LAXMMAN DAS SABDANI,JAIPUR vs. INCOME TAX OFFICER, WARD-4, JAIPUR

During the course of hearing, the ld. AR submitted that the assessee filed his return of income on 29.07.2009 declaring total income of Rs. 1,48,320/-. Assessee, during the relevant previous year, sold his own residential property located at Plot No. 39, Sindhu Nagar Colony Nahari Ka Naka, Jaipur (“the property”). The property was sold by the assessee for Rs. 23,00,000/- to M/s Shiva Builders, Jaipur (“the buyer”) vide registered sale deed dated 8.12.2008. The property for the purpose of stamp duty, on the date of execution of the sale deed, was considered as residential property and was valued at Rs. 23,00,000/-. Out of the sale consideration of Rs. 23,00,000, received on sale of the property, Rs. 22,30,440 was used for purchase and construction/improvement of a new residential property situated at 95, Krishna Nagar, Sirsi Road, Vaishali Nagar, Jaipur and accordingly deduction was claimed out of the long term capital gain under section 54 of Income Tax Act, 1961. Value of the property for the purpose of stamp duty was reassessed twice from the value of Rs. 23,00,000/- considered by the Registrar at the time of registration of the sale deed. At first, the value of the property was enhanced to Rs. 32,93,512/-, considering the same as residential and then subsequently was further enhanced to Rs. 77,03,999/-. The enhancement, at the second instance, was done on the basis of field visit alleged to have been conducted by the Stamp Valuation Authorities on 08.12.2008. Taking cognizance of the second valuation done by the Stamp Valuation Authorities, ld. AO, in the first round of proceedings, considered Rs. 77,03,999 as the value for the purpose of Section 50C and accordingly determined Capital Gain at Rs. 54,03,999/- as against Rs. 65,095/- declared by the assessee in his return of income.

It was contended, before the AO, in the first round of proceedings, that the property was sold by the assessee for Rs. 23,00,000/- which was also the value adopted for the purpose of Stamp Duty, by the Stamp Valuation Authorities, as is evident from the registered sale deed dated 8.12.2008. However, the AO, in the first round of proceedings, considered reassessed amount of Rs. 77,03,999 as the value for the purpose of Section 50C. Order of AO dated 27.12.2011, was upheld by ld. CIT(A) in the first round of proceedings vide order dated 26.11.2012.

It was submitted that the buyer applied for reference before the Rajasthan Tax Board, against the order passed by Additional Collector (Order Dated 20.08.2010) enhancing the value of the property to Rs. 77,03,999/- for the purpose of Stamp Duty. Rajasthan Tax Board, vide its order dated 14.08.2012, set aside/quashed the order of the Additional Collector and pointed out the laxity in approach of Additional Collector and the field visit done for determining the enhanced value of the property.

The above fact of reference made by the buyer and the order of the Rajasthan Tax Board came to the knowledge of the assessee only in the form of reply received (Dated 23.07.2015) against application made by the assessee, in this regard, under the Right to Information Act, 2005. Before the ITAT, in the first round of proceedings, following documents were filed as part of the Additional Evidences: - • Copy of the order of the RAJASTHAN TAX BOARD in the case of M/S Shiva Builders • Copy of the order of ADDITIONAL COLLECTOR (STAMPS) enhancing the value of the property for the purpose of stamp duty • Copy of reply received against application filed under the Right to Information Act, 2005 The ITAT, in the first round of proceedings, admitted the above- mentioned Additional Evidences and set-aside the case to the file of the ld. AO.

The above-mentioned facts along with the relevant documents were made known to AO, in the set aside proceedings. The AO, based on the details submitted, also issued a notice, under section 133(6), to the Sub-Registrar, in order to find out the status of the litigation with regard to the Stamp duty proceedings. The Sub-Registrar vide letter dated 24.06.2016, 21.07.2016 & 15.12.2016 reiterated the fact that the order of Additional Collector (Stamps), enhancing the value of the property to Rs. 77,03,999/-, was subsequently quashed by the Rajasthan Tax Board. However, the ld. AO, made the same additions in the hands of the assessee, as done in the first round of proceedings.

Before ld. CIT(A), elaborate submissions were made, part of which have also been reproduced by him in his order from Page 2-3. It was contended before ld. CIT(A), that after the order of Rajasthan Tax Board, the enhanced value of the property should not be considered, as the order of Additional Collector has been set to naught by Rajasthan Tax Board. However, ld. CIT(A) upheld the order of ld. AO for the reason that the current status of the proceedings under the Rajasthan Stamp Act was unknown.

In the above factual background, the ld. AR submitted that the order, enhancing the value of the property, passed by the Additional Collector (Stamps) was subsequently quashed by the Rajasthan Tax Board. Thus, the value of the property as originally taken at the time of registering the sale deed of Rs. 23,00,000/- should be considered for the purpose of section 50C and not the enhanced value of Rs. 77,03,999/-. Thus, the matter with regard to the value for Stamp duty purpose attained finality once the order of Rajasthan Tax Board quashing the enhanced value was passed.

Further, in another set of proceedings, before the Additional Collector Stamps, for the same property, Addl. Collector Stamps vide its order dated 11.4.2016, acknowledged the fact that Rajasthan Tax Board, vide its order dated 14.08.2012 has already set aside the order of the Addl. Collector (Stamp Duty) dated 20.08.2010 in the case of buyer for the same property and directed to delete all the outstanding demand, with regard to stamp duty, against the buyer. Also, in response to the letter issued by ld. AO, seeking information under section 133(6) in this regard, Sub-Registrar, vide its letter dated 13.12.2016, has reiterated the fact in clear terms that the value of the property, for the purpose of stamp duty valuation has been reinstated to the original amount of Rs. 23,00,000 and the earlier order determining the value of the property at 77,03,999 has been rejected. Snap shot of the letter is reproduced here under:- mijksDr fo"k;kUrxZr izklafxd i= ds }kjk pkgh x;h lwpuk esa Jh y{eu nkl lCnkuh }kjk ,d nLrkost fnuakd 08-12-2008 dks 23]00]000@& yk[k :i;s dh ekfy;r ij izLrqr fd;k] ftldk ckn iath;u ekSdk fujh{k.k fd;k x;k] ckn ekSdk fujh{k.k mijkUr nLrkost dh ekfy;r 77]03]999@& yk[k :i;s vkadrs gq;s] U;k;ky; dyDVj eqnzkad ds ;gkWa izdj.k la[;k 611@2009 ls ntZ gksdj fnuakd 20-08-2010 dks fufeZr gqvk gS] ftlds fo:} vizkFkhZ dh vksj ls ekuuh; dj cksMZ jktLFkku] vtesj esa fuxjkuh la[;k 400@2001@t;iqj nk;j gqbZ] ftldk fu.kZ; fnukad 14-08-2012 dks ikfjr gksdj bl U;k;ky; fu.kz; dks vikLr fd;k tk pqdk gSA

Both the lower authorities took cognizance of the order dated 14.08.2012, passed by the Rajasthan Tax Board. However, considered the value of the property for stamp duty purposes, as per Section 50C, to be Rs. 77,03,999 instead of Rs. 23,00,000 for the sole reason that the current status of the proceedings before the Stamp Duty Authorities was not known.

It was submitted that the matter before the Stamp Duty Authorities reached finality after passing of the order dated 14.08.2012 by the Rajasthan Tax Board. Pursuant to such order of the Rajasthan Tax Board, the Stamp Duty Authorities have even granted refund of the amount deposited by the buyer, against the Stamp Duty demand. In this regard, letter dated 24.06.2020 was issued by the Stamp Duty Authorities, to the buyer, clearly stating that the order of Addl. Collector (Stamps) (Order No. 6/11/2009, dated 20.08.2010) enhancing the value of the property for the purpose of payment of stamp duty was subsequently quashed by the Rajasthan Tax Board vide Order No. 400/2011 dated 14.08.2012. Further, it has also been specified that whatever stamp duty on such enhanced value, which was deposited by the buyer initially, under protest, was to be refunded.

The fact that such amount was even refunded to the buyer subsequently is evident from the Bank Statement of the buyer for the month of July, 2020, wherein, the buyer, M/s Shiva Builders, has received Rs. 2,30,225/- on 02.07.2020. Thus, after passing of the order by Addl. Collector (Stamps), the refund has been granted to the buyer, of the stamp duty amount deposited on the enhanced value of the property. This clearly shows that the Stamp Duty Authorities have accepted the order of the Rajasthan Tax Board dated 14.08.2012. Accordingly, the value of the property for the purpose of Stamp Duty should be considered at Rs. 23,00,000/- and not Rs. 77,03,999/-. Letter dated 24.06.2020 issued by the Stamp Duty Authorities and also the Bank Statement of the buyer, as referred to in Para 3.7 to 3.9 above, have been filed as additional evidences, before the ITAT, Jaipur Bench, along with the Payer for their admission, under Rule 29 of the ITAT Rules, 1963. In view of the above, long term capital gain may please be determined based on the value of the property determined at the time of registering the sale deed and additions made by the ld. AO, and upheld by ld. CIT(A), deserves to be deleted.

Per contra, the ld. CIT/DR relied on the finding of the lower authorities and our reference was drawn to the findings of the ld. CIT(A) which are contained at para 4.3 which read as under:-

We have heard the rival contentions and perused the material available on record. It is not in dispute that the enhanced value of the property was challenged before the Rajasthan Tax Board and the Rajasthan Tax Board has since passed an order dated 14.08.2012 wherein the order dated 20.08.2010 of the Collector Stamp enhancing value of the property @ Rs. 77,03,999/- has been set aside. The only reason why the ld. CIT(A) has not accepted the plea of the assessee to consider the original value of the properly as per the original sale deed amounting to Rs. 23,00,000/- is that a fresh order has to be passed by the Collector Stamp to give effect to the order dated 14.08.2012 of Rajasthan Tax Board. To our mind, once the Rajasthan Tax Board has given its verdict and set-aside the order of the collector stamps wherein the latter has enhanced the value of the property, there is no basis left with the taxing authorities not to accept the same. We further fail to understand why even the ld CIT(A), being the appellate authority failed to appreciate the same and insisted on passing of the appeal effect order. In any case, we find that the assessee has since filed a copy of the order dated 24.06.2020 passed by the stamp duty authorities wherein the stamp duty on the enhanced value deposited by the buyer was directed to be refunded pursuant to and giving effect to the order of Rajasthan Tax Board dated 14.08.2012. In light of the same, where the stamp duty authorities have accepted the original value of the property as per the sale deed, there is no basis left with the AO to continue to apply the enhanced value and we hereby direct the Assessing Officer to consider the original value of the property as per registered sale deed @ Rs. 23,00,000/- for the purpose of Section 50C