Kamlesh Tiwari, Jaipur vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 587/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Smt. Kamlesh Tiwari cuke The I.T.O. 1, Nandanvan, Mahaveer Vs. Ward 5(3), Jaipur. Nagar, Tonk Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AANPT 4872 G vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri R.S. Singhvi & Shri P.D. Vaidya (C.A.) jktLo dh vksj ls@ Revenue by : Shri Ajay Malik (Addl.CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 04/12/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/02/2015

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

This is an appeal filed by the assessee against the order dated

19/03/2013 passed by the learned CIT (A)-II, Jaipur for A.Y. 2008-09.

The effective grounds of appeal are as under:-

"1) That the impugned order passed U/s 143(3)/148 of the Income-tax Act, 1961 by learned ITO, Ward-5(3) and learned CIT(Appeals)-II, Jaipur is bad in law as

2 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

well as on facts being against the principle of natural justice and for other reasons.

2) That the learned Assessing Officer has not followed the required procedure in revenue-opening of the assessment U/s 148 of the Income Tax Act. Hence any proceedings initiated on wrong premises or against the provisions of the Act is illegal since initiation, hence the order needs to be quashed in entirety.

3) That the learned Assessing Officer has grossly erred in considering full registration value of Rs. 98,20,156/- and learned CIT(Appeals) have also erred in giving part relief and taking the sale consideration at Rs. 47,34,400/- as against the sale consideration of Rs. 27,00,000/- actually received by the assessee while calculating the capital gain.

4) That the learned Assessing Officer has grossly erred in not referring the matter to the Valuation Cell as required under Section 50C(2) of Income-tax Act, 1961, if the Assessing Officer intended to adopt valuation done by the Registration Authorities, as against the actual sale consideration received in view of the provisions of law and also as principles of natural justice.

5(i) That the learned Assessing Officer has grossly erred in ignoring the fact that the agreement on which the sale is finally concluded was entered in 2005 and part consideration was handed over through cheque but due to unavoidable circumstances Development agreement got converted into sale agreement by that time the developer had partly constructed the building, which has resulted in decrease in valuation of land.

ii) That development agreement was of year 2005.

Hence even in the worst condition, DLC rate of 2005 should have been considered. Our above submissions 3 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

fortified by the fact that in the recent Budget, an Act has been amended on the lines submitted in our grounds of appeal.

6) That the assessee reserves his right to add, alter, amend, delete all or any grounds before or at the time of hearing."

2. The second ground of the appeal is against challenging the

validity of notice U/s 148 of the Income Tax Act, 1961 (hereinafter

referred to as the Act). As per AIR information received from CIB, it

came to notice that the sale value of Rs. 98,20,156/- of a property at

Khasra No. 124, village- Saladvas Thamer, Jaipur sold by the assessee

was adopted by the Sub-Registrar. On the other hand, the assessee had

declared this property sold at Rs. 27 lacs only and calculated capital

gain accordingly. The learned Assessing Officer observed that as per

Section 50C, the value adopted by the Sub-Registrar i.e. Rs.

98,20,156/- is to be taken as full value of consideration. There was

difference of Rs. 71,20,156/- is liable to be treated as income from

capital gain. Therefore, notice U/s 148 of the Act was issued after

recording reasons that in this case, the income chargeable to tax has

been escaped. The assessee challenged this issue before the learned

CIT(A), who has confirmed the issue by observing that the Assessing

Officer had reason to believe that the income has escaped assessment.

4 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

He was right in reopening the assessment U/s 147 read with Section

149 because 4 years has not been elapsed from the end of the

assessment year, therefore, the Assessing Officer has power to reopen

the case after recording his satisfaction U/s 147 of the Act. Accordingly,

he dismissed the assessee's appeal on this ground.

3. The assessee challenged the order of the learned CIT(A) on 148

notice and argued that the Assessing Officer received the information

from CIB regarding stamp valuation of the land and such reopening was

not justified for which he relied upon the decision of Hon'ble Allahabad

High Court in the case of Fusion Electronics Pvt. Ltd. Vs. CCIT 9

Taxmann.com 189 (2011) and decision of the Hon'ble Madras High

Court in the case of CIT Vs. K Rajapandian (2009) 311 ITR 477 (Mad)

for reopening on the basis of DVO report. He also relied on the decision

of the Hon'ble Bombay High Court in the case of ICICI Home Finance

Co. Ltd. vs. ACIT 25 Taxmann.com 241 (2012) for reasonable believe of

the Assessing Officer not any other authority. The learned AR also cited

various decisions on DVO's report and reopening on account of the

report. Therefore, he prayed to quash the 148 notice.

4. At the outset, the learned DR supported the order of both the

authorities and argued that the reopening is within 4 years and the 5 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

learned Assessing Officer recorded reasons and had reason to believe

on the basis of CIB information. The CIB information does not give any

idea of reason to believe simply an information passed on by the one

authority to another, which can be used in case of assessee when

concerned Assessing Officer satisfied himself that there was an under

assessment of income.

5. We have heard the rival contentions of both the parties and

perused the material available on the record. The learned Assessing

Officer has vast power U/s 147 within four years when there was no

scrutiny assessment in the case of the assessee. The case laws cited by

the learned counsel for the assessee are squarely not applicable. The

information received from CIB is simple information, has not construed

any opinion. It is for Assessing Officer to decide whether this

information can be part of the reason to believe or not. In this case, it is

undisputed fact that the assessee has not taken sale consideration of

the immoveable property as per Section 50, which is deeming provision

on computation of capital gain. Therefore, we confirm the reopening

made by the learned Assessing Officer, confirmed by the learned

CIT(A). This ground of assessee's appeal is dismissed.

6 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

6. The grounds No. 1,3,4 and 5 of the assessee's appeal are against

taking sale value consideration on the basis of sale deed for stamp

valuation and computing capital gain at Rs. 77,17,029/-. The learned

Assessing Officer has calculated the capital gain on the basis of sale

value consideration adopted by the Sub-Registrar at Rs. 98,20,156/- in

place of 27 lacs declared by the assessee. The learned AR for the

assessee submitted before the Assessing Officer that sale value adopted

by the stamp authority could not be considered sale value of the

property U/s 50C of the Act to calculate the capital gain. He further

submitted that the assessee entered in an agreement with the buyer of

the land on 19/09/2005 to construct commercial complex on this land.

As per agreement, some construction work was done but the

transaction could not be materialized. Since the assessee was in need of

money and sold the land to the buyer on agreed price of Rs. 27 lacs.

Leaving the cost of construction, which was incurred by the buyer under

the agreement and the assessee received Rs. 27 lacs from the buyer as

full value of consideration but the learned Assessing Officer after

considering Section 50C of the Act has taken the deemed value of sale

consideration at Rs. 98,20,156/-.

7 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

7. Being aggrieved by the order of the Assessing Officer, the

assessee carried the matter before the learned CIT(A), who had allowed

the appeal partly by observing that the stamp valuation authority had

taken sale consideration value of land at Rs. 47,34,400/-. The assessee

has sold only land not construction, therefore, valuation adopted by the

stamp authority for stamp purposes at Rs. 50,85,756/- cannot be

considered as part of sale consideration for the purpose of computing

capital gain. Accordingly she directed to the Assessing Officer to

recompute the capital gain on sale of land by considering the stamp

value for Rs. 47,34,400/-.

8. Now the assessee in the appeal before us. Learned A.R. for the

assessee submitted that the ale consideration on the basis of stamp

value adopted by the learned Assessing Officer at Rs. 98,20,156/- is not

correct and tenable. This stamp valuation made by the stamp authority

constitute to valuation i.e. (i) land valuation at Rs. 47,34,400/- and (ii)

construction valuation at Rs. 50,85,756/-. It is further argued that

construction expenses were borne by the buyer, which has not been

included in the sale consideration. However, the actual sale

consideration of the land was at Rs. 27 lacs. The learned Assessing

Officer did not refer this property to the valuation officer to find out the 8 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

estimated value of the land. He simply adopted the stamp authority's

figure as sale consideration. Thus, he prayed to delete the addition.

Further he argued on various aspects of the capital assets U/s 45-1

referred paras of sale deed and market price etc.. The appellant was in

need of money and there was delay in completion of project, the

appellant decided to sale the land to the developer, who already started

the construction on the land. Therefore, there was no alternate

available with the assessee other than to sale the land to the developer.

The sale consideration decided mutually and agreed by both the parties

was Rs. 27 lacs. It is further argued that as per sub-Section (2) of

Section 50C of the Act, the learned Assessing Officer was incumbent

upon to refer the matter to the valuation officer. He further argued that

if the Assessing Officer is not satisfied with the sale consideration

offered by the assessee then he must refer the valuation matter to the

valuation officer, for which he relied upon the following case laws:-

(i) Meghraj Baid Vs. ITO (2008) 23 SOT 25 (Jodh).

(ii) ITO Vs. Smt. Manju Rani Jain (2008) 24 SOT 24 (Delhi).

(iii) Ajmal Fragrances & Fashions (P) Ltd. vs. ACIT Circle 13(1)

(2009) 34 SOT 57 (Mum).

9 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

Therefore, he prayed to delete the addition made under the head

capital gain.

8.1 Learned A.R. further relied upon the decision of the Hon'ble

Punjab & Haryana High Court in the case of CIT Vs. Chandni Bhuchar

(2010) 323 ITR 510 and the decision of the Hon'ble Calcutta High Court

in the case of Sunil Kumar Agarwal Vs. CIT, Siliguri GA No. 3686 of

2013 ITAT No. 221 of 2013 order dated 13th March, 2014 and prayed to

set aside the order to the Assessing Officer and directed to refer this

case to the DVO for valuation of land on date of sale.

9. At the outset, the learned DR vehemently supported the order of

the learned CIT(A) and argued that the AR of the assessee could not

raise any objection against sale consideration except explain the receipt

of sale consideration and had not requested before the Assessing

Officer to refer this matter to the DVO for valuation of land.

10. We have heard the rival contentions of both the parties and

perused the material available on the record. It is undisputed fact that

the assessee simply challenged the sale consideration on the basis of

stamp valuation authority but had not requested to refer this issue to

the DVO but the Hon'ble Calcutta High Court in the case of Sunil Kumar

Agarwal Vs. CIT, Siliguri (supra) has held as under:-

10 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

"For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice.

The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub-Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/tax payer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the Assessing Officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to following the course provided by law.

For the aforesaid reasons, the order under challenge is set aside.

The impugned order including orders passed by the CIT(A) and the Assessing Officer are all set aside. The matter is remanded to the Assessing Officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is made, the assessment shall be made do novo in accordance with law."

The facts of the case are identical to case referred by the Hon'ble

Calcutta High Court, therefore, we are of the considered view that the 11 ITA 587/JP/2013_ Smt. Kamlesh Tiwari Vs. ITO

matter is required to be set aside to the Assessing Officer. The

Assessing Officer is directed to refer the valuation of land to the DVO

for the purpose of valuation of the land on the date of sale. Accordingly,

the matter is set aside to the Assessing Officer.

11. In the result, the assessee's appeal is allowed for statistical

purposes only.

Order pronounced in the open court on 27/02/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 27th February, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Smt. Kamlesh Tiwari, Jaipur.

2. izR;FkhZ@ The Respondent- The ITO, Ward 5(3), Jaipur.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 587/JP/2013)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar