Loading judgment…
Facts
The assessee sold land in 2007, leading to additions by the Assessing Officer for long-term capital gain and interest income, with the total income assessed at Rs. 1,04,72,594. The primary dispute was over the correct cost of acquisition of the land for calculating capital gains, as the assessee's claimed valuation of Rs. 19,92,698/- as on 01.04.1981 was rejected by the AO. Consequently, a penalty was imposed under Section 271(1)(c) for alleged concealment of income due to non-furnishing of the return.
Held
The CIT(A) partly allowed the appeal, granting a deduction under Section 54F but upholding the AO's lower cost of acquisition and the resulting penalty. The Tribunal found merit in the assessee's valuation report for the cost of acquisition as on 01.04.1981, set aside the CIT(A)'s rejection, and directed the AO to recalculate the capital gain based on this valuation. As the quantum assessment regarding cost of acquisition was set aside in favor of the assessee, the Tribunal also set aside the penalty imposed under Section 271(1)(c).
Key Issues
Whether the valuation of the cost of acquisition for long-term capital gain was correctly determined; and whether the penalty imposed under Section 271(1)(c) for concealment of income was justified.
Sections Cited
147, 144, 250, 50C, 54F, 271(1)(c), 80C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM
vkns'k@ORDER Per Bench:
This common order is to dispose of the above two captioned appeals as the same are interconnected, based on the same facts and have been argued together.
2. By way of this first captioned appeal, the assessee has challenged order dated 19.02.2025, passed by Learned CIT(A), National Faceless Appeal Centre, Delhi, u/s 250 of the Income Tax Act, 1961 (hereinafter & 595/JPR/2025 Bhagwan Sahay, Jaipur. referred to as “the Act”), whereby the appeal filed by the assessee challenging assessment order dated 19.03.2015, u/s 144 r.w.s. 147 of the Act, relating to the assessment year 2007-08, has been partly allowed.
Vide assessment order dated 19.03.2015, the Assessing Officer made following two additions:- Income from Long Term Capital Gain Rs. 1,03,09,915/- Interest income Rs. 9,046/- 4. Accordingly total income of the assessee was assessed, vide impugned assessment at Rs. 1,04,72,594/-.
Above mentioned first addition came to be made, in view of the observations and discussion made by the Assessing Officer, as regards the sale consideration of land situated in Village Keshyawala, Tehsil Sanganer, Jaipur, sold by the assessee and co-owners.
Case of the department is that as per information available with the office, the assessee alongwith others, named therein, sold their jointly held land, situated in the above said village. Said land was sold to Smt. Meera Devi for a consideration of Rs. 6,10,40,000/- on 03.02.2007.
The Registering Authority is said to have assessed the value of the land sold at Rs. 6,19,80,000/- for stamp duty purpose. The assessee was & 595/JPR/2025 Bhagwan Sahay, Jaipur. having 1/6th share in the land, and is stated to have been received Rs. 1,01,73,333/-. As observed in the assessment order, as per provisions of section 50C of the Act, share of the assessee in the sale consideration came to Rs. 1,03,30,000/-, but the assessee was found to have not filed any return of income.
So, the Assessing Officer conducted assessment proceedings and calculated the share of Long Term Capital Gain of the assessee, as regards the above said land as under:- “Sale consideration received (as per sec. 50C) Rs. 1,03,30,000/- Less: Cost of acquisition (3,870x518/100) Rs. 20,085/- Long Term Capital Gain Rs. 1,03,09,915/-“
When the assessment order was challenged by way of appeal, Learned CIT(A) observed that as regards deductions claimed u/s 54F of the Act, the assessee had substantiated his claim on the basis of documentary evidence in the form of purchase deed, bank statements, books of accounts etc. Accordingly, Learned CIT(A) directed the AO to allow deduction claimed by the assessee u/s 54F of the Act, to the tune of Rs. 44,80,000/-. To this extent, Learned CIT(A) allowed the appeal.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. However, as regards cost of acquisition of the above said land, Learned CIT(A) upheld the action taken by the Assessing Officer, to arrive at the credible figure for cost of acquisition of the land by taking comparables from nearby area of Jaipur, as per SRO data, as on 01.04.1981.
It may be mentioned here that SRO was based on the valuation of the land as per registered sale deed dated 03.02.2007, i.e. Rs. 6,19,80,000/- for the financial year 2006-07.
Consequently, as regards the cost of acquisition calculated by the Assessing Officer, the appeal filed by the assessee was dismissed. That is how, Learned CIT(A) partly allowed the appeal. Hence, the assessee is before this Appellate Tribunal.
The assessee is feeling aggrieved by the dismissal of his ground/claim as regards the cost of acquisition.
Penalty order dated 29.09.2015 was also under challenge before Learned CIT(A). Vide said penalty order, penalty of Rs. 23,27,610/- was imposed on the assessee u/s 271(1)(c) of the Act, due to the reason that the assessee was found to have concealed particulars of income earned & 595/JPR/2025 Bhagwan Sahay, Jaipur. from long term capital gain and interest income, by not furnishing the return of income for the year under consideration.
Vide impugned order dated 20.02.2025, Learned CIT(A) partly allowed the appeal, having allowed of claim of the assessee regarding deductions u/s 54F of the Act, to the tune of Rs. 44,80,000/-, as noticed above. Hence, the second mentioned appeal before this Appellate Tribunal.
Arguments heard. File perused.
It may be mentioned here that initially the appeal was sought to be adjourned as per request on behalf of the appellant, Ld. AR for the appellant having not come to the Court due to illness. However, subsequently, after seeking instructions from the concerned Ld. AR, arguments have been advanced by the proxy AR. Ld. DR for the department has also put forth her submissions.
Sale of the land by the assessee and other co-owners on 03.02.2007, for a sale consideration of Rs. 6,10,40,000/-, is not in dispute.
The Registering Authority, admittedly, assessed the value of the land sold at Rs. 6,19,80,000/- for stamp duty purposes.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. It is also not in dispute that the assessee was having 1/6th share in the land sold. The assessee claims to have received Rs. 1,01,73,333/- towards his share in the above said sale consideration.
Before the Assessing officer, the assessee submitted following details:- ”i ) Two purchase deeds of the land sold were filed. One land was purchased by sale deed dated 27.5.1969 for Rs. 1999/- on Rs. 100 stamps and other was for purchase of land on 23.12.1969 for Rs. 499/- on stamps of Rs. 15/-. ii) The assessee claimed the cost of acquisition of land on 1.4.1981 at Rs. 19,92,698/-. iii) The assessee disclosed of having salary income of Rs. 1,37,481/-. iv) The assessee further claimed the deduction of Rs. 44,80,000/- u/s 54F of the IT Act claiming that he purchased the property in his wife's name and incurred total expenditure of Rs. 44,80,000/- on it. v) The assesses enclosed the computation of income showing capital loss of Rs. 12,441/-on the sale transaction. vi) The assesses filed copy of sale deed of the land jointly with other co-owners. vii) Purchase deed of house No. 53 B, Dada Gurudev Nagar, Sanganer for purchase of house by the wife of assessee Smt. Munni Devi on 11.04.07 was filed by the assessee. viii) Copy of bank statements of account No. 660110110000898 in Bank of India and account No. 8352 in Urban Co operative Bank of the assessee for the period from 8.2.2007 to 7.8.2007 and from 1.4.2006 to 31.8.2007 respectively were filed. ix) Bank book of the above two accounts prepared by the assesse was filed. x) Computation of Income was filed by the assessee showing gross total Income of Rs. 1,46,887/- which included Salary income of Rs. 1,37,481/- with claim of deduction of Rs. 15,792/- for HRA, Long term capital loss of Rs.12,444/- with & 595/JPR/2025 Bhagwan Sahay, Jaipur. further claim of deduction of Rs. 44,80,000/- u/s 54 F,Bank interest of Rs. 9,406/- and deduction u/s 80C of Rs. 37,828/-. xi) Copy of ITR-2 for the assessment year 2007-08was filed, which is treated as non est, being filed beyond the prescribed period. xii) House a/c, Advance for House a/c, 03 contractors a/c and cash book prepared 1.4.2006 to 28.7.2007. xiii) Contract note prepared with three person on plain papers for demolition and construction of house at 53 B Dada Gurudev Nagar, Sanganer and copy of vouchers wherein cash payments to these persons for construction work on various dates have been shown.”
While assessing costs of acquisition of the land, the Assessing Officer observed as under:- “The claim of the assessee of construction of house before 1981 and after the purchase of land is not supported with any evidence. Moreover if the cost of Rs.19,00,000/- approx. is claimed towards incurring of construction of house then it is a very huge amount in that period. This is also evident from the fact that total cost of purchase of 3.87 hect. land was only Rs. 2,579/- only then how can be the cost of construction of a house on a small part of land can be so much huge. In actuality no construction of house was got done on this land. This is only claimed as on the sale deed of this land it is written that, "कुल �े�फल 3.87 हे�ेयर स�ूण�, ��थत �ाम के�ावाला, तहसील-सांगानेर, िजला-जयपुर को मय पानी, पूला, मेड़, डोल, बॉल, सोल, कुआ-कोठी आिद को िबना रखे िकसी भी अंश व भाग के सम� �ािम�, ��ािधकारों, खातेदारी हक, हकूक सिहत �पया 6,10,40,000/- (अ�रे �. छः करोड़ दस लाख चालीस हजार मा�) के बदले ि�तीयप� �ेती के हक म� िव�य कर दी है।". To take advantage of the word Kothi mentioned in the sale deed the assessee claimed higher cost of acquisition which is just an after thought put forth by the assessee to evade the taxability of long term capital gain. It is worthwhile to mention that on the date of purchase of land from Sh. Narayan s/o Late Sh. Ramla the 'Kothi' (House) already existed, as mentioned in the purchased deed. Page No. 02 of the purchase deed where this is mentioned has been made part of this order as Annexure-A to this order. Therefore, at a later stage if the assessee claims any further cost of construction of this land, the same should not be considered as & 595/JPR/2025 Bhagwan Sahay, Jaipur. the 'kothi' existed from the beginning i.e before purchase of land. It is pertinent to mention that the assessee claimed such cost of acquisition which after getting indexed(5.19 times) can be more than the sale value of consideration of assessee's share. This only seems to be the basis of claim of cost of acquisition of his share of land as on 01.04.1981 at Rs. 19,92,698/-. As per the deed produced by the a sessee the cost of purchase of land in the financial year 1969-70 was Rs. 166.60 per Bigha{2579/15.48 Bigha(3.87 hect.)). In regard to the cost of land as on 01.04.1981 nothing has been submitted by the assessee except as a vague claim of Rs. 19,92,698/-, which is not supported with any claim and seems a far fetched story. As there is no information available for the cost of acquisition of land reference is given to the order passed by the ITO ward 7(2), Jaipur in the case of Sh. Ganesh Narayan Sharma for the A.Y.2007-08. As per the information called by the ITO ward 7(2), Jaipur from the DG(Stamps) for the assessment in the case of Sh. Ganesh Narayan Sharma, it was gathered that the cost of land at Bagru Khurd on 21.05.1980 was Rs. 1,136/- per Bigha(Seller-Smt. Sanjhya w/o late Sh. Bhura). On 01.04.1981 the land rates in all the areas nearby Jaipur was the same. As no other parameter is available, considering the rate of Bagru Khurd, fair market value of the land of the assessee as on 01.04.1981- is taken at Rs. 1,500/- per Bigha. The share of the assessee in the land sold is .645 hect. (3.87/6) or 2.58 Bigha.Applying this ratio, the cost of land of the assessee as on 01.04.1981 comes to Rs.3,870/-(1500x2.58) only. After indexation the cost of acquisition comes to Rs.20,085/-, which is allowed to the assessee for calculation of capital gain.”
From the very beginning, claim of the assessee is that his share of cost of acquisition of land as on 01.04.1981, came to Rs. 19,92,698/-.
It may be mentioned here that during pendency of the appeal before Learned CIT(A), remand report was called thereupon the Assessing Authority submitted remand report dated 11.01.2017.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. Before Learned CIT(A), the assessee submitted a valuation report, according to which the property was valued at Rs. 19,92,698/-, as on 01.04.1981. It was argued on behalf of the assessee there that the Assessing Officer had arrived at a valuation of Rs. 1,500/- per bigha without considering key factors like location and quality of land etc.
The Assessing Officer rejected the contention raised on behalf of the assessee, while observing that the assessee had presented baseless facts regarding valuation of the property and that the assessee had not presented any detailed documents regarding construction of the house.
In para 6.3.4, Learned CIT(A) observed that as per evidence on record i.e. purchase deeds produce by the appellant, the above said land was purchased in the financial year 1969- 70 for a total consideration of Rs. 2,579/- including the stamp cost. This fact was not disputed by the appellant before Learned CIT(A), as mentioned in para 6.3.4 of the impugned order.
The issue before Learned CIT(A) was “ as to how, the assessee had arrived the conclusion that the cost of acquisition was Rs. 19,92,6981/- as on 01.04.1981.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. Before Learned CIT(A), the assessee produced a valuation report dated 26.08.2015 prepared by Registered Valuer. Standing order no. X-3 of 1981 issued by Chief Engineer, PWD (B & R), Rajasthan, Jaipur BSR PWD 1981 was made the basis of the estimate.
Learned CIT(A) observed that the valuation report of the said property as on 01.04.1981 was stated to have been arrived at by working backwards from the SRO value at Rs. 1,03,30,000/- in the financial year 2006-07. Learned CIT(A) held the above said valuation report submitted by the assessee to be a self serving document having no credibility, the reasons being that the same was prepared 8 years after the sale of the property and lacked any details and specifications of the property valued other than its location.
On behalf of the assessee, reliance has been placed on the valuation dated 26.08.2015, made in respect of the above said land, its copies available at page 19 of the paper book. As per this valuation report, standing order no. X-3 of 1981 issued by Chief Engineer, PWD (B & R), Rajasthan, Jaipur BSR PWD 1981 was made the basis of the estimate.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. Ultimately, the Registered Valuer observed that since the value for the financial year 2006-07 was Rs. 1,03,30,000/-, the value of the land sold, as on 01.04.1981, worked out at Rs. 19,92,698/-. Significantly, nothing to the contrary was brought on record by the department before Learned CIT(A) to discard or reject the said valuation report. While conducting proceedings for submission of remand report, the Assessing Officer was to analyse only the evidence submitted before Learned CIT(A) in the appeal proceedings. In this situation, there was no justification to disbelieve the valuation report submitted on behalf of the assessee-appellant simply on the ground that the sale had taken place about 8 years back.
In the given facts and circumstances of the case, we find merit in the contention raised on behalf of the appellant that cost of acquisition of land in question was properly and legally valued, at the fair market value as on 01.04.1981. Having regard to the facts and circumstances, the impugned order passed by Learned CIT(A), rejecting the valuation report prepared by the Registered Valuer, and furnished by the assessee, deserves to be set aside. We order accordingly.
& 595/JPR/2025 Bhagwan Sahay, Jaipur. Consequently, the Assessing Officer is directed to make calculations having regard to the said valuation report prepared by the Registered Valuer for the purposes of assessing cost of acquisition of land, at the fair market value as on 1.4.1981. Result 29. This appeal is disposed of accordingly.
30. In view of the above findings and decision in i.e. as regards the quantum assessment proceedings, it has been rightly argued on behalf of the assessee that once the report of the Registered Valuer regarding valuation of the land sold has been accepted, the penalty order dated 19.03.2015 and the impugned order passed by Learned CIT(A), u/s 250 of the Act, also deserve to be set aside.
Once the quantum assessment proceedings on the point of cost of acquisition has been set aside in the manner indicated above, it cannot be said that the assessee had concealed any such income concerning Long Term Capital Gain, the impugned order passed by Learned CIT(A), and the penalty order passed under section 271(1)(c) of the Act also deserve to be set aside. We order accordingly.