SHRI RAJNEESH ARORA, Kanpur V. I.T.O., Kanpur

ITA 583/LKW/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1196 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 27-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MISHRA
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Retrospective amendment
• Section: 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 583/LKW/2015 ASSESSMENT YEAR: 2003 - 04 RAJNEESH ARORA 117/H2/57, PANDU KANPUR V. INCOME TAX OFFICER WARD 2(3) KANPUR T AN /PAN : AANPA5107H (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY: SHRI A. K. MISHRA, D.R. DATE OF HEARING: 06 12 201 7 DATE OF PRONOUNCEMENT: 08 01 2018 O R D E R PER T.S. KAPOOR, A .M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - I, KANPUR DATED 29/5/2015. 2 . THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE REPRODUCED HEREUNDER: - 1 . THAT THE LD. COMMISSIONER OF INCOME TAX, APPEALS - 1 HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT THE CONDITIONS PRECEDENT FOR ACQUIRING JURISDICTION WHILE ISSUING NOTICE U/S. 148 WAS ABSENT AS NO INCOME HAS ESCAPED FROM ASSESSMENT IN THE YEAR. 2 . THAT THE LD COMMISSIONER OF INCOME TAX, APPEALS - 1 HAS FURTHER ERRED IN LAW AS WELL AS ON FACT IN NOT APPRECIATING THAT [ ITA NO.583/LKW/2015 ] 2 THE NOTICE U/S. 148 WAS ISSUED AT THE END OF THE YEAR WHEN THE PROCEEDINGS WERE GOING TO BE BARRED BY LIMITATION. 3 . THAT THE LD COMMISSIONER OF INCOME TAX, APPEALS - 1 HAS FURTHER ERRED IN LAW AS WELL AS ON FACT IN NOT APPRECIATING THAT THE A.O. HAD SUFFICIENT MATERIAL IN POSSESSION TO CONCLUDE THAT THE PROPERTY HAD BEEN TRANSFERRED LONG TIME BACK AND NOT IN THE YEAR UNDER CONSIDERATION. 4 . THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX, APPEALS - 1 IS BAD IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE, WITHOUT APPRISING THE FACTS OF THE CASE, MATERIAL PUT ON RECORD AND WRITTEN SUBMISSIONS FILED DURING THE COURSE OF THE APPELLATE PROCEEDINGS. 3 . THE LD. A.R. OF THE ASSESSEE DID NOT PRESS GROUNDS NO.1 & 2 WHICH RELATES TO LEGAL ISSUE RELATING TO REOPENING. ACCORDINGLY , GROUNDS NO.1 & 2 ARE DISMISSED AS NOT PRESSED. 4 . AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAD MADE AN ADDITION ON ACCOUNT OF SALE OF PROPERTY. IT WAS SUBMITTED THAT THE ADDITION WAS MADE BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THIS PROPERTY WAS NOT SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, BUT IT WAS SO LD WAY BACK VIDE AGREEMENT TO SELL DATED 7/9/1981 AND ALL THE PAYMENTS HAD ALSO BEEN RECEIVED. IT WAS SUBMITTED THAT POSSESSION WAS ALSO GIVEN AT THE TIME OF AGREEMENT TO SELL AND WITH THE EXECUTION OF THE AGREEMENT TO SELL , A POWER OF ATTORNEY WAS ALSO E XECUTED GIVING POWER TO EXECUTE TO TRANSFER THE PROPERTY IN FAVOUR OF THE PURCHASER AND SUCH POWER OF ATTORNEY HOLDER HAD EXECUTED THE SALE DEED DURING THE YEAR UNDER CONSIDERATION. THE LD. A.R. OF THE ASSESSEE IN THIS RESPECT INVITED OUR ATTENTION TO THE COPY OF AGREEMENT TO SELL AND COPY OF GENERAL [ ITA NO.583/LKW/2015 ] 3 POWER OF ATTORNEY PLACED IN THE PAPER BOOK PAGES 13 TO 32 AND THEREFORE IT WAS SUBMITTED THAT SINCE THE PROPERTY HAD BEEN SOLD BEFORE INTRODUCTION OF SECTION 50C OF THE ACT, PROVISIONS OF SECTION 50C OF THE AC T ARE NOT APPLICABLE. IT WAS FURTHER SUBMITTED THAT EVEN IF THE PROVISIONS OF SECTION 50C ARE TO BE APPLIED, THE CIRCLE VALUE EXISTING AT THE TIME OF EXECUTION OF AGREEMENT TO SELL WILL HAVE TO BE TAKEN INTO ACCOUNT. RELIANCE IN THIS RESPECT WAS PLACED O N THE ORDER OF VISAKHAPATNAM BENCH OF THE TRIBUNAL IN ITA NO.639/VIZAG/2013 WHERE IN THE TRIBUNAL VIDE ORDER DATED 23/12/2016 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 5 . THE LD. D.R. , ON THE OTHER HAND , SUBMITTED THAT ACTUAL TRANSFER TOOK PLACE DURING THE YEAR UNDER CONSIDERATION AND ASSESSEE HAS SOLD THE PROPERTY FOR RS.2 LAKHS WHEREAS THE CIRCLE RATE OF THE PROPERTY WAS RS.8.62 LAKHS AND , THEREFORE , THE ASSESSING OFFICER HAS RIGHTLY APPLIED THE PROVISIONS OF SECTION 50C OF THE ACT. 6 . WE HAVE HEARD THE RIVAL PART IES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT VIDE AGREEMENT 7/9/1981 , ASSESSEE HA D ENTERED INTO AN AGREEMENT TO SELL AND HAD ALSO EXECUTED POWER OF ATTORNEY IN FAVOUR OF THE PURCHASER AND HA D RELINQUISHED ALL HIS RIGHT REGARDING T HIS PROPERTY. THE AGREEMENT TO SELL IS REGISTERED WITH THE PRESCRIBED AUTHORITIES. VIDE GENERAL POWER OF ATTORNEY, THE ASSESSEE ALSO EXECUTED POWER OF ATTORNEY IN THE NAME OF SHRI SARDAR SATPAL SINGH WHO HAPPENS TO BE HUSBAND OF THE PURCHASER OF SUCH PRO PERTY. O N GOING THROUGH THESE DOCUMENTS, WE FIND THAT THE ASSESSEE HAD ALREADY RELINQUISHED ALL HIS RIGHTS REGARDING SUCH PROPERTY AND, THEREFORE, SALE WAS COMPLETED DURING THE YEAR 1981 - 82 AND , THEREFORE , PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPL ICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FURTHER FIND THAT EVEN IF PROVISIONS OF SECTION 50C OF THE [ ITA NO.583/LKW/2015 ] 4 ACT ARE TO BE APPLIED, THE STAMP VALUE AS ON DATE OF AGREEMENT TO SELL HAS TO BE CONSIDERED AND NOT STAMP DUTY VALUE AS ON DATE OF SALE DEED. THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN ITS ORDER DATED 23/12/2016 IN ITA NO.639/VIZAG/2013 IN THE CASE OF SMT. CHALASANI NAGAR RATNA KUMARI, VISAKHAPATNAM VS. INCOME TAX OFFICER, WARD 3(2), VISAKHAPATNAM , VIDE PARAGRAPHS 11 TO 13 HAS HELD AS UNDER: - 11. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION IS ADOPTION OF VALUE U/S 50C OF THE ACT, FOR THE PURPOSE OF DETERMINATION OF CAPITAL GAINS. THE A.O. ADOPTED MARKET VALUE OF THE PROPERTY U/S 50C OF THE ACT AS ON THE DATE OF SALE DEED FOR THE PURPOSE O F COMPUTATION OF CAPITAL GAINS. THE CONTENTION OF THE ASSESSEE IS THAT STAMP DUTY VALUE AS ON THE DATE OF AGREEMENT TO SALE HAS TO BE CONSIDERED, BUT NOT THE STAMP DUTY VALUE AS ON THE DATE OF SALE DEED. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE, FOR THE REASON THAT THE ASSESSEE HAS SOLD THE IMPUGNED LANDS BY WAY OF REGISTERED SALE AGREEMENT DATED 15.12.2007 FOR A CONSIDERATION OF RS. 3,40,00,00 0/ - AND RECEIVED AN ADVANCE OF RS. 2,52,00,000/ - . AS ON THE DATE OF AGREEMENT, THE MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IS LESS THAN THE CONSIDERATION SHOWN IN THE SALE AGREEMENT. THE SAID PROPERTY HAS BEEN CONVEYED THROUGH A REGISTERED SALE DEED ON 1.9.2008 FOR A CONSIDERATION OF RS. 3,40,00,000/ - , WHEREAS THE STAMP DUTY VALUATION O F THE PROPERTY WAS FIXED AT RS. 4,12,30,000/ - . THE A.O. ADOPTED STAMP DUTY VALUE OF THE PROPERTY AS ON THE DATE OF SALE DEED FOR THE PURPOSE OF SECTION 50C OF THE ACT, TO COMPUTE THE DEEMED CONSIDERATION FOR THE PURPOSE OF CAPITAL GAINS. IT IS THE CONTENTIO N OF THE ASSESSEE THAT MARKET VALUE AS ON THE DATE OF AGREEMENT TO SALE HAS TO BE CONSIDERED, BUT NOT AS ON THE DATE OF SALE DEED FOR THE PURPOSE OF DETERMINATION OF DEEMED CONSIDERATION TO COMPUTE CAPITAL GAINS. 12. HAVING HEARD BOTH THE SIDES AND CONSIDE RED MATERIALS ON RECORD, WE FIND THAT THE A.O. HAS ADOPTED STAMP DUTY VALUE OF THE [ ITA NO.583/LKW/2015 ] 5 PROPERTY AS ON THE DATE OF SALE DEED. THE FACTS RELATING TO THE MARKET VALUE AS ON THE DATE OF AGREEMENT TO SALE AND AS ON THE DATE OF SALE DEED IS NOT DISPUTED. THE ONLY DI SPUTE IS WHETHER THE STAMP DUTY VALUE AS ON THE DATE OF AGREEMENT TO SALE OR SALE DEED TO BE CONSIDERED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE PURPOSE OF INTRODUCING SECTION 50C OF THE ACT WAS TO COUNTER SUPPRESSION OF SALE CONSIDERATION OF SA LE OF IMMOVABLE PROPERTIES. BEFORE INSERTION OF SECTION 50C OF THE ACT TO THE STATUTE, THERE ARE LOT OF LITIGATIONS AS TO CONSIDERATION SHOWN IN DOCUMENT CONVEYING TITLE AND PAYMENT OF STAMP DUTY. TO OVERCOME THE LITIGATIONS, THE PROVISION OF SECTION 50C O F THE ACT HAS BEEN INSERTED TO THE STATUTE W.E.F. 1.6.2003 WHEREIN IT IS MADE MANDATORY TO ADOPT VALUE U/S 50C OF THE ACT FOR THE PURPOSE OF DETERMINATION OF CONSIDERATION. A PROVISO TO SECTION 50C OF THE ACT HAS BEEN INSERTED BY THE FINANCE ACT, 2016 W.E. F. 1.4.2007 TO RESOLVE THE GENUINE AND INTENDED HARDSHIP, IN THE CASE IN WHICH THE DATE OF AGREEMENT TO SALE IS PRIOR TO THE DATE OF SALE AND MARKET VALUE OF THE PROPERTY AS ON THE DATE OF AGREEMENT TO SALE AND DATE OF SALE DEED IS DIFFERENT. THE SAID PROV ISO TO SECTION 50C OF THE ACT HAS BEEN EXAMINED BY THE COORDINATE BENCH OF ITAT, AHMEDABAD BENCH IN THE CASE OF DHARMA SIBAI SONANI VS. DCIT IN ITA NO.1237/AHD/2013 DATED 30.09.2016 AND HELD THAT THE PROVISO TO SECTION 50C OF THE ACT INSERTED BY THE FINANC E ACT, 2016 W.E.F. 1.4.2007 IS CURATIVE IN NATURE AND INTENDED TO REMOVE AN UNDUE HARDSHIP TO THE ASSESSEE AND ACCORDINGLY GIVEN RETROSPECTIVE EFFECT FROM 1ST APRIL, 2003 I.E. THE DATE EFFECTIVE FROM WHICH SECTION 50C OF THE ACT WAS INTRODUCED. ACCORDINGL Y, AS PER THE PROVISO, THE STAMP DUTY VALUE OF THE PROPERTY ON THE DATE OF EXECUTION OF THE AGREEMENT TO SALE SHOULD BE ADOPTED INSTEAD OF VALUE ON THE DATE OF EXECUTION OF SALE DEED. 13. IN THE PRESENT CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS ENTERED INTO A SALE [ ITA NO.583/LKW/2015 ] 6 AGREEMENT IN THE YEAR 2007 AND AS ON THAT DATE, THE STAMP DUTY VALUE OF THE PROPERTY WAS LESS THAN SALE CONSIDERATION AGREED TO BE PAID BETWEEN THE PARTIES. ALTHOUGH, STAMP DUTY VALUE OF THE PROPERTY HAS BEEN CHANGED AS ON THE DATE OF SALE DEED, FOR THE PURPOSE OF DETERMINATION OF DEEMED CONSIDERATION U/S 50C OF THE ACT, STAMP DUTY VALUE OF THE PROPERTY AS ON THE DATE OF EXECUTION OF AGREEMENT TO SALE SHOULD BE ADOPTED, INSTEAD OF VALUE ON THE DATE OF EXECUTIO N OF SALE DEED. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS ERRED IN ADOPTING VALUE OF THE PROPERTY AS ON THE DATE OF SALE DEED TO DETERMINE DEEMED CONSIDERATION U/S 50C OF THE ACT. HENCE, WE DIRECT THE A.O. TO ADOPT VALUE OF THE PROPERTY AS ON THE DAT E OF AGREEMENT TO SALE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN U/S 50C OF THE ACT. 7 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRECEDENCE, WE FIND MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT PROVISIONS OF SECTION 50C OF THE ACT WI LL BE APPLIED KEEPING IN VIEW THE CIRCLE RATE EXISTING ON THE DATE OF EXECUTION OF AGREEMENT, WHICH IS 1981 - 82. MOREO VER, WE F IN D THAT THE ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE OF RS.2 LAKHS WHICH HAS BEEN RECEIVED BY ASSESSEE DURING THE YEAR. TH EREFORE, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER TO EXAMINE THE TAXABILITY OF RS.2 LAKHS WHICH HAS BEEN PAID BY THE PURCHASER FOR EXECUTION OF SALE DEED. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8/1/2018 . SD/ - SD/ - [ SUNIL KUMAR YADAV ] [ T.S. KAPOOR ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH JANUARY, 2018 JJ: 1 4 12 [ ITA NO.583/LKW/2015 ] 7 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRA R