Shri Surya Prakash Toshniwal , Kolkata V. ITO, Ward - 5(1) , Kolkata

ITA 82/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8246 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 17-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NICOLAS MURMU
• Assessee Lawyers: GIRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Set aside
• Section: 50C

Judgement Text

1 ITA NO. 82/KOL/2019 SHRI SURYA PRAKASH TOSHNIWAL, AY 2015-16 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 82/KOL/2019 ASSESSMENT YEAR: 2015-16 SHRI SURYA PRAKASH TOSHNIWAL (PAN: ABTPT 8950 C) VS. ITO, WARD 5(1), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 13.06.2019 DATE OF PRONOUNCEMENT 17.07.2019 FOR THE APPELLANT SHRI RAJEEVA KUMAR, AR & SHRI GIR IDHAR DHELIA, AR FOR THE RESPONDENT SHRI NICOLAS MURMU, ADDL. CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) 2, KOLKATA DATED 16.11.2018 FOR ASSESSMENT YEAR 2015-1 6. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN NOT ACCEPTING ASSESSEES REQUEST TO REFER THE VALUATION OF LAND IN QUESTION TO DVO BEFORE ASSESSMENT OF CAPITAL GAIN ON IT. 3. BRIEF FACTS OF THE CASE IS THAT THE AO NOTED THA T THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY AT A PRICE OF RS. 42,25,000/- WHEREAS ACCO RDING TO THE STAMP VALUATION AUTHORITY, THE VALUE OF THE PROPERTY IS AT RS. 47,30,000/-. WH EN ASKED BY THE AO, THE ASSESSEE IN HIS REPLY DATED 17.11.2017 SUBMITTED THAT THE PURCHASER PAID HIM LESS AMOUNT OF RS 47,30,000/- I.E. LESS BY RS. 6,05,000/- (RS. 47,30,000/- RS. 4 1,25,000/-) DUE TO SOME UNFINISHED FITTINGS IN THE PROPERTY. HOWEVER ACCORDING TO THE AO AS PER PROVISION OF SECTION 50C OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT), THERE IS NO SUCH CLAUSE WHERE THE PURCHASER CAN 2 ITA NO. 82/KOL/2019 SHRI SURYA PRAKASH TOSHNIWAL, AY 2015-16 CERTIFY AND JUSTIFY THE UNDERVALUATION OF PROPERTY. THEREAFTER, THE AO ISSUED A SHOW CAUSE NOTICE ON 18.12.2017 ASKING THE ASSESSEE AS TO WHY RS. 6,05,000/- SHOULD NOT BE ADDED TO HIS TOTAL INCOME AS PER SECTION 50C OF THE ACT. THE ASSESSEE REPEATED THE SAME REPLY DATED 20.12.2017 AS WELL AS REQUESTED THE AO TO REFER THE MATTER TO DVO BEFORE MAKING ANY ADDITION. HOWEVER, THE PLEA OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HE MADE AN ADDITION OF RS. 6,05,000/-. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CONFIRM THE SAME. AGGRIEVED THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RECORDS. WE NOTE THAT THE ASSESSEE HAD SOLD THE IMMOVABLE PROPERTY AT A PRICE OF RS. 41,25,000/- WHEREAS THE STAMP VALUATION AUTHORITY HAD VALUED THE PROPERTY OF RS. 47,30,000/-. ACCORDING TO THE ASSESSEE HE WAS NOT ABLE TO HANDOVER THE FULLY COMPLETED FLAT T O THE BUYER AS PROMISED, SO A REDUCTION OF COST OF RS. 6,05,000/- WAS ALLOWED TO HIM FOR COMPL ETION OF VARIOUS FITTINGS IN THE FLAT WHICH WAS SOLD BY THE ASSESSEE. MOREOVER, THE ASSESSEE RE QUESTED TO THE AO FOR REFERENCE TO DVO FOR VALUATION OF PROPERTY BEFORE PASSING THE ASSESS MENT ORDER. HOWEVER, THE AO WITHOUT REFERRING IT TO DVO HAS PASSED THE ASSESSMENT ORDER MAKING THE ADDITION OF RS. 6,05,000/- WHICH IS AGAINST THE DICTUM OF LAW AND EXPRESS DIRE CTION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS SUNIL KUMAR AGARWAL (2015) 372 ITR 83 (CAL) WHEREIN IT HAS BEEN HELD AS UNDER: 7. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APP EARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRE SUMABLY, THE CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILING PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROP OSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT SUB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENCE CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER ACCEPT IT OR DISPUTE IT. THE AS SESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB-REGISTRAR, HAVE CLAIMED ANYT HING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LAKHS WHICH, ACCORD ING TO THE ASSESSEE, WAS THE HIGHEST PREVAILING MARKET PRICE. IT WOULD FOLLOW AUTOMATICA LLY THAT HIS CASE WAS THAT THE FAIR MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAK HS AS ASSESSED BY THE DISTRICT SUB REGISTRAR. IN A CASE OF THIS NATURE THE ASSESSING O FFICER SHOULD, IN FAIRNESS, HAVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MAD E BY THE DEPARTMENTAL VALUATION OFFICER CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COURSE, IN ALL SUCH CASES THE 3 ITA NO. 82/KOL/2019 SHRI SURYA PRAKASH TOSHNIWAL, AY 2015-16 ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSE SSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER . 8. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION TH AT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INT END THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MA DE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/T AXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSESSEE, WHO MAY NOT HAVE BEEN PR OPERLY INSTRUCTED IN LAW, THE ASSESSING OFFICER, DISCHARGING A QUASI JUDICIAL FUN CTION, HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM A N OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. 9. FOR THE AFORESAID REASONS, THE ORDER UNDER CHALLENG E IS SET ASIDE. 10. THE IMPUGNED ORDER INCLUDING ORDERS PASSED BY THE CIT(A) AND THE ASSESSING OFFICER ARE ALL SET ASIDE. THE MATTER IS REMANDED TO THE AS SESSING OFFICER. HE SHALL REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER IN ACC ORDANCE WITH LAW. AFTER SUCH VALUATION IS MADE, THE ASSESSMENT SHALL BE MADE DE NOVO IN ACCORDANCE WITH LAW.[EMPHASIS GIVEN BY US] 5. IN A CASE OF THIS NATURE WHERE THE ASSESSEE OBJE CTS TO VALUATION OF IMMOVABLE PROPERTY MADE BY THE STAMP DUTY VALUATION AUTHORITY , THE AO IS REQUIRED TO CALL FOR REPORT OF THE DVO AND THEN ONLY FRAME THE ASSESSMENT. IN THE LIGHT OF THE ORDER OF HONBLE HIGH COURT [SUPRA], WE SET ASIDE THE ORDER OF THE LD. CI T(A) AND REMAND THIS ISSUE BACK TO THE FILE OF THE AO FOR DE NOVO ASSESSMENT ON THIS ISSUE AND DIRECT THE AO TO REFER THE VALUATION OF THE IMMOVABLE PROPERTY IN QUESTION TO THE DVO AND A FTER RECEIVING HIS VALUATION REPORT TO FRAME THE ASSESSMENT IN ACCORDANCE TO LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH JULY, 2 019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17TH JULY, 2019 BISWAJIT (SR. PS) 4 ITA NO. 82/KOL/2019 SHRI SURYA PRAKASH TOSHNIWAL, AY 2015-16 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SHRI SURYA PRAKASH TOSHNIWAL, SHRI N.K. GOYAL, 16, N.S. ROAD, 2 ND FLOOR, KOLKATA 700 001. 2 RESPONDENT ITO, WARD-5(1), KOLKATA. 3 4 5 CIT(A) - 2, KOLKATA. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA BENCHES