SMT. ANGOORI DEVI,JAIPUR vs. INCOME TAX OFFICER, WARD-2-4, JAIPUR

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ITA 1261/JPR/2018Status: DisposedITAT Jaipur06 May 2020AY 2011-1211 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the sale consideration as agreed between the parties and reflected in the sale deed, which was Rs. 12,00,000/-, represented the correct fair market price of the property. The Tribunal noted that the DVO's valuation, based on DLC rates with only a 15% discount for a distressed sale, was not justified. The Tribunal found that the property was occupied by tenants at a meager rent, and legal disputes regarding possession were pending, which adversely affected its fair market value. Therefore, the addition made by the AO and sustained by the CIT(A) on this account was deleted. Regarding the cost of construction, the Tribunal observed that both the AO and DVO accepted the years of construction. The Tribunal found that the average of the indexed cost of construction claimed by the assessee and estimated by the AO would be a just and reasonable amount. Accordingly, the Tribunal directed the AO to recompute the LTCG by allowing the average indexed cost of construction, which came to Rs. 5,68,056/-. The appeal of the assessee was partly allowed.

What were the facts?

The assessee, Smt. Angoori Devi, filed her return for Assessment Year 2011-12, declaring a Long Term Capital Gain (LTCG) of Rs. 2,35,744/-. The Assessing Officer (AO) reopened the assessment under Section 148, citing a discrepancy between the declared sale consideration of Rs. 12,00,000/- and the stamp duty valuation of Rs. 24,86,065/-. The AO invoked Section 50C and assessed LTCG at Rs. 20,49,864/-. The assessee appealed to the CIT(A), arguing that the AO failed to refer the matter to the Departmental Valuation Officer (DVO) and that the property had deficiencies. The CIT(A) referred the matter to the DVO, who determined the fair market value at Rs. 20,59,400/-. The CIT(A) sustained the addition based on the DVO's valuation. The assessee further contended that the DVO's valuation did not adequately account for the property being tenanted and involved in legal disputes, and that the cost of construction was incorrectly calculated.

What were the issues?

1. Whether the reopening of assessment under Section 148 was permissible when the assessee had made a full and true disclosure, and whether the reasons for reopening, based on stamp duty valuation, were valid, particularly in relation to Section 50C. - Assessee's contention: Reopening was not permissible as full disclosure was made. Reasons for reopening were based on stamp duty valuation, which lacks evidentiary value and cannot be the sole basis for invoking Section 50C. The formation of belief of income escapement was not justified by mere adoption of a higher value for stamp duty purposes. - Revenue's contention: Not recorded. 2. Whether the fair market value of the property, for the purpose of computing LTCG under Section 50C, was correctly determined by the DVO, considering the property was tenanted and involved in legal disputes. - Assessee's contention: The DVO's valuation, based on DLC rates and a mere 15% discount for distressed sale, did not adequately account for the property's deficiencies, including tenancy and pending court cases, which significantly reduced its fair market value below the sale consideration. - Revenue's contention: Not recorded. 3. Whether the cost of construction claimed by the assessee for computing the indexed cost of improvement was correctly calculated and allowed. - Assessee's contention: The AO and CIT(A) erred in reducing the claimed cost of construction for F.Y. 1984-85 and F.Y. 2002-03, thereby incorrectly computing the indexed cost of improvement. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 148,Section 50C,Section 143(3),Section 48,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCH ‘A’, JAIPUR

Before: Shri Vijay Pal Rao, JM & Shri Vikram Singh Yadav, AM

For Appellant: Shri S.L. Jain,Advocate &, Shri Ashok Kumar Gupta, Advocate
For Respondent: Shri K.C. Gupta, JCIT-DR
Hearing: 23/03/2020Pronounced: 06/05/2020

Order pronounced in the open court on 06 /05/2020.

Sd/- Sd/- ¼ foØe flag ;kno ½ ¼fot; iky jko½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@ Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06/05/ 2020 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1vihykFkhZ@The Appellant- Smt. Angoori Devi, , Jaipur 2izR;FkhZ@ The Respondent- The ITO, Ward- 2(4), Jaipur 3.vk;dj vk;qDr¼vihy ) @ CIT(A), 4.vk;dj vk;qDr@ CIT, 5.विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6.xkMZ QkbZy@ Guard File (ITA No1261/JP/2018) vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

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