Income Tax Appellate Tribunal - Ahmedabad
Shri Arjanbhai Karshanbhai Patel,, ... vs The Income Tax Officer, Ward-3(2)(6),, ... on 28 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH
Before: Shri Rajpal Yadav, Judicial Member
And Shri Amarjit Singh, Accountant Member
ITA No. 2692/Ahd/2016 & CO No. 05/Ahd/2017
Assessment Year 2012-13
The ITO, Shri Arjanbhai
W ard- 3(2)(6), Karshanbhai Patel,
Ah medabad Vs 20, Krishna Park,
(Appellant/Respondent) Jashodanagar Road,
Nr. Kans, Vat va,
Ah medabad-382443
PAN: AHTPP9930C
(Respondent/Cross
Objector)
Reve nue by: Shri B.P. Sri vastava, Sr. D.R.
Assessee by: Shri Shailes h Sha h, A.R.
Date of hearing : 10-09-2018
Date of pronounce ment : 28-09-2018
आदेश /ORDER
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This appeal filed by revenue and cross objection filed by assessee for A.Y. 2012-13, arise from order of the CIT(A)-3, Ahmedabad dated 31-08-2016, in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. The revenue has raised following grounds of appeal:-
"1. The Id. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,21,41,964/- made on account of long term capital gain u/s. 50C of the Act. 1.1 The Ld. CIT(A) has further erred in exercising his powers under Rule 46A of the I. T. Rules and admitting the additional evidences directly collected by him without getting them verified by the Assessing Officer and inviting the comments thereon from the Assessing Officer.
I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 2 ITO vs. Shri Arjanbhai Karshanbhai Patel
2. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer."
3. The cross objection filed by the assessee has supported the order passed by the Ld. CIT(A) stating that appeal decided by the Ld.CIT(A) was in accordance with the Law and the assessee has also filed documentary evidences regarding cancellation of sale deeds before the assessing officer therefore the ground raised by the revenue on the basis of rule 46A will not arise. Both the grounds of appeal and cross objection of the assessee are inter-connected to the common issue, therefore, the same are adjudicated together.
4. The brief fact of the case is that return of income declaring income of Rs. 2,18,810 was filed on 27th December, 2011. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act. During the course of assessment proceedings, the assessing officer noticed that assessee had sold an immovable property which was registered with sub-registrar Narol, Ahmedabad on 29th Jan, 2011. In the sale deed, the assessee has declared the sale consideration of Rs. 3 lacs. However, the valuation of the property as per stamp duty paid was determined at Rs. 70,19,837/-, therefore, the assessing officer observed that assesseee has undervalued the property by Rs. 67,91,837/- . During the year under consideration the assessee had also sold another property showing consideration of Rs. 2 lacs but the value as per the stamp duty paid was determined at Rs. 54,52,100/- The assessing officer has worked out the undervaluation of sale consideration of these two properties to the amount of Rs. 1,20,38,340/- (Rs. 67,86,240/- Rs. 52,52,100/-) .The assessee was asked to explain why not the capital gain should be determined as per provision of section 50C of the act on the sale of the two properties as mentioned above. No reply has been furnished by the assesssee during the course of assessment proceedings, therefore, the assessing officer has determined total long term capital gain on selling of two properties as cited above to the amount of Rs. 1,21,41,964/- and added to the total income of the assessee. I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 3 ITO vs. Shri Arjanbhai Karshanbhai Patel
5. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee. The relevant part of the decision of the ld. CIT(A) is reproduced as under:-
"Decision:
I have considered the facts mentioned in the assessment order of the AO and the submission filed by the appellant carefully. The affidavit filed is also considered. At the outset, it is stated that the appellant has not been adequately conversant with the complexity of income tax Act and that is getting reflected in the confused/inconsistent replies on record, however, the facts have been co-related and corroborated to give a judicious decision in this case.
The original owner of the captioned land was one Govindbhai H. Patel from whom the\ land was purchased by "Patel Saw Mill" a Partnership firm in which Arjanbhai K. Patel, Rameshbhai G. Patel and Karsanbhai Somaji were partners through a Banakhat executed on 20/05/1992 on stamp paperRs.10/- (observation: however, the appellant has acted as sole owner while undertaking failed exercise of sale). The purchasers including the appellant is in possession of land but the final sale deed in their favour was not executed as the land was of Navi Sharat and NA was' not issued. The second land situated at 572/4, Taluka Vaatva, Village Vinzol was purchased from Savdharia Corporation on agreement stamp paper Rs.20/-. The land as noted by the AO were .sold, bearing Ward No.01317, T.P. No.72, Final Plot No.46 (1+2), Survey No.572 and survey No.568, Final Plot No.42+43/2, 44(1+2)1- municipal tenement No.0317-43-1076-0001-M. the appellant has also sold a property bearing City Survey No.334 having ward No.48 and housing plot No.334, T.P. scheme No.51, municipal tenement No.0418-15-1396- 0001-H. For both the properties the appellant has received Rs.3,00,000/- and Rs.2,00,00'0/- respectively from the purchaser as sale consideration. However, the appellant has submitted that the title of properties was not clear hence marketable therefore, the deed of cancellation was executed on 24.05.2016 for property situated at Survey No.334, Mouje Village Khokhara, Mahemadabad and the appellant returned a sum of Rs.2,00,000/- to the purchaser. The second property survey No.568, final Plot No.42 + 43/2, 44 (1+2)/1, Final Plot No.43 (1+2) Vinzol sale deed was also cancelled and same was executed on 25.04.2016. The consideration so received of Rs.3,00,000/- was returned. A copy of Form No.7/12 for property-1, has been filed to show that there was no clear title and the property still remains in the names even as on 03.05.2016 as it was in the revenue records a few years ago. Bank statement of Kotak Mahindra Bank has also been filed wherein it is seen that the sales consideration received have been returned separately on 20.08.2016. Therefore, as per perusal of banakhat, sale deed and cancellation deed alongwith bank statement and 7/12 clearly indicates that no sale of impugned two properties has actually taken place by the appellant in question. The appellant has filed a number of case laws such as
i) Vania Silk Mills (P) Ltd. Vs. CIT[1991] 191 ITR 647 [SC]
ii) ACIT vs. Hotel Harbour View [2010] 133 TTJ 0454 (Coch)
iii) CITvs. Chunilal Prabhudas & Co. [1970] 76 ITR 566 [Cal]
iv) Dr. Devendra H. Dave Udgith vs. ITO 49 ITR (Trib.) 561 (Mum), wherein it is stated that in such circumstances, no tax liability can be fastened on the appellant and the argument appears to be correct.
4.1 The appellant has raised another argument saying that the valuation of both the lands was disputed before the AO and filed a copy of letter filed on 22.01.2015. It has been mentioned therein that "As I have no dear title of the properties as detailed in my previous reply, I can claim that the value adopted/assessed by the stamp valuation authority under Section 50C(1) exceeds the fair market value in my hand as on the date of transfer. Title of the property is the main aspect for valuation of the property which is not clear in my hands. Generally no one will purchase the properties without clear title but I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 4 ITO vs. Shri Arjanbhai Karshanbhai Patel here purchaser are my son and sister's son as the intention is to transfer only the shed on the land as the land cannot be sold as I have only possession on the land but not have any other right on the property (land)." The appellant filed a copy of record sheet received by present AR from Shri Rangani, the AR who attended the impugned assessment proceedings to show that the valuation had infact being disputed before AO as the title was defective etc. The evidences indicate that such a letter had infact been ' filed but has not been commented in the assessment order. AR's certification of the document in question is on record. The AO calculated the long term capital gain equivalent to stamp valuation of property at Rs.54,52,100/- without giving benefit of any indexation or cost thereto, for property-1. The AO further calculated the long term capital gain equivalent to stamp valuation of property at Rs.66,89,864/- for second property by allowing cost + indexation (95-96).
The appellant has discussed the provisions of section 50C (2) and emphasized that the Assessing Officer ought to have sent the matter to DVO in case he was to adopt stamp valuation rates. After all, the properties in question were having inherent and serious shortcomings so as to make them marketable. The appellant has relied on the ratio in the case of Gopi S. Shivnani vs. ITO (2011) 39(ii) ITCL 423(MUM"G"TRIB). Further the appellant filed a notarized affidavit dated 10.05.2016 as under:
"7 Arjanbhai Karshanbhai Patel, aged 58 years, residing at 20, 21, Krishna Park, Jashodanagar, Ahmedabad take oath and state as under:
1. That I am assessed to Income Tax by t-he Assessing Officer, Ward 3(2)(6), Ahmedabad on file bearing PAN AHTPP9930C.
2. That the Assessing Officer has made mistake in writing the Assessment year and previous year, in the Assessment order passed u/s.143(3) of the IT act, 1961 dated 25.03.2015 the.previous year should be 2010-11 and assessment year should be 2011- 12 instead of previous year 2011-12 and assessment year 2012-13.
3. That I preferred an appeal to the Commissioner Appeal-3, Paratyaksh Kar Bhavan, Panjarapole, 'Ambawadi-15 against the assessing officers order of Assessment dated 25.03.2015 for the Assessment order 2011-12.
4. The- M/s. Patel Saw Mill, a partnership firm had purchased land situated at Survey No.334/335, situated at district Ahmedabad, Taluka Maninagar, Village Khokhara (Non Agriculture Land) on a stamp paper of Rs. 10/- by executing agreement to sale from Govindbhai H. Patel.
5. That I had purchased land situated at 572/4, district Ahmedabadd, Taluka Vatva, village, VinzoL from Savdharia Corporation by executing agreement to Sale on stamp paper of Rs.20/-.
6. That I had Gifted only residential property and shop at Survey No.334, T.P. Scheme No.51, Dist. Ahmedabad Sub Dist. Ahmedabad, Taluka City, Gam Moje, Khokhara, Mahemdabad having Market value of Rs.8,00,000/- on land situated at S. No. 334.
7. That I had gifted Shop having construction area of 100 Sq.Mtr. Residential Building having 103 mtr. and shed of 500 Sq.Mtr. which is known as Pate/ Timber Trading Company at Survey A/o.572, T.P. Scheme No.72, Final Plot No.46 (1+2) and survey No.568 P.P. No.42 + 43/2, 44 (1+2)1 Dist. Ahmedabad Sub Dist. Ahmedabad, Taluka Daskoi, hathijan, Vinzol having market value of Rs. 10,00,0007- on land situated at Survey No. 572.
8. That as I was intending to give gift of constructed property to my son (Sureshbhai Arjanbhai Patel) on land bearing survey No. 568/572, Jashodanagar Ring Road, Vinzol, Ahmedabad and nephew (nephew) Rameshbhai Govindbhai Patel on land bearing Survey-No.334, Nr. Gor No Kuvo, Khokhara, Maninagar, Ahmedabad. I have executed gift deed in favour of Sureshbhai A. Patel and Rameshbhai Govindbhai Patel on 26.06.2010.
9. That as I was intending to give Gift to immovable property I had approached my advocate and he has advised me to execute sale deed for the captioned property.
I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 5 ITO vs. Shri Arjanbhai Karshanbhai Patel
10. That on the basis of advise of my advocate I had executed Sale deed in favour of my son (Sureshbhai A. Patel) and nephew (Rameshbhai G. Patel).
11. That my intention was to give gift of only building and not land as I was not the owner of land.
12. That as on today also my Name is not appeared in the Government Record Form No.8A and Form No. 7 for the property bearing survey No. 334/335 and Survey No. 568/572.
I ARJANBHAI K. PATEL do hereby verify that the contents of para 1 to 12 afore going are true to the best of my knowledge and belief nothing material has been concealed and no part of it is false.
Verified at Ahmedabad on this __ day of May 2016.
Place : Ahmedabad Date : __ May 2016
Sd/-Deponent"
4.2 I have carefully gone through the affidavit of appellant on record. I find the ratio
favourable to the appellant in following case laws:
(a) Dinesh Kumar Mittal vs. ITO (1992) 193 ITR 770 (All.),
(b) CIT vs. Smt. Raj Kumar Vimla Devi and another (2005) 279 ITR 360 (All.)
(c) CIT vs. Chandani Bhochar (2010) 323 ITR 510 (P&H),
(d) N. Meenakshi 226 CTR 625 (Mad.),
(e). Mohd. Shoib vs. DCIT (2009) 29 DTR 306 (ITAT Lko), .
(f) Meghraj Baid vs. ITO (2008) 114 TTJ 841 (Jodh.), v:(g): Ajmal Fragrances & Fashions (P) Ltd. vs. CIT (2009) 34 SOT 57 (Mum.),
(h) Nandita Khosla 11 Taxmann.com 344,
(i) ShaikMohidden vs, ITO (2009) 123 TTJ 411(Chennai)
(k) ITAT Delhi in case of ITO vs, Manju Rani Jani 24 SOT 24,
(n) ITAT Lucknow in case of Jitendra Mojhan Saxena 117 TTJ 974 (Trib. Luck.) and
(c) CIT and another vs. Shri Chandra Barain Chaudhri
(g) ITAT Mumbai in case of Kalpataru Industries vs. ITO - ITA No. 5540/Mum/07 dated 24-08-.2009, I have gone through the judgment relied by the appellant. Hon'ble Calcutta High Court decision in the case of Sunil Kumar Agrawal Vs. CIT-372 ITR 83 (Cal.), has held that reference to DVO was mandatory and the relevant portions of judgment is reproduced as under:
"7. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs. 10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that^ > his case was that the fair market value of the property could not be Rs.35 lakhs as x assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer.
8. 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 not eh basis of the valuation to be made by the District Sub Registrar for the purpose of stamp I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 6 ITO vs. Shri Arjanbhai Karshanbhai Patel duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. 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 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 follow the course provided by law."
It is understood that the appellant raised objections to the Stamp Duty Valuation and the AO failed to send the matter for valuation to DVO as per provisions of section 50C(2). 4.3 Firstly, the fact of the matter which cannot be disputed is that there is no effective sale of the assets involved, therefore, no taxability can arise. Secondly, AO overburdened himself with avoidable responsibility by not sending the issue for expert opinion to the DVO as per specific provisions of sub section 2 of section 50C of IT Act, 1961 and mechanically adopted stamp valuation rates by not considering the shortcomings in the titles of the land and surrounding circumstances such as cancellation sale deed on record. The jurisdictional ratio in the case of Jute Corporation of India Ltd. 187ITR 688 (SC) has been kept in mind. In view of above facts and the ratio laid down by various High Courts and ITATs on section 50C, the addition of Rs.1,21,41,964/- made u/s.50C of IT Act, 1961 is hereby deleted. The ground of appeal is allowed."
6. We have heard the rival contentions and perused the material on record carefully. During the assessment, the assessing officer noticed that assessee has sold two properties for sale consideration at Rs. 3,00000/- and Rs. 2,00000/- respectively as elaborated supra in this order. The value on the basis of stamp duty paid was determined at Rs. 70,86,240/- and Rs. 54,52,100/- resulting in capital gain Rs. 1,20,38,340/-. Before the ld. CIT(A) the assessee has contended that he was not having clear title of the properties and the value adopted by the stamp valuation authority u/s. 50C(1) of the act exceeded the fair market value of the property. He also submitted before the ld. CIT(A) that the assessing officer was not justified in adopting the sale consideration as per the stamp valuation without referring the matter to the DVO for ascertaining the fair market value of the property according to the provision of section 50C(2) of the act. Before the Ld.CIT(A). it was also claimed that the assesse was only having right in the property and there was no ownership over the impugned land. It is also claimed that he had constructed residential shelter on the land which he had given as a gift to his son. It is also stated that impugned land was originally procured by the partnership firm named Patel Shaw Mill in which the assessee was partner from Shri Gobindbhai H. Patel as per banakhat executed on 25/05/1992 and the assssee was in the possession of the land but the final sale I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 7 ITO vs. Shri Arjanbhai Karshanbhai Patel deed was not executed as the land was of Navi Sharat and NA was not issued. The second land was purchased from Savadharia Corporation on agreement stamp paper of Rs. 20/-. The assessee has claimed befor the Ld.CIT(A) that the title of the properties were not clear therefore the sale deed of both the properties were cancelled no 24/05/2016 and 25/04/2016 respectively and the sale considerations received of both the properties of Rs. 2,00,000/- and Rs. 3,00,000/- were retuned. The ld. CIT(A) has deleted the impugned addition briefly on the basis of the following two reasons:-
(i) The assessing officer has not sent the matter for valuation to DVO as per provisions of section 50C(2) of the act.
(ii) Not considering the shortcoming in the titles of the land such as cancellation of sale deed.
We have considered the findings of the ld. CIT(A) and perused the material on record carefully. It is noticed that the during the course of assessment proceedings the assessing officer has obtained information from the sub- registrar, Narol, Ahmedabad that the assessee had sold immovable property. The assessee has received sale consideration of Rs. 3 lacs and 2 lacs respectively but the value of these properties as per the stamp value was to the amount of (Rs. 7086240 + Rs. 5452100) Rs. 12038340/-. Therefore, the assesse was show caused to explain any the difference between the market value and sale consideration should not be added to the total income within the purview of provisions of section 50C of the I.T. act. However, the assessee has failed to make any compliance before the assessing officer and even has not raised any objection in respect of the proposed addition. Subsequently at the time of appellate proceedings before the ld. CIT(A), the assessee has briefly raised the following new contentions :-
(i) Title of the properties were not clear.
I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 8 ITO vs. Shri Arjanbhai Karshanbhai Patel
(ii) (ii) The assessing officer should have referred the matter to the DVO to ascertain the fair market value of the property as per section 50C(2) of the act.
(iii) The assessee has only rights in the property and there was no ownership of land.
(iv) The assessee had given only constructed Residential property, shop and shed which were given by way of gift to his relatives viz. son and nephew.
(v) The assessee had cancelled the deal and received back the consideration from the buyers.
(vi) The ld. CIT(A) has also referred a letter dated 22/01/2015 addressed to the assessing officer stating that there was no clear title of the properties and the stamp valuation authority under section 50C(1) has exceeded the fair market value in his hand as on the date of transfer.
In the light of the above facts and circumstances, we observe that assessee has claimed that he has cancelled the deal and received back the consideration from the buyers. The ld. CIT(A) has neither elaborated in his findings any verification made by him about the correctness of the additional information/material provided by the assessee that there was no effective sale of the assets nor he has given any opportunity to the assessing officer to verify these facts and even no remand report was called. We have further observed that the ld. CIT(A) has also not called any remand report from the assessing officer regarding the claim of the assessee furnishing of information vide letter dated 22/08/2014 and 22/01/2015. The ld. CIT(A) has also not recorded any reasons as per rule 46A of the I.T. Rules in his order regarding the additional evidences which were not furnished before the assessing officer at the time of assessment proceedings.
I.T.A No.2692 /Ahd/2016 & CO No. 05/Ahd/2017 A.Y. 2012-13 Page No 9 ITO vs. Shri Arjanbhai Karshanbhai Patel In the light of the briefly stated lacuna and deficiency in the order of the ld. CIT(A), we are of the view that in the interest of justice it will be appropriate to restore this case to the file of assessing officer to adjudicate afresh after referring the matter to DVO as per the provisions of section 50C(2) of the Act. Accordingly, the matter is set aside to the file of assessing officer as directed above to decide de-novo as supra after affording adequate opportunity to the assessee. In the result, the appeal of the Revenue is allowed for statistical purposes and the cross objection filed by the assessee is dismissed for the reason as supra stated in this order .
7. In the result, the appeal of the revenue is allowed for statistical purposes and the cross objection of the assessee is dismissed.
Order pronounced in the open court on 28-09-2018
Sd/- Sd/-
(RAJPAL YADAV) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad : Dated 28/09/2018
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद