Shri Arjanbhai Karshanbhai Patel, Ahmedabad V. The ITO, Ward-3(2)(6), Ahmedabad

MA 322/AHD/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7672 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Sale consideration of property below Jantri Value; Gift; Additional evidence; Fair market value; TDS; Set aside
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI ARJANBHAI KARSHANBHAI PATEL, 20, KRISHNA PARK, JASHODANAGAR ROAD NR. KANS, VATVA, AHMEDABAD - 382443 PAN: AHTPP9930C (APPELLANT) VS THE IT O , WARD - 3(2)(6) , AHMEDABAD - 380014 (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE BY: SHRI SHAILESH SHAH, A.R. DATE OF HEARING : 15 - 03 - 2 019 DATE OF PRONOUNCEMENT : 03 - 04 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF ITAT C BENCH VIDE ITA N O. 2692/AHD/ 2016 DATED 28 - 09 - 2018. VIDE THE AFORESAID MISCELLANEOUS APPLICATION , THE ASSESSEE H AS MAINLY STATED AS UNDER: - M.A. NO. 322/AHD/2018 ( IN CO NO . 05 / A HD/20 17) A SS ESSMENT YEAR 2012 - 13 M.A. NO. 322/AHD/2018 (IN C.O. NO. 05 /AHD/20 17) A.Y. 2012 - 13 PAGE NO SHRI ARJANBHAI KARSHANBHAI PATEL VS. IT O 2 [2] THE ROOT CAUSE OF GRIEVANCE .RELATES TO ADDITION OF RS.1,21,41,964/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE FACTS REGARDING LONG TERM CAPITAL GAIN AND ADDITION MADE BY THE ASSESSING OFFICER AND RELIEF GRANTED BY CIT (A) M AY BE SUMMED UP AS UNDER. PARTICULARS ADDITION MADE BY ASSESSING OFFICER RELIEF GRANTED BY CIT APPEAL AS PER ASSESSING OFFICER RS. 1,21,41,964 AS PER CIT APPEAL * RS. 1,21,41,964 [3] THE COMMON CONTROVERSY CHALLENGED IN THE APPEAL IS RELATED TO LONG TERM CAPITAL GAIN IS NOT APPLICABLE AS THE DOCUMENTS HAS ALREADY BEEN CANCELED WITH THE SUB - REGISTRAR OFFICE IN RESPECT OF LAND IN QUESTION, DUE TO THE TITLE OF THE PROPERTY ARE NOT CLEAR AND MARKETABLE. THE SAME MAY BE BRIEFLY NARRATED AS UNDER. APPEAL FILED BY GROUND OF APPEAL NO. CONTROVERSY BEFORE IT AT DEPARTMENT 1 WHETHER CIT (A) WAS JUSTIFIED IN ALLOWING LONG TERM CAPITAL GAIN OF RS. 1,21,41,964/ - U/S. 50C OF THE IT ACT. AGAINST ADDITION MADE BY A.O. DEPARTMENT DEPARTMENT 2 WHETHER CIT(A) WAS JUSTIFIED IN EXERCISING HIS POWER UNDER RULE 46A OF THE IT RULES. [4] FROM ITAT ORDER DATED 28/09/2018 IN THE DEPARTMENTAL APPEAL, IT IS SEEN THAT ON ACCOUNT OF, DEFICIENCY IN THE ORDER OF THE LD. CIT(A) THE MATTER WAS RESTORE TO THE FILE OF A.O. TO ADJUDICATE AFRESH AFTER REFERRING THE MATTER TO DVO AS PER THE PROVISION OF SECTION_50C(2) OF THE ACT. ACCORDINGLY, THE MATTER IS SET ASIDE TO THE FILE OF ASSESSING OFFICER. THE ORDER PASSED BY THE LEARNED CIT (A) WAS NOT DEFECTIVE, AS PER THE DECISION OF HONORABLE HIGH COURT IN THE CASE OF PRINCIPAL CIT TDS V. SAFARI FINE CLOTHING (P) LTD. WHICH HAS BEEN CITED BY THE AUTHORIZED REPRESENTATIVE IN THEIR SUBMISSION DATED 6/4/2018 WHICH IS NOT CONSIDERED BY THE HONORABLE BENCH , THEREFORE RECTIFICA TION U/S. 254, OF THE IT ACT, 1961 MAY PLEASE BE CONSIDER. [5] LEARNED CIT(A) AHMEDABAD HAS ALLOWED APPEAL AFTER CONSIDERING FOLLOWING OBSERVATIONS. 1. THE SALE DEED OF LAND UNDER CONSIDERATION WAS CANCELLED BY THE RESPONDENT WHICH IS P LACE ON RECORDS VIDE PAPER BOOK DATED 06/04/2018 PAGE NO. 98 - 113, 114 - 130. M.A. NO. 322/AHD/2018 (IN C.O. NO. 05 /AHD/20 17) A.Y. 2012 - 13 PAGE NO SHRI ARJANBHAI KARSHANBHAI PATEL VS. IT O 3 2. THE RESPONDENT HAS FILED AN AFFIDAVIT IN WRITTEN SUBMISSION DATED 06/04/2018 PAGE NO. 89 - 90. CONSIDERING THE ABOVE DOCUMENTS WHICH ARE THE ROOT OF THE FACTS OF THE CASE OF TH E RESPONDENT AND CONSIDERING THE SAME CIT (A) HAS ALLOWED APPEAL WHICH IS NOT ERRONEOUS OR PREJUDICIAL. MOREOVER, WHEN THERE IS NO TRANSFER TOOK PLACE THEN THERE IS NO NEED TO REFER THE MATTER TO DVO UNDER SECTION 50C(2). LOOKING TO THE FACTS AND CIRCUMSTA NCES OF THE CASE OF THE RESPONDENT THE ORDER PASSED BY HONORABLE ITAT REQUIRES TO BE RECTIFY U/S. 254 OF THE IT ACT, 1961. A VERY STRANGE SITUATION AS ARISEN DESPITE THE FACT THAT THE CIT(A) HAS ALLOWED THE LONG TERM CAPITAL GAIN ON ACCOUNT OF (I) THERE I S NO EFFECTIVE SALE OF THE ASSETS THEREFORE NO TAXABILITY CAN ARISE. (II) BY NOT SENDING THE ISSUE FOR EXPERT OPINION TO THE DVO AS PER SPECIFIC PROVISION OF SUB - SECTION 2 OF SECTION 50C OF THE IT ACT, 1961. (III) BY NOT CONSIDERING THE SHORT COMING IN THE TITLE OF THE LAND (IV) CANCELLATION OF SALE DEED. (V) AFFIDAVIT ON RECORD. [6] A> THE LD. CIT(A) HAS ELABORATED IN HIS FINDING AND VERIFICATION MADE BY HIM ABOUT THE CORRECTNESS OF THE ADDITIONAL INFORMATION / MATERIAL PROVIDED BY THE RESPONDENT AS PER T HE DECISION OF LD. CIT (A) PAGE NO. 11, POINT NO. 4 WHICH READ AS 'THEREFORE, AS PER PERUSAL OF BANAKHAT, SALE DEED AND CANCELLATION DEED ALONG WITH BANK STATEMENT AND 7/12 CLEARLY INDICATE THAT NO SALE OF IMPUGNED TWO PROPERTY HAS ACTUALLY TAKEN PLACE BY THE APPELLATE IN QUESTION. B> REGARDING OPPORTUNITY TO A.O. TO VERIFY THE FACTS, REMAND REPORT AND NOT RECORDED ANY REASON AS PER RULE 46A FOR ADDITIONAL EVIDENCE THE RESPONDENT RELY UPON THE JUDGMENT OF PRINCIPAL CIT (IDS) VS. SAFARI FINE CLOTHING (P) LTD . (2018) 160 TR (A) 93 (GUJ - HC):2017 TAXPUB (DT) 5540 (GUJ - HC) WHICH WAS SUBMITTED TO THE HONORABLE ITAT AS PER THE WRITTEN SUBMISSION DATED 06/04/2018 PAGE NO, 6. WHEREIN IT WAS HELD THAT 'WHERE ADDITIONAL EVIDENCE WAS OBTAINED BY THE FIRST APPELLATE AUTH ORITY ON ITS OWN MOTION., THERE WAS NO REQUIREMENT IN LAW THAT HE SHOULD INVARIABLY CONSULT / CONFRONT THE A.O. WITH SUCH ADDITIONAL EVIDENCE. IF THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE THE FIRST APPEILALE AUTHORITY WAS IN THE NATURE OF CL INCHING EVIDENCE LEAVING NO FURTHER ROOM FOR ANY DOUBT OR CONTROVERSY, IN SUCH A CASE NO USEFUL PURPOSE WOULD BE SERVED BY FORWARDING SUCH EVIDENCE / MATERIAL TO THE A.O. TO OBTAIN HIS REPORT AND IN SUCH EXCEPTIONAL CIRCUMSTANCES THE SAID REQUIREMENT COULD BE DISPENSED WITH.' AS FAR AS NOT RECORDED ANY REASONS AS PER RULE 46A FOR ADDITIONAL EVIDENCE AS PER SUB - RULE (1)(C) EXCEPT IN THE FOLLOWING CIRCUMSTANCES NAMELY IT IS STATED THAT 'WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFO RE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL IN THAT CASE THE QUESTION FOR RECORDING IN WRITING THE REASONS OF ITS ADMISSION IS NECESSARY. HOWEVER, THE SAME IS NOT APPLICABLE IN THE RESPONDENT CASE AS THE DEED OF CANCELLATION WAS EXECUTED AFTER PASSING THE ASSESSMENT ORDER BY THE LEARNED A.O. 2. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD CAREFULLY. WE HAVE GONE THROUGH THE ORDER OF THE ITAT M.A. NO. 322/AHD/2018 (IN C.O. NO. 05 /AHD/20 17) A.Y. 2012 - 13 PAGE NO SHRI ARJANBHAI KARSHANBHAI PATEL VS. IT O 4 VIDE NO. 2692/AHD/20 16 DATED 28/09/2018 AND NOTICED THAT AS PER PARA 6 OF THE AFORESAID ORDER, THE SUBMISSION OF BOTH THE SIDES ALONG WITH MATERIAL ON RECORD WERE DULY CONSIDERED BY THE CO - ORDINATE BENCH WHILE ADJUDICATING THE APPEAL IN THE CASE OF THE ASSSESSEE. T HE CONCLUS ION DRAWN VID E ORDER OF THE ITAT VIDE ITA NO. 2692/AHD/2016 DATED 28 - 09 - 2018 IS REPRODUCED AS UNDER : - 3 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SOLD TWO PROPERTIES FOR SALE CONSIDERATION AT RS. 3,00000/ - AND RS. 2,00000/ - RESPECTIVELY AS ELABORATED SUPRA IN THIS ORDER. THE VALUE ON THE BASIS OF STAMP DUTY PAID WAS DETERMINED AT RS. 70,86,240/ - AND RS. 54,52,100/ - RESULTING IN CAPITAL GAIN RS. 1,20,38,340/ - . BEFORE THE LD. CIT(A) THE ASSESSEE HAS CONTENDED THAT HE WAS NOT HAVING CLEAR TITLE OF THE PROPERTIES AND THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY U/S. 50C(1) OF THE ACT EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY. HE ALS O SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADOPTING THE SALE CONSIDERATION AS PER THE STAMP VALUATION WITHOUT REFERRING THE MATTER TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY ACCORDING TO THE P ROVISION OF SECTION 50C(2) OF THE ACT. BEFORE THE LD.CIT(A). IT WAS ALSO CLAIMED THAT THE ASSESSE WAS ONLY HAVING RIGHT IN THE PROPERTY AND THERE WAS NO OWNERSHIP OVER THE IMPUGNED LAND. IT IS ALSO CLAIMED THAT HE HAD CONSTRUCTED RESIDENTIAL SHELTER ON TH E LAND WHICH HE HAD GIVEN AS A GIFT TO HIS SON. IT IS ALSO STATED THAT IMPUGNED LAND WAS ORIGINALLY PROCURED BY THE PARTNERSHIP FIRM NAMED PATEL SHAW MILL IN WHICH THE ASSESSEE WAS PARTNER FROM SHRI GOBINDBHAI H. PATEL AS PER BANAKHAT EXECUTED ON 25/05/ 1992 AND THE ASSSSEE WAS IN THE POSSESSION OF THE LAND BUT THE FINAL SALE DEED WAS NOT EXECUTED AS THE LAND WAS OF NAVI SHARAT AND NA WAS NOT ISSUED. THE SECOND LAND WAS PURCHASED FROM SAVADHARIA CORPORATION ON AGREEMENT STAMP PAPER OF RS. 20/ - . THE ASS ESSEE HAS CLAIMED BEFOR THE LD.CIT(A) THAT THE TITLE OF THE PROPERTIES WERE NOT CLEAR THEREFORE THE SALE DEED OF BOTH THE PROPERTIES WERE CANCELLED NO 24/05/2016 AND 25/04/2016 RESPECTIVELY AND THE SALE CONSIDERATIONS RECEIVED OF BOTH THE PROPERTIES OF R S. 2,00,000/ - AND RS. 3,00,000/ - WERE RETUNED. THE LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION BRIEFLY ON THE BASIS OF THE FOLLOWING TWO REASONS: - (I) THE ASSESSING OFFICER HAS NOT SENT THE MATTER FOR VALUATION TO DVO AS PER PROVISIONS OF SECTION 50C( 2) OF THE ACT. (II) NOT CONSIDERING THE SHORTCOMING IN THE TITLES OF THE LAND SUCH AS CANCELLATION OF SALE DEED. WE HAVE CONSIDERED THE FINDINGS OF THE LD. CIT(A) AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS NOTICED THAT THE DURING THE COURSE OF A SSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBTAINED INFORMATION FROM THE SUB - REGISTRAR, NAROL, AHMEDABAD THAT THE ASSESSEE HAD SOLD IMMOVABLE PROPERTY. THE ASSESSEE HAS RECEIVED SALE CONSIDERATION OF RS. 3 LACS AND 2 LACS RESPECTIVELY BUT THE VALUE O F THESE PROPERTIES AS PER THE STAMP VALUE WAS TO THE AMOUNT OF (RS. 7086240 + RS. 5452100) RS. 12038340/ - . THEREFORE, THE ASSESSE WAS SHOW CAUSED TO EXPLAIN ANY THE DIFFERENCE BETWEEN THE MARKET VALUE AND SALE M.A. NO. 322/AHD/2018 (IN C.O. NO. 05 /AHD/20 17) A.Y. 2012 - 13 PAGE NO SHRI ARJANBHAI KARSHANBHAI PATEL VS. IT O 5 CONSIDERATION SHOULD NOT BE ADDED TO THE TOTA L INCOME WITHIN THE PURVIEW OF PROVISIONS OF SECTION 50C OF THE I.T. ACT. HOWEVER, THE ASSESSEE HAS FAILED TO MAKE ANY COMPLIANCE BEFORE THE ASSESSING OFFICER AND EVEN HAS NOT RAISED ANY OBJECTION IN RESPECT OF THE PROPOSED ADDITION. SUBSEQUENTLY AT THE TIME OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE HAS BRIEFLY RAISED THE FOLLOWING NEW CONTENTIONS : - (I) TITLE OF THE PROPERTIES WERE NOT CLEAR. (II) (II) THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER TO THE DVO TO ASCERTAIN THE FAIR MARKE T VALUE OF THE PROPERTY AS PER SECTION 50C(2) OF THE ACT. (III) THE ASSESSEE HAS ONLY RIGHTS IN THE PROPERTY AND THERE WAS NO OWNERSHIP OF LAND. (IV) THE ASSESSEE HAD GIVEN ONLY CONSTRUCTED RESIDENTIAL PROPERTY, SHOP AND SHED WHICH WERE GIVEN BY WAY OF GIF T TO HIS RELATIVES VIZ. SON AND NEPHEW. (V) THE ASSESSEE HAD CANCELLED THE DEAL AND RECEIVED BACK THE CONSIDERATION FROM THE BUYERS. (VI) THE LD. CIT(A) HAS ALSO REFERRED A LETTER DATED 22/01/2015 ADDRESSED TO THE ASSESSING OFFICER STATING THAT THERE WAS NO CLEAR TITLE OF THE PROPERTIES AND THE STAMP VALUATION AUTHORITY UNDER SECTION 50C(1) HAS EXCEEDED THE FAIR MARKET VALUE IN HIS HAND AS ON THE DATE OF TRANSFER. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE OBSERVE THAT ASSESSEE HAS CLAIMED THAT HE HAS CANCELLED THE DEAL AND RECEIVED BACK THE CONSIDERATION FROM THE BUYERS. THE LD. CIT(A) HAS NEITHER ELABORATED IN HIS FINDINGS ANY VERIFICATION MADE BY HIM ABOUT THE CORRECTNESS OF THE ADDITIONAL INFORMATION/MATERIAL PROVIDED BY THE ASSESSEE THAT TH ERE WAS NO EFFECTIVE SALE OF THE ASSETS NOR HE HAS GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THESE FACTS AND EVEN NO REMAND REPORT WAS CALLED. WE HAVE FURTHER OBSERVED THAT THE LD. CIT(A) HAS ALSO NOT CALLED ANY REMAND REPORT FROM THE ASSESS ING OFFICER REGARDING THE CLAIM OF THE ASSESSEE FURNISHING OF INFORMATION VIDE LETTER DATED 22/08/2014 AND 22/01/2015. THE LD. CIT(A) HAS ALSO NOT RECORDED ANY REASONS AS PER RULE 46A OF THE I.T. RULES IN HIS ORDER REGARDING THE ADDITIONAL EVIDENCES WHICH WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. IN THE LIGHT OF THE BRIEFLY STATED LACUNA AND DEFICIENCY IN THE ORDER OF THE LD. CIT(A), WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE IT WILL BE APPROPRIATE TO R ESTORE THIS CASE TO THE FILE OF ASSESSING OFFICER TO ADJUDICATE AFRESH AFTER REFERRING THE MATTER TO DVO AS PER THE PROVISIONS OF SECTION 50C(2) OF THE ACT. ACCORDINGLY, THE MATTER IS SET ASIDE TO THE FILE OF ASSESSING OFFICER AS DIRECTED ABOVE TO DECIDE DE - NOVO AS SUPRA AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED FOR THE REASON AS SUPRA STATED IN THIS ORDER . 3 . ON PERUSAL OF THE ABOVE STATED MATERIAL FACTS & FINDINGS ELABORATED IN THE ORDER OF THE ITAT , WE FIND THAT THE DETAIL REASONS AND FACTS ON THE BASIS OF WHICH THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER DULY CONSIDERED BEFORE ARR IVING AT THE CONCLUSION. I T IS ALSO PERTINENT TO M.A. NO. 322/AHD/2018 (IN C.O. NO. 05 /AHD/20 17) A.Y. 2012 - 13 PAGE NO SHRI ARJANBHAI KARSHANBHAI PATEL VS. IT O 6 MENTION THAT THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS PATENT MISTAKE, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE WHICH IS REQUIRED TO BE ESTABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE DETAILED FINDINGS OF THE CO - ORDINATE BENCH IN T HE CASE OF THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THE MISC. APPLICATION OF THE ASSESSEE, THEREFORE, THE SAME IS DISMISSED. 4 . IN THE RESULT, THE MISC. APPLICATION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 - 0 4 - 2019 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 03 /04 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,