PRAFULLA SHANTILAL KOTHARI,PUNE vs. INCOME-TAX OFFICER, WARD - 7 (3), PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by assessee is emanating out of the order of 1. Commissioner of Income Tax (Appeals) – 8, Pune dated 10.05.2019 for A.Y. 2012-13.

Assessee is an individual, who is engaged in the business of trading in mobile phones and recharge vouchers under the name and style of P.R. Communication. Assessee electronically filed his return of

income for A.Y. 2012-13 on 23.09.2012 declaring total income at

Rs.9,76,614/-. The case was selected for scrutiny and thereafter

assessment was framed u/s 143(3) of the Act vide order dated

31.03.2015 and the total income was determined at Rs.21,23,614/-.

Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who vide order dated 10.05.2019 (in appeal No.PN/CIT(A)-

8/ITO, Wd.7(3)/474/18-19) granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal and has

raised the following effective ground :

“The learned CIT (Appeals) erred in confirming the addition of Rs.8,21,300/- by reducing the addition on account of STCG to Rs.3,25,700/- from Rs.11,47,000/- made by the AO on account of difference between the stamp duty value and sale value of the property as per Index II by applying the provisions of Sec. 50C of the Income Tax Act, 1961 on the ground that the ld CIT(A) failed to appreciate the contention of the appellant that where the difference between the value adopted by the appellant and the value adopted by the DVO is less than 10 per cent a liberal approach in favor of the appellant be taken and the difference is liable to be ignored.”

assessee had sold on 07.06.2011 a property for Rs.30 lakhs whose

value for the purpose of stamp duty was Rs.41,47,000/-. She also

noticed that the land was purchased on 23.06.2010 for Rs.20,00,000/-

and its value for stamp duty purpose was Rs.36,15,840/-. During the

course of assessment proceedings, AO asked the assessee to show cause

as to why the value determined for stamp duty purpose at the time of

sale not be adopted for the purpose of working out the capital gains.

Assessee objected for adopting the value determined by Stamp Valuation

Authority as against the sale consideration adopted by the assessee and

requested that the matter be referred to the District Valuation Officer

(DVO) for determining the Fair Market Value (F.M.V). Thereafter, the

matter was referred to the DVO for determining the FMV but since the

valuation report was not received till the time of passing of assessment

order, AO adopted the value determined by the stamp duty authorities

as per provisions of Sec.50Cof the Act for working out the capital gains

and accordingly worked out the gains at Rs.19,35,412/-. Aggrieved by

the order of AO, assessee carried the matter before Ld.CIT(A). During

the course of appellate proceedings, the report of the Valuation Officer

was received who had valued the property at Rs.33,25,700/-. Before

Ld.CIT(A), it was submitted that if the difference between the value

worked out by the DVO and the sale consideration was less than 10%,

the same be ignored. Ld.CIT(A) did not accept the contention of ignoring

the valuation report but however directed the AO to reduce the addition

based on the value determined by the DVO and thus directed the

addition of Rs.3,25,700/- as against Rs.11,47,000/- made by the AO.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.

and Ld.CIT(A) and further submitted that the value of property as

considered by the assessee is Rs.30 lacs which is as per the registered

document and the valuation as per DVO is Rs.33,25,700/- and the

difference in value of land is 10.86% of the valuation adopted by

assessee and 9.79% of the value adopted as per the report of DVO. He

submitted that the Courts and Tribunals have held that liberal

approach be adopted when the difference is marginal. In support of his

contentions, he relied on the decision in the case of Rahul Constructions

Vs. DCIT reported in (2010) 38 DTR 19 (Pune). He also placed reliance

on the decision in the case of M/s. Radhika Sales Corporation Vs. ACIT

in ITA No.1474/PUN/2016 order dated 16.11.2018. He also relied on

the decision of Hon’ble Patna High Court in the case of Bimla Singh Vs.

CIT reported in 308 ITR 71 and the decision of Hon’ble Delhi High Court

in the case of CIT Vs. Sadhna Gupta reported in 352 ITA 595. He

therefore submitted that the addition be set aside. Ld. D.R. on the other

hand, supported the order of Ld.CIT(A).

record. It is an undisputed fact that the value of the property

considered by the assessee is Rs.30 lakhs as against which the FMV of

the property determined by the valuer at Rs.33,25,700/-. The

difference in value thus being of Rs.3,25,700/- which is 9.79% of the

valuation adopted by DVO. It is an undisputed fact that the valuation

is not a mathematical precission and there is bound to be difference

between one valuer and another valuer as since it is a matter of opinion

it differs from valuer to valuer. I find that the Co-ordinate Bench of the

Tribunal in the case of Dattatraya Kerba Lonkar Vs. DCIT in ITA

No.181/PUN/2014 order dated 30.01.2017 after considering various

decisions including the decision in the case of Rahul Constructions Vs.

DCIT (supra) and the judgment of Hon’ble Patna High Court in the case

of Bimla Singh Vs. CIT (supra) directed the AO to adopt the actual

consideration as mentioned in the sale deed to be the Fair Market Value

for determining the capital gains. The relevant observations of the

Tribunal reads as under :

“8. We find merit in the submission of Ld. A.R. The difference between the fair market value determined by the DVO and actual sale consideration is Rs.7,14,530/- i.e slightly more than 2 per cent of the sale consideration. The co-ordinate Bench of the Tribunal in the case of Rahul Construction V/s. DCIT (supra) has held that where difference between the sale consideration declared by the assessee and fair market value as determined by the DVO u/s 50C is less than 10 percent, the Assessing Officer was not justified in substituting the value determined for sale consideration disclosed by the assessee. The Co-ordinate Bench after

considering the provisions of Section 50C of the Act and the provision of section 23A and 24(5) of the Wealth Tax Act held as under :-

“13. A combined reading of the above provisions shows that the valuation adopted by the DVO is subject to appeal and the same is not final. In the instant case we find that as Aagainst the value of Rs. 28,73,000/- adopted by the stamp valuation authorities, the DVO has determined the FMV on the date of transfer at Rs. 20,55,000/- . This itself shows that there is wide variation between the two values. Further, the value adopted by the DVO is also based on some estimate. We find that the difference between sale consideration shown by the assessee at Rs.19,00,000/- and the FMV determined by the DVO at Rs. 20,55,000/- is only Rs. 1,55,000 which is less than 10 per cent. The Courts and Tribunals are consistently taking a liberal approach in favour of the assessee where the difference between the value adopted by the assessee and the value adopted by the DVO is less than 10 per cent.

any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition.

cited by Ld.D.R nor has pointed any distinguishing facts between the

assessee’s case and that of Dattatraya Kerba Lonkar Vs. DCIT (supra).

Further Ld.D.R. has also not placed any material to demonstrate that

the decision of the Tribunal in the case of Dattatraya Kerba Lonkar Vs.

DCIT (supra), has been set aside or over ruled by higher Judicial

Forum. In view of the aforesaid facts, I following the decision of Co-

ordinate Bench of the Tribunal in the case of Dattatraya Kerba Lonkar

Vs. DCIT (supra) and for similar reasons, direct the AO to adopt actual

sale consideration as mentioned in the Sale Deed as a Fair Market Value

for determining the long term capital gains. Thus, the grounds of

the assessee are allowed.

Order pronounced on 17th day of October, 2019.

Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 17th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-8, Pune. 4. Pr. CIT-4, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / DR, ITAT, “SMC” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.