Income Tax Appellate Tribunal - Jaipur
Sharvan Kumar Sharma, Jaipur vs Ito, Jaipur on 4 October, 2017
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES (SMC), JAIPUR
Jh Hkkxpan] ys[kk lnL;] ds le{k
BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER
vk;dj vihy la-@ITA No. 307/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2008-09
Sharvan Kumar Sharma, cuke Income Tax Officer,
Plot NO. 50, Malviya Nagar, Vs. Ward-6(1),
Ramjipura, Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGWPS 1900 R
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vijay Gupta.
jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 03/10/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 04/10/2017
vkns'k@ ORDER
PER: BHAGCHAND, A.M.
This is an appeal filed by the assessee emanates from the order of
the ld. CIT(A)-2, Jaipur dated 17/03/2017 for the A.Y. 2008-09, wherein
the assessee has raised following grounds of appeal:-
"1. On the facts and circumstances of the case and in law, the ld.
CIT(A) was not justified in holding the addition of Rs. 44,74,609/-
under the head capital gain made by the A.O. The action of ld.
CIT(A) is illegal and deserved to be set aside. The ld. CIT(A) has
erred both in facts and in law.
2. On the facts and circumstances of the case, the ld. CIT(A) grossly
erred in disallowing deduction U/s 80C. The action of the ld.
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Sharvan Kumar Sharma Vs ITO
CIT(A) is illegal and deserved to be set aside. The ld. CIT(A) has
erred both in facts and in law."
2. The assessee has not filed return of income for the assessment
year 2008-09. Notice U/s 148 of the Income Tax Act, 1961 (in short the
Act) issued on 23/03/2015. Initially, the assessee submitted that during
the financial year 2007-08 relevant to assessment year 2008-09 he had
not entered into any transaction as per his knowledge. Only a power of
attorney was executed in favour of him on behalf of Shri Sanjay
Banshiwal, R/o- A-65, Naya Kheda, Jaipur. The assessee had claimed
had he had not earned any income. The Assessing Officer did not accept
the contention of the assessee and made an addition of Rs. 44,74,609/-
as long term capital gain. The relevant portion of the order of the
Assessing Officer is reproduced hereunder:
5. The assessee in response to show cause submitted his submission
vide his letter dated 23.02.2016. The submission of the assessee
was gone through carefully and discussed as under:
5(i). The assessee in his earlier replies/letter has denied of having any
sale of property and transaction. The assessee in his earlier replies
has stated that the property was sold on behalf of Shri Sanjay
Banshiwal as power of attorney holder only. However after issue
of show cause u/s 144, the assessee in his submission agreed that
the property under consideration was firstly purchased by him
from Sanjay Banshiwal for Rs 10,00,000/- through agreement on
15.05.2000 and a power of attorney was also executed in his
3 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
favour by Sanjay Banshiwal on 01.02.2008. Copy of agreement
and sale deed was also submitted along with his letter.
Afterwards, the property was sold out to Smt Pallavi Jain for
consideration of Rs 11,50,000/- on 02.02.2008 and sale deed was
got executed in capacity of power of attorney holder. Therefore as
mentioned in show cause issued u/s 144, the assessee had
purchased the property under consideration on power of attorney
and thus it was a transfer in his hands within the meaning and
purview of section 2(47)(v) of the IT Act. These findings and facts
were admitted by the assessee in his written submission filed on
23.02.2016. The assessee in his said written submission has
submitted and calculated capital loss at Rs 2,18,142/- taking sales
consideration at Rs 11,50,000/-. However the value by stamp
authorities was adopted at Rs 58,31,751/- by the Sub Registrar
u/s 54. In view of section 50C the sales consideration is to taken
at Rs 58,31,751/- i.e. the value adopted by sub Registrar.
5(ii) The assessee in his written submission filed on 23.02.2016 has
submitted that the section 50C is not applicable in his case. The
assessee vide letter submitted on 23.02.2016 contended that for
calculating of Capital Gain Income the provisions of Section 50C is
not applicable in the case of the assessee. In this regard it has
been stated that the right in property was sold without handing
over the possession of the property (as it was already acquired by
RIICO) and the title of the property was already in dispute with
RIICO and was under judicial review by the competent
authorities/courts.
5(iii) The contention of the assessee is not acceptable, as the
transaction took placed well before the decision of the Hon'ble
Supreme Court. The Hon'ble High Court, Jodhpur Bench had
4 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
delivered its decision in favour of Co-operative society. Initially the
property (plot) was allotted to Sh. Sanjay Banshiwal by Subhash
Sindhi co-operative Housing Society on 28.08.87 and the
possession was taken over by him. Afterwards the property was
purchased by the assessee through agreement and then sold out
further and received sales consideration. As per sale deed the
possession was also handed over to the purchaser. The property
was sold out by the assessee and sale deed was also got executed
with the stamp authorities. When there is clear cut transaction of
sale of immovable property it cannot be said and acceptable that it
was a transfer of sale of rights only. In view of the facts of the
case it is a clear transfer within the meaning and purview of
Section 2(47) of the IT Act, 1961 and the assessee is liable to pay
Capital Gain Tax and section 50C of the IT Act is clearly applicable
in the case. Section 50C is applicable on transfer of capital assets
being land or building or both. The assessee has sold out land in
form of plot and sale deed was got registered with Sub Registrar
in name of purchaser and possession was handed over to her. If
the property was already acquired by RIICO, it could not have got
registered with the Sub-Registrar. Thus 50C is clearly applicable in
the case. Therefore in view of the facts of the case as discussed
above the assessee has sold out the immovable property in shape
of plot and plea of the assessee that only rights were sold out and
thus section 50C is not applicable is not acceptable.
6. Further the assessee in his submission dated 23.02.2016has
objected the value adopted by the stamp authorities and
requested to refer to valuation officer. It is pertinent to mention
here that the assessment proceedings were in progress since
23.03.2015 when the notice u/s 148 was issued. In spite knowing
5 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
the facts the assessee never objected the value of the property
adopted by the stamp authorities during the assessment
proceedings. Firstly denied of involvement in transaction in sale of
property and after issue of show cause u/s 144 admitted the facts
that sale transaction was made and consideration was received by
him only which shows that the original owner has nothing to do
with the sale to Smt. Pallavi Jain. However in last juncture of the
proceedings vide his letter dated 23.02.2016 the assessee has
objected the value of the property adopted by the stamp
authorities without any basis. At the time of registration also the
value was not objected by the assessee. The assessee should have
objected the same well before in time which was not done so. It
seems that just for making objection only & without merits it is
done so. As the case is going to be time barred on 31.03.2016,
there is no time left for the DVO to estimate fair market value. It is
pertinent to mention here that statuary references to DVO
normally require 120 days. As such, the transaction took place in
the year 2007, therefore, it was obligatory on the part of the
assessee to file his return of income and to disclose the Income
truly and fully voluntarily, the assessee failed to do so, which
prove the conduct of the assessee that he is evasive and never
tried to disclose full facts of the case. The assessee has also relied
upon some of the decisions which are not squarely applicable in
the case of the assessee."
3. The ld. CIT(A) has dismissed the appeal of the assessee by
holding as under:
2.3 I have perused the facts of the case, the assessment order and the
submissions of the appellant. It is noted that the assessee had made a
6 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
sale of immovable property at Rs. 11,50,000/- sale consideration and
no return of income had been filed. As per information with the
Assessing Officer, the value of the property was adopted at
Rs.58,31,751/- by the Sub- Registrar IV, Jaipur. The Assessing Officer
noted that the said property had purchased for a consideration of Rs.
10,00,000/- from one Shri Sanjay Banshiwal through an agreement on
15.05.2000 and sold to Smt. Pallavi Jain for a consideration of Rs.
11,50,000/- on 02.02.2008 and the sale deed was registered with sub-
registrar-IV, Jaipur. Further facts of the case are that the property was
initially allotted to Shri Sanjay Bansiwal by M/s Subhash Sindhi
Cooperative Housing Society Ltd. and a dispute was going on between
RIICO and the society as the land had been acquired by the
government and handed over to RIICO and yet the M/s Subhash Sindhi
Cooperative Society had purchased the same from the Khatedars
being aware of the fact of its acquisition by the Government.
During assessment proceedings, it has been contended that provisions
of section 50C were not applicable as only the right in property was
sold without handing over the possession of the property and the title
of the property was in dispute. The Assessing Officer held that since
the sale and purchase of immovable property has taken place that the
sale deed had been registered and stamp value determined as per
rules, section 50C would be applicable and capital gains Rs.44,74,609/-
had been arrived at as long term capital gain.
In the present proceedings, the Authorized Representative has
submitted that in view of the decision of the Hon'ble Supreme Court in
this case the land which was sold by Khatedars was a disputed land
and sold through an agreement to the respondent society on
21.07.1981. Subsequently, the society without any charge or
7 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
conversion/ approval from state Government sold the land to Shri
Sanjay Bansiwal who in turn executed the sale agreement and power
of attorney in favour of Shri Sharwan Kumar Sharma in May, 2007 in
which, in the documents it was clearly mentioned that the land had
been acquired by the RllCO/State Government and if not
freed/released by the Government, purchasers will only be entitled to
compensation from the RlICO/State Government. On the above basis,
it is Claimed that the transaction between society to Sanjay Banshiwal,
Sharwan Sharma to Pallavi Ji, to the ultimate purchaser, is only
transfer of rights. Reliance was placed on the case of Tara Chand Jain
Vs. IT dated 09.10.2015 of ITAT, Jaipur and Atul G. Puranik Vs. ITO of
ITAT, Mumbai. Further, request was made for reference to valuation
officer as certain factors needed to be considered for its valuation. On
the basis of all the above, it was submitted that invocation of section
50C was not in order.
During the proceedings, the Authorized Representative was required
to produce the notification by which the Government of
Rajasthan/RIICO had acquired the property as also the evidence and
date on which physical possession was acquired by the government
but the Authorized Representative explained his inability and placed
reliance of the contents of the order passed by, the Hon'ble Apex
Court in this case dated 12.02.2013.
Considering the above factual matrix that all the parties involved right
from the M/s Subhash Sindhi Society, in reference to which the order
of Apex Court has been rendered and the subsequent sellers and
purchasers are aware of the illegality of the transaction as the land
had already been acquired by the Government and handed over to
RIICO as per the order. The Authorized Representative is also relying
8 ITA 307/JP/2017_
Sharvan Kumar Sharma Vs ITO
on the fact that since the Apex Court has held the transaction as void,
the sale and its subsequent events are also void and application of
section 50C of the I.T. Act. 1961 is incorrect.
The observation of the Hon'ble Court regarding the behavior of the
society included that society members had entered into an agreement
to sell even though, a notification under section 4 to carry out
acquisition had been issued by the government, fully knowing the legal
implication that may arise and the bonafide of the society had been
questioned. However, the relevant and important point is that at the
time of the sale transaction the Hon'ble Rajasthan High Courts order
was in force in this case, in which it had been ruled as follows (para 27
of the Apex Courts order):
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7254 OF 2003
The Rajasthan State Industrial Development ....Appellant and Investment Corporation
Versus
Subhash Sindhi Cooperative Housing Society ...Respondents Jaipur & Ors.
WITH
CIVIL APPEAL NO. 853 OF 2013
JUDGMENT
Dr. B. S. CHAUHAN, J.
1. These appeals have been preferred against the impugned judgment and order dated 30.7.2002 passed by the High Court of Rajasthan (Jaipur Bench) in Civil Writ Petition No. 454 of 1993, by which the High Court has issued directions to the Rajasthan State Industrial Development and Investment Corporation (in short `RIICO'), the appellant herein, to release the land in dispute from land Page 2 acquisition in favour of respondent No.1 - housing society (hereinafter referred to as `the society').
9 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO
27. A large number of issues were agitated before the High Court, however, the High Court did not deal with any of those. The Court allowed the petition merely observing:
"The petitioner Subhash Sindhi Cooperative Housing Society is contesting only for a limited piece of land measuring 17 Bighas 9 Biswas which had been acquired and given to DGDC by the RIICO. The case of the society is that in view of the observations made by the Supreme Court in its order, it has pleaded its case in this petition on the basis that the other land which had been acquired had been released or it stood de facto released and the government was itself a party to it in releasing the acquired land and large number of lands of this nature de facto stood released from acquisition inasmuch as houses have been constructed thereon; the Government itself has acquiesced with such construction and has also taken steps for regularisation of such construction and the decision which was taken by the JDA in the meeting headed by the Chief Minister was implemented qua all others except the land of petitioner Society, merely because the petitioner society's land had been given to DGDC/RIICO. This small piece of land which is claimed by the society in the facts and circumstances of the case, can very well be restored to the Society and to that extent, land allotted to DGDC can be curtailed without having any adverse impact on the prospects of business of DGDC. Facts have come on record through documents that to start with, DGDC had demanded only 35 acres of land. This demand was raised from time to time and ultimately, it reached upto 105 acres. It is also on record that the RIICO had given only 80 acres of land to DGDC as against the allotment of 105 acres. In such a situation, if a small piece of land measuring 17 Bighas 9 Biswas out of the land allotted to DGDC is restored back to the petitioner Society it cannot have any adverse impact on the business prospects of DGDC nor the RIICO may 29 Page 30 have any just objection and the State Government which has already acquiesced with the release of such acquired lands in large number of cases, cannot have any legitimate case to contest the grant of relief to the petitioner society and the petitioner Society is found to be entitled for the same on the principles of parity as well as equity."
Due to the same, the ownership of the land was legal at the time of registration of sale deed and vested with the seller. Further, the noting 10 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO in the registered sale deed regarding the land and its ownership are reproduced below:
;g fd eq[r;kjdrkZ Jh lat; ca'khoky dks lqHkk'k flU/kh dks vkWijsfVo gkmflax lkslk;Vh fy- t;iqj jft- uEcj 1588 ,y ds vkoaVu i= }kjk IykV uEcj 120 ;kstuk la[;k 23 r:N;k uxj] t;iqj esa vkoafVr fd;k x;k Fkk ftldh vfxze jkf'k ,oa izo's k 'kqYd o 210@& :i;s tfj;s jlhn Øekad 258 fnuakd 8-8-1981 bZLoh dks tek djk fn;s Fks] rRi'pkr~ lfefr ds la'kksf/kr ekufp=kuqlkj IykV uEcj 120 ds LFkku ij IykV uEcj 113 ifjofrZr dj fn;k x;k rFkk lfefr }kjk vkoaVu i= fnukad 28- 08-1987 bZLoh dks mDr lfefr esa tek djkdj mDr of.kZr IykV dk okLrfod dCtk e; lkbV Iyku ds izkIr dj fy;k FkkA bl izdkj eq[r;kjdrkZ Jh lat; ca'khyky mijksDr of.kZr IykV uEcj 113 ¼iqjkuk uEcj 120½ ;kstuk la[;k 23 r:Nk;k uxj] Vksd a jksM] t;iqj dk fcuk fdlh vU; O;fDr ds lhj o lk{ks ds ,d ek= ekfyd] Lokeh o vf/kdkjh gS]a ftldks eq[r;kjdrkZ us vkt rd fdlh Hkh vU; O;fDr dks jgu] foØ; o gLrkUrfjr vkfn ugh fd;k gS rFkk mDr of.kZr IykV jhdks ds vfrjfDr izR;sd izdkj ds >xM+s V.Vs] vokfIr] _.k Hkkj ljdkjh] v}Zljdkjh] cSd a o tulk/kkj.k ls eqDr gS rFkk fdlh dtkZ] dqdhZ fMdh o vuqcU/k i= }kjk Hkh cfU/kr ugha gS ,oa blds fo'k; esa e[r;kjdrkZ dks izR;sd izdkj ls vius dke esa ysus o jgu] foØ; o gLrkUrfjr vkfn djus ds lEiw.kZ Lorokf/kdkj ekfydkuk gd izkIr gSA ;g fd foØ; fd;s x;s IykV ds lEcU/k esa jhdks ds vfrfjDr vkt ls igys dh dksbZ cdk;k jkf'k] dksbZ >xM+k] V.Vk] _.k Hkkj
11 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO ljdkjh] v}Zljdkjh] cSad o tulk/kkj.k dk ik;k x;k vFkok bl fcpkSrh ds fo:} dksbZ O;fDr] cSd a o laLFkk fdlh izdkj dh vkifRr ;k vk{ksi djrs gSa rks mu leLr ds fuiVkjs dh ftEesnkjh eq[r;kjdrkZ izFke i{k dh gksxh rFkk vkt ds i'pkr~ dh leLr ftEesnkjh f}rh;i{k dh gksxh ,oa Hkfo'; esa yxus okys leLr VSDlst] fu;eu 'kqYd] 'kgjh tekcUnh] lhojst pktZ vkfn leLr f}rh; i{k gh vius ikl ls tek djkosxhA ;g fd mDr of.kZr lEifRr jhdks dh vokfIr esa gs rFkk ekuuh; mPpre U;k;ky; ds ;gk okn fopkjk/khu gS] ftldh tkudkjh f}rh;i{k dks ns nh gS rFkk bldh leLr ftEesnkjh f}rh;i{k dh Loa; dh gksxhA ;g fd foØ; fd;s x;s IykV ls lEcfU/kr leLr vly dkxtkr izFkei{k us f}rh;i{k dks lEHkyk fn;s gSA In view of the discussion as above, it is clear that on the date of transaction, the ownership of the land was with the appellant as per the order of the Jurisdictional High Court in force at that time. The registered sale deed clearly shows that the land was transferred for a consideration and all the papers of ownership were handed over. In view of the above, the value adopted by stamp valuation authority has to be adopted. As regards reference to valuation officer, the same was requested for by the assessee at the fag end of the financial year and the time was insufficient for the same and the assessment was getting time barred. The compliance was made to the show cause notice under section 144(1) on 01.02.2016. In view of the above, the application of section 50C is upheld and the addition of Rs.44,74,609/- under the head long term capital gain is confirmed.
12 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO
4. While pleading on behalf of the assessee, the ld AR of the assessee has submitted that the assessee has not sold out any property, therefore, the provisions of Section 50C of the Act are not applicable. He claimed that the property was sold without handing over the possession and the title of the property was in dispute.
5. On the other hand, the ld DR has submitted that the assessee has sold the plot of land, which was allotted to him by a Cooperative society and the sale deed clearly mentions in this regard, therefore, there is no merit in the claim of the assessee.
6. After hearing both the sides, I hold that this was a transfer of a plot, which was allotted to its member by a cooperative society, which was purchased by the assessed and sold. Therefore, there is no substance in the pleadings of the assessee. The facts and circumstances of the case are clearly shows that the provisions of Section 50C of the Act are applicable and it was a transfer of a capital asset being plot of land.
7. The second argument of the ld AR of the assessee was that the assessee has submitted before the A.O. that the value adopted by the stamp valuation authority was on a higher side and requested to the Assessing Officer to refer the matter to the Valuation Officer but the 13 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO same was not done. The Assessing Officer dismissed the claim of the assessee for the reason that the assessment was getting time barred and there is no time left for the DVO to estimate the fair market value.
For ready reference, the provisions of Section 50C(2) of the Act read as under:
50C (2) Without prejudice to the provisions of sub-section (1), where--
(a) the assessee 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.
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."
Thus, the provisions of the Act provides that where the assessee claims before the Assessing Officer that the value adopted or assessed by the Stamp Valuation Authority under sub-Section (1) exceeds the fair market value of the property as on the date of transfer then the Assessing Officer may refer the valuation of the capital asset to the 14 ITA 307/JP/2017_ Sharvan Kumar Sharma Vs ITO Valuation Officer. Thus the assessee's request should have been accepted with regard to reference to DVO. Therefore, in my considered view and in the interest of justice and equity, I find it appropriate to restore the matter to the file of the Assessing Officer with a direction that the matter may be referred to the Valuation Officer as per the provisions of Section and decide the issue afresh.
8. In the result, the appeal of the assessee is allowed for statistical purposes only.
Order pronounced in the open court on 04/10/2017.
Sd/-
¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04th October, 2017 *Ranjan vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Sharvan Kumar Sharma, Jaipur.
2. izR;FkhZ@ The Respondent- The ITO, Ward-6(1), 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. 307/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar