SHRI C. THANGARAJ, TIRUPUR V. PCIT-3, , COIMBATORE

ITA 382/CHNY/2020

AI Insights

The case revolves around the appeal by C. Thangaraj against the order of the Principal Commissioner of Income Tax - 3, Coimbatore, which set aside the original assessment order and directed a re-assessment. The original assessment did not tax the sale of agricultural lands beyond 7 km from Tirupur Municipal Corporation limits. However, the PCIT found that the guideline values of these lands were not adopted in the assessment, leading to a significant underreporting of capital gains. The Tribunal dismissed the appeal, agreeing with the PCIT that the original assessment was erroneous as it did not consider the guideline values as per section 50C(1) of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134973 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 16-02-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Revision of order; Opportunity of being heard; Reasonable cause; Assessment record; Condonation of delay; Set aside; Capital Gains
• Section: 56; 263; 143(3); 2(14); 143(2); 264

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.382/Chny/2020 िनधाŊरण वषŊ/Assessment Year: 2014-15 C. Thangaraj, No. 1, Vaikkal Thottam, Palladam Road, Tirupur 641 604. [PAN:ABTPT5217E] Vs. The Principal Commissioner of Income Tax - 3, Coimbatore. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : None ŮȑथŎ की ओर से/Respondent by : Shri V. Nandakumar, CIT सुनवाई की तारीख/ Date of hearing : 13.09.2023 घोषणा की तारीख /Date of Pronouncement : 21.09.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax-3, Coimbatore, dated 27.03.2019 relevant to the assessment year 2014-15. 2. The appeal filed by the assessee is delayed by 264 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay in support of an affidavit by stating as under: The original assessment of Sri C. Thangaraj (PAN: ABTPT5217E) for the assessment year 2014-15 was passed on 22.12.2016 by Income Tax Officer 2(1) wherein the sale of agricultural lands stated to be situated beyond 7 kms. I.T.A. No. 382/Chny/20 2 from Tirupur Municipal Corporation limits was not taxed. The above order was subjected to revision u/s 263 by the Principal Commissioner of Income Tax – 3, Coimbatore for the reason that the guideline value of the agricultural lands were not adopted by the assessing officer and has set aside the assessment order with the direction to redo the assessment as per law considering the facts of the case. The above order of Principal Commissioner of Income Tax dtd. 27.03.2019 was received by the assessee on 30.03.2019. Since in the original assessment, there was no assessment of capital gains on sale of agricultural lands and as the Principal Commissioner of Income tax has directed to redo the assessment as per law, I was under the impression that even if guideline value is adopted as deemed sale consideration the same would be out of tax net, being the agricultural lands situated beyond the limits contemplated u/s 2(14) of the Income Tax Act. I was also under the impression when the guideline value is substituted for the sale consideration, the purchase value also to be substituted by guideline value in which case there would not be any taxable gain but it would result in loss only. Because of the above facts I have not advised for appeal against the order of Principal Commissioner of Income Tax u/s 263. In the assessment order passed on 11.12.2019, the officer has simply taken the guideline value as sale consideration and levied huge tax on short term capital gain, without verifying the distance of agricultural lands and without taking the guideline value towards purchase consideration. I have advised to file appeal against the order of Principal Commissioner of Income Tax u/s 263 though it is delayed. When the appeal was taken up for hearing, none appeared on behalf of the assessee,. However, by filing detailed written submissions towards condonation of delay as well as affidavit filed by the ld. Counsel for the assessee, it was stated there was reasonable cause for the delay and the delay in filing the appeal is neither wilful nor wanton. It was prayed for condonation of delay and to admit the appeal for adjudication. Against the above written submissions of the assessee, the ld. DR has not raised any serious objection. Considering the petition filed in support of an affidavit I.T.A. No. 382/Chny/20 3 for condonation of delay, the delay stands condoned and admits the appeal for adjudication. 3. Brief facts of the case are that the assessee is an individual, partner in firms and prop: of Key Tex Hosieries, filed his return of income on 26.05.2015 admitting an income of ₹.6,40,230/-. The case was selected for scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was issued on 27.07.2016 and served. After considering the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 22.12.2016. 4. Subsequently, the ld. PCIT, by exercising powers conferred under law, a notice under section 263 of the Act dated 07.03.2019 was issued to the assessee by observing that on verification of the assessment records reveals that the assessment order passed under section 143(3) of the Act appears to be erroneous and in so far as it is prejudicial to the interest of Revenue due to the following reasons: 2.1 You have sold an immovable property during the year relevant to the assessment year 2014-15 for a sale consideration of ₹.3,23,05,500/- to Shri K. Vasudevan and another property to Smt. V. Karpagam for a sale consideration of ₹.92,38,900/-. 2.2 On verification of the records and the order u/s. 143(3) dated 22.12.2016, it is seen that the value of the properties are adopted at ₹.3,23,500/- and ₹.92,38,500/- instead of ₹.6,10,99,200/- and I.T.A. No. 382/Chny/20 4 ₹.1,98,00,000/- respectively. You have registered the property and paid stamp duty for ₹.6,10,99,200/- and ₹.1,98,00,000/-. As per the provisions of section 50C(1) of the Income-tax Act, 1961, the guideline value of ₹.6,10,99,200/- and ₹.1,98,00,000/- adopted by the registration department was not considered by the Assessing Officer. 5. In response to the notice issued by the ld. PCIT, the assessee has submitted before him that the case was selected for limited scrutiny for verification of the cash deposits. So far as details of agricultural land sale deposits were furnished to the Assessing Officer and the agricultural land sale consideration are exempt from capital gains and should be dropped the proceedings. 6. After considering he explanation of the assessee, the ld. PCIT has held that the order passed by the Assessing Officer under section 143(3) of the Act dated 22.12.2016 was erroneous and prejudicial to the interest of the Revenue and accordingly, set aside the assessment order and given directions to the Assessing Officer to redo the assessment as per law considering the facts of the case and also directed to verify the taxability in the hands of buyers under section 56 of the Act after affording the assessee a reasonable opportunity of being heard. 7. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. None appeared on behalf of the assessee, whereas, written submissions were filed including paper books. I.T.A. No. 382/Chny/20 5 8. The ld. DR has submitted that in the assessment order, the Assessing Officer has not examined the taxability of land sold by the assessee and therefore, the order passed by the ld. PCIT is not in accordance with law for the reason that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 9. We have gone through the assessment order and reply given by the assessee as well as written submissions filed in the form of paper book. We have also considered the submissions of the ld. DR. In this case, the ld. PCIT issued notice under section 263 of the Act to the assessee and after considering the submissions, the ld. PCIT set aside the assessment order passed by the Assessing Officer on the ground that the Assessing Officer has not considered to invoke the provisions of section 50C(1) of the Act. The contention of the assessee was that the lands sold by the assessee are agricultural land in nature and therefore, no capital gain is involved in this case. We are of the opinion that first of all the Assessing Officer has to examine whether the sale consideration received by the assessee was as per SRO value or not. Thereafter, the Assessing Officer has to decide the land is agricultural land or not. In this case, the Assessing Officer has not examine as to whether the lands sold I.T.A. No. 382/Chny/20 6 by the assessee are agricultural land or not and also not examined the value of the land as per the provisions of section 50C(1) of the Act. In view of the above, we are of the opinion that the ld. PCIT has rightly exercised jurisdiction and held that the assessment order passed under section 143(3) of the Act dated 22.12.2016 is erroneous and prejudicial to the interest of the Revenue. Accordingly, the appeal filed by the assessee is dismissed. 10. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 21 st September, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 21.09.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.