Smt. Manju Soni, Ballia V. ITO, Ward - 2(4), Ballia

ITA 9/VNS/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2100 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 12-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Assessment record; Set aside
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT ‘SMC’ BENCH, VARANASI BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA No.09/VNS/2020 Assessment Year: 2015-16 Smt. Manju Soni, Mohalla Arya Samaj Road, Ballia-277001 PAN-BJLPS2336A v. Income Tax Officer, Ward-2(4), Ballia (Appellant) (Respondent) Appellant by: Sh. Praveen Godbole, C.A. Respondent by: Sh. A.K. Singh, Sr. D.R. Date of hearing: 06.07.2022 Date of pronouncement: 28.07.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 24.10.2019 of CIT(A) for the assessment year 2015-16. The assessee has filed following revised grounds:- “1. That in any view of the matter assessment framed u/s 143(3) vide order dated 22.12.2017 on income of Rs. 29,56,670/- is bad both on the facts and in law. 2. That in any view of the matter the addition of Rs. 26,90,000/- on account of long term capital gain as made by the Assessing Officer and his action as confirmed by CIT(A) is highly unjustified. 3. That, in any view of the matter the assessing officer was wrong in invoking provision of section 50C as per stamp value when the value of land sold was very negligible and it was not correct on the part of stamp authority /valuation authority to fix two rates for same piece of land on same date hence The value as adopted by two lower authorities are totally incorrect baseless and uncalled for. 4. That in any view of the matter the assessing officer has not considered the valuation report submitted by the assessee nor referred the matter to valuation officer (D.V.O.) as per section 50C(2)of the Act to ascertain correct valuation of said property hence stamp value as adopted by assessing officer is uncalled for. ITA No.09/VNS/2020 Smt. Manju Soni 2 5. That in any view of the matter both the two lower authorities failed to appreciate the facts that actual sale consideration was only Rs.2,00,000/- which was received through banking channel and there was no evidence to show that any amount received by the assessee over and above the actual sale consideration hence provision of section 50C as applied without referring the matter to D.V.O. is not correct as such the assessee was debarred from justice.” 2. The assessee is an individual and filed her return of income on 27.3.2017 declaring total income of Rs. 3,51,670/-. The case was selected for scrutiny to examine the capital gain / loss on sale of property. The Assessing Officer noted that the assessee has shown a short term capital gain of Rs. 85,000/- from the sale of land for a consideration of Rs. 2,00,000/- which was purchased at a cost of Rs. 1,15,000/-. On perusal of the sale deed, the Assessing Officer noted that the stamp duty value of the land is Rs. 28,05,000/- whereas the assessee has shown the sale consideration of Rs. 2,00,000/-. The Assessing Officer accordingly, proposed to consider the full value consideration as per the provision of section 50C of the Income Tax Act by adopting the Stamp Duty Valuation. The assessee submitted that the price of the land disclosed by the assessee is the actual prevailing market price and further submitted that there was a dispute over the said land between the assessee and Devendra Nath Mishra which is pending before the Hon'ble High Court as well as before District Judge, Ballia. The Assessing Officer did not accept the reply of the assessee and made the addition under section 50C of the Income Tax Act to the short term capital gain by adopting full value consideration at Rs. 28,05,000/-. The assessee challenged the action of the Assessing Officer before the CIT(A) but could not succeed. 3. Before the Tribunal, the learned AR of the assessee has submitted that the assessee purchased the land at mauja Newari Ballia measuring 0.210 hectare (52 decimal) or about 17 Kattha for a consideration of Rs. 16,00,000/- on 27.02.2015. Out of the said land measuring 0.210 hectare, the assessee sold only 0.025 hectare ITA No.09/VNS/2020 Smt. Manju Soni 3 or (6.14 decimal) or about 2 Kattha for a consideration of Rs. 2,00,000/- on 24 th March, 2015 and thereby disclosed the short term capital gain of Rs. 85,000/-. 4. He has further contended that during the course of assessment proceedings, the assessee has objected to adoption of Stamp Duty Valuation as full value consideration by giving the reasons that the land was sold within one month and at the time of purchase, the Stamp Duty Valuation was Rs. 16,88,000/- which is not much higher than as the purchase consideration shown in the deed which is less than the sale consideration of the part of the land sold. The learned AR has thus submitted that once the assessee has raised the objection against the adoption of Stamp Duty Valuation as full value consideration the Assessing Officer as well as CIT(A) was bound to refer the valuation of the property to the DVO as per the provisions of section 50C(2) of the Act. The assessee purchased the land for a consideration of Rs. 16,00,000/- and only 10% was sold for a consideration of Rs. 2,00,000/- which is more than the proportionate purchase consideration as well as Stamp Duty Valuation at the time of purchase. He has also referred to the valuation report of the registered valuer and submitted that the valuation of property in question is determined at Rs. 2,61,000/-. Thus, the addition made by the Assessing Officer and confirmed by the CIT(A) is unjustified when the objection of the assessee was not taken into consideration and the fair market value of the property in question was not determined by the DVO. In support of his contention, he has relied upon the following decisions:- i. Raj Kumari Agarwal vs. DCIT, Circle-2, Agra ii. Vijay Kumar Patni vs. Income Tax Officer 5. On the other hand, the learned DR has submitted that as the assessee has not made any request before the Assessing Officer for referring the valuation to the DVO. The assessee has not disputed the Stamp Duty Valuation determined by the authority in the registration of the sale deed. Therefore, the Assessing Officer was justified in adopting the Stamp Duty Valuation as full value consideration as ITA No.09/VNS/2020 Smt. Manju Soni 4 per section 50C of the Income Tax Act. He has relied upon the orders of the authorities below. 6. I have considered the rival submissions as well as relevant material on record. The assessee purchased the land in question situated at mauja Newari Ballia measuring 52 decimal or 0.21 hectare, vide purchase deed dated 27.2.2015 for a total consideration of Rs. 16,00,000/-. Thereafter, the assessee sold a part of the said land measuring 0.025 hectare or about 2 Kattha on 24 th March, 2015 for a consideration of Rs. 2,00,000/-. The transaction of purchase and sale of land happened within a period of one month. The Assessing Officer has made an addition under section 50C of the Act to the short term capital gain by adopting the Stamp Duty Valuation of Rs. 28,05,000/- as full value consideration as against the sale consideration of Rs. 2,00,000/- shown by the assessee. Consequently, an addition of Rs. 26,90,000/- has been made by the Assessing Officer to the total income of the assessee. It is evident from the assessment record that the assessee has submitted its reply explaining the reasons for the sale consideration of Rs. 2,00,000/- as fair market value of the land in question and also contended that the entire piece of land was valued by the Stamp Duty at Rs. 16,88,000/- at the time of purchase on 27 th February, 2015 and within one month only 10% of the said land was valued at the time of sale on 24 th March, 2015 at Rs. 28,05,000/- which itself shows that the Stamp Duty Valuation is not reasonable and abnormally high. It is a matter of fact that the Stamp Duty authority has valued the property in question at Rs. 16,88,000/- on 27 th February, 2015 and then within a period of one month, 10% of the said land was valued by the Stamp Duty authority at Rs. 28,05,000/- which shows that there is a steep hike in the valuation for the purpose of Stamp Duty and that too within a period of one month. Thus, such an enhancement / increase in the Stamp Duty Valuation is possible only when some abnormal or inordinary event happened. All these facts explained by the assessee before the Assessing Officer which lead to the fair inference that the assessee has seriously ITA No.09/VNS/2020 Smt. Manju Soni 5 objected to the adoption of Stamp Duty Valuation as full value consideration in terms of section 50C(2) of the Income Tax Act and consequently the Assessing Officer is duty bound to refer the valuation of the property in question to the DVO for determination of fair market value of the property. Only after getting the fair market value determined by the DVO, the Assessing Officer ought to have computed the capital gain and consequential addition, if any. The Agra Bench of this Tribunal in the case of Raj Kumari Agarwal vs. DCIT (supra) has considered this issue in para 6 to 8 as under:- “6. We find that here is a case in which the assessee has specifically objected to the adoption of stamp duty valuation rate. The mere fact that the appellant has not challenged the stamp duty valuation cannot be put against the assessee. The authority for the this proposition is contained in, Hon’ble jurisdictional High Court’s judgment, in the case of CIT Vs Chandra Narain Chaudhuri ([2013] 38 taxmann.com 275 (Allahabad), wherein Their Lordships have observed that, “The question as to whether the assessee filed any objections before the Stamp Valuation Authority to dispute the valuation, or filed appeal or revision or made reference before any authority, court or the High Court under sub section (2) (b) of Section 50 C of the Act is not of any relevance in this case, as the AO himself observed that the assessee did not dispute the stamp valuation before the Stamp Valuation Authority. There may be several reasons for the purchaser not to file such objection. A purchaser may not go into litigation, and pay stamp duty, as fixed by the Stamp Valuation Authority, which may be over and above the fair market value of the property, as on the date of transfer, though the amount so determined has not been actually received by owner of the property”. The position as to whether reference should be made to the DVO, even when there is no specific plea to that effect by the assessee, is now well set out in Hon’ble Calcutta High Court’s judgment in the case of Sunil Kumar Agarwal CIT (GA No 3686/2013 in ITAT No 221/ 2013; judgment dated 13th March 2014), wherein Their Lordships have, inter alia, observed as follows:- “ ....we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made 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/taxpayer. 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 properly instructed in law, the assessing officer, discharging a ITA No.09/VNS/2020 Smt. Manju Soni 6 quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.” 7. As there is no binding judicial precedent contrary to what has been held by Hon’ble Calcutta High Court, as above, the esteemed views of Their Lordships, even though from a non jurisdictional High Court, bind us as well. 8. In the light of the above legal position, the plea of the assessee, as set out in the ground of appeal, is indeed well taken. The prevailing legal position is now like this. Once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities, it is incumbent upon the Assessing Officer to refer the valuation of said land or building to the departmental valuation officer. In the present case, the Assessing Officer has not done so. In view of this factual position, and in the light of the discussions above, we deem it fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo after making a reference to the DVO, and completing the assessment on the basis of the valuation so received from the DVO. While so deciding the matter afresh, the Assessing Officer will decide the matter in accordance with the law, by way of a speaking order and after giving a reasonable opportunity of hearing to the assessee. We direct so.” 7. Similar view has been taken by the Tribunal in a series of decisions including the decisions relied upon by the learned AR. Accordingly, in the facts and circumstances of the case, the impugned order is set aside and the matter is remanded to the record of the Assessing Officer to redo computation of the capital gain after referring valuation of the property to the DVO for determination of the fair market value, as per section 50C(2) of the Income Tax Act. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 28.07.2022 at Allahabad, U.P. in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 28/07/2022 Varanasi/Allahabad Sh ITA No.09/VNS/2020 Smt. Manju Soni 7 Copy forwarded to: 1. Appellant-Smt. Manju Soni 2. Respondent-ITO, Ward-2(4), Ballia 3. CIT(A),Varanasi 4. CIT 5. DR By order Sr. P.S.