Chhanchalben Kantilal Kantharia, Surat V. Income Tax Officer Ward -1(3)(6), Surat

ITA 71/SRT/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5915 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 28-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: RASESH SHAH
• Keywords: Value adopted by valuation officer; Additional evidence; Cost of acquisition; Fair market value; Valuation report

Judgement Text

CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.71/SRT/2017 / ASSESSMENT YEAR: 2013-14 CHHANCHALBEN KANTILAL KANTHARIA, 82, SNEH SMRUTI SOCIETY, RANDER ROAD, ADAJAN PATIA, SURAT- 395 002. [PAN: AEBPK 1344 N] V . INCOME TAX OFFICER, WARD-1(3)(6), SURAT. / APPELLANT /RESPONDENT /ASSESSEE BY SHRI RASESH SHAH , C A /REVENUE BY MS. ANUPAMA SINGLA, SR. DR / DATE OF HEARING: 12 - 02 - 2020 /PRONOUNCEMENT ON: 14 - 02 - 2020 /O R D E R PER O.P.MEENA, AM: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, SURAT [IN SHORT THE CIT(A)] DATED 09-06-2017, FOR THE ASSESSMENT YEAR 2013-14. 2. THE SUBSTITUTED GROUND OF APPEAL STATES THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN TAKING COST OF ACQUISITION OF LAND AS ON 01-04-1981 AT RS.197 PER SQ. MTR AS AGAINST RS.510 PER SQ. MTR AS CLAIMED BY THE ASSESSEE. 3. BRIEF FACTS OF THE CASES ARE THAT THE ASSESSEE DERIVES INCOME FROM TEXTILE BUSINESS. THE ASSESSEE ALONG WITH OTHER CO-OWNERS HAD SOLD THE AGRICULTURAL LAND SITUATED AT RS NO.130/A, FP NO.139, MOJE SINGANPUR, TPS NO.26, SURAT FOR A SALE CONSIDERATION OF RS.6,95,00,000/- (ASSESSEES SHARE CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 2 OF 6 RS.1,15,83,333/-) AND HAD CLAIMED INDEXED COST OF ACQUISITION AGAINST IT ON THE BASIS OF VALUATION REPORT OF GOVERNMENT APPROVED REGISTERED VALUER FOR URBAN AND AGRICULTURAL LANDS DATED 20-12-2012 BY TAKING RATE OF LAND AT RS.510/- PER SQ. MTR AS ON 01-04-1981 AND CONSIDERED THE FAIR MARKET VALUE AT RS.47,44,530/-. HOWEVER, THE AO REFERRED THE MATTER TO DVO U/S.55A OF THE ACT WHO VALUED THE FAIR MARKET VALUE AT RS.197/- PER SQ. MTR AS AGAINST RS.510/- PER SQ. MTR ESTIMATED BY THE GOVERNMENT APPROVED REGISTERED VALUER OF THE ASSESSEE. THUS, THE FAIR MARKET VALUE WAS WORKED OUT AT RS.18,32,691/- IN WHICH ASSESSEES SHARE WAS WORKED OUT AT RS.87,57,319/-. THEREFORE, THE AO HAS ISSUED A SHOW CAUSE NOTICE WHICH WAS REPLIED BY THE ASSESSEE WHICH HAS BEEN REPRODUCED BY THE AO IN THE ASSESSMENT ORDER. IT WAS FURTHER SUBMITTED BY THE ASSESSEE A REGISTERED VALUER REPORT OBTAINED FROM ANOTHER VALUER WHO ESTIMATED THE LAND RATE OF RS.315/- PER SQ. MTR AFTER CONSIDERING VARIOUS FACTORS AFFECTING THE VALUE OF LAND. HOWEVER, THE AO DID ACCEPT THE CONTENTION OF THE ASSESSEE AND WORKED OUT THE CAPITAL GAIN BY CONSIDERING THE MARKET VALUE AT THE RATE OF RS.197/- PER SQ. MTR AS DETERMINED BY THE DVO AND ACCORDINGLY TAKES THE LONG-TERM CAPITAL GAIN OF RS.87,57,319/- IN THE CASE OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THAT THE ASSESSEE HAS RAISED OBJECTION BEFORE THE DVO AGAINST THE RATE OF LAND OF RS.197/- PER SQ. MTR AS THE FAIR MARKET VALUE BY THE DVO AS AGAINST THE REGISTERED VALUER OF THE ASSESSEE WAS DETERMINED AT RS.510/- PER SQ. MTR. IT WAS FURTHER SUBMITTED THAT THE AO HAS WRONGLY ADOPTED THE VALUE DETERMINED BY THE DVO WITHOUT CONSIDERING THE LOGICAL AND VALID OBJECTION BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 3 OF 6 PROCEEDINGS. THE DVO FAILED TO CONSIDER THE ISSUES RAISED BY THE ASSESSEE IN HER OBJECTION LETTER FILED AGAINST THE PROPOSED VALUATION. HE ALSO DID NOT CONSIDER THE VALUATION REPORT OF ANOTHER GOVERNMENT APPROVED REGISTERED VALUER OF SHRI RAMESHCHANDRA JAIN WHO HAS CONSIDERED THE RATE OF RS.315/- PER SQ. MTR AS ON 01-04-1981. HOWEVER, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS CONTENDED THAT HE HAD MADE ANOTHER REPORT FROM THE APPROVED VALUER OF SHRI RAMESHCHANDRA JAIN WHO HAS CALCULATED THE FMV (FAIR MARKET VALUE) AT THE RATE OF 315 PER SQ. MTR AS ON 01-04-1981 ON THE BASIS OF COMPARABLE SALES INSTANCES. HOWEVER, THE APPELLANT HAS SUBMITTED A REPORT OF REGISTERED VALUER OF SHRI P K DESAI WHO WAS REFERRED BY THE DVO BY THE AO TO DETERMINE THE FMV AS ON 01-04-1981. THE DVO AS PER HIS REPORT CALCULATED THE FMV, THE RATE OF 197 PER SQ. MTR AGAINST THE VALUE DECLARED BY THE REGISTERED VALUER OF SHRI P K DESAI AT THE RATE OF 510 PER SQ. MTR. THE APPELLANTS SUBMISSION OF A FRESH REPORT OF REGISTERED VALUER OF SHRI RAMESHCHANDRA JAIN AT THE APPELLATE STAGE IS A FRESH EVIDENCE UNDER RULE 46A OF THE IT RULES FOR WHICH NO REASONS HAVE BEEN GIVEN. HENCE, THE SAME WAS NOT ADMITTED AS PER PROVISIONS OF RULE 46A OF THE I.T RULES. HOWEVER, THE LD. COUNSEL SUBMITTED THAT THE SAID REPORT IS DULY MENTIONED AT PARA (VI) OF THE ASSESSEES SUBMISSIONS REPRODUCED AT PAGE 4 TO 5 OF THE APPELLATE ORDER, WHEREIN IT IS CLEARLY STATED THAT WE HAVE ENCLOSED HEREWITH THE VALUATION REPORT OF INCOME FOR AGRICULTURAL LAND AND AS PROPOSED A VALUE OF LAND AT RS.315/- PER SQ. MTR AFTER CONSIDERING THE VARIOUS FACTORS AFFECTING THE VALUE OF LAND. THIS VALUATION WAS MUCH HIGHER THAN VALUATION DETERMINED BY DVO AND VALUATION IS GIVEN BY THE DVO UNREASONABLE AND UNJUSTIFIABLE AND VERY MUCH ON LOWER SIDE. THEREFORE, IT WAS REQUESTED THAT CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 4 OF 6 THE DVO HAS NOT APPRECIATED BY TAKING THE VALUE @197 PER SQ. MTR AS ON 01- 04-1981 AS AGAINST THE REGISTERED VALUER REPORT OF THE ASSESSEE AT RS.315/- & 510/- PER SQ. MTR. HOWEVER, THE CIT(A) WAS NOT CONSIDERED THE REPORT OF RAMESHCHANDRA JAIN IN GOVERNMENT APPROVED REGISTERED VALUER WHO DETERMINED THE LAND RATE AT 315 PER SQ. MTR AFTER CONSIDERING VARIOUS FACTORS AS AN EVIDENTIAL FINDINGS IN RULE 46A. HOWEVER, THIS REPORT WAS VERY MUCH BEFORE THE AO, THEREFORE, THIS REPORT NOT IN ADDITIONAL EVIDENCE AS ASSUMED BY THE LD. CIT(A). THE LD. COUNSEL FURTHER RELIED IN THE CASE OF HEEMABEN DESAI V. ITO, WARD-3, SURAT AND IN ITA NO. 3204/AHD/2016/(SURAT-TRIB.) DATED 21-02-2019 WHEREIN THE SURAT BENCH, TRIBUNAL HAS CONSIDERED THE REPORT OF DVO AND APPROVED VALUER AND CONSIDERED THE AVERAGE RATE OF THREE VALUATION REPORT FOR TAKING FMV AS ON 01-04-1981 IN SIMILAR CIRCUMSTANCES. THEREFORE, IT WAS REQUESTED THAT THE FAIR MARKET VALUE AS ON 01-04-1981 MAY BE CONSIDERED BY TAKING THE AVERAGE OF THESE THREE REPORTS THAT THE DVO REPORT, P K DESAI REPORT & RAMESHCHANDRA JAIN REPORT WHICH HAVE BEEN TAKEN THE FMV @ 197, 315 & 510 PER SQ. MTR RESPECTIVELY AS ON 01-04-1981. 5. PER CONTRA, THE LD. SR. DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THE DVO AS THE FINAL AUTHORITY FOR MAKING VALUATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE DISPUTE BETWEEN THE ASSESSEE AND THE AO IS THE RATE AT RS.197 PER SQ. MTR AS FMV AS ON 01-04-1981 BY THE DVO WHEREAS THE APPROVED REGISTERED OF THE ASSESSEE SHRI P K DESAI HAS ESTIMATED THE SAME RATE @510 PER SQ. MTR AND SHRI RAMESHCHANDRA JAIN HAS ESTIMATED THE VALUATION OF LAND @315 PER SQ. MTR AS ON 01-04-1981. THUS, CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 5 OF 6 THERE ARE THREE REPORTS WHICH GIVE DIFFERENT RATE FOR THE VALUATION OF LAND OF THE SAME PROPERTY AFTER CONSIDERING THE VARIOUS FACTORS. WE FIND THAT SHRI P K DESAI AS PER PARA 8 OF HIS REPORT STATED THAT THE INSTANCE OF THE AGRICULTURAL LAND AVAILABLE IN THE AREAR VERY FEW NUMBER. MOREOVER SALE INSTANCES AVAILABLE ARE FOUND TO BE UNDER-VALUED DUE TO THE LAND THAT THE INVOLVEMENT OF UNACCOUNTED MONEY UPTO THE SOME EXTENT MUCH HIGHER AND THE STAMP DUTY TO BE PAID AT HIGHER SIDE, WHEREAS HE HAS VALUED THE LAND BY CONSIDERING OVERALL TRADES OF SALE INSTANCES EXECUTED PROCEEDINGS FROM THIS DATE OF VALUATION I.E. 01-04-1981 AND BY MAKING LOCAL ENQUIRIES FROM THE CONCERNED GOVERNMENT DEPARTMENT AND LOCALITY OF THE LAND, AND DEVELOPMENT AND ANY ACTIVITY HAS TAKEN AROUND A VALUER AND MORE THAN ACTUAL INDEXED PROVIDED THE BASIS FOR FIXING A LAND, ACCORDINGLY, THE DVO HAS VALUED THE RATE PAY TAKING THE REVERSE METHOD ACCORDING TO WHICH VALUE @510 PER SQ. MTR WAS WORKED OUT, WHEREAS THE OVERALL RATE @550.60 PER SQ. MTR. HOWEVER, THERE IS ANOTHER REPORT OF SHRI RAMESHCHANDRA JAIN WHO DETERMINES THE VALUE OF 315 PER SQ. MTR. THEREFORE, CONSIDERING THE DECISION OF HEEMABEN DESAI V. ITO (SUPRA) OF SURAT BENCH AND CONSIDERED THE ENTIRETY OF THE FACTS AND TAKING HOLISTIC VIEW, WE ARE INCLINED TO ACCEPT THE ARGUMENT OF THE ASSESSEES COUNSEL THAT THE AVERAGE VALUE OF THE THREE VALUATION REPORT I.E. DVO OF SHRI P K DESAI AND SHRI RAMESHCHANDRA JAIN WOULD BE VERY REASONABLE AND APPROPRIATE FOR DETERMINING THE FMV LAND AS ON 01-04-1981. ACCORDINGLY, THE AVERAGE RATE OF FMV IS WORKED OUT OF RS.340/- PER SQ. MTR [197+510+315+1022)/3 = 340]. THE AO HAS DIRECTED TO WORKED OUT THE INDEX COST OF ACQUISITION BY TAKING THE FAIR MARKET VALUE CHHANCHALBEN KANTILAL KANTHARIA V. ITO, WARD-1(3)(6),SURAT/ITA. 71/SRT/2017/A.Y.2013-14 PAGE 6 OF 6 @340 PER SQ. MTR AND ARE COMPUTED THE TAXABLE LTCG (LONG TERM CAPITAL GAIN). ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 7. GROUND NO.3 IS NOT PRESSED BEFORE US BY THE LD. COUNSEL; HENCE, THE SAME IS TREATED AS DISMISSED, AS NOT PRESSED. 8. GROUND NOS.4 & 5 ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14-02-2020 SD/- SD/- (SANDEEP GOSAIN) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 14 TH FEB, 2020 / SAMANTA, PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/ GUARD FILE OF ITAT. BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, SURAT