DHIRENDRA KOTHARI, Kota V. ITO, JHALAWAR

ITA 568/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5111 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Assessee Lawyers: B L BHOJWANI
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 50C; 142(1); 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 568/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI DHIRENDRA KOTHARI NARENDRA BHAWAN, JHALAWAR CUKE VS. THE ITO JHALAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ARJPK 5499A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 567/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI SURENDRA KUMAR KOTHARI PROP.: ARIHANT SAREE CENTRE, JHALAWAR CUKE VS. THE ITO JHALAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ARJPK 5499A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI B.L. BHOJWANI, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 25 /07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ABOVE ASSESSEE'S HAVE FILED RESPECTIVE APPEAL AGAINST DIFFERENT ORDERS OF THE LD. CIT(A), AJMER DATED 06-03-2013 FOR THE ASSESSMENT YEAR 2006-07 RAISING THEREIN FOLLOWING GROUND:- ITA NO. 568/JP/2013 DHIRENDRA KATHARI ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 2 THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMI NG THE ADDITION OF RS. 8,18,590/- MADE BY THE AO IN SA LE PRICE OF AGRICULTURE LAND UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE WHICH DESERVES TO BE DELETED. ITA NO. 567/JP/2013 SURENDRA KUMAR KATHARI THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMI NG THE ADDITION OF RS. 5,38,639/- MADE BY THE AO IN SA LE PRICE OF AGRICULTURE LAND UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE WHICH DESERVES TO BE DELETED. 2.1 SINCE THE ISSUE IN THE ABOVE APPEALS IS SAME, T HEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, I FIRST TAKE THE ISSUE INTO CONSIDERATION FOR DISPOSAL IN THE CASE OF SHRI DHIRENDRA KOTHARI IN I TA NO. 568/JP/2013 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR THE ASSESSEE SOLD AGRICULTURE LAND WITHIN THE LIMIT OF MUNICIPAL AREA, JHALAWAR. HOWEVER, THE ASSESSEE DID NOT FILE THE RETURN OF INCOME. THEREFORE, THE INCOME HAD ESCAPED FOR ASSES SMENT. HENCE, NOTICE U/S 148 WAS ISSUED BY THE AO AFTER RECORDING REASON ON 27-04-2009 AND THE SAME WAS SERVED ON 12-05-2009. IN RESPONSE TO N OTICE, THE ASSESSEE FURNISHED HIS RETURN OF INCOME ON 15-06-2009 DECLAR ING TOTAL INCOME OF RS. 1,17,232/-. THEREFORE, THE AO ISSUED NOTICES U/ S 143(2) AND 142(1) AND THE SAME WAS SERVED ON THE ASSESSEE ON 16-08-20 09. SUBSEQUENTLY, THE QUESTIONNAIRE WAS ISSUED ON 13-05-2010. IN COMP LIANCE OF NOTICES, THE ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 3 LD. AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS BEF ORE THE AO AND FURNISHED DETAILS WHICH WERE EXAMINED ON TEST CHECK BASIS. ON PERUSAL OF THE RECORDS, THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN SALE CONSIDERATION OF THE LAND OF RS. 4,04,250/- AND IND EXED COST OF ACQUISITION OF RS. 2,87,018/- FOR THE PURPOSE OF CAPITAL GAIN W HILE REGISTERING AUTHORITY HAS VALUED THE ASSESSEE'S SHARE OF LAND A T RS. 20,38,061/-.THE AO HAS MENTIONED THAT ON DEMAND OF THE ASSESSEE, TH E REFERENCE WAS MADE TO THE VALUATION WING TO DETERMINED THE FAIR M ARKET VALUE OF THE LAND SOLD AS ON 19-05-2005 AND ALSO AS ON 01-04-198 1. THE VALUATION OFFICER HAS VALUED THE FAIR MARKET VALUE OF THE ASS ESSEE'S SHARE OF LAND AS ON 01-04-1981 AT RS. 18,966/- AND FAIR MARKET VALUE OF THE OF ASSESSEE'S SHARE OF LAND ON 19-05-2010 AT RS. 12,22,840/-. THE ASSESSEE RAISED VARIOUS OBJECTIONS FOR THE SAID VALUATION BY THE VA LUATION OFFICER WHICH WERE SENT BY THE AO TO THE VALUATION OFFICER. THE A O AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE AND THE REPLY OF THE VALUATION OFFICER HAS HELD THAT VALUATION OFFICER HAS ALREADY GIVEN 40% D EDUCTION ON ACCOUNT OF ENCUMBRANCE, NON-CONVERSION OF LAND USE, CO-OWNE RSHIP AND UNDEVELOPED LAND SITE. ACCORDINGLY, THE AO ADOPTED THE FAIR MARKET VALUE U/S 50C AS DETERMINED BY THE VALUATION OFFICER AS O N 01-04-1981 AND ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 4 19-05-2010 FOR THE PURPOSE OF LONG TERM CAPITAL GAI NS OF RS. 11,28,579/- IN PLACE OF RS. 1,17,232/- SHOWN BY THE ASSESSEE. 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 4.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPELL ANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSES SEE HAS SOLD 5.775 BIGHAS OF LAND AND HAS CLAIMED THE SALE RATE AT RS. 70,000/ PER BIGHA. HOWEVER, THE DY. DIG STAMP, KOTA HAS TAKEN T HE VALUE OF THE SAID LAND AT RS. 20,38,061/-. AS DESIRED BY THE ASSESSEE, THE AO REFERRED THE MATER TO THE VALUATION OFFICER WHO HAS GIVEN DEDUCTION OF 40% ON THE VALUE DETERMINED BY THE REG ISTRATION AUTHORITIES AND VALUED THE PROPERTY AT RS. 12,22,85 0/-. THE VALUATION OFFICER HAS GIVEN THE DEDUCTION ON ACCOUN T OF VARIOUS FACTORS I.E. ENCUMBRANCE, NON-CONVERSION OF LAND US E, CO-OWNERSHIP AND UNDEVELOPED LAND SITE ETC. THOUGH THE ASSESSEE HAS CONTESTED ABOVE VALUATION, ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY COMPARABLE INSTANCE OF THE SIMILAR LAND BEING LESS THAN WHAT H AS BEEN DETERMINED IN THE CASE OF ASSESSEE BY ANY AUTHORITY . THE OBJECTIONS OF THE ASSESSEE HAVE BEEN FAIRLY AND ADEQUATELY CON SIDERED BY THE VALUATION OFFICER AND THE AO AND LAND HAS BEEN VALU ED AT RS. 12,22,840/- IN PLACE OF VALUE DETERMINED BY THE REG ISTRATION AUTHORITIES AT RS. 20,38,061/- BY THE REGISTRATION AUTHORITY. ACCORDINGLY, THE FAIR MARKET VALUE OF THE PROPERTY AS ON 19-05- 2005 DETERMINED U/S 50C(3) IS UPHELD AND ASSESSEE CONTENTIONS IN THIS REGARD ARE REJECTED. HOWEVER, THE APPELLANT HAS POINTED OUT THAT APPELLA NT HAS NOT SOUGHT DETERMINATION OF FAIR MARKET VALUE OF THE PR OPERTY AS ON 01- 04-1981 AND REFERENCE U/S 50C CAN BE MADE ONLY IN R ESPECT OF VALUATION OF ASSET AT THE TIME OF ITS TRANSFER WHIC H GIVES RISE TO LEVY OF CAPITAL GAINS TAX. THE ABOVE CONTENTION IS SUPPO RTED BY THE ASSESSEE'S LETTER DATED 31-05-2010 IN WHICH THE ISS UE UNDER CONSIDERATION WAS REGARDING THE SALE PRICE OF THE L AND IN THIS ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 5 CONTEXT U/S 50C OF THE I.T. ACT. IT HAS BEEN HELD I N THE CASE OF NEVILLE DE NORANHA VS. ACIT 5 DTR 389 THAT U/S 50C NO REFERENCE CA BE MADE FOR PURPOSE OF EVALUATING THE ASSET AS O N 01-04-1981. IN VIEW OF ABOVE DISCUSSION, THE AO IS DIRECTED TO ADO PT THE INDEXED COST OF ACQUISITION AS ON 01-04-1981 AS SHOWN BY TH E ASSESSEE AND COMPUTE THE LONG TERM CAPITAL GAINS ACCORDINGLY. TH IS GROUND OF APPEAL IS PARTLY ALLOWED. 2.3 THE LD. DR RELIED ON THE ORDERS OF THE LD. CIT( A) IN THE CASES OF BOTH THE ASSESSEE'S BEING SIMILAR ISSUE. 2.4 NOW THE ASSESSEE IS BEFORE ME WITH THE PRAYER T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 8,18,59 0/- MADE BY THE AO IN SALE PRICE OF PRICE OF AGRICULTURE LAND. THE LD. AR OF THE ASSESSEE FILED THE DECISION DATED 24-05-2013 OF ITAT JAIPUR BENCH IN T HE CASE OF SHRI RAMESHWAR PRASAD KACHOLIA VS. ACIT (ITA NO. 248 & 2 49/JP/2012 FOR THE ASSESSMENT YEAR 2007-08- ASSESSEE'S APPEAL) AND DCIT VS. SHRI RAMESHWAR PRASAD KACHOLIA (ITAA286 & 282/JP/2012 FO R THE A.Y. 2007- 08- REVENUES APPEAL). THE LD. AR OF THE ASSESSEE H AS ALSO FILED THE COMPUTATION OF TOTAL INCOME AND ALSO COPY OF THE SA LE DEEDS IN RESPECT OF BOTH THE ASSESSEE'S. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORDS TH AT THE ASSESSEE HAD SOLD 5.775 BIGHAS OF LAND AND CLAIMED THE SALE RATE AT R S. 70,000/- PER BIGHA ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 6 VALUING AT RS. 4,04,250/-.. THE DY. DIG STAMP, KOTA HAS TAKEN THE VALUE OF THE SAID LAND AT RS. 20,38,061/-. IT IS NOTED TH AT AS DESIRED BY THE ASSESSEE, THE AO REFERRED THE MATTER TO THE VALUATI ON OFFICER WHO HAD GIVEN THE DEDUCTION OF 40% ON THE VALUE DETERMINED BY THE REGISTRATION AUTHORITIES AND VALUED THE PROPERTY AT RS. 12,22,84 0/-. THUS THE VALUATION OFFICER HAD GIVEN THE DEDUCTION ON ACCOUNT OF VARIO US FACTORS I.E. ENCUMBRANCE, NON-CONVERSION OF LAND USE, CO-OWNERSH IP AND UNDEVELOPED LAND SITE ETC. IT IS NOTICED THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ANY COMPARABLE INSTANCES OF THE SIMILAR LAND BEING VALUED LESS THAN WHAT HAD BEEN DETERMINED IN THE CASE OF ASSESSEE BY ANY AUTHORITY. IT IS NOTICED THAT THE OBJECTIONS OF THE ASSESSEE HAD BEEN FAIRLY AND ADEQUATELY CONSIDERED BY THE VALUATION OFFICER AND THE AO AND THE LAND HAD BEEN APPROPRIATELY VALUED AT RS. 12,22,840/- IN PLACE OF VALUE DETERMINED BY THE REGISTRATION AUTHORITIES AT 20,38,061/-.THUS TH E FAIR MARKET VALUE OF THE PROPERTY AS ON 19-05-2005 DETERMINED U/S 50C WAS RI GHTLY UPHELD BY THE LD. CIT(A) AND I DO NOT SEE ANY INFIRMITY IN HIS OR DER ON THIS ISSUE. 2.5.1 IT IS ALSO NOTICED FROM THE ORDERS OF LOWER A UTHORITIES THAT THE ASSESSEE HAS NOT SOUGHT DETERMINATION OF FAIR MARKE T VALUE OF THE PROPERTY AS ON 01-04-1081 AND REFERENCE U/S 50C CAN BE MADE ONLY IN RESPECT OF VALUATION OF ASSET AT THE TIME OF ITS TRANSFER WHIC H GIVES RISE TO LEVY OF ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 7 CAPITAL GAIN TAX. THIS CONTENTION OF THE ASSESSEE B EFORE THE LD. CIT(A) VIDE HIS LETTER DATED 31-05-2010 IN WHICH THE ISSUE UNDER CONSIDERATION WAS REGARDING THE SALE PRICE OF THE LAND ONLY AND A SSESSEES REQUEST WAS VALUATION OF THE LAND IN THE CONTEXT OF SECTION 50C OF THE I.T. ACT. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE DECISION O F NEVILLE DE NORANHA VS. ACIT 5 DTR 389 IN WHICH IT IS HELD THAT U/S 50C NO REFERENCE CAN BE MADE FOR PURPOSE OF EVALUATING THE ASSET AS ON 01-0 4-1981. HENCE, THE LD. CIT(A) DIRECTED THE AO TO ADOPT THE INDEXED COST OF ACQUISITION AS ON 01- 04-1981 AS SHOWN BY THE ASSESSEE AND COMPUTE THE LO NG TERM CAPITAL GAIN ACCORDINGLY. I CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE FIND NO REASON TO INTERFERE WITH THE OR DER OF THE LD. CIT(A) WHICH IS UPHELD. THUS THE ISSUE RAISED BY THE ASSES SEE IN HIS APPEAL IS DISMISSED. 3.1 NOW I TAKE UP THE APPEAL OF SHRI SURENDRA KOTHA RI IN ITA NO. 567/JP/2013 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN THE OBSERVATION OF THE LD. CIT(A) IS MOSTLY SIMILAR AS IN THE CASE OF SHRI DHIRENDRA KOTHARI AND THE SAME IS REPRODUCED AS UNDER:- 4.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN T HAT THE ASSESSEE HAS SOLD 3.8 BIGHAS OF LAND AND HAS CLAIMED THE SAL E RATE AT RS. 70,000/ PER BIGHA. HOWEVER, THE DY. DIG STAMP, KOTA HAS TAKEN THE VALUE OF THE SAID LAND AT RS. 13,41,062/-. AS D ESIRED BY THE ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 8 ASSESSEE, THE AO REFERRED THE MATER TO THE VALUATIO N OFFICER WHO HAS GIVEN DEDUCTION OF 40% ON THE VALUE DETERMINED BY THE REGISTRATION AUTHORITIES AND VALUED THE PROPERTY AT RS. 8,04,639/-. THE VALUATION OFFICER HAS GIVEN THE DEDUCTION ON AC COUNT OF VARIOUS FACTORS I.E. ENCUMBRANCE, NON-CONVERSION OF LAND USE, CO- OWNERSHIP AND UNDEVELOPED LAND SITE ETC. THOUGH THE ASSESSEE HAS CONTESTED ABOVE VALUATION, ASSESSEE HAS NOT BEEN AB LE TO GIVE ANY COMPARABLE INSTANCE OF THE SIMILAR LAND BEING LESS THAN WHAT HAS BEEN DETERMINED IN THE CASE OF ASSESSEE BY ANY AUTH ORITY. THE OBJECTIONS OF THE ASSESSEE HAVE BEEN FAIRLY AND ADE QUATELY CONSIDERED BY THE VALUATION OFFICER AND THE AO AND LAND HAS BEEN VALUED AT RS. 8,04,639/- IN PLACE OF VALUE DETERMIN ED BY THE REGISTRATION AUTHORITIES AT RS.13,41,062/- BY THE R EGISTRATION AUTHORITY. ACCORDINGLY, THE FAIR MARKET VALUE OF TH E PROPERTY AS ON 19-05-2005 DETERMINED U/S 50C(3) IS UPHELD AND ASSE SSEE CONTENTIONS IN THIS REGARD ARE REJECTED. HOWEVER, THE APPELLANT HAS POINTED OUT THAT APPELLA NT HAS NOT SOUGHT DETERMINATION OF FAIR MARKET VALUE OF THE PR OPERTY AS ON 01- 04-1981 AND REFERENCE U/S 50C CAN BE MADE ONLY IN R ESPECT OF VALUATION OF ASSET AT THE TIME OF ITS TRANSFER WHIC H GIVES RISE TO LEVY OF CAPITAL GAINS TAX. THE ABOVE CONTENTION IS SUPPO RTED BY THE ASSESSEE'S LETTER DATED 31-05-2010 IN WHICH THE ISS UE UNDER CONSIDERATION WAS REGARDING THE SALE PRICE OF THE L AND IN THIS CONTEXT U/S 50C OF THE I.T. ACT. IT HAS BEEN HELD I N THE CASE OF NEVILLE DE NORANHA VS. ACIT 5 DTR 389 THAT U/S 50C NO REFERENCE CA BE MADE FOR PURPOSE OF EVALUATING THE ASSET AS O N 01-04-1981. IN VIEW OF ABOVE DISCUSSION, THE AO IS DIRECTED TO ADO PT THE INDEXED COST OF ACQUISITION AS ON 01-04-1981 AS SHOWN BY TH E ASSESSEE AND COMPUTE THE LONG TERM CAPITAL GAINS ACCORDINGLY. TH IS GROUND OF APPEAL IS PARTLY ALLOWED. 3.2 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND THAT SINCE THE ISSUE RA ISED BY THE ABOVE ASSESSEE SHRI DHIRENDRA KOTHARI IS SIMILAR TO FACTS OF THE CASE OF SHRI ITA NO. 568/JP/2013 SHRI DHIRENDRA KOTHARI VS. ITO, JHALAWAR . 9 SURENDRA KUMAR KOTHARI, IN WHICH THE APPEAL OF THE ASSESSEE I.E. SHRI DHIRENDRA KOTHARI IS DISMISSED. THUS THE DECISION T AKEN IN THE CASE OF SHRI DHIRENDRA KOTHARI SHALL APPLY MUTATIS MUTANDIS TO THE CASE OF SHRI SURENDRA KUMAR KOTHARI ASSESSEE FOR THE ASSESSMEN T YEAR 2006-07 ALSO. HENCE, THE APPEAL OF SHRI SURENDRA KUMAR KOTHARI IS DISMISSED. 4.0 IN THE RESULT, THE APPEALS OF THE ABOVE ASSESS EES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 /07/2 016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 /07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI DHIRENDRA KOTHARI, JHALAWAR 2. VIHYKFKHZ@ THE APPELLANT- SHRI SURENDRA KUMAR KOTHARI, JHALAWA R 3. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD, JHALAWAR 4. VK;DJ VK;QDRVIHY@ CIT(A). 5. VK;DJ VK;QDR@ CIT, 6. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 7. XKMZ QKBZY@ GUARD FILE (ITA NO. 568 & 567/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR