MADHUSUDHAN JAJU,HYDERABAD vs. INCOME TAX OFFICER, WARD-1, SANGAREDDY

आयकर अपीलीय अधिकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad

BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER

आ.अपी.सं /ITA No.442/Hyd/2023
(निर्धारण वर्ा/Assessment Year:2013-14)

Shri Madhusudhan Jaju,
Hyderabad.
PAN:ABIPJ0817F

Vs.
Income Tax Officer,
Ward-1, Hyderabad.
(Appellant)

(Respondent)
C.O. No.7/Hyd/2024
(निर्धारण वर्ा/Assessment Year:2013-14)
(By Revenue)
निर्धाररती द्वधरध/Assessee by: Shri P. Murali Mohan Rao, C.A.
रधजस्‍व द्वधरध/Revenue by:: Shri SPG Mudaliar, SR-DR

सुिवधई की तधरीख/Date of hearing: 26/12/2024
घोर्णध की तधरीख/Pronouncement: 15/01/2025

आदेश/ORDER
PER MADHUSUDAN SAWDIA, A.M:

This appeal is filed by Shri Madhusudhan Jaju (“the assessee”) and Cross Objection (“C.O.”) filed by the Revenue, feeling aggrieved by the order passed by the Learned
Commissioner of Income Tax (Appeals), National Faceless Appeal
Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 10.07.2023 for the A.Y.
2013-14. 2. The assessee has raised the following grounds :
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“1. The order of Ld. CIT(A) is erroneous both on facts and in law.
2. The Ld. CIT(A) ought to have annulled the reassessment u/s 143(3) r.w.s. 147 of the Act dated 22-12-2019. 3. The Ld. CIT(A) ought to have appreciated the fact that the reassessment u/s 143(3) r.w.s 147 is erroneous as no tangible material was found which indicates that the assessee has escaped the income.
4. The Ld. CIT(A) ought to have appreciated the fact that the reassessment cannot be initiated merely due to change in opinion of AO.
5. The Ld. CIT(A) ought to have appreciated the fact that the AO erred in issuing notice u/s 148 dated 22.11.2018 which is barred by limitation.
6. The Ld. CIT(A) erred in not considering that the AO and Valuation officer ought to have appreciated the fact that the land being in disputed land and in unequal dimensions, the land was sold by the seller in a distress.
7. The Ld. CIT(A) erred in not considering that the AO and Valuation officer ought to have appreciated the fact that the land being encroached by local area people and community and no proper survey being done in spite of numerous attempts, the assessee was forced to sell the land in a distress sale.
8. The Ld. CIT(A) erred in not considering that the AO and valuation officer ought to have appreciated the fact that the land in question was in disputes towards tittle of property and in respect of its boundaries.
9. The Ld. CIT(A) erred in not considering that the AO ought to have appreciated the fact there were also the court case going or (O.P. No. 7
of 2008 and O.S. No. 39 of 2009) in regard to the tittle of the property.
10. The Ld. CIT(A) ought to have appreciated that AO and Valuation officer erred in not appreciating the fact that the market value of land at Rs.39,75,000/- as per the valuation report submitted by the appellant was fair and correct.
11. The Ld. CIT(A) erred in not considering the valuation report submitted by appellant, as in facts of our case, title was in dispute and valuation as per DVO cannot be conclusive one.
12. The Ld. CIT(A) ought to have appreciated the fact that the AO erred in recomputing the long term capital gains of Rs. 66,16,700/- by not considering the point that valuation report was prepared by chartered engineer after proper inspection and survey.
13. The Ld. CIT(A) erred in confirming the computation of long term capital gains of Rs. 66,16,700/- as determined by the AO in the reassessment.
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of the C.O. He prayed before the bench to condone the delay in filing of the appeal. After hearing the Ld. AR, we found that there was reasonable cause behind the filing of C.O. by the Revenue.
Accordingly, we condone the delay and allow the C.O. for adjudication.
4. The brief facts of the case are that, the assessee is an individual, filed its Return of Income (“ROI”) for A.Y. 2013-14 on 5.3.2015
admitting total income of Rs.3,21,052/-. The Learned Assessing
Officer (“Ld. AO”) was on receipt of information that the assessee had sold land during the year under consideration and shown the sales consideration at Rs.45 lakhs. However, the value as per the Stamp
Duty Valuation (“ V”) was Rs.96,20,000/-. Therefore, the case of the assessee was reopened u/s.147 of the Income Tax Act, 1961 ('the Act') and notice u/s.148 of the Act was issued to the assessee. In response to the notice u/s.148 of the Act, the assessee filed its ROI on 02.01.2019 admitting total income of Rs.3,11,050/- in the ROI. But in the ROI so filed, again the assessee had shown sales consideration of land at Rs.45 lakhs, instead of the value as per the V of C.O. No.7/Hyd/2024
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Rs.96.20 lakhs. During the assessment proceedings, the assessee filed a revised computation of income (page nos.2 & 3 of the paper book).
As per the revised computation of income, the assessee had claimed expenditure of Rs.12 lakhs towards payment made to litigants of the land and litigation expenses. The assessee had also claimed the expenditure of Rs.7.50 lakhs towards cost of improvement and accordingly claimed index cost of the improvement at Rs.13,68,697/-.
After claiming all the expenses, the assessee worked out Long Term
Capital Gain (“LTCG”) of Rs.18,14,003/- and claimed exemption u/s.54F of the Act. Finally, the assessee had shown Rs.Nil on account of LTCG on sale of land. The Ld. AO disallowed the claim of exemption on account of payments to litigants and litigation expenses of Rs.12 lakhs, cost of improvement of Rs.7,50,000/- (index cost of Rs.13,68,697/-) contending that no evidence in support of these expenses were produced by the assessee. As there was difference in the value of sale consideration shown by the assessee and the value as per V, at the request of the assessee, the Ld. AO referred the issue to the Learned Departmental Valuation Officer (“ Ld. DVO”) for valuation. The Ld. DVO valued the land at Rs.67,34,000/-.
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Accordingly, the Ld. AO considered the sale consideration of land at Rs.67,34,000/- instead of Rs.45 lakhs, as shown by the assessee. The Ld. AO found that, the assessee had claimed exemption of Rs.18,14,003/- u/s.54F of the Act on account of investment of Rs.45
lakhs in Capital Gain Account Scheme (“CGAS”). The Ld. AO disallowed the exemption claimed by the assessee u/s.54F contending that, the assessee had deposited the amount in CGAS after the due date specified u/s.139(1) of the Act. Finally, the Ld. AO completed the assessment u/s.143(3) r.w.s. 147 of the Act on 22.12.2019
considering the sales consideration at Rs.67,34,000/-, allowing the deduction of Rs.1,17,300/- on account of Index Cost of acquisition of land and made addition of Rs.66,16,700/- on account of LTCG.
5. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) upholding the findings of the Ld. AO, dismissed the appeal of the assessee.
6. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, in this appeal, four issues are involved. The first issue
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is related to substitution of sale consideration of Rs.67,34,000/- in place of Rs.45 lakhs. The second issue is disallowance of cost of improvement of Rs.7.50 lakhs, the third issue is relating to the disallowance of cost of expenses of Rs.12 lakhs on account of payments made to litigants and litigation expenses and the fourth issue is relating to denial of exemption u/s.54F of the Act.
7. With regard to the first issue, the Ld. AR submitted that the assessee has sold the land for a consideration of Rs.45 lakhs.
However, the valuation of the property as per stamp duty authority was Rs.96,20,000/-. During the assessment proceedings, the case was referred to the Ld. DVO for the purpose of valuation of the property, who valued the fair market value at Rs.67,34,000/- and on the basis of the valuation done by the DVO, the Ld. AO treated
Rs.67,34,000/- as the sale consideration of the land for the purpose of LTCG. The Ld. AR further submitted that, the land which has been sold was subject to litigation for which the Ld. AR brought our attention to page nos.11 to 37 of the paper book containing the evidences related to litigation. The Ld. AR further submitted that,
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due to the litigation, the assessee was able to realize only Rs.45 lakhs from the sale of the land. Further, the sale consideration of the land has been acknowledged by the purchaser before the Sub-