SHRI BANWARI LAL SHARMA, Jaipur V. ITO, Jaipur

ITA 889/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74867 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Competent authority
• Section: 50C; 147; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NO. 889/JP/2012 ASSESSMENT YEAR: 2008-09 PAN: AKEPS 1038 A SHRI BANWARI LAL SHARMA VS. THE ITO 45B, SANTOSH SAGAR COLONY WARD 2(1) BHARAMPUR COLONY, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 951/JP/2012 ASSESSMENT YEAR: 2008-09 PAN: AKEPS 1038 A THE ITO VS. SHRI BANWARI LAL SHARMA WARD 2(1) 57, GUTA GARDEN, GOVIND NAGAR (W) JAIPUR AJMER ROAD, JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 938/JP/2012 ASSESSMENT YEAR: 2008-09 PAN: ABOPG 3690 H THE ITO VS. SHRI VIVEK GUPTA WARD 2(1) 30, KAMLA GATTA COLONY JAIPUR NEAR GOVIND DEV JI MANDIR KANWAR NAGAR, JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 939/JP/2012 ASSESSMENT YEAR: 2008-09 PAN: AIPQG 9087 M THE ITO VS. SHRI ASHISH GUPTA WARD 2(1) 30, KAMLA GATTA COLONY JAIPUR NEAR GOVIND DEV JI MANDIR KANWAR NAGAR, JAIPUR (APPELLANT) (RESPONDENT) 2 ASSESSEE BY : SHRI MANISH AGARWAL DEPARTMENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 29.01.2014. DATE OF PRONOUNCEMENT : 05.03 .2014 ORDER PER BENCH IN ALL THE ABOVE CAPTIONED APPEALS ALMOST IDENTICA L ISSUES ARISING FROM COMMON SET OF FACTS ARE INVOLVED. THEREFORE, FOR THE SAKE OF CONGRUENCE, BREVITY AND CONVENIENCE, WE ARE PROCEEDING TO DECIDE THEM BY THIS COMMON ORD ER. ITANOS:889/JP/12(ASSESSEESAPPEAL- BANWARILALSHARMA & 951/JP/12(REVENUES APPEAL) 2.0 THESE ARE THE CROSS APPEALS PERTAINING TO THE A SSESSMENT YEAR 2008-09 HAVING BEEN FILED AGAINST THE ORDER OF THE LD. CIT(A)-I, J AIPUR DATED 04.10.2012. 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N HIS APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN RS. 6,34,62,356/- ARBITRARILY. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN NOT APP RECIATING THE FACT THAT THE LD. AO HAS NOT ISSUED ANY NOTICE UNDER THE INCOME TAX ACT, 1961 TO SMT. PAMELA JEAN KOLAKO EVEN ON HER LOCAL ADDRESS WHICH HAS BEEN MENTIONED IN THE R EGISTERED SALE DEED AND LD. AO HAS NOT MADE ANY EFFORT TO TAX THE INCOME IN RIGHT HANDS BU T TAXED THE SAME IN THE HANDS OF THE ASSESSEE TO JUST COMPLY WITH THE PROVISIONS OF THE I.T. ACT, 1961. 3. WITHOUT PREJUDICE TO THE ABOVE, LD. CIT(A) HAS G ROSSLY ERRED IN CONSIDERING THE SALES VALUE AT RS. 9,50,67,760/- AS ADOPTED BY SUB-REGISTRAR FO R VALUATION OF STAMP DUTY, THE ASSESSEE HAS CHALLENGED THE VALUE DETERMINED BY SUB-REGISTRA R BEFORE THE COMPETENT AUTHORITIES AND THESE FACTS WERE DULY INTIMATED BY ASSESSEE. 2.2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN HIS APPEAL:- 3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN :- 1) HOLDING THAT SHRI BANWARI LAL SHARMA ONLY AND NO T SHRI VIVEK GUPTA AND SHRI ASHISH GUPTA, WAS AN AGENT OF SMT. PAMELA JEANS COL LECO FOR A.Y. 2008-09 IN RESPECT OF HER INCOME FROM CAPITAL GAIN ON SALES OF ONE PROPERTY BY SHRI BANWARI LAL SHARMA AS POWER OF ATTORNEY HOLDER OF SMT. PAME LA JEANS COLLECO, IGNORING THE FACT THAT UNREGISTERED POWER OF ATTORNEY WAS NE ITHER SIGNED BY SHRI BANWARI LAL SHARMA NOR BY THE WITNESS. 2) CHANGING THE PROTECTIVE ASSESSMENT INTO SUBSTANT IVE ASSESSMENT BY HOLDING THAT SHRI BANWARI LAL SHARMA ALONE WAS REPRESENTATIVE AS SESSEE U/S 163(1)(A) OF THE I.T. ACT, 1961 AND TAX IS PAYABLE BY SHRI BANWARI L AL SHARMA ONLY. 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD PLACED BEFORE US. THE FACTS OF THE CASE, IN BRIEF A RE THAT THE ASSESSEE, VIDE ORDER PASSED U/S 163 OF THE I.T. ACT, 1961 (THE ACT IN SHORT) HAS BEEN HELD AS A REPRESENTATIVE ASSESSEE, WITHIN THE MEANING OF SECTION 160 OF THE I.T. ACT, 1961, IN RESPECT OF ONE NRI LADY SMT. PAMELA COLLECO. THE ASSESSEE WAS APPOINTED AS THE P OWER OF ATTORNEY (POA) HOLDER BY SMT. PAMELA COLLECO IN RESPECT OF HER IMMOVABLE PRO PERTY SITUATED AT 55-A AND 55-B, AGRA ROAD, JAIPUR, IN TERMS OF THE SPECIFIC / SPEC IAL POWER OF ATTORNEY MADE AND EXECUTED ON 21.03.2005. ASSESSEE ON THE BASIS OF TH IS POWER OF ATTORNEY EXECUTED TWO SEPARATE SALE DEEDS ON 26.05.2007 FOR THE TRANSFER OF THESE IMMOVABLE PROPERTIES FOR A TOTAL CONSIDERATION OF RS. 3.00 CRORES WHICH WAS RE CEIVED BY HIM ON BEHALF OF THE OWNER SMT. PAMELA COLLECO. THE STAMP AUTHORITIES HAVE VAL UED THESE TRANSACTIONS AT RS. 9,50,67,760/- AS AGAINST ACTUAL VALUE OF TRANSACTIO NS OF RS. 3.00 CRORES SHOWN IN THE DEED. CASE OF THE ASSESSEE WAS RE-OPENED IN THE CAPACITY OF AN AGENT AND REPRESENTATIVE ASSESSEE FOR SMT. PAMELA COLLECO AND ASSESSMENT WA S COMPLETED U/S 143(3)/147 OF THE 4 ACT AT A TOTAL INCOME OF RS. 6,34,62,356/- AS LONG TERM CAPITAL GAINS (LTCG) ON PROTECTIVE BASIS. 2.4 AGGRIEVED, THE ASSESSEE WENT IN APPEAL AND THE LD. CIT(A) HAS HOLD THAT TH E ASSESSEE IS LIABLE FOR TAX IN THE CAPACITY OF REPR ESENTATIVE ASSESSEE (RA) FOR THE INCOME ARISING FROM THE SALE OF IMMOVABLE PROPERTY AS LTCG ON SUBSTANTIVE BASIS AND NOT ON PROTECTIVE BASIS. 2.5 NOW BOTH THE PARTIES ARE AGGRIEVED FROM THE ORD ER OF THE LD. CIT(A) AND HAVE FILED THEIR RESPECTIVE APPEALS BY RAISING THE GROUN DS AS STATED ABOVE. 2.6 THE GROUNDS NO. 1 AND 2 OF THE ASSESSEES APPEA L AND GROUNDS NO. 1 & 2 OF REVENUES APPEAL PERTAIN TO THE ISSUE OF ADDITION O F RS. 6,34,62,356/- MADE AS LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE BY TREATI NG THE ASSESSEE AS A REPRESENTATIVE ASSESSEE FOR SMT. PAMELA COLLECO, THE REAL AND ACTU AL OWNER OF THE PROPERTY ON SUBSTANTIVE BASIS. WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO. 890/JP/12 WE HAVE ALREADY HELD THAT SHRI BANWARI LAL SHARMA, THE ASSESSEE, AS THE AGENT U/S 163(1)(C) OF THE ACT AND A REPRESENTATIVE ASSESSEE OF SMT . PAMELA COLLECO, WITHIN THE MEANING OF SECTION 160 OF THE ACT. THUS, BY FOLLOWING THE R EASONS GIVEN THEREIN, WE FIND NO MERIT IN THE GROUNDS RAISED BY BOTH THE PARTIES. ACCORDIN GLY, THE GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL AND GROUND NOS. 1 AND 2 OF THE R EVENUES APPEA ARE DISMISSED. 3.1 THE GROUND NO. 3 OF ASSESSEES APPEAL IS REGARD ING THE ACTION OF THE AO IN CONSIDERING THE FAIR MARKET VALUE OF THE SALE CONSI DERATION AT RS. 9,50,67,760/- BEING THE VALUE ADOPTED BY THE STAMP AUTHORITIES AGAINST THE DECLARED SALES CONSIDERATION AT RS. 3.00 CRORES. 5 3.2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT ASSESSEE, IN THE CAPACITY OF ATTORNEY OF SMT. PAMELA COLLECO SOLD THE IMMOVABLE PROPERTY SI TUATED AT 55A AND 55B, AGRA ROAD, JAIPUR VIDE TWO SEPARATE SALE DEEDS FOR RS. 1.50 CR ORES, EACH. HOWEVER, THE STAMP AUTHORITY, FOR THE PURPOSES OF CHARGING THE STAMP DUTY, HAS VALUED THE SAME AT RS. 9,50,67,760/-. THE AO AFTER INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT HAS TREATED IT AS A FAIR MARKET VALUE OF THE TRANSACTION FOR TH E PURPOSE OF COMPUTING THE CAPITAL GAINS AND AFTER REDUCING THE INDEXED COST OF ACQUISITION HAS WORKED OUT THE LONG TERMS CAPITAL GAINS AT RS. 6,34,62,356/-. IT WAS STATED BY THE LD . AR THAT THE ASSESSEE HAS CHALLENGED THE VALUATION DONE BY THE STAMP AUTHORITY BEFORE THE CO MPETENT AUTHORITY AND THEREFORE, THE FAIR MARKET VALUE SHOULD HAVE BEEN DECIDED AFTER MA KING REFERENCE TO THE VALUATION OFFICER IN TERMS OF THE PROVISIONS OF SECTION 50C(2 )(A) OF THE ACT AND TO SUPPORT THIS VERSION, THE LD. AR HAS MADE WRITTEN SUBMISSION WHI CH IS BEING EXTRACTED IN TOTO AS UNDER :- IT IS FURTHER SUBMITTED THAT THE SUB REGISTRAR-VI JAIPUR HAS ESTIMATED THE VALUE AT RS. 9,50,67,760/- AS AGAINST THE ACTUAL SALES CONSIDERA TION OF RS. 3 CRORES IN RESPECT OF BOTH THE PROPERTIES SOLD BY THE ASSESSEE AS POWER OF ATT ORNEY HOLDER. ASSESSEE HAS CHALLENGED THE VALUATION ESTIMATED BY SUB REGISTRAR BEFORE THE COMPETENT AUTHORITIES AND THESE FACTS WERE BROUGHT TO THE NOTICE OF THE LD. AO AND THE CO PIES OF THE PETITIONS FILED BEFORE THE COMPETENT AUTHORITIES AS SUBMITTED BEFORE THE LD. A O ARE AT (APB 32-40) . THE LD. AO WITHOUT PROPERLY FOLLOWING THE PROVISION OF SECTION 50C OF THE INCOME TAX ACT, 1961 AND ALSO WITHOUT REFERRING THE VALUATION TO THE DISTRIC T VALUATION OFFICER HAS ADOPTED THE SALE VALUE OF THE PROPERTIES AT RS. 9,50,67,760/- INSTEA D OF ACTUAL SALE CONSIDERATION OF RS. 3,00,00,000/- TO COMPUTE THE LONG TERM CAPITAL GAIN . ATTENTION OF HONBLE BENCH IS INVITED TO THE PROVIS IONS OF SECTION 50C(2)(A) WHICH READS AS UNDER: 50C(2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB- SECTION (1), WHERE - (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUT HORITY UNDER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY AS ON THE DATE OF TRANSFER. (B) 6 THE ASSESSING OFFICER MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO A VALUATION OFFICER THE LD. AO HAD SIMPLY REFUSED TO ENTERTAIN THE OBJE CTIONS RAISED BY THE ASSESSEE AGAINST TAKING UP OF DLC RATES AND ARBITRARILY PROCEEDED TO COMPUTE THE AMOUNT OF LONG TERM CAPITAL GAIN ARISING FROM THE TRANSFER OF THE SUBJE CT PROPERTY ON THE BASIS OF DLC RATES TAKEN BY REGISTERING AUTHORITIES FOR STAMP PURPOSES . IT IS A WELL ESTABLISHED LAW THAT WHERE ASSESSEE OBJECTS TO THE TAKING UP OF DLC, THE AO IS REQUIRED AND AS A MATTER OF FACT, BOUND TO REFER THE MATTER TO VALUATION OFFICE R FOR PROPER VALUATION OF THE PROPERTY. IT HAS REMARKABLY BEEN NOTED IN THE CASE OF MEGHRAJ BAID V. ITO, (2008) 114 TTJ JODH 841 BY THE HONBLE ITAT, JODHPUR BENCH AS FOLLOWS: AFTER EXAMINING THE PROVISION EXTRACTED HEREIN AB OVE IN ITS LETTERS AND SPIRIT, WE ARE OF THE OPINION THAT INCASE THE AO DOES NOT A GREE WITH THE EXPLANATION OF THE ASSESSEE WITH REGARD TO LOWER CONSIDERATION DISCLOSED BY HIM THEN HE SHOULD REFER THE MATTER TO DVO FOR GETTING ITS MARK ET RATE ESTABLISHED AS ON DATE OF SALE TO ARRIVE AT THE CORRECT SALE CONSIDER ATION. IF THIS PROVISION IS READ IN THE SENSE THAT IF THE AO IS NOT SATISFIED WITH T HE EXPLANATION OF THE ASSESSEE THEN HE MAY OR MAY NOT SEND THE MATTER FOR VALU ATION TO THE DVO THEN IN THAT CASE THIS PROVISION WOULD BE RENDERED REDUNDAN T. THE WORD MAY USED IN THIS SUB-SECTION SIGNIFIES THAT IN CASE LD. AO IS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, HE SHOULD REFER THE MATTER TO DVO FOR MENTIONED PURPOSE. LD. AR HAS RELIED IN THE DECISIO N OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF ASHOK LEYLAND LTD. V. UNION OF INDIA AND ORS. (1997) 105 STC 152 (SC) WHEREIN, IT HAS BEEN HELD T HAT THE DEEMING PROVISIONS ARE REBUTTABLE ONE. WE HAVE EXAMINED THE ENTIRE FACTS OF THIS CASE IN THE LIGHT OF THE PROVISIONS AND PRECEDENTS RELIE D BEFORE US. IN OUR CONSIDERED OPINION THE BEFITTING REPLY OF ALL THE Q UERIES AROUSE IN OUR MINDS AS WELL AS RAISED BY THE PARTIES IS THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. AO WITH A DIRECTION THAT HE SHALL R EFER THIS MATTER OF VALUATION IN THE LIGHT OF SUB SECTION (2) OF SECTION 50C TO T HE DVO FOR DETERMINING THE CONSIDERATION OF THIS PLOT SOLD BY THE ASSESSEE UND ER SECTION 50C OF THE ACT. THE OTHER CONNECTED GROUNDS ARE ALSO RELATED TO THI S MAIN GROUND. THEREFORE, ENTIRE APPEAL IS RESTORED BACK TO THE FILE OF THE A O WITH THE DIRECTION THAT HE WOULD DO AS DIRECTED ABOVE AND ALSO GIVE OPPORTUNIT Y OF HEARING TO THE ASSESSEE AS PER LAW THE ABOVE LAID OBSERVATIONS OF THE HONBLE ITAT, JO DHPUR HAVE BEEN DULY FOLLOWED BY THE HONBLE ITAT, HYDERABAD IN SRI SRINIVASA PAPER & BOARD MILLS PVT. LTD. V. DCIT, ITA NO. 1131/HYD/2009. THE HONBLE TRIBUNAL IN THE SAME SET OF FACTS AND FOLLOWING THE OBSERVATIONS OF HONBLE ITAT, JODHPUR HAD SET ASIDE THE ASSESSMENT ORDER AND RESTORED BACK TO THE FILE OF AO FOR FRESH CONSI DERATION. THEREFORE, IN VIEW OF THE ABOVE OBSERVATIONS, IT IS APTLY CLEAR THAT THE ACT OF AO IN NOT REFERRING THE MATTER TO DVO WAS AN INCURABLE ILLEGA LITY EMBEDDED IN THE ASSESSMENT ORDER AND WHICH CANNOT BE DONE AWAY WITH AT THIS ST AGE AS IT IS GOING TO RENDER THE ENTIRE ASSESSMENT ORDER AND SUBSEQUENT APPELLANT PROCEEDIN GS INVALID. THEREFORE, IN THE INTERESTS 7 OF JUSTICE WHAT SEEMS TO BE THE MOST APPROPRIATE RE MEDY IS TO SET ASIDE THE MATTER TO THE FILE OF AO FOR DE NOVO CONSIDERATION. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED ALT ERNATIVELY THAT, IN THE PRESENT CASE, THE ASSESSEE CLAIMED BEFORE THE AO THAT THE VALUATION D ONE BY THE STAMP VALUE AUTHORITIES WAS ON HIGHER SIDE WHERE THE PROPERTY WAS PARTLY CO NSIDERED AS COMMERCIAL AND PARTLY AS SEMI-COMMERCIAL AS AGAINST THE ACTUAL CHARACTER OF THE PROPERTY BEING THE RESIDENTIAL, THEREFORE, IN SUCH A SITUATION A REFERENCE TO THE V ALUATION OFFICER HAS TO BE MADE TO FIND OUT THE REAL VALUE. FURTHER IN RESPECT OF ABOVE PRO PERTY, THE PHYSICAL POSSESSION WAS NOT HANDED OVER TO THE ASSESSEE FOR THE ENTIRE PROPERTY AS PART OF THE AREA IS OCCUPIED BY SOME PERSON ON RENTAL BASIS WHO HAS NOT VACATED THE PREM ISES WHICH FACT IS APPEARING IN THE REGISTERED SALE DEED ALSO, THUS VALUATION AS HAS BE EN DONE BY THE STAMP AUTHORITIES SHOULD BE REDUCED SUBSTANTIALLY. THE LD. AO HAS NO T BROUGHT ON RECORD ANY EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAS RECEIVED THAT SALE CONSIDERATION OVER OR ABOVE RS. 3.00 CRORES AS MENTIONED IN THE SALE DEED. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS: ABBAS I. RESAMWALA V. ITO ITAT A BENCH, MUMBAI BE FORE N.V. VASUDEVAN (JM) & R.K. PANDA (AM) ITA NO. 3093/MUM./ 2009 A.Y. 2006 -07. DECIDED ON 30.11.2009 S. 50CSUBSTITUTION OF SALES CONSIDERATION ON TRANS FER OF LAND AND BUILDING WITH THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITYASSE SSEE OBJECTING TO THE SUBSTITUTION OF SALES PRICEAO HAS NO DISCRETION AND SHOULD REFER T HE MATTER TO VALUATION OFFICER TO DETERMINE FAIR VALUE. 3.3 THE LD. DR ALSO SUPPORTED THE ARGUMENTS ADVANCE D BY THE AR OF THE ASSESSEE AND SUBMITTED THAT THE MATTER SHOULD HAVE BEEN REFERRED TO THE VALUATION OFFICER TO DETERMINE THE FAIR MARKET VALUE OF THE SUBJECT PROPERTY SINCE THE ASSESSEE HAS NOT ACCEPTED THE VALUE ADOPTED BY THE STAMP AUTHORITIES AND HAS CHALLENGED IT BEFORE THE COMPETENT AUTHORITY. 3.4 AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIO NS ON THIS ISSUE AND AFTER RELYING ON THE RELEVANT DECISIONS RELATING TO THE ISSUE, WE AR E OF THE CONSIDERED OPINION THAT THE ACTION OF THE AO IS NOT LEGAL AND FOR COMPUTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, HE SHOULD HAVE REFERRED TH E MATTER TO THE VALUATION OFFICER AS PROVIDED IN SECTION 50C(2)(A) OF THE ACT WHEN THE A SSESSEE HAS OBJECTED AND CLAIMED THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITIES EXCEEDED THE REAL TIME 8 FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. IT IS A WELL ESTABLISHED LAW THAT WHERE THE ASSESSEE OBJECTS TO THE VALUE ADOPTED OR ASSESSED BY STAMP AUTHORITIES FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE AO IS REQUIRED AND AS A MATTER OF LAW BOUND TO REFER THE MATTER TO VALUATIO N OFFICER FOR DETERMINATION OF FAIR MARKET VALUE OF SUCH PROPERTY AS ON THE DATE OF TRA NSFER. THE JODHPUR BENCH OF ITAT IN THE CASE OF MEGHRAJ BAID V. ITO, (2008) 114 TTJ JOD H 841, WHERE ONE OF US WAS CONSTITUTED IN THAT BENCH, HAS EXPRESSED SIMILAR VIEW. THUS, BY RESPECTFULLY FOLLOWING THE DECISIONS OF VARIOUS BENCHES OF ITAT, IN OUR CO NSIDERED OPINION THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECT ION THAT THEVALUATION ISSUE SHOULD BE REFERRED FOR VALUATION TO THE DEPARTMENTAL VALUER I N TERMS OF SUB-SECTION (2) OF SECTION 50C FOR THE DETERMINATION OF THE FAIR MARKET VALUE OF THIS PROPERTY SOLD. THEREFORE, THE MATTER IS SET ASIDE TO THE FILE OF THE AO WITH THE DIRECTIONS AS STATED ABOVE. ACCORDINGLY THE GROUND NO. 3 IS DISPOSED OFF FOR STATISTICAL PU RPOSES. ITA NO. 938/JP/12 [SHRI VIVEK GUPTA ] 4.1 THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD CIT(A)-1,JAIPUR DATED 09-10-2012 FOR THE A.Y. 2008-09 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:-. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN :- 1) HOLDING THAT SHRI BANWARI LAL SHARMA ONLY AND NO T SHRI VIVEK GUPTA, WAS AN AGENT OF SMT. PAMELA JEANS COLLECO FOR A.Y. 2008-09 IN RESPECT OF HER INCOME FROM CAPITAL GAIN ON SALES OF ONE PROPERTY BY SHRI BANWARI LAL SHARMA AS POWER OF ATTORNEY HOLDER OF SMT. PAMELA JEANS COLLECO, IG NORING THE FACT THAT UNREGISTERED POWER OF ATTORNEY WAS NEITHER SIGNED B Y SHRI BANWARI LAL SHARMA NOR BY THE WITNESS. 2) DELETING THE ADDITION OF LTCG AMOUNTING TO RS. 3 ,17,36,886/- MADE ON SUBSTANTIVE BASIS IN THE CAPACITY OF REPRESENTATIVE ASSESSEE BY HOLDING THAT SHRI 9 BANWARI LAL SHARMA ALONE WAS REPRESENTATIVE ASSESSE E U/S 163(1)(C) OF THE I.T. ACT, 1961 AND TAX IS PAYABLE BY SHRI BANWARI LAL SH ARMA ONLY. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS PUR CHASED A PLOT OF LAND SITUATED AT 55, AGRA ROAD, JAIPUR, FOR A TOTAL CONSIDERATION OF RS . 1,55,00,000/- FROM PAMELA COLLECO THROUGH HER ATTORNEY SHRI BANWARI LAL SHARMA. THE A SSESSEE HAS BEEN HELD AS AN AGENT OF SMT. PAMELA COLLECO U/S 163(1)(C) OF THE ACT IN RES PECT OF HER INCOME ARISING ON THE SALE OF THE PROPERTY IN A.Y. 2008-09, WHICH WAS PURCHAS ED BY THE ASSESSEE AND ASSESSED AT AN INCOME OF RS. 3,17,36,890/- AS AN INCOME FROM CAPIT AL GAIN U/S 144 / 147 AS A REPRESENTATIVE ASSESSEE U/S 160(1) OF THE ACT OF PA MELA COLLECO, ON SUBSTANTIVE BASIS. THE SELLER I.E. SMT. PAMELA COLLECO WAS REPRESENTED BY BANWARI LAL SHARMA WHO IS HOLDING POWER OF ATTORNEY EXECUTED IN HIS FAVOR BY SMT. PAMELA COLLECO IN RELATION TO THE PROPERTY TRANSFERRED BY SHRI BANWARI LAL SHARMA. SI NCE THE SELLER I.E. SMT. PAMELA COLLECO OR HER LEGALLY APPOINTED ATTORNEY SHRI BANW ARI LAL SHARMA HAD NOT PAID DUE TAXES ON THE INCOME FROM SALE OF THE PROPERTY PURCH ASED BY THE APPELLANT, THEREFORE, THE INCOME FROM THE CAPITAL GAIN WAS ASSESSED IN THE HA NDS OF THE ASSESSEE AS AGENT OF SMT. PAMELA COLLECO FOR A.Y. 2008-09. 4.3 AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE LD. CIT(A) WHO HAS ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE AND HAS HELD THAT THE ASSESSEE WAS NOT AN AGENT OF SMT. PAMELA COLLECO FOR A.Y. 2008-09 IN RESPECT OF HER I NCOME ON CAPITAL GAIN ON THE SALE OF ONE PROPERTY THROUGH SHRI BANWARI LAL SHARMA U/S 16 3(1) OF THE ACT AND FURTHER DELETED THE ADDITION MADE ON SUBSTANTIVE BASIS ON ACCOUNT O F LONG TERM CAPITAL GAIN IN THE HANDS OF THE APPELLANT. 10 4.4 AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE R EVENUE RAISED THE ABOVE INCORPORATED GROUNDS. 4.5 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HA VE FOUND THAT THE ASSESSEE HAS BEEN HELD AS AN AGENT OF SMT. PAMELA COLLECO, AS THE AS SESSEE PURCHASED A PROPERTY OWNED BY HER THROUGH SHRI BANWARI LAL SHARMA WHO WAS THE POW ER OF ATTORNEY HOLDER. WHILE DECIDING THE APPEAL IN ITA NO. 890/JP/12, WE HAVE A LREADY HELD THAT SHRI BANWARI LAL SHARMA IS THE AGENT AND IS A REPRESENTATIVE ASSESSE E U/S 163(1)(C) OF THE ACT FOR THE INCOME ARISING FROM CAPITAL GAIN ON THE TRANSFER O F HER IMMOVABLE PROPERTIES. FURTHER, IN THE CASE OF THIS APPELLANT, BEFORE US, IN APPEAL NO. 952/JP/12, WE HAVE ALREADY HELD THAT HE CANNOT BE ASSESSED AS AN AGENT OF PAMELA COLLECO . THE LD. CIT(A) ALSO AFTER APPRECIATING THESE FACTS HAS HELD THAT SHRI BANWAR I LAL SHARMA HAS A VALID POWER OF ATTORNEY FROM SMT. PAMELA COLLECO AND ON THE BASIS OF SUCH VALID POWER OF ATTORNEY HE HAS TRANSFERRED HER PROPERTY TO THE APPELLANT DURIN G THE A.Y. 2008-09. THE, VERBATIM, EXTRACT OF THE ORDER OF LD. CIT(A) IN PARA 4.4 IS B EING REPRODUCED AS UNDER: 4.4 THE AO HAS COMPLETED THE ASSESSMENT IN THE HAN DS OF THE ASSESSEE ON SUBSTANTIVE BASIS. THE AO OBSERVED ON PAGE 8 OF THE ASSESSMENT ORDER THAT THE POWER OF ATTORNEY BY MS. PAMELA JEAN KOLEKO IN FAVOUR OF SHR I BANWARI LAL SHARMA WAS NOT SIGNED BY SHRI BANWARI LAL SHARMA AND WAS ALSO NOT SIGNED BY ANY WITNESS. IT WAS FURTHER NOTED THAT IT WAS NOT REGISTERED. THERE FORE, HE HELD THAT THIS WAS INCOMPLETE AND COULD NOT BE ENTERTAINED AS A LEGAL POWER OF ATTORNEY. THE AR OF THE APPELLANT HAS NOT PRESSED THE GROUND WHILE FILING THE SUBMISSIONS. HOWEVER, HE HAS GIVEN A DETAILED NOTE WHILE FILING THE SUBMISSIONS FOR GROUNDS NO. 1 & 2 AS TO WHY THE POWER OF ATTORNEY SIGNED BY MS. PAMELA JEAN KOLEKO IN FAVOUR OF SHRI B.N. SHARMA IS ADMISSIBLE UNDER THE INDIA EVIDENCE ACT. THE FACTS ARE SUMMARIZED BELOW: (1) THAT MS. PAMELA JEAN KOLEKO NOTARIZED A POWER OF ATTORNEY IN U.K. IN FAVOUR OF SHRI B.N. SHARMA IN THE PRESENCE OF A WIT NESS WITH RESPECT TO THE PROPERTY UNDER CONSIDERATION. 11 (2) THIS PROPERTY WAS TRANSFERRED BY SHRI BANWARI LAL SHARMA VIDE SALE DEEDS REGISTERED ON 26.05.2007 FOR SALE TO SHRI ASHISH GU PTA FOR RS. 1,50,00,000/-. (3) THIS AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OF SHRI B.N. SHARMA BUT WAS SUBSEQUENTLY RE-ROUTED TO THE FAMILY MEMBERS AN D CONCERNS OF THE PURCHASERS. (4) IT IS TO BE NOTED THAT THE TRANSFER DEED WAS R EGISTERED IN THE OFFICE OF THE SUB-REGISTRAR-VI GOVT. OF RAJASTHAN. IN THIS REGARD PROVISIONS CONTAINED IN SECTION 85 OF INDIAN EVIDENCE ACT, 1872, IS RELEVANT WHICH CLARIFIES THE PRESUMPTION AS TO POWE R OF ATTORNEY. PROVISION OF SECTION 85 OF THE INDIAN EVIDENCE ACT READS AS UNDE R: 85. PRESUMPTION AS TO POWERS OF ATTORNEY: THE COURT SHALL PRESUME THAT EVERY DOCUMENT PURP ORTING TO BE A POWER OF ATTORNEY, AND TO HAVE BEEN EXECUTED BEFORE , AND AUTHENTICATED BY, A NOTARY PUBLIC, OR ANY COURT, JU DGE, MAGISTRATE, 1 (INDIA) CONSUL OR VICE-CONSUL, OR REPRESENTATIVE OF THE CENTRAL GOVERNMENT WAS TO EXECUTED AND AUTHENTICATED. FROM THE PLAIN READING OF SECTION 85 OF INDIAN EVI DENCE ACT, 1872, IT IS EVIDENT THAT EVERY DOCUMENT PURPORTING TO BE A POWER OF ATT ORNEY WHICH HAVE BEEN EXECUTED BEFORE AND AUTHENTICATED BY EVEN A NOTARY PUBLIC IS A VALID POWER OF ATTORNEY AND ACCEPTABLE AS EVIDENCE IN COURT OF LAW . THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THE HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF ABDUL JABBAR AND ORS. 2 ND ADDITIONAL DISTRICT JUDGE, REPORTED IN AIR 1980 ALL 369 WHEREIN VIDE ORDER DATED ON 24.04.1980 THE HONBLE HIGH COURT HAS HELD THAT SECTION 85 OF INDIA EVIDENCE ACT, 1872 SQ UARELY APPLIES TO DOCUMENTS AUTHENTICATED BY NOTARIES PUBLIC OF OTHER COUNTRIES . IN VIEW OF THE LEGAL POSITION AS DISCUSSED ABOVE, T HE POWER OF ATTORNEY SIGNED BY MS. PAMELS JEAN KOLEKO IN U.K. IN FAVOUR OF SHRI BA NWARI LAL SHARMA WITH RESPECT OF PROPERTY UNDER CONSIDERATION IS ADMISSIB LE WITHIN SECTION 85 OF INDIAN EVIDENCE ACT, 1872. SINCE IT WAS NOTARIZED IN U.K. WHERE MS. PAMELA JEAN KOLEKO WAS RESIDING IT HAS NOT BEEN SIGNED BY SHRI B.N. SHARMA BUT IT BEARS THE SIGNATURE OF A WITNESS. MOREOVER, SHRI B.N. SHARMA HAS EXERCISED ALL THE RIGHTS AS POWER OF ATTORNEY HOLDER WITH RESPECT TO THIS PROPE RTY. THE SECOND FACTOR WHICH COULD INVALIDATE THE TRANSA CTION IS THE FACT DISCOVERED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE PAYMENTS RECEIVED BY SHRI B.N. SHARMA ON TRANSFER OF THIS LAND TO SHR I VIVEK GUPTA AND SHRI ASHISH GUPTA WERE SUBSEQUENTLY RETURNED BY HIM TO THE FAMI LY MEMBERS AND OTHER CONCERNS OF THE PURCHASERS AS FOLLOWS: 1. SHRI ASHISH GUPTA (BUYER OF PLOT) RS. 61,01,804/ - 2. SHRI VIVEK GUPTA (BUYER OF PLOT) RS. 26,01,804/- 3. SMT. PRAMILA GUPTA (MOTHER OF ASHISH & VIVEK GUP TA) RS. 11,00,000/- 12 4. SHRI MAHENDRA KUMAR GUPTA RS. 20,00,000/- 5. M/S RAJASTHALI TEXTILE DEV. CORPN. RS. 12,00,000 /- 6. M/S ALL RAJASTHAN SHILP GRAM UDYOG RS. 14,00,000 /- 7. M/S ALL RAJASTHAN HANDBLOCK FACTORY RS. 7,00,000 /- IT HAS BEEN HELD IN THE CASE OF DOE VS. JAMES 16 E AST. 213 AT P. 214 UNDER THE TRANSFER OF PROPERTY ACT THAT MERE REFUNDING OF A P ART OF THE PURCHASE MONEY DOES NOT INVALIDATE THE SALE THOUGH IT IS SUGGESTIVE OF COLLUSION AND FRAUD. IT IS BY NO MEANS ESSENTIAL THAT ALL THE CONSIDERATION FOR WHIC H THE TRANSFER IS PURPORTED TO HAVE BEEN MADE MUST BE ESTABLISHED, FOR ALL THAT IS REQUIRED TO TAKE A TRANSFER OUT OF THE RULE IS THAT THE CONSIDERATION SHOULD BE VAL UABLE AND ADEQUATE. IF THIS IS ESTABLISHED IT IS SUFFICIENT, THOUGH THE CONSIDERAT ION PAID MAY NOT COINCIDE WITH THE CONSIDERATION STATED IN THE DEED. CF. YEDU VS. KESARBAI. 8 BOM. L.R. 110 AT P. 114: SAN DUN VS. MEIN GATE, 3 L.B.R. 188. RAJANI KU NWAR VS. GOUR KISHORI. I.L.R. 35 CAL. 1051 AT P. 1057: CHINA PITCHIAH VS. PEDAKOTAIAH. I.L.R. 36 MAD. 29: 10 M.L.T. 183: 11 I.C. 868. THUS SHRI B.N. SHARMA HAD A VALID POWER OF ATTORNE Y IN HIS FAVOUR FROM MS. PAMELA JEAN KOLEKO AND HE TRANSFERRED THIS PROPERTY TO SHRI ASHISH GUPTA AND SHRI VIVEK GUPTA DURING THIS A.Y. IN LIEU OF WHICH HE RECEIVED PAYMENT FROM THE PURCHASERS IN HIS BANK ACCOUNT. THIS MONEY WAS NEVE R FORWARDED TO MS. PAMELA JEAN KOLEKO. GIVEN THESE FACTS THE INCOME FROM THE CAPITAL GAINS WAS TAXED IN HIS HANDS IN PROTECTIVE CAPACITY IN THE ORDER PASSED BY THE AO U/S 147 / 144 DATED 29.12.2011. THE CIT(A) VIDE HER ORDER ITA NO. 467/11-12 DATED 04.10.2012 HAS CONFIRMED THE ADDITION OF CAPITAL GAINS ON THE ENTIRE TRANSAC TION OF RS. 6,34,62,360/- IN THE HANDS OF SHRI B.N. SHARMA IN SUBSTANTIVE CAPACITY. FURTHERMORE, THE CIT(A) VIDE HER ORDER ITA NO. 587 /11-12 DATED 05.10.2012 HAS NOT HELD TO SHRI VIVEK GUPTA TO BE THE REPRESENTATI VE ASSESSEE U/S 163 OF MS. PAMELA JEAN KOLEKO. THEREFORE, THE ADDITION OF RS. 3,17,36,886/- MADE IN THE HANDS OF THE APPELLANT IN SUBSTANTIVE CAPACITY AS R EPRESENTATIVE ASSESSEE U/S 163 OF MS. PAMELA JEAN KOLEKO IS DELETED. 4.6 WE HAVE CAREFULLY PERUSED THE MATERIAL AVAILAB LE ON RECORD AND THE ORDERS OF THE LOWER AUTHORITIES. WE FIND NO INFIRMITY IN THE ORDE R OF THE LD. CIT(A) WHO HAS RIGHTLY HELD THAT THE POWER OF ATTORNEY ISSUED IN FAVOUR O F SHRI BANWARI LAL SHARMA IS A VALID AND IS ENFORCEABLE IN THE EYES OF THE LAW BASED ON WHICH BANWARI LAL SHARMA HAS SOLD THE PROPERTY OF SMT. PAMELA COLLECO, TO THE APPELL ANT. UNDER THESE CIRCUMSTANCES, WE 13 UPHOLD THE ORDER OF LD. CIT(A). ACCORDINGLY THE GRO UNDS NOS. 1 & 2 OF THE REVENUES APPEAL STAND DISMISSED. ITA NO. 939/JP/12 [ASHISH GUPTA] 5.1 THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD CIT(A)-1,JAIPUR DATED 05-10-2012 FOR THE A.Y. 2008-09 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED.:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN :- 1) HOLDING THAT SHRI BANWARI LAL SHARMA ONLY AND N OT SHRI ASHISH GUPTA, WAS AN AGENT OF SMT. PAMELA JEANS COLLECO FOR A.Y. 2008-09 IN RESPECT OF HER INCOME FROM CAPITAL GAIN ON SALES OF ONE PROPERTY BY SHRI BANWARI LAL SHARMA AS POWER OF ATTORNEY HOLDER OF SMT. PAMELA JEANS COLLECO, IGNOR ING THE FACT THAT UNREGISTERED POWER OF ATTORNEY WAS NEITHER SIGNED BY SHRI BANWARI LAL SHARMA NOR BY THE WITNESS. 2) DELETING THE ADDITION OF LTCG AMOUNTING TO RS. 3,17,22,050/- MADE ON SUBSTANTIVE BASIS IN THE CAPACITY OF REPRESENTATIVE ASSESSEE BY HOLDING THAT SHRI BANWARI LAL SHARMA ALONE WAS REPRESENTATIVE ASSESSEE U/S 16 3(1)(C) OF THE I.T. ACT, 1961 AND TAX IS PAYABLE BY SHRI BANWARI LAL SHARMA ONLY. 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS PUR CHASED A PLOT OF LAND SITUATED AT 55, AGRA ROAD, JAIPUR FOR A TOTAL CONSIDERATION OF RS. 1,55,00,000/- FROM PAMELA COLLECO THROUGH HER ATTORNEY SHRI BANWARI LAL SHARMA. THE A SSESSEE WAS HELD AS AN AGENT OF SMT. PAMELA COLLECO U/S 163(1)(C) OF THE ACT IN RESPECT OF HER INCOME ON THE SALE OF THE PROPERTY IN A.Y. 2008-09 WHICH WAS PURCHASED BY THE ASSESSEE AND ASSESSED AT AN INCOME OF RS. 3,17,36,890/- AS INCOME FROM CAPITAL GAIN U/ S 144 / 147 AS REPRESENTATIVE ASSESSEE U/S 160(1) OF THE ACT OF PAMELA COLLECO ON SUBSTANT IVE BASIS. THE SELLER I.E. SMT. PAMELA COLLECO WAS REPRESENTED BY BANWARI LAL SHARMA WHO I S HOLDING POWER OF ATTORNEY EXECUTED IN HIS FAVOR BY SMT. PAMELA COLLECO IN REL ATION TO THE PROPERTY TRANSFERRED BY 14 SHRI BANWARI LAL SHARMA. SINCE THE SELLER I.E. SMT. PAMELA COLLECO OR HER LEGALLY APPOINTED ATTORNEY SHRI BANWARI LAL SHARMA HAD NOT PAID DUE TAXES ON THE INCOME FROM SALE OF THE PROPERTY PURCHASED BY THE APPELLANT, TH EREFORE, THE INCOME FROM THE CAPITAL GAIN WAS ASSESSED IN THE HANDS OF THE ASSESSEE AS A GENT OF SMT. PAMELA COLLECO FOR A.Y. 2008-09. WE HAVE ALREADY DECIDED THE SIMILAR ISSUE IN THE CASE OF VIVEK GUPTA IN ITA NO. 938/JP/12 (SUPRA) WHERE WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN DELETING THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE MAD E BY HOLDING HIM AS AGENT U/S 163(1) OF THE ACT OF SMT. PAMELA COLLECO IN RESPECT OF HER INCOME FROM THE CAPITAL GAIN ARISING ON THE SALE OF IMMOVABLE PROPERTY. THUS FOLLOWING T HE SAME REASONS, THE GROUNDS NO. 1 & 2 OF THE PRESENT APPEAL ARE DISMISSED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 889/JP/12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEALS OF THE DEPARTM ENT IN ITA NOS.951/JP/12, 938/JP/12 AND 939/JP/12 ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-0 3-2014. SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER *MISHRA COPY FORWARDED TO :- 1. SHRI BANWARI LAL SHARMA, JAIPUR 2. SHRI VIVEK GUPTA, JAIPUR 3. SHRI ASHISH GUPTA, JAIPUR 4. THE ITO, WARD 2(1), JAIPUR 5. THE LD.CIT(A) BY ORDER 6. THE LD CIT 7. THE D/R 8. GUARD FILE (ITA NO889/JP/2012) AR ITAT, JAIPUR 15 16