Gurav Balkrishna Agarwal, Pune V. Assistant Commissioner of Income-tax,

ITA 79/PUN/2014

• Counselvise Citation: 7924514 RSA 2014
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: S N DOSHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Search and seizure; Additional evidence; Fair market value; Valuation report; Block assessment
• Section: 50C; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 76 /PN/20 1 4 ASSESSMENT YEAR : 20 09 - 10 SHRI BALKRISHNA G. AGARWAL, 264/5, NA CHIKET PARK, BANER ROAD, BANER, PUNE - 411045 VS. ACIT, CIRCLE - 4, PUNE (APPELLANT) (RESPONDENT) PAN NO. AARPA2442F ITA NO. 77 /PN/2014 ASSESSMENT YEAR : 20 09 - 10 SMT. LATA BALKRISHNA AGARWAL, 264/5, NACHIKET PARK, BANER ROAD, BANER, PUNE - 411045 VS . ACIT, CIRCLE - 4, PUNE (APPELLANT) (RESPONDENT) PAN NO. AARPA2449Q ITA NO. 78 /PN/2014 ASSESSMENT YEAR : 20 09 - 10 SHRI VIKAS BALKRISHNA AGARWAL, 264/5, NACHIKET PARK, BANER ROAD, BANER, PUNE - 411045 VS. ACIT, CIRCLE - 4, PUNE (APPELLANT) (RESPONDE NT) PAN NO. AARPA2422K ITA NO. 79/PN/2014 ASSESSMENT YEAR : 2009 - 10 SHRI GAURAV BALKRISHNA AGARWAL, 264/5, NACHIKET PARK, BANER ROAD, BANER, PUNE - 411045 VS. ACIT, CIRCLE - 4, PUNE (APPELLANT) (RESPONDENT) PAN NO. AARPA2450R REVENUE BY: SHRI B.C. MALAKAR ASSESSEE BY: SHRI S.N. DOSHI DATE OF HEARING : 04 - 1 2 - 2014 DATE OF PRONOUNCEMENT : 30 - 1 2 - 2014 2 ITA NO S . 76, 77, 78 & 79 /PN/2014, SHRI BALKRISHNA G. AGARWAL & ORS., P UNE ORDER PER R.S . PADVEKAR , JM : - THIS BATCH OF FOUR APPEALS ARE FILED CHALLENGING RESPECTIVE IMPUGNED ORDERS OF THE CIT(A) II, PUNE, DATED 30 TH SEPTEMBER 2013, FOR THE ASSESSMENT YEAR 2009 10. THE ASSESSEES ARE RELATED TO EACH OTHER AND THE ISSUE IS IN RESPECT OF COMPUTATION OF CAPITAL GAIN ON THE SALE OF LONG TERM CAPITAL ASSET AND THE APPLICABILITY OF THE PROVISIONS OF SEC. 50C OF THE INCOM E TAX ACT, 1961 (FOR SHORT 'THE ACT' ). THE ASSESSEES HAVE TAKEN THE FOLLOWING GROUNDS WHICH ARE VERBATIM IN ALL THE APPEALS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ADOPTING THE SALE CONSIDERATION AT RS.6,44,85,000, AS E STIMATED BY DVO FOR FOLLOWING REASONS: - 1. THE DIFFERENCE IN DVOS VALUATION AND THE ACTUAL SALE CONSIDERATION IS HARDLY 6.65% AND HENCE DVOS VALUATION SHOULD HAVE BEEN IGNORED. REFER CIT V/S PRATAP SINGH AMRO SINGH RAJASTHAN HIGH COURT 200 ITR 788 AND VIMAL SINGH V/S CIT PATNA HIGH COURT 308 ITR 71. 2. THE SAID VALUATION OF DVOI, THE REFERENCE ACTUALLY BEEN RECEIVED AFTER THE COMPLETION OF ASSESSMENT ORDER, SUCH VALUATION SO ADOPTED VITIATES THE VALIDITY OF THE ASSESSMENT ORDER. 2. THE FACTS, WHICH AR E REVEALED FROM THE RECORD THAT THESE ASSESSEES WERE THE JOINT OWNERS OF LAND BEARING GAT NO.25, VILLAGE TALAVDE, PIMPRI CHINCHWAD MUNICIPAL CORPORATION (PCMC) ADMEASURING TOTAL AREA AT ABOUT 12 HEC. 67 R. THE SAID LAND WAS SOLD BY THESE ASSESSEES VIDE RE GISTERED SALE DEED DATED 7 TH MAY 2008. THESE ASSESSEES WERE HAVING 1/4 TH SHARE EACH IN THE SAID LAND AND THE SAID LAND WAS SOLD FOR THE CONSIDERATION OF RS.6 ,02,00,000/ - . THE ASSESSEES, ACCORDINGLY , BY ADOPTING 1/4 TH SHARE IN THE SAID LAND, DECLARED SALE CONSIDERATION OF RS. 1,50,50,000/ - AND WORKED OUT THE LONG TERM CAPITAL GAIN. IT WAS NOTICED BY THE ASSESSING OFFICER THAT FOR THE PURPOSE OF THE PAYMENT OF 3 ITA NO S . 76, 77, 78 & 79 /PN/2014, SHRI BALKRISHNA G. AGARWAL & ORS., P UNE STAMP DUTY , VALUATION ON THE READY RECK ONER BASIS WAS ADOPTED AT THE TIME OF REGISTRATION OF THE AGR EEMENT TO SALE WHICH WAS OF RS. 8,08,71,000/ - . THE ASSESSING OFFICER, THEREFORE, PROCEEDED TO APPLY THE PROVISIONS OF SECTION 50C FOR SUBSTITUTING THE SALE CONSIDERATION SHOWN BY THE ASSESSEE AT RS. 6,02,00,000/ - WITH RS. 8,08,71,000/ - , WHICH WAS VALUATION MA DE FOR THE PAYMENT OF STAMP DUTY. THE ASSESSEES OBJECTED TO THE ACTION OF THE ASSESSING OFFICER BY TAKING THE STAND THAT THE SALE CONSIDERATION DECLARED IS REASONABLE ON THE REASON THAT IT WAS A DISTRESS SALE AND PROPERTY IN QUESTION WAS HAVING THE DEFECTI VE TITLE. THE ASSESSING OFFICER MADE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER (DVO) AS PER PROVISIONS OF SEC. 50C (2) OF THE ACT BUT IT APPEARS THAT THE VALUATION REPORT FROM THE DVO WAS NOT RECEIVED BY THE ASSESSING OFFICER IN TIME. AS THE ASSESSME NTS WERE GETTING TIME BARRED, THE ASSESSING OFFICER SUBSTITUTED THE VALUE OF RS. 8,08,71,000/ - , IN PLACE OF RS. 6,02,00,000/ - , AS DECLARED IN THE CONVEYANCE DEED AND APPORTIONING THE SAID VALUE BY TAKING THE 1/4 TH SHARE OF EACH OF THE ASSESSEE, WORKED OUT TH E LONG TERM CAPITAL GAIN AND PASSED THE ASSESSMENT ORDER. 3. THE ASSESSEES CHALLENGED THE ACTION OF THE ASSESSING OFFICER DETERMINING THE LONG TERM CAPITAL GAIN ON THE SALE OF THE LAND BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT, WITHOUT WAITING FOR THE VALUATION REPORT OF THE DVO. 4. IT APPEARS THAT BEFORE THE CIT(A), THE ASSESSEE FILED THE VALUATION REPORT FROM THE GOVT. APPROVED VALUER AND THE GOVT. APPROVED VALUER DETERMINED THE FAIR MARKET VALUE (FMV) OF THE SAID LAND AT RS. 5,47,57,500/ - . THOUGH THE CIT(A) DECLINED TO ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHICH WAS IN THE NATURE OF VALUATION REPORT FROM THE GOV T. APPROVED VALUER BUT THE ASSESSEES HAVE NOT RAISED ANY GRIEVANCE AGAINST THE SAME. IT APPEARS THAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER RECEIVED THE VALUATION REPORT FROM THE DVO DATED 28 TH FEBRUARY 2013 AND THE DVO HAS DETERMINED THE VALUE OF 4 ITA NO S . 76, 77, 78 & 79 /PN/2014, SHRI BALKRISHNA G. AGARWAL & ORS., P UNE THE LAND AT RS. 6,44,85,000/ - AS AGAINST RS. 8,08,71,000/ - , AS ADOPTED BY THE ASSESSING OFFICER WHICH WAS ON THE BAS IS OF VALUATION MADE FOR THE PAYMENT OF THE STAMP DUTY BASED ON THE READY RECK O N E R SYSTEM. AS THE VALUATION REPORT OF THE DVO WAS AVAILABLE BEFORE THE CIT(A), HE ADOPTED THE SAME SUBSTITUTING THE VALUE OF THE SALE CONSIDERATION OF THE LAND AT RS. 6,44,85,00 0/ - , AS AGAINST RS. 8,08,71,000/ - . 4.1 THE ASSESSEE RAISED ALTERNATE PLEA THAT THERE WAS MARGINAL DIFFERENCE OF 6.65% IN THE VALUATION MADE BY THE DVO OF RS. 6,44,85,000/ - AND THE SALE CONSIDERATION AS DECLARED BY THE ASSESSEE OF RS. 6,02,00,000/ - , AS THE DI FFERENCE WAS ONLY TO THE EXTENT OF RS. 42,85,000/ - . THE ASSESSEE TOOK THE PLEA BEFORE THE CIT(A) THAT AS THE DIFFERENCE IS LESS THAN 15%, HENCE, THE VALUATION MADE BY THE DVO MAY BE DISCARDED AND THE SALE CONSIDERATION DECLARED IN THE AGREEMENT TO SALE MAY BE ADOPTED. THE ASSESSEES ALSO PLACED RELIANCE ON FEW DECISIONS IN SUPPORT OF ABOVE PLEA. THE CIT(A) WAS NOT CONVINCED WITH THE ALTERNATE PLEA OF THE ASSESSEES AND HE DIRECTED THE ASSESSING OFFICER TO WORK OUT THE CAPITAL GAIN BY ADOPTING THE VALUE AT RS. 6 ,44,85,000/ - AS PER THE VALUATION REPORT OF THE DVO. NOW THE ASSESSEES ARE IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD AND ALSO CONSIDER THE PRECEDENT RELIED UPON BY THE LD. COUNSEL. THE ISSUE BEFORE US I S IN A NARROW COMPASS. IN THIS CASE, THERE IS NO DISPUTE ABOUT THE FACT THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE TO THE TRANSACTION IN QUESTION. AS PER THE AGREEMENT TO SALE, THE SALE CONSIDERATION IS DECLARED AT RS. 6,02,00,000/ - , BUT A S PER THE VALUATION REPORT OF THE DVO, THE FAIR MARKET VALUE (FMV) OF THE LAND ON THE DATE OF THE SALE WAS OF RS. 6,44,85,000/ - . THE CIT(A) HAS GIVEN THE RELIEF TO THE ASSESSEE BY ACCEPTING THE FAIR MARKET VALUE DETERMINED BY THE DVO AT RS. 6,44,85,000/ - . THE ONLY PLEA OF THE ASSESSEE IS THAT AS PER THE FMV AS DETERMINED BY THE DVO AND THE SALE CONSIDERATION DECLARED BY THE ASSESSEE, THE DIFFERENCE IS ONLY TO THE EXTENT OF 6.65% 5 ITA NO S . 76, 77, 78 & 79 /PN/2014, SHRI BALKRISHNA G. AGARWAL & ORS., P UNE AND, HENCE, AS IT IS LESS THAN 15%, THE FMV DETERMINED BY THE DVO MAY BE DISCAR DED. FOR THIS PROPOSITION, THE COUNSEL PLACED HIS RELIANCE IN THE CASE OF BIMLA SINGH V/S CIT, 308 ITR 71 (PAT.) AND CIT V/S PRATAP SINGH AMROSINGH RAJENDRA SINGH AND DEEPAK KUMAR, 200 ITR 788 (RAJ.). 5.1 IN THE CASE OF BIMLA SINGH (SUPRA), IT WAS A CASE OF SEARCH AND SEIZURE ACTION AND THE MATTER WAS REFERRED TO THE DVO FOR DETERMINING THE VALUE OF THE HOUSE. THERE WAS A DIFFERENCE OF LESS THAN 15% IN THE VALUE DETERMINED BY THE DVO AND THE AMOUNT DISCLOSED BY THE ASSESSEE IN THE CONSTRUCTION OF THE HOUS E AS AN INVESTMENT. THE HIGH COURT HELD THAT AS THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND AS DETERMINED BY THE DVO IS LESS THAN 15%, THE SAME IS TO BE IGNORED. IN THE CASE OF PRATAP SINGH SINGH AMROSINGH RAJENDRA SINGH AND D EEPAK KUMAR (SUPRA), AGAIN THE ISSUE OF VALUATION WAS THERE AND THE DIFFERENCE IN THE VALUATION WAS LESS THAN 10%. NOW, WE HAVE TO EXAMINE THE PROVISIONS OF SECTION 50C OF THE ACT . 6. AS PER THE PROVISIONS OF SEC. 50C(2) THE ASSESSING OFFICER MAY MAKE THE REFERENCE TO THE DVO FOR DETERMINING THE VALUE OF THE CAPITAL ASSET AND THE PROVISIONS OF SUB - SEC. ( 2 ) , ( 3 ) , ( 4 ) , ( 5 ) & (6) OF SEC. 16A OF THE WEALTH TAX ACT, 1957 SHALL APPLY WITH NECESSARY MODIFICATIONS. AS PER THE PROVISIONS OF SEC. 16A (6) WHEN THE RE FERENCE IS MADE BY THE ASSESSING OFFICER FOR COMPLETING THE ASSESSMENT UNDER THE WEALTH TAX ACT, 1957 , THEN AFTER RECEIPT OF THE VALUATION REPORT THE ASSESSING OFFICER HAS TO PASS THE ORDER IN CONFORMITY WITH THE VALUATION REPORT OF THE DVO. IN SUM AND SU BSTANCE THE VALUATION REPORT OF THE DVO IS BINDING ON THE ASSESSING OFFICER. IN THE PRESENT CASE, ADMITTEDLY, THE VALUATION MADE BY THE DVO AS PER THE REFERENCE MADE BY THE ASSESSING OFFICER U/S. 50C(2) IS MUCH LESS THAN THE VALUATION ADOPTED BY THE STAMP DUTY AUTHORITIES AT THE TIME OF THE REGISTRATION OF THE DEED OF CONVEYANCE. WE FIND THAT IN THE CASE OF BIMLA SINGH (SUPRA) , EVEN THOUGH IN THE SAID CASE , THE ISSUE WAS IN RESPECT OF COMPLETION OF THE BLOCK ASSESSMENT BUT 6 ITA NO S . 76, 77, 78 & 79 /PN/2014, SHRI BALKRISHNA G. AGARWAL & ORS., P UNE THE FACT REMAIN THAT THE REFEREN CE WAS MADE TO THE DVO FOR DETERMINING THE VALUE OF INVESTMENT AS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSEES BOOKS OF ACCOUNT. IN OUR OPINION THE SAME PRINCIPLES CAN APPLY TO THE REFERENCE MADE U/S. 50C(2) OF THE ACT AS IN THIS CASE THE DIFFERENC E IS MERELY ON 6.65% WHICH IS LESS THAN 10%, CONSIDERING THE DIFFERENCE BETWEEN THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AND THE FMV DETERMINED BY THE DVO THEN AS ULTIMATELY EVEN THOUGH THE DVO IS EXPERT THE VALUATION MADE BY HIM IS ONLY ON ESTIMATI ON HENCE, THE BENEFIT OF THE ESCALATION IS TO BE GIVEN. O N THE SAME PRINCIPLES AS HELD IN THE CASE OF BIMLA SINGH (SUPRA) THE BENEFIT CAN BE GIVEN TO THE ASSESSEE. IN OUR OPINION ALL THE ASSESSEES HAVE TO SUCCEED. WE, ACCORDINGLY, ALLOW THE GROUNDS TAKE N BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ACCEPT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE S AND COMPLETE THE ASSESSMENT. 7. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 - 1 2 - 201 4 SD/ - SD/ - ( R . K . PAN DA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 30 TH DECEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, PUNE 4 THE CIT - II, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , PUNE