Vijay Kumar 342 Industrial Area Phase I ... vs Assessee

Vinay Kumar, Vs. The Addl.CIT, 342, Industrial Area I Range 2, Phase I, Chandigarh. Chandigarh. PAN: AAUPK1557A (Appellant) (Respondent)

Appellant by : Shri Ajay Jain Respondent by : Shri S.K.Mittal, DR

Date of hearing : 24.03.2015 Date of Pronouncement : 26.03.2015

PER BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed

against the order of learned Commissioner of Income

Tax(Appeals), Chandigarh dated 26.3.2014 for assessment

year 2009-10 on the following grounds :

"1. That the order of Learned C.I.T. (A) Chandigarh is b a d a n d a g a i n s t t h e f a c t s & L a w.

2. That the Ld. CIT(A) has erred in conf irming the a d d i t i o n o f R s . 1 9 , 9 9 , 3 1 6 / - u / s 5 0 C o f I n c o me T a x Act made by assessing off icer by taking the stamp value in the registered sale deed executed between 2

Steel Authority of India & Purchasers on 27-07-2011 without appreciating the f act that the appellant has tr ansf erred the rights in f lats during the Financial Y e a r 2 0 0 8 - 0 9 o n t h e b a s i s o f a g r e e me n t s t o s e l l n o t on the basis of registered sale deeds & also erred in ignoring the f act that provisions of Section 50C are applicable w. e . f 01-10-2009 on unregistered a g r e e me n t . Further the Id CIT(A) has f ailed to appreciate the f act that value me n t i o n e d in registered sale deeds executed on 27-07-2011 cannot be relevan t f or compu tation of cap ital gain arose during the AY 2009-10.

3. That the CIT(A) has wr o n g l y inf erred that the appellant has agreed for addition wi t h o u t appreciating the f act that the appellant has raised specif ic objectio n wi t h r e s p e c t t o v a l u e t a k e n b y assessing off icer during the course of assessmen t proceedings . Furthur the Ld CIT(A)Jhas no material on record to infer that the appellant has agreed f or a d d i t i o n o f R s 1 9 9 9 3 1 6 / - U / S 5 0 C o f I n c o me T a x A c t & t h e r e f o r e t h e o r d e r o f L d C IT ( A ) i s b a d & d e s e r v e s to be quashed."

2. The brief facts of the case are that the assessee had

declared long term capital loss of Rs.1,42,984/- on sale of

three flats in Mumbai. These flats were acquired on

31.12.2003 and sold for Rs.9,19,700/- on 16.10.2008. The

cost of acquisition was adopted at Rs.10,62,684/- after

availing the benefit of indexation. In the assessment

proceedings, the assessee had filed details of assets sold and

the Assessing Officer noticed that the market value of these

flats, as assessed by the Government of Maharashtra was

Rs.10,20,500/- each for two of these flats and Rs.10,21,000/- 3

for the third flat. The Assessing Officer asked the assessee

vide order sheet dated 23.12.2011 to show cause as to why

the sale price should not be taken at Rs.10,20,500/- each for

two flats and Rs.10,21,000/- for the third flat. The assessee

was supposed to file reply on 29.12.2011 but no submissions

were filed. The Assessing Officer, therefore, concluded that

the assessee had no objection for adopting the sale price at

Rs.30,62,000/- for all the flats and computed long term

capital gain at Rs.19,99,316/-.

3. The assessee challenged the addition before the

learned CIT (Appeals) and written submission was filed,

mainly raising the issue that the properties were not

transferred on the basis of registered sale deed and so

provisions of section 50C of the Act were not applicable. The

learned CIT (Appeals), however, dismissed the appeal of the

assessee. His findings in para 5 of the appellate order are

reproduced as under :

"5. I have considered the submission of the Ld. Counsel. T he Assessing Off icer had s pecif ic ally asked the appellan t about taking the market value of these f lats as assessed b y t h e G o v e r n m e n t o f M a h a r a s h t r a f o r t h e p u r p o s e s of section 50C of the Act, but the appellant had not f iled any submission, meaning thereby the appellant had no objection to the proposal of the Assessing Of f icer for valuing the f lats as assessed by the G o v e r n me n t of Mah ar ash tr a and so he proceeded to co mpute the long term capital gain on the basis of the value assessed by t h e G o v e r n me n t o f M a h a r a s h t r a . T h u s , t h e a d d i t i o n wa s made by concluding that the appellant had no objection to the proposed addition. No reason has been given by the 4

Ld. Counsel f or the appellant f or not f iling reply bef ore the Assessing Officer to the specific query made in this regard and so it has to be inf erred that the appellant had agreed f or the addition. A s i t wa s a n a g r e e d a d d i t i o n , t h e a p p e l l a n t should not be aggrieved no w and hence, the addition made i s c o n f i r me d . Grounds of appeal taken by the appellant are dismissed."

4. We have heard the learned representatives of both the

parties and perused the material available on record.

5. The learned counsel for assessee contended that the

provisions of section 50C of the Act were not applicable in the

assessment year under appeal because the properties were

transferred through "agreement to sell" dated 1.10.2008. The

copies of the "agreement to sell" are filed in the Paper Book

from pages 54 to 65. He has also referred to circular on

amendment in section 50C of the Act to say that the

amendment in section 50C of the Act is applicable w.e.f.

1.10.2009 (PB-11) by inserting Explanation-2 to section 50C

of the Act, which has explained the expression "assessable".

He has also relied upon the decision of the Hon'ble Madras

High Court in the case of CIT Vs. R. Sugantha Ravindran, 352

ITR 488, in which it was held :

"Pursuant to a m e n d me n t wi t h eff ect from 01.10.2009, S e c t i o n 5 0 C o f t h e A c t wo u l d b e a p p l i c a b l e o n l y i n r e s p e c t o f c a s e s wh e r e t h e r e g i s t r a t i o n o f d e e d h a d t a k e n p l a c e a n d n o t o t h e r wi s e . "

5 6. He has also relied upon the order of the I.T.A.T.,

Amritsar Bench in the case of ITO Vs. Shri Ashok Kumar

Aggarwal in ITA No.182(Asr)2013 (PB-5), in which following

the decision of the Hon'ble Madras High Court in the case of

R. Sugantha Ravindran (supra) departmental appeal was

dismissed. He has also relied upon the decision of the

I.T.A.T., Jaipur Bench in the case of Smt. Vijay Laxmi

Dhaddha Vs. ITO, 20 DTR 365 on the same proposition, in

which it was held :

"Provisions of s. 50C cannot be invoked in the absence of a r e g i s t e r e d d o c u me n t i . e . i n t h e a b s e n c e o f a n y v a l u e a d o p t e d o r a s s e s s e d b y a n y a u t h o r i t y o f S t a t e G o v e r n me n t for the purpose of payment of stamp duty in respect of such transf er."

7. On the other hand, the learned D.R for the Revenue

relied upon the orders of the authorities below.

8. We have considered the rival submissions and

perused the material available on record. The findings of the

learned CIT (Appeals) reproduced above, clearly show that the

learned CIT (Appeals) dismissed the appeal of the assessee

holding that the addition was made on agreed basis. The

learned CIT (Appeals), therefore, did not decide the appeal of

the assessee on merits. The assessment order shows that

though the Assessing Officer issued show cause notice for

proposed addition and the assessee did not file any reply but 6

it would not prove that the assessee has agreed to the

proposed addition. When the assessee raised the legal issue

before the learned CIT (Appeals) that section 50C of the Act is

not applicable in his case because the amendment in section

50C of the Act adding Explanation 2 to section 50C of the Act

is effective from 1.10.2009, the learned CIT (Appeals) should

have decided the appeal of the assessee on merits because

there was nothing on record to suggest that the assessee has

agreed for the addition. The learned CIT (Appeals) also in the

absence of any reply from the side of the assessee inferred

that the assessee agreed for the addition. The finding of the

learned CIT (Appeals) is, therefore, wholly incorrect to hold

that the assessee has agreed for the proposed addition.

Merely because the assessee did not file any reply before the

Assessing Officer, would not prove on record that the assessee

has agreed for the addition. Therefore, inference of the

learned CIT (Appeals) that the assessee has agreed for the

addition and is now not aggrieved against the order of the

Assessing Officer, is wholly illogical and incorrect. The order

of the learned CIT (Appeals) is, therefore, liable to be set

aside. Since the learned CIT (Appeals) did not decide the

appeal of the assessee on merits, therefore, the matter

requires reconsideration at his level. We accordingly set aside

the order of the learned CIT (Appeals) and restore the appeal

of the assessee to his file with direction to redecide the appeal

of the assessee on merits strictly in accordance with

provisions of section 50C of the Act and in the light of the

case laws relied upon by us and the learned CIT (Appeals) 7

shall give reasonable sufficient opportunity of being heard to

the assessee.

9. In the result, the appeal of the assessee is allowed

for statistical purposes.

Order pronounced in the open court on this 26th day of

March, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 26 t h March, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh