SATISH ZUMBERLAL FIRODIA,,AHMEDNAGAR vs. INCOME TAX OFFICER,, AHMEDNAGAR

Incidental to the disputed land, the transfer of the disputed land by the opponent Nos. 1 to 5 to the opponent Nos. 6 to 7 is declared legally invalid in terms of section 84 (C)(4). Of the Mumbai Tenancy and Agricultural Lands Act 1948.

The disputed property be surrendered to the State Government after the expiry of time period for appeal against this order. 3. The order be communicated to all the concerned.”

On going through the above order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar, it is manifest that the transfer of the land in question by means of Sale Deed dated 07- 12-2010 came to be declared invalid and the disputed property was directed to be surrendered to the State Government after expiry of time period for filing of appeal against this order. On a pertinent query, the ld. AR submitted that the assessee did not file any appeal against the order passed by the Tehsildar and Agricultural Lands Tribunal, Ahmednagar and further that the disputed property was also not transferred to the State Government. He further claimed that the assessee has no knowledge of any appeal having been filed by other co-owners. Thus, it is manifest that there is an apparent contradiction in the part reply submitted on behalf of the assessee vis-à-vis the terms of the order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar. Firstly, the ld. AR has not drawn my attention towards either the relevant provision under which the Tehsildar and Agricultural Lands Tribunal set aside the registered sale deed or the copy of petition challenging the registered sale deed before such Tribunal. Secondly, arguendo, that the Tehsildar and Agricultural Lands Tribunal was competent to do so, then his order should have taken its logical conclusion, namely, the disputed property should have vested in the State Government after the expiry of the time for filing appeal against the order. Per contra, the ld. AR submitted that the property in question has not vested in the State Government. There are so many loose ends on this issue. The ld. AR denied to have any information about all such aspects, which in my considered opinion have an important bearing on the question. If the registered Sale Deed has itself been set-aside, to which the assessee is one of the co-owners as transferor and no further transfer has taken place inasmuch as the property has come back to the co-owners, then there cannot be any question of capital gain arising in the hands of the assessee. Au contraire, if the order of Tehsildar and Agricultural Lands Tribunal, Ahmednagar itself has been set-aside in further appeal, then, of course, the assessee will be obliged to pay tax on capital gain on the transfer of the property taking place by means of the registered Sale Deed on 07-12-2010 in the year under consideration. In the third scenario of the property in question getting vested in the State Government, again several consequences will follow as regards the timing and the amount of computation of capital gain. These aspects of the matter have remained unanswered. At this stage, it is relevant to mention that the argument about the order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar, dated 9.11.2013 setting aside the registered sale deed executed in the year 2010, was taken up before the Tribunal for the first time. No such plea was there before the AO or the ld. CIT(A) that the sale made through registered Sale Deed 07-12-2010 was set-aside by the Tehsildar and Agricultural Lands Tribunal, Ahmednagar, even though the impugned order came to be passed in the year 2016, much after the order of the Tehsildar and Agricultural Lands Tribunal, Ahmednagar.

The ld. AR stated that the assessee submitted before the AO that the stamp value was excessive and the matter of valuation be referred to the DVO, which the AO did not accept. I find that there is a categorical mention of this contention in the assessment order at page 8 para 7(e) of the assessment order. Section 50C(2) of the Act provides that where the assessee claims, inter alia, before the Assessing Officer that the value adopted etc. by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer. The word `may’ as used herein has been interpreted by the Hon’ble High Courts as `shall’, meaning thereby, that when the assessee makes a request to the AO for making a reference to the DVO, the AO is bound to do so and then adopt the value so determined in place of the stamp value as the full value of consideration in the computation of capital gains. Despite the specific request of the assessee, the AO did not make any such reference to the DVO and proceeded to compute capital gain on the basis of the stamp value only.

In these circumstances, I am of the considered opinion that it would be in the fitness of things if the impugned order is set-aside and the matter is restored to the file of AO for re-deciding the issue afresh as per law in terms of discussion made herein above.

Before parting with the appeal, it is hereby clarified that all the decisions referred by both the sides, to the extent germane to the issues in appeal, have been taken into consideration.

In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 16th March, 2022.