M/S Malvika Agrotech Pvt. Ltd., Dhar V. THE ITO-2(2), Indore

ITA 358/IND/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0565 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: C P RAWKA
• Keywords: Gross profit estimation; Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Opportunity of being heard; Additional evidence; Cost of acquisition; Fair market value; Valuation report; Unabsorbed depreciation
• Section: 143(3); 50C; 68; 148

Judgement Text

MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.358/IND/2016 ASSESSMENT YEAR: 2009-10 REVENUE BY S HRI P.K. MITRA, SR. DR ASSESSEE BY SHRI C.P. RAWKA ,CA DATE OF HEARING 1 0.09. 2018 DATE OF PRONOUNCEMENT 19 . 9 .2018 O R D E R PER MANISH BORAD, AM. THIS APPEAL FILED BY THE ASSESSEE PERTAINING TO A.Y . 2009-10 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX(APPEALS)-I, INDORE, (IN SHORT CIT(A)), VIDE A PPEAL NO. IT- 29/2014-15 ORDER DATED 29.01.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINA FTER CALLED AS THE ACT) FRAMED ON 29.03.2014 BY ITO-2(2), INDOR E. M/S MALVI KA AGROTECH PVT. LTD, PLOT NO.185, SECTOR-1, PITHAMPUR, DHAR ITO, 2(2 ), INDORE ( APPELLANT ) (RESPONDENT ) PAN NO.AA CCM6451G MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 2 2. BRIEFLY STATED THE FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. INCOME O F RS.25,48,889/- DECLARED IN THE RETURN OF INCOME FIL ED ON 30.9.2009. SUBSEQUENTLY ON THE BASIS OF AIR INFORMATION REVEAL ING THAT THE ASSESSEE HAS SOLD IMMOVEABLE PROPERTIES WORTH RS.55 ,96,000/- AND RS.37,76,000/- ON 24.10.2008 AND 23.01.2009 RESPECT IVELY AND ALSO MADE CERTAIN INVESTMENT IN MUTUAL FUNDS, THE LD.A.O IN ORDER TO EXAMINE THESE TRANSACTIONS, ISSUED NOTICE U/S 1 48 OF THE ACT ON 4.5.2012 DULY SERVED UPON THE ASSESSEE. NECESSARY DETAILS AS CALLED FOR WERE FILED. APART FROM THE ADDITIONS FO R LOW GROSS PROFIT AS WELL AS ADDITION U/S 68 OF THE ACT, ADDITION WAS A LSO MADE FOR SHORT TERM CAPITAL GAIN COMPUTED AFTER APPLYING PRO VISION OF SECTION 50C OF THE ACT AT RS.78,04,301/-. IT WAS CO NTENDED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT NO ADDIT ION SHOULD BE MADE U/S 50C OF THE ACT BY WAY OF APPLYING THE VALU E ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE ALLEGED INDUST RIAL LAND WAS A DISPUTED LAND AND WAS ENCROACHED BY OTHER PERSONS. DUE TO THIS REASON THE ALLEGED PROPERTY WAS SOLD AT A VALUE LES S THAN THE FAIR MARKET VALUE. BUT THE ASSESSING OFFICER WAS NOT CO NVINCED WITH THIS STATEMENT AND HE WITHOUT REFERRING TO THE DEPA RTMENTAL VALUATION OFFICER FOR VALUATION OF IMPUGNED LAND CO MPUTED THE MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 3 SHORT TERM CAPITAL GAIN U/S 50C OF THE ACT AND MADE THE ADDITION. INCOME WAS ASSESSED AT RS.54,59,521/- IN FOLLOWING MANNER; INCOME SHOWN AS PER COMPUTATION OF INCOME ADD: SHORT TERM CAPITAL GAIN U/S 50C AS DISCUSSED ABOVE ADDITION ON A/C OF LOW GP ADDITION ON U/S 68 AS DISCUSSED ABOVE RS.38,64,60/ - RS.78,04,301/- RS. 2,00,000/- RS. 20,09,500/- TOTAL INCOME ASSESSED LESS: UNABSORBED BUSINESS LOSES OF EARLIER YEARS RS.3319385/- UNABSORBED DEPRECIATION OF EARLIER YEARS RS.5099501/- RS.1,38,78,807/ - RS. 84,18,886/- NET TAXABLE INCOME RS.54,59,521/ - 3. AGGRIEVED ASSESEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND PARTLY SUCCEEDED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL RAISING SOLE ISSUE RELATING TO THE ADDITION FOR SHORT TERM CAP ITAL GAIN ON SALE OF LAND AT RS.78,04,301/- RAISING FOLLOWING GROUND; THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY THE A.O ON ACCOUNT OF SHORT TERM C APITAL GAIN ON SALE OF LAND AT RS.78,04,301/- WITHOUT CONSIDERING THE F ULL FACTS 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE RELY ING ON THE DECISION OF I.T.A.T., INDORE BENCH IN THE CASE OF S ADHANA SHARMA I.T.A.NO. 396/IND/2016 DATED. 26.7.18 SUBMITTED THA T BOTH THE LOWER AUTHORITIES ERRED IN NOT REFERRING THE MATTER TO THE MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 4 DEPARTMENTAL VALUATION OFFICER FOR THE VALUATION OF FAIR MARKET PRICE OF THE INDUSTRIAL LAND EVEN WHEN THE ASSESSEE RAISE D THE OBJECTION BEFORE THE LOWER AUTHORITIES SUBMITTING THAT THE AL LEGED INDUSTRIAL LAND WAS ENCROACHED BY THE PERSONS AND EVEN AFTER UNSUCCESSFULLY TRYING TO TAKE POSSESSION OF THE PROPERTY BY RESOR TING TO LEGAL ACTION THERE WAS NO OPTION LEFT WITH THE ASSESSEE EXCEPT TO SALE THE PROPERTY. 6. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE S UPPORTED THE ORDERS OF LOWER AUTHORITIES AT LOWER PRICES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORDS PLACED BEFORE US AND GONE THROUGH THE DECIS ION RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. 8. THE SOLE ISSUE RAISED BY THE ASSESSEE RELATES TO THE SHORT TERM CAPITAL GAIN ADDITION AT RS.78,04,301/- MADE BY THE LD.A.O BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT THERE BY CALCULATING THE SALE CONSIDERATION OF THE INDUSTRIAL LAND SOLD BY THE ASSESSEE ON THE BASIS OF THE VALUE ADOPTED BY THE STAMP VALUATI ON AUTHORITIES. IT IS NOT DISPUTED THAT SALE DEED HAVE BEEN REGISTE RED AND HAVE BEEN SIGNED BY THE ASSESSEE. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT EVEN WHEN THE OBJECTION WAS RAISED BEFORE BOTH THE LOWER AUTHORITIES STILL THE ADDITION HAVE BEEN MADE U/S 5 0C OF THE ACT EVEN WHEN AS PER THE PROVISIONS OF THE ACT THE ASSE SSING OFFICER SHOULD HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER TO VALUE THE ALLEGED PROPERTY. WE FIND THA T THE LD.CIT(A) CONFIRMED THE ADDITION OBSERVING AS UNDER; MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 5 8. GROUND NOS. 4 & 5 :- BY THESE GROUNDS THE APPELLANT HAS CHALLENGED THE ADDITION OF RS. 7804301/ - BEING STC G ADDED BY INVOKING SECTION 50C OF THE INCOME TAX ACT, 1961 . THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT OR DER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED WRIT TEN SUBMISSIONS OF THE APPELLANT ARE REPRODUCED AT PARA NO.3 ABOVE. 8.1 BRIEFLY STATED THE FACTS ARE THAT FOR THE YEAR UNDE R CONSIDERATION THE AO NOTED THAT THE APPELLANT HAS S OLD IMMOVABLE PROPERTIES ON 24/10/2008 AND 23/01/2009 F OR RS.987000/- & RS.658000/-. AS PER THE SALE DEED THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IN RESPECT OF THE ABOVE PROPERTIES WAS RS.5596000 / - AND RS.3776000 / - RESPECTIVELY. APPELLANT HAD NOT SHOWN ANY CAPITAL G AIN ON THE ABOVE TRANSACTION. THE AO THEREFORE ASKED THE APPEL LANT TO SHOW CAUSE AS TO WHY THE STCG AS PER PROVISION OF S ECTION 50C OF THE INCOME TAX ACT, 1961 OF RS. 7804301/ - N OT BE ASSESSED FOR THE YEAR UNDER CONSIDERATION. APPELLAN T CONTENDED THAT PROVISION OF SECTION 50C WERE NOT AP PLICABLE AS THE ASSET WAS A BUSINESS ASSET BEING INDUSTRIAL LAND . APPELLANT ALSO CONTENDED THAT THE TRANSACTION WAS NOT ENTERED IN THE BOOKS OF ACCOUNTS AS REPRESENTATIVE OF THE COMPANY WHO PARTICIPATED IN THE AUCTION OF THE SAID LAND DID NO T INFORM THE COMPANY AND MADE THE PAYMENT OUT OF FUNDS OF SPEED AUTOMOBILE. FURTHER AFTER PURCHASE IT WAS NOTICED B Y HIM THAT THE LAND WAS DISPUTED AND SO THE SAID LAND WAS SOLD TO TWO DIFFERENT PURCHASERS. AS A RESULT OF THIS BOTH THE PURCHASE AND SALE OF THE LAND WAS NOT COMMUNICATED TO THE APPELL ANT COMPANY AND HENCE NECESSARY ACCOUNTING EFFECTS WAS NOT MADE IN THE BOOKS OF ACCOUNTS. APPELLANT ALSO FILED VARI OUS PAPERS IN SUPPORT OF THE CONTENTION THAT THE LAND I N QUESTION MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 6 WAS DIVERTED FOR INDUSTRIAL USE AND WAS THUS USED F OR BUSINESS PURPOSES AND HENCE WAS NOT COVERED BY PROV ISIONS OF SECTION 5 OC OF THE INCOME TAX ACT, 1961. IT WAS ALSO ARGUED THAT AS THE TITLE WAS DISPUTED THE LAND WAS SOLD IM MEDIATELY AT ALMOST COST PRICE. AO HOWEVER, STATED THAT THE A BOVE ARGUMENTS WERE NOT TENABLE AS THE REGISTRY/DEED WER E UNDER THE' NAME AND SEAL OF THE COMPANY AND PART OF THE L AND STILL CONTINUED IN THE NAME OF THE COMPANY. AO ALSO NOTED THAT THE APPELLANT DID NOT CARRY OUT ANY BUSINESS ACTIVI TY ON THE SAID LAND, AND SOLD THE LAND VERY QUICKLY AND THERE FORE IT CANNOT BE SAID THAT IT WAS A BUSINESS ASSET OF THE APPELLANT OR THAT THERE WAS DISTRESS SALE. 8.2 FROM THE MATERIAL ON RECORD IT IS THUS EVIDENT THAT THE APPELLANT HAS NOT SHOWN ANY CAPITAL GAINS ON THE SA LE OF THE ABOVE TWO IMMOVABLE PROPERTIES. THE CONTENTION OF T HE APPELLANT IS THAT BECAUSE OF THE NON COMMUNICATION OF THE PURCHASE AND SALE TRANSACTION BY THE REPRESENTATIVE ACCOUNTING EFFECT IN THE BOOKS OF ACCOUNTS WERE NOT MADE. THIS CAN HARDLY BE CONSIDERED AS A VALID REASON FOR NOT SHOWING THE CAPITAL GAINS. IT IS AN ADMITTED POSITI ON THAT THE REGISTERED DOCUMENTS WERE IN THE NAME OF THE COMPAN Y AND ALSO PART OF THE LAND STILL CONTINUED IN THE NAME O F THE COMPANY. THUS AS PER THE LEGAL PROVISIONS THE OWNER SHIP WAS OF THE APPELLANT COMPANY. THE CONTENTION THAT THE L AND WAS BUSINESS ASSET AND HENCE PROVISIONS OF SECTION 5 OC ARE NOT ATTRACTED IS ALSO NOT ESTABLISHED. IT IS AN ADMITTE D FACT THAT THE LAND IN QUESTION IS A CAPITAL ASSET AND IS NOT A PART OF THE STOCK IN TRADE OF THE APPELLANT COMPANY AND HENCE I S COVERED BY THE PROVISIONS OF SECTION SOC. IN THE CASE OF INDERLOK HOTELS(P) LTD. VS. ITO THE ITAT MUMBAI BENCH I 32 S OT 419 (MUMBAI) HAS HELD AS UNDER:- AS PER THE LEGISLATIVE HISTORY, SECTION 5OC WAS IN SERTED IN THE ACT BY MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 7 THE FINANCE ACT, 2002 WITH EFFECT FROM 1-4-2003 AND IT IS IN THE NATURE OF SPECIAL PROVISION WHICH IS INTRODUCED IN DETERMINING THE FULL VALUE OF THE CONSIDERATION IN CASE OF TRANSFER OF L AND OR BUILDING OR BOTH. THE VALUE DETERMINED OR ASSESSED BY ANY AUTHORITY OF THE STATE GOVERNMENT FOR PURPOSE OF PAYMENT OF STAMP DU TY IN RESPECT, OF SUCH REGISTRATION OF CONVEYANCE DEED WOULD BE D EEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. IT BECOMES APPARENT THAT THE SAID SECTION SPECIFICALLY DEALS WITH THE TRANSFER OF THE 'CAPITAL ASSET', BEING LAN D OR BUILDING OR BOTH AND IT PROVIDES FOR REPLACING THE VALUE ADOPTED OR ASSESSED FOR THE PURPOSE OF STAMP DUTY, UNDER SECTION 48 IN PLACE OF VALUE OR SALE CONSIDERATION SHOWN BY THE ASSESSEE. SO FAR AS SECTION 5OC IS CONCERNED THE LANGUAGE OF THE SAID SECTION IS SO CLEAR IN RESPECT OF ITS INTENTION THAT IT IS BROUGHT ON THE STATUTE BOOK BY WAY OF DEEMING PROVISION IN THE NATURE OF THE EXPLANATION TO SECTI ON 48. MOREOVER, IT IS ABUNDANTLY CLEAR FROM THE EXPLANATION GIVEN IN THE CBDT CIRCULAR NO. 8 OF 2002, DATED 27-8-2002 THAT THE BASIC INTENTION T O INSERT SECTION 5OC WAS FOR THE PURPOSE OF DETERMINING FULL VALUE OF SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAINS UNDER SECTION 48. THERE SHOULD NOT BE ANY CLOUD OF DOUBT THAT SECTION 5OC HAS APPLICATION ONLY TO THE EXTENT OF DETERMINING S ALE CONSIDERATION FOR COMPUTATION. OF CAPITAL GAIN UNDER CHAPTER JV-E OF THE ACT AND I T CANNOT BE APPLIED FOR DETERMINING THE INCOME UNDER OTHER HEADS. THEREFORE, WHEN, ADMITTEDLY, IN THE INSTANT CASE TH E SALE OF THE FLATS WAS TREATED AS THE BUSINESS INCOME AND NOT AS A CAP ITAL GAIN, THE PROVISION OF SECTION 5OC WAS NOT APPLICABLE.' SAME VIEW HAS BEEN TAKEN BY THE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. THIRUVENGADAM INVESTMENT (P.) LTD. 320 ITR 345. IN THE CASE OF ITO VS. UNITED MARINE ACADEMY FOLLOWING OBSERVATION HAVE BEEN MADE. 'THE MAIN ISSUE FOR CONSIDERATION IN THE INSTANT CASE WAS AS TO WHETHER IN A CASE WHERE CAPITAL GAIN ARISING FROM T HE TRANSFER OF MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 8 DEPRECIABLE ASSET IS COMPUTED AS PER THE SPECIAL PROVISIONS CONTAINED IN SECTION 50, THE PROVISIONS OF SECTION 50C CAN BE APPLIED SO AS TO ADOPT THE VALUE ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY TO BE THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. [PARA 11] THERE ARE TWO DEEMING FICTIONS CREATED IN SECTION 5 O AND SECTION 5OC. THE FIRST DEEMING FICTION MODIFIES THE TERM 'COST OF ACQUISITION' USED IN SECTION 48 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS ARISING FROM TRANSFER OF DEPRECIABLE ASSETS WHERE AS THE DEEMINQ FICTION CREATED IN SECTION 5OC MODIFIES THE TERM 'F ULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF THE CAPITAL ASSET USED IN SECTION 48 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS ARISING FROM THE TRANSFER OF CAPITAL A SSET BEING LAND OR BUILDING OR BOTH. THE DEEMING FICTION CREATED IN SE CTION 5 OC THUS OPERATES IN A SPECIFIC FIELD WHICH IS DIFFERENT FROM THE FIELD WHICH SECTION 50 IS APPLICABLE. IT WAS THUS NOT A CASE WHERE ANY SUPPOS ITION HAD BEEN SOUGHT TO BE IMPOSED ON OTHER SUPPOSITION OF LAW. THERE ARE TWO DIFFERENT FICTIONS CREATED INTO TWO DIFFERENT P ROVISIONS AND GOING BY THE LEGISLATIVE INTENTIONS TO CREATE THE SAID FICTI ONS, THE SAME OPERATE IN DIFFERENT FIELDS. THE HARMONIOUS INTERPRETATION. OF THE RELEVANT PROVISIONS MAKES IT CLEAR THAT THERE IS NO EXCLUSION OF APPLICABILITY OF ONE FICTION IN A CASE WHERE OTHER FICTION IS APPLICABLE. AS A MATTER OF FACT, THERE IS NO CONFLICT BETWEEN THESE TWO LEGAL FICTIONS WHICH OP ERATE IN DIFFERENT FIELDS AND THEIR APPLICATION IN A GIVE N CASE SIMULTANEOUSLY DOES NOT RESULT IN IMPOSITION OF SUPPOSITION ON OTHER SU PPOSITION OF LAW. THE ASSESSING OFFICER THUS WAS RIGHT IN APPLYI NG THE PROVISION OF SECTION 5 OC TO THE TRANSFER OF DEPRECIABLE CAPITAL ASSETS COVERED BY SECTION 50 AND IN COMPUTING THE CAPITAL GAIN ARISING FROM THE S AID TRANSFER BY ADOPTING THE STAMP DUTY VALUATION. [PAR A 20]' IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME-TAX , CO. CIRCLE IV(3), CHENNAI VS. MIL INDUSTRIES LTD. 142 ITD 428 IT HAS BEEN HELD AS UNDER:- MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 9 'WHETHER WHATEVER MAY BE PROBLEMS SUFFERED BY AN ASSESSEE, IN REALITY THOSE REASONS CANNOT BE PERMITTED TO GO BEY OND SCOPE OF SECTION 5 OC _ HELD, YES _ WHETHER, THEREFORE, MISFORTUNES HAPPENED TO ASSESSEE OR DIFFICULTIES FACED BY ASSESSEE OR MATTER OF DISTRESS SALES, ETC., CANNOT BE A GROUND TO MODIFY VALUATION - HELD, YES' CONSIDERING THE ABOVE FACTS AND THE LEGAL POSITION IT IS SEEN THAT THE APPELLANT COMPANY HAS ADMITTED THAT THE LA ND IN QUESTION WAS NOT STOCK IN TRADE AND WAS A CAPITAL A SSET HENCE IT WAS WELL COVERED BY THE PROVISIONS OF SECTION 5O C OF THE INCOME TAX ACT, 1961. THE APPELLANT COMPANY HAS NOT DISPUTED THE VALUE ADOPTED BY THE STAMP VALUATION A UTHORITY AND HAS ALSO NOT OBJECTED TO THE ADOPTION OF THE SA ME BY THE AO. IN VIEW OF THE ABOVE THE COMPUTATION OF STCG AT RS.7804301/- MADE BY THE AO IS UPHELD IN APPEAL. TH ESE GROUNDS OF THE APPELLANT ARE THEREFORE DISMISSED. 9. WE FURTHER FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FILED THE SUBMISSIONS OBJECT ING THE LEVY OF CAPITAL GAIN PLEADING THAT THE LAND WAS AN INDUSTRIAL LAND AND WAS DISPUTED AND THE REGISTRY DOCUMENTS WE RE SIGNED UNDER THE NAME AND SEAL OF THE COMPANY TO BU Y PEACE JUST TO GET RID OF THE DISPUTED PROPERTY NO MATTER THE CONSIDERATION IS LESS THAN THE FAIR MARKET PRICE. 10. THEREAFTER WHEN THE MATTER CAME UP BEFORE THE LD.CIT(A), ASSESSEE MADE FOLLOWING SUBMISSION:- GROUND NO.4&5: LD. AO HAS ASSESSED SHORT TERM CAP ITAL GAIN U/S 50C AMOUNTING TO RS.7804301/- WITHOUT APPRECIAT ING THAT THE PROPERTY SOLD BY THE ASSESSEE WAS THE BUSINESS ASSET IN THE BOOKS OF ASSESSEE, IN FACT, THE PROPERTY APPEARED IN THE BALANCE SHEET OF THE ASSESSEE SINCE THE DAY OF ITS ACQUISITION IN A AUCTION _ ~ MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 10 BUT ASSESSEE COULD NOT GET ITS POSSESSION WITH CLEAR TITLE UP TO THE DATE IT WAS DISPOSE OFF. THE ASSESSEE HAS MADE A SUC CESSFUL BID IN A AUCTION CONDUCTED BY THE COMMERCIAL DEPARTMENT WH ICH WAS ATTACHED AGAINST COMMERCIAL TAX RECOVERY AGAINST TH E DEFAULTER OWNER OF THE PROPERTY. THE ASSESSEE GOT THE TITLE TRA NSFERRED BY VIRTUE OF ABOVE AUCTION. BUT TO HIS SURPRISE, HE COU LD NOT GET THE POSSESSION AS THE SAID PROPERTY WAS UNDER ENCROACHM ENT AND DISPUTE WITH OTHER PARTIES. THE ASSESSEE UNSUCCESS FULLY TRIED TO TAKE POSSESSION OF THE PROPERTY BY RESORTING TO LEGA L ACTION AGAINST THE ENCROACHER WHO WAS HOLDING ADVERSE POSSESSION. WHEN LEGAL BATTLE DID NOT GIVE FRUITFUL RESULTS, THE ASSESSEE HAD TO MADE DISTRESS SALE OF THE PROPERTY. YOUR HONOUR MAY APP RECIATE THAT NO PROPERTY WILL FETCH MARKET VALUE IT CARRIES DISPUTE WITH IT. IN SUCH CIRCUMSTANCES, THE LD. ASSESSING OFFICER ERRED IN A SSESSING STCG BY INVOKING SECTION. 50C. 11. THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE BEF ORE THE LOWER AUTHORITIES REVEALS THAT THE OBJECTION HAS BE EN RAISED BY THE ASSESSEE CHALLENGING THE VALUE ADOPTED BY THE A SSESSING OFFICER TO COMPUTE THE SHORT TERM CAPITAL GAIN. IT SEEMS THAT THE LD. ASSESSING OFFICER HAS DIRECTLY RESORTE D TO IMPOSE THE PROVISIONS OF SECTION 50C WITHOUT EVEN CALLING FOR A DEPARTMENTAL VALUATION OFFICERS REPORT WHEN THE VA LUE SO ADOPTED BY THE STAMP VALUATION AUTHORITIES HAS BEEN CHALLENGED BY THE ASSESSEE. EVEN WHEN THE MATTER C AME UP BEFORE LD.CIT(A), HE EVEN WHEN HAVING CO-TERMINUS P OWER AS THAT OF THE ASSESSING OFFICER DID NOT REFER THE MAT TER FOR VALUATION TO DVO. 12. WE FIND THAT SIMILAR SET OF FACTS CAME BEFORE U S IN THE CASE OF SADHANA SHARMA VS. ITO-2(4), INDORE, MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 11 I.T.A.NO.396/IND/97 (SUPRA) WHEREIN WE HAVE DIRECTED THE LD.CIT(A) FOR EXAMINING THE ADDITIONAL EVIDENCES AN D ALSO DIRECTED HIM TO MAKE DUE REFERENCE TO THE DVO FOR V ALUING THE IMPUGNED LAND, OBSERVING AS FOLLOWS; 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED REC ORDS PLACED BEFORE US. THE ASSESSEE, APART FROM CHALLENGING THE ADDITI ON OF SHORT TERM CAPITAL GAIN CONFIRMED BY LD. CIT(A) HAS ALSO CHALL ENGED THE ACTION OF LD.CIT(A) OF REJECTING THE ASSESSEES APPLICATION F OR ADMISSION OF ADDITIONAL EVIDENCE. 9. WE OBSERVE THAT IN THE INSTANT APPEAL THE ISSUE RELATES TO THE ADOPTION OF MARKET VALUATION AS PER STAMP DUTY VALUATION AUT HORITY BY THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SEC TION 50C OF THE ACT WHEREAS THE SALE CONSIDERATION SHOWN IN REGISTERED SALE DEED WAS LESS THAN THE VALUE ADOPTED BY THE ASSESSING OFFICER. D UE TO THIS REASON THE ADDITION OF SHORT TERM CAPITAL GAIN OF RS.25,32,495 /- HAS BEEN CONFIRMED BY BOTH THE LOWER AUTHORITIES. WE FIND T HAT THE ASSESSEE DID NOT RAISE ANY OBJECTION AGAINST THE ADOPTION OF MARKET VALUE BY DEPARTMENTAL VALUATION OFFICER BEFORE THE ASSESSIN G OFFICER TO MAKE REFERENCES TO DEPARTMENTAL VALUATION OFFICER (IN S HORT DVO) NOR HE FILED ANY VALUATION REPORT FROM ANY OTHER REGISTERED VALU ER. HOWEVER WHEN THE ASSESSEE CAME UP IN APPEAL BEFORE LD.CIT(A) THE APP LICATION FOR ADMISSION OF ADDITIONAL EVIDENCE WAS FILED IN ORDER TO PROVE THE POOR LOCATION OF THE IMPUGNED LAND BEING NEAR TO NALLAH WHICH AFFECTS THE MARKET VALUE OF THE LAND. THE ASSESSEE HAS ALSO SU BMITTED SALE DEEDS OF THE LANDS IN THE IMMEDIATE VICINITY OF THE IMPUGNED LAND WHERE THE MARKET PRICE ADOPTED BY THE STAMP VALUE AUTHORITY A RE ALMOST AT PAR WITH THE SALE CONSIDERATION SHOWN BY THE ASSESSEE. THESE ADDITIONAL EVIDENCES WERE REJECTED BY LD.CIT(A) ONLY FOR THE R EASONS THAT THE ASSESSEE COULD NOT GIVE ANY POSSIBLE REASON FOR BEI NG FAILED TO PROVIDE THE SAME DURING THE ASSESSMENT PROCEEDINGS. FROM THE P ERUSAL OF THE JUDGMENT REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE WE MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 12 OBSERVE THAT THE HONBLE HIGH COURT OF BOMBAY IN T HE CASE OF RALLIES INDIA LTD V/S CIT (APPEALS) ADJUDICATING THE ISSUE AS TO WHERE THE ASSESSING OFFICER FAILS TO MAKE ENQUIRY U/S 55A BY PASSING THE ASSESSMENT ORDER, CAN THE COMMISSIONER OF APPEALS D URING THE APPELLATE PROCEEDINGS BEFORE HIM CAN MAKE SUCH AN ENQUIRY BY MAKING REFERENCE TO DEPARTMENTAL VALUATION OFFICER EITHER HIMSELF OR DIRECT THE ASSESSING OFFICER TO DO SO IN TERMS OF SECTION 250(4) OF THE ACT AND HONBLE COURT HOLDING IN FAVOUR OF THE ASSESSEE TAKING SUPPORT F ROM THE VIEW TAKEN BY HONBLE APEX COURT IN THE CASE OF CIT VS KANPUR CO ALS SYNDICATE (1964) 53 ITR 225 WHEREIN THE HONBLE APEX COURT HELD THA T IT IS UNDISPUTED THAT THE POWER OF CIT (APPEALS) IS CO TERMINUS WITH THAT OF ASSESSMENT OFFICER, IN FACT THE CIT (APPEALS) CAN DO WHAT THE ASSESSING OFFICER CAN DO. 10. SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE HIGH OF GUJARAT IN THE CASE OF CIT VS AHMEDABAD PRINCIPALCOMPANIES (1994) 76 TAXMANN.COM 109(GUJARAT) HOLDING THAT IT WAS OPEN TO THE ATO C ONSIDER ON MERITS CONTENTIONS RAISED IN AN APPEAL, ON AN ASPECT WHICH WAS NEVER BEFORE ITO AND WITH WHICH THE ASSESSEE NEVER AGREED. 11. COMING TO THE FACTS OF THE INSTANT APPEAL AND E XAMINING THEM IN THE LIGHT OF ABOVE JUDGMENTS WE FIND THAT THE ASSESSEE FAILED TO RAISE OBJECTION BEFORE THE ASSESSING AUTHORITY ABOUT THE ADOPTION OF STAMP AUTHORITY VALUATION BUT SUBSEQUENTLY RAISED THE ISS UE BEFORE LD. CIT(APPEALS). SPECIFIC GROUND WAS ALSO RAISED FOR ADMITTING OF ADDITIONAL EVIDENCE AND OBJECTED THE MARKET VALUE ADOPTED BY T HE ASSESSING AUTHORITY BUT LD. CIT(A) CASUALLY BRUSHED ASIDE THI S APPLICATION. WE THEREFORE IN THE GIVEN CIRCUMSTANCES OF THE CASE AN D IN THE INTEREST OF JUSTICE AND FAIR PLAY ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE AS I T IS WELL WITHIN HIS POWERS PROVIDED IN SECTION 250 OF THE ACT AND SHOUL D HAVE MADE DUE REFERENCES TO THE DEPARTMENTAL VALUATION OFFICER FO R VALUING THE IMPUGNED LAND. WE THEREFORE ACCEPT THE ADDITIONAL EVIDENCE AND SET ASIDE ALL THE ISSUES RAISED IN THIS APPEAL TO THE F ILE OF LD.CIT(A) TO MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 13 EXAMINE THE ADDITIONAL EVIDENCE FILED BY THE ASSESS EE AND DECIDE ACCORDINGLY AS PER PROVISIONS OF LAW. NEEDLESS TO MENTION THAT REASONABLE OPPORTUNITY SHOULD BE PROVIDED TO THE AS SESSEE. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES 13. WE THEREFORE FOLLOWING OUR OWN JUDGMENT IN TH E CASE OF SADHANA SHARMA VS. ITO-2(4), INDORE, I.T.A.NO.396/I ND/97 (SUPRA) ARE OF THE CONSIDERED VIEW THAT THE INSTANT APPEAL IS ALSO HAVING SIMILAR SET OF FACTS AND THEREFORE DIRECT TH E LD.CIT(A) TO ADJUDICATE THIS ISSUE AFRESH AFTER PROCURING THE VA LUATION REPORT FROM THE DEPARTMENTAL VALUATION OFFICER ABOUT THE F AIR MARKET VALUE OF THE IMPUGNED INDUSTRIAL LAND SITUATED AT B HAGIRATHPURA INDUSTRIAL AREA, INDORE AS ON THE DATE OF SALE AND ALSO AFTER APPRECIATING THE DOCUMENTS PLACED AT PAGE 34 TO 41 OF THE PAPER BOOK WHICH ARE RELATED TO THE UNAUTHORIZED POSSESSI ON OF THE INDUSTRIAL LAND OWNED BY THE ASSESSEE AND THE LITIG ATION CARRIED BETWEEN THE ASSESSEE AND OTHER PARTIES. NEEDLESS T O SAY THAT A PROPER OPPORTUNITY OF BEING HEARD SHOULD BE GIVEN T O THE ASSESSEE TO FURNISH NECESSARY DOCUMENTS AND DETAILS OF THE P ROPERTY TO THE DEPARTMENTAL VALUATION OFFICER AS WELL AS LD.CIT(A) . 14. IN THE RESULT THIS GROUND OF APPEAL OF THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.9.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER MALVIKA AGROTECH PVT. LTD ITA NO.358/IND/2016 14 / DATED : 19 TH SEPTEMBER, 2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE