Mr.Naveen Cariappa , Bangalore V. Income Tax Officer Ward-1(2)(4), Bangalore

ITA 657/BANG/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1973 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K Y NINGOJI RAO
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report; Set aside
• Section: 50C; 234B

Judgement Text

ITA NO.657/BANG/2019 MR. NAVEEN CARIAPPA, BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.657/BANG/2019 ASSESSMENT YEAR: 2014-15 MR. NAVEEN CARIAPPA #33/4, THYAGARAJA LAYOUT MARUTHI SEVA NAGAR BENGALURU 560 033 PAN NO : AEOPC5555N VS. ITO WARD-1(2)(4) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI K.Y. NINGOJI RAO, A.R. RESPONDENT BY : SHRI SUNIL KUMAR AGARWAL, D.R. DATE OF HEARING : 03.03.2021 DATE OF PRONOUNCEMENT : 03.03.2021 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A) BENGALURU DATED 13.2.2019 FOR THE A.Y . 2014-15. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE IMPUGNED ORDER OF THE CIT(A)-1, BENGALURU IS LI ABLE TO SET ASIDE IN SO FAR AS THE UPHOLDING OF THE ADDITIONS AND DIS ALLOWANCES MADE BY THE RESPONDENT OFFICER ARE INCORRECT, IMPROPER, UNLAWFUL AND OPPOSED TO FACTS OF THE CASE AND LAW. 2. THE LD. CIT(A)-1 ERRED IN UPHOLDING THE ASSESSMENT OF 50% OF THE SUM OF RS.65,53,068/- AS INCOME IN THE HANDS OF THE APPELLANT U/S 56(2)(VII) OF THE INCOME TAX ACT. ITA NO.657/BANG/2019 MR. NAVEEN CARIAPPA, BENGALURU PAGE 2 OF 4 3. THE LD. APPELLATE COMMISSIONER ERRED IN UPHOLDING T HAT THE PROVISIONS CONTAINED U/S 56(2)(VII) OF THE INCOME T AX ACT IS APPLICABLE TO THE CASE OF THE APPELLANT. 4. THE LD. APPELLATE COMMISSIONER ERRED IN UPHOLDING T HE IMPUGNED ADDITION EVEN THOUGH THE CASE OF THE APPELLANT DID NOT FALL WITHIN THE GAMUT OF SECTION 56(2)(VII) OF THE INCOME TAX ACT. 5. THE LD. APPELLATE COMMISSIONER ERRED IN DISREGARDIN G THE VALUATION REPORT AND OTHER EVIDENCES ADDUCED BY THE APPELLANT AND IN DISMISSING THE CONTENTION OF THE APPELLANT THAT THE RESPONDENT OFFICER WAS BOUND TO REFER TO THE VALUATION MACHINERY PROVI DED UNDER THE ACT BEFORE HE COULD DRAG THE APPELLANT WITHIN THE G AMUT OF SECTION 56(2)(VII) OF THE INCOME TAX ACT. 6. THE LD. APPELLATE COMMISSIONER ERRED IN UPHOLDING I MPUGNED ADDITION EVEN THOUGH THE SAME IS OPPOSED TO THE FAC TS OF THE CASE AND ALSO OPPOSED TO THE LAW AND HENCE THE SAME DO NOT F ALL WITHIN THE AMBIT OF SECTION 5 OF THE INCOME TAX ACT. 7. THE LD. APPELLATE COMMISSIONER ERRED IN UPHOLDING I NTEREST LEVIED BY THE RESPONDENT OFFICER UNDER SECTION 234B OF THE INCOME TAX ACT, 1961. 2. AT THE TIME OF HEARING, THE ASSESSEE PRIMARILY O BJECTED THAT APPLYING THE PROVISIONS OF SECTION 50C OF THE INCOM E-TAX ACT,1961 ['THE ACT' FOR SHORT] IS NOT PROPER WITHOUT REFERRI NG THE VALUATION OF ASSET TO THE VALUATION CELL. IT WAS SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY OBSERVED THAT THE ASSESSEE HAS NOT MADE ANY STATEMENT THAT MARKET VALUE WAS LESS THAN THE GUIDANCE VALUE, THE QUESTION OF REFERRING IT TO THE VALUATION CELL BY A.O. DOES NOT ARISE. IT WAS SUBMITTED THAT IN ALL FAIRNESS, THE A.O. HIMSELF OU GHT TO HAVE REFERRED THE MATTER TO THE VALUATION CELL TO DETERMINE THE F AIR MARKET VALUE OF THE PROPERTY AND HE CANNOT SOLELY GO BY THE SALE VA LUE MENTIONED IN THE SALE DEED, SO AS TO BRING THE DIFFERENCE BETWEE N VALUE MENTIONED IN THE SALE DEED AND STAMP DUTY VALUATION ADOPTED F OR REGISTRATION OF SAID PROPERTY. ITA NO.657/BANG/2019 MR. NAVEEN CARIAPPA, BENGALURU PAGE 3 OF 4 3. ON THE OTHER HAND, THE LD. D.R. STRONGLY OPPOSED THE ARGUMENT OF THE ASSESSEES COUNSEL AND SUBMITTED THAT WHEN T HE ASSESSEE MAKES REQUEST FOR REFERENCE TO THE VALUATION CELL, THEN ONLY THE A.O. COULD REFER THE MATTER TO THE VALUATION CELL IN TER MS OF SECTION 50C(2) OF THE ACT. FURTHER, IT WAS SUBMITTED THAT THE WOR D MENTIONED IN SECTION 50C(2) OF THE ACT IS THAT THE A.O. MAY REFE R THE VALUATION OF THE CAPITAL ASSET TO VALUATION OFFICER AND IT IS NO T SHALL ACCORDING TO HIM IT IS ONLY DISCRETIONARY OF THE A.O. TO REFER T HE MATTER TO THE VALUATION CELL TO DETERMINE THE FAIR MARKET VALUE O F THE CAPITAL ASSET. HE RELIED ON THE ORDER OF THE LD. CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE ORDERS OF THE LOWER AUTHORITIES, IT IS APP ARENT THAT THE A.O. HAS NOT REFERRED THE MATTER TO THE DVO FOR VALUING THE PROPERTY AS PER SECTION 50C(2) OF THE ACT. THE ASSESSEE MADE A REQUEST FOR REFERRING THE MATTER TO THE VALUATION CELL FOR VALU ING THE PROPERTY, SO AS TO DETERMINE THE FMV OF THE PROPERTY BEFORE CIT( A). HOWEVER, CIT(A) REJECTED THE CLAIM OF THE ASSESSEE STATING T HAT THE ASSESSEE NOT ABLE TO SHOW THAT MARKET VALUE ADOPTED WAS LESS THA N THE GUIDANCE VALUE. ACCORDING TO THE CIT(A), THERE WAS NO QUEST ION TO MAKE A REFERENCE TO THE VALUATION CELL BY THE A.O. THIS F INDING OF THE CIT(A) IS NOT PROPER. IN OUR OPINION, WHEN THE ASSESSEE H AS CHALLENGED THE VALUE DETERMINED BY THE REGISTRATION AUTHORITY, IT IS THE PRIMARY DUTY OF THE A.O. TO REFER THE MATTER TO LD. DVO FOR VALU ATION OF THE CAPITAL ASSET. SINCE THE ASSESSEE HAS NOT MADE A REQUEST B EFORE A.O. IT WONT DISENTITLE THE ASSESSEE TO MAKE THE SAME CLAIM BEFO RE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) SIMPLY BRUSHED ASIDE THE REQUEST OF THE ASSESSEE BY STATING IN HIS ORDER THAT THE AS SESSEE HAS NOT MADE ANY REQUEST TO THE A.O. TO REFER THE MATTER TO THE DVO AND ALSO OBSERVED THAT THE ASSESSEE NOT SHOWN THAT THE MARKE T VALUE OF THE ITA NO.657/BANG/2019 MR. NAVEEN CARIAPPA, BENGALURU PAGE 4 OF 4 PROPERTY WAS LESS THAN THE GUIDANCE VALUE OF SAID P ROPERTY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE MATTER HAS TO BE REFERRED BACK TO THE FILE OF A.O. WITH THE DIRECTION TO REFE R THE MATTER TO THE LD. DVO AND THEREAFTER, PASS AN APPROPRIATE ORDER A S PER LAW AND ON MERIT AFTER AFFORDING SUFFICIENT OPPORTUNITY OF HEA RING TO THE ASSESSEE. SINCE WE HAVE REMITTED THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH CONSIDERATION AT THIS TIME, WE REFRAIN FROM GOING I NTO OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAR, 2021. SD/- (N.V. VASUDEVAN ) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER BANGALORE, DATED 3 RD MAR, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.