Income Tax Appellate Tribunal - Hyderabad
Jagadishwar Rao Madhavaram, Hyd, ... vs Ito, Ward-11(5), Hyd, Hyderabad on 6 December, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" (SMC), HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 1208/HYD/2016
Assessment Year: 2008-09
Sri Jagadeshwar Rao Income Tax Officer,
Madhavaram, Vs Ward-11(3),
HYDERABAD HYDERABAD
[PAN: ABGPR8677P]
(Appellant) (Respondent)
For Assessee : Shri K.A. Sai Prasad, AR
For Revenue : Smt. N. Swapna, DR
Date of Hearing : 30-11-2017
Date of Pronouncement : 06-12-2017
ORDER
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-5, Hyderabad, dated 30-06-2016, for the AY. 2008-09 on the issue of adoption of sale consideration invoking provisions of Section 50C of the Income Tax Act [Act].
2. Briefly stated facts are that assessee, an individual had sold two properties during the year. On one property there was Long Term Capital Gain which was claimed exempt as sale of agricultural land. In a survey, assessee admitted the Long Term Capital Gain and filed revised return, on which there is no dispute.
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The present dispute is with reference to the second property sold by assessee.
2.1. During the year under consideration, assessee along with Co-
owner sold a property situated in Hakeempet. It was claimed that it was sold for Rs. 40,00,000/- and hence his 1/4th share therein amounting to Rs. 10,00,000/- was offered by him after deducting there from the cost of acquisition thereof. However, since the value of the said land as per SRO was Rs. 91,37,500/-, the Assessing Officer( AO )referring to Section 50C called upon the assessee as to why he should not adopt assessee's 1/4th share at Rs. 22,84,375/- instead of Rs. 10,00,000/- offered by assessee in the return. Assessee in reply submitted as under:-
"I had offered income from short term capital gains on sale of Hafeezpet land. I am enclosing a copy of the purchase deed evidencing my co-ownership 25% share in the property. The proportionate cost is claimed as expenditure. Sale consideration of Rs. 10,00,000 offered by me in the computation represents my share of consideration as reflected in the registered sale deed. The value adopted by the SRO is higher than the sale consideration received by me. The sole purpose of fixing the rates as per SRO is to collect stamp duty. These rates do not reflect the actual prevailing fair market value. These area-wise rates of SRO are adopted by fixing a uniform rate of land for the entire area/locality, which inherently disregards peculiar features of particular property. There can be wide variations in price of land in the same area due to different reasons. The sweeping generalizations inherent in the circle rates cannot hold good in all situations. It is, therefore, not uncommon that while fixing the area rates, local authorities do err on the side of excessive quotes by adopting higher rates of land in a particular area. I, therefore, request your goodselves to adopt the sale consideration as reflected in the sale deed as the fair market value of the property at the time of sale."
2.2. However, the AO stating that assessee's arguments are not acceptable because the provisions u/s. 50C provide for adoption of assessed value by Registration Authorities, that assessee had not I.T.A. No. 1208/Hyd/2016 :- 3 -:
disputed the assessment made by the Registration authorities, added the difference between the SRO value and the value returned by assessee to the income returned.
3. Before the Ld.CIT(A), assessee has raised specific grounds (Ground Nos. 3 and 4) contending that AO ought to have referred the matter to valuation officer and not justified in his reasoning that assessee had not disputed the value made by registering authority. Ld.CIT(A) had upheld the action of AO by stating as under:
"The assessing officer categorically mentioned that assessee had not disputed the assessment made by the registration authorities. The assessee had also not requested for valuation to be made by the valuation officer. Since the assessing officer viewed that there is no need of referring the case to valuation officer I hold that the addition made by the assessing officer is justified in accordance with the provisions of section 50C. Hence all the grounds of appeal are dismissed".
4. Referring to the grounds raised before the Ld.CIT(A) and facts stated, it was the submission of the Ld. Counsel that Ld.CIT(A) got confused with admission of Long Term Capital Gain in survey and adoption of values u/s. 50C and wrongly opined that assessee had tried to evade taxes. These two issues are not connected. The dispute is with reference to the second property on which provisions of Section 50C was adopted. It was submitted that the reference to valuation officer is mandatory and if AO and CIT(A) failed to refer, in spite of assessee objecting before AO and raising specific grounds before CIT(A), the adoption of values u/s. 50C should be struck-off and no further chance should be given. He relied on Co-ordinate Bench decision in the case of ACIT Vs. Lalitha Karan in ITA No. 1130/Hyd/2015 dt. 04-01-2017, wherein I.T.A. No. 1208/Hyd/2016 :- 4 -:
the Co-ordinate Bench at Hyderabad had upheld the action of Ld.CIT(A) in deleting the addition, as AO failed to refer the matter to DVO under the mandatory provisions of Section 50C(2).
5. Ld.DR, however, relied on the orders of AO and CIT(A) and has submitted that the matter may be referred to AO again to comply with the provisions, as assessee had not specifically requested the reference.
6. I have considered the rival contentions. It is true that the Co-ordinate Bench had upheld the order of Ld.CIT(A) wherein the assessee had specifically requested for reference to valuation officer and AO failed in his duty, in the above referred case of ACIT Vs. Lalitha Karan in ITA No. 1130/Hyd/2015 dt. 04-01-2017. In this case, however, the assessee had given reasons why the stamp value should not be adopted, but not made any specific request for reference to valuation officer. Even though specific objections were raised before the Ld.CIT(A), Ld.CIT(A) failed to consider the grounds and in fact, got confused with another issue of admission of Long Term Capital Gain during the survey, to opine that assessee tried to evade taxes. The action of CIT(A) in rejecting the specific contentions is not correct. He should have directed the AO to refer the matter to valuation cell. In fact, the grounds raised are not addressed by CIT(A), even though he had considered the mandatory nature of Section 50C in his decision part. It was also submitted that no action was taken on the co-sharer who has sold the balance property.
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7. The Co-ordinate Bench at Mumbai in the case of Rina Surendra Patel Vs. ITO in ITA No. 943/M/2012 dt. 03-07-2013 has considered the similar facts and held as under:
"7. We have heard both the parties and perused the orders of the Revenue Authorities and the information filed before us. We find that the order of Assessment evidences the facts relating to the objections raised by the assessee with regard to the lower market value of the flat at Mira Road and para 6 of the assessment order is relevant here. Of course, there is no expressed prayer for making a request for reference to the Valuation Officer u/s 50C(2) of the Act. However, the impugned order of the CIT (A) contains the assessee's request for referral to the DVO and objection for adopting the market value of Rs. 11.25 lacs without attending to the disadvantages narrated by the assessee before the authorities. CIT (A) instead of rectifying the said deficiencies in the order of the AO, he preferred to dismiss the assessee's objections by simply mentioning that the assessee failed to make a formal prayer for referral of the property to the DVO for want of market valuation. In our opinion, such decision is not proper considering the 'principles of natural justice' and administration of justice to the appellant. Therefore, we find it relevant to accept the prayer of the assessee for setting aside the grounds raised before us to the files of the AO for fresh adjudication of the issues raised in accordance with law after granting a reasonable opportunity of being heard to the assessee. Accordingly, grounds raised by the assessee are set aside".
8. In the case of Raj Kumari Agarwal Vs. DCIT [150 ITD 597] (Agra-Trib) the Co-ordinate Bench at Agra has held as under:
"Once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities, it is incumbent upon the Assessing Officer to refer the valuation of said land or building to the departmental valuation officer. In the instant case, the Assessing Officer has not done so. In view of this factual position, it is deemed fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo after making a reference to the DVO, and completing the assessment on the basis of the valuation so received from the DVO. ".
9. Respectfully following the above decisions, I am of the opinion that it is fit and proper to remit the matter to AO for adjudicating denovo after making a reference to the DVO and after giving due I.T.A. No. 1208/Hyd/2016 :- 6 -:
opportunity to assessee and considering his objections. The issue in these grounds are accordingly set aside to the file of AO for adjudicating afresh as per facts and law.
10. In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 6th December, 2017 Sd/-
(B. RAMAKOTAIAH) ACCOUNTANT MEMBER Hyderabad, Dated 6th December, 2017 TNMM I.T.A. No. 1208/Hyd/2016 :- 7 -:
Copy to :
1. Sri Jagadeshwar Rao Madhavaram, C/o.
Ch. Parthasarathy & Co., 1-1-298/2/B/3, 1st Floor, Sowbhagya Avenue, St.No.1, Ashoknagar, Hyderabad.
2. The Income Tax Officer, Ward- 11(3), Hyderabad.
3. CIT (Appeals)-5, Hyderabad.
4. Pr.CIT-5, Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.