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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee directed against the order of the learned Commissioner of Income Tax (Appeals)-12, Chennai (hereinafter called as ‘CIT(A)’) dated 13.02.2019 for the assessment year 2014-15.
(AY: 2014-15) :- 2 -: 2. The Appellant raised the following grounds of appeal:
“1. The CIT(A) erred in holding that there has been no violation of principles of natural justice in so far as the assessment was completed in haste at the fagend of the year and the notice dated 20.12.2017 did not even reach the Appellant 2.1 The CIT(A) went wrong in holding that the sale of Tea Factory along with the land, garden and building did not constitute a slump sale. 2.2 The CIT(A) failed to consider that merely because the land and building has been conveyed by separate documents, it does not follow that it is an itemized sale. 2.3 The CIT(A) ought not to have held that the sale is not a slump sale on the hyper technical ground of non-furnishing of Form 54CEA uls.50B. 3.1 The CIT(A) erred in upholding the computation of capital gains u/s.50C and failed to see that the final valuation Report was not available at the time of assessment proceedings. 3.2 The CIT(A) erred in holding that there are no differences between the Preliminary Report and the Final Report and hence there cannot be any change in the computation of capital gains. 3.3 In any event, the CIT(A) went wrong in holding adoption of State P.W.D rates does not have any legal basis.
4. The CIT(A) ought to have held that the sale of Tea Garden constitutes sale of agricultural land and failed to see that the CIT(A) does not have powers to remand the issue back to the file of the Assessing Officer to verify and examine the claim.
5. The CIT(A) erred in upholding the computation of capital gains on sale of machinery on untenable reasons.
6. Any other grounds that may be raised at the time of hearing.”
The brief facts of the case are as under:
The appellant is an individual deriving income under the head “income from other sources and capital gains”. The return of income for the AY 2014-15 was not filed voluntarily under the provisions of s. 139 of (AY: 2014-15) :- 3 -: the Income Tax Act, 1961 (in short ‘the Act’). Subsequently, the AO on receipt of the information that the appellant derived short term capital gains on the sale of assets situated at Kotagiri, Nilgiris District, notice u/s. 148 of the Act was issued on 30.03.2017. In response to the said notice, return of income was filed on 11.08.2017 declaring a loss of Rs. 73,32,725/-. Against the said return of income, the assessment was completed by the ITO, Non-Corporate Ward-10(5), Chennai (hereinafter called “AO”) vide order dated 28.12.2017 passed u/s. 143(3) of the Act at total income of Rs. 67,07,648/-. While doing so, the AO brought to tax the capital gain on account of sale of property at Kotagiri, Nilgiris District, which the assessee failed to disclose. The brief facts of the case are that the appellant acquired Tea Factory along with Tea Plantation Industry situated in Kotagiri, Nilgiris District in the year 2010 through auction conducted by Debts Recovery Tribunal for consideration of Rs. 62 lakhs.
During the previous year relevant to the assessment year under consideration the said property was sold for total consideration of Rs. 42,16,440/- and Rs. 11,11,560/- vide Sale Deed No.868 & 869/2013 dated 25.04.2013 as against the guidelines value adopted for stamp duty purpose of Rs. 1,75,00,480/-. During the course of assessment proceedings, the AO had put the appellant on notice as to why guidelines value should not be adopted for stamp duty purpose as deemed value of consideration under the provisions of s. 50C of the Act. It was submitted
(AY: 2014-15) :- 4 -: that the appellant had filed objections for adoption of guidelines stating that the value is unrealistic and requested the AO to refer the matter to DVO. On reference to the DVO, the value was determined by the DVO at Rs. 1,00,75,700/-. Accordingly, the AO computed the short term capital gain and brought to tax.
Being aggrieved by the above addition an appeal was filed before ld. CIT(A) challenging the addition u/s. 50C of the Act. It is contested before the ld. CIT(A) that the AO had valued the building by adopting CPWD rates as against state PWED rates. Placed reliance on the decision of TMPN Murugesan vs. CIT 217 Taxmann 40 (Mad) and CIT vs. V. Gajalakshmi [2011] 331 Taxmann 216 (Mad). Being aggrieved, the appellant is in appeal before us in the present appeal.
We heard the rival submissions and perused material available on record. The only issue in the present appeal relates to the addition u/s. 50C of the Act. It is a matter of record that when the appellant objected to adoption of the guidelines value on stamp duty purpose as deemed consideration u/s. 50C of the Act, the AO referred the matter to DVO.
From the perusal of para 5.5.2 of ld. CIT(A), it is clear that the DVO report was received after the completion of the assessment. Therefore, it is clear that the appellant had no opportunity the DVO’s report, which is against him. The ld. CIT(A) ought to have given opportunity to the (AY: 2014-15) :- 5 -: appellant to rebut the findings of the DVO, which are against the appellant. In the circumstances, we consider that the matter should go back to the AO in order to enable the assessee to file objections if any, before the DVO. In the circumstances, the matter is restored back to the file of AO to the stage of receipt of DVO report to complete the assessment in accordance with law.
In the result, the appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on 31st October, 2019 in Chennai.