Income Tax Appellate Tribunal - Jaipur
Shri Ram Ballabh Rawat, Jaipur vs Income Tax Officer, Jaipur on 4 December, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 19/JP/2018
fu/kZkj.k o"kZ@Assessment Years : 2011-12
Shri Ram Ballabh Rawat cuke The ITO,
4th Floor, Haldia House Vs. Ward 5(4), NCRB,
Johari Bazar, Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABLPR1815Q
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri M. L. Borad (Advocate)
jktLo dh vksj ls@ Revenue by: Shri K. C. Gupta (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 05/09/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 04/12/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT (A)-2, Jaipur dated 30.10.2017 for Assessment Year 2011-12 wherein the assessee has taken the following grounds of appeal:-
"1. That the learned Commissioner (Appeals) erred in sustaining addition of Rs. 27,08,092/- [income declared in the return of income under the head Long Term Capital Gain at a loss of Rs. 3,73,800/- + positive income assessed by the AO in the impugned assessment under the head Long Term Capital Gain at Rs. 23,34,292/-] made by the AO under the head "Long Term Capital Gain" by assessing income under the head Long Term 2 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur Capital Gain at Rs. 23,34,292/- as against loss of Rs. 3,73,800/- declared by the assessee in the return of income under the head Long Term Capital Gain, which sustaining of addition of Rs. 27,08,092/- under the head long term capital gain is most arbitrary, unjust, untenable and bad in fact and in law and in the alternative it is highly excessive w.r.t facts and circumstances of the case.
2. That on the facts and circumstances of the case sustaining by the learned Commissioner (Appeals) value of the sold property at Rs. 92,80,201/- as adopted by the AO u/s 50C as against apparent sale consideration of Rs. 75,00,000/- is unjustified and not maintainable in law and in the alternative excessive.
3. That on the facts and circumstances of the case upholding by the learned Commissioner (Appeals) cost of acquisition of the land at Rs. 38,500/- as against cost of acquisition adopted by the appellant at Rs. 5,80,000/- in the return of income while working out long term capital gain is highly unjustified and in the alternative very low.
4. That the learned Commissioner (Appeals) erred in sustaining addition of Rs. 36,000/- made by the AO under the head Salary Income by taking the income from salary at Rs. 1,80,000/- as against the correct income of salary at Rs. 1,44,000/- as declared by the assessee in the return of income, which sustenance of addition of Rs. 36,000/- under the head 'Salary Income' is unjust and in the alternative excessive."
2. Ground No. 1 is general in nature and does not require a separate adjudication.
3 ITA No. 19/JP/2018Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur
3. In Ground No. 2, the assessee has challenged consideration of deemed sale consideration u/s 50C as against sale consideration of Rs. 75,00,000/- as per the registered sale deed.
4. Briefly stated, the facts of the case are that during the course of assessment proceedings, the AO sought information from Sub-Registrar regarding the value taken for the purpose of stamp duty purposes. The Registrar vide his letter dated 24.12.2013 submitted a copy of conveyance deed wherein the value has been taken at Rs. 92,80,201. Therefore, the assessee was asked by the AO to show cause as to why the sale consideration to the extent of 50% of his share in property amounting to Rs. 46,49,100/- should not be taken for the purpose of computing the capital gains and along with the show cause notice, a copy of the order of Sub-Registrar was also provided to the assessee along with notice u/s 54 of the Stamp Act. In response, the assessee vide his submission dated 13.02.2014 referring to the notice issued u/s 54 of the Stamp Act submitted that the matter of adopting higher valuation is pending before the Sub-Registrar and a notice cannot become a good basis of adopting higher valuation until a formal order by the registering authority. The assessee further submitted that even after passing of the revised order by the registering authority, the effected parties are given right of appeal. In other words, until the revised order as well as order of appellate authorities is finalized the value already adopted by the registering authority at the time of registering of sale deed should not be changed. The submissions so filed by the assessee were not found acceptable to the Assessing Officer. As per the Assessing Officer, the assessee has not submitted any document in support of his contention that the matter of adopting higher valuation is pending before the Sub-Registrar. Accordingly, the 4 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur AO adopted sale consideration of Rs. 92,80,201/- as per provisions of section 50C as against sale consideration of Rs. 75,00,000/- shown by the assessee. On appeal, ld. CIT(A) confirmed the said position taken by the AO regarding application of section 50C of the Act.
5. During the course of hearing, the ld AR reiterated the submissions made before the lower authorities. The ld. AR submitted that the notice given by registering authority for adopting higher valuation than what is mentioned in the sale deed cannot become a valid basis of adopting higher valuation until a formal order is passed by the registering authority. It was submitted that the the ld. CIT(A) further failed to appreciate that even after passing of the revised order by the registering authority, the effected parties are given right of appeal under the law and until the revised order as well as appellate order, if any, are finalized the value already adopted by the registering authority at the time of registration of sale deed cannot be changed.
6. We have heard the rival contentions and purused the material available on record. As per registered sale deed dated 12.01.2011, the sale consideration has been stated as Rs 75,00,000 and at the same value, the property has been registered and the stamp duty has been paid which has been taken as a basis for declaring sales consideration by the assessee. However, as per Sub-Registrar letter dated 24.12.2013, value as per conveyance deed is Rs 92,80,201 and a copy of conveyance deed along with copy of order of the Sub-Registrar was shared with AO. At the same time, there is a reference of notice issued under 54 of the Stamp Act in the said communication of the Sub- Registrar. Relying solely on the said notice, the contention of the assessee is that the higher stamp value has not been finalized basis the notice issued under section 54 of the stamp Act and it could be subject 5 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur matter of appeal and till such time, such higher value has not been finalized, the same cannot be accepted for section 50C purposes. The contention of the Revenue is that the assessee has not furnished any documentation in support of the fact that such higher valuation so adopted by the registering authority has been challenged in appeal. The copy of conveyance deed, the order of the sub-registrar, the notice under section 54 of the stamp Act and the status of any appeal being preferred against the said order are not brought on record by either of the parties. In absence of adequate material on record, we are therefore unable to take a view in the matter. At the same time, we note that there are adequate provisions in terms of section 155(15) of the Act which take care and addresses the situation in such fact pattern which reads as under:
"(15) Where in the assessment for any year, a capital gain arising from the transfer of a capital asset, being land or building or both, is computed by taking the full value of the consideration received or accruing as a result of the transfer to be the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in accordance with sub-section (1) of section 50C, and subsequently such value is revised in any appeal or revision or reference referred to in clause (b) of sub-section (2) of that section, the Assessing Officer shall amend the order of assessment so as to compute the capital gain by taking the full value of the consideration to be the value as so revised in such appeal or revision or reference; and the provisions of section 154 shall, so far as may be, apply thereto, and the period of four years shall be reckoned from the end of the previous year in which the order revising the value was passed in that appeal or revision or reference."6 ITA No. 19/JP/2018
Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur The matter is accordingly set-aside to the file of the AO to examine the same a fresh after seeking requisite information from the Sub-Registrar authority regarding the final value so determined in respect of impunged property and decide as per law taking into consideration the above discussions. In the result, the ground is allowed for statistical purposes.
7. In respect of Ground No. 2, the assessee has challenged the cost of acquisition of the land taken by the AO at Rs. 38,500/- as against cost of acquisition taken by the appellant as Rs. 5,80,000/- in the return of income while working out long term capital gains on sale of property situated at B-8, Raghunath Colony, Near Galta Gate, Jaipur which was jointly owned by the assessee along with his brother. The assessee has taken the valuation as on 01.04.1981 based on registered valuer's report whereas the Assessing Officer has considered the cost of the acquisition based on the purchase deed dated 17.04.1980 relating to the impunged property wherein the purchase consideration has been shown at Rs 35,000/- and giving benefit of 10% appreciation for cost of acquisition, the AO has considered Rs. 38,500/- as the cost of acquisition. As per the Assessing Officer, the information was called from the assessee's registered valuer u/s 133(6) and he has submitted that no document/purchase deed was provided by the assessee. Further, the Assessing Officer observed that the property is a residential property as also evidenced by the sale deed dated 17.04.1980 wherein the Registrar has treated the same as residential house whereas the valuer has taken commercial rate while valuing the said property. On appeal, the ld. CIT(A) has confirmed the said addition and now, the assessee is in appeal before us.
8. During the course of hearing, the ld. AR submitted as under:-
7 ITA No. 19/JP/2018Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur "1. That in the facts and circumstances of the case sustenance of addition of Rs.27,08,092/- [income declared in the return of income under the head Long Term Capital Gain at a loss of Rs.3,73,800/- + positive income assessed by the AO in the impugned assessment under the head Long Term Capital Gain at Rs.23,34,292/-] by the learned Commissioner(Appeals) under the head "Long Term Capital Gain" by assessing income under the head Long Term Capital Gain at Rs.23,34,292/- as against loss of Rs.3,73,800/- declared by the assessee in the return of income is unjustified and in the alternative excessive.
2. That before making the above addition the learned CIT(A) failed to appreciate that the reason of increase in value of the land from apparent purchase consideration of Rs.35,000/- as agreed in February 1978 to Rs.5,49,780/- as on 01.04.1981 is on account of appreciation in value of the land between February 1978 to 31-3-1981. This appreciation in value is mainly attributed to the facts that in the year 1980 construction of hundreds of shops over the land of Surajpole Anaj Mandi, which is in immediate vicinity of the impugned property, were started. On account of construction of shops having started in Surajpole Anaj Mandi, assessee's land acquired commercial value. It is normal phenomena that commercial property has a higher value in comparison to residential one and so is the case in relation to the above mentioned land. In view of this, the fair market value shown by assessee as on 01.04.1981 is thus in quite consonance and rather as per the valuation made by the government approved valuer. A copy of this valuation report forms part of the paper book being filed simultaneously and separately.8 ITA No. 19/JP/2018
Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur 3 That the learned CIT(A) ought to have appreciated that the income declared under LTCG at a loss of Rs.3,73,800/- as per working given hereunder was quite in order and it should have been accepted as it is.
Working of long term capital gain is as under:
Sale Consideration Rs. 37,50,000/-
Less:
1.Value of the complete house property as on 01.04.1981as per the valuation made by the registered valuer (copy of valuation report enclosed) at Rs.11,60,000 and assessee's half share comes at Rs.5,80,000) 5,80,000
2. Indexed cost 41,23,800 Rs. 41, 23,800/-
Long Term capital gain (Loss) Rs. 3,73,800/-
4. That the learned CIT(A) erred in not taking into consideration following supporting papers/documents/information before sustaining the addition of Rs. 27,08,092/-.
i. That the land in question was purchased by the assessee before the year 1981 and in the year 1981 and upto the year 1981, no DLC rates were published by the Government.
ii. That in the assessment order the A.O. has mentioned that the property in question was purchased by the assessee and his brother jointly on 17.04.1980. It is respectfully submitted that this observation of the A.O. is not correct. The factual position is that the property in question was agreed to be purchased by the assessee from the seller as back as on February 1978 for 9 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur Rs.35,000/-. This fact of purchasing the property in February 1978 is very much corroborated from the recital mentioned at page 2 of the sale deed registered on 17.04.1980.
iii That in Jaipur property dealers started forming housing co-operative societies in the year 1976 for acquiring the lands in the name of housing co-operative societies and thereafter allotting the same to its members. In the beginning of the year 1978 i.e. in February 1978 when this business of property was in its inception the assessee and his brother jointly purchased the above land at comparatively low rates i.e. for Rs.35,000/-. In the later part of the year 1978 and in the year 1979 there came a sudden boom in property market and prices of land which were very low in the years prior to 1978 shot up to 15 to 20 times what it was in 1977-78. It is one of the main reasons of high increase in the value of the land as on 01.04.1981.
iv That the plot area of the sold property is very large i.e. 1078 Sq.Mtr. as against normal sizes of plots ranging from 200 Sq.Mtrs to 450 Sq.Mtrs. Moreover it is situated very close to famous and very big Surajpole Anaj Mandi in the heart of Jaipur City. On account of this situation, it is of commercial value and as such, its value has to be very high as compared to other plots of land of normal size in the immediate vicinity.
v. That the fact of assessee's land being of commercial character and commercially important is fortified from the narration of past history given in the registered sale deed itself as to how the seller acquired the land in question as given in page 1 and page 2 of the 10 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur registered sale deed whereby the above mentioned house property was sold. From the perusal of facts given in the sale deed it clearly comes out that earlier to jointly purchase of the land by the assessee and his brother, the land in question was originally purchased by a partnership firm, named M/s. Khandelwal Lands vide registered sale deed registered in the office of Sub-Registrar Jaipur at Serial No.3794 and Book No.1 on 26.12.1970. For one reason or the other this partnership firm Khandelwal Lands got dissolved on 02.12.1975. On dissolution of the partnership firm Khandelwal Lands, the above mentioned plot No. B-8, Raghunath Colony Jaipur came into the share of the seller Shri Ashok Kumar Son of Shri Gopinathji Gupta, Jaipur.
vi That in the course of assessment proceedings the assessee filed a valuation report of registered valuer. The registered valuer has clearly certified and taken the fair market value of the total land as on 01.04.1981 at Rs.5,49,780/-. In all humbleness it is submitted that the valuation given by the approved valuer should have been taken on face value and indexed cost of land should have been taken on the basis of valuation made by the approved valuer. Taking of lesser value than the value taken by the approved valuer for valuation purposes is not justified under any circumstance and under any law.
vii That in above regard it is further submitted that the valuation of a land depends on many factors including its size, situation, width of the road, living standards of the locality, public facilities like light, water, sanitation, roads, commercial use etc. viii That the other reason in appreciation of the value of the sold property is attributed to the fact that the plot area of the purchased property is 1078 sq mtr, and it is an ideal size of a good 11 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur residential/commercial plot. Moreover the sold house property is very close and in immediate vicinity of Surajpole Anaj Mandi which came into existence at that time i.e. during 1978 to 1980. The sold house property being in immediate vicinity of newly developed commercial area, namely, Suraj pole Anaj Mandi the value of sold house property increased by leaps and bounds in the period 1978 to March 1981.
ix. That it is an established fact that a land having commercial value has very high value than a residential one and in view of this, the fair market value taken by the government approved valuer as on 01.04.1981 at Rs.5,49,780/- of the sold land cannot be termed exorbitant by any canon of law. The learned AO also failed to take into consideration the fact that the land in question acquired a character of commercial value on account of development of a business area Surajpole Anaz Mandi in its immediate vicinity at Rs.5,49,780/- is quite in order."
9. The ld AR further refers to provisions of sec.55(2)(b)(i) and Sec.55A of the I.T. Act, 1961, which reads as under:
Section 55(2)(b)(i) of the Income tax Act, 1961 For the purposes of sections 48 and 49, "cost of acquisition" in relation to any other capital asset means "where the capital asset became the property of the assessee before the 1st day of April, 1981 means the cost of acquisition of the asset to the assessee or the fair market value of the asset as on the 1St day of April, 1981, at the option of the assessee;
Section 55A of the Income tax Act, 1961 12 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur "With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a valuation officer --
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the [Assessing] Officer is of opinion that the value so claimed is less than its fair market value;
(b) in any other cases, if the Assessing Officer is of opinion-
i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or
ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of sub-section (2),(3),(4),(5) and (6) of section 16A, clauses (ha) and (i) of sub- section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957(27 of 1957), shall with the 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 -- In this section, "valuation officer' has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 It was submitted by the ld AR that from reading the above sections 55(2)(b)(i) and 55A, it clearly transpires that the concept of fair 13 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur market value for the purpose of Chapter-IV of the Act pertaining to computation of income from capital gain can be found under section 55(2)(b)(i) of the Act, where under, an assessee has the option to take the actual cost of the acquisition of the asset or the fair market value of the asset on the 1.4.1981 for the purpose of Sections 48 and 49 of the Act. In other words, for arriving at the taxable figure of capital gain while deducting the cost of acquisition from the sale consideration, an assessee may either adopt the figure of cost of acquisition actually incurred or the fair market value of the property as on 1.4. 1981 at his option.
It was further submitted by the ld AR that in the instant case, the reference by the AO to the valuation officer u/s.55A for valuation of fair market value of the property as on 1st April, 1981 could not have been made for the reason that the value of the asset as claimed by the assessee is in accordance with the estimate made by registered valuer and the AO was duty bound to adopt the valuation report given by the government approved valuer. This valuation report of the government approved valuer stood already filed with the AO. Moreover the valuation made by the government approved valuer is also not less than fair market value taken by the assessing officer. There is a consensus of judicial opinion that reference to the departmental valuation officer can only be made in cases where the value of the capital asset shown by the assessee is less than its fair market value as on 1st April, 1981. But in assessee's case it is much more than the fair market value estimated by the AO.
It was further submitted that reference for the valuation of the capital asset could have been made to the valuation officer by the assessing officer in the course of assessment proceedings only. The 14 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur factual position in this case is that the assessing officer has not made any reference to the valuation officer in regard to assessee's case. Moreover in the present case assessment order has already been passed and first appellate authority, namely, Commissioner (Appeals) has also passed the order and the assessee is in appeal against this order passed by the Commissioner (Appeals) before the Tribunal. In support, reliance was placed on the decision of Hon'ble Gauhati High Court in the case of Bhola Nath Majumdar Vs. ITO and Others reported in (1996) 221 ITR 608.
10. The ld DR is heard who has relied on the findings of the lower authorities. Further, he referred to the findings of the ld CIT(A) which are contained at para 2.3 of her order which is reproduced as under:-
"2.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. The facts of the case are that the assessee had shown a long-term capital loss of Rs. 3,73,800/- on his half share of property at Raghunath colony, Jaipur sold for Rs. 75 lakhs as per the registered sale deed. The AO noted that the cost of acquisition has been shown at Rs. 11.60 lacs which included Rs. 5,49,780/- for cost of land whereas as per the purchase deed dated 17/04/1980 the plot was purchased for Rs. 35,000/- on 17/04/1980 that is within a period of 11 ½ months the cost of acquisition has enhanced from Rs. 35,000/- to Rs. 5,49,780/-. In support of the acquisition cost, the valuation report of an approved valuer had been filed in which the AO noted that while the property is recorded as residential but commercial rates have been taken for the purpose of valuation. The AO after discussing in detail and as per the following reasons:15 ITA No. 19/JP/2018
Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur "(i) The assessee's contention that the agreement to purchase by the assessee was made in Feb. 78 and the sale deed registered on 17.4.1980. Nowhere in the deed dated 17.4.1980 it has been mentioned by the registrar that the agreement was made on Feb. 78. Without any evidence the assessee may show the purchase prior to 17.4.1980 any time. Further the registrar has also taken the value at Rs. 35,000/- as on 17.4.1980.
(ii) As per information called from the registered valuer under sec. 133(6) regarding the value, he vide his letter dated 10.01.2014 has stated that no document/purchase deed was provided by the assessee regarding valuation of the said property. Therefore, the value of land adopted by the registered valuer is not acceptable.
(iii) As regards, the property in question whether the residential or commercial, as per the address of the property and as per sale deed dated 17.4 1980 the registrar has treated the same as residential. The registered valuer taken the rate of commercial @ 536/- sq.mtr. In absence of any documents provided by the assessee. As per land rates of various areas in Jaipur 1 as rovi e yt e registered valuer, as on 1.4.1981 for the location Ramganj Bazar to Galta Gate, whereas the property was an agricultural plot situated at Raghunath Colony which is situated outside Galta Gate and far away i.e. 500-600 mtrs. From Galta Gate and was an undeveloped area at that time."
and after giving a benefit of 10% appreciation has taken the cost of acquisition at Rs. 38,500/-.
Further as regards applicability of provisions of section 50C, the AR submitted that the matter of adopting higher valuation was pending before the sub registrar and the AO after applying the provisions of 16 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur section 50C and value of acquisition as above, arrived at long-term capital gains of the share of the assessee at Rs. 23,34,292/-.
In the present proceedings, the Authorized Representative reiterated the submissions as made in the assessment proceedings. It is seen that as per the purchase deed dated 17/04/1980 the plot was purchased for Rs. 35,000/-. The approved valuers report which has valued the same plot at Rs. 5,49,780/- within a period of 11 1 / 2 months has not given any details or reasons. Further, no details furnished by the registered valuer for information called for by the AO under section 133(6) in this regard. The property is residential as per the valuers report, however he has applied commercial rates without supplying any justification.
It was also submitted in the present proceedings that the land was originally allotted to M/s Khandelwal Lands and as the firm got dissolved it was allotted to the partners, this by itself does not make the land as commercial. Rather in the purchase deed it is recorded on page 4 para 2 as follows:
" bl IykW V es a [kM~ M k gS o ihNs dh rjQ dk gS o ukys ds ikl gS vr% ekfy;r Hkh foØ; nz O ; ls vf/kd ugha gS "
Further, considering the plea of the Authorized Representative, a 10% increase has already been granted by the Assessing Officer in the cost of construction. In view of the discussion as above, the cost of acquisition has been correctly arrived at by the AO as well as application of section 50C and the long-term capital gain arrived at by the AO are confirmed. Ground of appeal is dismissed."
17 ITA No. 19/JP/2018Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur
11. We have heard the rival contentions and perused the material available on record. Firstly, on perusal of the purchase deed dated 17.04.1980, the recital talks about verbal agreement to purchase the impunged property in February 1978 and an advance of Rs 500 has been shown as paid. However, the said recital alone nowhere leads to a conclusion that the assessee has actual purchased the property in February 1978. The reason for the same is two-fold. Firstly, the assessee has only paid an amount of Rs 500 as against the final sale consideration of Rs 35,000 and it is unbelievable by any standard that a person will handover his property on mere receipt of Rs 500 as against the stated consideration of Rs 35,000 as finally agreed. Secondly, as per the sale deed, the possession over the property was handed over by the seller to the assessee on the date of execution of the sale deed that is, on 17.04.1980 and not at any time prior to the execution of the sale deed. Therefore, we are unable to accede to the contention of the ld AR that the property was transferred and purchased by the assessee in year 1978 and not in the year 1980. The sale deed dated 17.04.1980 is the only credible evidence on record and the assessee has thus acquired the property in April 1980 and not at anytime prior to that date.
12. Having said that, in terms of section 55(2)(b)(i), where the property has been acquired prior to 1.4.1981, there is no dispute that cost of acquisition shall be determined based on actual cost of acquisition to the assessee or the fair market value as on 1.4.1981 at the option of the assessee. Where the assessee exercises such an option of taking the fair market value, he has to substantiate the same with credible verifiable evidence and the onus is clearly on the assessee to demonstrate the same with adequate documentation in terms of 18 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur contemporarious third party sale transactions. In the present case, we find that the assessee has submitted a valuation report in support of its claim of fair market value as on 1.4.1981. On perusal of such valuation report, it is noted that the valuer has surveyed and valued the property on 15.5.2011. The description of the property has been shown as residential situated in a residential area which is occupied by the owner. The land value has been taken at the rate of Rs 510 per sq meter for land measuring 1078 sqm valued at Rs 549,780. As per AO, the said rate of land has been taken as that of commercial land and not that of residential piece of land. In order to verify the same, the valuer was issued notice u/s 133(6) and in response, he submitted that no document/purchase deed was provided by the assessee regarding valuation of land and he has taken the land rate basis the commercial land rates of various areas in Jaipur city for the location Ramgang Bazar to Galta Gate. Further, what those land rates are, there is no data which has been shown as forming part of the valuation report. We therefore find serious deficiency in the approach of the valuer. Firstly, where he has himself described the property as residential located in a residential area and occupied by the assessee for own residence and not rented out, a fact not been disputed even before us, that on basis, he has considered the commercial land rate. Secondly, what stopped the assessee who has appointed the valuer in sharing a copy of the registered purchase deed with the valuer. This shows the conduct of the assessee and his intention of seeking a valuation report which supports his case of a higher value instead of determining a fair market value which is the mandate of law. Therefore, we are of the considered view that the lower authorities have rightly rejected the valuation report and do not agree with the contention of the ld AR that the AO could not have rejected the valuation report and ought to have accepted the 19 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur same. The approach of the AO has however been found acceptable to us. To our mind, he has taken a sound basis of taking the value as per actual purchase deed dated 17.04.1980 and taking an average appreciation in the value of property @ 10% per annum, determined the fair market value at Rs 38,500. In the result, the ground no. 3 of the assessee's appeal is hereby dismissed.
13. In Ground No. 4, the assessee has challenged the sustenance of addition of Rs. 36,000/- made by the AO under the head "salary" wherein the income was taken at Rs. 1,80,000/- as against income of Rs. 1,44,000/- as declared by the assessee. The ld. CIT(A) has stated that as per the salary certificate issued by the firm which is reflecting salary of Rs. 15,000 per month paid to the assessee, the addition was made by the Assessing Officer. During the course of appellate proceedings, it was further submitted that the Accountant has wrongly mentioned the salary figure and fresh salary certificate was submitted during the appellate proceedings. However, the same was rejected by the ld. CIT(A) in absence of showing of reasonable cause for not submitting the same before Assessing Officer.
14. During the course of hearing, the ld. AR submitted that the correct facts of the case are that the total salary of the assessee during the period 1.4.10 to 31.3.2011 was Rs.1,44,000/- calculated @ Rs.12,000/- p.m. However for the period 1.4.11 to 30.3.2012, the salary was Rs.1,80,000/- calculated @ Rs.15,000/- p.m. In the course of assessment proceedings, the AO asked the assessee to file a salary certificate for the year 2011-12. The assessee in turn told his accountant to prepare a salary certificate for 2011-12. That while preparing salary certificate, the accountant mistakenly took the salary 20 ITA No. 19/JP/2018 Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur figures of financial year 2011-12 (relevant to assessment year 2012-13) instead of financial year 2010-11 relevant to assessment year 2011-12. It is further submitted that when it was told to the accountant that hearing of financial year 2011-12 is going on and you prepared a certificate for the year 2011-12 for submitting it to the Income tax authorities, he prepared a salary certificate for Rs.1,80,000/- @ Rs.15,000/- which was in fact was salary of financial year 2011-12 and not of financial year 2010-11. In fact, total salary of assessee in the previous year relevant A.Y. 2011-12 is Rs. 1,44,000/- and not Rs.1,80,000/-. The mistake occurred on account of wrong understanding by the accountant and not thoroughly going through it by the directors while putting their signatures is very much regretted. It is respectfully submitted that this being a typographical error, the same may kindly be ignored and addition of Rs.36,000/-may kindly be deleted. A copy of correct salary certificate for the previous year relevant to A.Y. 2011-12 was duly filed with the learned CIT(A) and a copy thereof forms part of the paper book being filed simultaneously and separately which may be considered.
15. We have heard the rival contentions and purused the material available on record. The ld AR has contended that the salary for the impunged year is Rs 144,000 and salary for the next year is Rs 180,000 and by mistake, salary certificate for the next year has been submitted during the assessment proceedings, however a correct certificate has been submitted during the appellate proceedings. The AO is directed to verify the salary certificates with the return of income and where the same is found in order, allow the necessary relief to the assessee. In the result, the ground of appeal is allowed with above directions.
21 ITA No. 19/JP/2018Shri Ram Ballabh Rawat, Jaipur vs. ITO, Ward 5(4), NCRB, Jaipur In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 04/12/2018.
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(Vijay Pal Rao) (Vikram Singh Yadav)
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vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Ram Ballabh Rawat, Jaipur
2. izR;FkhZ@ The Respondent- ITO, Ward 5(4), NCRB, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 19/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar