Mini Jain, Delhi V. ITO, New Delhi

ITA 5332/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2736 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 24-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKHVEER CHOUDHARY
• Assessee Lawyers: V MOHAN C AS; MRS RANO JAIN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 5332/DEL/2012 ASSESSMENT YEAR: 2009-10 SMT. MINI JAIN, VS. ITO S K JAIN DISTRIBUTORS WARD -29,(3) 1748, BHAGIRATH PALACE, NEW DELHI. CHANDNI CHOWK, DELHI-110006 PAN: AALPJ3220A (APPELLANT) (RESPONDENT) ASSESSEE BY : MRS. RANO JAIN & SH. V. MOHAN, CAS. REVENUE BY : SH. SUKHVEER CHOUDHARY, SR. DR. ORDER PER RAJPAL YADAV, JM : THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF A SSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 5.09.2012 PASSED FOR A.Y . 2009-10. 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF AP PEAL BUT HER GRIEVANCES REVOLVES AROUND A SINGLE ISSUE, WHEREBY SHE HAS CONTENDED THAT AO HAS ERRED IN ADOPTING THE CIRCLE RATE AS PER SEC TION 50C OF THE IT ACT, WHILE TAKING THE DEEMED VALUE OF SALE CONSIDERATION OF THE CAPITAL ASSET I.T.A. NO. 5332/DEL/2012 2 TRANSFERRED BY THE ASSESSEE, FOR THE PURPOSE OF CAL CULATING THE CAPITAL GAIN, INSTEAD OF ACTUAL SALE CONSIDERATION RECEIVED BY TH E ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT ASSESSEE WAS CO-OWNER AND IN POSSESSION OF A PROPER TY BEARING NO. 1/89 GYAN KHAND, INDIRAPURAM, IN EQUAL SHARES WITH SHRI ANIL KUMAR JAIN, WHO IS BROTHER OF HER HUSBAND. WHILE PASSING THE ASSESS MENT ORDER IN THE CASE OF SHRI ANIL KUMAR JAIN, AO HAS REPLACED THE SALE CONS IDERATION WITH DEEMED VALUE OF THE LAND COMPUTED AS PER CIRCLE RATE U/S 5 0C OF THE ACT. THE ASSESSEE, SHRI ANIL KUMAR HAS CHALLENGED THIS ACTIO N OF THE AO AND CONTENDED THAT THE VALUE ADOPTED BY THE STAMP VALUE AUTHORITIES, WHILE NOTIFYING THE CIRCLE RATES FOR LEVY OF STAMP DUTY D OES NOT REPRESENT THE FAIR MARKET VALUE OF THE PROPERTY. SINCE ASSESSEE HAS AC CEPTED THE VALUATION FOR THE PURPOSE OF THE STAMP DUTY BUT THAT DOES NOT MEA N THAT ASSESSEE HAS SOLD THE PROPERTY AT THAT RATE. THE AO WAS BOUND TO MAKE REFERENCE TO THE VALUATION OFFICER AS PER SECTION 50C(2) FOR DETERMI NING THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE. THIS DISPUTE T RAVELED UP TO THE TRIBUNAL IN ITA NO. 5331/DEL/2012, THE TRIBUNAL HAS SET ASIDE T HE ORDERS OF THE REVENUE AUTHORITIES BELOW AND DIRECTED THE AO TO MAKE A REF ERENCE TO THE VALUATION OFFICER U/S 50C(2) AND RE-ADJUDICATE THE ISSUE. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD COPY OF THE TRIBUNAL S ORDER DATED 26.4.2013. I.T.A. NO. 5332/DEL/2012 3 4. THE LD. DR ON THE OTHER HAND WAS UNABLE TO CONTR OVERT THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY, IT EMERGES OUT FROM THE RECORD TH AT ASSESSEE HAS FILED HER RETURN OF INCOME ON 30.30.2010 DECLARING TOTAL INCO ME OF RS.2,24,900/-. SHE HAS SHOWN SHORT-TERM CAPITAL GAIN OF RS.1,11,234/- ON SALE OF HALF SHARES IN THE PROPERTY, BEARING NO. 1/89 GYAN KHAND INDIRAPUR AM, GHAZIABAD. ACCORDING TO THE ASSESSEE THE PROPERTY WAS SOLD FOR A CONSIDERATION OF RS.27,50,000/- THE PURCHASE PRICE AND OTHER EXPENSE S WERE OF RS26,38,766/-. ON AN ANALYSIS OF THE SALE DEED, LD. AO HAS OBSERVE D THAT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY, VALUE OF THE PROPERTY HAS BE EN TAKEN AT RS.78,10,000/-, THEREFORE, HE CONFRONTED THE ASSESS EE AS TO WHY THE SALE CONSIDERATION SHOULD NOT BE DEEMED AT RS.78,10,000/ - AS PER SECTION 50C OF THE ACT. ACCORDING TO THE ASSESSEE SHE HAS CONTENDE D THAT SALE PROCEEDS SHOWN BY HER, ARE THE ACTUAL SALE PROCEEDS, THE PRO PERTY DOES NOT COMMAND FAIR MARKET VALUE AT RS.78,10,000/-. THE AO ADOPTED THE SALE VALUE AT RS.39,05,000/- BEING 50% OF 78,10,000/- AS SALE CON SIDERATION IN THE HANDS OF THE ASSESSEE. HE OBSERVED THAT ASSESSEE FAILED T O GIVE ANY EVIDENCE THAT THE MARKET VALUE OF THE PROPERTY IS NOT EQUIVALENT TO THE ONE NOTIFIED IN THE I.T.A. NO. 5332/DEL/2012 4 CIRCLE RATE BY STAMP DUTY VALUATION AUTHORITIES. HE DETERMINED THE CAPITAL GAIN ACCORDINGLY. 6. APPEAL TO THE CIT (A) DID NOT BRING ANY RELIEF T O THE ASSESSEE. 7. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE FIND THAT IN CASE OF CO-OWNER TRIBUNAL HAS SET ASIDE THIS ISSUE BY OBSERVING THAT AO FAILED TO COMPLY WITH THE PROCEDURE PROVIDED IN SUB -SECTION 2 OF SECTION 50C. THE FINDING OF THE TRIBUNAL READ AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE FI RST AND FOREMOST POINT THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER T O THE VALUATION OFFICER U/S 50C(2) OF THE ACT TO DETERMIN E THE FAIR MARKET VALUE BEFORE INVOKING PROVISIONS OF SECTION 50C(1) OF THE ACT. FROM CAREFUL PERUSAL OF THE ASSESSMENT ORD ER, WE FIND THAT THE ASSESSING OFFICER HAS ACKNOWLEDGED THE REP LY OF THE ASSESSEE VIDE LETTER DATED 12.11.2011, 14.11.2011 A ND 18.11.2011 (PAPER BOOK PAGE NO. 13 TO 17) WHEREIN T HE ASSESSEE HAS EMPHASIZED THE FACT THAT CIRCLE RATE I .E. VALUE ADOPTED BY STAMP VALUATION AUTHORITY UNDER SUB-SECT ION (1) OF SECTION 50C IN RESPECT TO THE PROPERTY SOLD IS MUCH HIGHER THAN THE ACTUAL FAIR MARKET VALUE AND THE PROPERTY HAS B EEN SOLD ON THE CONSIDERATION AS STIPULATED IN THE SALE DEED. I N THE LAST OPERATIVE PART OF THE ASSESSMENT ORDER, THE ASSESSI NG OFFICER HELD THAT THE ASSESSEE HAS NOT GIVEN ANY EXPLANATIO N IN RESPECT I.T.A. NO. 5332/DEL/2012 5 OF APPLICABILITY OF PROVISIONS OF SECTION 50C(1) OF THE ACT, THEREFORE, FOR CALCULATING SHORT TERM CAPITAL GAIN, THE VALUE OF HALF SHARE OF THE PROPERTY IS TAKEN AT RS.39,05,000 AS PER VALUE ADOPTED BY STAMP VALUATION AUTHORITY WHILE REGISTER ING THE SALE DEED. 8. FROM THIS FINDING RECORDED BY THE ASSESSING OFF ICER, IT IS CLEAR THAT THE ASSESSEE MADE A CLAIM BEFORE THE ASS ESSING OFFICER THAT THE CIRCLE RATE WAS MUCH HIGHER THAN A CTUAL MARKET VALUE OF THE PROPERTY. IN THIS SITUATION, SECTION 5 0C(2) PROVIDES THAT WITHOUT PREJUDICE TO THE PROVISION OF SUB-SECT ION (1) WHERE THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER OR AUTHORITY THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VAL UATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROP ERTY AS ON THE DATE OF TRANSFER AND THE VALUE SO ADOPTED AND ASSES SED BY THE STAMP VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR ANY REFERENCE HAS BEEN MADE BEFORE A NY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING O FFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUA TION OFFICER AND IN THAT EVENT, RELEVANT AND CORRESPONDING PROVI SIONS OF THE WEALTH TAX ACT SHALL, WITH NECESSARY MODIFICATIONS, WILL APPLY. 9. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS MADE A CLAIM BEFORE THE ASSESSING OFFICER THAT THE VALUE A ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y WAS HIGHER THAN THE FAIR MARKET VALUE. FROM THE REPLIES FILED BY THE ASSESSEE, WE ALSO OBSERVE THAT IT IS ALSO NOT THE C ASE WHETHER THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY HAS EVER BEEN DISPUTED BY THE ASSESSEE IN ANY APPEAL OR REVISION OR OTHERWISE I.T.A. NO. 5332/DEL/2012 6 AS REFERRED TO IN SECTION 50C(2) OF THE ACT. IN THE SE CIRCUMSTANCES, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO REFER THE MATTER FOR VALUATION TO A VALUATION OFFIC ER HAS PROVIDED IN SUB-SECTION 50C(2) OF THE ACT. 10. ON THE BASIS OF FOREGOING DISCUSSION AND FACTU AL MATRIX OF THE PRESENT CASE, WE HOLD THAT THE VIEW TAKEN BY THE ASSESSING OFFICER AS WELL AS CONFIRMED BY THE COMMISSIONER OF INCOME TAX(A) IS NOT CORRECT. SINCE THE ASSESSING OFFICER FAILED TO REFER THE MATTER TO THE VALUATION OFFICER U/S 50C(2) OF T HE ACT, WE FIND IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH ADJUDICATION AFTER RE FERRING THE MATTER TO THE VALUATION OFFICER U/S 50C(2) OF THE A CT. THE ASSESSING OFFICER SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THEN DECIDE THE ISSUE ACCORDINGLY. WE ALSO MAKE IT CLEAR THAT THE MATTER WITH REGARD TO THE DETERMINAT ION OF SALE CONSIDERATION AND CAPITAL GAIN SHALL REMAIN OPEN BE FORE THE ASSESSING OFFICER AND BOTH THE PARTIES SHALL BE AT LIBERTY TO RAISE ANY OTHER CONTENTION SUBMITTED BY ANY OTHER D OCUMENT OR EVIDENCE AS THEY MAY THINK FIT AND PROPER UNDER THE LAW. THE ASSESSING OFFICER WILL CONSIDER ALL THE CONTENTIONS AND EVIDENCE PLACED BEFORE HIM AND DECIDE THE ISSUE DE NOVO BY P ASSING A SPEAKING AND WELL-REASONED ORDER. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINA TE BENCH PASSED IN THE CASE OF CO-OWNER, WE ALLOW THE APPEAL OF THE AS SESSEE AND SET ASIDE THIS I.T.A. NO. 5332/DEL/2012 7 ISSUE TO THE AO FOR RE-ADJUDICATION. LD. AO SHALL F OLLOW THE DIRECTIONS GIVEN IN THE CASE OF CO-OWNER (EXTRACTED SUPRA). 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2013. SD/- SD/- ( T. S. KAPOOR ) (RAJP AL YADAV) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 31/07/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR