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Income Tax Appellate Tribunal, ‘A’ SMC BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN
आदेश /O R D E R
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Madurai, dated 06.03.2019 and pertains to assessment year 2009-10.
No one appeared for the assessee inspite of issue of notice. Therefore, I heard the Ld. D.R. and proceeded to dispose the appeal on merit.
Shri K. Hari Govind, the Ld. Departmental Representative, submitted that two issues arise for consideration in this appeal. The first issue is with regard to estimation of market value as on 01.04.1981 for the purpose of computing capital gains. The second issue arises for consideration is with regard to estimation of sale consideration for the purpose of computing capital gain under Section 50C of the Income-tax Act, 1961 (in short 'the Act').
As far as the first issue is concerned, the Ld. D.R. submitted that the assessee inherited the property from his father. In fact, the assessee acquired the property during the year 1965-1967. According to the Ld. D.R., the assessee adopted the cost of acquisition as on 01.04.1981 at ₹125/- per sq.ft. and the cost of building at ₹100/-. The Assessing Officer accepted the cost of acquisition of the building at ₹100/- per sq.ft. However, on the basis of guideline value, he reduced the cost of acquisition of the land at ₹50/- per sq.ft. In the absence of any material, according to the Ld. D.R., the Assessing Officer has rightly adopted the cost of acquisition at ₹50/-. The Ld. D.R. further submitted that even though the assessee raised a ground with regard to adoption of sale consideration under Section 50C of the Act, there were no facts coming out from the assessment order.
I heard the Ld. D.R. and perused the relevant material available on record. As regards the first issue of estimation of fair market value as on 01.04.1981, as rightly submitted by the Ld. D.R., the assessee adopted ₹125/- per sq.ft. in respect of the land. However, the Assessing Officer restricted the same at ₹50/- per sq.ft. on the basis of the guideline value of State Registration Department. As regards the cost of building, the Assessing Officer accepted the valuation of the assessee at ₹100/- per sq.ft. From the observation made by the Assessing Officer at para 5 of his impugned order, it appears there was reference about partition deed on the property at Tamil Sangam Road. For the purpose of partition, the property would be valued among the family members and there was no transfer of property as such. In the partition, there would be division of property by metes and bounds, and there is no transfer of property, therefore, the value adopted for registration of partition deed may not always reflect the fair market value of the land for other transactions.
This Tribunal is of the considered opinion that fair market value of the land and building would depend upon various factors such as location of the property, area of the land, infrastructure available around the property, potential for future development and also the public infrastructure facilities, etc. Of course, guideline value of the State Registration Department is also one of the factors to be taken into consideration along with comparative sale instance at the locality. In this case, the comparative sale instance was not taken into consideration.
The Assessing Officer has taken only the guideline value of the State Registration Department. The other factors as referred above were not taken into consideration by the Assessing Officer. Therefore, this Tribunal is of the considered opinion that for determining the fair market value as on 01.04.1981, it is a bounden duty of the Assessing Officer to bring on record all those factors and thereafter determine the fair market value as on 01.04.1981.
The CIT(Appeals), however, has not discussed anything on merit.
The CIT(Appeals) simply rejected the appeal on the ground that no one appeared for the assessee. Even though the CIT(A) observed that he proceeded to dispose the appeal on merit based on the material available on record, there is no discussion in the impugned order of the CIT(Appeals) about the case on merit. The CIT(Appeals) simply says nothing on record to justify any of the grounds of appeal of the appellant.
This kind of observation cannot be construed disposal of appeal on merit.
This Tribunal time and again points out that the CIT(Appeals) has no power to dismiss the appeal for non-prosecution. A mere reference in the order that the appeal is disposed on merit does not, in fact, mean that the appeal is actually disposed on merit. Disposal of appeal on merit means that the CIT(Appeals) has to independently examine the facts, re- appreciate the material available on record and record his own reasoning for conclusion by passing a speaking order. These things are apparently lacking in the order of the CIT(Appeals). Therefore, this Tribunal is unable to uphold the orders of both the authorities below. Accordingly, orders of both the authorities below are set aside and the issue of determining the fair market value as on 01.04.1981 is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the observation made by this Tribunal and thereafter determine the fair market value as on 01.04.1981 after giving a reasonable opportunity to the assessee.
Now coming to the issue of determination of sale consideration by applying the provisions of Section 50C of the Act. This issue also has not been discussed by both the authorities below. No facts were coming out of the orders of the CIT(Appeals) and the Assessing Officer and therefore, this Tribunal is of the considered opinion that this also needs to be re-examined by the Assessing Officer and determine the applicability of Section 50C of the Act after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.