Kishorbhai Vaghjibhai Patel, Rajkot V. Income Tax Officer, Ward-5(2), Rajkot

ITA 476/RJT/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7264 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition
• Section: 147; 139; 143(3); 50C; 69A

Judgement Text

आयकरअपील यअ धकरण, राजकोट यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकरअपीलसं./ITA No. 476/Rjt/2017 नधा रणवष /Asstt. Year:2006-07 Kishorbhai Vaghjibhai Patel C/o D.R. Adhia, “OM Shri Padmalaya”, Beside Trikamraiji Haweli, Opp. Hotel Imperial Palace, 16 Jagnath Plot, Dr. Yagnik Road, Rajkot PAN: ACYPP1362N Vs. ITO Ward-5(2), Rajkot (Applicant) (Respondent) Assessee by : Written Submission Revenue by : Shri B. D. Gupta, Sr. DR स ु नवाईक तार ख/Date of Hearing : 06/07/2022 घोषणाक तार ख/Date of Pronouncement: 14/09/2022 आदेश/O R D E R PER BENCH: The captioned appeal hasbeen filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax-(Appeals)-3, (in short the Ld. CIT(A)), Rajkot dated 29/09/2017arising in the matter of assessment order passed under Section 143(3) r.w.s. 147of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2006-07. 2. The assessee has raised the revised grounds of appeal: “1. The Ld. CIT(A) has erred in law and facts in confirming addition of Rs. 7,16,881/- mentioning and treating the same as long term capital gain. The addition needs deletion. 2. Taking into consideration the legal, statutory, factual, accounting and administrative aspects, no addition amounting to Rs. 7,16,881/- ought to have been confirmed. The addition needs deletion. ITA No.476/Rjt/2017 A.Y. 2006-07 2 3. Without prejudice, the assessment made is bad in law and deserves annulment. 4. Without prejudice, since no return of income in response to notice issued U/s. 148 has been filed by the assessee, the subsequent issuance of notice U/s. 143(2) is bad in law, illegal and sustainable. The assessment needs annulment. 5. Without prejudice, the Ld. CIT(A) has erred in law and facts in changing the heads of income without statutory authority. The same being band in law deserves cancellation. 6. Without prejudice, the Ld. CIT(A) has erred in law and facts in not giving opportunity to the assessee to make his submissions against the change of heads of income which he determined in appeal order. The appeal order having been passed against principals of natural justice and decisions of the Hon. Supreme Court, needs cancellation with a direction to refund the amount of appeal fee paid by the appellant for filing appeal before the Hon. ITAT. 7. Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while passing assessment order. The assessment needs annulment. 8. Without prejudice, no adequate, sufficient and reasonable opportunity has been provided while passing appeal order. The assessment needs annulment. 9. The appellant craves leave to add/alter/amend and/or substitute any or all ground of appeal before the actual hearing takes place.” 3. The interconnected issue raised by the assessee that the Ld. CIT(A) erred in confirming the addition of Rs. 7,16,881/- treating the same as long-term capital gain. 4. The facts in brief are that the assessee in the present case is an individual and engaged in the business of manufacturing of engineering goods under the name and style of M/s. Ravi Enterprise. The AO during the assessment proceedings found that the assessee has sold an immovable property for a value of Rs. 3,91,000/- but the same is determined for the purpose of stamp duty value of Rs. 7,16,881/- only. The AO found that the assessee has not disclosed such transaction in the Income Tax Return. On question by the AO the assessee has not furnished any reply. Thus, the AO in the absence of any reply from the assessee treated the entire value of the property as capital gain of the assessee and accordingly the addition was confirmed for Rs. 7,16,881/- to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the Ld. CIT(A) who confirmed the order of the AO by observing as under: ITA No.476/Rjt/2017 A.Y. 2006-07 3 “5.4 It is also beyond dispute that the said undeclared asset was disposed during the relevant previous year and therefore capital i.e. short term capital gain has arisen to the appellant in lieu of sale of a immovable property. This is so because no date of acquisition had been provided by appellant. No cost of acquisition was also provided but as the market value declared in sale deed has already been treated as unexplained money, the same should be taken as cost of acquisition for working out capital gain. As he asset being disposed off, is land & building, section 50C will come into operation if the stamp duty value exceeds the declare sale considerations. During the assessment proceedings the appellant has not appeared before the assessing officer meaning by no objection was raised by the assessee regarding the stamp duty value being in excess of the fair market value. Therefore, the AR's argument that AO has erred in not referring the matter to the valuation officer is also without any force. The AO's action of making addition under the head capital gain is confirmed, however he is directed to restrict the addition under the head capital gain only of the amount of Rs. 716000A reduced by 391000/- (which had already been added u/s 69A) i.e. at Rs. 325000/-. Thus in place of the addition of Rs. 716881/- under the head of "Long Term Capital Gain" AO is directed to make addition u/s 69A of Rs. 391000/- and under the head of Short Term Capital r.w.s 50C at Rs. 325000/-. ” 6. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 7. The Ld. AR before us filed a written submission running into 4 pages wherein it was contended that the gross stamp value cannot be taken as income of the assessee without deducting the corresponding cost of the property. 8. On the contrary, the Ld. DR vehemently supported the order of the authorities below. 9. We have heard the Ld. DR and perused the materials available on record. There is no dispute to the fact that there was a transfer of immovable property for a consideration of Rs.3.91 lakhs, the value of which for the purpose of the stamp duty was at Rs.7,16,881/-. Thus, there remains no ambiguity that value reported for the purpose of stamp duty being higher of the actual amount of sale consideration has been adopted for the purpose of capital gain in pursuance to the provisions of section 50C of the Act. However, the provisions of sub-section (2) of Section 50C of the Act provides the authority to the assessee to disagree with the value taken for the purpose of the stamp duty as the sale consideration for calculating the capital gain. In such a situation, the AO shall refer the valuation of ITA No.476/Rjt/2017 A.Y. 2006-07 4 the capital assets to the Departmental Valuation Officer. Thus it was prayed by the Ld. AR for the assessee to refer the matter to the DPO for the purpose of the valuation of the property in order to work out the amount of sale consideration in pursuance to the provisions of Section 50C of the Act. We do not find any infirmity in the request made by the Ld. AR for the assessee. 10. Moving further, we note that the amount of sale consideration shown by the assessee in the registered papers for Rs.3.91 lakhs, cannot be treated as unexplained money under the provisions of Section 69A of the Act merely on the reasoning that the assessee failed to furnish the detail of the cost of acquisition of the property in dispute. It is for the reason that the source of money is very much known for Rs.3.91 lakhs i.e. money received by the assessee on the transfer of the immovable property. Thus, the underlying transaction in the given facts and circumstances represent transfer of the immovable property, thus to the best of our knowledge, the provisions of Section 69A cannot be attracted. 11. It is not out of place to mention that it is the duty of the assessee to furnish the necessary detail including the information about the cost of acquisition of the property in dispute. But the assessee failed to furnish the same in the given facts and circumstances. But the Revenue cannot take the benefit of the default committed by the assessee. In other words revenue cannot act arbitrarily in a situation where the assessee does not extend any assistance by furnishing the necessary details. As such the revenue has been empowered under the statute to extract the necessary information from the concerned parties. For this purpose the powers have been given to AO under the provisions of Section 133(6)/131 of the Act besides the supporting staff provided to the assessing officer including the inspector of the income tax. The assessee for any reason best known to him failed to furnish the details about the cost of acquisition, then the onus shifts upon the revenue to collect the necessary details from the registrar of property office to ascertain the cost of acquisition. But we find that the authorities below failed to exercise such powers. ITA No.476/Rjt/2017 A.Y. 2006-07 5 12. Be that as it may be, we find that case of the assessee has been mishandled by the authorities below primary in the absence of the information to be furnished by the assessee at the relevant time. Therefore, in the interest of justice and fair play we are inclined to give one more opportunity to the assessee to set up his case of fresh hearing before the AO along with the supporting documents. Thus, we set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 13. As regards the technical issue raised by the assessee challenging the validity of the assessment framed under Section 147 of the Act, we note that the assessee has not filed any return of income either under Section 139 or in response to the notice issued under Section 148 of the Act. Thus, in the absence of any return of income, the revenue had no alternative except to proceed the assessment based on the materials available on record. Thus, the technical ground raised by the assessee is dismissed. 14. In the result, the appeal filed by the assessee is partly allowed for the statistical purposes. Order pronounced in the Court on 14/09/2022 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 14/09/2022 Tanmay, Sr. PS TRUE COPY आदेशक त ल प े षत/Copy of the Order forwarded to : आदेशान ु सार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील!यअ"धकरण, अहमदाबाद / ITAT, Ahmedabad 1. अपीलाथ / The Appellant 2. !"यथ / The Respondent. 3. संबं धतआयकरआय ु $त/ Concerned CIT 4. आयकरआय ु $त(अपील) / The CIT(A) 5. %वभागीय!(त(न ध, आयकरअपील यअ धकरण/ DR, ITAT, 6. गाड*फाईल / Guard file.