Sanapala Tirumalamadhav, Visakhapatnam V. The Deputy Commissioner of Income Tax, (International Taxation), Visakhapatnam

ITA 551/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3763 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 24-10-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 5 51 /V IZ /201 8 ( / ASSESSMENT YEAR : 2008 - 09 ) SANAPALA TIRUMALA MADHAV D.NO. 11 - 8 - 25/1, PLOT NO.21 DASPALLA HILLS VISAKHAPATNAM [PAN : BDPPS5704N ] VS. DY.COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI G.V.N.HARI, AR / RESPONDENT BY : SHRI P.SRINIVASA MURTHY , D R / DATE OF HEARING : 17 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT : 30 .0 8 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 10, HYDERABAD VIDE I.T.A.NO.0047/CIT(A) - 10/2016 - 17/CIT(A),HYD - 10/10053/2016 - 17 DATED 20.09.20 18. 2 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM 2. GROUND NO.1 AND 5 ARE GENERAL IN NATURE W HICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE VALIDITY OF ISSUE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THE LD.AR RELIED ON THE GROUNDS OF APPEAL AND THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUT HORITIES. 4. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND FOUND THAT THE ASSESSEE HAS SOLD THE PROPERTIES IN THE IMPUGNED ASSESSMENT YEARS BUT DID NOT FILE THE RETURN OF INCOME. THE AO HAD ISSUED NOTICE U/S 148 AFTER RECORDING THE REASO NS. THE ASSESSEE HAS FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED U/S 148 DECLARING TOTAL INCOME OF RS.20,64,920/ - . FROM THE INFORMATION AVAILABLE ON RECORD, THE ASSESSING OFFICER (AO) HAS ISSUED THE NOTICE U/S 148 HAVING REASON TO BELIEV E THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AFTER RECORDING THE REASONS. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND UPHOLD THE ISSUE OF NOTICE U/S 148. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS D ISMISSED. 3 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM 5 . GROUND NO.3 AND 4 ARE RELATED TO THE VALUATION OF THE PROPERTY AND SUSTAINING THE ADDITION OF RS.34,92,500/ - U/S 50C OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE HAS SOLD THE PROPERTY ADMEASURING 371 SQ.YDS OF SITE ALONG WITH150 SFT OF AC SHED SITUATED AT MADHAVADHARA, VISAKHAPATNAM TO SHRI DADI KASIVISWESWARA RAO, VISAKHAPATNAM FOR A CONSIDERATION OF RS.5,56,500/ - VIDE DOCUMENT NO.2429/2007 DATED 03.10.2007. THE MARKET VALUE OF THE PROPERTY AS PER SRO WAS RS.40,49,000/ - , S INCE THERE WAS DIFFERENCE IN THE STAMP DUTY VALUATION ADOPTED BY THE SRO AND THE CONSIDERATION ADMITTED BY THE ASSESSEE, THE AO REOPENED THE ASSESSMENT. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED EXPLANATION STATING THAT THE BUYER HAD PAID THE S TAMP DUTY ON THE MARKET VALUE AND REGISTERED THE PROPERTY UNDER GPA TO THE VENDOR AND HE WAS UNAWARE OF THE PROVISIONS OF SECTION 50C OF THE ACT. THE AO CONSIDERED THE EXPLANATION OF THE ASSESSEE AND REJECTED THE SAME AND ADOPTED THE VALUE AS PER THE STAM P DUTY AUTHORITIES AS PER SECTION 50C OF THE ACT AND THE DIFFERENCE AMOUNT OF RS.34,92,500/ - WAS BROUGHT TO TAX AS LONG TERM CAPITAL GAINS. 4 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM 6 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ORD ER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. 7 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE HAS OBJECTED THE VALUATION OF THE PROPERTY AT THE TIME OF ASSESSMENT AND FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT AWARE OF THE INCOME TAX PROVISIONS WITH REGARD TO DEEMED CONSIDERATION AS PER SECTION 50C, HENCE HE DID NOT MAKE REQUEST TO THE AO FOR REFERENCE TO THE VALUATION CELL. THE SECOND REASON SUBMITTED BY THE ASSESSEE IS THAT THE IMPUGNED PROPERTY WAS UNDER LITIGATION, HENCE, THE ASSESSEE COULD NOT GET REASONABLE PRICE FOR THE PROPERTY. THE LD.AR ARGUED THAT SINCE THE ASSESSEE HAD OBJECTED FOR TAKING THE VALUE AS PER THE STAMP VALUATION AUTHORITIES, THE AO OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION CELL, INSTEAD OF STRAIGHT AWAY PROCEEDING TO TAKE THE CONSIDERATION AS PER THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITIES. THE LD.AR FURTHER SUBMITTED THAT THE LD.CIT(A) ALSO ERRED IN UPHOLDING THE ORDER OF THE AO. AT LEAST, THE LD.CIT(A) OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION CELL BEFORE 5 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM DECIDING THE CAPITAL GAINS AND BRINGING THE DIFFERENCE BETWEEN THE ACTUAL CONSIDERATION AND THE DEEMED CONSIDERATION AS PER SECTION 50C OF THE ACT. 8 . ON THE OTHER HAND, THE LD.DR VEHEMENTLY OBJECTED F OR REFERRING THE PROPERTY TO THE DISTRICT VALUATION CELL. HE ARGUED THAT THE ASSESSEE SHOULD HAVE OBJECTED FOR ADOPTING THE VALUE AS PER SECTION 50C OF THE ACT AT THE TIME OF ASSESSMENT. THE ASSESSEE CHANGED HIS STAND BEFORE THE LD.CIT(A) AND SUBMITTED T HAT THE PROPERTY WAS IN DISPUTE AND LITIGATION. THE ASSESSEE HAS TAKEN INCONSISTENT STAND BEFORE BOTH THE LOWER AUTHORITIES, HENCE, ARGUED THAT THERE IS NO CASE FOR REFERRING TO VALUATION CELL AND ACCORDINGLY REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A ) AND DISMISS THE APPEAL OF THE ASSESSEE. 9 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IT IS A FACT ON RECORD THAT THE ASSESSEE HAS OBJECTED FOR ADOPTING THE MARKET RATE AS PER THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITI ES. THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE WAS ONLY RS.5,56,500/ - AND THE STAMP DUTY WAS PAID ON MARKET VALUE OF RS.40,49,000/ - , THEREBY RESULTING IN DIFFERENCE OF RS.34,92,500/ - . THOUGH THE ASSESSEE HAS NOT OBJECTED IN CLEAR TERMS BUT EXPRESS ED HIS VIEW AND PLACED OBJECTION BEFORE 6 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM THE AO FOR ADOPTING THE MARKET VALUE AS PER SECTION 50C OF THE ACT. BEFORE THE LD.CIT(A) ALSO, THE ASSESSEE HAS OBJECTED FOR VALUATION AND SUBMITTED THAT THE LAND IN QUESTION WAS TO BE ACQUIRED BY THE GOVERNMENT UN DER A DRAFT NOTIFICATION DATED 12.06.1968. SUBSEQUENTLY, THE LAND WAS NOTIFIED TO BE SURPLUS UNDER URBAN LAND (CEILING AND REGULATION) ACT, 1976. THUS, THE LAND PURCHASED WAS IN PROLONGED LITIGATION AND HENCE, THERE WAS NO APPRECIATION IN THE VALUE OF THE LAND EVEN AT THE TIME OF SALE BY THE ASSESSEE IN 2007. THE ABOVE FACT IS VERIFIABLE FACT THOUGH THE ASSESSEE COULD NOT BRING IT TO THE NOTICE OF THE AO AT THE TIME OF ASSESSMENT. THERE IS NO BAR ON THE ASSESSEE TO FURNISH THE VERIFIABLE FACTS BEFORE THE APPELLATE AUTHORITIES ALSO. THEREFORE, THIS IS CLEAR CASE FOR REFERENCE TO THE VALUATION CELL TO DECIDE THE MARKET VALUE AS ON THE DATE OF SALE. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO RE FER THE DEPARTMENT VALUATION CELL AND TO DECIDE THE APPEAL ON THE OUTCOME OF THE REFERENCE MADE TO THE VALUATION CELL. ACCORDINGLY, THE ASSESSMENT IS SET ASIDE DENOVO WITH A DIRECTION TO REDO THE ASSESSMENT AFRESH AFTER BEING REFERRED THE VALUE OF THE PROP ERTY TO THE VALUATION CELL. THE AO SHOULD GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE TO PRESENT HIS 7 I.T.A. NO . 5 51 /VIZ/201 8 , A.Y.2008 - 09 SANAPALA TIRUMALAMADHAV, VISAKHAPATNAM CASE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 30 .0 8 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - SANAPALA TIRUMALA MADHAV , D.NO. 11 - 8 - 25/1, PLOT NO.21, DASPALLA HILLS, VISAKHAPATNAM 2. / THE REVENUE - DY.COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION),VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX ( IT &TP ) , HYDERABAD 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 10, HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM