SMT. BINA WADHWA,AGRA vs. ITO WARD 1(1)(1), AGRA

In the Income-Tax Appellate Tribunal, Agra Bench, Agra

Before : Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member

ITA No. 147/Agr/2018 Assessment year: 2010-11

Late Smt. Bina Wadhwa, (Through vs. Income-tax Officer, L/h. Rahul Wadhwa), 29, Nikhil Ward 1(1), Agra. Garden, Taj Nagri, Phase-II, Agra. (Appellant) (Respondent)

Appellant by Sh. Rajesh Malhotra, CA Respondent by Sh. Waseem Arshad, Sr. DR

Date of Hearing 12.09.2019 Date of Pronouncement 18.09.2019

ORDER Per Laliet Kumar, J.M.: This appeal is filed by assessee being aggrieved by the order of ld. CIT(A)

dated 30.11.2017 on the following grounds :

1.1. Because under the facts and circumstances the order passed by the Ld CIT(A) on aspects agitated in appeal is contrary to the provisions of law and facts of the case and without appreciation of the facts and circumstances of the case in their right perspective.

1.2. Because under the facts and circumstances the Ld CIT(A) has grossly erred in holding the initiation of reassessment proceedings under section 147/148 of the Income Tax Act as valid, which is highly perverse, wrong, illegal and bad in law.

1.3Because under the facts and circumstances, the reasons recorded by the Ld AO are based on mere suspicion and vague, hence not valid.

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1.4Because under the facts and circumstances, the assessment order passed under section 143(3)/147 is wrong, illegal, perverse and bad in law.

2.1 Because the Ld CIT(A) has grossly erred in confirming the addition of Rs. 2558900/- (being stamp value of land) on the basis of valuation report dated 24/08/2017 issued by AVO, which is not a valuation report as per law as the AVO has not event visited the place where the property was located nor has done any enquiry/ investigation before issuing valuation report.

2.2. Because the AVO has not followed the procedure laid down in sub sections (2),(3),(4),(5) and (6) of section 16A, clauses (i) of sub section (1) and sub section (6) and (7) of section 23A, sub section (5) of section 24, section 34AA, section 35 and section 37 of Wealth Tax Act, 1957 as applicable on Valuer as per provisions of sub section (2) of section 50C of the Income Tax Act, when matter is referred to Valuation officer for valuation.

2.3 Because the AVO has not acted judicially and fairly, rather acted arbitrarily and also did not conform to the principles of natural justice in issuing valuation report. This is quite evident from the valuation report dated 24/08/2017 that the AVO has acted casually, mechanically and without proper application of the mind.

additional grounds which are required to be admitted as the said grounds are legal

in nature and for that purpose the assessee relied upon the decision of Hon’ble

Supreme Court in the matter of NTPC v. CIT, 229 ITR 383 (SC) and Jute Corporation

of India vs. CIT, 187 ITR 688 (SC). The additional grounds raised are to the following

effect :

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“1. Because the Ld. Assessing Officer has taken approval of Ld CIT-1, Agra for issue of notice under section 133(6), evident from the Assessing Order, and no approval has been taken for issue of notice under section 148 of the Income Tax Act, hence reopening of case without valid approval of Joint Commissioner is bad in law.

2- Because as per sub section (2) of section 151 no notice shall be issued under section 148 by Assessing officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing officer, that it is a fit case for the issue of such notice. No such approval as required as per sub section (2) of section 151 has been taken by the Assessing officer, hence the reopening, in the absence of approval is bad in law.

Tribunal have been raised for the first time and were not raised before the lower

authorities. It was, therefore, submitted that the grounds raise before us has mixed

questions of facts and law and therefore, the assessee cannot be permitted to raise

these grounds.

way of additional grounds has sought to challenge issuance of notice u/s.148 by the

Assessing Officer and it was submitted that no approval was sought from the JCIT

and hence, the same is bad in law u/s. 151 of the Act. For urging the above said

ground, it was essential for the assessee to bring on record some cogent material to

show that there was no approval, inadequate approval or wrong approval. But the

assessee has failed to demonstrate by way of any evidence that the present case is a

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case of no approval. In our view this Tribunal, being the final fact finding body and it

is not required to be used as a forum to collect the evidences for assessee. It is for

the assessee to bring on record some evidence/documents to show that the notice

u/s. 148 was issued by the Assessing Officer without any approval. Since nothing

has been brought on record and only general and vague statement by way of

additional question of law was filed before us, therefore, we are of the opinion that

this kind of additional ground cannot be permitted to be raised. For this purpose we

rely upon the decision of Bombay High Court in the matter of Ultratech Cement Ltd.

v. CIT, 217 TIOL 784. Therefore, respectfully following the decision of Bombay High

Court, we disallow the additional grounds raised before us.

Assessing Officer. The ld. AR for the assessee during the course of arguments has not

seriously urged the same.

Assessing Officer wherein it was clearly mentioned that the reasons recorded for

reopening for the assessment year 2010-11 on 18.07.2012 were within four years

and the objections were filed by the assessee and the assessee had also filed return

in compliance of notice u/s. 148. Said objections of the assessee were disposed of by

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the Assessing Officer by way of speaking order on 18.09.2012. In view thereof, the

objections which were raised by the assessee once disposed of, the assessee was not

required to improve upon the objections on the grounds before us. In this regard, as

the assessee has not seriously challenged this issue, we do not widh to adjudicate

the same. Moreover, the ld. CIT(A) in paragraph No. 11.1 had decided these

objections in the following manner :

“11.1. From a perusal of the written submission and the facts of this case, I find that the appellant has cited many judicial precedents in order to argue that the impugned proceedings were not legally valid. No facts to substantiate this argument have been produced by the appellant in the present proceedings. Hence, I am of the opinion that the initiation of reassessment proceedings was fair and legal. The appellant’s contention that section 50C being a deeming section, cannot be used for the purpose of initiating reassessment proceedings, in my opinion, is not correct.”

We do not find any error in the decision of the ld. CIT(A) and accordingly, grounds

Nos. 1.1 to 1.4 are dismissed.

the return of income declaring income at Rs.1,59,570/- for the assessment year

2010-11. In the said return of income, income from house property was shown as

Rs.81,799/- and income from capital gain at Rs.89,653/-. The Assessing Officer

issued notice u/s. 148 and provided the reasons for reopening. Therefore, the reply

was sought and after considering the reply, the Assessing Officer concluded the

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assessment proceedings by making addition of Rs.38,18,000/- being the difference

in the amount of long term capital gain worked out by the Assessing Officer by

taking the stamp value of the property as sale consideration. In the assessment

proceedings, the reference was made to the AVO. However, on account of non-

cooperation by the assessee, the Assessing Officer had determined the value on the

basis of stamp valuation of property.

16.06.2019 and has calculated the value of the property at Rs.10,85,869/-. It was

also the case of the assessee that the assessee at the time of getting the property

registered had mentioned the valuation report in the sale deed and our attention

was drawn to page 26 of the paper book (sale deed) where the valuation has been

mentioned at Rs.10,85,869/-. It was also submitted that the said valuation was

calculated by the approved valuer after considering that the property being old and

there are five tenants in the property. Our attention was drawn to the valuation

report and in the valuation report, the value of ground floor was calculated on the

rent realization method. At Sl. No. 39, the land rate adopted was mention as

Rs.14000/- per sq. mtr. for ground floor and Rs. 7000/- per sq. mtr. for other floors

without ground floor. After receiving the valuation report from the assessee, the

CIT(A) had sent the copy to the Assessing Officer who has furnished the valuation

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report of the AVO vide letter dated 31.08.2017. In the report dated 24.08.2017 it is

mentioned as under :

“Kindly refer to letter cited above vide which it w requested to submit the valuation report of above said property. In this context Sh. Rahul Wadhwa the son of Assessee Smt. Beena Wadhwa (Deceased Assessee) had submitted an affidavit(copy enclosed) to this office that the the said building had already been demolished by the buyer and the building which was sold is not available at present. Considering the affidavit this office is not in the position to determine the value of building. As far as value of land is concerned, land value can be taken as prevailing Circle Rate of Land at the time of sale.”

proceedings had decided the matter by computing long term capital gain at

Rs.41,58,903/- instead of Rs.54,18,000/- (para 11.4).

taken the circle rate of land which is contrary to the procedure for valuation and had

further submitted that the building at the time of sale was under the possession of

the tenants and the tenants were not vacating the property and therefore, it was a

distress sale. Therefore, the value of the land cannot be taken as per circle rate.

Further, it was submitted that in the matter of Rajesh Manchanda, the ITAT vide

order dated 13.04.2018 had remanded the matter back to the DVO for deciding the

matter afresh and our attention was drawn to para 7 to the following effect :

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“7.It is, thus, seen that as per the DVO’s letter, which has been attached as annexure A to the DVO’s final report, the record and details of the inquiries made by the DVO were not maintained. It has not been shown as to how it is not practicable to do so and as to how it is beyond the scope of the guidelines for valuation. As such, if any inquiries were made, since the result thereof were to be utilized against the assessee, these alleged inquiries having been conducted at the back of the assessee, the results thereof ought to have been, in accordance with the principles of natural justice, been necessarily confronted to the assessee. This has not been done.”

was let out, i.e., out of total six shops, five shops were let out and one shop was in

possession of the owner. Besides, the possession of one shop at ground floor, the

assessee was in the possession of first, second and third floor of the property. He

had drawn our attention to the valuation report of the assessee where the first,

second and third floors were shown to be in possession of the assessee. It was

further submitted that the property was situated in a commercial area and

therefore, the valuation taken by the lower authorities was in accordance with law.

the sale deed registered on 13.07.2009, it is mentioned at page 19 that there are six

shops in the commercial area of 65.64 sq. mtr and the remaining area is residential.

Further, it is mentioned that as per the Collector office of Agra, the rate of

commercial property is 54000/- per sq. mtr valuing to Rs.35,44,560/- whereas for

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the residential area of 24.99 sq. mtr, the value of property at the circle rate of

Rs.12000/- per sq. mtr is of Rs.3,11,880/-. Thus, the total value calculated by the

stamp valuer was Rs.38,56,440/- for the value of commercial land and

Rs.15,61,170/- for the residential area. If we look into the valuation report of the

assessee, the assessee has failed to take into account the value of commercial area

and had only applied the rate at Rs.14000/- per sq. mtr. In our view, once the area

was commercial then the rate of commercial area are required to be applied and for

the residential area, corresponding circle rates are required to be applied. Nothing

has been brought on record to contradict the finding recorded by the lower

authorities. Merely filing the report by registered valuer is not sufficient and what

has been approved by the ld. CIT(A) is only the cost of land as per the circle rate of

the property. Further, we find that the circle rate of property is required to be

factored in considering the fact that the tenants were in possession of ground floor

(five shops). However, no evidence was filed before us showing that any efforts

were made by the assessee to get the property vacated by issuing legal notices or by

taking any legal recourse. In absence of any supporting documents, it is difficult to

comprehend that the sale made by the assessee was on account of distress sale and

the tenants were not vacating the property. Even when the Assessing Officer has

written a letter and the report was submitted by the AVO on 24.08.2017, it was

mentioned that the property was not in the original possession and was demolished

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by the buyer. As mentioned hereinabove, the sale deed was executed by assessee on

13.07.2009 and the report was given by the AVO on 24.08.2017. Thus, there is

difference of 8 years between the date of sale and the report of the AVO. In view of

the above, in our view, some element of discount is required to be given to the

valuation determined by the AVO relying upon the commercial circle rate of the

property. Accordingly, we deem it appropriate to remand back the matter to the file

of CIT(A) with the direction to make the local enquiries or direct the DVO to make

local enquiry to find out what would be the effect on the commercial land value

when property(five shops) were possessed by the tenants in the ground floor or is

in possession of the owner at first, second and third floor. Above said exercise be

done by the CIT(A) preferably before 30.03.2010. The DVO while finalizing the

report based on the above parameter, if find out any comparable instance or

otherwise, shall give an opportunity to the assessee and consider the objections

raised by him.

Order pronounced in the open court on 18th Sept., 2019.

Sd/- Sd/- (Dr. Mitha Lal Meena) (Laliet Kumar) Accountant Member Judicial member

Dated: 18th Sept., 2019 *aks*