MR. ANTONY D'SILVA,MANGALORE vs. DCIT(INTERNATIONAL TAXATION), BENGALURU
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal noted that the assessee had adopted a cost of acquisition of Rs. 46,50,000/- as on 01.04.2001 for indexation. The AO, however, adopted the guidance value of the Sub-Registrar. The CIT(A) upheld the AO's order. The Tribunal observed that the AO had adopted the guidance value of the Sub-Registrar, which was lower than the value adopted by the assessee. The Tribunal found that the AO had not provided any material to justify the lower value. The Tribunal held that the CIT(A) erred in upholding the AO's order without proper justification. The Tribunal directed the AO to consider the cost of acquisition as adopted by the assessee for the purpose of indexation. The appeal was allowed.
What were the facts?
The assessee, Mr. Antony D’Silva, a non-resident, filed his return of income for Assessment Year 2019-20, declaring capital gains of Rs. 49,92,650/-. The return was processed under section 143(1) of the Income-tax Act, 1961, resulting in a refund. The case was selected for scrutiny due to a high refund-to-TDS ratio related to section 195. The Assessing Officer (AO) issued a notice under section 143(2). During the year, the assessee sold a property in Koramangala, Bengaluru, for Rs. 1,80,00,000/-. The assessee adopted Rs. 46,50,000/- as the cost of acquisition as of 01.04.2001 for indexation purposes. The AO, however, used the guidance value of the Sub-Registrar. The appeal is against the order of the CIT(A)-12, Bangalore, dated 28.11.2022.
What were the issues?
1. Whether the Tribunal had to decide if the CIT(A) erred in upholding the AO's order. The assessee contended that the CIT(A) erred in upholding the AO's order. The revenue's contentions are not recorded. 2. Whether the CIT(A) erred in holding that the valuation report of the AO was binding on the AO, without appreciating that it was not binding on the CIT(A). The assessee argued that the valuation report was not binding on the CIT(A). The revenue's contentions are not recorded. 3. Whether the AO erred in directing the assessee to consider the cost of acquisition of the appellant's plot at Rs. 11,80,857/- for the purpose of indexation. The assessee argued that the AO erred in directing the consideration of Rs. 11,80,857/- as the cost of acquisition for indexation. The revenue's contentions are not recorded.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against order of CIT(A)- 12, Bangalore dated 28.11.2022 for the assessment year 2019-20. The assessee has raised following grounds:
“On the facts and in the circumstances of the case, the Id. CIT (A) erred in upholding the order of the Assessing officer.
On the Facts and circumstances of the case the Ld. CIT(A) erred in holding that the valuation report of the AO was binding on the AO without appreciating that the same was not binding on the CIT(A). 3. On the Facts and in the circumstances of the case, the Ld. AO erred in directing the AO to consider the Cost of Acquisition of the Appellant's plot at. Rs. 11,80,857/-for the purpose of indexation. 4. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”
IT(IT)A No.38/Bang/2023 Mr. Antony D’Silva, Mangalore
Page 2 of 5
Facts of the issue are that the assessee, Shri Antony D'Silva, a non-resident, filed his return of income for A.Y. 2019-20 on 21.10.2019 declaring income of Rs. 49,92,650/- under the head 'capital gains'. The case was processed u/s 143(1) of the Income-tax Act,1961 ['the Act' for short] by the Centralized Processing Centre, Bengaluru on 30.04.2020 resulting in a refund of Rs. 33,58,670/ -. The case was selected for scrutiny on the issue of income from high ratio of refund to TDS relating to section 195 of the Act. Accordingly, a notice u/s 143(2) of the Act was issued by the AO to the assessee on 31.03.2021. During the year under appeal, the assessee had sold an immovable property, being a vacant site bearing Corporation number 683, PID No. 67-6-683, 8th Block, Koramangala, Bengaluru for a total consideration of Rs. 1,80,00,000/ -. The assessee had adopted a value of Rs. 46,50,000/- as on 01.04.2001 as the cost of acquisition for the purpose of indexation. The area of the land being 218.926 square meter, the per square foot cost worked out to Rs.1,973.27/-. However, the AO adopted the guidance value of the Sub-Registrar Koramangala at Rs. 450/-per square foot, which resulted in the cost of acquisition being taken as Rs.10,60,425/-. The assessee was issued a show-cause notice dated 15.09.2021 by the AO as to why the guidance value provided by the Sub- Registrar, Koramangala should not be treated as the cost of acquisition for the purpose of computing capital gain. The assessee did not file any response to the show-cause notice. Accordingly, it was deemed that the assessee had no objection to the proposed variation and the capital gain was recomputed. Against the returned income of Rs.49,92,650/- , the AO computed the total income of the assessee at
IT(IT)A No.38/Bang/2023 Mr. Antony D’Silva, Mangalore
Page 3 of 5 Rs.1,50,43,457/-, leading to an addition of Rs.1,00,50,807/- Aggrieved of this, assessee went in appeal before ld. CIT(A).
The ld. CIT(A) observed that assessee has adopted the rate at Rs.1,973.27 P.Sq.ft. However, AO adopted the guideline value at Rs.450 P.Sq.ft. While computing the cost of acquisition of property, she has referred the matter to the DVO who has taken the value at Rs.501/- P.Sq.ft. as on 1.4.2001. As per this, the cost of acquisition was worked out at Rs.11,80,857/- as on 1.4.2001. She observed that the valuation report furnished by the DVO is binding on the AO and directed the AO to consider the value of the plot at Rs.11,80,857/-. Against this, assessee is in appeal before us by way of above grounds.
Before us, the ld. A.R. filed additional evidence along with application under Rule 29 of the Tribunal Rules, 1963, which is being valuation report procured from Registered valuer in respect of property No.683, PID No.67-6-683, 8th Block, Koramangala, Bangalore 560 095, wherein determined the land value at Rs.23,78,265/- i.e. at Rs.633/- P. Sq.ft. say Rs.630/- P. Sq.ft. The ld. A.R. submitted that the assessment was conducted during Covid- 19 period and the assessee was not present in the country during this period and also there was also travelling restrictions imposed by Government, as such, non-production of this valuation report from the registered valuer is not due to any deliberate or malafide intention. This document was very essential to prove the cost of acquisition and to determine the capital gain arising out of transfer of capital asset. Accordingly, he prayed that this additional evidence may be admitted and adjudicated on merits.
IT(IT)A No.38/Bang/2023 Mr. Antony D’Silva, Mangalore
Page 4 of 5 5. The ld. D.R. strongly opposed the admission of additional evidence and submitted that it is a deliberate attempt to delay the proceedings before the authorities.
We have heard the rival submissions and perused the materials available on record. The assessee filed additional evidence in the form of registered valuation report in respect of the impugned property, which was procured after the passing of ld. CIT(A)’s order. This document is very essential to determine the cost of acquisition of the impugned property. The lower authorities have no occasion to go through this as this was procured subsequent to the passing of order by lower authorities. Hence, in the interest of justice, we admit this additional evidence for adjudication.
6.1 With regard to merit of the additional evidence, we are of the opinion that this was not made available to the AO on earlier occasion. It is appropriate to remit this additional evidence to the file of AO for fresh consideration as it goes to the root of the matter of the dispute before us. Accordingly, the entire issue in dispute is remitted back to the file of AO for fresh consideration to decide the same after going through the valuation report obtained from the DVO.
In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 26th July, 2023
Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member
Bangalore, Dated 26th July, 2023. VG/SPS
IT(IT)A No.38/Bang/2023 Mr. Antony D’Silva, Mangalore
Page 5 of 5
Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(Judicial) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore.
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