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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI GIRISH AGRAWAL
आदेश /O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order no. ITBA/NFAC/S/250/2020- 21/1031329252(1) dated 09.03.2021 against the assessment order of ACIT, Non Corporate Circle-5, Coimbatore passed u/s. 144 of the Income-tax Act, 1961 (herein after referred to as “the Act”) dated 28.12.2018.
2 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 2. The grounds of appeal taken by the assessee are reproduced as here under: “(1) The order of the National Faceless Appeal Centre, Delhi, (NFAC) u/s 250 of the I.T. Act, 1961, dated 09.03.2021, confirming the impugned order u/s 144 rws 147 of the Act, dated 28.12.2018 of the AO, is unsustainable in the facts and circumstances of the case and in law. (2) The NF AC, has erred in holding that the proceedings u/s 147/148, was valid in law. (3) The sale consideration, as admitted by the appellant, in his Return, in respect of this 10% interest in the capital asset, cannot be substituted with the valuation fixed on the basis of Circle rate, without bringing on record that the appellant had received more than the consideration stated in the document, in the facts and circumstances of the case and in law. (4) The learned CIT(A) ought to have held that in the circumstances as were prevailing in the case of the appellant, the full value of the consideration for the transfer of the capital asset, as stated in the document, was genuine, and as such, no income had escaped assessment, in the facts and circumstances of the case and in law. (5) The NF AC, ought to have held that the AO could not have completed the assessment u/s 144 of the Act, when there was no fault on the part of the appellant, in the facts and circumstances of the case and in law. ( 6) The NF AC ought to have held that the AO, after making a reference, u/s 50C(2) of the Act, could not have adopted higher valuation, as the AO had power to revise his order u/s 155 of the I.T.Act, 1961, later, if warranted, in the facts and circumstances of the case and in law. (7) The appellant could not be put to a greater burden, pending the receipt of the report from the Stamp Valuation Authority, by an order u/s. 144 of the Act, stating that it would be revised after receipt, is not sustainable in law, as the benefit should be given to the citizen and not to the State, in the facts and circumstances of the case. (8) The NFAC ought to have appreciated that any assessment made, under the provisions of the Income Tax Act 1961, should be validly made and if not, the same has to be quashed, as non-est in the eye of law, in the facts and circumstances of the case. (9) For these and other additional grounds of appeal that may be adduced at the time of hearing, the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, is opposed to law and unsustainable in the facts and circumstances of the case.”
There is a delay of 62 days in filing of this appeal by the assessee. The assessee placed on record petition for condonation of
3 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 delay along with affidavit explaining the reason for the delay in filing the appeal. The Ld. Counsel for the assessee submitted that the delay in filing the appeal is attributable to the Pandemic of Covid-19 and is covered by the decision of Hon’ble Supreme Court in its decision in suo moto Writ Petition (Civil) No.3/2020 dated 10.01.2022 had held that the period from 01.03.2020 to 28.02.2022 should be excluded while reckoning limitation period. Further, the Hon’ble Supreme Court has allowed 90 days from 01.03.2022 to file the belated appeals. Accordingly, the Counsel claimed that this appeal is filed within the time permitted by the Hon’ble Supreme Court and thus, prayed for its admission by condoning the delay. The assessee has put on record an Affidavit explaining the reasons for the delay. We have duly considered the contentions of the ld. Counsel and gone through the record. Accordingly, for the just decision of the controversy, we find it proper to condone the delay of 62 days which is related to Covid-19 pandemic and thus, admit it for adjudication.
Brief facts of the case are that the assessee filed his return of income on 08.08.2014 reporting a total income of Rs. 1,22,06,910/- which included long term capital gain of Rs. 1,05,91,500/- in respect of his share of 10% in the sale of residential property. In the course of assessment proceedings, Ld. AO noted that assessee and 6 others
4 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 jointly sold their residential property for a total sale consideration of Rs. 12,00,00,000/-. The assessee had 10% share in the property and included sale consideration of Rs. 1,20,00,000/- for computing long term capital gains reported in the return of income filed by the assessee. Ld. AO further noted that the value of the property was determined at Rs. 15,14,93,000/- by the District Revenue Officer for the purpose of stamp duty and accordingly Ld. AO found that assessee had not taken the sale value as per section 50C of the Act which should have been Rs. 1,51,49,300/-, considering his share at 10%. Accordingly, Ld. AO was of the view that there is a short report of income to the extent of Rs. 31,49,300/- (Rs.15,14,93,000/- (-) Rs. 12,00,00,000/- = Rs. 3,14,93,000/- & 10% of this = Rs. 31,49,300/-). Ld. AO proposed to make addition in respect of this amount and issued a show cause notice to the assessee for submitting his explanation. In response the assessee submitted its reply dated 09.11.2018 raising an objection in accordance with section 50C(2) of the Act and requested for making a reference to the valuation officer. Based on the request made by the assessee, Ld. AO referred the matter to the District Valuation Officer, Chennai vide his letter dated 15.11.2018 with a request to value the land and building and produce the valuation report of the said property on or before 05.12.2018. The Ld. AO had sent a reminder letter to the District Valuation Officer, but the
5 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 valuation report was not received by him till 27.12.2018. To this effect, the assessee submitted vide his letter dated 27.12.2018 that since the valuation report has not been received by the Ld. AO, the assessment ought to be made on the basis of income returned by the assessee. However, Ld. AO did not consider the request of the assessee and proceeded to make the addition of Rs. 31,49,300/-. Ld. AO while completing the assessment noted that since the valuation report has not been received from the District Valuation Officer, the assessment being time barred by 31.12.2018, the addition of Rs. 31,49,300/- will be revised if necessary on the receipt of pending valuation report. The observations and findings of the Ld. AO in the impugned order are reproduced as under: “3. After verifying the submitted documents, this office issued a letter dated 30.10.2018 and 12.11.2018 proposing to assess the difference between 10% of the share of the sale consideration admitted i.e. Rs. 1,20,00,000/- and guideline value of Rs.1,51,49,300/- approved by the DRO vide his order dated 12.09.2013 (Rs.15,14,93,000-Rs.12,00,00,000) i.e. Rs. 31,49,300/- as the income of the assessee under the head 'Capital Gain' for the AY 2014-15, in addition to normal income admitted. 4. In response, the assessee submitted a letter dated 09.11.2018 which was received at this office on 14.11.2018 stating his objection to the substitution of valuation, fixed by the Stamp Valuation Authority i.e. District Revenue Officer u/s 50 (C) (2), as excessive. He also stated that without making a reference to the Valuation Officer, it is premature to hold that any escape from income has taken place and re-computing the capital gain is not acceptable to him. 5. As requested. by the assessee, the above property was referred to the District Valuation Officer, Chennai on 15.11.2018 with a request to value the land and building and produce the valuation report of the said property on or before 05.12.2018. As the
6 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 valuation report was not received before 15.12.2018, a reminder letter dated 18.12.2018 was issued to District Valuation Officer intimating the time limit to complete the assessment i.e. on or before 31.12.2018 and requested to produce the valuation report on or before 24.12.2018. But, the valuation report has not been received till 27.12.2018. 6. The assessee vide his letter dated 27.12.2018 stated that, since the valuation report admittedly has not been received by this office, AO cannot proceed to make an order in writing, to make an assessment- of the total income and determine the tax payable by him, on the basis of such assessment, not, in accordance with the provisions of section 143(3) of the IT Act 1961. 7. The objection of the assessee is not considered as he has requested to refer the property to evaluation officer only on 14.11.2018. The property was referred to the valuation officer immediately on 15.11.2018. Therefore, the delay in referring the property to the valuation cell is attributable on the part the assessee and not by the department. 8. As I have no other alternative, but to complete the assessment in time, Guideline Value of the property adopted by the Sub- Registrar of Rs. 15,14,93,000/- is taken as the full value of sale consideration received by the sellers i.e. assessee and others and assessment is finalised accordingly. However, on receipt of valuation report, the assessment will be revised, if necessary.”
Aggrieved, the assessee went into appeal before the Ld. CIT(A), who confirmed the addition and dismissed the appeal and reiterated the observations made by the Ld. AO which is reproduced as under: 4.5.2 It is fact that vide letter dated 09-11-2018 the appellant has raised the objection regarding valuation fixed by the stamp valuation authority, accordingly following the rule of law, the assessing officer has referred the matter before the Valuation Officer. Therefore appellant claim in ground No 6 has no force. The assessing officer has made a reference to Valuation Officer on the instance of appellant and non receiving of report from the valuation officer before passing the order dated 28-12-2018, and non- submission of explanation by appellant leads to passing the order u/s 144 of the Act. In the Order it has been also mentioned by the Assessing Officer that on receipt of valuation report, the assessment will be revised. Therefore these grounds of appeal are dismissed.”
Aggrieved, the assessee is in appeal before the Tribunal.
7 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15
Before us, Mr. R. Vijayaraghavan, Advocate represented the assessee and Mr. AR V Sreenivasan, Addl. CIT represented the Department.
At the outset, Ld. Counsel of the assessee pointed out that assessment has been completed by the Ld. AO without the receipt of valuation report from the District Valuation Officer, Chennai referred to by the Ld. AO as per the provisions of section 50C(2) of the Act. According to the Ld. Counsel, assessment made by the Ld. AO by applying the provisions of section 144 of the Act is bad in law as there was no such occasion depicting failure on the part of the assessee, for the pendency of the receipt of the valuation report from the District Valuation Officer. He also pointed out that Ld. AO has specifically stated in the impugned order that the valuation report has not been received till 27.12.2018 and on receipt of the said valuation report, the assessment will be revised, if necessary. In the light of these facts, Ld. Counsel of the assessee prayed that the matter may be remitted back to the file of the Ld. AO for getting the valuation report of the property from the District Valuation Officer and completing the assessment in the light of the report so received by affording reasonable opportunity of being heard to the assessee and allowing the
8 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 assessee to make his submissions to rebut the valuation report, if required. Ld. Sr. DR when confronted with these set of facts and prayer made by the Ld. Counsel did not controvert on the same.
We have heard the rival contentions, perused the material on record and have given thoughtful consideration to the observations and findings given by the Ld. AO and the Ld. CIT(A) in respect of the matter in hand. At the outset, we find that it is an undisputed and uncontroverted fact that a reference was made to the District Valuation Officer, Chennai by the Ld. AO for the valuation of the property in respect of which the addition to the total income of the assessee was proposed by the Ld. AO. It is also a fact that the valuation report from the District Valuation Officer, Chennai was not received until passing of the impugned assessment order as required u/s. 50C(2) of the Act. We also note that assessee had categorically made a request that in the absence of receipt of valuation report, the assessment ought to have been completed by accepting the income returned by the assessee. We also note that Ld. AO concluded the assessment by very specifically noting that the assessment will be revised on receipt of the pending valuation report, if necessary. Considering these facts on record and the prayer made by the Ld. Counsel which is uncontroverted by the Ld. Sr. DR, we find it proper to remit the matter
9 V. Ramnarayanan ITA No. 248/Chny/2021 AY: 2014-15 back to the file of the Ld. AO for getting the valuation report of the property from the District Valuation Officer, Chennai as required u/s. 50C(2) of the Act and pass the assessment order in accordance with law by considering the valuation report and the submissions made by the assessee. Needless to say that the assessee be given a reasonable opportunity of being heard, who will be at liberty to make further submissions as and when required in respect of the valuation report received from the District Valuation Officer. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 26th May, 2022 at Chennai. Sd/- Sd/- (िगरीश अ�वाल) (महावीर �सह ) (GIRISH AGRAWAL) (MAHAVIR SINGH) लेखा सद�य /ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT
चे�ई/Chennai, �दनांक/Dated, the 26th May, 2022 JPV आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.