Harilal R.Jariwala, Surat vs Assessee

ITO, Ward-2(3), Surat Respondent

PAN: AAQPJ6789H

आवेदकक ओरसे/ By Assessee : Shri D. K. Parikh, A.R. राज वक ओरसे / By Revenue :ShriDinesh Singh, Sr.D.R. सन ु वाईक तार ख/Date of Hearing :14.05.2015 घोषणाक तार ख/Date of Pronouncement : 05 .06.2015

ORDER

PER SHAILENDRA KUMAR YADAV, J.M:

This appeal has been filed by assesseeagainst the order ofCIT(A)-II, Surat, dated 14.11.2011 for the assessment year 2008-09 on following grounds:

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"1. The CIT(A) erred in not considering the revised return filed prior to the date of receipt of assessment order.

2. The CIT(A) erred in not considering & admitting the revised return filed, as additional ground vide rule 46A(1)(a) & 46A(1)(c).

3. The CIT(A) erred in not considering the contents of affidavit filed.

The assesse cannot be presumed to be aware of the date of passing the assessment order.

4. The CIT(A) erred in not appreciating valuation report valuing the property as on 01/04/1981 filed with the revised return.

5. That the orders of authorities below viz. CIT(A) & A.O. may kindly be set aside & the matter may kindly be restored back to the file of A.O. with necessary directions to recomputed the Long Term Capital Gain working as per revised return filed.

6. The CIT(A) erred in not giving deduction of Section 50EC for Rs.1,00,000 invested."

ITA No. 179/Ahd/2012 for A.Y. 2008-09 in case of Shri Ajay HasmukhlalJariwala.

3. Assessee owned 14 properties with 17 other co-owners and his share in property was 1/18th. The document value of properties sold was Rs.2,37,34,750/-. Assessee's share in sale proceeds was Rs.13,18,595/-. He claimed cost of acquisition at Rs.2,70,258/- (FMV at 01.04.1981) which gave index cost of acquisition of Rs.14,89,122/-. Long term capital loss of I TA N o s . 1 7 7 / A h d / 1 2 A . Y . 0 8 - 0 9 ( S h r i H a r i l a l R . J a r i w a l a v s . I TO ) Page 3

Rs.1,83,713/- was claimed. Assessing Officer obtained information u/s.133(6) from Sub-Registrar, Navagam, Surat-3, according to which, the value of plot of land sold as per stamp duty valuation was Rs.4,48,50,675/-. As per Section 50C, value adopted for stamp duty purpose was to be deemed as full value of consideration received or accruing as a result of transfer. The share of assesse as per provisions of Section 50C worked out to Rs.24,91,704/- and long term capital gain accruing to assesse worked out to Rs.9,89,396/-. Assessing Officer issued show cause to assesse asking him to explain why long term capital gain income not be taken as Rs.9,89,396/-. In response to same, assesse submitted that he had come to know that land in the same locality had been sold for Rs.5,000/- per sq.mt. one year ago and therefore in their opinion the sale rate of Rs.10,000/- per sq.mt. by assesse was true and fair market value. It was submitted that purchaser had paid stamp duty at Rs.18500/- per sq.mt. without their knowledge. It was submitted that case be referred to District Valuation Officer, Surat. Explanation was not accepted by Assessing Officer as submission that land had been sold at Rs.5,000/- per sq.mt. one year ago was not supported by any evidence. As neither the seller i.e. assessee nor purchaser of property had made any representation or disputed the valuation adopted by the State Authority, the valuation was final and required to be adopted for Section 50C. In absence of any evidence that rates adopted were high, the I TA N o s . 1 7 7 / A h d / 1 2 A . Y . 0 8 - 0 9 ( S h r i H a r i l a l R . J a r i w a l a v s . I TO ) Page 4

request for reference to District Valuation Officer, was rejected. Assessing Officer applying Section 50C adopted the full value of consideration of assessee's 1/18thshare as Rs.24,91,704/- and worked out the long term capital gain at Rs.9,89,396/- as against loss of Rs.1,83,713/- worked out by assesse.

4. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same CIT(A) upheld the order of Assessing Officer. Before us, learned Authorized Representative submitted that Assessing Officer should have refer the matter to District Valuation Officer in view of objection taken by assessee and also fulfilling the condition of Section 50C. Learned Authorized Representative pointed out that ITAT 'C' Bench on identical issue in case of one of the co- owner ShriNikunjkumar H. Jariwala vs. ITO in ITA No. 2404/Ahd/2011 has considered the facts and set aside the matter to Assessing Officer to make assessment in accordance with valuation as per District Valuation Officer by observing as under:

"5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that in the instant case, the AO has made addition on the basis of the difference in the value of the property declared by the assesse as sale consideration and adopted by the stamp valuation authority. The contention of the ld. Counsel for the assesse is that in terms of the provisions of section50C(1) of the Act, where the AO finds that the consideration received or I TA N o s . 1 7 7 / A h d / 1 2 A . Y . 0 8 - 0 9 ( S h r i H a r i l a l R . J a r i w a l a v s . I TO ) Page 5

accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed (or assessable) by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed (or assessable) shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. The ld.counsel for the assessee submitted that the AO adopted the full value of the consideration as adopted by the "stamp valuation authority". However, the AO failed to take note of the mandate of sub-section(2) of Section 50C of the Act. At this juncture, it would be appropriate to reproduce hereunder the section 50C(2) of the Act for the better appreciation of the submission of ld.counsel for the assessee.

"Section 50C(2):- Without prejudice to the provisions of sub- section (1), where-

(a) theassessee claims before any Assessing Officer that the value adopted [or assessed or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;

(b) the value so adopted [or assessed or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or the High Court,

the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-

section (1) of section 16A of that Act.

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Explanation.: [1] For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).

[Explanation 2 : For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.]"

5.1. The ld.counsel for the assessee has drawn our attention towards para-6 of the assessment order in support of the contention that before the AO a request was made to refer the case to DVO for seeking his report on the fair market value of the property. Para-6 of the assessment order is reproduced hereinbelow:-

"6. The reply of the assessee dated 10.12.2010 is reproduced as under:-

"We just come to know that one open land in the same locality was sold at 5,000/- per sq.mt. Before one year ago, we are in the opinion that what we got amount @ 10,000/- per sq.mt. is true & fair market value.

Secondly, we are of the opinion to refer the case to the D.V.O., Surat to justify the case.

There are cases of judgement of:

> New KalindiKamavati Co-Op. Housing Society Ltd. Vs. State of Gujarat &Ors. 2006(2) Guj.LR.Vol.XLVII(2).

> Dineshkumar Mittal Vs. ITO 193 ITR 770 (All.) > Hindustan Motors Ltd. Vs. Members

Appropriate Authority(2001) 249 ITR 424 (Mad.) I TA N o s . 1 7 7 / A h d / 1 2 A . Y . 0 8 - 0 9 ( S h r i H a r i l a l R . J a r i w a l a v s . I TO ) Page 7

> K.R. PalanisamyVs. UOI 306 ITR 61 (Mad.).

In which the juntry value is a guideline & not instrument la lay down on the assessee".

5.2. Therefore, in view of the provisions of section 50C(2) of the Act, we are of the considered view that the AO was not justified in adopting the value of the property as adopted by the "stamp valuation authority" without referring to the DVO for ascertaining the fair market value of the property. Therefore, the orders of the authorities below on this issue are hereby set aside and the additional ground raised by the assessee is restored back to the file of AO to decide the same in accordance with law. Needless to say that the AO would afford reasonable opportunity of being heard to the assessee before passing the order. Thus, additional ground raised by the assessee is allowed for statistical purposes.

Nothing contrary was brought to our knowledge. Facts being similar, so following same reasoning, we hold that Assessing Officer was not justified in adopting value of property as adopted by Stamp Valuation Authority without referring to District Valuation Officer for ascertain fair market value of the property. Therefore, following the reasoning of ShriNikunjkumar H. Jariwala, we set aside the order of authorities below on the issue and issue raised by way of additional ground by assesse is restored back to the file of Assessing Officer with direction to decide the same in accordance with law after providing due opportunity of being heard to assessee.

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5. In result, assessee's appeal is allowed for statistical purpose.

Pronounced in the open Court on this the 5thday of June, 2015.

Sd/- Sd/- (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 05/06/2015

S.K.SINHA आदे श क त ल प अ े षत / Copy of Order Forwarded to:- 1. राज व / Revenue 2. आवेदक / Assessee 3. संब ं धत आयकर आय! ु त / Concerned CIT 4.आयकर आय! ु त- अपील / CIT (A)

5. )वभागीय ,-त-न ध,आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड3 फाइल / Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपील य अ धकरण,अहमदाबाद ।

Strengthen preparation & delivery of orders in the ITAT

1) Date of taking dictation As per ITA No. 179 / Ahd / 2012

2) Direct dictation by Member straight on XXX computer/laptop/dragon dictate

3) Date of typing & draft order place before Member 14.05.2015

4) Date of correction

5) Date of further correction

6) Date of initial sign by Members

7) Order uploaded on

8) Original dictation pad has been enclosed in this file

9) Final order and 2nd copy send to Bench Clerk on I TA N o s . 1 7 7 / A h d / 1 2 A . Y . 0 8 - 0 9 ( S h r i H a r i l a l R . J a r i w a l a v s . I TO ) Page 9