Angana Dutta, Kolkata V. ITO, WD-11(4), KOLKATA, Kolkata

ITA 913/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9451 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 16-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2016
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: H R SINGH
• Assessee Lawyers: V N DATTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 142(1); 143(2)

Judgement Text

ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 1 IN THE INCOME TAX APPELLATE TRIBUNAL,DBENCH, KOLKATA BEFORE: SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 913/KOL/2016 A.Y: 2010-11 SMT. ANGANA DUTTA VS. INCOME TAX OFFICER PAN: ADRPD9989E WARD 11(4),KOLKATA (APPELLANT) (RESPONDENT) APPEARANCES BY : SHRI V.N. DATTA, ADVOCATE, LD.AR FOR THE ASSESS EE SHRI H.R SINGH, ADDL.CIT, SR. D.R FOR THE REVEN UE DATE OF HEARING : 19-01-2017 DATE OF PRONOUNCEMENT : 08-02-2017 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS),7, KOLK ATA DATED 22-02-2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY EFFECTIVE ISSUE IS TO BE DECIDED IN THI S APPEAL AS TO WHETHER THE CIT-A JUSTIFIED IN CONFIRMING THE AD DITION MADE BY THE AO ON ACCOUNT OF DETERMINATION OF CAPITAL GA IN OF RS.5,17,400/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND DERIVES HER INCOME FROM PROFESSION, CAPITAL GAIN AND OTHER SOURCES. THE ASSESSEE FILED HER RETURN O F INCOME ON ONLINE DECLARING TOTAL INCOME OF RS.42,270/- FOR TH E A.Y UNDER ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 2 CONSIDERATION ON 26-04-2011. UNDER SCRUTINY NOTICE S U/S. 143(2) & 142(1) OF THE ACT WERE ISSUED. AGAINST WHI CH THE ASSESSEE FILED REQUISITE DETAILS AS PER REQUISITION S OF THE AO. 4. DURING THE SCRUTINY PROCEEDINGS THE AO FOUND THA T THE ASSESSEE SOLD A PROPERTY UNDER JURISDICTION OF ADDL . DISTRICT SUB REGISTRAR, ASANSOL AND SUCH PROPERTY WAS VALUED FOR THE PURPOSE OF STAMP DUTY AT RS.58,89,657/-. FROM THE D ETAILS AND INFORMATION OF AIR, THE AO WAS OF THE VIEW THAT THE ASSESSEE AND ONE OF THE DIRECTORS OF M/S. CEASCON ENGINEERIN G SERVICES PVT. LTD EXECUTED A JOINT VENTURE AGREEMENT DATED 1 1-04-2002 WITH THE LAND LORDS OF THE PREMISES AT RUPNARAYANPU R, ASANSOL FOR DEVELOPING G+3 BUILDING. THE RATIO OF SHARE BET WEEN THE LAND LORD AND THE SAID COMPANY WAS 27.5% AND 72.5% AS PER SAID JOINT VENTURE AGREEMENT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD THE AFORESAID INCO MPLETE PROPERTY TO SRI HARA PRASAD DAS AND SRI SHYAMAL MON DAL FOR A CONSIDERATION OF RS.25,75,000/- AND THE ADDL. DISTR ICT SUB- REGISTRAR, ASANSOL VALUED THE SUCH PROPERTY AT RS.5 8,89,657/- FOR THE PURPOSE OF STAMP DUTY. AS PER SECTION 50C(1 ) OF THE ACT, A SHOW CAUSE NOTICE WAS ISSUED BY THE AO TO AS SESSEE EXPLAINING THAT WHY PROFIT ON TRANSFER OF CAPITAL ASSETS SHOULD NOT BE TREATED AS CAPITAL GAIN AS PER PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSEE COULD NOT FILE ANY EXPLANA TION, BUT AS PER THE AO THE LD.AR OF THE ASSESSEE ACCEPTED THE S AME AS SHOW CAUSED BY THE AO. ACCORDINGLY, THE AO DETERMIN ED THE TOTAL CAPITAL GAIN AT RS.5,17,400/- BY FOLLOWING TH E FORMULA OF COST OF INFLATION AND THEN DEDUCTING THE SALE CONSO LIDATION @ ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 3 72.5% OF RS.58,89,657/, THEREBY ADDED THE AMOUNT OF RS.5,17,400/-BEING CAPITAL GAIN. 5. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT THE AO HAD TAKEN THE VALUATION OF SUCH PROPERTY AT RS.58,89,65 7/- AS VALUED BY THE STAMP VALUATION AUTHORITY. BEFORE HIM THE ASSESSEE ALSO AGITATED THAT THE AO DID NOT FOLLOW C ONSISTENT AND SYSTEMATIC WAY IN TAKING THE VALUE FOR THE SALE AND PURCHASE OF THE ASSESSEE. THE AO DID NOT ADOPT THE UNIFORM PROC EDURE IN DETERMINING THE LONG TERM CAPITAL GAIN AND ALSO DID NOT FOLLOW THE PROCEDURE AS CONTEMPLATED U/S. 50C OF THE ACT B Y REFERRING THE MATTER TO THE DVO FOR THE VALUATION OF SUCH PRO PERTY FOR THE PERIOD I.E. AT THE TIME OF ACQUISITION AND DISPOSAL THE PROPERTY BY WAY OF SALE.. THE AO DETERMINED THE CAPITAL GAIN ON HIS OWN ACCORD, WHICH IS AN ARBITRARY AND WITHOUT APPLICATI ON OF MIND. THE SAME IS LIABLE TO BE QUASHED. 6. THE CIT-A WAS OF THE OPINION THAT THE ASSESSEE D ID NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE COMPANY WHO H AD TRANSFERRED THE PROPERTY TO ASSESSEE ON VALUATION O F RS.15,02,600/- ON THE DATE OF PURCHASE I.E. 18-02-2 005. THE ASSESSEE HAS ALSO NEVER DISPUTED THE STAMP DUTY VAL UE OF THE PROPERTY. THE ASSESSEE ACCEPTED THE VALUATION OF TH E PROPERTY FOR THE PURPOSE OF LONG TERM CAPITAL GAINS U/S. 50C OF THE ACT AND THE AO HAS RIGHTLY ASSESSED THE CAPITAL GAIN A S PER SECTION 50C OF THE ACT IN ADOPTING THE STAMP DUTY VALUE AND CONFIRMED THE VALUATION OF LONG TERM CAPITAL GAIN AT RS.5,17, 400/- BY THE AO. RELEVANT OBSERVATION OF THE CIT-A IN DOING SO I S REPRODUCED HEREIN BELOW:- ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 4 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APP ELLANT AND THE ASSESSMENT ORDER. AS PER THE DEED OF INDENTURE DT. 18.02.2005 THE COMPANY M/S CEASCON ENGINEERING SERVICES PVT. LTD. REGISTER ED PART OF THE FLATS OF THE AFORESAID PREMISES IN THE NAME OF SRI JAGANATH DATT A, SMT. ANGANA DATTA AND SMT. RINA CHAKRABORTY AT A CONSIDERATION OF RS. 4,2 7,200/- RS. 1,00,000/- AND RS. 1,30,560/- RESPECTIVELY. DURING THE FY 2009-10 THE AFORESAID INCOMPLETE PROPERTY WAS SOLD TO SRI HARA PRASAD DAS AND SRI SH YAMAL MONDAL AT A CONSIDERATION OF RS.11,00,000/-ONLY. THE ADDL. DIST RICT SUB-REGISTRAR, ASANSOL VALUED THE SAID PROPERTY AT RS.58,89,657/- FOR THE PURPOSE OF STAMP DUTY. THE APPELLANT HAS NOT DISPUTED THE FACT THAT THE PROPER TY WAS VALUED AT RS.58,89,657/- AS PER SECTION 50C OF THE IT ACT. TH E APPELLANT'S ONLY CONTENTION WAS TO ADOPT THE STAMP DUTY VALUE FOR PU RCHASE AND SALE OF PROPERTY FOR THE PURPOSE OF LONG TERM CAPITAL GAIN. AS PER THE APPELLANT'S OWN ADMISSION THE STAMP DUTY VALUE OF THE PROPERTY AT T HE TIME OF PURCHASE WAS RS.50,83,850/- AND AT THE TIME OF SALE WAS OF RS.58 ,89,657/-. FROM THE ABOVE IT IS SEEN THAT THE APPELLANT HAS REGISTERED THE PR OPERTY ONLY WITH AN INTENTION TO EVADE THE INCOME TAX. THOUGH THE APPELLANT'S SHA RE OF PROPERTY WAS VALUED AT RS.15,02,600/- ON THE DATE OF PURCHASE I.E 18.02 .2005 SHE GOT IT REGISTERED ONLY FOR RS.1,00,000/- AT NOMINAL VALUE IN SPITE OF THE FACT THAT SHE WAS A DIRECTOR OF THE COMPANY, WHICH HAD TRANSFERRED THE PROPERTY TO THE APPELLANT TO A LESSER VALUE WITH AN INTENTION TO EVADE THE TA X IN THE HANDS OF THE COMPANY. THE APPELLANT HAS NOT PRODUCED ANY EVIDENC E TO SHOW THAT THE COMPANY HAS ADMITTED THE SALE CONSIDERATION AT RS.1 5,02,600/- TOWARDS THE SHARE OF THE APPELLANT. SIMILARLY, THE APPELLANT AL SO DID NOT FURNISH ANY EVIDENCE HAVING ADMITTED THE DIVIDEND INCOME AS PER SECTION 2(22)( E) OF IT. ACT. THE APPELLANT HAS NEVER DISPUTED THE STAMP DUT Y VALUE OF THE PROPERTY. IN FACT THE APPELLANT'S A/R HAS ACCEPTED THE VALUATION OF PROPERTY AS PER SECTION 50C FOR THE PURPOSE OF LONG TERM CAPITAL GAINS. THE REFORE, THE AO HAS RIGHTLY ASSESSED THE CAPITAL GAIN AS PER SECTION 50C OF IT ACT ADOPTING THE STAMP DUTY VALUE. THE TOTAL CONSIDERATION OF THE PROPERTY WAS OF RS.11,00,000/- AND STAMP DUTY VALUE WAS OF RS.58,89,657/- RELATING TO T E THREE CO-OWNERS SMT. ANGANA DUTTA, SMT. RINA CHAKRABORTY AND SHRI JAGANN ATH DUTTA. THE APPELLANT'S SHARE OF 15.20% OF CAPITAL GAIN WORKED OUT TO RS.5,17,400/- WHICH WAS ASSESSED BY THE AO. THE ADDITION MADE BY THE AO IS CONFIRMED. 7. BEFORE US THE LD.AR OF THE ASSESSEE HAS REITERAT ED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT-A. FURTHER, HE SUBMITS THAT OBSERVATION OF THE AO IS, WRONG IN FIN DING THE PROVISIONS AS CONTEMPLATED U/S. 50C OF THE ACT IS N OT APPLICABLE TO THE PRESENT ISSUE. IN SUPPORT OF HIS SUBMISSIONS /CONTENTIONS THE LD.AR OF THE ASSESSEE HAS RELIED ON THE FOLLOWI NG DECISIONS:- A) SUNIL KUMAR AGARWL VS. CIT REPORTED IN 2015 327 ITR 83(CAL), WHEREIN HE ARGUED THAT THE AO HAS DUTY TO REFER THE MATTER TO THE DVO FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY B) INDORE MALWA UNITED MILLS LTD VS. STATE OF M P & ORS REPORTED IN 1966 60 ITR 41(SC) AND ARGUED THAT THE DIRECTION MAY BE GIVEN TO AO TO CONSIDER THE CASE AFRESH IN PURSUANCE OF PROVISIONS OF SECTI ON 50C OF THE ACT 8. IN REPLY, THE LD.DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 5 9. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO ADOPTED THE METHOD O F TAKING THE SAME VALUE IN RESPECT OF SALE AND PURCHASE CONS IDERATION OF THE PROPERTY AS ADOPTED BY THE STAMP VALUATION AUTH ORITY. THEREFORE, THERE WAS NO UNIFORMITY IN THE PROCEDURE AS ADOPTED BY THE AO IN DETERMINING THE LONG TERM CAPITAL GAIN . IT IS ALSO OBSERVED FROM THE IMPUGNED ORDER OF THE CIT-A THAT THE ASSESSEE MADE THE SUBMISSIONS BEFORE HIM THAT THE A O HAS NOT FOLLOWED THE PROCEDURE AS CONTEMPLATED U/S. 50C OF THE ACT IN REFERRING THE ISSUE TO THE DVO. IN OUR OPINION THAT THE CIT-A DID NOT CONSIDER THE SAME. WE FIND THAT IN THE CASE OF SUNIL KUMAR OF THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT AO HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREAT MENT GIVING HIM AN OPTION TO FOLLOW THE PROCEDURE PROVIDED BY L AW. RELEVANT FINING AT PARA 9 IS REPRODUCED HEREIN BELOW FOR BET TER UNDERSTANDING:- 9. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION SAC, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DI D 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 ST AMP DUTY. THE LEGISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIV E A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHIN ERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THER EOF 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-JUD ICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREAT MENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. 10. FOR THE AFORESAID REASONS, THE ORDER UNDER CHAL LENGE IS SET ASIDE. 10. IN THE CASE OF INDORE MALWA UNITED MILLS LTD, S UPRA THE HONBLE SUPREME COURT WAS PLEASED TO OBSERVE THAT T HE TRIBUNAL BEING FACT FINING AUTHORITY, DUTY WAS THER E TO CONSIDER THE ARGUMENTS AS ADVANCED AND EXPLANATION GIVEN BY THE PARTIES, AND COME TO THEIR OWN CONCLUSION. THE HON BLE COURT HAS REMANDED THE ISSUE TO THE ASSESSING OFFICER TO CONSIDER THE ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 6 SAME AFRESH ENTIRE MATERIAL. RELEVANT FINDING OF TH E HONBLE SUPREME COURT IS REPRODUCED HEREIN BELOW:- IN THE ABSENCE OF ANY SUCH FINDING, IT WAS NOT OP EN TO THEM TO PICK AND CHOOSE SOME OF THE REGISTERS WHICH WERE MORE FAVOUR ABLE TO THE REVENUE. IN CHOOSING THE SALE CONTRACT REGISTER, WHERE ONLY NOM INAL WEIGHT WAS GIVEN, AND IGNORING THE ACTUALS REGISTER, THEY HAD ACCEPTED NO TIONAL FIGURES IN PREFERENCE TO THE ACTUALS WITHOUT HOLDING THAT THE ACTUALS WER E NOT TRUE FIGURES. IN ACCEPTING THE FIGURES IN THE DAILY YARN PRODUCTION REGISTER THEY HAD NOT CONSIDERED THE REASONS GIVEN BY THE ASSESSEE WHY IN FLATED FIGURES WERE SHOWN THEREIN. THEY COULD ACCEPT THE ASSESSEE'S EXPLANATI ONS OR REJECT THEM OR THEY COULD CHECK THE ENTRIES THEREIN WITH REFERENCE TO T HE OTHER REGISTERS. BUT THEY HAD DONE NONE OF THESE THINGS. THEY HAD ALSO NOT CO NSIDERED THE EXPLANATION OFFERED BY THE ASSESSEE WHY THE WEIGHTS IN THE SALE CONTRACT REGISTER WOULD NECESSARILY BE LESS THAN THE WEIGHTS GIVEN IN THE A CTUAL CLOTH PRODUCTION REGISTER. BEING TRIBUNALS OF FACT, IT WAS THEIR DUT Y TO CONSIDER ALL THE ACCOUNTS, HAVING REGARD TO THE ARGUMENTS ADVANCED AND THE EXP LANATIONS GIVEN BY THE PARTIES, AND COME TO THEIR OWN CONCLUSION. BUT AS T HEY HAD NOT DONE SO, WE THINK THAT THIS IS A FIT CASE TO GIVE THEM ANOTHER OPPORTUNITY TO DO SO. THE HIGH COURT REMANDED THE MATTER TO THE ASSESSING OFFICER AND DIRECTED HIM TO GIVE OPPORTUNITY TO THE APPELLANT-COMPANY TO PRODUCE MAT ERIALS WITH REFERENCE TO THE THREE POINTS MENTIONED IN ITS JUDGMENT. IN THE AFORESAID CIRCUMSTANCES, WE THINK THAT THE SCOPE OF THE ENQUIRY BEFORE THE ASSE SSING OFFICER SHOULD NOT BE LIMITED IN THE MANNER SUGGESTED BY THE HIGH COURT. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER AFRESH THE ENTIRE MATERIAL THA T HAS ALREADY BEEN PLACED BEFORE HIM, AND SUCH OTHER MATERIAL, SUCH AS REGIST ERS WHICH HAVE BEEN MAINTAINED BUT ARE ADMITTEDLY NOT PRODUCED, AND OTH ER RELEVANT EVIDENCE AS MAY BE BROUGHT BEFORE HIM, AND COME TO A CONCLUSION IN REGARD TO THE QUESTION OF UNACCOUNTED YARN IN THE LIGHT OF THE DIRECTIONS GIVEN BY THIS COURT AND THOSE GIVEN BY THE HIGH COURT IN OTHER MATTERS. THE ASSES SING OFFICER SHALL NOT IN ANY CASE INCREASE THE TAX LIABILITY ON THIS POINT OVER AND ABOVE THAT HE HAS INITIALLY ASSESSED. 11. IN VIEW OF ABOVE OBSERVATIONS OF THE HONBLE CA LCUTTA HIGH COURT AND HONBLE SUPREME COURT THAT THE ASSESSEE M ADE THE SUBMISSIONS BEFORE THE CIT-A TO REFER THE MATTER TO DVO, BUT NO SUCH STEPS HAVE BEEN TAKEN EITHER BY THE AO/CIT- A. THE AO ALSO DID NOT FOLLOW THE PROCEDURE AS CONTEMPLATED I N SECTION 50C OF THE ACT. WE ALSO FIND THAT THE HONBLE HIGH COURT HAS REMANDED THE ISSUE TO THE AO WITH THE DIRECTION THA T AO SHALL REFER THE MATTER TO THE DVO IN ACCORDANCE WITH LAW. THEREFORE, WE FIND THAT THE RATIO OF JUDGMENT OF THE HONBLE C ALCUTTA HIGH COURT IS SQUARELY APPLICABLE TO THE PRESENT CASE AL SO. RESPECTFULLY FOLLOWING THE ABOVE, WE DEEM IT FIT AN D PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO TO DO SO AFR ESH IN ACCORDANCE WITH LAW BY FOLLOWING THE PROCEDURES AS ITA NO. 913/KOL/16 SMT. ANGANA DUTTA 7 CONTEMPLATED U/S. 50C OF THE ACT. THE ASSESSEE SHAL L BE AT LIBERTY TO FILE REQUISITE EVIDENCES, IF ANY, TO SUB STANTIATE HER CLAIM. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 08/02/ 2017 SD/- SD/- WASEEM AHMED S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 08 -0 2-2017 *PP/SPS: COPY OF THE ORDER FORWARDED TO: 1 . THE APPELLANT/ASSESSEE : SMT. ANGANA DUTTA 74 SARA T CHATTERJEE ROAD, KOLKATA-89. 2 THE RESPONDENT/DEPARTMENT- THE INCOME TAX OFFICER WARD 11(4), AAYKAR BHAWAN, P-7 CHOWRINGHEE SQUARE, KOLKATA-700 069. 3 4. THE CIT(A) THE CIT 5 . DR, KOLKATA BENCH 6 . GUARD FILE . BY ORDER, ASSTT. REGISTRAR