Shri Sarwan Kumar, New Delhi V. ITO, New Delhi

ITA 4379/DEL/2009

• Counselvise Citation: 437920114 RSA 2009
• Duration Of Justice: 4 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 29-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G: NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTAN T MEMBER ITA NO. 4379/DEL/2009 ASSESSMENT YEAR 2006-07 SARWAN KUMAR, VS. ITO (PROP. M/S. SARWAN DAIRY) W ARD 26 (3) 14, GULAB BAGH, UTTAM NAGAR, NEW DELHI. NEW DELHI. (PAN AAYPK1239K) (APPELLANT) (RESPO NDENT) AND ITA NO. 2373/DEL/2012 ASSESSMENT YEAR 2006-07 ITO VS. SARWAN KUMAR, WARD-26(3), ROOM NO. 314-D 14, GULAB BAGH VIKAS BHAWAN UTTAM NAGAR, NEW DELHI. NEW DELHI. (PAN AAYPK1239K) (APPELLANT) (RESPO NDENT) APPELLANT BY : SHRI SALIL AGGARW AL, SHRI SHAILESH GUPTA, ADVOCATES RESPONDENT BY: SMT. RENUKA J AIN GUPTA, SR. DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER ITA NO. 4379/D/2009 THE ASSESSEE HAS QUESTIONED FIRST APPEL LATE ORDER ON THE FOLLOWING GROUNDS :- 1.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPE AL) HAS ERRED IN TAKING THE VALUE OF PROPERTY AT RS. 64,10,000/- U/S 50C OF THE ITA NOS. 4379/DEL/09 & 2373/DEL/2012 2 INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE EVIDE NCES EXPLANATION AND DETAILS FURNISHED DURING THE APPELL ATE PROCEEDING. 1.3 THE LEARNED COMMISSIONER OF INCOME TAX (APP EAL) HAS ERRED IN NOT TAKING IN TO ACCOUNT CIRCLE RATE WHICH IS RS . 24,00,000/- AND HAS TAKEN THE RATE ADOPTED BY THE PARTIES AT RS. 64 ,10,000/-. 1.4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEA L) HAS NOT CONSIDERED THE FACT THAT THE VALUE ADOPTED BY THE A SSESSING OFFICER RS. 64,10,000/- IS NOT THE CIRCLE RATE ADOPTED BY T HE STAMP DUTY AUTHORITY BUT THE HIGHER AMOUNT OF VALUATION AGREED BETWEEN THE PARTIES FOR PAYING STAMP DUTY THOUGH THE PROPERTY W AS ACTUALLY SOLD FOR RS. 10,00,000/- 1.5 THE LEARNED COMMISSIONER OF INCOME TAX (APP EAL) WHILE PASSING THE ORDER HAS NOT APPRECIATED THE FACT IN T HE SAME PERIOD CERTAIN OTHER LAND WERE SOLD BY SOME OTHER PARTIES IN THE SAME VICINITY WHERE BY THE ACTUAL SALES CONSIDERATION WA S EVEN LESS THAN THE AMOUNT ACTUALLY RECEIVED BY THE ASSESSEE OF RS. 10,00,000/-. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS A DVANCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERI AL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE A PROPRIETOR OF A DAIRY CONCERN HAD SOLD IMMOVABLE PROPERTY SITUATED IN THE INDUSTRIAL AREA AT ABADANPUR IN DISTT. BAREILY FOR A SALE CONSIDERATION OF RS. 10 LAC (TW O DEEDS OF RS. 8 LAC AND RS. 2 LAC) AS AGAINST THE FAIR MARKET VALUE OF RS. 64,10, 000/- SHOWN IN AGGREGATE IN TWO REGISTRATION DEEDS FOR STAMP PURPOSES. THE AO I NVOKING THE PROVISIONS OF SECTION 50C OF THE ACT COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 28.12.2008 AT RS. 57,54,670/-. THIS ACTION OF THE A O WAS UPHELD BY THE LD. CIT(A) ON THE BASIS BESIDES OTHERS THAT NO PROPER C LAIM BEFORE THE AO HAS BEEN ITA NOS. 4379/DEL/09 & 2373/DEL/2012 3 FILED STATING THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE. 4. IN SUPPORT OF THE GROUNDS THE LD. AR SUB MITTED THAT IN SUCH A SITUATION AND FACTS OF THE CASE WHEN THE ASSESSEE HAD DISPUT ED BEFORE THE AO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS NOT TH E FAIR MARKET VALUE OF THE PROPERTY AT THE TIME OF THE TRANSACTION, IT WAS MAN DATORY ON THE PART OF THE AO TO REFER THE VALUATION OF THE SAID PROPERTY U/S 50C (2) OF THE ACT. IN THIS REGARD HE REFERRED THE CONTENTS OF LAST PAGE OF THE ASSESS MENT ORDER WHEREIN THE AO HAD MENTIONED THAT THE SECTION 50C (2) USES THE WO RD MAY OR NOT SHALL REFER THE MATTER TO THE VALUATION OFFICER DEFINED U /S 2 OF THE WEALTH TAX ACT 1957. THE AO HAS FURTHER MENTIONED THAT SUFFICIENT EVIDENCE WAS NOT PRODUCED BEFORE HER TO ENABLE HER TO MAKE REFERENCE TO THE V ALUATION SALE UNDER CLAUSE 50C(2)(B) OF THE ACT. IN SUPPORT THE LD. AR REFERRE D FOLLOWING DECISIONS :- 1. ITO VS. SMT. MANJU RAN I JAIN (2008) 24 SOT 24 (DELHI) 2. K.K. NAG LTD. VS. ACIT (2012) 52 SOT 381 (PUNE) 3. N. MINAKESHI VS. ACIT 226 CTR 625 (MADRAS) 4. NATHU RAM PREMCHAND V. CIT. 49 ITR 561 (ALLAHABAD) 5. COMMISSIONER OF INCOME TAX. V. GILLANDERS ARBUTHNOT AND CO.( 1973) 87 ITR 407 (SC) 6. COMMISSIONER OF INCOME -TAX V. SHAKUNTALA KANTILAL (1991) 190 ITR 56 (BOMBAY) 7. COMMISSIONER OF INCOME -TAX V. TEXSPIN ENGINEERING AND MANUFACTURING WORKS [ 2003] 263 ITR 345 (BOM) ITA NOS. 4379/DEL/09 & 2373/DEL/2012 4 5. THE LD. SR. DR TRIED TO JUSTIFY THE ACTIO N OF THE AUTHORITIES BELOW ON THE ISSUE. SHE SUBMITTED THAT U/S 50C (2) IT IS DISCRET IONARY ON THE PART OF THE AO TO REFER THE MATER TO THE VALUATION OFFICER CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF THE CASE. SHE SUBMITTED FURTHER THAT THE DECISIO NS RELIED UPON BY THE LD. DR HAVING DISTINGUISHABLE FACTS ARE NOT HELPFUL TO THE ASSESSEE. SHE ALSO REFERRED CONTENTS OF PAGE NO. 8 OF PARA NO. 4 OF THE FIRST A PPELLATE ORDER TO SUPPORT HER CONTENTION THAT NO SUCH ISSUE FOR REFERENCE THE VAL UATION OF THE PROPERTY U/S 50(2) TO THE VALUATION OFFICER WAS RAISED. SHE SUB MITTED FURTHER THAT IT IS THE SATISFACTION OF THE AO TO REFER THE VALUATION OF TH E PROPERTY U/S 50C(2) OF THE ACT TO THE VALUATION OFFICER IF CERTAIN CONDITIONS ARE FULFILLED. LD. SR. DR POINTED OUT FURTHER THAT THE CIRCLE RATE PREVAILING IN THAT ARE A WAS RS. 24 LACS PER HECTARE WHEREAS THE ASSESSEE HAD SOLD 0.967 HECTARES. SHE S UBMITTED FURTHER THAT ASSESSEE DID NOT CHALLENGE THE VALUATION ADOPTED BY THE STAMP AUTHORITY BEFORE THE PRESCRIBED APPELLATE AUTHORITY. IN THIS REGARD SHE REFERRED THE PROVISIONS LAID DOWN U/S 50C(2) (B) OF THE ACT. 6. HAVING GONE THROUGH THE DECISIONS RELIED UP ON BY THE LD. AR WE FIND THAT IT IS NOW AN ESTABLISHED PROPOSITION OF LAW THAT WH ERE AN ASSESSEE HAD CLAIMED BEFORE THE AO THAT VALUE OF LAND AND BUILDING ASSE SSED BY STAMP VALUATION AUTHORITY EXCEEDED FAIR MARKET VALUE OF PROPERTY , THEN IN TERMS OF SECTION 50C(2) (A) THE AO OUGHT TO HAVE REFERRED MATTER TO VALUATION OFFICER INSTEAD OF STRAIGHTAWAY DEEMING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS FULL ITA NOS. 4379/DEL/09 & 2373/DEL/2012 5 VALUE OF CONSIDERATION. SIMILAR ARE THE FACTS IN TH E CITED CASE OF PUNE BENCH IN THE MATTER OF K.K. NAG LTD. VS. ACIT (SUPRA) WHEREI N THE AO APPLYING PROVISIONS OF SECTION 50C, ADOPTED STAMP DUTY VALUE OF LAND AN D BUILDING AS TOTAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPI TAL GAIN. THE ASSESSEE RAISED THE OBJECTION THAT SINCE IT HAD CLAIMED THAT THE VA LUE ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE, THE AO OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER TO ASC ERTAIN THE VALUATION. FOR A READY REFERENCE THE MATTER TRAVEL TO THE TRIBUNAL AND THE TRIBUNAL HAS HELD AS UNDER :- SECTION 50C PRESCRIBES FOR ADOPTION OF FULL VALUE OF CONSIDERATION IN CERTAIN CASES. IT IS PROVIDED THAT WHERE THE CONSID ERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED BY AN AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSES OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THEN THE VALUE SO ADOP TED BY THE STATE GOVERNMENT AUTHORITY SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. THE SAID PROVISIONS OF SUB-SECTION (1) OF SECTION 50C A RE FURTHER CIRCUMSCRIBED BY SUB-SECTION (2) OF SECTION 50C. IN TERMS OF CLAUSE (A) OF SUB-SECTION (2) OF SECTION 50C, IT IS PROVID ED THAT WHERE AN ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT T HE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THEN THE ASSESSING OFFICER MAY REFER VALU ATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. IN INSTANT CASE, FACTUALLY IT IS EVIDENT THAT THE ASSESSEE HAD CLAIMED IN THE RETURN OF INCOME ITSELF THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY EXCEEDED THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER AS PROVIDED IN SECTION 50C(2)(A). UNDER THESE CIRCUMSTANCES, THE A SSESSING OFFICER OUGHT TO HAVE REFERRED THE MATTER TO THE VA LUATION OFFICER INSTEAD OF STRAIGHTAWAY DEEMING THE VALUE ADOPTED B Y THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONSIDERAT ION. THE POINT MADE OUT BY THE REVENUE THAT IT IS ONLY DISCRETIONA RY ON THE PART OF THE ASSESSING OFFICER TO REFER THE MATTER TO THE VA LUATION OFFICER, IS QUITE UNTENABLE. THE DISCRETION VESTED IN THE ASSES SING OFFICER IN ITA NOS. 4379/DEL/09 & 2373/DEL/2012 6 SUCH A SITUATION IS REQUIRED TO BE USED IN A JUDICI OUS MANNER. SECTION 50C IS A DEEMING PROVISION AND OSTENSIBLY I NVOLVE CREATION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THEREFORE, NOTWITHSTANDING THE PRESENCE OF THE EXPRESSION MAY IN SECTION 50C (2)(A), THE ASSESSING OFFICER IN THIS CASE OUGH T TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER FOR ASCERTAININ G THE VALUE OF THE CAPITAL ASSET IN QUESTION. THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) IS TO BE SET ASIDE AND THE ASSESSING OFFI CER IS TO BE DIRECTED TO ADOPT THE COURSE MENTIONED IN SECTION 5 0C(2)(A) AND THEREAFTER, PROCEED TO DETERMINE CAPITAL GAIN ON SA LE OF LAND AND BUILDING. 7. THE DELHI BENCH OF THE TRIBUNAL IN THE A BOVE CITED CASE OF ITO VS. SMT. MANJU RANI JAIN (SUPRA) HAS EXPRESSED A SIMILAR VIE W WHEREIN THE ACTION OF LD. CIT(A) HAS BEEN UPHELD. THE LD. CIT(A) ON FINDING T HAT AO HAD WORKED OUT CAPITAL GAIN BY ADOPTING MARKET VALUE OF PROPERTY F OR STAMP DUTY PURPOSES, HAD DIRECTED AO TO REFER PROPERTIES TO VALUATION SALE O F THE DEPARTMENT FOR PURPOSE OF VALUATION OF PROPERTIES AND THEREAFTER TO ADOPT VA LUATION FOR WORKING OUT THE CAPITAL GAINS IN VIEW OF THE PROVISIONS OF SECTION 50C(2) OF THE ACT. SIMILAR ARE THE FACTS OF THE PRESENT CASE BEFORE US WHEREIN BEF ORE THE AO THE ASSESSEE HAD CLAIMED THAT VALUE OF LAND AND BUILDING ASSESSED BY STAMP VALUATION AUTHORITY EXCEEDED FAIR MARKET VALUE OF PROPERTY BUT THE AO H AD DENIED THE REFERENCE U/S 50C TO THE VALUATION OFFICER WITH THIS FINDING ALS O, IT IS HELD THERE IS NO NEED TO REFER THE MATTER TO DEPARTMENTAL VALUATION OFFICER AS STIPULATED IN SECTION 50C(2). THE SECTION 50C(S) USES THE WORD MAY AND NOT SHALL REFER THE MATTER TO THE VALUATION OFFICER DEFINED U/S 2 OF THE W.T. ACT 19 57. SUFFICIENT EVIDENCE HAS ITA NOS. 4379/DEL/09 & 2373/DEL/2012 7 NOT BEEN PRODUCED BEFORE THE UNDERSIGNED TO ENABLE HER TO MAKE REFERENCE TO THE VALUATION CELL UNDER CLAUSE 50C(2)(B). THE LD. CIT(A) HAS UPHELD THIS ACTION OF THE AO. THUS THE POINT MADE OUT BY THE REVENUE W AS THAT IT IS ONLY DISCRETION ON THE PART OF THE AO TO REFER THE MATTER TO THE VA LUATION OFFICER TO WHICH WE IN VIEW OF THE PROVISIONS LAID DOWN U/S 50(C) OF THE A CT DO NOT CONCUR WITH. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF K.K. NAG LTD. VS. ACIT (SUPRA) AFTER DETAILED DISCUSSION OF THE PROVISIONS LAID DOWN U/S 50C OF THE ACT HAS HELD THAT THE DISCRETION GRANTED IN SUCH A SITUATION IS REQUI RED TO USE IN A JUDICIOUS MANNER. SECTION 50C IS A DEEMING PROVISION AND OSTE NSIBLY INVOLVE CREATION OF AN ADDITIONAL TAX LIABILITY ON THE ASSESSEE AND, THERE FORE, NOTWITHSTANDING THE PRESENCE OF THE EXPRESSION MAY IN SECTION 50C(2)( A), THE AO IN THIS CASE OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICE R FOR ASCERTAINING THE VALUE OF THE CAPITAL ASSET IN QUESTION. THE ORDER OF THE COM MISSIONER (APPEALS) WAS THUS HELD TO BE SET ASIDE AND THE AO WAS DIRECTED TO ADO PT THE COURSE MENTIONED IN SECTION 50C(2)(A) AND THEREAFTER PROCEED TO DETERMI NE CAPITAL GAIN ON SALE OF LAND AND BUILDING. RESPECTFULLY FOLLOWING THIS DECI SION OF PUNE BENCH ON AN IDENTICAL ISSUE UNDER ALMOST SIMILAR FACTS, WE WHIL E SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE DIRECT THE AO TO ADO PT THE COURSE MENTIONED IN SECTION 50C(2)(A) AND THEREAFTER, PROCEED TO DETERM INE CAPITAL GAIN ON SALE OF THE PROPERTIES IN QUESTION AFTER AFFORDING OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS ARE THUS ALLOWED FOR STATISTI CAL PURPOSES. ITA NOS. 4379/DEL/09 & 2373/DEL/2012 8 8. IN THE RESULT APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ITA NO. 2373/D/2012 9. THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER WHEREBY THE LD. CIT(A) HAS DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT AT RS. 12.29.909/- IMPOSED BY THE AO ON THE ADDITION OF RS. 54,60,000/ - ON ACCOUNT OF CAPITAL GAINS. 10. HEARD THE PARTIES AND ORDERS OF THE AUTHO RITIES AS WELL AS SUGGESTIONS HAVE BEEN GONE THROUGH. 11. LD. SR. DR HAS TRIED TO JUSTIFY THE ORD ER PASSED BY THE AO U/S 271(1)(C) OF THE ACT WITH THIS SUBMISSION THAT THERE WAS DELI BERATE ACTION ON THE PART OF THE ASSESSEE TO LOWER THE INCIDENCE OF TAX WHILE PAYING STAMP DUTY ON A HIGHER SALE CONSIDERATION TO IN GETTING THE PROPERTY REGISTERED AT A LOWER VALUE. THE LD. AR ON THE OTHER HAND PLACED RELIANCE ON THE FIRST APPE LLATE ORDER WITH THIS SUBMISSION THAT RELEVANT FACTS RELATING TO THE CLAI MED CAPITAL GAIN WAS DISCLOSED FULLY AND TRULY ON THE BASIS OF WHICH ONLY THE AO H AD WORKED OUT THE ADDITION AND HAD LEVIED PENALTY IN QUESTION U/S 271(1) RELIED U PON BEFORE THE LD. CIT(A) INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). ITA NOS. 4379/DEL/09 & 2373/DEL/2012 9 12. CONSIDERING THE ABOVE SUBMISSIONS WE FULLY CONCUR WITH THE FINDING OF THE LD. CIT(A) IN THE PRESENT CASE THAT THE VALUATION OF PROPERTY FOR STAMP DUTY PURPOSES WAS REBUTTABLE ISSUE HENCE IN ORDER TO PRO VE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS, AO HAD TO ES TABLISH THAT ON MONEY HAD CHANGED HANDS OR THAT SUBSTANTIAL EVIDENCE / MATERI AL WAS AVAILABLE TO PROVE THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT BEFORE INVOCATION OF PENAL PROVISIONS LAID DOWN U/S 271(1)(C) OF THE ACT, THE AO HAD TO ESTABLISH BEYON D DOUBT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE WHILE CLAIMING THE TURN ED DOWN RELIEF RESULTING IN THE ABOVE ADDITION ON THE BASIS OF WHICH PENAL PROCEED INGS HAVE BEEN INITIATED. ALSO BECAUSE THE ADDITION ON WHICH PENALTY IN QUESTION H AS BEEN IMPOSED HAS BEEN SET ASIDE IN THE ABOVE APPEAL TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN VIEW OF THE PROVISIONS LAID DOWN U/S 50C OF THE ACT, THE PRESENT PENALTY DOES NOT STAND. THE GROUND IS THUS REJECTED. 13. IN THE RESULT APPEAL IS DISMISSED. 14. THE APPEAL PREFERRED BY ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES AND THAT BY THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2014. SD/- SD/- (B.C. MEENA) ( I .C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 28 TH JANUARY, 2014 ITA NOS. 4379/DEL/09 & 2373/DEL/2012 10 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR, ITAT