Mr. Bhawarlal Jawantraj Marlecha, CHENNAI V. DCIT, CHENNAI

ITA 362/CHNY/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73696 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARI RAO
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Cost of acquisition; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. . . . , . ! '# ! '# ! '# ! '# , $ $ $ $ % % % % & & & & BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER . / I.T.A.NO.362/MDS/2012 $ # '# / ASSESSMENT YEARS :2006-07 MR. BHAWARLAL JAWANTRAJ MARLECHA, NO.3, CHANDRAPPA STREET, SOWCARPET, CHENNAI 600 079. [PAN :AACPM5183E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE X, CHENNAI 600 006. ( () () () () / APPELLANT ) ( *+() *+() *+() *+() / RESPONDENT ) ASSESSEE BY : DR. ANITA SUMANTH, ADVOCATE DEPARTMENT BY : SHRI HARI RAO, JCIT ! , -. / DATE OF HEARING : 29.01.2014 /0' , -. /DATE OF PRONOUNCEMENT : 17.02.2014 1 1 1 1 / 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 COMMISSIONER OF INCOME TAX(APPEALS) IV, CHENNAI DAT ED 12.12.2011 RELEVANT TO THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND DOING FINANCE BUSINESS. HE HAS FILED RETURN ADMITTI NG NET INCOME OF ` .2,20,520/-. THE ASSESSMENT WAS INITIALLY PROCESSED UNDER SECTION I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 2 143(1) OF INCOME TAX ACT AND THEREAFTER AFTER FOLLO WING DUE PROCEDURE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED LONG TERM CA PITAL GAINS ON SALE OF PROPERTY AT RAYAPETTAH, CHENNAI AND CALLED FOR THE DETAILS OF COPY OF PURCHASE AND SALE DEED AND PROOF FOR INVEST MENTS MADE IN THE BONDS TO CLAIM THE EXEMPTION OF CAPITAL GAINS ETC. FROM THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS NOTICED THAT THE PROPERTY SOLD WAS OF 0.54 CENTS SITUATED AT ZAMIN PALLAVARAM VILLAGE, TAMBARAM TALUK, KANCHIPURAM DISTRICT AND ACQUIRED B Y THE ASSESSEE BY MEANS OF A WILL DATED 15.07.1972, WHICH DEVOLVED ON HIM W.E.F. 07.03.1973 ON ACCOUNT OF HIS FATHERS DEATH. THIS P ROPERTY WAS SOLD BY THE ASSESSEE ON 11.07.2005 FOR A SUM OF ` .32,40,000/-. WHILE CALCULATING THE CAPITAL GAINS, THE PROPERTY WAS TAK EN AT ` .5,32,000/-, BASED ON THE VALUATION REPORT GIVEN BY SRI S. RAMAM URTHY, REGISTERED VALUER AS THE PROPERTY WAS ACQUIRED BY THE ASSESSEE BEFORE 01.04.1981, THE COST OF THE PROPERTY ADOPTED BY THE ASSESSEE WAS NOT ACCEPTED, SINCE THE PROPERTY UNDER QUESTION IS A VA CANT LAND. SINCE THE LAND WAS ACQUIRED BEFORE 01.04.1981, THE GUIDELINE VALUE AS ON 01.04.1981 IS TO BE ADOPTED AS THE COST OF THE BASE YEAR. THEREFORE, I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 3 THE ASSESSING OFFICER HAS OBTAINED GUIDELINE VALUE OF THE LAND AS ON 01.04.1981 FROM THE SUB-REGISTRAR, PALLAVARAM AND A CCORDINGLY VALUED THE LAND AT ` .25,920/- AND INTIMATED TO THE ASSESSEE FOR FILING OBJECTIONS, IF ANY TO ADOPT THE SAME AS COST OF THE LAND AS ON 01.04.1981. SINCE, THERE WAS NO EXPLANATION/OBJECTI ON FROM ASSESSEES SIDE, THE ASSESSING OFFICER HAS COMPLETED THE ASSES SMENT. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(APPEALS) AND AFTER CONSIDERING SUBMISSIONS/EXPL ANATION OF THE ASSESSEE, CONFIRMED THE ORDER OF THE ASSESSING OFFI CER BY OBSERVING AS UNDER: 4. I HAVE CONSIDERED THE WRITTEN SUBMISSIONS OF T HE ID. AR OF THE ASSESSEE MR. SHREYANS, ACA OF M/S. S.H. BHANDARI & CO. I HAVE ALSO PERUSED THE VALUATION REPORT FILED THE APPELLANT DU RING THE APPEAL PROCEEDINGS. I AM OF THE VIEW THAT THE ASSESSING OF FICER IS CORRECT IN ADOPTING THE FAIR MARKET VALUE AS PER THE RECORDS O F SUB-REGISTRAR FOR THE FOLLOWING REASONS: (A) THE VALUATION AS PER THE SUB-REGISTRAR RECORDS IS MORE AUTHENTIC AND RELIABLE BECAUSE THEY ARE BASED ON THE SALES RE GISTRATIONS DONE IN THAT AREA, THE FAIR MARKET VALUE IS FIXED B Y THE GOVERNMENT. EVEN THOUGH THIS VALUE IS NOT CONCLUSIV E, IT GIVES FAIRLY ACCEPTABLE VALUE. (B) FROM THE VALUATION REPORT PAGE-3, PARA 2.2, IT MAY BE SEEN THAT THE VALUE WAS GIVEN BY THE REGISTERED VALUER BASED ON VERIFICATION, SURVEY, LOCAL ENQUIRIES AND NECESSARY INFORMATION AND EXPLANATION RECEIVED, THE VALUE WAS ADOPTED AS ON 01.04.1981. IN THIS VALUATION REPORT, THE VALUER HA S NOT GIVEN WHAT ARE THE VERIFICATIONS DONE BY HIM AND WHAT ARE THE LOCAL ENQUIRIES CAUSED BY HIM' AND WHAT IS THE NECESSARY A VAGUE ONE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 4 ANOTHER METHOD ADOPTED BY THE REGISTERED VALUER IS REVERSE METHOD BY GOING BACK FROM THE CURRENT RATE TO THE V ALUE AS ON 01.04.1981. THIS METHOD IS NOT ACCEPTABLE BECAUSE T HE LAND PRICES WILL NOT GO ACCORDINGLY TO THE REVERSE METHO D ADOPTED BY THE REGISTERED VALUER. IT IS A MATTER OF COMMON KNO WLEDGE THAT THE PRICES WILL GO UP BY LEAPS AND BOUNDS AND SOMET IMES THE VALUE OF THE LAND MIGHT NOT INCREASE MUCH. IN THESE CIRCUMSTANCES, THE VALUE MENTIONED BY THE SUB-REGIS TRAR OF IMMOVABLE PROPERTY IS THE BEST INDICATOR TO FIND OU T THE FAIR MARKET VALUE AS ON 01.04.1981. (C) THE APPELLANT HAS NOT GIVEN ANY INSTANCE OF SA LE IN THE ADJACENT AREA AS ON 01.04.1981 TO COME TO A CONCLUSION THAT THE FAIR MARKET VALUE AS ON 01.04.1981 IS THE SAME VALUE AS ADOPTED. (D) IN THE CASE OF P. RAMACHANDRAN, HON'BLE ITAT O F CHENNAI, 'A' BENCH, ITA NO.1608/07 DATED 12.12.2008, IT WAS HELD THAT UNLESS THE ASSESSEE GIVES A SALE INSTANCE AS ON 01.04.1981 , THE SUB- REGISTRAR RATE CAN BE TAKEN FOR COMPUTATION OF CAPI TAL GAINS. (E) SIMILAR VIEW AS MENTIONED ABOVE IN (D) ABOVE W AS REITERATED BY HON'BLE CHENNAI ITAT IN THE CASE OF DR. V. RAMACHAN DRAN, ITA NO.310/08 DATED 31.12.2008, 'A' BENCH. (F) IN THE CASE OF MS. THULASI RAJKUMAR, ITA NO.85 5/07, 'A' BENCH DATED 24.10.2008, HON'BLE ITAT OF CHENNAI HAS HELD THAT THE ASSESSING OFFICER IS ENTITLED' TO ADOPT THE GUIDELI NE VALUE WHEN THERE IS NO EVIDENCE SHOWN BY THE ASSESSEE FOR A LE SSER VALUE. 5. IN VIEW OF THE ABOVE, THE ASSESSING OFFICERS V ALUATION ADOPTING THE SUB-REGISTRAR RECORDS IS UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER WITHOUT CONSIDERING THE REGISTERE D VALUERS REPORT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 5 ADOPTED THE SUB-REGISTRARS GUIDELINE VALUE TO DETE RMINE THE FAIR MARKET VALUE IS BAD IN LAW AND THEREFORE, THE VALUE ADOPTED BY THE REGISTERED VALUER HAS TO BE ACCEPTED AS THE COST OF ACQUISITION OF THE PROPERTY AS ON 01.04.1981 OF ` .5,32,000/-. THE GUIDELINE VALUE ADOPTED BY THE ASSESSING OFFICER WAS NOT CORRECT AND SUBMIT TED THE GUIDELINE VALUE OF THE SUB-REGISTRAR IS NOT REGARDED AS FINAL DOCUMENT AND RELIED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF THULASIMANI AMMAL V. CIT [2000]158 CTR (MAD)5. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE ASSESSING OFFICER, AFTER DUE ENQUIRY/VERIFICATION, ADOPTED GU IDELINE VALUE AS PROVIDED BY THE SUB-REGISTRAR, PALLAVARAM AND THERE FORE, THE VALUE ADOPTED BY THE ASSESSING OFFICER IS FOUND TO BE COR RECT AND IT HAS TO BE CONFIRMED. IN SO FAR AS REPORT GIVEN BY THE REGISTE RED VALUER IS NOT BINDING ON THE DEPARTMENT AND HE STRONGLY SUPPORTED THE ORDER PASSED BY THE LOWER AUTHORITIES. HE HAS ALSO SUBMITTED THA T WHILE FINALIZING THE ASSESSMENT, THE ASSESSEE WAS CALLED FOR OBJECTION/E XPLANATION, WHICH WAS NOT RESPONDED. THEREFORE, NOW HE CANNOT RAISE T HE OBJECTION AGAINST THE VALUE ADOPTED BY THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 6 GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE I SSUE INVOLVED IN THIS APPEAL RELATING TO PROPERTY SOLD BY THE ASSESSEE OF 0.54 CENTS SITUATED AT ZAMIN PALLAVARAM VILLAGE, TAMBARAM TALUK, KANCHI PURAM DISTRICT. THE ASSESSEE HAS INHERITED THE PROPERTY THROUGH WIL L DATED 15.07.1972 WHICH WAS DEVOLVED ON HIM WITH EFFECT FROM 07.03.19 73 ON ACCOUNT OF HIS FATHERS DEATH. THIS PROPERTY WAS SOLD BY THE A SSESSEE ON 11.07.2005 FOR A SUM OF ` .32,40,000/-. FOR CALCULATING THE CAPITAL GAINS, THE ASSESSEE HAS TAKEN THE COST OF THE PROPERTY AS ON 01.04.1981 OF ` .5,32,000/-. THE ASSESSING OFFICER HAS NOT AGREED T HE VALUE ADOPTED BY THE ASSESSEE AND CALLED FOR REPORT FROM THE SUB- REGISTRAR, PALLAVARAM AND ACCORDING TO THE REPORT GIVEN BY THE SUB-REGISTRAR, THE ASSESSING OFFICER BEFORE ADOPTING THE COST OF ACQUI SITION AS ON 01.04.1981 AT ` . 25,920/-, CALLED FOR EXPLANATION/OBJECTION, IF AN Y FROM THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT OBJECTE D/EXPLAINED BEFORE THE ASSESSING OFFICER. HOWEVER, ON APPEAL BE FORE THE LD. CIT(APPEALS), THE ASSESSEE STRONGLY OBJECTED THE CO ST ADOPTED BY THE ASSESSING OFFICER AND SUBMITTED THAT WITHOUT CONSID ERING THE VALUATION REPORT GIVEN BY REGISTERED VALUER, ADOPTING GUIDELI NE VALUE OF SUB- REGISTRAR IS BAD IN LAW. HOWEVER, THE LD. CIT(APPEA LS) HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND OBSERV ED THAT THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 7 VALUATION REPORT IS VAGUE AND THEREFORE, HE REJECTE D THE SAME AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER SINCE IT IS NOT BINDING ON THE DEPARTMENT TO ADOPT VALUATION REPORT OF THE REG ISTERED VALUER. WE FIND THAT THERE IS LOT OF VARIATION ON THE GUIDELIN E VALUE FURNISHED BY THE SUB-REGISTRAR AND ADOPTED BY THE ASSESSING OFFICER TO THAT OF THE VALUE ADOPTED BY THE ASSESSEE OF REGISTERED VALUER S VALUATION. IT IS WELL SETTLED LAW THAT THE GUIDELINE VALUE OF THE RE GISTRATION DEPARTMENT REGARDING VALUATION OF THE PROPERTY HAS EVIDENTIARY VALUE AND THEY ARE ONLY INTENDED TO GIVE INFORMATION OR INSTRUCTION TO THE REGISTERING AUTHORITIES BUT THE GUIDELINE VALUE ALONE IS NOT A DECIDING FACTOR. IT HAS TO BE DEPEND UPON VARIOUS FACTS, SUCH AS NATURE OF LAND, LOCATION OF THE LAND, ETC.. THE LD. CIT(APPEALS) HAS OBSERVED THAT IN THE VALUATION REPORT, THE REGISTERED VALUER HAS NOT GIVEN WHAT AR E THE VERIFICATIONS DONE BY HIM, WHAT ARE THE LOCAL ENQUIRES CAUSED BY HIM, WHAT IS THE NECESSARY INFORMATION AND EXPLANATION RECEIVED BY H IM AND SIMPLY STATED THAT THE VALUATION REPORT IS VAGUE. WE FIND THAT THE DEPARTMENT HAS NOT MADE ANY INDEPENDENT INVESTIGATION AND COLL ECTED ANY INFORMATION WITH RESPECT TO ANY SALE TRANSACTION IN NEIGHBOURING LAND FOR DETERMINING THE FAIR MARKET VALUE OF THE LAND A ND SIMPLY ADOPTED THE GUIDELINE VALUE AS PROVIDED BY THE SUB-REGISTRA R AND ACCEPTED BY I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.362 362362 362/M/ /M/ /M/ /M/1 11 12 22 2 8 THE ASSESSING OFFICER FOR DETERMINING THE FAIR MARK ET VALUE, WHICH IN OUR OPINION, IS FOUND TO BE INCORRECT. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND REMIT HE MATTER BACK TO TH E ASSESSING OFFICER AND DIRECT HIM TO EXAMINE AND INVESTIGATE SIMILAR SALE TRANSACTION IN NEARBY AREA OF ASSESSEES LAND FOR DETERMINING THE FAIR MA RKET VALUE AS ON 01.04.1981 AND DECIDE THE ISSUE AFRESH AFTER ALLOWI NG SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 17 TH OF FEBRUARY, 2014 AT CHENNAI. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE-PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 17.02.2014 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.