Shri Kiritbhai Bhikhabhai Patel, Ahmedabad V. The Income Tax Officer, Ward-14(3), Ahmedabad

ITA 384/AHD/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9694 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Capital asset; Fair market value
• Section: 143(3); 142(1)

Judgement Text

SMC-ITA NO. 384/AHD/2016 KIRITBHAI BHIKHABHAI PATEL VS. ITO AY : 2010-11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 384/AHD/2016 ASSESSMENT YEAR : 2010-11 KIRITBHAI BHIKHABHAI PATEL ............APPE LLANT FLAT NO.101, JIVABHAI TOWER, LAD SOCIETY ROAD, VASTRAPUR, AHMEDABAD-380 054 [PAN : ACPPP 7268 N] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 14(3), AHMEDABAD APPEARANCES BY: WRITTEN SUBMISSION - FOR THE APPELLANT VK SINGH, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 19.06.2018 DATE OF PRONOUNCING THE ORDER : 20.09.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 14 TH DECEMBER 2015, PASSED BY THE BY THE CIT(A)-4, AHMEDABAD, IN THE MATTER OF ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2010-11. 2. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOL LOWS:- 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND AS PER LAW, LEARNED CIT(APPEALS) ERRED IN SUSTAINING T HE ADDITIONS OF RS.17,78,350 ON THE GROUND OF UNDISCLOSED LONG TERM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND. 1.2 THAT LEARNED CIT (APPEALS) WAS OUGHT TO HA VE ACCEPTED THE F.M.V., OF RS. 1587710, AS ON 1-04-1981 AS ESTIMATE D BY THE GOVERNMENT APPROVED VALUER AGAINST VALUE, AS ON SAM E DATE, OF RS.735948, ESTIMATED BY THE D.V.O. APPOINTED U/S. 5 5A OF THE I.T. ACT, 1961. 1.3 THAT LEARNED CIT (APPEALS) WAS OUGHT TO HA VE CONSIDER THE FACT THAT A.O. HAD NO JURISDICTION, AS PER LAW PREVAILIN G FOR THE YEAR UNDER CONSIDERATION, UNDER SECTION 55A OF THE INCOME-TAX ACT, 1961 AS VALUE DETERMINED BY THE GOVERNMENT APPROVED VALUER, FOR T HE LAND UNDER SMC-ITA NO. 384/AHD/2016 KIRITBHAI BHIKHABHAI PATEL VS. ITO AY : 2010-11 PAGE 2 OF 4 CONSIDERATION, WAS HIGHER THAN SAME DETERMINED BY T HE D.V.O. AS PER THE RATIO LAID DOWN BY JURISDICTIONAL TRIBUNAL AND HIGH COURT, IN VARIOUS CASES, LEARNED A.O. HAD NO JURISDICTION UND ER SECTION 55A OF THE I.T.ACT AS PER THE FACTS OF THE CASE. 1.4 WITHOUT PREJUDICE. LEARNED CIT (APPEALS) F AILED TO BRING ON RECORD ANY REASON FOR ACCEPTING THE VALUE DETERMINE D BY THE D.V.O. AND REJECTING THE VALUE ESTIMATED BY THE GOVERNMENT APPROVED VALUER. 3. TO ADJUDICATE ON THIS APPEAL, A FEW MATERIAL FAC TS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS A SALARIED TAX PAYER AND, DURING THE RELEVANT PREVIOUS YEAR, HE ALONG WITH SOME CO-OWNERS SOLD AN AGRICULT URAL LAND FOR A CONSIDERATION OF RS.1.01 CRORES. IN THE COMPUTATION OF CAPITAL GAINS ON THE SALE OF LAND, THE VALUATION OF PROPERTY AS ON 01.04.1981 WAS TAKEN AT RS.15,77,710/-. THIS VALUATION WAS DONE BY A GOVERNMENT APPROVED VALUER BY ADOPTING THE RATE OF RS.339/- PER SQUARE METER. THE ASSESSING OFFICER W AS OF THE VIEW THAT THE RATE IS VERY EXCESSIVE AND HE, THEREFORE, REFERRED THE MATT ER TO THE DISTRICT VALUATION OFFICER (DVO). AS PER THE DVOS REPORT, THE LAND W AS VALUED AT RS.7,53,948/- BY ADOPTING THE RATE OF RS.162/- PER SQUARE METER ON T HE BASIS OF COMPARABLE SALE INSTANCES. ACCORDINGLY, THE CAPITAL GAINS WERE RECO MPUTED BY ADOPTING THE FAIR MARKET VALUE AS ON 01.04.1981 AT RS.17,78,350/-. A GGRIEVED, INTER ALIA, BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS, INTER ALIA, CONTEND ED THAT THE ASSESSING OFFICER DID NOT HAVE JURISDICTION TO MAKE A REFERENCE TO THE DV O UNDER SECTION 55A OF THE ACT ON THE FACTS OF THIS CASE. LEARNED CIT(A) REJECTED THE SAME AND OBSERVED AS FOLLOWS:- 7.3 BEFORE ME, IT WAS ARGUED ON BEHALF OF THE APPE LLANT THAT SINCE F.M.C. OF THE LAND UNDER CONSIDERATION AS DETERMINED BY TH E REGISTERED VALUER APPOINTED BY THE APPELLANT WAS HIGHER, LEARNED AO H AD NO JURISDICTION UNDER SECTION 55A AS IT APPLICABLE FOR THE YEAR UND ER CONSIDERATION. 7.4 I HAVE CONSIDERED THE RIVAL SUBMISSIONS, RELEV ANT PROVISIONS OF THE INCOME-TAX ACT FOR THE YEAR UNDER CONSIDERATION AND JUDICIAL PRONOUNCEMENT. IN MY CONSIDERED VIEW, IN THE INSTA NT CASE APPELLANT HAD NOT DISCLOSED THE INCOME FROM SALE OF URBAN AGRICUL TURAL LAND IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS ONLY WHEN AO ISSUED NOTICE UNDER SECTION 142(1) CALLING FOR INFORMATION RELATING TO THE GAIN ON SALE OF LAND UNDER CONSIDERATION, APPELLANT APPOINT ED REGISTERED VALUER TO DETERMINE F.M.V. OF THE LAND AS ON 01.04.1981. HEN CE, IN MY CONSIDERED VIEW ASSESSING OFFICER HAD JURISDICTION UNDER SUB-C LAUSE (II) OF CL. (B) OF SECTION 55A OF THE I.T. ACT, WHICH DEALS WITH OTHER RELEVANT CIRCUMSTANCES IN THE OPINION OF THE ASSESSING OFFICER TO REFER THE V ALUATION OF CAPITAL ASSET TO A VALUATION OFFICER. SMC-ITA NO. 384/AHD/2016 KIRITBHAI BHIKHABHAI PATEL VS. ITO AY : 2010-11 PAGE 3 OF 4 7.5 APPELLANT HAD ALSO RAISED ISSUE REGARDING TAXA BILITY OF CAPITAL GAIN ON SALE OF LAND UNDER CONSIDERATION ON THE GROUND THAT SAME IS AGRICULTURAL LAND AND DOES NOT COME UNDER THE DEFINITION OF CAP ITAL ASSET AS PER THE PROVISIONS OF SECTION 2(14)(III)(A) OR (B) OF THE I T ACT, 1961. SINCE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR EVEN DURING THE HEARING OF APPEAL, APPELLANT HAD NOT SUBMITTED ANY CREDIBLE EV IDENCES IN SUPPORT OF HIS CONTENTION NOR BEFORE ME ANY EVIDENCES IN SUPPO RT HAS BEEN FURNISHED, THIS GROUND OF THE APPELLANT IS NOT SUSTAINABLE. ON THESE FINDINGS, THE ACTION OF THE AO AND ADDITIO NS OF RS.17,78,350/- ON THE GROUND OF UNDISCLOSED LONG TERM CAPITAL GAIN AR E CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 4. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 5. I HAVE PERUSED THE WRITTEN SUBMISSION FILED BY T HE ASSESSEE, HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND DULY CONSID ERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. I FIND THAT UNTIL THE AMENDMENT WAS MADE IN SECT ION 55A BY THE FINANCE ACT, 2012, A REFERENCE TO THE DVO CHALLENGING THE V ALUATION BY THE REGISTERED VALUER COULD ONLY HAVE BEEN MADE WHEN THE VALUE OF THE ASSETS AS CLAIMED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE - THAT CERTAINLY NOT THE CASE BEFORE US. AS REGARDS THE AMENDMENT BY THE FINANCE ACT, 2 012 PERMITTING THE REFERENCE TO THE DVO IN A CASE WHERE THE VALUATION BY REGISTE RED VALUER IS IN VARIANCE WITH THE FAIR MARKET VALUE . THIS AMENDMENT CAME INTO EFFECT ONLY WITH EFFEC T FROM 1 ST JULY 2012, THAT WAS MUCH BEFORE THE END OF THE RELE VANT ASSESSMENT YEAR. OBVIOUSLY, IT CANNOT HAVE APPLICATION IN THE PRESEN T CASE. CLEARLY, THEREFORE, THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO WAS VITIATED IN LAW. GIVEN THE LEGAL POSITION AS IT WAS IN EXISTENCE AT THE RE LEVANT POINT OF TIME, A VALUATION BY THE REGISTERED VALUER COULD ONLY HAVE BEEN QUESTION ED BY MAKING A REFERENCE TO DVO UNDER SECTION 55A WHEN THE VALUE CLAIMED BY THE REGISTERED VALUER WAS LESS THAN THE FAIR MARKET VALUE. THE SUBSEQUENT AME NDMENT IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 7. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIRETY OF THE CASE, I UPHOLD THE PLEA OF THE ASSESSEE. THE REFERENCE MADE TO THE DVO UNDER SECTION 55A WAS VITIATED IN LAW AND THE COMPUTATION OF CAPI TAL GAINS COULD NOT, THEREFORE, BE MADE ON THE BASIS OF DVOS VALUATION IN THE PRES ENT CASE. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO ACCEPT THE VALUA TION AS PER THE REGISTERED VALUER AND DELETE THE IMPUGNED DISALLOWANCE. 8. AS I PART WITH THE MATTER, I MAY ALSO MENTION TH AT THE VALUATION OF THE LAND BY THE DVO IS BASED ONLY ON THE SALE INSTANCES, BUT THEN, AS IT IS WIDELY KNOWN FACT THAT, THERE WAS WIDESPREAD USE OF UNACCOUNTED AND UNDISCLOSED CONSIDERATION AT THE RELEVANT POINT OF TIME AS ON 01.04.1981 AND IT WAS BECAUSE OF MALPRACTICES THAT REFORMS HAD TO BE BROUGHT IN FROM TIME TO TIME IN TAXATION OF CAPITAL GAINS. SALE INSTANCES CANNOT BE A CONCLUSIVE AND SAFE INDI CATOR OF THE PREVAILING MARKET SMC-ITA NO. 384/AHD/2016 KIRITBHAI BHIKHABHAI PATEL VS. ITO AY : 2010-11 PAGE 4 OF 4 PRICES SO FAR AS THAT ERA IS CONCERNED. HOWEVER, AS I HAVE SET ASIDE THE VERY REFERENCE TO THE DVO ON THE FACTS OF THE PRESENT CA SE, IT IS NOT NECESSARY TO DEAL WITH THIS ASPECT OF THE MATTER IN MUCH DETAIL. I L EAVE IT AT THAT FOR THE TIME BEING. 9. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON THE 20 TH DAY OF SEPTEMBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 20 TH DAY OF SEPTEMBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .....3 PAGES DICTATION PAD A TTACHED......20.09.2018.......... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 20.09.2018.... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 20.09.2018.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: . 20.09.2018 . 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . . 20.09.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......