFFICER IS DUTY BOUND TO REFER THE VALUATION TO THE VALUATION OFFICER. ONCE THE ASSESSEE HAS DISPUTED THE VALUE ADOPTED BY THE STAMP VALUATI ON AUTHORITY, EVEN THOUGH THE SAME WAS NOT DISPUTED BEFORE THE STAMP V ALUATION AUTHORITY, THE COORDINATE BENCHES WERE CONSISTENTLY HOLDING THAT W ITH REFERENCE TO DVO UNDER SUB-SECTION 2 OF SECTION 50C IS MANDATORY. 8. IN THE CASE OF MEGHRAJ BAID VS. ITO, THE JODHPUR BENCH HAS HELD AS UNDER: IN CASE THE AO DOES NOT AGREE WITH THE EXPLANATION OF THE ASSESSEE WITH REGARD TO LOWER CONSIDERATION DISCLOSED BY HIM THEN HE SHOULD REFER THE MATTER TO DVO FOR GETTING ITS MARKET RATE ESTABLISH ED AS ON DATE OF THE SALE TO ARRIVE AT THE CORRECT SALE CONSIDERATION. IF THIS PROVISION IS READ IN THE SENSE THAT IF THE AO IS NOT SATISFIED WITH THE EXPLANATIO N OF THE ASSESSEE THEN HE MAY OR MAY NOT SEND THE MATTER FOR VALUATION TO THE DVO THEN IN THAT CASE THIS PROVISION WOULD BE RENDERED REDUNDANT. THE WO RD MAY USED IN THIS SUB-SECTION SIGNIFIES THAT IN CASE AO IS NOT SATISF IED WITH THE EXPLANATION OF THE ASSESSEE, HE SHOULD REFER THE MATTER TO THE D VO FOR THE MENTIONED PURPOSE. THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH A DIRECTION THAT HE SHALL REFER THIS MATTER OF VALUAT ION IN THE LIGHT OF SUB-S.(2) OF S. 50C TO THE DVO FOR DETERMINING THE CONSIDERATION OF THIS PLOT SOLD BY THE ASSESSEE UNDER S.50C. 9. SIMILAR VIEW WAS EXPRESSED BY OTHER COORDINATE B ENCHES RELIED ON BY THE ASSESSEE IN THE COURSE OF ARGUMENTS. CONSIDERI NG THE PROVISIONS OF SUB- SECTION 2 OF SECTION 50 WHEREIN IT IS VERY CLEARLY MENTIONED THAT IF THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT T HE VALUE ADOPTED AS ASSESSED BY STAMP VALUATION AUTHORITY EXCEEDS THE F AIR MARKET VALUE, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CA PITAL ASSET TO A VALUATION OFFICER AND SUB-SECTION 3 PROVIDES THAT SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECTION 2, ONLY THE VALUE ADOPTED OR ASSESSED B Y STAMP VALUATION AUTHORITY SHALL BE TAKEN AS FULL VALUE OF CONSIDERA TION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, IT IS MANDATO RY ON THE PART OF THE ASSESSING OFFICER TO REFER THE VALUATION TO THE DVO WHETHER ASSESSEE OBJECTS THE SAME BEFORE THE STAMP VALUATION AUTHORITY OR NO T. THEREFORE, WE ARE OF THE OPINION THAT BOTH THE ASSESSING OFFICER AND THE LD. CIT(A) ERRED IN NOT CONSIDERING THE ASSESSEES REQUEST. RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS ITA NO.351/VIZ/2011 SMT. R. SUHASINI, BHEEMUNIPATNA M 4 TO REFER THE ISSUE TO THE DVO AND THEN ONLY HE CAN ADOPT THE VALUATION UNDER THE PROVISIONS OF SECTION 50C. FOR THIS PURPOSE, W E SET ASIDE THE ORDER OF THE AO AND CIT ON THIS ISSUE AND RESTORE THE COMPUTATIO N OF CAPITAL GAIN TO THE FILE OF THE AO WITH A DIRECTION TO REFER THE ISSUE TO THE VALUATION OFFICER TO CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE AND ADOPT THE FAIR MARKET VALUE ACCORDINGLY. 10. THE APPEAL CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 06.12.2013 SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 6 TH DECEMBER, 2013 COPY TO 1 SMT. R. SUHASINI, C/O SRI C. SUBRAHMANYAM, FCA, 102 , LAKSHMI APARTMENTS, FACOR LAYOUT, WALTAIR UPLANDS, VISAKHAP ATNAM-530 003. 2 DCIT, CENTRAL CIRCLE - 1, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAP ATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM