S. Harinath Chowdary, Hyderabad V. ITO,Ward 6(4), Hyderabad

MA 89/HYD/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2052 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ESTHER N HANGHAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Sale consideration of property below Jantri Value; Rectification of order; Opportunity of being heard
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER MA NO. 89/HYD/2014 IN ITA NO. 853/HYD/2013 A.Y. 2007-08 MA NO. 90/HYD/2014 IN ITA NO. 896/HYD/2013 A.Y. 2007-08 SRI S. HARINATH CHOWDARY HYDERABAD PAN: AGQPS1831H VS. THE INCOME TAX OFFICER WARD-6(4) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI P. MURALI MOHAN RAO RESPONDENT BY: SMT. ESTHER N. HANGHAL DATE OF HEARING: 13 .0 6 .2014 DATE OF PRONOUNCEMENT: 16 .07.2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BY THE ABOVE TWO MISCELLANEOUS APPLICATIONS (MAS), THE ASSESSEE IS SEEKING RECTIFICATION OF MISTAKES I N THE CONSOLIDATED ORDER OF THE TRIBUNAL DATED 04.04.2014 IN ITA NOS. 896 AND 853/HYD/2013 FOR THE A.Y. 2007-08. 2. THE FACTS ARE THAT THE ASSESSEE HAD FILED HIS RETUR N OF INCOME FOR A.Y. 2007-08 ON 14.8.2008 ADMITTING T HE TOTAL INCOME AT RS. 1,14,120. IN THE ASSESSMENT COMPLETED U/S. 143(3) OF INCOME-TAX ACT, 1961, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 51,19,683 TOWARDS SHORT TERM CAPITAL GAINS AFTER TAKING INTO CONSIDERATION THE SALE CONSIDERATION OF RS. 70 LAKH S. ACCORDINGLY, THE ASSESSING OFFICER DETERMINED THE T OTAL INCOME AT RS. 50,92,035. 2 MA NOS. 89 & 90/HYD/2014 SRI S. HARINATH CHOWDARY ====================== 3. IN APPEAL BEFORE THE CIT(A), THE CIT(A) WHILE ALLOWING THE APPEAL PARTLY DIRECTED THE ASSESSING O FFICER TO ADOPT THE SALE PRICE OF FLAT AT RS. 38,56,040 AN D COMPUTE THE CAPITAL GAIN ACCORDINGLY. 4. AGAINST THE ORDER OF THE CIT(A), BOTH THE DEPARTMENT (IN ITA NO. 896/HYD/2013) AND THE ASSESS EE (IN ITA NO. 853/HYD/2013) FILED APPEALS BEFORE THE TRIBUNAL. THE TRIBUNAL WHILE DECIDING THE CROSS AP PEALS FOR A.Y. 2007-08 IN ITA NO. 896/HYD/2013 AND IN ITA NO. 853/HYD/2013 VIDE PARA NOS. 12 AND 13 HELD AS FOLLO WS: 'WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES. THE MAIN ISSUE THAT ARISES FOR OUR CONSIDERATION IN THESE CROSS APPEALS RELATES TO THE DETERMINATION OF SALE PROCEEDS RECEIVED BY THE ASSESSEE ON THE SALE OF THE SIXTH APARTMENT, I.E. WHETHER IT IS RS. 22,68,000 AS DISCLOSED BY THE ASSESSEE, AS AGAINST SRO RATE OF RS. 38,56,040, TAKEN BY THE CIT(A) ON THE GROUND THAT WHAT IS SOLD BY HIM IS ONLY A SEMI-FINISHED FLAT; OR IT IS RS. 70,00,000 AS TAKEN BY THE ASSESSING OFFICER. WE FIND THAT THE IMPUGNED ORDER OF THE CIT(A) CANNOT BE SUSTAINED AS THE CIT(A) HAS ADOPTED THE SALE CONSIDERATION, TAKING THE SRO RATE AT RS. 41,27,040. WHILE THE COURSE THUS ADOPTED BY THE CIT(A) IS PARTLY AS PER THE PROVISIONS OF S. 50C, SINCE THE ASSESSEE WAS DISPUTING THE ADOPTION OF ANYTHING OTHER THAN THE DISCLOSED SALE CONSIDERATION OF RS. 22,68,000 FOR THE SEMI-FINISHED APARTMENT SOLD, AND THUS DISPUTING THE SRO RATE AS PER S. 50C, IN TERMS OF SUB-SECTION (2) OF S. 50C, THE CIT(A) SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER. HAVING FAILED TO DO SO, THE ORDER OF THE CIT(A) CANNOT BE SUSTAINED. WE DRAW SUPPORT IN RESPECT OF THIS PROPOSITION, FROM THE DECISION OF THE COORDINATE BENCH DATED 29.1.2010 IN THE CASE OF DY. CIT 3 MA NOS. 89 & 90/HYD/2014 SRI S. HARINATH CHOWDARY ====================== CIRCLE 7(1), HYDERABAD V/S. KHAJA KUTUBUDDIN KHAN, HYDERABAD IN ITA NO. 1451 & 1452/HYD/2008, A COPY OF WHICH HAS BEEN FURNISHED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE. WHILE DOING SO, THE CIT(A) HAS NOT ADHERED TO THE PROCEDURE AS PER S. 50C IN ITS TOTALITY, WHICH MANDATED, IN THE EVENT OF DISPUTE BY THE ASSESSEE AS TO THE ADOPTION OF VALUE AS PER SRO, A REFERENCE TO THE VALUATION CELL. THAT APART, THERE IS A DISPUTE WITH REGARD TO THE NATURE AS TO THE CONDITION OF THE APARTMENT SOLD. WHILE IT IS THE CASE OF THE ASSESSEE THAT WHAT IS SOLD IS A SEMI-FINISHED ONE AND NOT A COMPLETED ONE, THE CASE OF THE REVENUE IS THAT THE WORKS GOT DONE THROUGH BHOOPAL REDDY AND CO. CANNOT BE ACCEPTED AS GENUINE, AND WHAT THE ASSESSEE GOT IN TERMS OF DEVELOPMENT AGREEMENT AND SOLD BY HIM IS ONLY AN APARTMENT, CONSTRUCTION OF WHICH WAS COMPLETE IN ALL RESPECTS. WITH REGARD TO THE WORKS GOT DONE THROUGH BHOOPAL REDDY AND CO., THE ASSESSEE HAS TO SUBSTANTIATE HIS CLAIM. 13. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO RE-EXAMINE THE MATTER AFTER FOLLOWING THE PROCEDURE ENVISAGED IN S. 50C OF THE ACT IN ITS ENTIRETY, AND IF NEED BE, BY MAKING REFERENCE ALL THE ASPECTS OF THE MATTER, INCLUDING THE NATURE OF CONSTRUCTION, VIZ. COMPLETENESS OR OTHERWISE OF THE CONSTRUCTION SOLD, TO THE VALUATION CELL. THE ASSESSING OFFICER SHALL, THEREAFTER, REDECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, BASED ON SUCH REPORT THAT MAY BE RECEIVED FROM THE VALUATION CELL, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.' 5. BY THESE MAS I.E., MA NO. 90/HYD/2014 IN ITA NO. 896/HYD/2013 AND MA NO. 89/HYD/2014 IN ITA NO. 853/HYD/2013 THE APPLICANT HAS STATED THAT AN ERROR HAS CREPT IN THE ORDER OF THE TRIBUNAL DATED 4.4.2014 W HEREIN 4 MA NOS. 89 & 90/HYD/2014 SRI S. HARINATH CHOWDARY ====================== THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSIN G OFFICER WITH A DIRECTION TO RE-EXAMINE THE ISSUE AFTER FOLL OWING THE PROCEDURE ENVISAGED IN S. 50C OF THE ACT IN ITS ENT IRETY AND REFER THE MATTER TO THE VALUATION CELL AND DECI DE THE SAME BASED ON THE REPORT THAT SHALL BE RECEIVED FRO M THE VALUATION CELL. THE PETITIONER SUBMITS THAT THE OR DER OF THE TRIBUNAL IS RESULTING IN ENHANCEMENT OF INCOME OF THE ASSESSEE AS ASSESSED BY THE ASSESSING OFFICER WHICH IS NOT ALLOWED UNDER THE PROVISIONS OF THE ACT AND THE SAM E HAS TO BE REVISED. 6. WE HAVE GONE THROUGH THE MISCELLANEOUS PETITIONS. WHILE COMPUTING CAPITAL GAINS RECEIVED FROM SALE OF FLAT, THE ASSESSING OFFICER HAS TAKEN THE SALE PRICE AT R S. 70 LAKHS AND WORKED OUT THE CAPITAL GAINS ARISING FROM SALE OF SUCH FLAT AT RS. 51,19,683 WHEREAS THE CIT(A) HA S TAKEN THE SALE PRICE AT RS. 38,56,040. HOWEVER, BO TH THE AUTHORITIES HAVE OMITTED TO CONSIDER THE APPLICABIL ITY OF PROVISIONS OF S. 50C IN DETERMINING THE DEEMED FULL VALUE OF CONSIDERATION RECEIVED. IN THE IMPUGNED ORDER T HE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTE THE CAP ITAL GAINS APPLYING THE PROVISIONS OF S. 50C AND THE ASS ESSEE IS OBJECTING TO THE SAME. 7. WE WISH TO POINT OUT THAT IT IS WELL SETTLED THAT T HE TRIBUNAL IS THE FINAL FACT FINDING BODY. THE FINDI NGS OF THE TRIBUNAL ARE NOT LIABLE TO BE INTERFERED WITH, UNLE SS THE TRIBUNAL HAS TAKEN INTO CONSIDERATION ANY IRRELEVAN T MATERIAL OR HAS FAILED TO TAKE INTO CONSIDERATION A NY RELEVANT MATERIAL OR THE CONCLUSION ARRIVED AT BY T HE TRIBUNAL IS PERVERSE IN THE SENSE THAT NO REASONABL E PERSON, ON THE BASIS OF THE FACTS BEFORE THE TRIBUN AL, 5 MA NOS. 89 & 90/HYD/2014 SRI S. HARINATH CHOWDARY ====================== COULD HAVE COME TO THE CONCLUSION TO WHICH IT HAS C OME. IN THE PRESENT CASE, WE HAVE TO POINT OUT THAT IN T HE ABSENCE OF BOTH THE LOWER AUTHORITIES NOT CONSIDERI NG THE PROVISIONS OF S. 50C, TRIBUNAL IN ITS INHERENT POWE RS WAS RIGHT IN SETTING ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO FOLLOW THE PROCEDURE PRESCRIBED U/S. 50C OF THE ACT. 8. IN THE CASE OF THE ASSAM TRIBUNE VS. CIT (285 ITR 452) THE GAUHATI HIGH COURT HAS HELD AS FOLLOWS: 'SECTION 254(1) OF THE ACT PROVIDES THAT THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. RULE 11 OF THE RULES ALSO PROVIDES THAT THE APPELLANT SHALL NOT, EXCEPT BY LEAVE OF THE TRIBUNAL, URGE OR BE HEARD IN SUPPORT OF ANY GROUND NOT SET FORTH IN THE MEMORANDUM OF APPEAL, BUT THE TRIBUNAL IN DECIDING THE APPEAL, SHALL NOT BE CONFINED TO THE GROUNDS SET FORTH IN THE MEMORANDUM OF APPEAL OR TAKEN BY LEAVE OF THE TRIBUNAL, PROVIDED THE PARTY WHO MAY BE AFFECTED THEREBY HAS HAD SUFFICIENT OPPORTUNITY OF BEING HEARD ON THAT GROUND. IT IS THEREFORE EVIDENT FROM THE PROVISION CONTAINED IN SECTION 254 OF THE ACT AND RULE 11 OF THE RULES THAT THE POWER OF THE LEARNED TRIBUNAL WHILE DEALING WITH THE APPEAL IS IN THE WIDEST POSSIBLE TERMS AND THE WORD 'THEREON', OCCURRING IN SECTION 254 OF THE ACT RESTRICTS THE JURISDICTION OF THE LEARNED TRIBUNAL TO THE SUBJECT-MATTER OF THE APPEAL ONLY.' 9. ALSO WE WOULD LIKE TO POINT OUT THAT THE LEGAL PRINCIPAL THAT WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL ASSESSED INCOME CANNOT BE ENHANCED IS IMPL ICIT IN EACH ORDER OF THE TRIBUNAL. HOWEVER, SINCE THE SAME HAS NOT BEEN EXPLICITLY STATED IN THE ORDER OF THE TRIBUNAL DATED 4.4.2014 AT PARA 13, NOW WE AMEND PARA 13 OF THE 6 MA NOS. 89 & 90/HYD/2014 SRI S. HARINATH CHOWDARY ====================== TRIBUNAL ORDER DATED 4.4.2014 AND THE FOLLOWING SEN TENCE IS ADDED TO PARA 13 WHICH READS AS UNDER: 'FURTHER, THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL SHALL COMPUTE THE CAPITAL GAINS BY APPLYING THE PROVISIONS OF S. 50C AND ENSURE THAT THE FINALLY DECIDED CAPITAL GAIN DOES NOT EXCEED THE CAPITAL GAINS ORIGINALLY ASSESSED IN THE ASSESSMENT ORDER.' 10. IN THE RESULT, BOTH THE MAS ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2014 SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 16 TH JULY, 2014 TPRAO COPY TO: 1. SRI S. HARINATH CHOWDARY, C/O. M/S. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-6755/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. THE INCOME TAX OFFICER, WARD - 6(4), HYDERABAD. 3. THE CIT(A) - II I, HYDERABAD. 4. THE CIT - II , HYDERABAD. 5. THE DR, A - BENCH, ITAT, HYDERABAD.