Vanja T.Nair, Hyderabad V. Income Tax Officer, Ward-11(3), Hyderabad

ITA 694/Hyd/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9856 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-02-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Sale consideration of property below Jantri Value; Tangible material; Valuation report
• Section: 143(3); 50C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B - SMC , HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 694/H/2019 ASSESSMENT YEAR: 2008 - 09 VANAJA T. NAIR, SECUNDERABAD. PAN: AGKPT 8224 H VS. INCOME TAX OFFICER, WARD - 11(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI B. SHANTHI KUMAR REVENUE BY: SRI RAVI BABU, DR DATE OF HEARING: 04/02/2020 DATE OF PRONOUNCEMENT: 24 /06/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: - THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 6, HYDERABAD IN APPEAL NO.0034/2016 - 17/B3/CIT(A) - 6, DATED 01/03/2019 PASSED U/S. 143(3) R.W.S 147 AND U/S. 250(6) OF THE ACT FOR THE AY 2008 - 09. 2. THE ASSESSEE HAS RAISED THREE GROUNDS BEFORE US AND THEY ARE BRIEFLY STATED HEREIN BELOW FOR ADJUDICATION. 2 (I ) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO , WHO HAD INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AND TREATED THE SALE CONSIDERATION AT THE SRO VALUE OF RS. 16,18,000/ - AS AGAINST THE ACTUAL SALE CONSIDERATION RECEIVED RS. 7,51,000 / - DISREGARDING THE FACT THAT THE PROPERTY WAS UNDER LITIGATION AND WAS SOLD ON THE COMPROMISE ARRIVED IN THE COURT . ( I I) THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO , WITHOUT OBTAINING THE VALUATION REPORT FROM THE LD. DVO , THOUGH THE SAME WAS SOUGHT BY THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT NOT YET RECEIVED . (III) THE LD. CIT (A) HAD FAILED TO QUASH THE ASSESSMENT ORDER CONSIDERING THE FACT THAT THE INITIATION OF ACTION U/S. 147 OF THE ACT IS ERRONEOUS BECAUSE THERE WERE NO FRESH TANGIBLE MATERIALS AGAINST THE ASSESSEE . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT ADMITTING LONG TERM CAPITAL LOSS OF RS.2,87,906/ - . NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE BECAUSE THE ASSESSEE HAD SOLD HER HOUSE 3 PROPERTY BEARING NO. 7 - 69/1, PLOT NO.522 AND 523, S.NO. 36 ADMEASURING 284 SQ.YDS LOCATED IN RAJRAJESWARI NAGAR COLONY, OLD BOWENPALLY VILLAGE, SECUNDERABAD ON 10/12/2007 FOR SALE CONSIDERATION OF RS. 7,51,000/ - VIDE DOC. NO. 422/2007. HOWE VER, IT WAS OBSERVED BY THE REVENUE THAT FOR THE PURPOSE OF STAMP DUTY THE MARKET VALUE OF THE PROPERTY WAS VALUED AT RS. 16,18,000/ - BY THE STATE REGISTRATION AUTHORITY. IT WAS ALSO OBSERVED THAT THE ASSESSEE HAD NOT FILED HER RETURN OF INCOME FOR THE RE LEVANT ASSESSMENT YEAR . THEREFORE, THE REVENUE WAS OF THE OPINION THAT INCOME CHARGEABLE TO CAPITAL GAIN TAX IN THE CASE OF THE ASSESSEE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. 4. FROM THE ABOVE FACTS OF THE CASE IT IS OBV IOUS THAT PRIM A - F ACIE FRESH MATERIALS HA D SURFACED BEFORE THE REVENUE AGAINST THE ASSESSEE FOR ESCAPEMENT OF INCOME CHARGEABLE TO CAPITAL GAIN TAX BECAUSE THE SRO VALUATION OF THE PROPERTY WAS MORE THAN THE SALE PRICE DECLARED IN THE SALE DEED. T HEREFORE , IT IS JUSTIFIABLE ON THE PART OF THE REVENUE TO ASSESS THE INCOME OF THE ASSESSEE U/S. 143(3) R.W.S 147 & 148 OF THE ACT. HENCE, THE THIRD GROUND RAISED BY THE ASSESSEE DOES NOT SURVIVE AND ACCORDINGLY DISMISSED. 4 5. BEFORE THE LD. REVENUE AUTHORITIES THE ASSESSEE HAD EXPLAINED THAT THE PROPERTY SOLD BY THE ASSESSEE WAS UNDER LITIGATION AND AFTER A PROLONGED PERIOD OF TIME T HE MATTER WAS SETTLED IN THE COURT BY VIRTUE OF COMPROMISE FOR THE SALE OF THE PROPERTY AT RS. 7,51,000/ - . THE ASSESSEE HAD ALSO SUBMITTED THE COPY OF THE COURT ORDER OF THE ADDL. CHIEF METROPOLITAN MAGISTRATE DATED 19/12/2007 TO JUSTIFY H ER STAND . HOWEVE R, THE LD. AO OPINED THAT THE DISPUTE BEFORE THE COURT WAS WITH REFERENCE TO THE OWNERSHIP OF THE PROPERTY AND NOT WITH REGARD TO THE VALU E OF THE PROPERTY . H ENCE THE QUESTION OF LITIGATION IN THE COURT DOES NOT HAVE ANY BEARING FOR ADOPTING THE MARKET VAL UE OF THE PROPERTY DETERMINED BY THE STATE REVENUE AUTHORITY FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. ACCORDINGLY, THE LD. AO COMPUTED THE LTCG OF THE ASSESSEE BY TREATING THE SALE CONSIDERATION AS PER THE VALUE DETERMINED BY THE STATE REVENUE AUTHORITY AT RS. 16,18,000/ - AS AGAINST THE A CTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE BY VIRTUE OF COMPROMISE ARRIVED IN THE COURT FOR RS. 7,51,000/ - . ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO, HOWEVER, KEEPING IN VIEW OF THE PROVISIONS OF SECTION 50C (3) OF THE ACT , HE DIR ECTED THE LD. AO TO ADOPT THE VALUE ARRIVED AT BY THE LD. DVO IF SUCH VALUE IS LESS THAN TH E VALUE ESTIMATED BY THE SRO. 5 6. BEFORE ME THE LD. AR SUBMITTED THAT THE LD. REVENUE AUTHORITIES HAD NOT DISPUTED THE LITIGATION INVOLVED IN THE PROPERTY, BUT THE Y HAD MADE THE ADDITION BY SIMPLY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT WITHOUT OBTAINING THE VALUATION REPORT FROM THE LD. DVO. THE LD. AR FURTHER SUBMITTED THAT THE ACTUAL MARKET VALUE OF THE PROPERTY HAD SUBSTANTIALLY DETERIORATED DUE TO TH E LITIGATION AND THE ASSESSEE HAD TO SETTELE FOR A COMPROMISE IN THE COURT AND REALISE LESSER VALUE IN ORDER TO AVOID PROTRACTED LITIGATION. THE LD.AR FURTHER ARGUED THAT THE LD.REVENUE AUTHORITIES HAD NOT CONSIDERED THAT THE MARKET VALUE OF THE PROPERTY HAD CONSIDERABLY REDUCED EITHER DUE TO THE DEFICIENCY IN THE TITLE OR DUE TO THE PROLONGED LITIGATION TO BE FACED FOR PERFECTING THE TITLE OF THE PROPERTY. THE LD. AR THEREFORE PLEADED THAT THE ADDITION MADE BY THE LD. REVENUE AUTHORITIES BY INVOKING THE P ROVISIONS OF SECTION 50C OF THE ACT IS NOT JUSTIFIABLE IN THE CASE OF THE ASSESSEE . THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES AND ARGUED IN SUPPORT OF THE SAME . 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE PROPERTY SOLD BY THE ASSESSEE WAS ENGULFED IN LITIGATION. IT IS ALSO OBVIOUS THAT THE ASSESSEE HAD TO ARRIVE AT A COMPROMISE IN THE COURT AND OBTAIN A LESSER VALUE TO SELL THE PROPERTY. THESE FACTS ARE NOT 6 DISPUTED BY THE REVENUE AS WELL. FURTHER, THE REVENUE HA D NOT OBTAINED THE VALUATION REPORT FROM THE DVO BEFORE COMPLETING THE ASSESSMENT. THIS ACTION OF THE LD. REVENUE A UTHORITIES IS ALSO NOT JUSTIFIABLE. CONSIDERING THE SE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE HELD THAT THE ACTUAL MARKET VALUE OF THE PROPERTY IS RS., 16,18,000/ - THOUGH THE STATE REVENUE AUTHORITY HAD ESTIMATE SO, BECAUSE THE STATE REVENUE AUTHORITY HA D NOT TAKEN INTO CONSIDERATION OF THE LITIGATION INVOLVED IN THE PROPERTY. IN THIS SITUATION, I AM OF THE CONSIDERED VIEW THAT INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT BY DISREGARDING THE ACTUAL MARKET VALUE OF THE PROPERTY AT RS. 7,51,000/ - DUE TO THE LITIGATION INVOLVED IN THE PROPERTY IS NOT JUSTIFIABLE. KEEPING IN VIEW OF THE INTRICACIES OF THE LITIGATION INVOLVED IN THE PROPERTY , THE CHIEF METROPOLITAN MAGISTRATE HAD ACCEPTED THE COMPROMISE MADE BY THE ASSESSEE FOR THE SAL E OF THE PROPERTY AT RS. 7,51,000/ - . HENCE, I AM OF THE VIEW THAT THE ACTUAL MARKET VALUE OF THE PROPERTY CONSIDERING ITS DRAW BACK CANNOT BE PRESUMED MORE THAN RS. 7,51,000/ - . FURTHER THERE IS NO IOTA OF DOUBT THAN ON - MONEY IS INVOLVED IN THE TRANSACTION. THEREFORE, I HEREBY DIRECT THE LD. AO TO ADOPT THE ACTUAL SALE PRICE RECEIVED BY THE ASSESSEE FOR THE SALE OF HER PROPERTY OF RS. 7,51,000/ - FOR THE PURPOSE OF ASSESSING LONG TERM CAPITAL GAIN / LOSS IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, BOTH THE FIR ST AND SECOND GROUND RAISED BY THE ASSESSEE ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 7 8. BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING THE APPEAL, WHICH IS THOUGH AGAINST THE USUAL NORMS, I FIND IT APPROPRIATE, TAKING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID - 19 PANDEMIC. WHILE DOING SO, I HAVE RELIED IN THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/2 018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14TH MAY 2020. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE, 2020. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 24 TH JUNE, 2020. OKK C OPY TO: - 1) SMT. VANAJA T. NAIR, 8 - 7 - 116/5, HAL COLONY, OLD BOWENPALLY, SECUNDERABAD. 2) INCOME TAX OFFICER, WARD - 11(3), HYDERABAD 500 084. 3) THE CIT(A) - 6, HYDERABAD. 4) THE PR. CIT - 5, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE