Shri Aziz Ahmed Siddiqui, Bhopal V. The ITO Ward 3(1), Bhopal

ITA 57/IND/2012

• Counselvise Citation: 5722714 RSA 2012
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: GIRISH AGARWAL CAS
• Keywords: Gift; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AJWPA - 5880F I.T.A.NO. 166 /IND/201 2 A.Y. : 2007 - 08 SHRI RAIS AHMED, 4,AHMEDABAD PALACE ROAD, BHOPAL. VS ITO, WARD 3(1), BHOPAL. ASSESSEE RESPONDENT PAN NO. : APO,PS4888M I.T.A.NO. 57/IND/2012 A.Y. : 2007 - 08 SHRI AZIZ AHMED SIDDIQUE, D-SECTOR KOH-E-FIZA, BHOPAL. VS ITO, WARD 3(1), BHOPAL. ASSESSEE RESPONDENT ASSESSEE S BY : SHRI A SHISH GOYAL AND SHRI GIRISH AGARWAL, CAS RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 02 . 0 5 .2012 DATE OF PRONOUNCEMENT : 7 . 0 5 .201 2 -: 2: - 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08. 2. AS THE GROUNDS INVOLVED IN BOTH THE APPEALS RELATE TO COMMON ISSUE, BOTH ARE HEARD TOGETHER AND ARE NOW D ECIDED BY THIS CONSOLIDATED ORDER. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE SHRI RAIS AHMED IS A RETIRED LABOUR OFFICER, AGED 83 YEARS. H E HAD INHERITED A PIECE OF AGRICULTURAL LAND SITUATED AT KHAJURI KHURD FROM HIS FATHER ON HIS DEATH IN THE YEAR 1975. HE S OLD THE LAND TO HIS BROTHERS SON FOR RS. 10 LAKHS, WHICH WAS VA LUED BY THE SUB REGISTRAR FOR REGISTRATION PURPOSES AT RS. 38,1 1,000/-. THE ASSESSING OFFICER ASKED THE ASSESSEE FOR TAKIN G SALE VALUE AT RS. 38.11 LAKHS FOR THE PURPOSE OF COMPUTING CAP ITAL GAINS. HOWEVER, AT THE INSTANCE OF THE ASSESSEE, THE MATTE R WAS REFERRED BY ASSESSING OFFICER TO THE DVO, WHO VALUE D THE LAND AT RS. 24,76,890/-. BY ADOPTING DVOS VALUATION, TH E ASSESSING OFFICER COMPUTED CAPITAL GAINS AND ALSO D ID NOT -: 3: - 3 ALLOW THE ASSESSEES CLAIM OF EXPENDITURE OF RS. 3, 82,356/- ALLEGED TO BE INCURRED ON IMPROVEMENT OF LAND. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ASSESSING OFFICERS ACTION AGAINST WHICH THE ASSESS EE IS IN APPEAL BEFORE US. 5. IT WAS ARGUED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE LAND WAS SITUATED IN REMOTE VILLAGE AND 1. 5 KMS AWAY FROM APPROACH ROAD. IT WAS ALSO SUBMITTED THAT THE LAND WAS IN POSSESSION OF THAKUR SAMAJ FOR MORE THAN 50 YEAR S AND THE ALLEGATION WAS THAT THE LAND HAS BEEN GIVEN BY FATH ER OF THE ASSESSEE TO THAKUR SAMAJ AS A GIFT. THE ASSESSEE WA S ALWAYS TRYING TO SELL OUT THE LAND BUT THERE WAS NO POWER AS SUCH, BECAUSE OF UNAUTHORIZED POSSESSION OF THE LAND BY T HE THAKUR PEOPLE. WITH THE FEAR THAT THE LAND MIGHT NOT BE GR ABBED BY THE POSSESSOR THROUGH ANY MEANS, THE ASSESSEE DREW A POWER OF ATTORNEY IN FAVOUR OF HIS YOUNGER BROTHER SHRI A ZIZ AHMED SIDDIQUE TO SOMEHOW SELL OUT THE LAND. WHEN THE AZI Z AHMED SIDDIQUE CAME TO KNOW THAT THE SAID ILLEGAL POSSESS ORS WERE PLANNING TO GET THE LAND TRANSFERRED IN THEIR FAVOU R UNDER BHUMI SWAMY ACT ON ACCOUNT OF PROLONGED ADVERSE -: 4: - 4 POSSESSION, A PART OF LAND MEASURING 5.23 ACRES WER E SOLD TO HIS OWN SON ANIS AHMED ON 5.5.2006 FOR A SUM OF RS. 10 LAKHS ON WHICH LONG TERM CAPITAL GAIN WORKED OUT AN D RETURN OF INCOME WAS FILED SHOWING THE LONG TERM CAPITAL G AINS OF RS. 55,618/-. HE FURTHER SUBMITTED THAT AS AGAINST THE SALE VALUE OF RS. 10 LAKHS THE STAMP DUTY AUTHORITY VALUED THI S PIECE OF LAND AT AN EXORBITANT FIGURE OF RS. 38,11,000/- AS PER RATE FIXED UNDER THE COLLECTORS GUIDELINES. THE MATTER OF VALUATION WAS HOWEVER REFERRED TO THE DEPARTMENTAL VALUATION CELL AT THE INSTANCE OF THE ASSESSEE WITHIN THE PROVISIONS OF SECTION 50-C READ WITH SECTION 55A OF THE INCOME-TAX ACT. T HE VALUATION OFFICER DID ADMIT THAT THIS LAND HAS BEEN IN POSSESSION OF THE THAKUR SAMAJ LONG AND HENCE VALUE D THE SAID LAND AT A FAIR MARKET VALUE OF RS. 24,76,890/- AS ON THE DATE OF SALE I.E. 05.05.2006 AS AGAINST THE COLLECT ORS VALUE OF RS. 38,11,000/-. THERE WAS NO BASIS FOR DEPARTMENT VALUER TO SUPPORT HIS VALUATION. LD. AUTHORIZED REPRESENTATIV E FURTHER SUBMITTED THAT THE ASSESSING OFFICER ADOPTED SUCH V ALUE AS DETERMINED BY THE VALUATION OFFICER I.E. RS. 24,76, 890/- AND FINALIZED THE ASSESSMENT ACCORDINGLY. IN THE PROCES S, HOWEVER, -: 5: - 5 HE ALSO DISALLOWED THE COST OF IMPROVEMENT/EXPENSES ON MAINTENANCE OF LAND INCURRED BY THE ASSESSEE, THE A CQUISITION VALUE OF WHICH WAS CLAIMED TO BE RS. 3,87,356/-. TH US THE ADOPTION OF VALUE OF LAND AT RS. 24,76,890/- AS AGA INST ACTUAL SALE VALUE OF RS. 10 LAKHS AND DISALLOWANCE OF EXPE NSES ON MAINTENANCE AT RS. 3,87,356/- BY THE ASSESSING OFFI CER ARE NOT AT ALL JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDED TH AT IN THE SUBSEQUENT YEAR I.E. FINANCIAL YEAR 2010-11 WITH AP PROVAL AND AGREEMENT OF THE UNAUTHORIZED OCCUPIERS OF LAND, IT WAS SOLD IN THE OPEN MARKET TO A 3 RD PARTY ON THE GOVERNMENTS VALUATION AND A PART OF THE SUM SO RECEIVED WAS PASSED ON TO THE UNAUTHORIZED OCCUPIERS FOR VACATING THE LAND. ON TH E OTHER HAND, THE LD. SR. DR DEFENDED THE ORDER OF LOWER AU THORITIES BY CONTENDING THAT ASSESSING OFFICER WAS JUSTIFIED IN TAKING DVOS REPORT AS A BASIS FOR COMPUTING CAPITAL GAINS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE LAND WAS INHERITED BY THE ASSE SSEE FROM HIS FATHER ON HIS DEATH IN 1975. HOWEVER, THIS LAND WAS PHYSICALLY IN POSSESSION OF THAKUR SAMAJ AND IT WAS CLAIMED -: 6: - 6 BY THEM THAT THE SAID LAND WAS GIFTED BY THE ASSESS EES FATHER. THE ASSESSEE EXECUTED POWER OF ATTORNEY IN FAVOUR O F HIS BROTHER SHRI AZIZ AHMED, WHO SUBSEQUENTLY SOLD THE LAND TO HIS SON FOR RS. 10 LAKHS ON 5.5.2006. THE ASSESSING OFFICER COMPUTED CAPITAL GAINS IN THE HANDS OF SHRI RAIS AH MED BY TAKING THE VALUE AS PER DVOS REPORT. HOWEVER, CONT ENTION OF THE ASSESSEE WAS THAT HIS FATHER HAS SIMPLY GIVEN T HE LAND TO THAKUR SAMAJ FOR THE PURPOSE OF CULTIVATION ONLY. O N A REFERENCE MADE BY ASSESSING OFFICER TO THE DVO, THE VALUATION OFFICER ALSO ADMITTED THAT THIS LAND WAS IN POSSESS ION OF THAKUR SAMAJ SINCE LONG BACK, BUT HE ARRIVED AT VAL UATION OF RS. 24,76,890/- WITHOUT GIVING ANY REASON ASSESSING OFFICER COMPUTED THE CAPITAL GAINS BY TAKING THE VALUE ARRI VED AT BY DVO. WE FOUND THAT WHEN THE LAND WAS PHYSICALLY POS SESSED BY STRONG COMMUNITY, THE MARKET VALUE OF LAND GOES DOWN SUBSTANTIALLY AS NOBODY WOULD DARE TO BUY SUCH LAND WHERE THAKUR SAMAJ HAVE THE POSSESSION ON THE LAND SINCE LONG BACK. THEREFORE, KEEPING INTO ACCOUNT THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VIS--VIS A CLEAR FINDING BY THE DVO IN THE VALUATION REPORT TO THE EFFECT THAT THE LAND WAS IN -: 7: - 7 ADVERSE POSSESSION, WE DEEM IT FIT TO HAVE THE FAIR MARKET VALUE OF THE SAME AT RS. 15 (FIFTEEN) LAKHS IN PLAC E OF VALUE ADOPTED BY THE DVO AT RS. 24,76,890/- AND THE VALUE AS PER COLLECTORS GUIDELINES AT RS. 38,11,000/-. WE ALSO FOUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE QUANTUM OF EXPENDITURE FOR IMPROVEMENT AMOUNTING TO RS. 3,87, 356/-, WHICH WAS ALSO NOT IN THE NATURE OF CAPITAL EXPENDI TURE, ACCORDINGLY, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE SAME. 7. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO CALC ULATE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE SHRI RAI S AHMED IN TERMS OF OUR DIRECTIONS GIVEN HEREINABOVE. 8. IN RESPECT OF APPEAL FILED BY SHRI AZIZ AHMED, WE F OUND THAT ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF AMOUNT OF RS. 10 LAKHS FOUND TO BE DEPOSITED IN HIS BANK ACCOUNT. IT WAS SUBMITTED BY SHRI AZIZ AHMED THAT H E WAS SIMPLY A POWER OF ATTORNEY OF HIS BROTHER SHRI RAIS AHMED AND AMOUNT WAS RECEIVED BY HIM ON SALE OF SAID AGRICULT URAL LAND, WHICH WAS DEPOSITED IN HIS ACCOUNT IN RESPECT OF CE RTAIN DUES FROM HIS BROTHER. THE ASSESSING OFFICER DID NOT ACC EPT THE -: 8: - 8 ASSESSEES CONTENTION AND ADDED THE AMOUNT IN HIS I NCOME AND THE LD. CIT(A) BY THE IMPUGNED ORDER CONFIRMED THE ASSESSING OFFICERS ACTION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT DURING THE COURSE OF SCRUTINY ASSE SSMENT, ASSESSEE WAS ASKED TO FURNISH IS BANK ACCOUNT, WHER EIN IT WAS FOUND THAT RS. 10 LAKHS WAS CREDITED IN THIS ACCOUN T. IT WAS EXPLAINED BY THE ASSESSEE THAT AMOUNT WAS RECEIVED ON SALE OF LAND FOR WHICH POWER OF ATTORNEY WAS GIVEN BY HIS B ROTHER SHRI RAIS AHMED. IN THE SALE DEED EXECUTED IN FAVOUR OF ANIS AHMED, IT WAS FOUND THAT THE ASSESSEE HAS SIGNED BO TH AS BUYER AND AS SELLER IN THE CAPACITY OF POWER OF ATT ORNEY HOLDER. HOWEVER, THE ASSESSEE COULD NOT SUBSTANTIATE ITS CL AIM THAT AMOUNT WAS GIVEN BY HIS BROTHER RAIS AHMED IN CLEAR ANCE OF SOME OF ITS PAST DUES. IT APPEARS THAT WITHOUT CROS S EXAMINING SHRI RAIS AHMED WITH REGARD TO PAYMENT OF AMOUNT TO ASSESSEE FOR CLEARANCE OF DUES, THE ASSESSING OFFIC ER REACHED TO ADVERSE INFERENCE. IN THE INTEREST OF JUSTICE, W E RESTORE BACK THIS ISSUE TO THE FILE OF ASSESSING OFFICER AND ASS ESSEE IS -: 9: - 9 DIRECTED TO SUBSTANTIATE ITS CLAIM FOR DEPOSIT IN T HE BANK ACCOUNT. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 7 TH MAY , 2012. SD SD (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMB ER ACCOUNTANT MEMBER DATED :_7 TH ______MAY, 2012. CPU* 345