ALKA MOHANLAL DESAI L/H OF LATE MOHANLAL AMBELAL DESAI,,NA vs. ARIVS.THE INCOME TAX OFFICER, WARD-3,, NAVSARI

This appeal filed by the Assessee is directed against the order of Learned Commissioner of Income Tax (Appeals)-Valsad, dated 20.05.2015 for the A.Y. 2009-10. The Assessee raised the following grounds of appeal:

Brief facts of the case are that the assessee was an individual filed his Return of Income for A.Y. 2009-10 on 19.05.2009 declaring income of Rs.2,13,560/-. In the computation of income the assessee claimed Long Term Capital Gain (LTCG) of Rs.1,58,750/-. During the assessment the assessing officer asked the assessee to substantiate the LTCG. On show cause by the Assessing Officer (AO), the assessee contended that during the relevant period the assessee along with his co-owner sold ancestral property bearing Late Shri Mohanlal Ambelal Desai Vs. ITO, Ward-3, Navsari. A.Y. 2009-10 Tikka No.86 CS No.3848 situated at Navasari. The assessee has 6.25% of his share in the said lan. The assessee received consideration of his share of Rs.12,50,000/- on which the assessee worked out the Long Term Capital Gain of Rs.1.58 lakhs. The AO in order to verify the correctness of claim made enquiry from Sub- Registrar concerned. The Sub-Registrar concerned informed that as per Stamp date Valuation, the value of property determined at Rs.4.09 crores against the sale consideration of Rs.2.00 crores. The AO on the basis of valuation of property valued by Stamp Valuation Authority treated the sale consideration of assessee’s shares at Rs.25,56,314/- against the sale consideration received by the assessee of Rs.12,50,000/-, accordingly, the AO worked out Long Term Capital Gain on the basis of Stamp Valuation Authority. The AO worked out Long Term Capital Gain of Rs.14,65,063/- against the Capital Gain claimed by the assessee at Rs.1,58,750/-, thereby made addition of Rs.13,06,313/-.

On appeal before the ld.CIT(A), the action of AO was confirmed. Thus, further aggrieved, the assessee filed present appeal before this Tribunal.

We have heard the submission of the ld. Authorised Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and have gone through the order of the Lower Authorities carefully. At the outset of hearing, the AR of the assessee submits that he has two fold submission, both are Late Shri Mohanlal Ambelal Desai Vs. ITO, Ward-3, Navsari. A.Y. 2009-10 independent with each other. The AR for assessee further submits that the amended provision of section 50C, amended w.e.f 01.10.2009 and is not applicable for the A.Y. 2009-10. Hence, the value so adopted by the stamp valuation authority cannot be considered against the assessee.

In other alternative submission the AR for the assessee submits that in assessee co-owner’s case the Department has accepted similar Long Term Capital Gain in the assessment order passed under section 143(3) of the Act. The AR of the assessee furnished the copy of assessment order in case of Smt. Prabhodhchandra Ambelal Desai dated 27.09.2013 and in case of Smt. Prabhaben H.Desai in the assessment order dated 27.09.2013 passed under section 147 r.w.s 143(3) of the Act. The AR for the assessee submits that being co-owner the assessee is also entitled for similar treatment. The Revenue cannot treat the assessee indifferently. In support of his submission the AR relied upon the decision of Madras High Court in CIT Vs. Kumar Rani Meenakshi Achi (207) 292 ITR 624 (Mad), decision of Ahmedabad Bench in Chetanbhai Prahaldbhai Gami Vs. ITO (ITA No. 2082/Ahd/2013) dated 19.07.2019 and CBDT Circular No.014(XL-35) dated 11.04.1955

On the other hand, the ld. DR for the Revenue supported the order of Lower Authorities.

The Hon'ble Madras High Court in ICT vs. Kumararani Meenakshi Achi (supra) held that during the same assessment year same quantity of wealth in possession of co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities is sanctioned it would militate against the principle of equality of laws enshrined in Article 14 of the Constitution. By following the same principle, the Co-ordinate Bench of this Tribunal in Chetanbhai Prahladbhai Gami vs. ITO in dated 19.07.2019, the Tribunal granted relief to the assessee holding that while making the assessment of the same property the similar treatment should be granted.

We have noted that in assessee’s co-owner’s case with respect to the property against the sale of which the assessee claimed Long Late Shri Mohanlal Ambelal Desai Vs. ITO, Ward-3, Navsari. A.Y. 2009-10 Term Capital Gain, the AO in assessee’s co-owner case in Prabhodhchandra Ambelal Desai allowed the similar Long Term Capital Gain by passing the following order :

We have noted that identical worded assessment order was passed in other co-owner case i.e. Smt. Prabhaben Harshadrai Desai, relevant part of the assessment order is extracted below;: “3. On perusal of records and details submitted by the assessee it was found that the assessee was co-owner having Late Shri Mohanlal Ambelal Desai Vs. ITO, Ward-3, Navsari. A.Y. 2009-10 share of 6.25% in the property sold for Rs.2,00,00,001/- on 19.01.2009 situated at Survey No.86, Lunsikui, Navsari. Value of property as per stamp duty valuation was determined at Rs.4,09,01,000/-. The assessee has not declared capital gain as he has not filed Return of Income for AY 2009-10. The said property was inherited by the assessee. The assessee has submitted valuation report of the property from Govt. Approved Valuer who has arrived value of property at Rs.66,61,020 as on 01.04.1981. The value of the assessee’s share comes to Rs. 4,16,314. Indexed cost as per section 48 of the Act is worked out at Rs.24,22,947/-. As per stamp duty authority the assessee’s share being 6.25% of sale value in the property comes to Rs.25,56,310/-. Thus capital gain comes to Rs. 1,33,363/-, which was taxable in the hands of the assessee. The capital gain of Rs.1,33,363 has now been shown by the assessee in the Return of Income filed in response to notice u/s 148 of the Act. However, the assessee has not declared suo moto Long Term Capital Gain as he has not filed return of Income. The assessee has consciously not filed return of income to avoid payment of tax. Therefore, Penalty proceedings u/s. 271(1)(c) of the Act are initiated on this issue for concealment of income.”

In view of the above aforesaid factual and legal discussion and respectfully following the decision of Madras High Court in Kumararani Meenakshi Achi (supra) and decision of Co-ordinate Bench in Prabhodhchandra Ambelal Desai (supra), the revenue cannot treat the assessee in different way, therefore, the addition to the Long Term Capital Gain added by the AO, confirmed by ld.CIT(A) is deleted. In the result the grounds of appeal raised by the assessee are allowed.