Shivaji Chintaman Jamkar (HUF), Beed V. Income-tax Officer,

ITA 448/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9532 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KIHOR PHADKE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 448/PUN/2015 / ASSESSMENT YEAR : 2009-10 SHIVAJI CHINTAMAN JAMKAR (HUF), C/O. SHIVAJI CHINTAMAN JAMKAR, JAWAHAR COLONY, NAGAR ROAD, DIST. BEED PAN : AADJ6074J . /APPELLANT VS. ITO, WARD-2, BEED . / RESPONDENT ASSESSEE BY : SHRI KIHOR PHADKE REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 21.12.2017 / DATE OF PRONOUNCEMENT: 05.01.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-2, AURANGABAD DATED 30-03-2015 FOR THE ASSES SMENT YEAR 2009-10. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LEARNED CIT(A), AURANGABAD, ERRED IN LAW AN D ON FACTS IN SUSTAINING THE ADDITION OF CAPITAL GAINS AMOUNTING T O RS. 28,63,357/- WORKED OUT BY THE ITO, WARD 2(4), BEED, BY INVOKING SECTION 50-C OF THE ITA, 1961; WITHOUT APPRECIATING THAT THE RIGHTS OF THE APPELLANT IN THE SAID LAND ARE NOT AKIN TO RIGHTS AS AN OWNER OF LAN D, AND THUS, ERRED IN NOT APPRECIATING THAT SECTION 50C IS NOT APPLICABLE IN THE PRESENT CASE . 2. THE LEARNED CIT(A), AURANGABAD, ERRED IN LAW AND ON FACTS IN SUSTAINING THE SAID ADDITION WITHOUT APPRECIATING T HAT THE SAID LAND WAS RESERVED BY GOVERNMENT FOR CATTLE GRAZING (GAIR AN); TRANSFER OF WHICH, IF MADE WITHOUT PERMISSION FROM APPROPRIATE GOVERNMENT AUTHORITIES, IS ILLEGAL AS PER RULE 22C OF MAHARASH TRA REGISTRATION RULES OF REGISTRATION ACT, 1908. THE LEARNED CIT(A) FAILE D TO APPRECIATE THAT SINCE THE REQUIRED PERMISSION WAS NOT TAKEN FROM ST IPULATED GOVERNMENT AUTHORIT I ES , THE SAID TRANSACTION WAS IRREGULAR . ITA NO.448/PUN/2015 SHIVAJI CHINTAMAN JAMKAR (HUF) 2 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS NO . 1 & 2 , THE L EARNED C IT( A ), AURANGABAD & THE LEARNED ITO, WARD 2(4), BEED ; ERRED I N LAW AND ON FACTS IN NOT APPRECIATING THAT THE ISSUE OF VALUATION OF THE SAID LAND WAS NOT REFERRED TO THE DEPARTMENTAL VALUATION OFFICER (DVO) , AS SO STIPULATED IN SECTION 50C(2). THE LEARNED I-T AUTHO RITIES OUGHT TO HAVE REFERRED THE ISSUE OF VALUATION OF THE SAID LAND TO THE OVA BEFORE CONCLUDING THE ASSESSMENT / APPEAL . 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE (HUF) DERIVES INCOME FROM HOUSE PROPERTY AND FILED THE RETURN OF INCOME ON 21-08- 2009 DECLARING TOTAL INCOME OF RS.1,16,720/- IN RESPECT OF HIS AGRICULTURAL INCOME FOR THE A.Y. 2009-10. THE RETURNED INCOM E INCLUDES THE INCOME BY WAY OF CAPITAL GAIN OF RS.59,550/- EAR NED ON SALE OF A LAND AT NALWANDI, DIST. BEED. DURING THE RE-ASSE SSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE SOLD CERT AIN LANDS DESCRIBED AS LANDS RESERVED BY THE GOVERNMENT FOR CAT TLE GRAZING FOR THE SALE CONSIDERATION OF RS.4,91,000/-. THE STAMP DUTY VALUATION OF THE SAID LAND IS RS.33.90 LAKHS. IN THE REASSESSMENT, THE AO ADOPTED THE SAID FIGURE FOR WORKING OUT THE LONG TERM CAPITAL GAINS AND APPLIED THE PROVISIONS OF SECTION 50C OF THE ACT AND ACCORDINGLY, THE CAPITAL GAIN WAS WORKED OUT. FURTHER, THERE WAS ANOTHER TRANSACTION OF SALE OF PLOTS AT GARKHEDA. THE VALUE AS PER THE SUB-REGISTRAR , BEED OF THE SAID PLOT OF LANDS IS RS.18,55,125/- EACH (TOTAL CONSIDERATION OF BOTH THE PLOTS (PLOT NO. 17 & 18 AT GARKHEDA) AS PER SECTION 50C WORKS OUT TO RS.37,10,250/-. THE AO APPLIED THE SAID PROVISIONS FOR THIS TRANSACTION AS WELL AND DETERMINED THE TOTAL INCOME AT RS.65,75,972/-. 4. THE CIT(A) CONFIRMED THE ADDITION RELATING TO THE SALE O F PROPERTY AT NALWANDI ROAD AND GRANTED RELIEF WITH REGARD TO THE SALE TRANSACTIONS INVOLVING GARKHEDA PLOT, AURANGABAD. THE RE VENUE IS NOT IN APPEAL AGAINST THE RELIEF GRANTED BY THE CIT(A) TO THE ASSESSEE. ITA NO.448/PUN/2015 SHIVAJI CHINTAMAN JAMKAR (HUF) 3 5. THE ASSESSEE IS IN APPEAL BEFORE US WITH REGARD TO TH E DECISION OF CIT(A) ON APPLICABILITY OF PROVISIONS OF SECTION 50C TO THE SAID LAND, WHICH ARE RESERVED BY THE GOVERNMENT FOR CATTLE GRAZING. 6. BEFORE US, LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT AO/CIT(A) FAILED TO APPRECIATE THE LANDS RES ERVED BY THE GOVERNMENT FOR CATTLE FEEDING ARE NOT FREE FROM OWNER SHIP OF THE GOVERNMENT ON THE SAID LANDS. THEREFORE, THE VALUE ADOPTED BY TH E AO REQUIRES DOWNWARD REVISION. ASSESSEE OPPOSED THE AOS MOVE FOR ADOPTING SUB REGISTRARS OFFICE VALUE AND HOWEVER, NO FORMA L REQUEST WAS MADE TO THE AO FOR REFERRING THE PROPERTY TO THE V ALUATION CELL FOR DETERMINING THE MARKET VALUE OF THE SAID PROPERTY. IF REFE RRED, THE VALUE WOULD BE CERTAINLY LESSER THAN THE VALUE OF RS.33.90 LAKHS AS PER THE STAMP DUTY AUTHORITIES. LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IT IS IN THE INTEREST OF JUSTICE, T HE MATTER SHOULD BE REMANDED NOW TO THE FILE OF AO FOR ADJUDICATION O F THIS ISSUE AND FOR MAKING REFERENCE TO THE VALUATION AUTHORITIES FOR A N EXPERT OPINION ON THESE LANDS/OR RIGHTS IN THE LANDS WHICH ARE NO T FREE FROM THE LITIGATION/ENCUMBRANCES/GOVERNMENT ATTACHMENTS, ETC. 7. FURTHER, ON THE ISSUE OF APPLICABILITY OF THE PROVISIONS TO THE RIGHTS IN THE LANDS OF THIS KIND, LD. AR FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE LANGUAGE OF SAID SECTION 50C SUBMITTED THAT THESE PROVISIONS ARE APPLICABLE ONLY TO A CAPITAL ASSET, LAND BUILDING OR BOTH AND NOT TO THE RIGHTS IN THE SAID LANDS OWNED AND RE SERVED BY THE GOVERNMENT FOR CATTLE FEEDING. 8. FURTHER, LD. AR FOR THE ASSESSEE FILED WRITTEN SUBMISSION S (SYNOPSIS) MAINLY HARPING ON THE NATURE OF THE LAND AND TH E APPLICABILITY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. YASIN ITA NO.448/PUN/2015 SHIVAJI CHINTAMAN JAMKAR (HUF) 4 MOOSA GOODIL ITA NO.2519/AHD/2009 WHICH IS RELEVANT FOR T HE PROPOSITION OF REMANDING THE MATTER TO THE INCOME-TAX A UTHORITIES. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS FOR THE PROPOSIT ION THAT A REQUEST FOR REFERRAL TO THE DVO AT THE STAGE OF APPELLATE PROCEEDINGS IS JUSTIFIED AND ALSO THE PROPOSITION FOR EXCLUSION OF RIGHTS IN THE LANDS OUTSIDE THE SCOPE OF PROVISIONS OF SECTION 50C OF THE ACT : CIT VS. GREENFIELD HOTELS & ESTATES (P) LTD. 389 ITR 68 (BOM,) KANCAST (P) LTD. VS. ITO 55 TAXMANN.COM 171 (PUNE TRIB.) ATUL G. PURANIK VS. ITO 11 TAXMANN.COM 92 (MUMBAI TRIB.) 9. FURTHER, BRINGING OUR ATTENTION TO THE PROVISIONS OF SU B-SECTION (2) OF SECTION 50C, LD. AR FOR THE ASSESSEE SUBMITTED THAT REFERRING A MATTER TO THE VALUATION OFFICER OUGHT TO HAVE BEEN DON E WHEN THERE IS SUBSTANTIAL DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES (RS.33.90 LAKHS) AND THE ACTUAL SALE CONSIDERATION , I.E. RS.4,91,000/-. RELIANCE IS PLACED ON THE JUDGMENT OF HONB LE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL VS. CIT 372 ITR 83. FURTHER ALSO, RELYING ON THE CBDT CIRCULAR NO.14XL - 35, D ATED 11-04-1955, LD. AR FOR THE ASSESSEE SUBMITTED, CONSIDERING THE UNAWARENESS OF THE ASSESSEE ON THE TECHNICALITIES/LEGAL PR OVISIONS, THE INCOME-TAX AUTHORITIES SHOULD HAVE GIVEN OPTION TO REFER T HE MATTER TO THE DVO DURING ASSESSMENT PROCEEDINGS. RELEVANT DECISION S ARE ENCLOSED TO THE SAID SYNOPSIS BEFORE US. 10. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAV ILY ON THE ORDERS OF THE AO AND THE CIT(A) ON THIS ISSUE AND SUBMITT ED THAT THE DECISION OF CIT(A) ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. HOWEVER, THE FACT OF NOT MAKING A FORMAL REQUEST BEFORE THE CIT(A) OR THE AO WAS HIGHLIGHTED BY TH E LD. DR BEFORE US. ITA NO.448/PUN/2015 SHIVAJI CHINTAMAN JAMKAR (HUF) 5 11. WE HEARD BOTH THE PARTIES ON THE ISSUE OF EXCLUSION OF RIGHTS OF LANDS OUTSIDE THE SCOPE OF PROVISIONS OF SECTION 50C OF THE ACT ON ONE SIDE, ADOPTING THE STAMP DUTY VALUE MECHANICALLY IGNORING T HAT THE FACT THAT THE LANDS ARE RESERVED BY THE GOVERNMENT FOR CATTLE FEEDING AND ALSO THE ILLEGALITY OF THE TRANSACTION OF SALE OF THE SAID LANDS BY THE ASSESSEE ON THE OTHER SIDE. IN OUR VIEW, THE REQUEST O F THE ASSESSEE BEFORE US ON BOTH THE COUNTS, I.E. REFERRAL TO THE DVO AS WELL AS EXCLUSION OF THE RIGHTS ON THE LANDS OUTSIDE THE SCOPE OF PROVISION OF SECTION 50C OF THE ACT REQUIRES REMANDING THE ISSUE TO T HE FILE OF AO FOR FRESH ADJUDICATION AND A DECISION ON BOTH THE ISSUES. IT IS THE DUTY OF THE AO TO MAKE A PROPER ASSESSMENT. REFERRAL OF THE PROPERTY TO DVO IS NECESSARY WHEN THE ASSESSEE OBJECTS TO THE AO S MOVE DIRECTLY OR INDIRECTLY FOR REDUCTION OF THE SUB-REGISTRARS OFFICE VA LUE. THEREFORE, AO IS DIRECTED TO STUDY THE ISSUE AFRESH AND CONCLUDE THE SAID ISSUES IN THE LIGHT OF THE DECISIONS RELIED UPON BY THE LD. AR FOR THE ASSESSEE BEFORE US. FURTHER, CONSIDERING THE SPECIAL ASPECTS OF THE LANDS, WE ALSO DIRECT THE AO TO OBTAIN AN EXPERT OPINION O F THE DVO AFTER MAKING REFERRAL TO THE DVO AND AFTER GIVING REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE FIND IT IS NOT A SIMPLE ISSUE WHEREBY THE AO CAN MECHANICALLY ADOPT THE STAMP DUTY FOR WORKING OUT THE LONG TERM CAPITAL GAINS IGNORING THE VARIO US FACTS ABOUT THE LAND LINKED TO THE PUBLIC PURPOSES INVOLVED AND THE NATURE OF THE LAND, LONG TERM NATURE OF THE ASSET, GOVERNMENT OW NERSHIP, ILLEGALITY OF THE TRANSACTION, APPLICABILITY OF PROVISIONS OF SECTION 50C OF THE ACT TO THE MERE RIGHTS ON THE LAND AND NOT THE OWNERSHIP OF THE LAND FOR BUILDING OR BOTH. AO NEEDS TO EXAMINE ALL ASPECTS OF THE ISSUE AND MAKE A PROPER ASSESSMENT. IN VIEW OF THE ABO VE DISCUSSION, AO IS DIRECTED TO GRANT REASONABLE OPPORTUNITY TO THE A SSESSEE AT ALL ITA NO.448/PUN/2015 SHIVAJI CHINTAMAN JAMKAR (HUF) 6 STAGES OF THE ASSESSMENT AND TAKE A FRESH DECISION IN TH E MATTER. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 05 TH JANUARY, 2018. COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 2, AURANGABAD CIT - 2, AURANGABAD % , , A BENCH PUNE; GUARD FILE.