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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R Per Shri A.K. Garodia, Accountant Member Both these appeals are filed by two different but connected assessees and these are directed against the order of ld. CIT(A)-6, Bangalore both dated 25.04.2018 for the same Assessment Year i.e. Assessment Year 2015-16. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
ITA Nos. 2409 & 2410/Bang/2018 Page 2 of 6 2. The grounds raised by the assessee in are as under. “1. The Commissioner of Income Tax (Appeals)-6, Bangalore, has erred in sustaining the order of the assessing authority to the extent of Rs.10,36,500/- being the addition made u/s 50C of the Income Tax Act, 1961.
2. The Commissioner of Income Tax (Appeals)-6 has erred in not considering detailed submission in support of grounds of appeal and sustaining the order of AO which is opposed to facts, circumstances and natural justice of the case.
3. The CIT(A)-6 has erred in not adjudicating the additional grounds of appeal filed by the appellant.
4. The AO ought to have considered the explanation of the appellant filed vide submission dated 22/11/2017 with regard to defective title of the property and had to sell to avoid total loss, resulting in distress sale for a price below the notified by Registration authority for stamp duty revenue purpose.
5. The AO in possession of submission of appellant with regard to defective title to the property ought to have referred for valuation of property. The AO ought to have followed of Judgment of Hon'ble ITAT Chennai in the case of ACIT v Royal Stitches Private Limited (2010) wherein it has been held that- "it is duty bound to give an opportunity to the assessee to present its case for valuation of the asset if the assessee is able to show that the title was defective".
6. The AO before making addition to the admitted income under Long term Capital Gain has failed to demonstrate, the appellant in reality has received the consideration equivalent to guidance value which is over and above the actual sale consideration stated in sale deed.
7. The AO ought to have applied the provisions of Section 50C to assess the appellant's Long Term Capital Gain more than the real income ignoring the fact that appellant title over the property was defective thereby under compelling situation to sell the property for a distress price.
8. For these and such other grounds that may be urged at the time of hearing, the appellant prays that addition made by the Assg. authority and sustained by the Commissioner of Income Tax (Appeals)-6, be deleted and the Appeal be allowed. The appellant prays for leave, to add, delete or amend the grounds of appeal at the time of hearing.” & 2410/Bang/2018 Page 3 of 6
3. The grounds raised by the assessee in are as under. “1. The Commissioner of Income Tax (Appeals)-6, Bangalore, has erred in sustaining the order of the assessing authority to the extent of Rs.10,36,500/- being the addition made u/s 50C of the income Tax Act, 1961.
2. The Commissioner of Income Tax (Appeals)-6 has erred in not considering detailed submission in support of grounds of appeal and sustaining the order of AO which is opposed to facts, circumstances and natural justice of the case.
3. The CIT(A)-6 has erred in not adjudicating the additional grounds of appeal filed by the appellant.
4. The AO ought to have considered the explanation of the appellant filed vide submission dated 22/11/2017 with regard to defective title of the property and had to sell to avoid total loss, resulting in distress sale for a price below the notified by Registration authority for stamp duty revenue purpose.
5. The AO in possession of submission of appellant with regard to defective title to the property ought to have referred for valuation of property. The AO ought to have followed of judgment of Hon'ble ITAT Chennai in the case of ACIT v Royal Stitches Private Limited (2010) wherein it has been held that- "it is duty bound to give an opportunity to the assessee to present its case for valuation of the asset if the assessee is able to show that the title was defective".
6. The AO before making addition to the admitted income under Long term Capital Gain has failed to demonstrate, the appellant in reality has received the consideration equivalent to guidance value which is over and above the actual sale consideration stated in sale deed.
7. The AO ought to have applied the provisions of Section 50C to assess the appellant's Long Term Capital Gain more than the real income ignoring the fact that appellant title over the property was defective thereby under compelling situation to sell the property for a distress price.
8. The AO having assessed the Long term capital gain income higher than the admitted income ought to have given exemption under Section 54F of the Income Tax Act, 1961 for investment in construction of residential apartment at a total cost of Rs.70,24,500/-, Rs. 1,16,16,440/- and Rs.10,00,000/- aggregating to Rs. 1,96,40,940/- invested during assessment years 2016-17 , 2017-18 and 2018-19 respectively. & 2410/Bang/2018 Page 4 of 6
9. For these and such other grounds that may be urged at the time of hearing, the appellant prays that addition made by the Assg. authority and sustained by the Commissioner of Income Tax (Appeals)-6, be deleted and the Appeal be allowed. The appellant prays for leave, to add, delete or amend the grounds of appeal at the time of hearing.”
At the very outset, it was submitted by ld. AR of assessee that the facts in dispute in both the cases are identical. He submitted that the AO invoked the provisions of section 50C of IT Act to assess the capital gain of the assessee in respect of sale of property although the title in property is defective. He submitted that the AO should have obtained the valuation report from the DVO as per section 50C (2) of IT Act and since, this has not been done by the AO, the matter should be restored back to AO for fresh decision after obtaining valuation report from the DVO. He also submitted that issue in respect of allowability of deduction u/s. 54F should also be restored back for fresh decision after correctly determining the amount of income in respect of long term capital gains in the case of both the assessees. In support of his contention, he placed reliance on the Tribunal order rendered in the case of Shri K M Rajendran vs. ITO as reported in TS- 5002-ITAT-2015(Bangalore)-O copy available on pages 31 to 34 of paper book. The ld. DR of revenue supported the orders of authorities below.
I have considered the rival submissions. First of all, I reproduce para no. 5 of this Tribunal order cited by ld. AR of assessee from pages 33 and 34 of paper book. “05. It was contended before us that the Assessing Officer failed to carry out the exercise u/s.50C(2)(b) of the Act. The CIT(A) has rejected this contention of the assessee on the ground that assessee has not made a specific prayer to this extent before the Assessing Officer. She reproduced the letter of the assessee dt 13.12.2011 at page 7 of her order. In our opinion the approach adopted by the C1T (A) is not in consonance with the position of law. Way back in 1955, the Board had issued a Circular bearing No. 14(XI-35) of 11th April, 1955, in which the Board has appraised its officers to assist the tax papers in every reasonable way for assessing the correct income. When assessee has pointed out to the Assessing Officer that property was sold at a lower rate because of the dispute on the property, then it was the duty of the Assessing Officer to find out the exact value. The Assessing Officer himself noticed about this plea of the assessee in & 2410/Bang/2018 Page 5 of 6 respect of dispute (extracted supra). Apart from this aspect, the appellate authority has doubted about the nature of the dispute, to our mind, without conducting any enquiry, it is difficult to find out the encumbrance over the property. This aspect can only be examined by the Valuation Officer because he has to evaluate the property as per the provisions of Wealth Tax Act where full procedure has been provided. Taking into consideration all these aspects, we are of the view that the orders of the Revenue authorities are not sustainable. We set aside both the orders and remit this issue to the file of the Assessing Officer for read judication. The Assessing Officer shall call for a report from the DVO and thereafter determine the gain, if any, accruing to the assessee on sale of the property.” 6. In the present case, I find that as per the assessment order, the AO has noted that the assessee has sold the property held by him jointly with his wife Smt. Uma Venkat and computed the capital gain on the basis of sale consideration as noted in the sale deed but since the value of stamp duty was higher, the AO invoked the provisions of section 50C and computed the capital gain on higher side. It does not come out from the assessment order that any opportunity was provided by AO to assessee to make out the case as to how the sale value declared by the assessee for computation of capital gain is correct. Under these facts and by respectfully following this Tribunal order cited by ld. AR of assessee, I feel it proper to restore back the matter to the file of AO for fresh decision after obtaining valuation report from the DVO as provided in section 50C (2) of IT Act. Accordingly, I set aside the order of CIT(A) in both the cases and restore the matter back to the file of AO for fresh decision in view of above discussion after providing reasonable opportunity of being heard to assessee. 7. In the result, both the appeals filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.