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Income Tax Appellate Tribunal, “SMC” “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of CIT(A) dated 11.7.2022 for the assessment year 2008-09. The assessee has raised following grounds of appeal:-
1. “On the facts and in the circumstances of the case, the order of CIT(A) II Bangalore, vide order dated: 11.07.2022 for the assessment year 2008-09, is bad in law and liable to set aside.
2 On the facts and in the circumstances of the case, the CIT (A) has not considered the valuation report submitted, before him in support of appellant claim for relevant assessment year. Thus, without appreciating the above submission made before him, Learned CIT
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Page 2 of 8 (A) passed the order, which is bad in law. Hence, the order passed by CIT (A) is liable to set aside, in the interest of justice.
3. On the facts and in the circumstances of the case, the CIT(A) failed to appreciate that, the valuation report given by the valuation officer, the value of property of Rs. 25,00,000/- and other the property for the Sqft.35,175. Which was ignored intentionally and upheld the order of Assessing Officer, is incorrect. Thus, the order of CIT (A) is not sustainable in law and liable to quash.
On the facts and in the circumstances of the case, the adoption of valuing property by Assessing Officer is not correct and the CIT(A) with appreciating the valuation office report for relevant assessment year 2008-09 and passed order is not maintainable in law and liable to delete.
5. On the facts and in the circumstances of the case, the CIT (A) was failed to appreciate that, the valuation of property was declared by the appellant are correct for relevant property, and even then, the valuation report the CIT (A) at least should have adopted. The valuation report which given under Income Tax Act, instead of upholding the assessing officer order. These blindly passed order by the CIT (A) is against law, and thus order is not in bad faith. Thus, the order of CIT (A) is liable to quash, in the interest of justice.
6. With produce the levied tax and interest, and same is upheld by the CIT (A) is excessive and arbitrary and liable to delete, in the interest of justice and equity.
7. For such other grounds may urged at the time of hearing and allow the appeal in the interest of justice and equity.”
Facts of the case are relate to the common issue of the action of the AO in making an -addition of Rs 41,83,801/-. In brief, during original assessment proceedings the AO invoked the provisions of Section 50C of the Income-tax Act,1961 ['the Act' for short] as the stamp duty value of the properties sold by the assessee was more than that reflected in the sale deed. The AO noted that the assessee had shown sale considerations which were lower than the stamp duty value of such properties. After the matter was restored by ITAT (vide
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Page 3 of 8 order dt. 24.08.2017) to the AO, the AO referred the matter to the Valuation Officer vide letter dated 01.06.2018. The Valuation Officer issued multiple letters to the assessee from 06.06.2018 onwards seeking details for the purpose of valuation, however the assessee did not submit the requisite details and kept on seeking more and more time. Finally, vide letter dt. 28.11.2018, the Valuation Office intimated the AO that the Valuation was unlikely to be accomplished by 31.12.2018 due to noncooperation on the part of the assessee. So the AO confronted this aspect to the assessee vide show cause notice dt. 03.12.2018. The assessee was asked as to why the addition should not be made as per provisions of Section 50C of the Act. The assessee chose not to respond to the same. So the AO proceeded ahead with the addition as per provisions of Section 50C of the Act.
On appeal, the ld. CIT(A) observed that the assessee’s argument that the principle of natural justice was not followed by the AO was without any merit. He further observed that as per directions of ITAT the matter was referred by the AO to the Valuation Officer. Thereafter multiple opportunities were given by the` Valuation Officer to the assessee to produce the relevant details. However, the assessee failed to do so. This was evidently to defeat the directions of the ITAT to get the property valued by DVO. The assessee used delaying tactics for this purpose by seeking more and more time so that the AO won't be able to get the report timely and thus he won't be able to consider the report while giving effect to the order of the ITAT. The AO had issued a show cause notice, but the assessee didn't respond to the same. Considering above it cannot-be said that the principle-of natural justice was violated at any stage. So the ground no.3 raised by the assessee was dismissed by the ld. CIT(A).
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Page 4 of 8 3.1 The ld. CIT(A) further observed that vide ground of appeal 4 the assessee has argued that her non-representation should not have been considered negatively by the AO and he should have passed the order by adopting the sale consideration in the sale deed for purpose of computation of the capital gains. This argument of the assessee thus clearly shows that the non- representation by the assessee was with a purpose i.e. by her act of non-representing the Valuation Officer would not be able to furnish the valuation report to the AO and the AO would then accept the sale consideration as per sale deed as the sale value for computation of the capital gains. Once the AO had referred the matter to the Valuation Officer, the onus was on the assessee to timely submit the details before him. However, the assessee not to discharge this onus so as to prevent the Valuation Officer from sending the report. Since the failure to get the valuation report was due to failure on part of the assessee, the AO was right in not waiting endlessly and passing the order by invoking provisions of Section 50C of the Act. In her reply the assessee has sought reliance on the report dt. 29.03.2019 from Valuation Officer. This is noted that the order was passed by the AO on 19.12.2018 and as such the above referred report received much later after the time barring date would not be relevant. The report was delayed due to intentional inaction on part of the assessee and she cannot be given benefit of the same. The assessee cannot be allowed to rely on certain documents which were not before the AO due to inaction on part of the assessee. Considering above the ground of appeal 4 was dismissed by the ld. CIT(A). Against this assessee is in appeal before us.
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Page 5 of 8 4. The assessee has filed an application along with affidavit with the following documents for admission of additional evidences: a) Copy of the sale deed dated 25.10.2007 vide TS No.608/D/1 and TS No.608/D4 b) Copy of the sale deed dated 14.2.2008 TS No.608/D/2 and TS No.608/D/3 c) Copy of the valuation reports of the property vide TS No.608/D/1 and TS No.608/D/4 d) Copy of the valuation reports of the property vide TS No.608/D/2 and TS No.608/D/3. 4.1 Further, the ld. AR submitted that the above documents were not filed before the lower authorities due to bonafide mistake and not due to deliberate or malafide intention and prayed that the additional evidences may be admitted in the interest of justice.
The Ld. D.R. strongly opposed the admission of additional evidences and requested that the same may not be admitted by the Tribunal.
I heard the rival submissions and perused the materials available on record with regard to admission of additional evidences. In my opinion, the DVO’s report which is very important for deciding the issue before me was not made available to AO on the reason that this report was dated 29.3.2019 i.e. after the passing of assessment order dated 19.12.2018. However, the assessee has produced the same before the ld. CIT(A) and the ld. CIT(A) observed that the report was delayed due to inaction on the part of assessee and she cannot be given benefit of the same. In my opinion, this finding of the ld. CIT(A) is not borne out of evidences brought on record and this DVO’s report is foremost important to decide the issue in dispute and I cannot find any malafide intention of the assessee in not filing
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Page 6 of 8 this report before the AO. Accordingly, the valuation report of both properties at sl.no.(c) & (d) above along with sale deed copies of properties at sl.nos.(a) & (b) mentioned above are admitted as additional evidences for adjudication. After admitting the additional evidences, in my opinion, the issue in dispute came for adjudication before this Tribunal in co-owner’s case Shri Abdul Azeez in vide order dated 21.10.2022 wherein the Tribunal remitted the issue to the file of AO with following observations:
“We have heard rival submissions and perused the material on record. The Tribunal in its earlier order dated 13.03.2018 in had restored the matter to the A.O. directing him to obtain DVO’s report u/s 50C(2) of the I.T.Act and decide the issue after affording adequate opportunity of hearing to the assessee. Pursuant to the ITAT’s order, the A.O. referred the matter to the DVO vide his letter dated 01.06.2018. The valuation report was submitted late due to non-cooperation of the assessee. Therefore, the assessment was completed prior to the submission of the DVO’s report.
Before the CIT(A), the DVO’s report was on record, however, the CIT(A) did not take into consideration the same by stating that the DVO’s report could not be submitted before the time limit for completion of the assessment order on account of non-cooperation on the part of the assessee. We are of the view that the stand taken by the CIT(A) is not correct. When the DVO’s report was available when the appellate proceedings were pending, he ought to have taken note of the same, especially when his powers are co-terminus with that of the A.O. The Mumbai Bench of the Tribunal in the case of Late Smt.Bhanuben Dhanji Shah v. DCIT (supra) had restored the matter to the A.O. in such a scenario to take into consideration the DVO’s report and to adjudicate the matter afresh in accordance with the terms of the report submitted by the DVO. The relevant finding of the Mumbai Bench of the Tribunal, reads as follows:-
“8. We have considered the rival submissions and perused the material available on record. We find that on 26/06/2014, the Asstt. Valuation Officer, Valuation Cell, Income Tax Department, Thane, had prepared valuation report under section 55A / 50C of the Act determining fair market value of the property namely Power Loom Gala, MH1441, Near Kaneri, Bhiwandi, as on 30/12/2005, at Rs.7,10,000. As per the assessee, the report from the aforesaid Department Valuation Officer, was sought by the learned CIT(A) during the pendency of its appeal.
Smt. Yusuff Hameeda Banu, Bellary Page 7 of 8 Since the impugned addition under the head “Long Term Capital Gain”, which was upheld by the learned CIT(A), has been made on the basis of value determined by the Registration Authority without taking into consideration the report of the Department Valuation Officer, we deem it fit and proper to restore this issue to the file of the Assessing Officer for de novo adjudication. The Assessing Officer is directed to compute the capital gains after considering the value, as determined by the Department Valuation Officer. As a result, grounds no.1, 2 and 3, raised in assessee’s appeal are allowed for statistical purpose.”
In view of the above order of the Tribunal, we restore the matter to the files of the A.O. The A.O. is directed to consider the DVO’s report and compute the capital gain after considering the value as determined by the DVO. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.”
6.1 In the present case, the assessee has produced the valuation report valuing one property situated within the registration District of Bellary, Ananthapur Road, Madras-Bombay Trunk Road, Sub- division TS No.608/D/3 & TS No.608/D/2 part, CTS Ward No.15, CMC Ward No.16A, Corporation Ward No.17, Block No.14 (old door no.120/68 part old CMC Assessment No.24160/18770) present vacant site CMC Assessment No.24160/D valuing at Rs.32,69,100/- and another property situated within the registration District of Bellary, Ananthapur Road, Madras-Bombay Trunk Road, Sub Division TS No.608/D/1 & TS No.608/D/4 prt, CTS Ward No.15, CMC Ward No.16A, Corporation Ward No.17, Block 14 (old door No.120/68 part old CMC Assessment no.24160/18770) present vacant site CMC assessment No.24160/D valuing at Rs.33,76,800/- . Thus, the total value of the property subject to dispute was Rs.66,45,900/-. The assessee’s share is only 50% of the above, which works out at Rs.33,22,950/-. In view of the above order of the Tribunal the value to be adopted for the purpose of computation of sale consideration of the capital asset should be at Rs.33,22,950/- in place of value adopted by the AO at Rs.48,43,601/-. In my
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Page 8 of 8 opinion, these facts are to be verified at the end of AO in the light of earlier order of the Tribunal in the case of Shri Abdul Azeez cited (supra). Accordingly, this issue is remitted to the file of AO for limited purpose of determining sale consideration as discussed above. Accordingly, the issue is remitted to the file of AO to decide it afresh in the light of my above observations.
7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 6th Feb, 2023