Shri Pyare Mohan Mathur,HUF, Aligarh V. ITO, Aligarh

ITA 471/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7062 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report; Competent authority
• Section: 50C; 68; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 471/AGRA/2009 ASSTT. YEAR : 2005-06 SHRI PYARE MOHAN MATHUR, HUF, VS. INCOME-TAX OFF ICER, 3/393 A, HARIOM NAGAR, WARD-2, ALIGARH. MARRIS ROAD, ALIGARH. (PAN : AABHP 5496E) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI RAJENDRA SHARMA, ADVOCATE. FOR RESPONDENT : SHRI VINOD KUMAR, JR. D.R. ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 15.10.2009 OF CIT(A), GHAZIABAD BY TAKING FOLLOWING EFFECTIVE GROUNDS : 1. THAT THE AUTHORITIES BELOW HAVE ERRED ON FACTS AS WELL AS IN LAW WHILE SUSTAINING THE ADDITION FOR RS.16,02,400/- UN DER THE HEAD LONG TERM CAPITAL GAIN BY IGNORING THE VALUE OF LAND AS ON 31.3.81 AS TAKEN BY ASSESSEE, BASED ON THE VALUATION REPORT OF APPROVED VALUER FILED BEFOR E THE AO, THE VALUE AS WORKED OUT IN THE VALUATION REPORT IS LIABLE TO BE ADOPTED FOR COMPUTING THE CAPITAL GAIN, THE VALUE ADOPTED BY THE AO (ON THE BASIS OF REPORT OF INCOME TAX INSPECTOR) IS WITHOUT ANY BASIS, NO ADDITION ON THIS SCORE IS CAL LED FOR, ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. 2. THAT WHILE WORKING OUT THE LONG TERM CAPITAL GA IN, THE AO HAS NOT ACCEPTED THE VALUATION REPORT OF THE APPROVED VALUE R FURNISHED BEFORE HIM NOR HAS REFERRED THE MATTER TO THE VALUATION OFFICER UNDER SECTION 55(A) OF THE INCOME TAX ACT FOR OBTAINING THE VALUATION. IN THE ABSENCE OF VALUATION REPORT OF ANY TECHNICAL PERSON CONTRARY TO THE VALUATION REPORT O F THE APPELLANT, THE VALUATION REPORT SUBMITTED BY THE APPELLANT SHOULD BE ACCEPTE D. ADDITION MADE BY AO AND SUSTAINED BY THE CIT(APPEALS) IGNORING THE VALUATIO N REPORT OF THE APPELLANT IS NOT CALLED FOR, LIABLE TO BE DELETED. 3. THAT THE VALUATION OF THE LAND, FOR THE PURPOSE OF CAPITAL GAIN AS ON 31.03.81 HAS BEEN RIGHTLY TAKEN BY THE ASSESSEE WHI CH IS ON THE BASIS OF THE REPORT OF TECHNICAL PERSON APPROVED BY INCOME TAX DEPARTME NT IS LIABLE TO BE ACCEPTED. ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED . 2 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS), A GRA HAS ERRED ON FACTS AS WELL AS IN LAW WHILE SUSTAINING THE ADDITION FOR RS.2,17,000/- MADE BY THE AO UNDER SECTION 68 OF THE INCOME TAX ACT. NO ADDITION IS LIABLE TO BE SUSTAINED. THE DEPOSITS MADE IN THE BANK A/C ARE FULLY EXPLAINED O N THE BASIS OF THE EXPLANATION AS OFFERED BY THE APPELLANT BEFORE AUTHORITIES BELO W, THE ADDITION SUSTAINED ON THIS SCORE IS LIABLE TO BE DELETED. 2. THE FIRST ISSUE RELATES TO THE SUSTENANCE OF THE ADDITION OF RS.16,02,400/- UNDER THE HEAD LONG-TERM CAPITAL GAIN. THE FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE HAS SHOWN LONG-TERM CAPITAL LOSS OF RS.2,30,000/- BY TAKING THE FAIR MA RKET VALUE OF THE PROPERTY AS ON 01.04.1981 TO BE THE COST OF ACQUISITION FOR THE PURPOSE OF COMPU TATION OF CAPITAL GAINS. HE GOT THE VALUATION OF THE PROPERTY DONE THROUGH REGISTERED VALUER. THE AS SESSING OFFICER DID NOT AGREE WITH THE ASSESSEE, BUT ON THE BASIS OF THE INSPECTORS REPOR T, HE TOOK THE CIRCLE RATE LIST DATED 08.06.1981 OF THE AGRICULTURAL LAND OF KOIL TEHSIL AND VALUED THE LAND AT THE RATE OF 12300/- PER BIGHA AS ON 01.04.1981 AND RECOMPUTED THE LONG-TERM CAPITAL GAI N AT RS.16,02,400/- IN THE FOLLOWING MANNER: TOTAL LAND SOLD BY THE ASSESSEE = 5 BIGHA SHARE OF ASSESSEE = 2.5 BIGHA HENCE, FAIR MARKET VALUE OF THE LAND AS ON 1.4.81 ON THE BASIS OF CIRCLE RATE AS DISCUSSED ABOVE. = 2.5 X 12,300/- = 30,750/- INDEXED COST OF ACQUISITION = 30,750 X 480/100 = 1,47,600/- SALE CONSIDERATION OF LAND AS PER PROVISION OF SEC .50C = 17,50,000/- HENCE, LONG-TERM CAPITAL GAIN = 17,50,000 1, 47,600 = 16,02,400/-. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), W HERE THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON FOR NOT ACCEPTING THE VALUATION REPORT OF THE REGISTERED VALUER, BUT RELIED ON THE REPORT OF THE INCOME-TAX INSPECTOR, WHO IS NOT A TECHNICAL PERSON. EVEN HE DID NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE INSPECTOR. IT WAS ALSO POINTED OUT THAT THERE IS DIFFERENCE IN THE FA IR MARKET VALUE AND THE CIRCLE RATE. THE CIRCLE RAT E 3 CAN BE SUBSTITUTED U/S. 50C FOR THE PURPOSE OF DETE RMINING THE SALE CONSIDERATION FOR COMPUTATION OF CAPITAL GAIN, BUT THERE IS NO PROVISION WHICH ST ATES THAT THE FAIR MARKET VALUE WILL BE REPRESENTED BY THE CIRCLE RATE. HAD THE ASSESSING O FFICER DOUBTED THE FAIR MARKET VALUE AS WORKED OUT BY THE REGISTERED VALUER, HE SHOULD HAVE SOUGHT THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER. THE CIT(A) DID NOT AGREE WITH THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. THE LEARNED AR BEFORE US REITERATED THE SUBMISSI ONS MADE BEFORE THE CIT(A). HE POINTED OUT THAT THE FAIR MARKET VALUE IS DEFINED U/S. 2(22 B). THIS SECTION NOWHERE STATES THAT THE FAIR MARKET VALUE WILL BE THE CIRCLE RATE AS NOTIFIED FO R THE PURPOSE OF REGISTRATION OF THE PROPERTIES UNDER THE STAMP DUTY ACT. THIS SECTION CLEARLY SAYS THAT FAIR MARKET VALUE WILL BE THE PRICE THAT THE CAPITAL ASSET WOULD ORDINARILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE AND WHERE SUCH PRICE IS NOT ASCERTAINABLE IT SHOULD BE DETERM INED IN ACCORDANCE WITH RULES MADE UNDER THE INCOME-TAX ACT. IT WAS POINTED OUT THAT NO RULE IN THIS REGARD HAS BEEN MADE SO FAR. ATTENTION WAS ALSO DRAWN TO SECTION 55(2)(B)(I) WHICH ALLOW THE O PTION TO THE ASSESSEE WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF ASSESSEE BEFORE 1 ST DAY OF APRIL, 1981 TO TAKE THE FAIR MARKET VALUE O F THE ASSET AS ON 1 ST DAY OF APRIL, 1981 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AS COST OF ACQUISITION. REFERRING TO SECTION 55A, IT WAS POINT ED OUT THAT THE ASSESSING OFFICER, IN CASE WAS NOT SATISFIED WITH THE ESTIMATE MADE BY THE REGISTE RED VALUER, HE SHOULD HAVE REFERRED TO THE MATTER TO THE VALUATION OFFICER. IT WAS POINTED OUT THAT THE CIRCLE RATES ARE TO BE ADOPTED ONLY FOR THE PURPOSE OF DETERMINATION OF SALE CONSIDERATION U/S. 50C. THUS, IT WAS CONTENDED THAT THE VALUE AS HAS BEEN ESTIMATED BY THE REGISTERED VALUER SHOU LD HAVE BEEN ACCEPTED AS FAIR MARKET VALUE AS ON 01.04.1991 FOR THE PURPOSE OF CAPITAL GAIN. 4 5. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, THE ORDERS OF THE TAX AUTHORITIES BELOW AND THE RELEVANT PROVISIONS OF THE INCOME-TAX ACT, AS HAS BEEN REFERRED TO. SECTION 55(2) DEFINES THE COST OF ACQUISITION FOR THE PURPOSE OF SECTION 48 AND 49 UNDER WHICH CAPITAL GAIN HAS TO BE COMPUTED. SECTION 55(2)(B) DEFINES THE COST O F ACQUISITION IN RELATION TO CAPITAL ASSET WHICH BECOME THE PROPERTY OF THE ASSESSEE PRIOR TO 1 ST APRIL, 1981 TO MEAN THE COST OF ACQUISITION OF THE ASSET OF THE ASSESSEE OR THE FAIR MARKET VALUE OF T HE ASSET AS ON 1.4.1981 AT THE OPTION OF THE ASSESSEE. THERE IS NO DISPUTE THAT THE IMPUGNED PRO PERTY WHICH WAS SOLD BY THE ASSESSEE BECAME THE ASSET OF THE ASSESSEE PRIOR TO 01.04.1981 AND T HE ASSESSEE HAS OPTED FAIR MARKET VALUE AS ON 01.04.1981 FOR THE PURPOSE OF COMPUTATION OF CAPITA L GAIN. FAIR MARKET VALUE IS DEFINED U/S. 2(22B) IN THE FOLLOWING MANNER : 2(22B). FAIR MARKET VALUE, IN RELATION TO A CAP ITAL ASSET, MEANS (I) THE PRICE THAT THE CAPITAL ASSET WOULD ORDINARILY F ETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE; AND (II) WHERE THE PRICE REFERRED TO IN SUB-CLAUSE (I) IS NO T ASCERTAINABLE, SUCH PRICE AS MAY BE DETERMINED IN ACCORDANCE WITH THE R ULES MADE UNDER THIS ACT. THIS IS A FACT THAT IN THIS CASE, NO RULES HAVE BEE N DETERMINED FOR THE PURPOSE OF DETERMINING FAIR MARKET VALUE. THE ASSESSEE HAS RELIED ON THE VALUAT ION REPORT WHICH HE OBTAINED FROM THE REGISTERED VALUER WHO IS TECHNICAL PERSON AND DULY APPROVED BY THE DEPARTMENT. HE HAS SUBMITTED THE COPY OF THE VALUATION REPORT. THE ASSESSING OFF ICER, ON THE OTHER HAND DEPUTED THE INSPECTOR WHO BROUGHT THE CIRCLE RATE OF THE VILLAGE WHERE TH E LAND WAS SITUATED AND HAS ADOPTED THE CIRCLE RATE TO BE FAIR MARKET VALUE. WE COULD NOT GET ANY PROVISION UNDER THIS CHAPTER RELATING TO THE COMPUTATION OF THE CAPITAL GAIN, WHICH STATES THAT CIRCLE RATE WILL BE TREATED TO BE THE COST OF ACQUISITION. CIRCLE RATES ARE NOTIFIED BY THE STATE GOVERNMENT FOR THE PURPOSE OF LEVYING THE 5 STAMP DUTY FOR REGISTRATION OF THE SALE DEEDS. THE CIRCLE RATES ARE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER U/S. 50C. BUT THIS SECTION NOWHERE STATES THAT CIRCLE RATE AS NOTIFIED WILL BE THE FAIR MARKE T VALUE. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 55A. THIS SECTION EMPOWERS THE ASSESSING OF FICER FOR ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSE OF COMPUTATION O F CAPITAL GAINS, TO REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER. THE RELEVANT PROVISIO N HAS BEEN LAID DOWN AS UNDER : 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VA LUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERE D VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE; (B) (C) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF T HE OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN S UCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND O THER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO; AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB-SECTION (2)(3)(4)(5) AND (6) OF SECTION 16A, CLAUSES (HA) AND (I) OF SUB -SECTION (1) AND SUB-SECTIONS (3A) AND (4) OF SECTION 23, SUB-SECTION (5) OF SECT ION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1 957), SHALL WITH THE NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-S ECTION (1) OF SECTION 16A OF THAT ACT. . . .. IN VIEW OF THE AFORESAID PROVISION, WE ARE OF THE V IEW THAT ONCE THE ASSESSEE HAS SUBMITTED THE NECESSARY EVIDENCE BY WAY OF VALUATION REPORT MADE BY THE REGISTERED VALUER, THE ONUS GETS SHIFTED ON THE ASSESSING OFFICER TO CONTRADICT THE REPORT OF THE REGISTERED VALUER. THE REGISTERED VALUATION OFFICER IS A TECHNICAL EXPERT AND THE OPI NION OF AN EXPERT CANNOT BE THROWN OUT WITHOUT 6 BRINGING ANY MATERIAL TO THE CONTRARY ON RECORD. TH E INSPECTOR IS NOT A COMPETENT AUTHORITY. HIS REPORT CANNOT BE REGARDED TO BE THE EVIDENCE TO CON TRADICT THE EXPERTS OPINION. IN CASE, THE ASSESSING OFFICER WAS NOT AGREEABLE WITH THE REPORT OF THE REGISTERED VALUER, HE WAS DUTY BOUND TO REFER THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981 WHICH HE FAILED TO DO. EVEN NO COMPARATIVE INSTANCE ETC. WAS BROUGHT ON RECORD TO REJECT THE VALUATION REPORT SUBMITTED BY THE ASSESSEE. UNDER T HESE FACTS, WE ARE OF THE OPINION THAT THE REVENUE HAS NOT DISCHARGED THE ONUS BUT MERELY REJE CTED THE FAIR MARKET VALUE AS HAS BEEN TAKEN BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE CAPITAL GAIN AFTER TAKING THE FAI R MARKET VALUE OF THE LAND AS ON 01.04.1981, AS CLAIMED BY THE ASSESSEE. THUS, THE GROUND NO. 1 TO 3 ARE ALLOWED. 7. GROUND NO. 4 RELATES TO SUSTENANCE OF ADDITION O F RS.2,17,000/- MADE BY THE AO U/S. 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED DEPOSITS IN TH E BANK ACCOUNT. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEPOSITED RS.67000/-, RS.50,000/- AND RS.1,00,000/- TOTALING TO RS.2,17,0 00/- RESPECTIVELY ON 15.07.07, 27.11.04 AND 24.12.04 IN HIS BANK ACCOUNT NO. 23/7626. THE CASH DEPOSITED IN THE BANK ACCOUNT WAS FOUND DISPROPORTIONATE TO THE INCOME SHOWN BY THE ASSESSE E IN RETURN OF INCOME. THE ASSESSEE WAS, THEREFORE, REQUIRED TO EXPLAIN THE SOURCE OF THESE DEPOSITS AND TO FURNISH THE CASH FLOW STATEMENT. THE AO FURTHER OBSERVED THAT THOUGH THE ASSESSEE FU RNISHED THE FUND FLOW STATEMENT, BUT FOR WANT OF ANY EVIDENCE IN SUPPORT THEREOF AND ALSO TH E FACT THAT THE ASSESSEE DID NOT PREPARE AND PERSONAL STATEMENTS OF AFFAIRS NOR MAINTAINED ANY B OOKS OF ACCOUNT, THE FUND FLOW STATEMENT FURNISHED BY ASSESSEE WAS DOUBTED AND THE AMOUNT OF RS.2,17,000/- WAS ADDED TO THE INCOME OF ASSESSEE U/S. 68 OF THE ACT AS UNEXPLAINED CASH CRE DITS, WHICH WAS CONFIRMED BY THE CIT(A). 7 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE NOTED THAT THE ADDITION OF RS.2,17,000/- MADE BY ASSESSING OFFICER U/S. 68 IS NOT SUSTAINABLE. THE ASSESSEE HAD FILED FUND FLOW STATE MENT FOR A.Y. 2004-05 AND 2005-06 WHICH REFLECTS ALL THE CASH TRANSACTIONS ENTERED BY THE A PPELLANT. THE CASH TRANSACTIONS SHOWN IN THE CASH FLOW STATEMENT ARE VERIFIABLE FROM THE BANK AC COUNT. THE DEPARTMENT HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO BELIE THE CASH TRANSACTIONS S HOWN IN THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE NOR IS THERE ANY SUCH OBJECTION THAT S UCH CASH TRANSACTIONS ENTERED BY THE ASSESSEE ARE NOT VERIFIABLE FROM THE BANK ACCOUNT. HENCE, WE FIND NO GOOD REASON TO SUSTAIN THE IMPUGNED ADDITION OF RS.2,17,000/- U/S. 68 OF THE ACT. THE O RDER OF THE CIT(A) IS, THEREFORE, SET ASIDE AND THE GROUND RAISED BY ASSESSEE IS, THUS, ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST APRIL, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY