RESHMA R DARYANANI, MUMBAI V. ITO WD 12(3)(3), MUMBAI

ITA 4785/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83749 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: G P MEHTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 4785/MUM/2014 (ASSESSMENT YEAR: 2006-07) SMT. RESHMA R. DARYANANI VS. INCOME TAX OFFICER, WARD 12(3)(3) 209, TULSIANI CHAMBERS 212, NARIMAN POINT MUMBAI 400021 1ST FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN - ABAPD1067D APPELLANT RESPONDENT APPELLANT BY: SHRI G.P. MEHTA RESPONDENT BY: SHRI NEIL PHILIP DATE OF HEARING: 10.09.2014 DATE OF PRONOUNCEMENT: 10.09.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A)-23, MUMBAI AND IT PERTAINS TO AY 2006-07. 2. THERE IS A DELAY OF NINE DAYS IN FILING THE APPEAL. ASSESSEE FILED AN EXPLANATION SEEKING CONDONATION OF DELAY. HAVING RE GARD TO THE CIRCUMSTANCES OF THE CASE THE DELAY IN FILING THE A PPEAL IS CONDONED AND THE APPEAL IS TAKEN FOR HEARING ON MERITS. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. DURING THE PREVIOUS YEAR RELEVANT TO THE AY UNDER CONSIDER ATION ASSESSEE SOLD A PLOT AT PALGHAR FOR A TOTAL CONSIDERATION OF ` 1,00,000/-. IN THE OPINION OF THE AO THE CONSIDERATION DECLARED IS LOW. HE THEREFORE ADO PTED THE VALUE DETERMINED BY THE STAMP AUTHORITIES IN THE PLACE OF THE SALE C ONSIDERATION DECLARED BY THE ASSESSEE AND ACCORDINGLY DETERMINED THE LONG TE RM CAPITAL GAIN OF ` 2,85,264/-. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THOUGH THE PROVISIONS OF SECTION 50C OF THE ACT SPEAKS OF VALU ATION DETERMINED BY ITA NO. 4785/MUM/2014 SMT. RESHMA R. DARYANANI 2 STAMP DUTY AUTHORITIES AS MARKET VALUE, WHEN THE AS SESSEE OBJECTED TO THE MARKET VALUE IT IS THE DUTY OF THE AO TO REFER THE MATTER TO THE VALUATION OFFICER WHEREAS IN THE INSTANT CASE THE AO REFUSED TO REFER TO THE VALUATION OFFICER AND HENCE THE VALUE ADOPTED BY THE AO IS BA D IN LAW. THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE. HOW EVER, THE APPELLATE TRIBUNAL, VIDE ITS ORDER DATED 07.10.2010 OBSERVED THAT WHEN AN ASSESSEE OBJECTED TO THE VALUE ADOPTED BY STAMP DUTY AUTHORI TIES AS MARKET VALUE, THE AO HAS A DISCRETION TO REFER THE MATTER TO THE VALUATION OFFICER FOR VALUATION OF THE CAPITAL ASSET. IN THE INSTANT CASE THE AO DID NOT APPLY HIS MIND ON THIS ASPECT AND HENCE THE ISSUE WAS SET ASI DE TO THE FILE OF THE AO WITH A DIRECTION TO PASS A SPEAKING ORDER. IT WAS A LSO MENTIONED THAT THE ASSESSEE IS FREE TO PRODUCE ANY SUPPORTING MATERIAL IN RESPECT OF HER CLAIM THAT THE MARKET VALUE IS MUCH LOWER THAN THE STAMP DUTY VALUE. IT DESERVES TO BE NOTICED THAT THE TRIBUNAL MENTIONED THAT THE ASSESSEE IS FREE TO PRODUCE SUPPORTING MATERIAL WHICH DO NOT INDICATE T HAT THE ASSESSEE IS DIRECTED TO PRODUCE SUPPORTING MATERIAL; ON THE CON TRARY IT ONLY SHOWS THAT THE AO IS DUTY BOUND TO APPLY HIS MIND IN AN OBJECT IVE MANNER AND TO HIGHLIGHT THAT THE VALUE DETERMINED BY THE STAMP DU TY AUTHORITIES IS APPLICABLE IN THE INSTANT CASE. THE AO, HOWEVER, PR OCEEDED ON THE ASSUMPTION THAT THE ONUS IS UPON THE ASSESSEE TO PR ODUCE THE MATERIAL. 5. IN THE INSTANT CASE THE ASSESSEE, IN THE SET ASIDE PROCEEDINGS, PLACED BEFORE THE AO COPY OF THE ENTIRE LAYOUT TO SHOW THA T THE PLOT IN QUESTION WAS LOCATED IN A VERY DISADVANTAGEOUS LOCATION AND COUL D NOT FETCH MORE VALUE THAN WHAT IT WAS SOLD FOR. IT WAS ALSO CONTENDED TH AT IN THE ABSENCE OF ANY POSITIVE EVIDENCE ON RECORD THAT THE ASSESSEE IN FA CT RECEIVED SALE CONSIDERATION MORE THAN WHAT WAS RECORDED IN THE SA LE AGREEMENT, THERE IS NO CASE FOR ALTERATION OF DISCLOSED CONSIDERATION/A MOUNT. 6. VIDE LETTER DATED 27.02.2011 ASSESSEE SUBMITTED BEF ORE THE AO THAT THE PIECE OF LAND BEARING PLOT NO. 109, SURVEY NO. 826 AT MAHIM VILLAGE, TALUKA PALGHAR WAS PURCHASED BY THE ASSESSEE ON 13. 01.1988 FOR A SUM OF ` 21,500/- AND THE SAME WAS SOLD ON 03.02.2006 FOR A CONSIDERATION OF ` 1,00,000/-. IT WAS ALSO SUBMITTED THAT THE PLOT IN QUESTION FORMS PART OF A ITA NO. 4785/MUM/2014 SMT. RESHMA R. DARYANANI 3 LARGE PIECE OF LAND ADMEASURING 152145.56 METRES FR OM SURVEY NO. 826 AT VILLAGE MAHIM, TALUKA PALGHAR. THE ENTIRE PROPERTY IS A SANCTIONED LAYOUT WHICH HAS PROVISIONS OF OPEN SPACE, SCHOOL, DISPENS ARY, VEGETABLE MARKET AND INTERNAL ROADS. HOWEVER, NO SUCH FACILITIES EXI STED AT THE MATERIAL TIME, I.E. AT THE TIME OF SALE OF THE PROPERTY IN QUESTIO N. IT WAS ALSO SUBMITTED THAT THIS LARGE PIECE OF LAND IS ABOUT 4 KMS AWAY FROM P ALGHAR RAILWAY STATION. THE PLOT SOLD IS ABOUT 1 KM INTERIOR FROM THE MAIN MAHIM ROAD AND AT THE FAG END OF THE LAYOUT. SERVICES LIKE WATER SUPPLY A ND SEWAGE DISPOSAL ARE NOT DEVELOPED. COPY OF THE ENTIRE LAYOUT PLAN WAS ALSO PRODUCED TO SHOW THAT THE PLOT IN QUESTION WAS LOCATED IN A VERY DISADVAN TAGEOUS LOCATION AND COULD NOT FETCH MORE VALUE THAN WHAT IT WAS SOLD FO R. 7. THE AO, HOWEVER, WAS OF THE OPINION THAT IN THE ABS ENCE OF REGISTERED GOVERNMENT APPROVED VALUERS REPORT THE PLEA OF THE ASSESSEE CANNOT BE CONSIDERED. HE THEREFORE PROCEEDED TO VALUE THE PRO PERTY AS VALUED BY THE STAMP DUTY AUTHORITIES, AND THUS REPEATED THE ADDIT ION WHICH WAS AGAIN CONFIRMED BY THE CIT(A) AND THUS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. I HAVE HEARD THE LEARNED COUNSEL FOR THE ASSESSEE A S WELL AS THE LEARNED D.R. IN THIS REGARD AND CAREFULLY PERUSED T HE RECORD. THE PLEA OF THE ASSESSEE IS THAT THE EXPRESSION MAY REFERRED TO I N SECTION 50C IMPOSES AN OBLIGATION ON THE PART OF THE AO TO APPLY HIS MIND OBJECTIVELY BEFORE APPLYING THE VALUE ADOPTED BY THE STAMP VALUE AUTHORITIES. I N THE INSTANT CASE THE ASSESSEE HAS GIVEN A DETAILED CLARIFICATION AS TO W HY THE LAND SOLD BY THE ASSESSEE COULD NOT FETCH HIGHER VALUE. THE AO HAS N OT PROPERLY DONE HIS HOMEWORK IN FINDING OUT AS TO WHAT WAS THE BASIS FO R THE STAMP DUTY AUTHORITIES IN ADOPTING THE VALUE AT ` 3,65,500/-. IT IS ORDINARILY BASED UPON SALE OF A PARTICULAR PLOT AT A PARTICULAR LOCATION. IT IS THE DUTY OF THE AO TO VERIFY THE PROXIMITY OF THAT PLOT TO THE PLOT WHICH WAS SOLD BY THE ASSESSEE SO AS TO OBJECTIVELY ASSESS AS TO WHETHER THE ASSESSEE COULD HAVE SOLD HER PLOT AT A PRICE WHICH WAS STIPULATED BY THE STAMP DUTY A UTHORITIES. NO SUCH ACTION WAS TAKEN BY THE AO DESPITE THE SPECIFIC DIR ECTION BY THE BENCH TO ANALYSE THE ISSUE OBJECTIVELY. UNDER THESE CIRCUM STANCES I AM OF THE FIRM ITA NO. 4785/MUM/2014 SMT. RESHMA R. DARYANANI 4 VIEW THAT THE ACTION OF THE AO IS NOT IN ACCORDANCE WITH LAW. THE DEPARTMENT, IN SUCH CASES, SHOULD HAVE BEEN MORE BE NEVOLENT RATHER THAN BEING CAPRICIOUS IN THEIR APPROACH PARTICULARLY WHE N THERE IS SPECIFIC DIRECTION FROM THE BENCH TO CONSIDER THE ISSUE OBJE CTIVELY. WITH THESE OBSERVATIONS THE ADDITION MADE BY THE AO IS DELETED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 10 TH SEPTEMBER, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 23, MUMBAI 4. THE CIT 12, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.