Income Tax Appellate Tribunal - Rajkot
Shri Pravinbhai Bachubhai Bhut,, ... vs The Income Tax Officer, Ward-1(3),, ... on 4 September, 2018
ITA Nos.335 & 380/RJT/2014
Assessment Year: 2009-10
Page 1 of 6
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
(Conducted through E-Court at Ahmedabad)
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND WASEEM AHMED, ACCOUNTANT MEMBER
ITA No.335/RJT/2014
Assessment Year: 2009-10
Shri Pravinbhai Bachubhai Bhut, vs. Income Tax Officer,
C/o. Kalpesh S. Doshi & Co., Ward - 1(3), Rajkot.
Chartered Accountants,
411, Cosmo Complex,
Mahila College Circle,
Rajkot - 360 001.
[PAN - ABPPB 8109 H]
ITA No.380/RJT/2014
Assessment Year: 2009-10
Income Tax Officer, vs. Shri Pravinbhai Bachubhai Bhut,
Ward - 1(3), Rajkot. C/o. Shree Raghuvir Steel,
Mavdi Main Road,
Near Jay Forge,
150 Feet Ring Road,
Rajkot.
[PAN - ABPPB 8109 H]
(Appellants) (Respondents)
Assessee by : Shri Kalpesh Doshi, A.R.
Revenue by : Shri Praveen Verma, Sr. D.R.
Date of hearing : 13.08.2018
Date of pronouncement : 04.09.2018
ORDER
PER WASEEM AHMED, ACCOUNTANT MEMBER:
ITA No.335/RJT/2014 is the appeal filed by the assessee and ITA
No.380/RJT/2014 is the appeal filed by the Revenue.
2. First we take up appeal filed by the assessee.
3. In ITA No.335/RJT/2014 the assessee has raised the following grounds of appeal:
ITA Nos.335 & 380/RJT/2014 Assessment Year: 2009-10 Page 2 of 6 "1) That, the learned CIT(A) has wrongly rejected the cost of improvement shown in the books of account and also valued by registered valuer and has wrongly confirmed the part of the addition on the basis of Department valuation report.
2) That, the learned CIT(A) has wrongly rejected the objections raised against the correctness of the valuation report of the Department Valuation Officer.
3) That, the learned CIT(A) has not considered the various defects pointed out in the report of the Department Valuation Officer,
4) That, the learned CIT(A) has wrongly considered the cost of improvement at Rs.42,00,000/- as against cost incurred of Rs.48,06,347/-.
5) That, the finding of the learned CIT(A) is not justified and required to be deleted."
4. The solitary issue raised by the assessee in all the grounds of appeal is that the ld. CIT(A) has erred in taking the cost of improvement at Rs.42,00,000/- as against the actual cost incurred at Rs. 48,06,347/-.
5. Briefly stated facts are that the assessee is an individual and declared its total income of Rs. 2,12,600/- under the head "business and profession". The assessee during the year had sold a piece of land bearing survey no.385 Paki 1 for Rs. 54,70,271/- only. However, the assessee has not disclosed any income on the sale of such property in his income tax return. On question by the Assessing Officer, the assessee offered a capital gain income of Rs. 6,70,271/- only as detailed under :-
Sale consideration Rs.54,70,271/-
Less: cost of acquisition including Rs. 6,70,271/- Rs.48,00,000/-
the development cost and conversion
cost of land into non-agricultural land
Balance Capital Gain Rs. 6,70,271/-
6. However, the assessee during the assessment proceedings failed to produce documentary evidence in support of the cost incurred towards land development and conversion of agricultural land into non-agricultural land. Therefore, the Assessing Officer worked out the capital gain at Rs. 53,90,325/- as detailed under :-
ITA Nos.335 & 380/RJT/2014 Assessment Year: 2009-10 Page 3 of 6 Sale consideration Rs.54,70,271/-
Less: Cost of acquisition Rs.59,260/-
Less: Cost of conversion Rs.20,686/- Rs. 79,946/-
Balance Capital Gain Rs.53,90,325/-
7. Thus the Assessing Officer determined the Short Term Capital Gain of the assessee at Rs.53,90,325/- only.
8. Aggrieved, assessee preferred appeal before the ld. CIT(A). Ld. CIT(A) has confirmed the order of the Assessing Officer in part by observing as under :-
"7. I have duly considered the submission of the appellant, remand report of the AO, valuation report of AVO and the counter- submission/objection of the appellant and also gone through the discussion made in the assessment order.
7.1 First three grounds of appeal are inter-related and are being taken together for disposal.
7.2 Here, the basic issue is valuation of cost of improvement to the said land. The appellant has claimed Rs.48,06,347/- while this value has been arrived at Rs.31,49,500/- by AVO, which has been vehemently objected by the appellant by pointing out some major mistakes in AVO's report which are as under :-
(i) The total quantity of the materials used for levelling is 18,430.25 Cu. Mts. As per registered valuer while the AVO has taken only 4,704.75 Cu. Mts. which is almost l/4th of the claim made by the appellant. Although rate for filling has been taken more as compared to appellant's claim.
(ii) The rate for cleaning the site development has been taken at Rs.3/- per sq. mt. instead of Rs.20/- per sq. mt. claimed by the appellant.
(iii) Similarly rate for marking individual plots and rate of road work too has been adopted much less than the registered valuer's report.
7.3 As the appellant has objected to the valuation done by the AVO on the ground of above mistakes as well as wide variation in valuation I have left with no option but to estimate the value of improvement taking following factors into mind:-
ITA Nos.335 & 380/RJT/2014 Assessment Year: 2009-10 Page 4 of 6 (1) Time Gap - There is a big time gap between the time the said land was earth-filled & the date of valuation. Hence, the claim made by the appellant is unverifiable completely/accurately. But at the same time the claim cannot be brushed aside completely too.
(2) The mistakes in the valuation report.
Therefore, in the interest of justice the value is estimated at Rs.42,00,000/- taking all the above (time gap, mistakes in AVO report, nature of improvement etc.) into account. This ground of appeal is partly allowed."
9. Being aggrieved by the order of the ld. CIT(A), assessee is in appeal before us.
10. Learned Authorised Representative before us filed Paper Book running from pages 1 to 68 and fairly agreed that the Hon'ble ITAT in the identical facts and circumstances in the case of Shri Pravinbhai Arjanbhai Sorathiya vs. ITO vide ITA Nos.336 & 379/RJT/2014 pertaining to A.Y. 2009-10, vide order dated 07.06.2018, decided the issue against the assessee.
11. On the other hand, learned Departmental Representative vehemently supported the order of authorities below.
12. We have heard the rival contentions and perused the material available on record. At the outset, we note that the Hon'ble ITAT in the identical facts and circumstances in the case of Shri Pravinbhai Arjanbhai Sorathiya vs. ITO (supra) has decided the issue against the assessee. The relevant extract of the order is reproduced as under :-
"6. We have carefully considered the rival submissions made by both sides in this regard and perused the orders of AO and CIT(A). As noted above, the valuation of cost of improvement before the land was sold is in question for the purposes of determination of short term capital gain on sale of land. In this regard, we find that the CIT(A) has taken cognizance of the valuation report filed by the assessee as well as Revenue and objectively appreciated the defects pointed out on behalf of the assessee in this regard. After taking note of the valuation report placed by the assessee and Revenue and case laws governing the field in such a situation, the CIT(A) has granted concessions to both sides and estimated the valuation at Rs.42 Lakhs. The relevant operative part of the order of the CIT(A) is reproduced hereunder:
ITA Nos.335 & 380/RJT/2014 Assessment Year: 2009-10 Page 5 of 6 "Decision:
7. I have duly considered the submission of the appellant, remand report of AO, valuation report of AVO and the counter-submission of the appellant and also gone through the discussion made in the assessment order.
7.1 First three grounds of appeal are inter-related and are being taken together for disposal.
7.2 Here, the basic issue is valuation of cost of improvement to the said land.
The appellant has claimed Rs.47,20,054/- while this value has been arrived at Rs.31,12,000/- by AVO, which has been vehemently objected by the appellant by pointing out some major mistakes in AVO's report which are as under:-
(i) The total quantity of the materials used for levelling is 18,430.25 Cu. Mts.
as per registered valuer while the AVO has taken only 4,755.25 Cu. Mts. which Is almost l/4th of the claim made by the appellant. Although rate for filling has been taken more as compared to appellant's claim.
(ii) The rate for cleaning the site development has been taken at Rs.3/- per sq.mt. instead of Rs.20/- per sq,mt. claimed by the appellant.
(iii) Similarly rate for marking individual plots and rate of road work too has been adopted much less than the registered valuer's report.
7.3 As the appellant has objected to the valuation done by the AVO on the ground of above mistakes as well as wide variation in valuation I have left with no option but to estimate the value of improvement taking following factors mind:-
(1) Time Gap - There is a big time gap between the time the said land was earth-filled & the date of valuation. Hence, the claim made by the appellant is unverifiable completely/accurately. But at the same time the claim cannot be brushed aside completely too.
(2) The mistakes in the valuation report.
Therefore, in the interest of justice the value is estimated at Rs. 42,00,000/- taking all the above (time gap, mistakes in AVO report, nature of improvement.) into account. This ground of appeal is partly allowed.
8. Last ground of appeal is against charging of interest u/s.234A/234B/234C/234D of the Act and the AO is directed to grant consequential relief."
7. As can be seen, the CIT(A) has taken into account the inherent limitations in the respective valuation report and has taken a benign view while holding the estimated cost of improvement at Rs.42 Lakhs. Thus, while the valuation determined by the registered valuer pointed out on behalf of the assessee has been scaled down, the valuation determined by the DVO has been scaled up. We are of the view that having regard to the facts and circumstances, the action of the CIT(A) cannot be faulted. The CIT(A), in our view, has approached the issue in right perspective while determining the cost of improvement/development costs. We, thus, decline to interfere.
ITA Nos.335 & 380/RJT/2014 Assessment Year: 2009-10 Page 6 of 6
8. In the result, the appeal of the assessee as well as that of Revenue is dismissed."
13. Respectfully following the same, we do not find any reason to interfere in the order of the ld. CIT(A). Hence, appeal of the assessee is dismissed.
14. Coming to ITA No.380/RJT/2014, appeal filed by the Revenue, at the outset, learned counsel for the assessee submitted that the present appeal of the Revenue needs to be dismissed on account of low tax effect in view of the recent CBDT Circular No.3 of 2018 dated 11.07.2018. The learned Departmental Representative fairly admitted that the tax effect involved in this appeal is less than the limit prescribed by the aforesaid CBDT Circular. In view of this undisputed fact and in the light of CBDT Circular No.3 of 2018 dated 11.07.2018, we are of the considered view that this appeal is liable to dismissed as withdrawn for the simple reason that tax effect involved in the appeal is less than Rs.20 Lakhs.
15. In the result, appeal filed by the assessee and that of the Revenue both are dismissed.
Pronounced in the open Court on this 4th day of September, 2018.
Sd/- Sd/-
RAJPAL YADAV WASEEM AHMED
(Judicial Member) (Accountant Member)
Dated: 4 September, 2018.
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) DR
(6) Guard File
By order
TRUE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Rajkot Bench, Rajkot