Bhojison Infrastructure Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(1)(2), Ahmedabad

ITA 395/AHD/2022

AI Insights

Bhojison Infrastructure Pvt. Ltd. appealed against the order of the CIT(A)-11, Ahmedabad, which partly allowed their appeal for the Assessment Year 2012-13. The primary issues in the appeal were the validity of the notice issued under Section 148 for reopening the assessment under Section 147, and the addition made on account of LTCG under Section 50C. The Tribunal upheld the reopening of the assessment but found merit in the appellant's argument regarding the LTCG addition, noting that the difference in valuation was less than 10%, and thus the value declared by the appellant should be accepted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129387 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 21-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 18-10-2022
• Other Referred Cases: Jayshriben Bharatbhai Patel vs. ITO (ITA No.449/Ahd/2020, order dated 02.12.2022)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Borrowed satisfaction
• Section: 50C; 143(1)

Judgement Text

ITA No.395/Ahd/2022 Assessment Year: 2012-13 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.395/Ahd/2022 Assessment Year: 2012-13 Bhojison Infrastructure Pvt. Ltd., vs. Income Tax Officer, 4, Shri Ghanshyam Park Co. Op. Ward – 1(1)(2), Ahmedabad. Housing Limited, B/h. Paraskunj Society, Satellite Road, Jodhpur, Ahmedabad. [PAN – AAACB 7764 K] (Appellant) (Respondent) Assessee by : Ms. Nupur Shah, AR Revenue by : Shri Suraj Bhan Garwal, Sr. DR Date of hearing : 22.02.2023 Date of pronouncement : 01.03.2023 O R D E R This appeal is filed by the Assessee against order dated 09.09.2022 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2012-13. 2. The Assessee has raised the following grounds of appeal :- “1. The Ld. CIT(A) has erred in law and on facts in partly allowing the appeal. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. I. Challenging the validity of notice issued u/s.148 of the Act for reopening the assessment u/s.147 of the Act as well as passing the order u/s.143(3) r.w.s. 147 of the Act. 1. The Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. AO in issuing the notice u/s,.148 of the Act for reopening the assessment u/s.147 of the Act as well as passing the order u/s.143(3) r.w.s. 147 of the Act. 2. The Ld. CIT(A) has erred in law and on facts in not considering the fact that reopening of the case of the appellant under section 147 of the Act by the Ld. AO merely on the basis of borrowed satisfaction without application of mind in absence of any tangible material and/or independent clinching evidence as well as cogent material evidence on record for reopening of the case of the appellant and therefore, in view of various judicial pronouncements of the Hon’ble Jurisdictional Gujarat ITA No.395/Ahd/2022 Assessment Year: 2012-13 Page 2 of 5 High Court and various other High Courts, the reopening of the case of the appellant is merely on borrowed satisfaction. 3. The Ld. CIT(A) has not properly considered various judicial pronouncement relied upon by the appellant. II. Addition on account of Long Term Capital Gain Rs.86,451/-. 1. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.86,451/- out of total addition of Rs.3,43,830/- on account of Long Term Capital Gain as made by the Ld. AO 2. The Ld. CIT(A) has erred in law and on facts in not properly considering the submission made by the appellant wherein, it was contended that the property sold by the appellant company was litigated property and there were various litigations in the said property and it was not possible to sale the property at market rate and the necessary evidence in respect of the litigation are mentioned in the sale deed and hence, provisions of section 50C does not ap0ply in the case of appellant. 3. The Ld. CIT(A) has erred in law and on facts in not considering the contention of the appellant in the application u/s.154 dated 09.01.2020 that if the difference between the valuation adopted by the Stamp Valuation Authority or and that declared by the appellant is less than 10 per cent, the AO should adopt the value as declared by appellant in view of various judicial pronouncements of various courts. In the case of appellant, the sale value declared by appellant in the return of income in respect of land at Rundh is Rs.9,49,89,978/- and the value as determined by the District Valuation Officer (DVO) is Rs.10,34,91,000/- which is approximately 8.95% higher but less than 10% and hence the value adopted by the appellant is to be accepted by the Ld. AO. 4. The Ld. CIT(A) has erred in law and on facts in not properly considering various judicial pronouncements relied upon by the appellant. PRAYER The appellant therefore respectfully prays that :- 1. The action of the Ld. CIT(A) in confirming the reopening of assessment by the Ld. AO by issuing the notice u/s.148 of the Act and passing of the order u/s.143(3) r.w.s. 148 of the Act may kindly be quashed. 2. The addition of Rs.86,451/- confirmed by the Ld. CIT(A) out of total addition of Rs.3,43,830/- on account of Long Term Capital Gain may kindly be deleted. 3. Such and further relief as the nature and circumstances of the case may justify. 3. The assessee filed its return of income on 29.09.2012 declaring total income at Rs.9,34,990/-. The same was processed under Section 143(1) of the Income Tax Act, ITA No.395/Ahd/2022 Assessment Year: 2012-13 Page 3 of 5 1961. Subsequently, information was received by the Assessing Officer that the assessee and other persons sold an immovable property at Surat for sale consideration of Rs.9,49,89,978/- on 09.08.2011. The Assessing Officer further observed that the assessee has shown its share of sale consideration of Rs.9,66,000/- whereas as per provisions of Section 50C of the Act the assessee was required to consider the Market Value (Jantri Value) of Rs.13,09,830/-. From the details filed in Income Tax Return, the Assessing Officer confirmed that the assessee has not considered the Jantri Value in computation of capital gain. The assessment was re- opened under Section 147 of the Act. The Assessing Officer observed that as per Rule of Gujarat State regarding levying of stamp duty on transfer of immovable property against sale, 4.9% of Jantri Value (Fair Market Value as decided for stamp duty) of the property is levied. The property was sold for less sale consideration as compared to market value as on doing reverse working for deriving Jantri Value of the property under consideration. After taking cognisance of the assessee’s reply, the Assessing Officer made addition of Rs.3,43,840/- under Section 50C of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that as regards to ground no.1, challenging the validity of notice issued under Section 148 of the Act, the CIT(A) erred in not considering the fact that reopening of the case of the assessee under Section 147 of the Act merely on the basis of borrowed satisfaction without application of mind in absence of any tangible material and/or independent clinching evidence is not justified. As regards ground no.2, the Ld. AR submitted that addition on account of Long Term Capital Gain (LTCG) to the extent of Rs.86,451/- out of total addition of Rs.3,43,830/- on account of LTCG is not proper. The Ld. AR submitted that the property sold by the assessee company was litigated property and there were various litigations in the said property it was not possible to sell the property at market rate and the necessary evidence in respect of litigation are mentioned in the sale deed and hence, provisions of Section 50C of the Act does not apply in assessee’s case. Ld. AR further submitted that if the difference between valuation adopted by the Stamp Valuation Authority or that declared by the assessee is less than 10%, the Assessing Officer should adopt the value as declared by the assessee as per various decisions pronounced by various Courts. The Ld. AR further submitted that sale value declared by the assessee in the ITA No.395/Ahd/2022 Assessment Year: 2012-13 Page 4 of 5 return of income in respect of land at Rundh is Rs.9,49,89,978/- and the value as determined by the District Valuation Officer (DVO) is Rs.10,34,91,000/- which is approximately 8.95% higher but less than 10%. Hence, the value adopted by the assessee should have been accepted by the Assessing Officer. The Ld. AR relied upon the decision of Tribunal in the case of Jayshriben Bharatbhai Patel vs. ITO (ITA No.449/Ahd/2020, order dated 02.12.2022). 6. Ld. DR submitted that the CIT(A) has restricted the addition to the extent of Rs.86,451/- on account of Section 50C of the Act. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. As regards to ground no.1, the re-opening of the assessment in assessee’s case was justifiable as the independent satisfaction was given. Besides that, the assessee in the details filed in Income Tax Return did not consider the Jantri Value in computation of gain which is the disputed fact by the Revenue. Therefore, ground no.1 is dismissed. 8. As regards to ground no.2, from the perusal of the records it can be seen that in the return of income in respect of land and the value as determined by the DVO is approximately 8.95% higher but less than 10%. This was never disputed or controverted by the Revenue at any point of time. As per third proviso to Section 50C brought on statute w.e.f. 01.04.2019, the Tribunal on various occasions has applied the said proviso retrospectively as the difference is less than 10% in the actual value taken than the DVO’s value. Therefore, ground no.2 is allowed. 9. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on this 1 st day of March, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 1 st day of March, 2023 PBN/* ITA No.395/Ahd/2022 Assessment Year: 2012-13 Page 5 of 5 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad