Vechatbhai Jivanbhai Dantani (Waghari), Gandhinagar V. ITO, Ward-4, Gandhinagar

ITA 522/AHD/2019

AI Insights

The case revolves around the sale of an ancestral property by Vechatbhai J. Dantani (Waghari), a vegetable vendor, which was subjected to income tax as a long-term capital gain. The property, sold for Rs.1,25,00,000, was initially valued by the appellant at a much higher cost due to its ancestral status, claiming a long-term capital loss. However, the Income Tax Officer (ITO) reassessed this value through a Valuation Officer, determining a significantly lower fair market value as of 1981, leading to a taxable long-term capital gain. The appellant's repeated non-appearance at hearings and failure to provide substantial evidence or objections during the assessment and appellate proceedings led to the dismissal of his appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125045 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 28-03-2019
• Other Referred Cases: Hiaben Jayantilal Shah vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN VERMA
• Assessee Lawyers: REGISTERED VALUER ONLY AFTER
• Keywords: Cost of acquisition; Fair market value; Valuation report
• Section: 147; 144; 143(3); 55A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I. T. A. No . 522/Ahd/20 19 ( नधा रण वष / A ss es sment Year : 2012-13) V ec h at bh a i Ji va n b ha i D a nt an i ( W a g hr i) Pl ot N o . – 10 89 , Th oke r V as , Ta r p oj A re a , V il la ge – Pe t ha pu r , Ta :- G a nd hin a g a r - 3 8 2 6 10 बनाम/ Vs . In c o m e T ax Of f ice r War d- 4 , G a n dh in a g ar थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : B J H PD 5 8 8 5 R (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : None यथ क ओर से/Respondent by : Shri Praveen Verma, Sr. D.R. स ु नवाई क तार ख / D a t e o f H ea r i ng 03/07/2023 घोषणा क तार ख /D a t e o f P r o n o u n c e me n t 07/07/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 15.11.2018 passed by the Ld. Commissioner of Income Tax (Appeals), Gandhinagar arising out of the order dated 29.03.2016 passed by the ITO, Ward-4, Gandhinagar under Section 143(3) r.w.s. 148 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2012-13. ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 2 - 2. The addition of Rs.1,23,50,000/- made on account of undisclosed income of capital gain is subject matter before us. 3. At the time of hearing of the matter, none appeared on behalf of the appellant, neither any adjournment has been sought for. It also appears from the records that on very many occasions whenever the matter was fixed for hearing, none appeared on behalf of the appellant, nor any adjournment was sought for. Having no other alternative, we have decided to proceed with the matter ex parte. 4. We have heard the Ld. DR who has relied upon the orders passed by the authorities below. 5. The brief facts leading to the case is this that the appellant being a vegetable vendor, had sold an open plot of land on 11.10.2011 at Pethapur, District: Gandhinagar lying and situated at Survey No. 3648 for a consideration of Rs.1,25,00,000/- by and under the Sale Deed No. GDR/12041/1-52/2011. Since the land was a commercial property, permission for building construction was granted to the appellant by the Pethapur Nagarpalika during F.Y. 2010-11 and the purchasers, namely, Shri Yusuf I. Parmar and Shri Hitendra Pratapsinh Parmar purchased the same for developing/plotting and sale of plots. The capital gain generated from the sale of property was taxable in the hands of the appellant. However, no return of income has been filed by the appellant nor the capital gain generated out of the sale transaction was offered. The reason to this effect that income chargeable to tax had escaped assessment was formed and reopening of assessment under Section 147 of the Act was done. Notice under Section 148 of the Act dated 19.09.2014 was duly served upon the appellant upon recording reasons as mentioned hereinabove whereupon on ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 3 - 26.06.2015 the appellant filed return of income declaring total income of Rs.1,80,610/-. The appellant has shown long term capital loss of Rs.1,47,331/- on account of sale of the abovementioned property and while calculating the long term capital gain claimed cost indexation benefit and the cost of acquisition has adopted by taking fair market value as on 01.04.1981 at Rs.16,11,125/-. As the cost of acquisition adopted by the appellant was without any basis and which seems to be on higher side, a reference was made to the Valuation Officer under Section 55A of the Act for determining the fair market value of this property as on 01.04.1981. By and under report dated 15/16-3-2016, the Valuation Officer determined the fair market value of the aforesaid property as on 01.04.1981 at Rs.19,024/-. Hence, a show cause notice issued, the appellant filed a written reply in the following manner: “From: Shri Vechatbhai Jivanbhai Vaghri PAN No. BHJPD5885R At & Post Pethapur, District: Gandhinagar Date: ..../03/2016 To, Income Tax Officer, Ward-4, Block No.-14 4 th Floor, Udhyog Bhavan, Sector-11, Gandhinagar Reference No. ITO/ GNR/ Ward-4/Scrutiny-56/2015-16 Sject Reply to the Show Cause Notice for the Assessment Year 2012-13 under Section 1 Section 44 of the Income Tax Act Respected Sir, 1) I am in receipt of the ship cause notice dated 17.03.2016 issued under Section 1433) / Section 144 of the Income Tax Act stating the calculation as per the valuation report which is erroneous and therefore the same is not acceptable by the assesse. It is stated that by way of this reply the assesse is fling present reply to the captioned show cause notice. ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 4 - 2) It is stated that assess herein during the Accounting Your 2011/ 12, executed a registered sale deed on 11.10.2011 having Registration Na GUR/12014/152/2011 Registered with office the Registrar Gandhinagar for the lanit bearing Old Varta No 207, New City Survey no. 1648, Total Area 6898 Sq. Mt. Paiki, 4756 Sq Mt is stated that the said sale deed been had been created for a consideration of an amount of Rs. 125,00,000, which aunt had been received from (1) Yusufbhai I. Parmar (2) HitendrainPratapsinhParmar in the Accounting Year 2010/11 and 2011/12 in form of cash and cheque. 3) The said lands us ancestral property of family of assesse und the same has been allotted to the father of the assesse in the year 1950 for the purpose of agriculture. The said fund had been used for the purpose of irrigation of vegetables and the same had also been reflected in the records of Pethapur Gram Panchayat. Copy of the land revenue demand notice is annexed herewith and marked as Exh.A. 4) It is stated that the said land was initially in the name of the father of the assesse (Jivanbhai Nathibhai Vaghri) on the record of gram panchayat. However after the death of the father of the assesse, the said land had been transferred in name of assesse (Vechatbhai Jivanbhai Vaghri). Copy of the Land Revenue demand notice dated 15.12 1993 issued in name of the assesse as a legal heir of Jivanbhai Nathubhai Vaghri is annexed herewith and marked as Exh B. 5) It is stated that Pethapur Gram Panchayat had been converted into Pethapur Nagarpalika due to increase of population in village and during which time all the properties were allotted new city survey numbers. It is stated that the said and ring Old Vada No 307 was left out for the allotment of New City Survey No. It is stated that the assesse had preferred an application dated 07.01.2000 for the same and after due verification and inspection, the authority had allotted new City Survey No 3648 to land bearing Old Vade No 307. 6) After the death of the father of the assesse, the said land had been transferred in the name of assessee and in the year 2010 the assessee has decided to sell the said land. That on 29.10 2010 that by way of an oral agreement to sale with (1) Yusufbhai I. Parmar Hitendrsinh Pratapsinh Parmar for total consideration of Rs. 1,25,00,000/- it was agreed to be sold the said land. It is stated that the assesse received total of Rs 65,00,000/- as advance the Accounting Your 2010/11. Copy accounts herewith and marked as Exh.C. 7) After the oral agreement to sale and receiving part of consideration, the purchaser has made an application for ploting and construction to the Pethapur Nagarpalika on 06.01.2011 the name of assesse since the sale deed not been executed that date. On 25.01.2011, Nappalika has given permission for construction and ploting. 8) That on 22.07.2011 the assesse has entered into written agreement to sale for an amount of Rs. 125,00,000/- with the purchaser and same had been registered with the office Registrar after payment necessary stamp duty, Out consideration the assesse has received total 1,05,00,000/- till 22.07.2011 and the assesse received the remaining amount of consideration at the of 11.10.2011 bearing registration no.12014. ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 5 - 9) It stated that since the land is an ancestral property since 1950 and for the first time it came to a registered sale deed, as per the provisions of Income Tax Act, 1961 the assesse was liable long term capital gain. It stated that as per Jantri of Year 1981 valuation of property comes to Rs. 16,11,125/- and which amount has been shown books of account of the assesse Copy of the same is annexed herwith and marked as Exh. D. 10) Valuation of land as per the Jantri of Year 1981 is of Rs. 16,11,125/- as against the valuation of sale deed for valuation of Rs.1,25,00,000/-. Calculation of Long Term Capital Gain is under. 16,11,125 *785 (Index of 2011-12) divided by (/) 100 (Index of Year 1981) -Rs. 1,26,47,331/ (Valuation as per Index for the year 2011-12) Valuation as Per Jantri of 1981 16,11,125/ Valuation as Pr Sale Deed 1.25,00,000/- Long Term Capital Amount 1,08,88,875/- Less (-) Amount as per Index of 2011/12 1,26,47,031/ Capital Loss 17,58,456/ And in alternative To arrive at market value of year 1981 - 785*100/685-114.50 - 2600(Current Market Value)*100/114.50 = 2269 (increase in percentage) - 2268-2600 = 331.05 - 4765 Sq. Mt. *331.05 = 15,74,474/- (Market Value as on 1981) Valuation of 1981 15,24,474/- Valuation as Per Sale Deed 1,25,00,000/- Less(-) Ament as per Index of 2011/12 1,23,59,620/- ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 6 - Capital Gain 1,40,380/- It is stated that as per the above mentioned calculation I am not liable to pay any long term capital gain and therefore the Assessment proceedings may be accordingly may be put to an end. It is further stated that the assesse has also get the valuation certificate on 25.07.2015 and calculation as per the valuation certificate is as follows and copy of the valuation certificate dated 25.07.2015 issued by the Shri Nimesh Raval, Govt. Approved Valuer is annexed herewith and marked as Ed E Valuation on 1981 13,50,000/- Index Cost 1,05,97,500/- Sale Value 1,25,00,000/- Capital Gain 19,02,500/- 11. It is further to inform that consideration received out of sale of land for an amount of Rs 1,25,00,000/- had been distributed between the assessee and his 10 children (5 Sons + 5 Daughters) Vechatbhai Vaghan 15,00,000/- Sons (5*15,00,000/-) 75,00,000/- Daughters (57,00,000/-) 35,00,000/- Total 1,25,00,000/ Copy of the accounts showing the above mentioned distribution is annexed herewith and marked as Exh. F 12] It is stated that the assesse has been served with the notice to pay the tax on long term capital gain received out of sale of an ancestral property. Since the property was an ancestral property and came to the shore of the assessee has sold the same by way of a registered sale deed and at the time of registration of the same the assesse was not having a PAN No. therefore at the relevant point of time and therefore the assesse has filled up the form no.60. The assesse has applied for PAN No. after the execution of said sale deed since the sale consideration was deposited in the Bank account and as part of compliance of Banking Rules the assesse has to provide Permanent Account Number 13] It is stated that in so far as the valuation report issue by the valuation officer upon the valuation sought for by the assessing officer under the provisions of Section 53A of the Income Tax Act is concerned, the act of seeking valuation from the valuation officer is beyond the scope of the Section 55A of the Income Tax Act. It is submitted in that regard that it is a well settled position of law that such a valuation can be sought for by the assessing officer in case where the assessee has assessed the value of the property at a lower rate than that off the market value. It would be pertinent to note that in the present case the value assessed by the assessee was much more on higher side comparing to the valuation arrived at by the valuation officer and therefore in the respectful submission of the assesse the powers exercised by the assessing officer is beyond the scope of the powers conferred under the Act. It is stated that in the case of Hiaben Jayantilal Shah Vis ITO reported in 2009(310) ITR ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 7 - 31, Hon'ble High Court of Gujarat was also pleased to observed that only the assessing officer is of the opinion that the value so claimed is less than the fair market value, the assessing officer is entitled to make reference to the Valuation Officer. Copy of the judgment is annexed herewith and marked as Exh G In view of the above facts the valuation arrived at by you is erroneous and therefore the same is not acceptable and in view of the same, I hereby request you to consider all the above aspect and finish the assessment proceedings at the earliest. Vechatbhai JabhaiVagin Sd/- I.T.P” 6. Alongwith the said reply dated 28.03.2016, the appellant filed valuation report dated 25.07.2015 prepared by a Government Valuer wherein the market value of the sale of land in question as on 01.04.1981 was determined at Rs.15,00,000/- and realizable value shown at Rs.13,50,000/-. However, it was found that the appellant never submitted this valuation report earlier during the course of assessment proceeding, neither raised any objection before the Valuation Officer in regard to the valuation of the land on the rate adopted by the Valuation Report as reflecting from the valuation report dated 15/16-3-2016, the copy whereof has already been reproduced by the Ld. AO in the assessment order. Taking into consideration this particular aspect of the matter, the working of capital gain furnished by the appellant was not found to be acceptable and the value determined by the Valuation Report Dated 15/16-3- 2016, the cost of acquisition of land as on 01.04.1981 at Rs.19,024/- and taxable LTCG has been computed in the following manner and Rs.1,23,50,662/- has been added to the total income of the appellant on account of LTCG not disclosed by the appellant: Sale consideration 1,25,00,000/- Cost of acquisition as on 1.4.1981 (As per Valuation Report dt. 15/16-3-2016) 19,024/- ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 8 - Indexed Cost of acquisition (Cost inflation index- F.Y. 2011-12 is 785) i.e. 19.024x785 100 1,49,338/- Long Term Capital Gain 1,23,50,662/- Long Term Capital Gain disclosed in the return (-)1,47,331/- (-)1,47,331/- Taxable Long Term Capital Gain 1,23,50,662/- 7. As valuation certificate has been obtained by the appellant from the Registered Valuer only upon re-assessment proceeding initiated and not submitted to the Ld. AO till 28.03.2016 by which period the Valuation Report from the DVO dated 15/16-3-2016 has already been obtained by the Ld. AO., and no objection was raised by the appellant against the DVO's report, neither any evidences were sought to be relied upon by the appellant in respect of value of the land in question, the Ld. CIT(A) confirmed the addition with the following observations: “5.3 On going through the facts of the case and the material on record, I find that firstly valuation certificate has been obtained by the appellant by registered valuer only after the assessment proceedings had begun in this case. Secondly, the same was not submitted to the AO till 28/03/2016 whereas the AO had already called for and obtained the valuation report of the DVO dated 15/16-03-2016. Therefore, there was no error on the part of the AO in referring the matter to the DVO. I also find that sufficient opportunities were given to the appellant both by the AO and DVO and no objections were raised by him before either of them. Thirdly, no documentary evidences of any sort in respect of valuation of the said land in question has been furnished by the appellant. In view of these facts, I find no reason to disagree with the decision of the AO in making the impugned addition by following the valuation report of the DVO. The addition of Rs 1,23,50,662/- is confirmed and Ground of appeal No.1 is dismissed.” 8. It is an admitted fact that on 28.03.2016, the Ld. AO received the valuation report submitted by the appellant, much after the valuation report dated 15/16-03-2016 as obtained by the Ld. AO from the DVO . In spite of the several opportunities, no objection was filed in regard to the same by the appellant neither any evidence has been relied upon even during the appellate proceeding. Thus, considering this aspect, we do not find any reason to interfere ITA No. 522/Ahd/2019 (Vechatbhai J. Dantani (Waghari) vs. ITO) A.Y.– 2012-13 - 9 - with the order of confirmation of addition made by the Ld. CIT(A) which according to us is just and proper. The same is, therefore, upheld. The appellant’s ground of appeal is found to devoid of any merit and, thus, dismissed. 9. The other grounds are consequential in nature, the same are also dismissed. 10. In the result, assessee’s appeal is dismissed. This Order pronounced on 07/07/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 07/07/2023 True Copy S. K. SINHA आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad