SUNIL KUMAR TIWARI, Jaipur V. ACIT, Jaipur

ITA 507/JPR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5569 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: VISHNU KHANDELWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report; Capital expenditure
• Section: 40A(3); 143(3); 50C; 37; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 507/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI SUNIL KUMAR TIWARI, C/O B.L. DUSAD & CO., 2 ND FLOOR, KHETAN BHAWAN, M.I. ROAD, JAIPUR. CUKE VS. THE ACIT, CENTRAL CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AARPT 0007 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VISHNU KHANDELWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/02/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 28/02/2017 VKNS'K@ ORDER PER SHRI KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)- 4, JAIPUR DATED 27.03.2015 PERTAINING TO A.Y. 2010- 11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDE R PASSED BY THE LD. CIT (A) IS BAD IN LAW AND VOID AB-INITIO . 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN MAKING THE ADDITION OF RS. 4,82,444/- U/S 50C OF THE INCOME TAX ACT, 1961. 2 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIST (A) HAS ERRED IN MAKING THE ADDITION OF RS. 35,00,000/- U/S 40A(3) OF THE INCOME TAX ACT, 1961. 4. THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY GRO UNDS OF APPEAL AT ANY TIME OF OR ON BEFORE THE HEARING OF A PPEAL. 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO. 1. THEREFORE, GRO UND NO. 1 IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 4 IS GENERAL IN NATURE, NEEDS NO SEPA RATE ADJUDICATION. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSES SMENT WAS FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT) VIDE ORDER DATED 31.03.2013. WHILE FRAMING TH E ASSESSMENT, THE ASSESSING OFFICER MADE ADDITION BY INVOKING THE PRO VISIONS OF SECTION 50C OF THE ACT OF RS. 4,82,444/- AND MADE ADDITION OF RS. 35,00,000/- BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. BEING AGGRIEVED, ON FURTHER APPEAL TO THE LD. CIT (A), THE APPEAL OF THE ASSESS EE WAS DISMISSED. AGGRIEVED BY THIS, THE ASSESSEE HAS FILED THE PRESE NT APPEAL BEFORE THIS TRIBUNAL. 5. APROPOS GROUND NO. 2, THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSING OFFICER ADOPTED THE VALUE AS ADOPTED BY THE STAMP AUTHORITY WITHOUT REFERRING IT TO THE VALUATION OFFICER. THE ASSESSEE HAS CLAIMED BEFORE 3 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. THE AO THAT THE VALUE ADOPTED BY THE AO IS NOT THE MARKET VALUE. THE LD. COUNSEL SUBMITTED THAT DESPITE THE ASSESSEE MAKING OBJECTION TO THE VALUATION MADE BY THE ASSESSING OFFICER, HE ADOPTED THE VALUE AS ADOPTED BY THE STAMP VALUATION AUTHORITY. HE SUBMITTED THAT THE ASSESSIN G OFFICER OUGHT TO HAVE REFERRED THIS MATTER TO THE VALUATION OFFICER AS PE R PROVISIONS OF SECTION 50C(2) THUS VIOLATED THE PROVISIONS OF THE INCOME-T AX ACT. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE HONBLE ALLAHABAD HIGH COURT RENDERED IN TH E CASE OF CIT VS. SHRI CHANDRA NARAIN CHAUDHRI IN INCOME TAX APPEAL NO. 28 7 OF 2011. THE LD. COUNSEL, THEREFORE, PRAYED THAT THE ADDITION MADE O N ACCOUNT OF SHORT TERM CAPITAL BE DELETED. 5.1. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATI VE OPPOSED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT LAW IS WELL SETTLED THAT THE ASSESSEE IS REQUIRED TO OBJECT BEF ORE THE ASSESSING OFFICER QUA THE VALUE ADOPTED AS PER STAMP VALUATION AUTHOR ITY. HE SUBMITTED THAT IN PRESENT CASE, THE ASSESSEE HAS NOT MADE ANY OBJECTI ON. THEREFORE, HE SUBMITTED THAT THE CASE LAWS AS RELIED BY THE LD. C OUNSEL WOULD NOT HELP. 5.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE AO AGAINST ADOPTING THE VALUE OF THE PROPERTY AS PER THE STAMP VALUATIO N AUTHORITY. ADMITTEDLY, THE ASSESSEE HAS NOT MADE OBJECTION OR REPRESENTATI ON BEFORE THE AO AGAINST 4 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. INVOCATION OF PROVISIONS OF SECTION 50C OF THE ACT. FOR THE SAKE OF CLARITY, THE PROVISIONS OF SECTION 50C OF THE ACT IS REPRODUCED HEREIN BELOW :- 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEI NG LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRE D TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y UNDER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY AS ON THE DATE OF TRANSFER; ( B ) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VA LUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUT ED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY O THER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTI ON16A, CLAUSE ( I ) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SEC TION 23A, SUB- SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFIC ER UNDER SUB- SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, VALUATION OFFICE R SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION 5 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHO RITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] A BARE READING OF THE ABOVE PROVISION MAKES IT CLEA R THAT AS PER SECTION 50C(2)(A) OF THE ACT, THE ASSESSEE HAS TO MAKE A CL AIM BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED (OR ASSE SSABLE) BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE O F THE PROPERTY IN THAT EVENT THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER. LD. COUNSEL FOR THE ASSESSEE COU LD NOT POINT OUT AS TO WHEN SUCH CLAIM WAS MADE BEFORE THE ASSESSING OFFICER. E VEN THE ASSESSEE HAS NOT PLACED ANY VALUATION REPORT BY AN APPROVED VALUER T O BUTTRESS THE CONTENTION THAT THE VALUE SO ADOPTED BY THE AO EXCEEDS THE FAI R MARKET VALUE AS ON THE DATE OF TRANSFER. UNDER THESE FACTS, THE SUBMISSION S OF THE ASSESSEE ARE DEVOID OF ANY MERIT, HENCE, THE GROUND RAISED IN TH IS APPEAL IS REJECTED. 6. APROPOS GROUND NO. 3, IN RESPECT OF ADDITION OF RS. 35,00,000/-, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROPERT Y IN QUESTION WAS PURCHASED ON 08.01.2010 FOR SETTING UP OF AN INDUST RY WHICH IS EVIDENT FROM THE TITLE DEED AND THE PROPERTY IS STILL LYING WITH THE ASSESSEE. HE, HOWEVER, SUBMITTED THAT DUE TO CERTAIN REASONS THE SETTING U P OF AN INDUSTRY COULD NOT TAKE PLACE AND IS HOPEFUL THAT THE INDUSTRY WILL BE ESTABLISHED. THE LD. COUNSEL SUBMITTED THAT THE INVESTMENT MADE IN THE PURCHASE OF THE PROPERTY IS A CAPITAL INVESTMENT AND NOT FOR TRADING ASSET AND UR GED THAT THE PROVISIONS OF 6 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. SECTION 40A(3) ARE NOT APPLICABLE. THE LD. COUNSE L SUBMITTED THAT PROVISIONS OF SECTION 40A(3) WERE BROUGHT ON STATUTE FOR STOPP ING BOGUS EXPENDITURE. HE SUBMITTED THAT IN THE CASE OF ASSESSEE THE GENUINEN ESS OF THE PAYMENT IS NOT DOUBTED AND THE PAYMENTS MADE TO THE PERSONS ARE ID ENTIFIABLE. HE, PLACED RELIANCE ON THE CBDT CIRCULAR NO. 6P DATED 6 TH JULY, 1968, SUBMITTED THAT PROVISIONS OF SECTION 40A(3) OF THE ACT IS NOT APPL ICABLE IN THE CASE OF THE ASSESSEE. THE LD. COUNSEL FURTHER RELIED ON THE DE CISION OF HONBLE GAUHATI HIGH COURT RENDERED IN THE CASE OF WALFORD TRANSPOR T (EASTERN INDIA) LTD. VS. CIT (1991) 240 ITR 902 (GAU.). HE, THEREFORE, PRAYE D THAT THE ADDITION MADE DESERVES DELETION. 6.1. ON THE CONTRARY THE LD. D/R SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 6.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIO NS OF THE PARTIES. ADMITTEDLY, CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE HAD MADE INVESTMENT INTO A CAPITAL ASSET. IT IS ALSO NOTED BY THE ASSESSING OFFICER TH AT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PURCHASED FOUR IND USTRIAL PLOTS FOR A TOTAL CONSIDERATION OF RS. 35,00,000/-. THE ASSESSING OF FICER INVOKED PROVISIONS OF SECTION 40A(3) OF THE ACT ON THE GROUND THAT THE IN VESTMENT IS MADE IN CASH. HOWEVER, THE CASE OF THE ASSESSEE IS THAT PROVISION S OF SECTION 40A(3) WOULD 7 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI. NOT BE APPLICABLE AS THE ASSESSEE HAD MADE CAPITAL INVESTMENT. HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE CONCEDED THAT T HE INVESTMENT MADE IS IN THE NATURE OF CAPITAL EXPENDITURE. THEREFORE, I N OUR CONSIDERED VIEW, PROVISIONS OF SECTION 40A(3) WOULD NOT BE APPLICABL E. ACCORDINGLY, WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION . THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/201 7. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/02/2017. D/- VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SUNIL KUMAR TIWARI, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 507/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 8 ITA NO. 507/JP/2016 SHRI SUNIL KUMAR TIWARI.