Hasmukhbhai Gopalbhai Patel(Hasmukhbhai Ukabhai Patel), Surat V. The Assistant Commissioner of Income Tax, Central Circle-4, Surat

ITSSA 52/SRT/2022

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The case involves Hasmukhbhai Gopalbhai Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) - 4, Surat, which confirmed the addition of Rs. 31,92,915 as long-term capital gain under Section 50C of the Income Tax Act, 1961. The addition was based on the difference between the registered sale value of the land and its fair market value as determined by the stamp duty authorities. The assessee argued that the DVO's valuation was incorrect, citing issues like the land's poor condition and lack of infrastructure. The Tribunal, referencing a similar case, adjusted the addition to Rs. 11,92,915, acknowledging the DVO's report's shortcomings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302226 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2022
• Other Referred Cases: Mr. Arjanbhai B Davariya (HUF) vs. DCIT, Circle-3(2)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Principle of natural justice; Fair market value; Valuation report
• Section: 132; 143(3); 50C; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM आयकर (खोज और जÞती) सं./IT(SS)A No.52/SRT/2022 (िनधाŊरणवषŊ / Assessment Year: (2012-13) (Physical Court Hearing) Hasmukhbhai Gopalbhai Patel (Hasmukhbhai Ukabhai Patel) 13, Ravinagar Society, Bharthana, Vesu Road, Althan, Surat-395017 Vs. Assistant Commissioner of Income Tax, Central Circle-4, Surat, Room No. 508, 5 th Floor, Aaykar Bhavan, Majura Gate, Surat-395001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: BEZPP 1300 Q (अपीलाथŎ/Assessee ) (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से/ Assessee by : Shri P.M. Jagasheth, CA राजˢ की ओर से /Respondent by : Shri Ashok B.Koli, CIT-DR सुनवाईकीतारीख/ Date of Hearing : 02/08/2023 घोषणाकीतारीख/Date of Pronouncement : 11/09/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to assessment year 2012-13, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-4, Surat, dated 05.04.2014, which in turn arises out of an assessment order passed by the Assessing Officer (‘assessing officer’ for short) u/s 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), vide order dated 27.02.2015. 2. Grounds of appeal raised by assessee are as follows: “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of the Assessing Officer in passing the assessment order, against the principles of natural justice and against the provisions of I.T. Act, 1961. 2. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in confirming the addition of Rs.31,92,915/- on account of long-term capital gain invoking provisions of Section 50C of the Income Tax Act without appreciating the fact that the sale consideration as per sale deed was as per fair market value of land. Page | 2 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel 3. On the facts and in the circumstances of the case as well as law on the subject, the learned Commission er of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition without issuing any show cause notice and without providing any opportunity of being heard which is against the principle of natural justice and against the law. 4. The addition has been made on the basis of whims and fancies of Ld. assessing officer which is not permissible in the eyes of the law. 5. It is therefore prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper. 6. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. The assessee has filed additional grounds of appeal, on 10.07.2023, which is reproduced below: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in farming assessment under section 143(3) r.w.s. 153A of the Act is not tenable in the eyes of the law since such assessment has been framed beyond the scope of material and evidence found during the course of search action carried out u/s 132 of the Income Tax Act, 1961 from the residence premises of the assessee.” 4. At the outset, Learned Counsel for the assessee, informs the Bench that assessee does not wish to press above “additional ground of appeal”, therefore, we dismiss the additional ground of the assessee as “not pressed”. 5. Succinctly, the factual panorama of the case is that assessee before us is an Individual. A search action u/s 132 of the Act was carried out at the residence of assessee on 27.12.2012 and the case of assessee was also covered in the said action. Being a search case, notice u/s 153A was issued to the assessee, on 30.10.2013. The assessee filed return of income, in response to notice u/s 153A of the Act, declaring total income of Rs.15,38,600. The assessee offered agriculture income of Rs.5,32,670/- and income from business of Rs.1,67,802/-, long term capital gain of Page | 3 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel Rs.14,38,180/- and income from other sources of Rs.41,668/-. The assessee has not offered any additional undisclosed income in the return of income filed in response to the notice u/s 153A of the Act. 6. The Assessing Officer noted that during the assessment year, the assessee sold some plots of land at Block No.173, 174-A, 174-B, 175, 176,177,183,184,185 at Jiyav, Surat, which were purchased by the assessee during the Month of October 2003. Later on, the permission for Non- Agricultural usage of the land was obtained by the assessee. The rate of stamp duty charged by the Gujarat Government was 3.5% of the fair market value and an additional stamp duty of 40% over the amount so calculated. Upon perusal of the registered deed made for the sale of land by the assessee, it was noted by the assessing officer that the stamp duty paid by assessee is calculated on the basis of fair market value and value so calculated exceeds the “registered sale value” hence the violation of provision of section 50C of the Act. The Assessing Officer worked out the amount to be added u/s 50C of the Act to the tune of Rs.83,66,295/- with help of the number of plots sold by the assessee during the AY under consideration. The chart of plot of land is mentioned in the assessment order page No.3.Thus, Assessing Officer observed that the assessee, being seller of the capital assets i.e. plot of land held by him for more than three year and claimed LTCG thereon after indexation of the cost, attracts the provisions of Section 50C of the Act and the difference in the fair market value adopted by the Stamp Duty Authorities and the value as registered through the sale deed ought to be covered as income of the assessee. Therefore, Assessing Officer computed the difference between registered sale value and value adopted by the stamp duty authorities at Rs. Rs.83,66,295/- (Rs.1,40,02,795 - Rs.56,36,500). The assessee has shown Long Term Capital Gain (LTCG) after all deduction at Rs.14,38,180/- and LTCG was enhanced by Rs.83,66,295/- as per provision of Section 50C of the Act. Page | 4 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel 7. Aggrieved by the order of Assessing Officer the assessee carried the matter in appeal before the Ld. CIT(A) who has partly deleted the addition made by the Assessing Officer. During appellate proceedings, the assessee requested for referring the properties in question for valuation to District Valuation Office (DVO) for determining the fair market value as provided in Section 50C(2) of the Act. Accordingly, a letter dated 23.08.2018 was written by ld CIT(A) to the Assessing Officer, directing him to get the properties in question valued through DVO. The DVO submitted his report dated 7.08.2020 valuing the properties in question at Rs.88,29,415/- as against the sale deed value offered by the assessee of Rs.56,36,500/-. The ld CIT(A) therefore observed that as the value determined by the DVO i.e. Rs.88,29,415/- is more than the value declared by the assessee in the return of income, therefore the fair market value (FMV) determined by DVO shall be the total value of consideration. Accordingly, the addition made by the Assessing Officer was restricted by the ld CIT(A) to the tune of Rs.31,92,915/- (Rs.88,29,415 - Rs.56,36,500). Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. 8. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Shri P.M. Jagasheth, Learned Counsel for the assessee, argued that since assessee has not pressed additional grounds of appeal, however on merit, he stated that valuation made by the DVO is not correct. Shri P.M. Jagasheth, invited our attention towards the valuation report of DVO, (which is placed on paper book page Nos. 1 to 14), and pointed out that valuation report of DVO contains many drawbacks and inconsistency. The ld Counsel stated that impugned land was situated in a bad condition where no road, Page | 5 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel transport/pakka rasta available. The ld Counsel further stated that considering the location, size, time factor, amenities and future potentiality etc, the valuation made by the DVO is very higher side. Therefore, ld Counsel prays the Bench that a reasonable relief may be allowed to the assessee. 9. On the other hand, Ld. CIT-DR for the Revenue reiterated the findings of Assessing Officer and also stated that DVO report is correct and does not contain any shortcomings, hence assessee does not deserve for further relief. 10. We have considered submissions of both the parties and observed that on identical facts, the Coordinate Bench of this Tribunal, in the case of Mr. Arjanbhai B Davariya (HUF) vs. DCIT, Circle-3(2), in ITA No.173/SRT/2018 dated 30.03.2023, has allowed a reasonable relief, as there was certain irregularity in the valuation report. The findings of the Co- ordinate Bench, are reproduced below: “13. We also note that assessee has not submitted the comparable sale instance subsequent to the date of sale. However, we note that ld DVO has considered the third comparable sale instance where the rate of Rs.1718.95 per sq.mt. was considered by him, which is higher very side and therefore we note that sale value should be determined for the assessee’s land under consideration by taking first sale instance of @ 500/- per sq.mt. (vide sale instances taken by the DVO in his Valuation Report). However, before us Ld. Counsel for the assessee submitted that as per assessee, the sale price should be determined by taking @ Rs. 80/-per sq. mt. We note that there is a big difference between Rs.500 per sq.mt. as per DVO and @ Rs.80/- per sq.mt. as per assessee. The DVO in his report taken three sale instances viz., @ Rs.500/- per sq.mt. Rs.596.79 per sq.mt. and Rs.1718.95 per sq.mt. and arrived at average sale price of @ Rs.1012/- per sq.mt., which seems to be very higher side, considering the facts and circumstances of the land and considering the factors explained by Ld. Counsel in above para of this order. 14. We note that determination of fair market value, after all, is an estimate only and therefore, considering the facts and circumstances of the assessee`s case, as noted above, we are of the view that ends of justice would be meet if a rate of Rs. 480 per sq.meter is adopted as sale value of assessee`s land, as the same would take care of the inconsistencies between DVO report and sale price adopted by Page | 6 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel the assessee. Therefore, we direct the assessing officer to recompute capital gain on sale of land by taking sale value of land at the rate of Rs. 480 per sq.meter.” 11. We also note that the assessee under consideration was subjected to search u/s 132 of the Act. The Assessing Officer made the addition Rs.83,66,295/- u/s 50C of the Act for the land at Block No.173, 174A & B, 175, 176, 177, 183,184 and 185 at Jiyav, Surat, without any incriminating material. On perusal of the registered sale deeds for the said plots of land it was observed by the Assessing Officer that the registered sale value as per the sale deed was Rs.56,36,500/- as against the stamp duty valuation of Rs.1,40,02,795/-. Hence, Assessing Officer held that the provision of Section 50C of the Act are attracted in assessee’s case and accordingly, made the addition of Rs.83,66,295/- being the difference between the stamp duty valuation (jantri rate) and sale deed value of the plots. On appeal by assessee, the ld CIT(A) restricted the addition to the tune of Rs.31,92,915/- (Rs.88,29,415 - Rs.56,36,500). However, we note that DVO report contains some drawback and shortcomings. The DVO has not considered situation of the land such as no road/transport available where the land is situated, and DVO has not considered the location, size, time factor, amenities and future potentiality etc, in right perspectives. Therefore, we note that the valuation made by the DVO is very higher side. Hence considering these facts and circumstances, we note that Ld CIT(A) has ignored the specific defects in the DVO report. The evidences submitted by ld Counsel states that DVO has not considered the location, size, time factor, amenities and future potentiality etc, therefore, based on these facts in our opinion the ends of justice would be met, if addition is restricted to the tune of Rs.11,92,915/-, since the same would take care of the inconsistencies in DVO report. Therefore, we direct the assessing officer to make the addition to the tune of Rs.11,92,915/- to the total income of the assessee. Page | 7 IT(SS)A No.52/SRT/2022 A.Y. 2012-13 Hasmukhbhai G. Patel 12. We make it clear that the issue involved in assessee`s case, has been adjudicated by us taking into account peculiar facts and circumstances of the case, as narrated above, hence the instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. 13. In the result, appeal of the assessee is allowed partly in above terms. Order pronounced on 11/09/2023 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 11/09/2023 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat rue copy/