ITO, Wd 3(1), Nanded, Nanded V. Rajesh Sambhaji Pawar, Nanded

ITA 445/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80073 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C SARANGI
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.445/PN/2012 (A.Y: 2005-06) DCIT, CIRCLE-3, NANDED APPELLANT VS. SHRI RAJESH SAMBHAJI PAWAR BHAGYALAXMI, PHULE NAGAR, NANDED. PAN: AAMPP4359B RESPONDENT APPELLANT BY : SHRI S.C. SA RANGI RESPONDENT BY : S/SHRI NI KHIL PATHAK & SUHAS P BORA DATE OF HEARING: 07.07.2014 DATE OF ORDER : 31.07.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [IN SHORT C IT(A)] AURANGABAD, DATED 26.12.2011 FOR A.Y. 2005-06 ON TH E FOLLOWING GROUNDS. 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E HON'BLE CIT (A) HAS IGNORED THE FACT, THAT THE DEPA RTMENTAL VALUATION REPORT ARE BASED ON THE ESTIMATION WHEREA S, THE VALUATION OF THE PROPERTY MADE BY STAMP DUTY AUTHOR ITY AS WELL AS TOWN PLANNING AND LOCAL VALUATION DEPARTMEN T FOR STAMP DUTY PURPOSE, CONSIDERING THE AREA HAVING FAS T DEVELOPMENT ETC. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE VALUATION OF PROPERTY PREPARED BY VALUATION OFFICER (IT) NAGPUR, AUDITED BY DISTRICT VALUATION (IT) BHOPAL A ND CONFIRMS THE VALUE OF PROPERTY AS VALUED FOR STAMP DUTY PURPOSE. 3. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFI CER MAY BE RESTORED. 2 ITA NO.445 OF 12 SHRI RAJESH SAMBHAJI PAWAR 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, CL ARIFY OR RAISE ANY NEW GROUND WHICH MAY BE DEEMED NECESSARY. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME ON 31.03.2006 DECLARING TOTAL INCOME OF 2,66,574/- INCLUDING LONG TERM CAPITAL GAIN AND AGRICULTURAL I NCOME OF 1,89,481/-. THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF ASSESSEE AT 39,51,074/- BY MAKING ADDITION OF LONG TERM CAPITAL GAIN 36,34,500/- AND ADDITION TOWARDS EXCESSIVE AGRICULTURAL INCOME 50,000/-. 3. THE ONLY ISSUE BEFORE US IS WITH REGARD TO ADDIT ION OF 36,34,500/- ON ACCOUNT OF LONG TERM CAPITAL GAIN BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSIN G OFFICER HAS NOTICED THAT THE GOVERNMENT VALUATION OF THE LAND F OR STAMP DUTY PURPOSE AND ACTUAL CONSIDERATION OF LAND SHOWN BY T HE ASSESSEE IN THE SALE DEEDS ARE DIFFERENT AND HENCE, THE ASSE SSING OFFICER HAS ADDED THE SAID DIFFERENCE U/S.50C OF THE ACT AS ADDITION TOWARDS LONG TERM CAPITAL GAIN AS UNDER: LAND DATE OF SALE GOVT. VALUATION ACTUAL CONSIDERATION DIFFERENCE S.NO.70A AREA 1900 MTR. 11/03/2005 RS.10,56,000/- RS.7,12,500/- RS.3,43,500/- S.NO.72B AREA 15100 MTR. 14/03/2005 RS.60,32,000/- RS.37,75,000/- RS.22,57,000/- S.NO.71-6/1 AREA 6800 MTR. 14/03/2005 RS.35,84,000/- RS.25,50,000/- RS.10,34,000/- TOTAL RS.36,34,500/- THE ASSESSING OFFICER HAS TAXED THE LONG TERM CAPI TAL GAIN ON ACCOUNT OF ABOVE DIFFERENCE OF 36,34,500/-. 4. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY. THE STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSING O FFICER HAS ERRED IN MAKING THE ABOVE ADDITION U/S 50C OF THE A CT WITHOUT REFERRING THE SAID LANDS FOR VALUATION TO THE DEPAR TMENTAL VALUATION OFFICER (DVO. IN VIEW OF THE ABOVE FACTS AND CONSIDERING THE PROVISIONS OF SECTION 50C(2) OF THE ACT AND 3 ITA NO.445 OF 12 SHRI RAJESH SAMBHAJI PAWAR VARIOUS DECISIONS ON THE ISSUE, THE SAID LANDS SOLD BY THE ASSESSEE HAVE BEEN REFERRED TO THE DVO FOR VALUATIO N. THE DVO HAS VALUED THE SAID LANDS VIDE HIS VALUATION REPORT DATED 04.11.2011 AS UNDER: LAND GOVT. VALUATION VALUE AS PER DVO ACTUAL CONSIDERATION DIFFERENCE AS PER DVO AND ACTUAL CONSIDERATION S.NO.70A AREA 1900 MTR. RS.10,56,000/- RS.8,55,000/- RS.7,12,500/- RS.3,43,500/- S.NO.72B AREA 15100 MTR. RS.60,32,000/- RS.39,37,500/- RS.37,75,000/- RS.22,57,000/- S.NO.71- 6/1 AREA 6800 MTR. RS.35,84,000/- RS.41,40,000/- RS.25,50,000/- RS.10,34,000/- 4.1 THE VALUATION REPORT OF THE DVO HAS BEEN FORWAR DED TO THE ASSESSEE FOR HIS COMMENTS. THE AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE VALUATION MADE BY T HE DVO IS NOT ON PROPER BASIS AND IS A MERE ESTIMATION WHEREA S THE CONSIDERATION SHOWN IN THE SALE DEEDS IS ACTUAL MAR KET VALUE OF THE LAND SOLD. WITHOUT PREJUDICE TO THE ABOVE CONTENTION, IT WAS CONTENDED ON BEHALF OF ASSESSEE THAT THE REPORT IN RESPECT OF LAND AT SURVEY NO.72B ADMEASURING 15100 SQ. METERS, THE DIFFERENCE IN VALUE AS PER DVO AND THE VALUE DECLAR ED IN SALE DEED IS ONLY 1,62,500/- WHICH IS LESS THAN 10% OF THE SALE CONSIDERATION AND HENCE EVEN THE ADDITION OF 1,62,500/- WAS NOT JUSTIFIED AS WELL AS THE ADDITION MADE BY THE A SSESSING OFFICER AT 22,57,000/- WAS ALSO NOT JUSTIFIED. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS RELIED ON THE DECISION IN THE CASE OF RAHUL CONSTRUCTIONS VS. DCIT (2010) 38 DTR 19 (PUNE ) WHEREIN IT HAS BEEN LAID DOWN THAT DIFFERENCE BETWEEN THE S ALE CONSIDERATION OF THE PROPERTY SHOWN BY THE ASSESSEE AND THE FMV DETERMINED BY THE DVO U/S 50C(2) BEING LESS THAN 10 %, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SUBSTITUTING THE VALUE DETERMINED BY THE DVO FOR THE SALE CONSIDERATION DI SCLOSED BY THE ASSESSEE. 4 ITA NO.445 OF 12 SHRI RAJESH SAMBHAJI PAWAR 4.2 AS REGARDS, LAND AT SURVEY NO.70A ADMEASURING 1 900 SQ. MTRS., THE STAND OF LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE HAS BEEN THAT RELYING ON THE ABOVE DECISIO N IN THE CASE OF RAHUL CONSTRUCTIONS (SUPRA) THE DIFFERENCE IS ON LY 1,42,500/- WHICH IS NOT EXCESSIVE AND IS ONLY DUE TO ESTIMATIO N BY THE DVO AND HENCE 10% ALLOWANCE SHOULD BE GIVEN ON THE VALU ATION MADE BY THE ASSESSING OFFICER AT 8,55,000/-. ACCORDINGLY, THE ASSESSEE HAS CLAIMED THAT THE DIFFERENCE OF L,42,500/- SHOULD BE REDUCED BY 85,500/- AND NET DIFFERENCE OF 57,000/- SHOULD ONLY BE TAXED AS LONG TERM CAPITAL GAIN. 4.3 AS REGARDS, LAND AT SURVEY NO.71-6/1 ADMEASURIN G 6800 SQ. MTRS., THE STAND OF THE ASSESSEE HAS BEEN THAT AS PER GOVERNMENT VALUATION FOR STAMP DUTY PURPOSE, THE VA LUE OF THE SAID LAND CONSIDERED BY THE ASSESSING OFFICER IS 35,84,000/- AS AGAINST 41,40,000/- DETERMINED BY THE DVO AND 25,50,000/- AS PER SALE DEED. THE ASSESSEE HAS CLA IMED THAT AS PER PROVISIONS OF SECTION 50C(3) OF THE ACT, THE VA LUE FOR STAMP DUTY PURPOSE I.E. GOVERNMENT VALUATION OF 35,84,000/- COULD BE CONSIDERED AND HENCE THE ADDITION WAS TO BE REST RICTED TO 10,34,000/- AS ARRIVED AT BY THE ASSESSING OFFICER. THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITH RESPECT OF FIRST TWO TRANSACTIONS. 5. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND CO NTENDED THAT THE CIT(A) HAS IGNORED THE FACT THAT THE DEPARTMENT AL VALUATION REPORT WAS BASED ON THE ESTIMATION WHEREAS, THE VAL UATION OF THE PROPERTY MADE BY STAMP DUTY AUTHORITY AS WELL AS TO WN PLANNING AND LOCAL VALUATION DEPARTMENT FOR STAMP DUTY PURPO SE, CONSIDERING THE AREA HAVING FAST DEVELOPMENT ETC. THE VALUATION OF PROPERTY PREPARED BY VALUATION OFFICER (IT) NAGP UR, AUDITED BY DISTRICT VALUATION (IT) BHOPAL AND CONFIRMS THE VAL UE OF PROPERTY AS VALUED FOR STAMP DUTY PURPOSE. ACCORDINGLY, REQ UESTED THAT 5 ITA NO.445 OF 12 SHRI RAJESH SAMBHAJI PAWAR THE ORDER OF ASSESSING OFFICER MAY BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUP PORTED THE ORDER OF CIT(A). 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE STAND OF THE ASSESSEE HAS BEEN THAT THE VALUATION REPORT OF THE DVO WAS JUST AN ESTIMATE AN D WITHOUT ANY PROPER BASIS WHEREAS THE SALE CONSIDERATION SHO WN IN THE SALE DEEDS REPRESENTS CORRECT MARKET VALUE OF THE L ANDS SOLD AND HENCE THE VALUATION OF DVO SHOULD BE IGNORED. THE ALTERNATIVE CONTENTION OF THE ASSESSEE IN RESPECT OF LAND AT LA ND AT SURVEY NO.72B ADMEASURING 15100 SQ. METERS, THE DIFFERENCE IN VALUE AS PER DVO AND THE VALUE DECLARED IN SALE DEED WAS ONL Y 1,62,500/- WHICH WAS LESS THAN 10% OF THE SALE CONS IDERATION AND HENCE ADDITION OF 1,62,500/- WAS NOT JUSTIFIED IN VIEW OF THE DECISION IN THE CASE OF RAHUL CONSTRUCTIONS (SU PRA). THEREFORE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT NO ADDITION SHOULD BE MADE IN RESPECT OF THE SAID LAND AT SURVE Y NO.72B ADMEASURING 15100 SQ.METERS. ACCORDINGLY, THE ADDI TION MADE BY THE ASSESSING OFFICER IN RESPECT OF THE SAID LAN D AT 22,57,000/- TOWARDS LONG TERM CAPITAL GAIN WAS RIGH TLY DELETED BY THE CIT(A). WE UPHOLD THE SAME. 6.1 REGARDING ANOTHER CONTENTION IN RESPECT OF LAND AT SURVEY NO.70A ADMEASURING 1900 SQ.MTR. WAS THAT THE DIFFER ENCE BETWEEN THE VALUE OF LAND ARRIVED AT BY THE DVO AT 8,55,000/- AND DECLARED BY THE ASSESSEE AT 7,12,500/- WAS ONLY 1,42,500/- WHICH IS ON ACCOUNT OF ESTIMATION AND HE NCE ALLOWANCE OF 10% ON ACCOUNT OF ESTIMATION MAY BE AL LOWED IN VIEW OF THE DECISION ITAT, PUNE IN THE CASE OF RAHU L CONSTRUCTIONS (SUPRA). IN VIEW OF THE FACT THAT TH E DIFFERENCE IN THE ABOVE MENTIONED TWO VALUES WAS NOT MUCH AND ALS O IN VIEW OF THE DECISION OF RAHUL CONSTRUCTIONS (SUPRA), THE DIFFERENCE OF 1,42,500/- WAS REDUCED BY 85,500/- AND NET DIFFERENCE OF 6 ITA NO.445 OF 12 SHRI RAJESH SAMBHAJI PAWAR 57,000/- WAS HELD TO BE TAXED AS LONG TERM CAPITAL GAIN. THE ADDITION MADE BY THE ASSESSING OFFICER OF 3,43,500/- TOWARDS LONG TERM CAPITAL GAIN IN RESPECT OF SALE OF LAND A T SURVEY NO.70A WAS RESTRICTED TO 57,000/-. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6.2 REGARDING LAND AT SURVEY NO.71-6/1 ADMEASURING 6800 SQ. MTRS., THE ADDITION HAS BEEN CONFIRMED BY THE CIT(A ) AND THE ASSESSEE IS NOT BEFORE US. SO, THE SAME IS NOT SUB JECT MATTER BEFORE US. IN VIEW OF ABOVE, THE TOTAL ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN MADE BY THE ASSESSING OFFICER AT 36,34,500/- WAS RESTRICTED TO 10,91,000/- ( 57,000 + 10,34,000). THUS, THE ASSESSEE GOT RELIEF OF 25,43,500/- ( 22,57,000 + 2,86,500/-). THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 31 ST OF JULY, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 31 ST JULY, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE