Pavitar Singh Chowdhry, New Delhi V. ITO, New Delhi

ITA 732/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5633 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 23-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value
• Section: 54F; 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 732/DEL/2014 ASSESSMENT YEAR: 2008-09 PAVITAR SINGH CHOWDHRY, D - 145, DEFENSE COLONY, NEW DELHI. PAN- ADCPC 1769R. (APPELLANT) VS. INCOME - TAX OFFICER, WARD 32(4), NEW DELHI (RESPONDENT) APPELLANT BY SMT. LALITA KRISHNAMURTHY, ADV. RESPONDENT BY SMT. SULEKHA VERMA, CIT/DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)- XXXVIII, NEW DELHI DATED 13.11.2013 FOR THE ASSESSM ENT YEAR 2008-09 ON THE FOLLOWING REVISED GROUNDS : 1. THAT IN THE ABSENCE OF SERVICE OF NOTICE UNDER SE CTION 143(2) OF IT ACT WITHIN THE PRESCRIBED PERIOD, THE AO HAS NO JUR ISDICTION TO MAKE AN ASSESSMENT AND ACCORDINGLY THE ASSESSMENT SO FRAMED BY THE AO IN FURTHERANCE OF SUCH INVALID ASSUMPTION OF JURISDICT ION BY WAY OF ISSUE OF NOTICE UNDER SECTION 143(2) IS INVALID AND BAD IN L AW. 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE VALUATION MADE BY THE VALUATION OFFICER (VO) BASED ON THE CIRCLE R ATE ADOPTED BY THE DATE OF HEARING 28.01.2019 DATE OF PRONOUNCEMENT 30.01.2019 ITA NO. 732/DEL/2014 2 STAMP VALUATION AUTHORITY WITHOUT PROPERLY LOOKING INTO THE OTHER DEROGATORY FACTORS IN RESPECT OF THE IMMOVABLE PROP ERTY, SUCH AS LEGAL DISPUTE GOING ON IN THE COURT, ILLEGAL POSSESSION B Y ACCUSED IS ARBITRARY, UNJUST AND CONSEQUENTLY THE CAPITAL GAINS AS SUSTAI NED, BASED ON SUCH ARBITRARY AND UNREASONABLE VALUATION OF VO IS ALSO ARBITRARY, UNREASONABLE AND AT ANY RATE VERY EXCESSIVE. 3. THAT WITHOUT PREJUDICE TO GROUND NOS. 1 AND 2 ABO VE CIT(APPEALS) / AO HAS ERRED ON FACTS AND UNDER THE LAW IN NOT ALLO WING THE DEDUCTION, IN RESPECT OF THE INVESTMENT FROM THE SALE PROCEEDS IN RESIDENTIAL HOUSE, UNDER SECTION 54 / 54F OF IT ACT AS PERMISSIBLE UNDE R THE LAW. 2. OUT OF ABOVE GROUNDS OF APPEAL, GROUND NO. 1 IS NOT PRESSED BY THE LD. AR OF THE ASSESSEE. THE SAME IS DISMISSED AS SUCH. 3. THE QUESTIONS EMERGE OUT OF THE REMAINING GROUND S OF APPEAL AND ATTENDING FACTS OF THE CASE, WHICH NEED ADJUDICATIO N BEFORE US ARE (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE CLAIM OF ASSESSEE TO CALCULATE THE LONG-TERM CAPITAL GAINS AFTER TAKING INTO ACCOUNT THE SALE CONSIDERATION OF RS.16,00,000/- AS ADMITTED BY THE ASSESSEE WAS JUSTIFIED OR THE LD. CIT(A) WAS JUSTIFIED TO DIRECT THE ASSESSIN G OFFICER TO CALCULATE THE CAPITAL GAIN AFTER CONSIDERING THE SALE CONSIDERATI ON OF RS.34,00,000/- OF THE PROPERTY TRANSFERRED, AS VALUED BY THE AVO; AND (II ) WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION CLAIMED U/S. 54/54F OF THE IT ACT. 4. THE RELEVANT FACTS ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME ON 26.09.2008 DECLARING TOTAL INCOME OF RS.4,81,332/-. THE CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATION THAT THE A SSESSEE HAD SOLD AN ITA NO. 732/DEL/2014 3 IMMOVABLE PROPERTY AT A SALE CONSIDERATION OF RS.37 LAKHS. THE INFORMATION SO RECEIVED WAS SUPPLIED TO THE ASSESSEE AND THE ASSES SEE WAS ASKED TO FILE THE COMPUTATION OF CAPITAL GAINS ON SALE OF PROPERTY. O N PERUSAL OF THE RETURN OF INCOME, THE ASSESSING OFFICER OBSERVED THAT IN THE CAPITAL GAIN SECTION OF THE COMPUTATION FILED WITH THE RETURN WAS CROSSED BY TH E ASSESSEE NOR DID THE ASSESSEE SHOW ANY CAPITAL GAIN OR DEDUCTION U/S. 54 OF THE IT ACT THEREIN. IN RESPONSE TO NOTICE, THE AR OF THE ASSESSEE FILED A COMPUTATION OF LONG-TERM CAPITAL GAINS WHEREIN HE HAS TAKEN FULL VALUE OF CO NSIDERATION AT RS.37 LAKHS, INDEXED COST OF ACQUISITION AT RS.7,49,323/- AND CO MPUTED THE LONG TERM CAPITAL GAINS AT RS.29,50,677/-, OUT OF WHICH THE A SSESSEE CLAIMED DEDUCTED U/S. 54 OF RS.29,04,841/- AND CALCULATED THE TAXABL E LONG TERM CAPITAL GAIN OF RS.45,836/- AND PAID TAX THEREON. THIS COMPUTATION OF CAPITAL GAINS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IS PLA CED AT PAGE 19 TO 23 OF THE PAPER BOOK. SUBSEQUENTLY, VIDE LETTER DATED 20.12. 2010, THE ASSESSEE INFORMED THAT THE PROPERTY IN QUESTION WAS SOLD AT RS.16,00,000/- AND REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE DVO, WHICH WAS REJECTED BY THE ASSESSING OFFICER STATING THAT SUCH A REQUEST WAS MADE AT THE FAG END OF THE ASSESSMENT PROCEEDINGS WHICH WERE GO ING TO BE TIME BARRED. THE ASSESSING OFFICER OBSERVED THAT IN THE RETURN O F INCOME AND COMPUTATION FILED THEREWITH THE ASSESSEE DID NOT DECLARE ANY CA PITAL GAIN NOR CLAIMED ANY DEDUCTION U/S. 54, THEREBY CONCEALING ENTIRE SALE O F PROPERTY. IT WAS ALSO OBSERVED THAT THE ASSET SOLD BY THE ASSESSEE WAS A PLOT OF LAND AND NOT A RESIDENTIAL HOUSE AND THEREFORE, THE DEDUCTION U/S. 54 WAS NOT LEGALLY AVAILABLE TO THE ASSESSEE. THEREFORE, REJECTING THE CLAIM OF DEDUCTION U/S. 54 AND OTHER CLAIMS OF ASSESSEE, THE ASSESSING OFFICER COMPUTED THE CAPITAL GAIN ITA NO. 732/DEL/2014 4 AT RS.29,50,677/- AS COMPUTED BY THE ASSESSEE IN H IS COMPUTATION OF CAPITAL GAINS SUBMITTED TO THE ASSESSING OFFICER AND ADDED THE ENTIRE CAPITAL GAIN TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHERE ON THE REQUEST OF ASSESSEE HE REFERRED THE VALUATIO N OF IMPUGNED PROPERTY TO THE VALUATION CELL AND THE AVO FILED HIS REPORT DET ERMINING THE FAIR MARKET VALUE OF THE PROPERTY AT RS.34,00,000/-. CONSIDERIN G THIS AMOUNT AS SALE CONSIDERATION OF THE PROPERTY, THE LD. CIT(A) DIREC TED THE ASSESSING OFFICER TO COMPUTE THE LONG TERM CAPITAL GAINS AFTER CONSIDERI NG THE SALE CONSIDERATION OF PROPERTY AT RS.34,00,000/-. HE, HOWEVER, CONFIRMED THE ACTION OF THE ASSESSING OFFICER REGARDING REJECTION OF ASSESSEES CLAIM OF DEDUCTION U/S. 54 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND SUBMITTED THAT THE LD. AUTHORITIES BELOW WERE NOT JUSTIFIED IN NOT CONSIDE RING THE ACTUAL SALE CONSIDERATION OF RS.16 LAKHS, SUPPORTED BY SALE DEE D AND THE DOCUMENTARY EVIDENCES PERTAINING TO LITIGATION ON THE SAID PROP ERTY, WHILE RELYING ON THE VALUATION MADE BY THE AVO AT RS.34 LAKHS, PARTICULA RLY WHEN THE ASSESSEE HAD OBJECTED TO THE SAME BY POINTING OUT VARIOUS DISCRE PANCIES THEREIN. IT WAS ALSO SUBMITTED THAT THE PROVISIONS OF SECTION 54 HA VE BEEN WRONGLY INTERPRETED BY THE AUTHORITIES BELOW BEFORE REJECTI NG THE LEGITIMATE CLAIM OF DEDUCTION MADE BY THE ASSESSEE. IT IS, THEREFORE, U RGED THAT THE LONG TERM ITA NO. 732/DEL/2014 5 CAPITAL GAINS BE COMPUTED BY TAKING INTO CONSIDERAT ION THE SALE VALUE OF PROPERTY AT RS.16,00,000/- AND LEGITIMATE DEDUCTION U/S. 54 OF THE ACT AS CLAIMED, BE ALLOWED TO THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND URGED FOR SUSTENANCE OF THE IMPUGNED ORDE R. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE NEITHER IN THE RETURN OF INCOME NOR IN THE COMPUTATION FILED THEREWITH HAD GIVEN THE DETAILS OF PROPERTY SOLD OR ANY CAPITAL GAINS OR DEDUCTION U/S. 54 OF THE ACT, ON THE PREMISE THAT S INCE NO TAXABLE CAPITAL GAINS AFTER CONSIDERING THE SALE VALUE OF PROPERTY AT RS. 16,00,000/- AND CONSIDERING THE DEDUCTION U/S. 54, WAS ARISING TO THE ASSESSEE, THE ASSESSEE CROSSED THE CAPITAL GAIN SECTION OF THE SAID COMPUTATION OF INC OME. THIS CONTENTION OF THE ASSESSEE DOES NOT APPEAR APPEALING TO REASON PARTIC ULARLY WHEN THE ASSESSEE ITSELF HAS FURNISHED THE COMPUTATION OF CAPITAL GAI N TO THE ASSESSING OFFICER IN RESPONSE TO HIS NOTICE. IT IS BORN OUT ON RECORD TH AT IN THE SAID COMPUTATION, THE ASSESSEE ITSELF HAS COMPUTED THE LONG-TERM CAPI TAL GAINS AT RS.29,50,677/- AND AFTER DEDUCTING RS.29,04,841/- U/S. 54, HAS ADM ITTED THE TAXABLE LONG- TERM CAPITAL GAINS AT RS.45,836/- AS NOTED ABOVE. I N PRESENCE OF THESE FACTS, THERE REMAINS NOTHING TO SAY ON BEHALF OF THE ASSES SEE TO CONSIDERING THE SALE CONSIDERATION OF PROPERTY AT RS.16,00,000/- FOR FUR THER COMPUTING THE CAPITAL GAIN OF THE SAID PROPERTY, PARTICULARLY WHEN THE RE QUEST OF ASSESSEE FOR ITA NO. 732/DEL/2014 6 REFERRING THE VALUATION TO VALUATION CELL HAS BEEN ACCEPTED BY THE LD. CIT(A) AND THE VALUATION OF AVO AT RS.34 LAKHS HAS BEEN AC CEPTED BY HIM AND THE ASSESSING OFFICER HAS BEEN DIRECTED ACCORDINGLY. WE , THEREFORE, DO NOT FIND ANY JUSTIFICATION IN THE CLAIM OF ASSESSEE TO CONSIDER THE SALE VALUE OF IMPUGNED PROPERTY AT RS.16 LAKHS IN THE PECULIAR FACTS AND C IRCUMSTANCES OF THE PRESENT CASE. 9. AS FAR AS THE CLAIM OF DEDUCTION U/S. 54 OF THE ACT IS CONCERNED, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS INVESTED IN PURCHA SE OF RESIDENTIAL PROPERTY AT B-40, MALCHA MARG, FOR RS.29,04,841/-. THE ASSESSIN G OFFICER WHILE REJECTING THE CLAIM OF ASSESSEE U/S. 54 OF THE ACT HAS OPINED THAT THE SAID DEDUCTION IS NOT AVAILABLE TO THE ASSESSEE U/S. 54 AS HE HAD SOL D A PLOT OF LAND AND NOT ANY RESIDENTIAL HOUSE. HOWEVER, IN THE REVISED GROUNDS OF APPEAL BEFORE US, THE ASSESSEE HAS SUBMITTED THAT THE CLAIM MADE BY ASSES SEE IS LEGITIMATE AND IS AVAILABLE TO IT U/S. 54/54F. IN OUR OPINION, ONCE T HE ASSESSEE HAS ADMITTED THE CAPITAL GAINS ON THE SALE OF CAPITAL ASSET AND HAS ADMITTEDLY INVESTED SUBSTANTIAL AMOUNT OF CAPITAL GAINS IN PURCHASE OF RESIDENTIAL PROPERTY WITHIN THE STIPULATED TIME, THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION U/S. 54 OR 54F, AS THE CASE MAY BE, AND THE ASSESSING OFFIC ER WAS BOUND TO GIVE CREDIT OF SUCH CLAIM LEGITIMATELY, MEANING THEREBY, IF THE ASSESSEE WAS FOUND NOT SATISFYING THE CONDITIONS OF SECTION 54 OF THE ACT, THE ASSESSING OFFICER WAS REQUIRED TO CONSIDER ITS CLAIM IN THE LIGHT OF SECT ION 54F OF THE ACT. WE, THEREFORE, THINK IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR CONSIDERING THE CLAIM OF ASSESSEE ON TH E ANVIL OF SECTION 54F OF THE ACT AND TO DECIDE THE ISSUE AFRESH AFTER BEING SATI SFIED WITH THE CONDITIONS OF ITA NO. 732/DEL/2014 7 SECTION 54F, IF SATISFIED BY ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORD INGLY, THE APPEAL DESERVES TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.01.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI