RAM JI LAL MEENA,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 306/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2008-09 cuke Ram Ji Lal Meena, Income Tax Officer, Vs. F.A-20, Sidharth Nagar, Ward-6(1), Malviya Nagar, Jaipur (Raj)- Jaipur. 302017. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AOOPL 6275 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vijay Gupta. jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 03/10/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 04/10/2017 vkns'k@ ORDER

PER: BHAGCHAND, A.M.

This is an appeal filed by the assessee emanates from the order of

the ld. CIT(A)-2, Jaipur dated 17/03/2017 for the A.Y. 2008-09,

wherein the assessee has raised following grounds of appeal:- “1. On the facts and circumstances of the case and in law, the ld. CIT(A) was not justified in holding the addition of Rs. 41,80,805/- under the head capital gain made by the A.O. The action of ld. CIT(A) is illegal and deserved to be set aside. The ld. CIT(A) has erred both in facts and in law.

ITA 306/JP/2017_ 2 Ram Ji Lal Meena Vs ITO

year 2008-09. Notice U/s 148 of the Income Tax Act, 1961 (in short the

Act) issued on 23/03/2015. Regarding the facts and observation, the

Assessing Officer has observed as under:

ITA 306/JP/2017_ 3 Ram Ji Lal Meena Vs ITO

plot of land was allotted to Shri Harbhan Singh by M/s. Subhash Sindhi Co-operative Housing Society Ltd., Jaipur on 28.08.1987 being a Member of the Society. There was some dispute between the RIICO and Subhash Sindhi Co-operative Society with regard to possession of the property. Shri Harbhan Singh sold the property to Shri Ram Ji Lai Meena and Shri Ram Ji Meena in turn sold the property to Shri Bhupendra Kumar Dak and sale consideration was received by the assessee. At that point of time the matter was pending before the Hon’ble Supreme Court for its decision. This fact has also been stated in the Sale deed. Later on, i.e. around after six years the Hon’ble Apex Court delivered its decision on 12.02.2013 in favour of RIICO. 3. The assessee vide letter submitted on 04.01.2016 contended that for calculating of Capital Gain Income the provisions of Section 50-C is not applicable in the case of the assessee. In this regard it has been stated that the right in property was sold without handing over the possession of the property (as it was already acquired by RIICO) and the title of the property was already in dispute with RIICO and was under judicial review by the competent authorities/courts. The contention of the assessee is not acceptable, as the transaction took placed well before the decision of the Hon’ble Supreme Court. Firstly the property was purchased by the assessee and then sold out further and received sales consideration. The property was sold out by the assessee and sale deed was also got executed with the stamp authorities. When there is clear cut transaction of sale of immovable property it cannot be said and acceptable that it was a transfer of sale of rights only. In view of the facts of the case it is a transfer within the meaning and purview of Section 2(47) of

ITA 306/JP/2017_ 4 Ram Ji Lal Meena Vs ITO

the IT Act, 1961 and the assessee is liable to pay Capital Gain Tax and section 50C of the IT Act is applicable in the case. Section 50C is applicable on transfer of capital assets being land or building or both. In view of the facts of the case as discussed above the assessee has sold out the immovable property in shape of plot and plea of the assessee that rights were sold out is not acceptable. A show cause vide order sheet dated 11.01.2016 was given to the assessee as why not sales consideration be taken at Rs 53,11,637/- adopted by the stamp registration authorities within the meaning and purview of section 50C of the IT Act. The assessee has not submitted any reply/written submission Therefore it is assumed that he has nothing to say in this regard. 4. The assessee has not filed any return of income for A.Y 2008-09 in response to notice u/s 148 and also no return of income was filed earlier u/s 139(1) of the IT Act. During the assessment proceedings the assessee has only filed a unsigned computation of total income for A.Y 2008-09 along with his letter dated 05.10.2015. Capital gain loss of Rs 1,22,303/- was shown in the said computation. However no return of income was filed by the assessee in response to notice issued u/s 148. Therefore in such circumstances and facts a show cause u/s 144(1) of the IT Act) 1961 was issued on 28.01.2016. In the show cause it was proposed to consider sale consideration at Rs.53,11,367/- i.e. the value as adopted by stamp authorities for computing capital gain on sale of plot. Further it was also proposed to estimate & assess regular income at Rs 2,00,000/- in absence of any return of income. 5. In response to the show cause issued u/s 144(1) the assessee has submitted reply vide letter dated 02.02.2016, placed on

ITA 306/JP/2017_ 5 Ram Ji Lal Meena Vs ITO

record. The reply of the assessee was gone through carefully. In his reply the assessee has stated more over the same facts as submitted earlier. The assessee has submitted that section 50C is not applicable as the land was under dispute and the assessee has sold out the rights. The reply of the assessee was not acceptable for the reasons as already discussed above in Para 3. Again the assessee has not filed any return of income u/s 148 of the IT Act. However, the assessee in his submission has objected the value adopted by the stamp authorities and requested to refer to valuation officer. It is pertinent to mention here that the assessment proceedings were regularly attended by the assessee from September 2015 and in spite knowing the facts never objected the value of the property adopted by the stamp authorities during the assessment proceedings. However in last juncture of the proceedings vide his letter dated 02.02.2016 submitted on 03.02.2016, the assessee has objected the value of the property adopted by the stamp authorities. The assessee should have objected the same well before in time which was not done so. However the matter was referred to the Departmental Valuation Officer and reference was sent to DVO vide this office’s letter No 2243 dated 05.02.2016 for determining the fair market value of the property in view of the objection raised by the assessee. The DVO, Jaipur vide his letter No 183 dated 10.02.2016 returned back the proposal stating therein that “I would like to inform you that the statuary references normally require 120 days. As a number of case are to be disposed off by this office before 31.03.2016 being time barring case, it would not be possible to take up this case at this stage. Therefore reference in original is hereby returned. ”

ITA 306/JP/2017_ 6 Ram Ji Lal Meena Vs ITO

The Assessing Officer did not accept the contention of the assessee and

made an addition of Rs. 41,80,805/- as long term capital gain.

holding as under:

2.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. It is noted that the assessee had made a sale of immovable property at Rs.11,70,000/- sale consideration, and no return of income had been filed on the relevant year. In response to notice under section 148, return was filed returning a capital loss on the transaction at Rs. 1,22,303/-. As per information with the Assessing Officer, the value of the property was adopted at Rs.53,11,367/- by the Sub- Registrar IV, Jaipur. The Assessing Officer noted that the said property had been purchased for a consideration of Rs.9,50,000/- from one Shri Harbhajan Singh through an agreement on 20.03.2003 and sold to Shri Bhupendra Kumar Dak for a consideration of Rs. 11,70,000/- on 07.05.2007 and the sale deed was registered with sub-registrar-IV, Jaipur. Further facts of the case are that the property was initially allotted to Shri Harbhjan Singh by M/s Subhash Sindhi Cooperative Society and a dispute was going on between RIICO and the society as the land had been acquired by the government and handed over to RIICO and yet the Subhash Sindhi Cooperative Society had purchased the same from the Khatedars being aware of the fact of its acquisition by the Government. During assessment proceedings, it has been contended that provisions of section 50C were not applicable as only the right in property was sold without handing over the possession of the property and the title of the property was in dispute. The Assessing Officer held that since

ITA 306/JP/2017_ 7 Ram Ji Lal Meena Vs ITO

the sale and purchase of immovable property has taken place that the sale deed had been registered and stamp value determined as per rules, section 50C would be applicable and Rs.41,80,805/- had been arrived at as the capital gains. In the present proceedings, the Authorized Representative has submitted that in view of the decision of the Hon'ble Supreme Court in this case the land which was sold by Khatedars was a disputed land and sold through an agreement to the respondent society on 21.07.1981. Subsequently, the society without any charge or conversion/ approval from state Government sold the land to Shri Harbhajan Singh who in turn executed the sale agreement and power of attorney in favour of Shri Ramji Lai Meena in May, 2007 in which, in the documents, it was clearly mentioned that the land had been acquired by the RliCO/State Government and if not freed/released by the Government purchasers will only be entitled to compensation from the RllCO/State Government. On the above basis, it is claimed that the transaction between society, Harbhajan Singh, Ramji Lai to Bhupendra Kumar to the ultimate purchaser are only transfer of rights. Reliance was 'W 'W placed on the case of Tara Chand Jain Vs. IT dated 'W 'W 09.10.2015 of ITAT, Jaipur and Atul G. Puranik Vs. ITO of ITAT, Mumbai. Further, request has been made for reference to valuation officer as certain factors needed to be considered for its valuation. Moreover, it was also mentioned that the assessee was not trying to circulate black money as buyer of rights was Addl. DGP who is not expected to indulge in such a transaction. On the basis of all the above, it was submitted that invocation of section 50C was not in order. During the proceedings, the Authorized Representative was required to produce the notification by which the Government of Rajasthan/RIICO had acquired the property as also the evidence and

ITA 306/JP/2017_ 8 Ram Ji Lal Meena Vs ITO

date on which physical possession was acquired by the government but the Authorized Representative expressed his inability and placed reliance on the contents of the order passed by the Hon'ble Apex Court in this case dated 12.02.2013. Considering the above factual matrix that all the parties involved right from M/s Subhash Sindhi Society, in reference to which the order of Apex Court has been rendered and the subsequent sellers and purchasers are aware of the illegality of the transaction as the land had already been acquired by the Government and handed over to RIICO as per the order. The Authorized Representative is also relying on the fact that since the Apex Court has held the transaction as void, the sale and its subsequent events are also void and application of section 50C of the I.T. Act. 1961 is correct. The observation of the Hon'ble Court regarding the behavior of the society included that society members had entered into an agreement to sell even though, a notification under section 4 to carry out acquisition had been issued by the government, fully knowing the legal implications that may arise and the bonafides of the society had been questioned. However, the relevant and important point is that at the time of the sale transaction, the Hon'ble Rajasthan High Courts order was in force in this case, in which it had been ruled as follows (para 27 of the Apex Courts order):

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7254 OF 2003 The Rajasthan State Industrial Development ….Appellant and Investment Corporation Versus Subhash Sindhi Cooperative Housing Society …Respondents Jaipur & Ors. WITH CIVIL APPEAL NO. 853 OF 2013

J U D G M E N T

ITA 306/JP/2017_ 9 Ram Ji Lal Meena Vs ITO

Dr. B. S. CHAUHAN, J.

“The petitioner Subhash Sindhi Cooperative Housing Society is contesting only for a limited piece of land measuring 17 Bighas 9 Biswas which had been acquired and given to DGDC by the RIICO. The case of the society is that in view of the observations made by the Supreme Court in its order, it has pleaded its case in this petition on the basis that the other land which had been acquired had been released or it stood de facto released and the government was itself a party to it in releasing the acquired land and large number of lands of this nature de facto stood released from acquisition inasmuch as houses have been constructed thereon; the Government itself has acquiesced with such construction and has also taken steps for regularisation of such construction and the decision which was taken by the JDA in the meeting headed by the Chief Minister was implemented qua all others except the land of petitioner Society, merely because the petitioner society’s land had been given to DGDC/RIICO. This small piece of land which is claimed by the society in the facts and circumstances of the case, can very well be restored to the Society and to that extent, land allotted to DGDC can be curtailed without having any adverse impact on the prospects of business of DGDC. Facts have come on record through documents that to start with, DGDC had demanded only 35 acres of land. This demand was raised from time to time and ultimately, it reached upto 105 acres. It is also on record that the RIICO had given only 80 acres of land to DGDC as against the allotment of 105 acres. In such a situation, if a small piece of land measuring 17 Bighas 9 Biswas

ITA 306/JP/2017_ 10 Ram Ji Lal Meena Vs ITO out of the land allotted to DGDC is restored back to the petitioner Society it cannot have any adverse impact on the business prospects of DGDC nor the RIICO may 29 Page 30 have any just objection and the State Government which has already acquiesced with the release of such acquired lands in large number of cases, cannot have any legitimate case to contest the grant of relief to the petitioner society and the petitioner Society is found to be entitled for the same on the principles of parity as well as equity.” Due to the same, the ownership of the land was legal at the time of registration of sale deed and vested with the seller. Further, the noting in the registered sale deed regarding the land and its ownership are reproduced below:

;g fd mijksDr of.kZr IykV dks eq[r;kjdrkZ Jh gjHkku flag dks lqHkk’k flU/kh dks vkijksfVo gkmflax lkslk;Vh fyfeVsM t;iqj jft- uEcj 1588 ,y ds vkoVau i= fnuakd 28-08-1987 bZLoh }kjk vkoafVr fd;k x;k Fkk] ftldh dher dh leLr jkf'k mDr lfefr esa tek djkdj mDr of.kZr IykV dk dCtk e; lkbV Iyku ds izkIr dj fy;k FkkA bl izdkj eq[r;kjdrkZ mijksDr of.kZr IykV uEcj 106 ¼iqjkuk uEcj 129½ ;kstuk la[;k 23 r:Nk;k uxj] VkSad jksM] t;iqj dk fcuk fdlh vU; O;fDr ds lhj o lk>s ds ,d ek= ekfyd] Lokeh o vf/kdkjh gqvk] ftldks mUgksusa vkt fd fdlh Hkh vU; O;fDr dks jgu] foØ; o gLrkUrfjr vkfn ugha fd;k gS rFkk mDr of.kZr IykV fjdks dh vokfIr esa gS rFkk ekuuh; mPpre U;k;ky; esa dsl fopkjk/khu gS] blds vfrfjDr mDr of.kZr IykV izR;sd izdkj ds >x<+s VVs] _.k Hkkj ljdkjh] v}Zljdkjh] cSad o tulk/kkj.k ls eqDr gS rFkk fdlh dtkZ] dqdhZ fMØh] o vuqcU/k i= }kjk Hkh cfU/kr ugha gS ,oa blds fo’k; esa eq[r;kjdrkZ dks izR;sd izdkj ls vius dke esa ysus o

ITA 306/JP/2017_ 11 Ram Ji Lal Meena Vs ITO jgu] foØ; o gLrkUrfjr vkfn djus ds lEiw.kZ Lorokf/kdkj ekfyfdkuk gd izkIr gSA

;g fd vc foØ; ewY;/ku dh jkf'k esa ls f}rh;i{k ls dqN Hkh ysuk ckdh ugha jgk gSA vc foØ; fd;s x;s IykV ls eq[r;kjdrkZ] izFkei{k dk o muds mRrjkf/kdkfj;ksa] LFkkukiUuksa] okfjlkuksa] ,tsUVksa izfrfuf/k;kWa vkfn dk dksbZ gd o lEcU/k ugha jgk gS rFkk uk gh Hkfo’; esa jgsxkA vc mijksDr of.kZr IykV dks f}rh;i{k vius fdlh Hkh dke esa ysos] eafty nj eafty fuekZ.k djkos] ikuh o fctyh ds dusD'ku vius uke yxok;s] Lo;a jgs] fdjk;s ij nsos ;k fdlh Hkh O;fDr dks fdlh Hkh izdkj ls jgu] foØ; o gLrkUrfjr vkfn dj Qk;nk mBkos] blesa e[r;kjdrkZ] izFkei{k dks o muds mRrjkf/kdkfj;ksa dks fdlh izdkj dh vkifRr djus dk vf/kdkj ugh gksxkA

;g fd foØ; fd;s x;s IykV ds lEcU/k esa jhdks }kjk vokfIr izfØ;k ds vfrfjDr vkt ls igys dh dksbZ cdk;k jkf'k >xM+k] V.Vk] _.k Hkkj ljdkjh] v}Zljdkjh] cSsad o tulk/kkj dk ik;k x;k rks mu leLr ds fuiVkjs dh ftEesnkjh eq[r;kjdrkZ] izFkei{k dh gksxh rFkk vkt ds i'pkr~ dh leLr ftEesnkjh f}rh;i{k dh gksxh ,oa Hkfo’; esa yxus okys leLr fu;eu 'kqYd] 'kgjh tekcUnh] lhojst pktZ] VSDlst vkfn dh jde f}rh;i{k gh vkius ikl ls tek djkosxkA

;g fd foØ; fd;s x;s IykV ls lEcfU/kr leLr vly dkxtkr izFkei{k us f}rh;i{k dks lEHkyk fn;s gSA

ITA 306/JP/2017_ 12 Ram Ji Lal Meena Vs ITO ;g fd foØ; fd;s x;s IykV ds lEcU/k esa vc f}rh;Ik{k dks vf/kdkj gS fd og bl foØ; i= ds vk/kkj ij leLr dk;kZy;ksa esa eq[r;kjdrkZ Jh gjHkku flag ds uke ds LFkku ij viuk uke vafdr djok ysos] ftlesa izFkei{k }kjk f}rh;i{k dk iw.kZ fyf[kr o ekSf[kd lg;ksx fd;k tkosxkA

In view of the discussion as above, it is clear that on the date of transaction, the ownership of the land was with the appellant as per the order of the Jurisdictional High Court in force at that time. The registered sale deed clearly shows that the land was transferred for a consideration and all the papers of ownership were handed over. In view of the above, the value adopted by stamp valuation authority has to be adopted. As regards reference to valuation officer, the same was requested for by the assessee at the fag end of the financial year and the time was insufficient for the same and the assessment was getting time barred. The compliance was made to the show cause notice under section 144(1) on 02.02.2016. In view of the above, the application of section 50C is upheld and the addition of Rs.41,80,805/- under the head long term capital gain is confirmed.”

assessee has submitted that the assessee has not sold out any property

but only rights, therefore, the provisions of Section 50C of the Act are

not applicable. He claimed that the property was sold without handing

over the possession and the title of the property was in dispute.

sold the plot of land, which was allotted to him by a Cooperative society

ITA 306/JP/2017_ 13 Ram Ji Lal Meena Vs ITO

and the sale deed clearly mentions in this regard, therefore, there is no

merit in the claim of the assessee.

plot, which was allotted to the assessee by a cooperative society,

therefore, there is no substance in the pleadings of the assessee. The

facts and circumstances of the case are clearly shows that the provisions

of Section 50C of the Act are applicable and it was a transfer of a capital

asset being plot of land.

although, the assessee has submitted that the value adopted by the

stamp valuation authority was on a higher side and the assessee has

requested to the Assessing Officer to refer the matter to the Valuation

Officer. The Assessing Officer dismissed the claim of the assessee for

the reason that the assessment was getting time barred and there is no

time left for the DVO to estimate the fair market value. For ready

reference, the provisions of Section 50C(2) of the Act read as under: 50C (2) Without prejudice to the provisions of sub-section (1), where— (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court,

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the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub- sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub- section (1) of section 16A of that Act. Explanation 1.—For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.—For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.” Thus, the provisions of the Act provides that where the assessee claims

before the Assessing Officer that the value adopted or assessed by the

Stamp Valuation Authority under sub-Section (1) exceeds the fair

market value of the property as on the date of transfer then the

Assessing Officer may refer the valuation of the capital asset to the

Valuation Officer. In paragraph No. 5 of the assessment order, it was

clearly stated by the Assessing Officer that the assessee has objected

the value adopted by the Stamp Valuation Authority and requested to

refer the matter to the valuation officer. The Assessing Officer referred

the matter to the departmental valuation officer on 05/02/2016 for

determination of fair market value of the property. However, the DVO

returned back the proposal by stating that the statutory references

normally requires 120 days and number of cases are to be disposed off

ITA 306/JP/2017_ 15 Ram Ji Lal Meena Vs ITO by his office prior to 31/3/2016 being time barring cases, therefore, it

would not be possible to take the case at that stage and the reference

was returned. After hearing both the sides and in the interest of justice

and equity, I find it appropriate to restore the matter to the file of the

Assessing Officer to be decided de novo after obtaining valuation report

from the DVO.

purposes only.

Order pronounced in the open court on 04/10/2017.

Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04th October, 2017 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Ram Ji Lal Meena, Jaipur. 1. izR;FkhZ@ The Respondent- The ITO, Ward-6(1), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 306/JP/2017) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत