Ranjitlal Chhaganlal Shah, Navsari V. The Income Tax Officer, Ward-4, Navsari

ITA 480/SRT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1895 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Bonafide belief; Period of limitation; Cost of acquisition; Reasonable cause; Fair market value; Condonation of delay
• Section: 50C; 55A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 480/Srt/2018 (Assessment Year: 2012-13) (Hearing in Virtual Court) Ranjitlal Chhaganlal Shah, Paras Building, 1 st Floor, Soniwad, Bilimora, Tal. Gandevi, Dist.- Navsari-396321. PAN No. ADIPS 9634 D Vs. I.T.O., Ward-4, Navasri. Appellant/ assessee Respondent/ revenue Appellant represented by Shri Hiren Vepari, A.R. Respondent represented by Shri Vinod Kumar, Sr.DR Date of hearing 25/05/2022 Date of pronouncement 15/07/2022 Order under section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Valsad (in short, the ld. CIT(A) dated 03/02/2017 for the Assessment year 2012-13. The assessee has raised following grounds of appeal: “1. The ld. CIT(A) erred in not dealing with Ground NO. (1)(4) of the Grounds of appeal before him by not granting indexed cost of fair market value as on 01/4/1981. 2. On the facts and circumstances of the case, the learned CIT(A) erred in taking the cost of acquisition of the property of 24/12/1928 as basis of cost for the purpose of FMV as on 01/4/1981. 3. In any case, prior to the amendment in Section 55A of the Act, the position of law only allowed the department to enhance the fair market value as on 01/4/1981. Hence, the learned CIT(A) ought to have accepted the report of the registered valuer given by the assessee. 4. The appellant craves leave to add, alter or vary any of the grounds of appeal.” ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 2 2. Perusal of record shows that the ld. CIT(A) passed the impugned order on 03/02/2017, however, the present appeal is filed on 10/07/2018. Thus, there is delay of 462 days in filing the appeal before the Tribunal. 3. The assessee has filed his affidavit for condonation of delay in filing the appeal. In the affidavit, the assessee contended that after passing the order by the ld. CIT(A) Valsad dated 03.02.2017, the Assessing Officer in his order dated 06.03.2017 while giving effect to the order of ld. CIT(A), has not allowed indexation value of asset as on 01/04/1981. Though, the assessee raised a specific ground of appeal before the ld. CIT(A) for allowing of indexation value of asset as on 01/4/1981. The assessee under legal advice filed appeal before Ld CI(A), against the action of assessing officer of order giving effect. The assessee under bonafide believe was pursuing remedy before ld CIT(A). The assessee filed said appeal on 04.05.3017 and the same was dismissed on 31.05.2018. 4. The ld. AR of the assessee submits that under the bonafide belief, the assessee was pursuing alternative remedy in filing appeal before ld CIT(A) by filing appeal against the order giving effect by assessing officer to save the time and cost. The ld. Ultimately dismissed the said appeal on 31.05.2018 by holding that the assessee is not eligible to files appeal against the order giving effect by assessing officer and the assessee should have filed appeal before Tribunal, against the order of ld CIT(A) dated ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 3 03.02.2017. On further seeking advice, the assessee was advised to file appeal against the order of ld. CIT(A) dated 03.02.2017 before the Tribunal by raising the grounds that the assessee is eligible for indexation cost of asset. The ld. AR of the assessee submits that there is a reasonable cause for non-filing appeal before the Tribunal as the assessee was pursuing remedy under bonafide belief before ld CIT(A) and the time spent in such proceeding is liable to be excluded. There was no intentional or deliberate delay in filing appeal belatedly rather there is a chance that the assessee made suffer irreparable loss. The ld. AR submits that the Bench may take liberal view and condone the delay in filing the appeal. The assessee is really interested in pursuing his appeal on merit. The assessee has already filed his affidavit for seeking condonation of delay in filing appeal. To support his submission, the ld. AR of the assessee has relied upon the decision of Hon’ble Jammu & Kashmir High Court in the case of Faisal Hameed Vs ITAT & Anr. (2013) 83 DTR (J&K) 10. 5. On the other hand, the learned senior departmental representative (DR) for the revenue submits that the assessee was very well aware that no relief about indexation cost was allowed by ld. CIT(A). The assessee ought to have filed appeal before the Tribunal and pursuing alleged alternative remedy is not helpful to the assessee. ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 4 6. We have considered the submissions of both the parties and have gone through the affidavit of assessee for condonation of delay. There is no dispute that the impugned order was passed by the ld. CIT(A) on 03/02/2017 and that the present appeal is filed only on 10/07/2018, thus there is inordinate delay in filing the present appeal before the Tribunal. It is a matter of fact that against the order giving effect the assessee filed appeal before ld CIT(A) for seeking indexation cost. The Assessing Officer passed order giving effect on the order of ld. CIT(A) on 04/04/2017. Against the order giving effect, the assessee filed appeal before the ld. CIT(A) on 04/05/2017. The appeal of assessee was dismissed on 31.05.2018 which is received by assessee on 01/06/2018. 7. Before us, the ld. AR of the assessee vehemently submitted that the assessee to avoid the cost and time were pursuing alternative remedy based on the advice, thus the time period spent in pursuing remedy from 04/04/2017 till 01/06/2018 may be excluded. Considering the peculiar facts of the case, we find that there is no dispute that against the order giving effect dated 04/04/2017, the assessee filed appeal before the ld. CIT(A) which was dismissed vide order dated 31/5/2018. The copy of order giving effect by the Assessing officer took place at page No. 1 of the paper book and the order of ld. CIT(A) against the order giving effect dated 31/05/2018 is also placed at page No. 7-8 of the paper book. On perusal of said order, ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 5 we find that the assessee was pursuing remedy, though no such remedy was available/maintainable to the assessee. We find that after dismissal of appeal against the order giving effect, the assessee filed the present appeal challenging the order of ld. CIT(A) in not allowing the indexation cost to the assessee. The assessee is also placed on record the grounds of appeal raised before the ld. CIT(A) in the original appeal. Perusal of such grounds of appeal, we find that the assessee has raised ground No. 4 as specific ground for seeking deduction of taxed value of fair market value of asset as on 01/04/1981. Considering the aforesaid facts of the case, we find that the assessee was wrongly pursuing the remedy before the ld. CIT(A) instead of filing appeal before the Tribunal, therefore, we find a reasonable cause in not filing the appeal before the Tribunal. Further considering the fact that if we exclude the time spent in pursuing remedy before the wrong forum i.e. from 04/04/2017 till 01/06/2018, the appeal filed by assessee would be within 60 days of period of limitation for filing appeal before the Tribunal. 8. The Hon’ble Jammu & Kashmir High court in Faisal Hameed Vs ITAT & Anr (supra) has held that the assessee pursuing one remedy or the other by filing appeal as per legal advice tendered to him. It is well settled that if the litigant initiated proceeding on the basis of legal advice, such event would constitute sufficient cause for condonation of delay as per provisions of Section 14 of Limitation Act. Thus, considering the aforesaid peculiar facts of ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 6 the present case and the decision of Hon’ble Jammu & Kashmir High Court in Faisal Hameed Vs ITAT & Anr (supra), we find that the assessee is able to show a reasonable cause for not filing the appeal within the period of limitation, therefore, the delay in filing the appeal is condoned. Now adverting to the merits of the case. 9. Briefly stated, facts of the case are that during the assessment, the Assessing Officer noted that the assessee has sold plot of land out of revenue survey No. 415, C.S. No. 2930 to 2939 and 2941 to 2967 admeasuring 1292 sq. meters at Desra, Taluka- Bilimora, District Navsari for a consideration of Rs. 81.00 lacs. The said property was acquired by predecessor of assessee on 24/12/1928 for a consideration of Rs. 6999/-. The Assessing Officer on further verification of registered sale deed, noted that the stamp valuation authority valued the property at Rs. 3.682 crore and recovered additional stamp duty of Rs. 18,39,200/-. The assessee is having 1/3 rd share, thus the share of assessee comes to Rs. 1.227 crore. The Assessing Officer issued show cause notice as to why the provision of Section 50C of the Income Tax Act, 1961 (in short, the Act) is not invoked against the assessee in treating deemed value of consideration. The Assessee filed its reply dated 13/3/2015. In reply, the assessee stated that the stamp duty authority determined the value as excessive. The assessee has not received any amount in excess of sale consideration shown on the ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 7 documents. The assessee requested to refer the matter for valuation by District Valuation Officer (DVO). The Assessing Officer recorded that on the submission of assessee, the matter was referred to DVO. The DVO report was not received till passing of assessment order on 30/03/2015. The Assessing Officer also noted that the assessee furnished the details of fair market value as on 01/4/1981 at Rs. 10,11,132/-. On furnishing such valuation of property, the report of Sub-Registrar was called. The Sub- Registrar vide his reply dated 27/3/2015, reported that no Jantri rate is available for F.Y. 1981. The Assessing Officer on the basis of value of property on 24/12/1928 worked out the value of property as on 01/4/1981 at Rs. 54,842/- in the following manner; “Original cost of purchase as on 24.12.1928----- Rs. 6999/- Indexed cost of 01.04.1981 = Rs.6999 x 785/100= Rs. 54,842/-“ 10. The assessing officer worked out the difference of sale consideration at Rs. 3,67,74,724/- after deducting Rs. 54,842/- on the alleged value of property adopted by Stamp valuation authority (3,68,29,566 – 54,842= 376,74,724). Since the assessee is having 1/3rs share, accordingly, addition of Rs. 1.225 crore was added and addition of Rs. 1.225 crore was made. 11. On appeal before the ld. CIT(A), the assessee filed detailed written submission. In the meantime, the report of DVO was also received. The DVO determined the value of sale consideration at Rs. 81.00 lacs. On the basis of which, the ld. CIT(A) determined the long term capital gain of Rs. ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 8 26,81,719/- ( 81,00,000 – 54,842= 80,45158/3 = 26,81,719) against the addition of Rs. 1.225 crore. Further aggrieved, the assessee has filed the present appeal before the Tribunal. 12. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that he has very limited prayer before the Tribunal that while filing appeal before the ld. CIT(A), the assessee raised specific ground of appeal vide ground No. 4 that “there was no justification for not granting deduction of indexation value of fair market value as on 01/4/1981”. The ld. CIT(A) has not adjudicated such ground of appeal while passing the impugned order on 03/2/2017. The ld. AR of the assessee furnished the copy of form No. 35 alongwith grounds of appeal. The ld. AR submits that the assessee is legally entitled for such indexation cost. The ld. AR submits that the Assessing Officer may be directed to allow the indexation cost. 13. On the other hand, the ld. Sr. DR for the Revenue submits that the issue may be restored back to the file of Assessing Officer to consider the indexation cost and passed the order in accordance with law. 14. We have considered the submissions of both the parties and have gone through the orders of lower authorities. On perusal of Form No. 35 and grounds of appeal annexed therewith, we find that the assessee has raised specific ground of appeal for allowing indexation cost as on 01/04/1981. ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 9 However, this ground of appeal has not adjudicated by the ld. CIT(A). We also find that the property was acquired prior to 01/04/1981 by the predecessor in interest of assessee, thus the cost of acquisition for the purpose of indexation has to be taken from the year 1981, therefore, we direct the Assessing Officer to grant deduction on the basis of indexed value as on 01/04/1981. Needless to direct that before passing the order on this issue/claim, the Assessing Officer shall grant opportunity of hearing to the assessee and to pass the order in accordance with law. The assessee is also directed to provide complete details to the assessing officer and not to cause further delay. In the result, the limited submissions made by the assessee against various grounds of appeal raised by the assessee are allowed for statistical purpose. 15. In the result, this appeal of assessee is allowed for statistical purposes only. Order pronounced in the open court on 15 th July, 2022 and result was also placed on the notice board. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 15/07/2022 *Ranjan ITA No. 480/Srt/2018 Ranjitlal Chhaganlal Shah Vs ITO 10 Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat