Prafulla Shantilal Kothari, Pune V. Income-tax Officer, Ward - 7 (3), Pune

ITA 913/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7591 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-08-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 14-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 143(3); 50C

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.913/PUN/2019 / ASSESSMENT YEAR : 2012-13 PRAFULLA SHANTILAL KOTHARI, FLAT NO.1, AKSHAY PLAZA, RAMNAGAR, WADGAONSHERI, PUNE 411014. PAN : ABEPK0479N. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 7(3), PUNE. . / RESPONDENT ASSESSEE BY : SHRI SUHAS BORA & SHRI SANKET BORA. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 8, PUNE DATED 10.05.2 019 FOR A.Y. 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS O F TRADING IN MOBILE PHONES AND RECHARGE VOUCHERS UNDER T HE NAME AND STYLE OF P.R. COMMUNICATION. ASSESSEE ELECTRONICALLY FILED HIS R ETURN OF / DATE OF HEARING : 29.08.2019 / DATE OF PRONOUNCEMENT: 17.10.2019 2 INCOME FOR A.Y. 2012-13 ON 23.09.2012 DECLARING TOTAL INCO ME AT RS.9,76,614/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE REAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 31.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.21 ,23,614/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 10.05.2019 (IN APPEAL NO.PN /CIT(A)- 8/ITO, WD.7(3)/474/18-19) GRANTED PARTIAL RELIEF TO THE ASSES SEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.8,21,300/- BY REDUCING THE ADDITION ON ACCOUNT O F STCG TO RS.3,25,700/- FROM RS.11,47,000/- MADE BY THE AO ON ACCOUNT OF DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND SALE VA LUE OF THE PROPERTY AS PER INDEX II BY APPLYING THE PROVISIONS OF SEC. 50C OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE LD CIT(A) FAILED TO APP RECIATE THE CONTENTION OF THE APPELLANT THAT WHERE THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY THE APPELLANT AND THE VALUE ADOPTED BY THE DVO IS LESS THAN 10 PER CENT A LIBERAL APPROACH IN FAVOR OF THE APPELLANT BE TAKEN AND THE DIFFERENCE IS LIABLE TO BE IGNORED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTICE D THAT ASSESSEE HAD SOLD ON 07.06.2011 A PROPERTY FOR RS.30 LA KHS WHOSE VALUE FOR THE PURPOSE OF STAMP DUTY WAS RS.41,47,000/-. SHE ALSO NOTICED THAT THE LAND WAS PURCHASED ON 23.06.2010 FOR RS .20,00,000/- AND ITS VALUE FOR STAMP DUTY PURPOSE WAS RS.36,15,840/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO ASKED THE ASSESSE E TO SHOW CAUSE AS TO WHY THE VALUE DETERMINED FOR STAMP DUTY PURPOSE AT THE TIME OF SALE NOT BE ADOPTED FOR THE PURPOSE OF WORKING OUT TH E CAPITAL GAINS. ASSESSEE OBJECTED FOR ADOPTING THE VALUE DETERMINED BY STAMP VA LUATION AUTHORITY AS AGAINST THE SALE CONSIDERATION ADOPTED BY THE ASSES SEE AND REQUESTED THAT THE MATTER BE REFERRED TO THE DISTRICT VALUATION OFFICER (DVO) FOR DETERMINING THE FAIR MARKET VALUE (F.M.V). THEREAFT ER, THE 3 MATTER WAS REFERRED TO THE DVO FOR DETERMINING THE FMV BUT SINCE THE VALUATION REPORT WAS NOT RECEIVED TILL THE TIME OF PASSING OF ASSESSMENT ORDER, AO ADOPTED THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES AS PER PROVISIONS OF SEC.50COF THE ACT FOR WORKING OUT THE CAPITAL GAINS AND ACCORDINGLY WORKED OUT THE GAINS AT RS.19,35,412/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE L D.CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE REPORT OF THE V ALUATION OFFICER WAS RECEIVED WHO HAD VALUED THE PROPERTY AT RS.33,25,70 0/-. BEFORE LD.CIT(A), IT WAS SUBMITTED THAT IF THE DIFFERENCE BETWEEN THE VALUE WORKED OUT BY THE DVO AND THE SALE CONSIDERATION WAS LE SS THAN 10%, THE SAME BE IGNORED. LD.CIT(A) DID NOT ACCEPT THE CONTEN TION OF IGNORING THE VALUATION REPORT BUT HOWEVER DIRECTED THE AO TO R EDUCE THE ADDITION BASED ON THE VALUE DETERMINED BY THE DVO AND THUS DIR ECTED THE ADDITION OF RS.3,25,700/- AS AGAINST RS.11,47,000/- MADE BY T HE AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 4. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE VALUE OF PRO PERTY AS CONSIDERED BY THE ASSESSEE IS RS.30 LACS WHICH IS AS PER THE REGISTERED DOCUMENT AND THE VALUATION AS PER DVO IS RS.33,25,700/- AND THE DIFFERENCE IN VALUE OF LAND IS 10.86% OF THE VALUATION ADOPTED BY ASSESSEE AND 9.79% OF THE VALUE ADOPTED AS PER THE REP ORT OF DVO. HE SUBMITTED THAT THE COURTS AND TRIBUNALS HAVE HELD THAT LIBERAL APPROACH BE ADOPTED WHEN THE DIFFERENCE IS MARGINAL. IN SUPPORT OF HIS CONTENTIONS, HE RELIED ON THE DECISION IN THE CASE OF RAHUL CONSTRUCTION S VS. DCIT REPORTED IN (2010) 38 DTR 19 (PUNE). HE ALSO PLAC ED RELIANCE ON THE DECISION IN THE CASE OF M/S. RADHIKA SALES CORPO RATION VS. ACIT IN ITA NO.1474/PUN/2016 ORDER DATED 16.11.2018. HE ALS O RELIED ON 4 THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SINGH VS. CIT REPORTED IN 308 ITR 71 AND THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. SADHNA GUPTA REPORTED IN 352 ITA 595. HE THEREFORE SUBMITTED THAT THE ADDITION BE SET ASIDE. LD. D.R . ON THE OTHER HAND, SUPPORTED THE ORDER OF LD.CIT(A). 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE VALUE OF THE PROPERTY CONSIDERED BY THE ASSESSEE IS RS.30 LAKHS AS AGAINST W HICH THE FMV OF THE PROPERTY DETERMINED BY THE VALUER AT RS.33,25,700 /-. THE DIFFERENCE IN VALUE THUS BEING OF RS.3,25,700/- WHICH IS 9.79% O F THE VALUATION ADOPTED BY DVO. IT IS AN UNDISPUTED FACT THAT THE VALUATION IS NOT A MATHEMATICAL PRECISSION AND THERE IS BOUND TO BE DIFFERENCE BETWEEN ONE VALUER AND ANOTHER VALUER AS SINCE IT IS A MATTER OF OPINION IT DIFFERS FROM VALUER TO VALUER. I FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DATTATRAYA KERBA LONKAR VS. DC IT IN ITA NO.181/PUN/2014 ORDER DATED 30.01.2017 AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THE DECISION IN THE CASE OF RAHUL CONSTRU CTIONS VS. DCIT (SUPRA) AND THE JUDGMENT OF HONBLE PATNA HIGH CO URT IN THE CASE OF BIMLA SINGH VS. CIT (SUPRA) DIRECTED THE AO TO ADOPT T HE ACTUAL CONSIDERATION AS MENTIONED IN THE SALE DEED TO BE THE FA IR MARKET VALUE FOR DETERMINING THE CAPITAL GAINS. THE RELEVANT OBSERVATIO NS OF THE TRIBUNAL READS AS UNDER : 8. WE FIND MERIT IN THE SUBMISSION OF LD. A.R. THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE DETERMINED BY THE DVO AND ACTUAL SALE CONSIDERATION IS RS.7,14,530/- I.E SLIGHTLY MORE THAN 2 PER CENT OF THE SALE CONSIDERATION. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F RAHUL CONSTRUCTION V/S. DCIT (SUPRA) HAS HELD THAT WHERE DIFFERENCE BE TWEEN THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AND FAIR MAR KET VALUE AS DETERMINED BY THE DVO U/S 50C IS LESS THAN 10 PERCE NT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SUBSTITUTING THE VALUE DETERMINED FOR SALE CONSIDERATION DISCLOSED BY THE ASSESSEE. THE CO-ORD INATE BENCH AFTER 5 CONSIDERING THE PROVISIONS OF SECTION 50C OF THE AC T AND THE PROVISION OF SECTION 23A AND 24(5) OF THE WEALTH TAX ACT HELD AS UNDER :- 13. A COMBINED READING OF THE ABOVE PROVISIONS SHO WS THAT THE VALUATION ADOPTED BY THE DVO IS SUBJECT TO APPEAL A ND THE SAME IS NOT FINAL. IN THE INSTANT CASE WE FIND THAT AS AAGA INST THE VALUE OF RS. 28,73,000/- ADOPTED BY THE STAMP VALUATION AUTH ORITIES, THE DVO HAS DETERMINED THE FMV ON THE DATE OF TRANSFER AT RS. 20,55,000/- . THIS ITSELF SHOWS THAT THERE IS WIDE VARIATION BETWEEN THE TWO VALUES. FURTHER, THE VALUE ADOPTED BY THE DVO IS ALSO BASED ON SOME ESTIMATE. WE FIND THAT THE DIFFE RENCE BETWEEN SALE CONSIDERATION SHOWN BY THE ASSESSEE AT RS.19,0 0,000/- AND THE FMV DETERMINED BY THE DVO AT RS. 20,55,000/- IS ONLY RS. 1,55,000 WHICH IS LESS THAN 10 PER CENT. THE COURTS AND TRIBUNALS ARE CONSISTENTLY TAKING A LIBERAL APPROACH IN FAVOU R OF THE ASSESSEE WHERE THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY T HE ASSESSEE AND THE VALUE ADOPTED BY THE DVO IS LESS THAN 10 PE R CENT. 14. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT V/S. HARPREET HOTELS (P) LTD. VIDE ITA N OS. 1156- 1160/PN/2000 AND RELIED ON BY THE LEARNED COUNSEL F OR THE ASSESSEE HAD DISMISSED THE APPEAL FILED BY THE REVE NUE WHERE THE CIT(A) HAD DELETED THE UNEXPLAINED INVESTMENT IN HO USE CONSTRUCTION ON THE GROUND THAT THE DIFFERENCE BETW EEN THE FIGURE SHOWN BY THE ASSESSEE AND THE FIGURE OF THE DVO IS HARDLY 10 PERCENT. 15. SIMILARLY, WE FIND THAT THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF ITO V/S. KAADDU JAYGHOSH APPASAHEB, VIDE IT A NO.441/PN/2004 FOR THE ASST. YR 1992-1993 AND RELIE D ON BY THE LEARNED COUNSEL FOR THE ASSESSEE FOLLOWING THE DECI SION OF THE J&K HIGH COURT IN THE CASE OF HONEST GROUP OF HOTELS (P ) LTD. V/S CIT (2002) 177 CTR (J&K) 232 HAD HELD THAT WHEN THE MAR GIN BETWEEN THE VALUE AS GIVEN BY THE ASSESSEE AND THE DEPARTME NTAL VALUER WAS LESS THAN 10 PER CENT , THE DIFFERENT IS LIABLE TO BE IGNORED AND THE ADDITION MADE BY THE A.O CANNOT BE SUSTAINED. 16. SINCE IN THE INSTANT CASE SUCH DIFFERENCE IS LE SS THAN 10 PER CENT AND CONSIDERING THE FACT THAT VALUATION IS ALW AYS A MATTER OF ESTIMATION WHERE SOME DEGREE OF DIFFERENCE BOUND TO OCCUR, WE ARE OF THE CONSIDERED OPINION THAT THE A.O. IN THE INST ANT CASE IS NOT JUSTIFIED IN SUBSTITUTING THE SALE CONSIDERATION AT RS. 20,55,000 AS AAGAINST THE ACTUAL SALE CONSIDERATION OF RS. 19,00 ,000/- DISCLOSED BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO TAKE RS.19,00,000/- O NLY AS THE SALE CONSIDERATION OF THE PROPERTY. THE GROUNDS RAISED B Y THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9. THE LD. A.R OF THE ASSESSEE HAS FURTHER PLACED R ELIANCE ON THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SI NGH V/S. CIT (SUPRA) WHEREIN HONBLE HIGH COURT HAS HELD THAT DIFFERENCE BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND AS DETERMINE D BY THE ASSESSING OFFICER BEING LESS THAN 15 PER CENT, THE SAME IS TO BE IGNORED FOR THE PURPOSES OF ADDITION. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S. SADNA GUPTA 352 ITA 595 HELD THAT UNLESS AND U NTIL THERE WAS SOME OTHER EVIDENCE TO INDICATE THAT EXTRA CONSIDERATION HAD FLOWED IN TRANSACTION FOR PURCHASE OF PROPERTY, REPORT OF DVO COULD NOT FORM BASIS OF 6 ANY ADDITION ON PART OF REVENUE. IN ABSENCE OF ANY EVIDENCE NO RELIANCE COULD BE PLACED ON THE REPORT OF DVO FOR MAKING ADD ITION. 10. THUS, IN VIEW OF THE FACT THAT THE DIFFERENCE B ETWEEN SALE CONSIDERATION AND THE MARKET VALUE DETERMINED BY TH E DVO IS NOT SUBSTANTIAL AND IS APPROXIMATELY LITTLE OVER 2 PER CENT OF THE ACTUAL SALE CONSIDERATION, WE FIND NO REASON FOR REJECTING ACTU AL SALE CONSIDERATION MENTIONED IN THE SALE DEED FOR DETERMINING LONG TER M CAPITAL GAIN. ACCORDINGLY, THE GROUND NO.1 RAISED IN APPEAL BY TH E ASSESSEE IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO ADOPT ACTUAL S ALE CONSIDERATION AS MENTIONED IN THE SALE DEED AS A FAIR MARKET VALUE F OR DETERMINING THE LONG TERM CAPITAL GAIN. 6. BEFORE ME, NO CONTRARY DECISION IN SUPPORT OF REVENUE H AS BEEN CITED BY LD.D.R NOR HAS POINTED ANY DISTINGUISHING FACTS BE TWEEN THE ASSESSEES CASE AND THAT OF DATTATRAYA KERBA LONKAR VS. DCIT (SUPRA). FURTHER LD.D.R. HAS ALSO NOT PLACED ANY MATERIAL TO DEMON STRATE THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF DATTATRAYA KE RBA LONKAR VS. DCIT (SUPRA), HAS BEEN SET ASIDE OR OVER RULED BY HIGHER JUDICIAL FORUM. IN VIEW OF THE AFORESAID FACTS, I FOLLOWING THE DECISIO N OF CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DATTATRAYA KERBA LONKAR VS. DCIT (SUPRA) AND FOR SIMILAR REASONS, DIRECT THE AO TO ADOPT ACTUAL SALE CONSIDERATION AS MENTIONED IN THE SALE DEED AS A FAI R MARKET VALUE FOR DETERMINING THE LONG TERM CAPITAL GAINS. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON 17 TH DAY OF OCTOBER, 2019. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 17 TH OCTOBER, 2019. YAMINI 7 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-8, PUNE. PR. CIT-4, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.