SMT ELIZEBETH VASHEELAKUMARI, NAGERCOIL V. ACI, CIRCLE-I, NAGERCOIL RANGE, NAGERCOIL

ITA 783/CHNY/2020

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The case involves Smt. Elizebeth Vasheelakumari, who appealed against the order of the Principal Commissioner of Income Tax (PCIT), Madurai, which was passed under section 263 of the Income Tax Act, 1961. The PCIT found that the original assessment under section 143(3) did not consider the provisions of section 50C, which mandates the adoption of the stamp duty value as the sale consideration for property transactions, if higher than the actual sale consideration. The PCIT's revision order was based on the observation that the difference between the guideline value and the sale consideration was not taxed, which was prejudicial to the interest of the revenue. The Tribunal dismissed the appeal, agreeing with the PCIT's decision to reassess the income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135363 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 20-09-2020
• Other Referred Cases: Malabar Industrial Company Ltd. vs. CIT (243 ITR 83), Swarup Vegetable Products Vs CIT (187 ITR 412), Jai Bharath Tanners (264 ITR 673), Ashok Leyland Ltd Vs CIT (260 ITR 599), K. A. Ramaswamy Chettiar vs. CIT (220 ITR 657), CIT Vs Raja Industries (340 ITR 344)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Revision of order; Opportunity of being heard; Fair market value; Assessment record; Capital Gains
• Section: 263; 143(3); 50C; 54F; 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी दुगाŊ राव Ɋाियक सद˟ एवं ŵी जी. मंजुनाथा, लेखा सद˟ के समƗ Before Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. No.783/Chny/2020 िनधाŊरण वषŊ/Assessment Year: 2015-16 Smt. Elizebeth Vasheelakumari, No. 3, Parama Street, W.C.C. Road, Nagercoil 629 001. [PAN:ABQPE8121P] Vs. The Assistant Commissioner of Income Tax, Circle I, Nagercoil Range, Nagercoil. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : None ŮȑथŎ की ओर से/Respondent by : Shri S. Senthil Kumaran, CIT सुनवाई की तारीख/ Date of hearing : 31.01.2023 घोषणा की तारीख /Date of Pronouncement : 03.02.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax/CIT 1, Madurai, dated 21.03.2020 relevant to the assessment year 2015-16 passed under section 263 of the Income Tax Act, 1961 [“Act” in short]. 2. The appeal filed by the assessee is delayed by 124 days in filing the appeal before the Tribunal due to outbreak of COVID-19 pandemic and accordingly, the delay is condoned and admitted the appeal for I.T.A. No.783/Chny/20 2 adjudication. 3. Brief facts of the case are that the assessee filed her return of income on 02.09.2016 for the assessment year 2015-16 admitting a total income of ₹.53,24,173/-. Subsequently, the case was selected for limited scrutiny through CASS and notice under section 143(2) of the Act was issued on 30.08.2017. After examining the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 18.12.2017 by assessing total income of the assessee at ₹.1,35,38,789/-. 4. On examination of the assessment records for the assessment year 2015-16, the ld. PCIT has noticed that during the financial year 2014-15, the assessee has sold 4 plots of vacant site for a total sale consideration of the property at ₹.1,60,00,000/-, whereas, the guideline value of the property was ₹.5,14,80,000/-. Since the difference of ₹.3,54,80,000/- ( ₹.5,14,80,000 – ₹.1,60,00,000) was not brought to tax as required under section 50C of the Act, the ld. PCIT has observed that the assessment order passed under section 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue and issued show-cause notice under section 263 of the Act dated 23.07.2019. I.T.A. No.783/Chny/20 3 After considering the submissions of the assessee and setting aside the assessment order passed under section 143(3) of the Act dated 18.12.2017 and exercising power conferred under section 263 of the Act, the ld. PCIT has directed the Assessing Officer to redo the assessment by applying the provisions of section 50C of the Act for determining and taxing the long term capital gains. 5. On being aggrieved, the assessee is in appeal before the Tribunal against the revision order passed under section 263 of the Act. Despite various opportunities afforded, none appeared on behalf of the assessee. Hence, we proceed to decide the appeal on merits after hearing the ld. DR. 6. We have heard the ld. DR, perused the materials available on record and gone through the orders of authorities below. In this case, the assessment was completed under section 143(3) of the Act dated 18.12.2017. After examining the assessment records, the ld. PCIT was of the opinion that the assessment order was erroneous and prejudicial to the interest of the Revenue by observing as under: “5. I have considered the submissions of the assessee in the light of the facts of the case, the provisions of the law and the material information available on records. The assessee's first contention is that he has filed appeal before the CIT(Appeals) and therefore, section 263 cannot be invoked as per the decision of the Hon'ble Madras High Court in the case of Renuka I.T.A. No.783/Chny/20 4 Philip. It is verified from the assessee's written submission dated 21.08.2019 that the assessee has filed an appeal before the CIT(Appeals) on 16.01.2018 against the order u/s 143(3) dated 18.12.2017 wherein the assessing officer has made an addition of Rs.77,14,616/- towards disallowance of claim under section 54F and the same is pending for disposal. The subject matter of appeal is disallowance of claim under section 54F whereas the issue raised in the show cause notice u/s 263 is non application of section 50C of the Act. Therefore, the appeal pertaining to the disallowance of claim made by the assessee under section 54F of the Act has nothing to do with the show cause notice issued by the undersigned. Accordingly the objection raised on this issue is settled. 5.1. With regard to the issue of 50C, it is verified from the records that the assessee has sold 4 plots bearing plots nos.99, 100,101 & 102 each measuring 1980 Sq.ft at Mani Nagar, Nolambur Village, Ambattur taluk, Thiruvalluvar district for a sale consideration of Rs.40,00,000/- each and the total sale consideration was Rs.1,60,00,000/-. However, it has been mentioned in the sale documents itself that the market value of the above said plots were Rs.69,30,000/- each. Even if that was taken into account as the market value of the properties, then the total sale consideration of the 4 plots would be Rs.2,77,20,000/-. It is pertinent here to mention that the guideline value available in the website of the Tamilnadu Government Registration Department in respect of the "Mani Nagar", Nolambur Village, Ambattur Taluk, SRO Konnur, thiruvalluvar district, is Rs.6500/- Sq.ft from the period 01.04.2012. Accordingly the stamp value of the property works out to Rs.5, 14,80,000/- (1980 Sq.ft* 4 plots* Rs.6500). 5.2. The authorized representative in his written submission has stated that the guideline value of the property was reduced by 1/3° with effect from 17.06.2017, that too the revision of guideline value will have retrospective effect. Actually, the said properties were sold during the financial year 2014- 15 whereas the Tamilnadu government revised the guideline value of the property with effect from 09.06.2017 only, and the counsel's contention that it will have retrospective effect is not acceptable since there are no such provisions. As on 09.06.2017, the guideline value as in the website of the Tamilnadu Government Registration Department for the "Mani Nagar", Nolambur Village, Ambattur Taluk, SRO Konnur, thiruvalluvar district, is Rs.4355/- Sq.ft. Even if it is taking into account as sale consideration, the total sale consideration would be Rs.3,44,91,600/- (1980 4 plots Rs.4355/-). 5.3. The contention of the learned authorized representative that the Assessing Officer stepped into shoes of the Valuation Officer and chose not to make any addition lacks merit and there is no rationale behind this. The law has specifically mandated valuation of property by Valuation Officer and no other authority, whosoever, can decide the fair market value of the property. It is only when the assessee disputes the value adopted by stamp valuation I.T.A. No.783/Chny/20 5 authority, the Assessing Officer shall refer the property to the Valuation Officer for its valuation. In this case as already discussed, the assessing officer has completely ignored to consider the application of section 50C of the Act and therefore the contention of the learned counsel that the assessing officer stepped into the shoes of the valuation officer is devoid of merits and deserves to be rejected. 5.4. In view of the foregoing discussion and in light of section 50C of the Act, the difference between the value adopted by the stamp value authority, i.e, Rs.5,14,80,000/- and the consideration as per the deed, i.e. Rs.1,60,00,000/-, which amounts to Rs.3,54,80,000/- (5,14,80,000 - 1,60,00,000) shall be taxed as income from Long Term Capital gain in addition to the Long Term Capital gain section already assessed after ascertaining the stamp duty value of the property from the registration authority and subject to provisions of section 50C(2). 6. It is therefore seen from the above, that the assessment order passed by the Assessing Officer is not only erroneous but prejudicial to the interest of revenue since the same has been passed without proper verification of provisions of section 50C of the Act. It is judicially well settled that the powers under section 263 of the Income Tax Act can be exercised by the Principal Commissioner or Commissioner where the order was passed by the Assessing Officer by incorrect application of Law or with incorrect assumption of facts or without any inquiry into the matter or without application of mind [Malabar Industrial Company Ltd. vs. CIT (243 ITR 83)]. The Hon'ble High Court of Allahabad in the case of Swarup Vegetable Products Vs CIT (187 ITR 412) has held that when the Assessing Officer accepted the assessee's claim without making proper enquiries, the Commissioner acting under section 263 was justified in setting aside the assessment order. Similar view has been taken by the Madras High Court in Jai Bharath Tanners (264 ITR 673). The Hon'ble High Court of Madras in the case of Ashok Leyland Ltd Vs CIT (260 ITR 599) has held that when the Assessing Officer was required to examine the claim of the assessee but has failed to do so, the order passed by him was not only erroneous but also prejudicial to the interest of the revenue. Further, the Hon'ble Madras High Court in K. A. Ramaswamy Chettiar vs. CIT (220 ITR 657) has held that when the Officer is expected to make an enquiry of income and if he does not make an enquiry as expected, it is to be a ground to interfere with the order passed by the Assessing Officer since such an order passed by the officer is erroneous and prejudicial to the interest of revenue. In this case, the assessing officer failed to apply the provisions of section SOC of the Act and therefore the revisional powers under section 263 would be justified in view of the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs Raja Industries (340 ITR 344). 7. In view of the above, I am satisfied that the order dated 18.12.2017 I.T.A. No.783/Chny/20 6 passed by the Assessing Officer u/s 143(3) of the Income Tax Act is erroneous in so far it is prejudicial to the interest of the revenue. Accordingly, in exercise of powers conferred u/s 263 of Income Tax Act, I set aside the aforesaid order with the direction to the Assessing Officer to frame the assessment afresh after making necessary enquiries and verification especially with regard to the points discussed in para (5.1) to (5.4) above. Needless to mention, that the Assessing Officer shall refer the valuation of property to the Valuation Officer if any objection to fair market value is raised by the assessee. The Assessing Officer shall allow reasonable opportunity of being heard to the assessee before passing the order.” 6.1 We have carefully gone through the revision order passed under section 263 of the Act and find no infirmity in the order passed by the ld. PCIT. Thus, the ground raised by the assessee is dismissed. 7. In the result, the appeal filed by the assessee is dismissed. Order pronounced on 03 rd February, 2023 at Chennai. Sd/- Sd/- (G. MANJUNATHA) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 03.02.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.