Smt. Santosh Sharma, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 483/ASR/2012

• Counselvise Citation: 48320914 RSA 2012
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value; Valuation report
• Section: 50C; 142(1); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.483(ASR)/2012 ASSESSMENT YEAR:2008-09 PAN :AQMPS0628J SMT. SANTOSH SHARMA, VS. INCOME TAX OFFICER, MAJITHA ROAD, WARD 4(4), AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING: 17/12/2013 DATE OF PRONOUNCEMENT:31/12/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 01.11.2012 FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. CIT(A), ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF THE AO WITHOUT APPRECIATING THE FACTS PLACED BEFORE HIM. A COPY OF THE WRITTEN SUBMISSIONS PLACED BEFORE THE LD. CIT(A ) IS ENCLOSED AND MADE PART & PARCEL OF THE GROUNDS OF APPEAL. ITA NO.483(ASR)/2012 2 3. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 ARE NOT AT ALL APPLICABLE AS THERE WAS NO UNDER HAND DEALING WHICH WAS SUPPOR TED BY THE SALE DEED AND THE AUTHORITIES BELOW HAVE FURTHER MI SERABLY FAILED TO APPRECIATE THAT THE REGISTRATION WAS GOT DONE ABOV E THE PREVAILING CIRCLE RATES. SINCE THE TRANSACTION WAS MORE THAN T HE CIRCLE RATE, THE AO HAS GROSSLY ERRED IN MAKING THE ADDITION ON THE BASIS OF VALUATION REPORT. THUS, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE CAPITAL GAIN AT RS.1062117/- AS WORK ED OUT BY THE AO AGAINST RS.266378/- SHOWN BY THE ASSESSEE. 4. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE PROPERTY WAS SOLD ABOVE THE CIRCLE RATE AND THERE WAS NO QUESTIO N OF REFERRING THE SAME TO THE VALUATION CELL. AS SUCH THE REFERENCE M ADE BY THE AO IS ILLEGAL, INVALID AND VOID AB-INITIO. AS SUCH TH E CAPITAL GAIN AS SHOWN WAS CORRECT AND THE SAME SHOULD HAVE BEEN ACC EPTED BY THE AO. SIMILARLY, THE CIT(A) HAS GROSSLY ERRED IN CONF IRMING THE ORDER OF THE AO AND AS SUCH THE ADDITION MADE MAY B E DELETED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THE AVO DID NOT ALLOW ANY REASONABLE & PROPER OPPORTUNITY OF BEING HEARD BEFORE MAKING THE VALUATION OF THE PROPERTY AT AN EXORBITA NT FIGURE. SIMILARLY, THE CIT(A) HAS GROSSLY ERRED IN NOT APPR ECIATING THE FACT THAT THE REPORT OF THE AVO OF THE DEPARTMENT SUFFE RS FROM FOLLOWING INHERENT DEFECTS: I) THAT THE VALUATION REPORT HAS BEEN PREPARED ON THE BASIS OF CONJECTURES, ESTIMATE AND SURMISES. II) THAT THE AVO DID NOT APPRECIATE THAT THE PROPERTY W AS A RENTED OUT PROPERTY AND THE VALUATION SHOULD HAVE B EEN MADE ON RENT YIELD METHOD. III) THAT THE AVO HAS REFERRED TO VARIOUS OPPORTUNITIES AFFORDED TO THE ASSESSEE BUT NO SUCH OPPORTUNITY OF BEING HEARD WAS ALLOWED. IV) THAT VARIOUS OBJECTIONS WERE RAISED BEFORE THE AVO WHICH HAVE NOT BEEN CONSIDERED AND THERE WAS NO APPLICATION OF MIND WHILE REJECTING THE OBJECTIONS RAISED BEFORE THE AVO. A COPY OF THE OBJECTIONS RAISED BEF ORE ITA NO.483(ASR)/2012 3 THE AVO IS ENCLOSED AND MADE PART & PARCEL OF THE GROUNDS OF APPEAL. V) THAT THERE WAS NO PROPER COMPARISON OF VALUATION OF PROPERTY AND NO COMPARABLE CASE WAS CONSIDERED. THE AVO WHILE VALUING THE PROPERTY HAS COMPARED THE CA SE OF THE ASSESSEE WITH THAT OF NEHRU SHOPPING COMPLEX WHICH IS NOT AT ALL A COMPARABLE CASE. 6. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THERE WAS NO COMPARISON WITH THE PROPERTY SITUATED AT NEHRU SHOP PING COMPLEX, AMRITSAR. RATHER THE PROPERTY SITUATED AT MAJITHA ROAD, AMRITSAR, SHOULD HAVE BEEN COMPARED WITH THAT OF PR OPERTY OF THE ASSESSEE. THUS, THE CAPITAL GAIN AS SHOWN SHOULD HA VE BEEN ACCEPTED. 7. THAT THE CAPITAL GAIN AS SHOWN BY THE ASSESSEE SHOU LD HAVE BEEN ACCEPTED BY THE AUTHORITIES BELOW AS THERE WAS NO B ASIS AND REASON FOR REJECTING THE SAME. 8. THAT WITHOUT PREJUDICE TO THE ABOVE, ALTERNATIVELY, THE CAPITAL GAIN ESTIMATED IS VERY HIGH & EXCESSIVE. 9. THAT THE AO HAS GROSSLY ERRED IN CHARGING INTEREST U/S 234A, 234B & 234C OF THE INCOME TAX ACT, 1961. NO INTEREST UND ER THESE SECTIONS OF THE INCOME-TAX ACT, 1961, IS AT ALL CAL LED FOR AND THE SAME MAY BE DELETED. ALSO, THE CIT(A) HAS GROSSLY E RRED IN CONFIRMING THE ORDER OF THE AO ANDS INTEREST CHARGE D U/S 234A, 234B AND 234C MAY KINDLY BE DELETED. ALTERNATIVELY, THE INTEREST CHARGED U/S 234A, 234B & 234C OF THE INCOME-TAX ACT , 1961 IS VERY HIGH & EXCESSIVE. 10. ANY OTHER GROUND OF APPEAL, WHICH MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E LADY HAS SHOWN LTC AMOUNTING TO RS.77,119/- AND BANK INTEREST FALLING UNDER THE HEAD INCOME FROM OTHER SOURCES.. DURING THE COURSE OF ASSTT. P ROCEEDINGS, IT WAS NOTICED ITA NO.483(ASR)/2012 4 BY THE AO THAT THE ASSESSEE HAD SOLD A PROPERTY ON 17.5.2007. IN ORDER TO ASCERTAIN THE EXACT FMV OF THE PROPERTY AS ON 17.5. 2007, A REFERENCE WAS MADE WITH REFERENCE TO FOUR SHOPS BUILT ON AN AREA OF 80 SQ. YDS. IN BHIWANI NAGAR. MAJITHA ROAD, AMRITSAR FOR A CONSIDERATION O F RS.19,76,000/- TO ASCERTAIN THE EXACT FMV OF THE PROPERTY IN QUESTIO N TO THE VALUATION OFFICER, WHO IN TURN EVALUATED THE FMV OF THE SAID PROPERTY AT RS.2771739/- . THE VALUATION REPORT DATED 29.10.10 WAS CONFRONTE D TO THE ASSESSEE VIDE AOS LETTER DT. 10.11.2010. IN RESPONSE THERETO, TH E ASSESSEES COUNSEL FILED OBJECTIONS, WHICH WERE IN TURN FORWARDED VIDE AOS LETTER DATED 26.11.10 TO THE AVO FOR MEETING OUT THE SAID OBJECTION. THE AVO VIDE HIS LETTER NO.71 DATED 2/12/2010 AFTER DEALING WITH THE ASSESSEES V ARIOUS OBJECTIONS STATED THAT HIS EARLIER VALUATION REPORT REQUIRES NO CHANG E BEING REASONABLE AND CORRECT. THEREAFTER, THE AO ISSUED QUESTIONNAIRE DT .3.12.2010 ALONGWITH NOTICE U/S 142(1) AND A COPY OF THE AVOS FRESH REP ORT, FIXING THE HEARING FOR 16/12/2010. ON THE APPOINTED DATE, THE ASS ESSES COUNSEL FILED A REPLY, WHICH STANDS INCORPORATED AT PAGE 3 & 4 IT SELF IN THE AOS ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES FINAL REPLY DT. 16.12.2010, IT WAS OPINED BY THE AO THAT THE ASSES SEES CONTENTION BEING REITERATION OF HER EARLIER AVERMENTS/OBJECTIONS WH ICH HAVE ALREADY BEEN DEALT WITH BY THE AVO VIDE HIS LETTER NO.71 DT. 2/1 2/2010, THE AO PROCEEDED AHEAD BY CONCLUDING THE ASSTT. PROCEEDING S BY ADOPTING THE FMV ITA NO.483(ASR)/2012 5 EVALUATED AT RS.27,71,739/- AND BY DOING THIS, HE W ORKED OUT THE ASSESSABLE NET LTC GAIN OF RS.1061117/- BY ALLOWING REBATE FOR INCIDENTAL EXPENSES AND ADJUSTING THE INDEXED COST SHOWN BY THE ASSESSE E; AS AGAINST THE LTC GAIN OF RS.266378/- DECLARED BY THE ASSESSEE. 3. BEFORE, THE LD. CIT(A), THE ASSESSEE HAS SUBMITT ED WRITTEN SUBMISSIONS WHICH WERE FORWARDED TO THE AO AND AFTE R TAKING COMMENTS OF THE A.O., THE LD. CIT(A) CONFIRMED THE ACTION OF TH E AO. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , ADVOCATE, MAINLY RELIED ON THE SUBMISSIONS MADE BEFORE THE AO AND TH E LD. CIT(A), WHICH ARE AVAILABLE ON RECORD AND RELIED UPON THE DECISION OF THE ITAT, AMRITSAR BENCH, IN THE CASE OF PUNJAB POLY JUTE CORPORATION VS. ASSTT. COMMR. OF INCOME TAX, (2009) 120 TTJ(ASR) 1113 [120 ITD 233] DATED 11 TH APRIL, 2008, THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF INCOME TAX OFFICER VS. NITIN JAYANTILAL SHAH (2011) 48 SOT 16 (AHD) DATED 6 TH MAY, 2011 AND ON THE DECISION OF HONBLE DELHI HIG H COURT IN THE CASE OF CIT VS. ABHINAV KUMAR REPORTED IN (2013) 213 ITR 20 (DELHI) DATED 23 RD JANUARY, 2013 AND PRAYED TO ALLOW THE APPEAL OF THE ASSESSEE. 5. THE LD. DR, MR. TARSEM LAL, ON THE OTHER HAND, S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND RELIED UPON THE DECISI ON OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X VS. DR. INDRA ITA NO.483(ASR)/2012 6 SWAROOP BHATNAGAR REPORTED IN (2012) 349 ITR 210 ( ALL.) AND PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS SOLD FOUR SHOPS SITUATED AT BHIWAN I NAGAR, MAJITHA ROAD, AMRITSAR FOR RS.19,76,000/-. IN ORDER TO ASCERTAIN THE EXACT FAIR MARKET VALUE (IN SHORT, FMV), THE AO REFERRED THE MATTER TO TH E VALUATION OFFICER, WHO ESTIMATED THE FMV OF THE PROPERTY AT RS.27,71,739/- , WHICH WAS CONFRONTED TO THE ASSESSEE, WHO RAISED OBJECTIONS, WHICH WERE FORWARDED TO THE AO, WHO IN TURN, STATED THAT THE VALUATION REPORT DOES NOT REQUIRE ANY CHANGE BEING REASONABLE AND CORRECT. THE ASSESSEE THEN FIL ED THE REPLY AND DEALT WITH THE OBJECTIONS/DEFICIENCIES IN THE AVOS REPORT. T HE ASSESSEE ALSO SUBMITTED THE REGISTERED VALUERS REPORT OF ONE M/S . MALHOTRA & ASSOCIATES VALUING THE PROPERTY AT RS.19,69,000/- A S AGAINST THE SALE PROCEEDS OF RS.19,76,000/- DECLARED BY THE ASSESSEE . AT THE OUTSET, IT IS PERTINENT TO MENTION THAT WHEN THE OBJECTIONS WERE RAISED BY THE ASSESSEE, THEY WERE NOT DEALT WITH BY THE AVO AS WELL AS BY THE AO AND FURTHER SUCH OBJECTIONS WERE IGNORED BY THE LD. CIT(A), AS WELL. THE OBJECTIONS AND THE RELEVANT POINTS, WHICH WERE IGNORED BY THE LD. CI T(A) AND THE AO ARE THAT THE DVO HAS TAKEN INTO CONSIDERATION, THE VALUE OF NEHRU SHOPPING COMPLEX, LAWRENCE ROAD, AMRITSAR, WHICH IS A POSH A REA, AS STATED BY THE ASSESSEE AND IS HAVING A GOOD COMMERCIAL VALUE AS A GAINST THE PRESENT ITA NO.483(ASR)/2012 7 PROPERTY SITUATED AT MAJITHA ROAD, WHICH IS A BACKW ARD AND NEGLECTED AREA. THE OTHER OBJECTION IS THAT THERE CANNOT BE ANY COM PARISON BETWEEN THE PROPERTY SOLD IN THE OPEN MARKET AND THE PROPERTY S OLD IN AUCTION. FURTHER, OBJECTION OF THE ASSESSEE WAS THAT THE ASSESSEES P ROPERTY WAS A RENTED OUT PROPERTY AND RENT YIELD METHOD ONLY COULD BE APPLI ED IN THIS CASE AND THERE CANNOT BE ANY COMPARISON BETWEEN THE SELF OCCUPIED PROPERTY AND A RENTED OUT PROPERTY. MOREOVER, THE CERTIFICATE OF THE INDE PENDENT AUTHORITY M/S. MALHOTRA & ASSOCIATES, VALUING PROPERTY AT RS.19,69 ,000/- WAS FILED BEFORE THE AO AND THE LD. CIT(A) AND NO DEFECT IN THE SAME HAS BEEN POINTED OUT. IT IS AGAIN PERTINENT TO MENTION THAT THE OBJECTIONS R AISED BY THE ASSESSEE HAVE NOT BEEN TAKEN INTO CONSIDERATION AND THEREFORE, TH E VALUE DECLARED BY THE ASSESSEE AS PER REGISTERED VALUERS REPORT SHOULD B E TREATED AS CORRECT. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, ON MERIT, THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE VALUE ADO PTED BY THE DVO AT RS.27,71,739/- AS AGAINST RS.19,76,000/- DECLARED B Y THE ASSESSEE. MOREOVER, THE COST OF CONSTRUCTION AS DECLARED BY T HE ASSESSEE IS ALSO ACCEPTED BY THE DVO. THE DIFFERENCE IS WITH REGARD TO THE COST OF LAND ONLY. THE PROPERTY SOLD IS AT MUCH HIGHER RATE AS COMPARE D TO CIRCLE RATES. THUS, THE PROPERTY HAS BEEN SOLD AT RS.19,76,000/- WHEREA S AS PER CIRCLE RATES, THE COST OF LAND COMES AT RS.12,00,000/- AND THE COST O F CONSTRUCTION OF FOUR SHOPS, IF TAKEN AS PER DEPARTMENTAL VALUERS REPORT IS AT RS.4,59,739/-, ITA NO.483(ASR)/2012 8 WHICH TOTAL COMES AT RS.16,59,739/-. THEREFORE, AS PER CIRCLE RATES, THE VALUATION COMES AT RS.16,59,739/- AND THE ASSESSEE HAS SOLD THE PROPERTY AT RS.19,76,000/- WHICH WAS MORE THAN THE CIRCLE RATES . THEREFORE, THE OBJECTION OF THE ASSESSEE THAT THE AO CANNOT REFER THE SAME TO THE SAME TO THE VALUATION OFFICER HAS NOT BEEN CONSIDERED IN TH E RIGHT SPIRIT BY THE ASSESSING OFFICER. 7. AS REGARDS THE REFERENCE TO THE VALUATION OFFICE R, THE MATTER HAS TO BE SEEN U/S 50C OF THE ACT. SECTION 55A CANNOT BE MADE APPLICABLE, SINCE REFERENCE TO THE DVO IS ALREADY PROVIDED IN SECTION 50C WHEN CERTAIN CONDITIONS ARE TO BE FULFILLED. IN THE PRESENT CASE , THE SALE CONSIDERATION IS MUCH MORE THAN THE CIRCLE RATES. THEREFORE, THE AO CANNOT REFER THE MATTER TO THE VALUATION OFFICER AS PER SECTION 50C OF THE ACT . THE ARGUMENT OF THE LD. DR THAT VALUATION HAS BEEN REFERRED U/S 55A OF THE ACT AND NOT U/S 50C CANNOT HELP THE REVENUE. ON MAKING QUERY BY THE BEN CH, THE LD. DR COULD NOT POINT OUT THAT THE AO HAS REFERRED THE CASE FOR VALUATION U/S 55A OF THE ACT. IN FACT, WHETHER THE ASSESSEE IS COVERED U/S 55A(A) OR 55A(B), NOTHING HAS BEEN MENTIONED BY THE AO BEFORE REFERRING THE M ATTER TO THE VALUATION OFFICER. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE, MR. P.N.ARORA, ADVOCATE, IN THE CASE OF INCOME TAX OFFICER VS. NIT IN JAYANTILAL SHAH OF ITAT, AHMEDABAD BENCH (SUPRA), THE AO IS NOT AUTHOR IZED TO REFER THE ITA NO.483(ASR)/2012 9 MATTER TO THE DVO IN THE PRESENT FACTS AND CIRCUMST ANCES OF THE CASE. AS REGARDS THE DECISION RELIED UPON BY THE LD. DR OF H ONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. DR. INDRA SWAROOP BHAT NAGAR (SUPRA), THE SAME IS NOT APPLICABLE SINCE THE FACTS IN THAT CASE ARE QUITE DIFFERENT FROM THE PRESENT CASE. THUS, IN THE FACTS AND CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) IS REVERSED AND THE A.O. IS DIRECTED TO DELE TE THE ADDITION SO MADE AND ALLOW THE CLAIM OF THE ASSESSEE AS PER RETURNED INCOME. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEES APPEAL ARE ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.483(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DECEMBER, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31ST DECEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SMT. SANTO SHARMA, 222, BHIWANI NAGAR, MAJITHA ROAD, AMRITSAR. 2. THE ITO, WARD-4(4), AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR