Sh. Padam Kumar Mittal, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 6159/DEL/2012

• Counselvise Citation: 615920114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 08-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Depreciation; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 142(1); 133(6); 144

Judgement Text

ITA NO. 6159/ DEL/ 2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. N O. 6159/DEL/2012 A.Y. : 2009 - 10 SH. PADAM KUMAR MITTAL, S/O SH. KRISHNA LAL MITTAL, PROP. M/S ALKHA ENTERPRISES, C/O VINOD KUMAR GOEL, 282, BOUNDARY ROAD, CIVIL LINES, MEERUT (PAN: AJQPM9493G) VS. INCOME TAX OFFICER, KHATAULI MUZAFFARNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VINOD KUMAR GOEL, ADV. DEPARTMENT BY : SH. VIKRAM SAHAY, SR. DR DATE OF HEARING : 08 - 1 - 201 5 DATE OF ORDER : 12 - 1 - 201 5 ORDER PER H.S. SIDHU : J M TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) , MUZAFFARNAGAR DATED 11 . 1 0 .201 2 P ERTAINING TO ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS: - 1. THAT THE LD. AO AS WELL AS LD. CIT(A) IS IN ERROR BY IGNORING VALUATION REPORT OF GOVERNMENT APPROVED VALUER FILED BY THE ASSESSEE. THE AO AND ITA NO. 6159/ DEL/ 2012 2 CIT(A) HAS ADOPTED THE VALUATION OF DVO, CONTAINING ERROR IN TREATING ENTIRE LAND OF THE PROPERTY AS COMMERCIAL LAND AND IGNORED THE CIRCULAR OF CIRCLE RATE ISSUED BY DM. 2. THAT THE LD. CIT(A) IS IN ERROR IN DIRECTING AO TO TREAT THE PROPERTY AS AGRICULT URAL LAND AS ON 1.4.1981, BECAUSE THE PETROL PUMP CAME INTO EXISTENCE AFTER THE YEAR 1985. HOWEVER, CORRECT FACT IS THAT THE PETROL PUMP WAS RUNNING SINCE 1972 AND THIS FACT WAS MENTIONED IN THE SALE DEED AS WELL AS VALUATION REPORT ESTIMATED BY DVO. 3 . THAT THE AO AS WELL AS THE CIT(A) IS IN ERROR IN DISALLOWING THE LIABILITIES, WHICH WAS CONFIRMED BY THE LEGAL HEIR OF THE CREDITORS AGAINST THE LAND AND CONFIRMED IN THE STATEMENT RECORDED BY AO DURING THE REMAND REPORT AND ALSO CONFIRMED THROUGH AN AFFIDAVIT. HENCE, ORDER PASSED BY CIT(A) IS AGAINST THE FACTS AND LAW. 4. THAT THE ASSESSEE HAS RIGHT TO ADD/ DELETE OR MODIFY ANY GROUNDS DURING THE APPEAL PROCEEDINGS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FR OM BUSINESS AND OTHER SOURCES. RETURN DECLARING INCOME OF RS. 1,34,225/ - WAS FILED ON 4.9.2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ISSUED NOTICES U/S. 143(2) / 142(1) ON VARIOUS DATES HOWEVER, THE SAME REMAINED UNCOMPLIED WITH. THEREFO RE, THE AO ISSUED PENALTY NOTICE U/S. 271(1)(C) OF THE ACT DATED 19.4.2011 AND IMPOSED PENALTY AT RS. 10,000/ - . IN RESPONSE THE COUNSEL FOR THE ASSESSEE ATTENDED AND FILED WRITTEN ITA NO. 6159/ DEL/ 2012 3 SUBMISSIONS ALONG WITH COPIES OF SALE DEED, COPY OF CAPITAL AND OTHER PAPER S. AS PER SALE DEED, THE VALUE AS DETERMINED BY THE STAMP DUTY AUTHORITY, SUB - REGISTRAR, KHATAULI WAS AT RS. 1,09,47,000/ - WHEREAS THE SAID PROPERTY WAS SOLD FOR RS. 17,00,000/ - ONLY. THUS THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SAME. THEREFORE, T HE COUNSEL OF THE ASSESSEE ATTENDED ONLY TO SEEK ADJOURNMENTS HOWEVER NO COMPLIANCE WAS MADE. THEREFORE, THE AO ISSUED NOTICE U/S. 144 OF THE ACT DATED 2.12.2011 REQUIRING THE ASSESSEE TO SHOW CAUSE REGARDING PROPOSED ADDITION OF RS. 43,39,930/ - . IN RES PONSE THE ASSESSEE REQUESTED TO REFER THE MATTER OF VALUATION OF THE IMPUGNED PROPERTY TO THE DVO. ON SUCH REQUEST THE AO REFERRED THE MATTER OF VALUATION OF THE PROPERTY TO THE DVO AND FOR THE PURPOSE OF SECTION 50C OF THE ACT. BUT TILL THE DATE OF COMPLETION OF THE ASSESSMENT, NO SUCH REPORT WAS RECEIVED FROM THE DVO. IN THE MEANTIME THE ASSESSEE SUBMITTED CALCULATION OF CAPITAL GAIN BY ADOPTING THE CIRCLE RATE OF THE COMMERCIAL LAND SITUATED AT GT ROAD, KHATAULI AND ALSO ENCLOSED THE COPY OF CERTI FICATE DATED 23.12.2011 ISSUED BY THE SUB - REGISTRAR, TEHSIL KHATAULI IN SUPPORT OF CALCULATION OF CAPITAL GAIN BASED ON WHICH THE CAPITAL GAIN WAS WORKED OUT AS NIL. THE AO SOUGHT INFORMATION U/S. 133(6) OF THE ACT FROM SUB REGISTRAR, KHATAULI BUT NO REPL Y WAS RECEIVED BY THE AO. THUS IN ABSENCE OF VALUATION REPORT OF THE DVO AND ALSO FROM THE SUB REGISTRAR, KHATAULI, THE AO WORKED OUT CAPITAL GAIN ON THE BASIS OF CIRCLE RATE AND LONG TERM CAPITAL GAIN WAS DETERMINED AT RS. 43,24,160/ - WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. AGAINST THE ABOVE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER DATED 11.10.2012 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO. 6159/ DEL/ 2012 4 4. AGAINST THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPE AL BEFORE US. 5. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESEE STATED THAT THE LAND WAS INHERITED AFTER THE DEATH OF HIS FATHER WHO EXPIRED IN THE YEAR 1997 TO THE ASSESSEE. HE FURTHER SUBMITTED THAT THE VALUE OF LAND AND INVESTMENT MADE IN PETRO L PUMP AND LOAN TAKEN FOR INSTALLATION OF PETROL PUMP WAS APPROXIMATE LY RS. 4,50,000/ - PLUS INTEREST IS NOT CONSIDERED TO COMPUTE CORRECT LOSS ON ACCOUNT FO SALE OF LAND. HE FURTHER STATED THAT THE REPORT OF THE D VO WAS NOT AVAILABLE ON THE DATE OF ASSESSMENT AND THE AO COMPUTED THE TOTAL INCOME OF THE ASSESSEE BY WAY OF CAPITAL GAIN ON THE BASIS OF STAMP VALUATION OF THE PROPERTY. 6. LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES, PAPER BOOK SUBMITTED BY THE LD. COUNSEL OF THE ASSEESSEE CONTAINING PAGES 1 TO 34. WE FIND THAT DURING THE APPELLATE PROCEEDINGS THE WRITTEN SUBMISS IONS ALONGWITH OBJECTIONS FILED BY THE ASSESSEE HANDED OVER TO THE AO FOR HIS COMMENTS. IN RESPONSE THERETO THE AO VIDE HIS LETTER DATED 13/17 - 9 - 2012 HAS FURNISHED THE REMAND REPORT BEFORE THE LD. CIT(A) WHICH THE LD. CIT(A) HAS REPRODUCED VIDE PARA 3.1. 1 AT PAGE 6 OF HIS IMPUGNED ORDER. THE ASSESSEE HAS FURNISHED THE REJOINDER OF THE AO WHICH THE LD. CIT(A) HAS REPRODUCED AT PARA 3.1.2 AT PAGE 9 TO 10 OF THE IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE THE REJOINDER FURNISHED BY THE ASSESSEE IN THE REMAND REPORT IS REPRODUCED BELOW: - ..IT IS SUBMITTED THAT IN THE ABOVE CASE, THE ASSESSEE HAS RECEIVED A COPY OF REMAND REPORT ON 5.10.2012. THE ASSESEE POINT - WISE REPLY AS UNDER: - ITA NO. 6159/ DEL/ 2012 5 1. THAT LD. AO ADMITTED THE VALUATION COMPUTED BY THE AO IS INCORRECT AND HE IS READY TO TAKE SALE VALUE OF RS. 98,21,600/ - INSTEAD OF RS. 1,09,47,000/ - TAKEN BY THE AO IN HIS ASSESSMENT. IT CLEARLY SHOW THAT HE WAS NOT JUSTIFIED IN TAKING COST OF LAND FOR TH E PURPOSE OF SECTION 50C HOWEVER, THIS VALUE TAKEN BY THE VALUATION CELL IS NOT ACCEPTED BECAUSE THE CC HAS SUBMITTED VALUATION REPORT BASED UPON MARKET VALUE WHICH IS NOT CONSIDERED BY THE VALUATION OFFICER PARTICULARLY, CIRCLE RATE OF COMMERCIAL PROPERTY AS DEFINE BY DISTRICT AUTHORITY. IZEQ[K LFPO M0 IZ0 IZ KKLU] DJ ,OA FUCU/KU] VUQHKKX 5] Y[KU DK IZ'KKLUKNS'K LA[;K D0FU0&4640 - 4789 LVKEI & 327 TS@02 FOFO/K FNUKAD 7 - 3 - 06 DS VUQIKYU ESA RGLHY TKULB DH LA'KKSF/KR VKOKLH; @O;KOLKF;D @ OKF.KFT;D DYSDVJ EWY ; LWPH TKS LM+D DS NKSUKSA VKSJ 15]15 EHVJ RD YKXW GKSXH A THEREFORE, VALUATION GIVEN BY THE LD. AO IS ERRONEOUS IN VIEW OF HON BLE SUPREME COURT JUDGMENT. DILLIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE, MUMBAI [2007] 161 TAXMAN 218 (SC), COPY OF THE JUDGMENT ALREADY FILED ON PAGE NO. 65 O THE FIRST PAPER BOOK. LD. AO HAS NOT MADE ANY COMMENT ON HIS JUDGMENT. 2. LD. AO TAKEN THE COST OF ACQUISITION AS ON 1.1.1987 IN PLACE OF 1.4.1981 FOR THIS PURPOSE LD. AO HAS NOT GIVEN ANY REASON. HOWEVER, THE ASSESSEE S CASE IS SUPPORTED BY THE ITAT JUDGMENTS AND SECTION 49 OF THE I.T. ACT, WHICH IS TOTALLY IGNORED BY THE AO IN HIS REMAND REPORT ALSO. THEREFORE, REMAND REPORT ON THIS ISSUE IS ALSO NOT ACCEPTED IN VIEW OF RECENT BOMBAY HIGH COURT J UDGMENT. ITA NO. 6159/ DEL/ 2012 6 IN THE CASE OF CIT VS. MS. JANHAVI S. DEASI (BOM.) 209 TAXMAN - 289, HELD AS UNDER: - ASSESSMENT YEAR 2005 - 06 ASSESSEE S FURTHER ACQUIRED PROPERTY FROM HIS GRANDFATHER PRIOR TO 1981 ASSESSEE S FATHER EXPIRED IN 1988, LEAVING BEHIND A WILL BEQ UEATHING PROPERTY TO HIS WIFE AND ASSESSEE IS EQUAL SHARES ASSESSEE S MOTHER EXPIRED ON 21.2.2000 LEAVING BEHIND A WILL BEQUEATHING HER 50 PER CENT SHARE IN PROPERTY TO ASSESSEE ASSESSE SOLD SAID PROPERTY AND IN COMPUTING LONG TERM CAPITAL GAIN, CONSI DERED DATE OF ACQUISITION OF PROPERTY TO BE PRIOR TO 1.4.1981 ASSESSING OFFICER, HOWEVER, COMPUTED CAPITAL GAINS ON BASIS OF DATE ON WHICH ASSESSEE INHERITED SHARE IN PROPERTY FROM HIS FATHER AND MOTHER RESPECTIVELY WHETHER FOR PURPOSES OF SECTION 2(4 2A) AND 49 AMBIT OF WORD PREVIOUS OWNER OF PROPERTY S DOES NOT INCLUDE A PERSON WHO ACQUIRED PROPERTY BY A MODE OF ACQUISITION REFERRED TO IN SUB - CLAUSES (I) TO (IV) OF SECTION 49(1) HELD, YES WHETHER IN BOTH CASE OF FATHER AND MOTHER, COST OF ACQUIS ITION MUST BE DETERMINED TO BE COST AT WHICH ASSESSEE S GRANDFATHER ACQUIRED PROPERTY AND NOT COST ON DATE ON WHICH ASSESSEE ACQUIRED IT FROM FATHER OR MOTHER HELD, YES WHETHER IN BOTH CASES, PERIOD OF HOLDING WITHOUT BE FROM 1.4.1981 HELD, YES. 3. TH E COST OF ACQUISITION AS ON 1.4.1981 WAS NOT ACCEPTED BY THE AO, HOWEVER, LD. AO HAS TAKEN COST OF ACQUISITION AS ON 1.1.1987, WHICH IS NOT SUPPORTED BY ANY EVIDENCE. LD. AO IGNORED THE CERTIFICATE OF THE TEHSILDAR ALREADY PLACED ON RECORD. 4. THE LD. AO IG NORED THE LOAN TAKEN BY THE ASSESSEE FOR THE BUSINESS OF PETROL PUMP. THIS LIABILITY ACCEPTED BY THE ITA NO. 6159/ DEL/ 2012 7 AO SH. DEVENDRA SINGH THROUGH AFFIDAVIT AS WELL AS STATEMENT RECORDED BY THE LD. AO HE RECEIVED BACK THIS LOAN OF RS. 6,50,000/ - WITH INTEREST AFTER THE SALE OF THE PROPERTY. REGARDING, EVIDENCE OF THE LOAN SH. DEVENDRA SINGH ALREADY ADMITTED BY THE AO AND THE AMOUNT SO RECEIVED WAS DULY CONFIRMED. THE PETROL PUMP WAS CLOSED FOR LAST TEN YEARS. THEREFORE, NO RECORD WAS KEPT AS BUSINESS IS CLOSED TEN YE ARS BACK AND ASSESEE IS LIABLE TO KEEP THEIR BOOKS OF ACCOUNTS UPTO SIX YEARS. IN THE ABSENCE OF ANY EVIDENCE STATEMENT RECORDED ON OATH IS A GOOD EVIDENCES AS CLAIMED BY THE ASSESSEE IN HIS EARLIER REPLY. CONSIDERING THE FACTS AND EVIDENCES YOUR HONOUR IS REQUESTED TO KINDLY ALLOW THE APPEAL AND OBLIGE .. 7.1 THE DVO HAS DISPOSED OF THE OBJECTIONS RAISED BY THE ASSESSEE. THE LD. CIT(A) HAS REPRODUCED THE SAME AT PAGE NO. 11 IN HIS ORDER. POINTWIS E REPLY TO OBSERVATIONS: - POINTS I), II) & III) : - THE BUILT UP PORTION OF THE PROPERTY HAS BEEN ACCOUNTED FOR AS ORDINARY CONSTRUCTED AND DEPRECIATION AS PER RULES HAS BEEN APPLIED IN PRE - VALUATION REPORT. POINTS 1 TO 4 : - THE SALE DEED ENUMERATED BY THE ASSESSEE IS NOT COMPARABLE TO THE PROPERTY IN QUESTION WHICH IS VERY DIFFERENT CONSIDERING ITS CHARACTER, LOCATION, SIZE AND SUITABILITY OF THE LAND FOR PETROL PUMP. ITA NO. 6159/ DEL/ 2012 8 HENCE, RANDOM SALE DEEDS PROVIDED BY THE ASSESSEE IN HIS OBJECTION ARE NOT BEING CO NSIDERED A REFLECTION OF THE FAIR MARKET VALUE OF THE PROPERTY UNDER CONSIDERATION. HENCE, SALE INSTANCES ARE NOT BEING CONSIDERED AS COMPARABLE AND APPLICABLE. 8. AFTER GOING THROUGH THE AFORESAID FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ALONGWITH T HE OBJECTIONS TO THE DVO REPORT FILED BY THE ASSESSEE AS WELL AS THE OBJECTIONS DISPOSED OFF BY THE DVO AS REPRODUCED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE DVO HAS NOT CONSIDERED THE FOLLOWING OBJECTIONS: - IZEQ[K LFPO M0 IZ0 IZ KKLU] DJ ,OA FUCU /KU] VUQHKKX 5] Y[KU DK IZ'KKLUKNS'K LA[;K D0FU0&4640 - 4789 LVKEI & 327 TS@02 FOFO/K FNUKAD 7 - 3 - 06 DS VUQIKYU ESA RGLHY TKULB DH LA'KKSF/KR VKOKLH; @O;KOLKF;D @ OKF.KFT;D DYSDVJ EWY; LWPH TKS LM+D DS NKSUKSA VKSJ 15]15 EHVJ RD YKXW GKSXH A 8.1 IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE AFORESAID OBJECTION IS VERY MUCH NECESSARY IN ORDER TO GIVE PROPER JUSTICE TO THE ASSESSEE. HENCE, IN OUR CONSIDERED OPINION, THE ISSUE IN DISPUTE REQUIRES RECONSIDERATION AT THE LEVEL OF THE ASSESSING OFF ICER. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO REFER THE MATTER TO THE DVO TO DECIDE THE AFORESAID OBJECTIONS AS MENTIONED IN HINDI LANGUAGE AND THEREAFTER THE AO MAY DECIDE THE SAME AFTER HEARING THE ASSESSEE AFRESH IN ACCORDANCE WITH LAW. ITA NO. 6159/ DEL/ 2012 9 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE O PEN C OURT ON 12 / 1 /20 1 5 . SD/ - SD/ - [ S.V. MEHROTRA ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 12 / 1 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 6159/ DEL/ 2012 10