Vinay Kumar, Chandigarh V. Addl. CIT Range 2 Chandigarh,

ITA 494/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86206 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Agreed addition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 494/CHD/2014 (ASSESSMENT YEAR : 2009-10) VINAY KUMAR, VS. THE ADDL.CIT, 342, INDUSTRIAL AREA I RANGE 2, PHASE I, CHANDIGARH. CHANDIGARH. PAN: AAUPK1557A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 24.03.2015 DATE OF PRONOUNCEMENT : 26.03.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), CHANDIGARH DATED 26.3.2014 FOR ASSESS MENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1 . THAT THE ORDER OF LEARNED C.I.T. (A) CHANDIGARH I S BAD AND AGAINST THE FACTS & LAW. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 19,99,316/- U/S 50C OF INCOME TAX ACT MADE BY ASSESSING OFFICER BY TAKING THE STAMP VALUE IN THE REGISTERED SALE DEED EXECUTED BETWEEN 2 STEEL AUTHORITY OF INDIA & PURCHASERS ON 27-07-2011 WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HA S TRANSFERRED THE RIGHTS IN FLATS DURING THE FINANCIA L YEAR 2008-09 ON THE BASIS OF AGREEMENTS TO SELL NOT ON THE BASIS OF REGISTERED SALE DEEDS & ALSO ERRED IN IGNORING THE FACT THAT PROVISIONS OF SECTION 50C AR E APPLICABLE W.E.F 01-10-2009 ON UNREGISTERED AGREEMENT. FURTHER THE ID CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT VALUE MENTIONED IN REGISTERED SALE DEEDS EXECUTED ON 27-07-2011 CANNOT BE RELEVANT FOR COMPUTATION OF CAPITAL GAIN AROSE DURING THE AY 2009-10. 3. THAT THE CIT(A) HAS WRONGLY INFERRED THAT THE APPELLANT HAS AGREED FOR ADDITION WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS RAISED SPECIFIC OBJECTION WITH RESPECT TO VALUE TAKEN BY ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . FURTHUR THE LD CIT(A)JHAS NO MATERIA L ON RECORD TO INFER THAT THE APPELLANT HAS AGREED FO R ADDITION OF RS1999316/-U/S 50C OF INCOME TAX ACT & THEREFORE THE ORDER OF LD CIT(A) IS BAD & DESERVE S TO BE QUASHED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAD DECLARED LONG TERM CAPITAL LOSS OF RS.1,42,984/- ON SALE OF THREE FLATS IN MUMBAI. THESE FLATS WERE ACQUIRED ON 31.12.2003 AND SOLD FOR RS.9,19,700/- ON 16.10.2008 . THE COST OF ACQUISITION WAS ADOPTED AT RS.10,62,684/- A FTER AVAILING THE BENEFIT OF INDEXATION. IN THE ASSESS MENT PROCEEDINGS, THE ASSESSEE HAD FILED DETAILS OF ASSE TS SOLD AND THE ASSESSING OFFICER NOTICED THAT THE MARKET VALUE OF THESE FLATS, AS ASSESSED BY THE GOVERNMENT OF MAHARASHTRA WAS RS.10,20,500/- EACH FOR TWO OF THESE FLATS AND RS.1 0,21,000/- 3 FOR THE THIRD FLAT. THE ASSESSING OFFICER ASKED T HE ASSESSEE VIDE ORDER SHEET DATED 23.12.2011 TO SHOW CAUSE AS TO WHY THE SALE PRICE SHOULD NOT BE TAKEN AT RS.10,20,500/ - EACH FOR TWO FLATS AND RS.10,21,000/- FOR THE THIRD FLAT. THE ASSESSEE WAS SUPPOSED TO FILE REPLY ON 29.12.2011 BUT NO SUB MISSIONS WERE FILED. THE ASSESSING OFFICER, THEREFORE, CON CLUDED THAT THE ASSESSEE HAD NO OBJECTION FOR ADOPTING THE SALE PRICE AT RS.30,62,000/- FOR ALL THE FLATS AND COMPUTED LONG TERM CAPITAL GAIN AT RS.19,99,316/-. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT (APPEALS) AND WRITTEN SUBMISSION WAS FI LED, MAINLY RAISING THE ISSUE THAT THE PROPERTIES WERE N OT TRANSFERRED ON THE BASIS OF REGISTERED SALE DEED AN D SO PROVISIONS OF SECTION 50C OF THE ACT WERE NOT APPLI CABLE. THE LEARNED CIT (APPEALS), HOWEVER, DISMISSED THE APPEA L OF THE ASSESSEE. HIS FINDINGS IN PARA 5 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 5. I HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL. THE ASSESSING OFFICER HAD SPECIFICALLY ASKED THE AP PELLANT ABOUT TAKING THE MARKET VALUE OF THESE FLATS AS ASS ESSED BY THE GOVERNMENT OF MAHARASHTRA FOR THE PURPOSES O F SECTION 50C OF THE ACT, BUT THE APPELLANT HAD NOT F ILED ANY SUBMISSION, MEANING THEREBY THE APPELLANT HAD NO OBJECTION TO THE PROPOSAL OF THE ASSESSING OFFICER FOR VALUING THE FLATS AS ASSESSED BY THE GOVERNMENT OF MAHARASHTRA AND SO HE PROCEEDED TO COMPUTE THE LONG TERM CAPITAL GAIN ON THE BASIS OF THE VALUE ASSESSE D BY THE GOVERNMENT OF MAHARASHTRA. THUS, THE ADDITION W AS MADE BY CONCLUDING THAT THE APPELLANT HAD NO OBJECT ION TO THE PROPOSED ADDITION. NO REASON HAS BEEN GIVEN BY THE 4 LD. COUNSEL FOR THE APPELLANT FOR NOT FILING REPLY BEFORE THE ASSESSING OFFICER TO THE SPECIFIC QUERY MADE IN THI S REGARD AND SO IT HAS TO BE INFERRED THAT THE APPELLANT HAD AGREED FOR THE ADDITION. AS IT WAS AN AGREED ADDITION, THE APPEL LANT SHOULD NOT BE AGGRIEVED NOW AND HENCE, THE ADDITION MADE IS CONFIRMED. GROUNDS OF APPEAL TAKEN BY THE APPEL LANT ARE DISMISSED. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 5. THE LEARNED COUNSEL FOR ASSESSEE CONTENDED THAT THE PROVISIONS OF SECTION 50C OF THE ACT WERE NOT APPLI CABLE IN THE ASSESSMENT YEAR UNDER APPEAL BECAUSE THE PROPERTIES WERE TRANSFERRED THROUGH AGREEMENT TO SELL DATED 1.10. 2008. THE COPIES OF THE AGREEMENT TO SELL ARE FILED IN THE PAPER BOOK FROM PAGES 54 TO 65. HE HAS ALSO REFERRED TO CIRC ULAR ON AMENDMENT IN SECTION 50C OF THE ACT TO SAY THAT THE AMENDMENT IN SECTION 50C OF THE ACT IS APPLICABLE W .E.F. 1.10.2009 (PB-11) BY INSERTING EXPLANATION-2 TO SEC TION 50C OF THE ACT, WHICH HAS EXPLAINED THE EXPRESSION ASS ESSABLE. HE HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. R. SUGANTHA RAVIN DRAN, 352 ITR 488, IN WHICH IT WAS HELD : PURSUANT TO AMENDMENT WITH EFFECT FROM 01.10.2009, SECTION 50C OF THE ACT WOULD BE APPLICABLE ONLY IN RESPECT OF CASES WHERE THE REGISTRATION OF DEED HAD TAKEN P LACE AND NOT OTHERWISE. 5 6. HE HAS ALSO RELIED UPON THE ORDER OF THE I.T.A. T., AMRITSAR BENCH IN THE CASE OF ITO VS. SHRI ASHOK K UMAR AGGARWAL IN ITA NO.182(ASR)2013 (PB-5), IN WHICH FO LLOWING THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN TH E CASE OF R. SUGANTHA RAVINDRAN (SUPRA) DEPARTMENTAL APPEAL W AS DISMISSED. HE HAS ALSO RELIED UPON THE DECISION OF THE I.T.A.T., JAIPUR BENCH IN THE CASE OF SMT. VIJAY LA XMI DHADDHA VS. ITO, 20 DTR 365 ON THE SAME PROPOSITION , IN WHICH IT WAS HELD : PROVISIONS OF S. 50C CANNOT BE INVOKED IN THE ABSENCE OF A REGISTERED DOCUMENT I.E. IN THE ABSENCE OF ANY VA LUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVER NMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. 7. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVE NUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIND INGS OF THE LEARNED CIT (APPEALS) REPRODUCED ABOVE, CLEARLY SHO W THAT THE LEARNED CIT (APPEALS) DISMISSED THE APPEAL OF THE A SSESSEE HOLDING THAT THE ADDITION WAS MADE ON AGREED BASIS. THE LEARNED CIT (APPEALS), THEREFORE, DID NOT DECIDE TH E APPEAL OF THE ASSESSEE ON MERITS. THE ASSESSMENT ORDER SHOW S THAT THOUGH THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTI CE FOR PROPOSED ADDITION AND THE ASSESSEE DID NOT FILE ANY REPLY BUT 6 IT WOULD NOT PROVE THAT THE ASSESSEE HAS AGREED TO THE PROPOSED ADDITION. WHEN THE ASSESSEE RAISED THE L EGAL ISSUE BEFORE THE LEARNED CIT (APPEALS) THAT SECTION 50C O F THE ACT IS NOT APPLICABLE IN HIS CASE BECAUSE THE AMENDMENT IN SECTION 50C OF THE ACT ADDING EXPLANATION 2 TO SECTION 50C OF THE ACT IS EFFECTIVE FROM 1.10.2009, THE LEARNED CIT (APPEA LS) SHOULD HAVE DECIDED THE APPEAL OF THE ASSESSEE ON MERITS B ECAUSE THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE ASS ESSEE HAS AGREED FOR THE ADDITION. THE LEARNED CIT (APPEALS) ALSO IN THE ABSENCE OF ANY REPLY FROM THE SIDE OF THE ASSESSEE INFERRED THAT THE ASSESSEE AGREED FOR THE ADDITION. THE FI NDING OF THE LEARNED CIT (APPEALS) IS, THEREFORE, WHOLLY INCORRE CT TO HOLD THAT THE ASSESSEE HAS AGREED FOR THE PROPOSED ADDIT ION. MERELY BECAUSE THE ASSESSEE DID NOT FILE ANY REPLY BEFORE THE ASSESSING OFFICER, WOULD NOT PROVE ON RECORD THAT T HE ASSESSEE HAS AGREED FOR THE ADDITION. THEREFORE, INFERENCE OF THE LEARNED CIT (APPEALS) THAT THE ASSESSEE HAS AGREED FOR THE ADDITION AND IS NOW NOT AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, IS WHOLLY ILLOGICAL AND INCORREC T. THE ORDER OF THE LEARNED CIT (APPEALS) IS, THEREFORE, LIABLE TO BE SET ASIDE. SINCE THE LEARNED CIT (APPEALS) DID NOT DE CIDE THE APPEAL OF THE ASSESSEE ON MERITS, THEREFORE, THE MA TTER REQUIRES RECONSIDERATION AT HIS LEVEL. WE ACCORDIN GLY SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS) AND RESTORE THE APPEAL OF THE ASSESSEE TO HIS FILE WITH DIRECTION TO REDEC IDE THE APPEAL OF THE ASSESSEE ON MERITS STRICTLY IN ACCORDANCE WI TH PROVISIONS OF SECTION 50C OF THE ACT AND IN THE LIG HT OF THE CASE LAWS RELIED UPON BY US AND THE LEARNED CIT (AP PEALS) 7 SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF MARCH, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH MARCH, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH