Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -3, Coimbatore, dated 12.12.2017 and pertains to assessment year 2012-13. The assessee has filed cross-objection against the very same order of the CIT(Appeals). Therefore, we heard both the appeal and the cross-objection together and disposing of the same by this common order.
Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative, submitted that the only issue arises for consideration is determination of fair market value as on 01.04.1981 for the purpose of computing capital gain. According to the Ld. D.R., the assessee is one of the co-owners, along with two others, in respect of the land situated at Khasra No.216, Khatena, Agra. According to the Ld. D.R., the Assessing Officer of one of the co- owners, referred the matter to the Valuation Officer. The Valuation Officer determined the fair market value as on 01.04.1981 at ₹654/- per sq.mtr. Subsequently, according to the Ld. D.R., the Departmental Valuation Officer filed the revised valuation report on the ground that he was in possession of a comparable sale instance which came subsequently. Accordingly, he filed the revised valuation estimating as on 01.04.1981 at ₹82.06 per sq.mtr. According to the Ld. D.R., the registered valuer estimated the fair market value as on 01.04.1981 at ₹750/- per sq.mtr. As per reverse index method, the valuation comes to ₹963/- per sq.mtr. However, according to the Ld. D.R., the assessee claimed the valuation as on 01.04.1981 at ₹450/- per sq.mtr. On a query from the Bench, the Ld. D.R. clarified that the Assessing Officer of the present assessee has not referred the matter to the Valuation Officer. Since there was valuation report by a technical expert by which the fair market value was estimated to ₹82.06 per sq.mtr., according to the Ld. D.R., the Assessing Officer has adopted the same. However, on appeal by the assessee, according to the Ld. D.R., the CIT(Appeals) found that the fair market value as on 01.04.1981 as adopted by the assessee at ₹450 per sq.mtr. was reasonable and directed the Assessing Officer to adopt the same. The only contention of the Ld. D.R. before this Tribunal is that the Departmental Valuation Officer in the case of one of the co-owners inspected the premises in person and on the basis of a comparable sale instance, estimated the fair market value as on 01.04.1981, at ₹82.06 per sq.mtr., therefore, that cannot be ignored by the CIT(Appeals). Hence, according to the Ld. D.R., the CIT(Appeals) is not justified in accepting the fair market value as estimated by the assessee at ₹450/- per sq.mtr.
On the contrary, Shri T.S. Lakshmivenkataraman, the Ld. representative for the assessee, submitted that at the first instance, the Departmental Valuation Officer in the case of the co-owner, valued the fair market value at ₹654 per sq.mtr. In fact, according to the Ld. representative, the valuation officer has taken the guideline value / circle rate in the year 1979 for the purpose of estimating the fair market value at ₹654/- per sq.mtr. Subsequently, the valuation officer claimed that he came across a comparable sale instance in respect of Khasara No.540, 541, 544 Nagar Nigam No.19/6, Moh – Khatena. According to the Ld. representative, a comparable sale instance, which was referred by the Departmental Valuation Officer in the case of co-owner, refers the land at Khasra 540, 541 and 544. According to the Ld. representative, the subject land which is under consideration in this appeal is at Khasra No.216. Therefore, the comparable sale instance referred by the Departmental Valuation Officer relates to the land which was situated in a far off place. Hence, according to the Ld. representative, the sale instance referred by the Departmental Valuation Officer in the case of another co-owner cannot be a basis to estimate the fair market value in the case of the assessee. Referring to the guideline value / circle rate, according to the Ld. representative, the very same Departmental Valuation Officer estimated the value as on 01.04.1981 at ₹654/- per sq.mtr., whereas, the assessee is claiming ₹450/- per sq.mtr. Hence, according to the Ld. representative, the CIT(Appeals) has rightly directed the Assessing Officer to adopt fair market value as on 01.04.1981 at ₹450 per sq.mtr.
We have considered the rival submissions on either side and perused the relevant material available on record. For estimating the fair market value, the Assessing Officer was expected to consider various factors such as the location of land, area of the land, infrastructure facilities available around the land, potential for future development, guideline value / circle rate and other factors which would influence the market rate in that locality. The Departmental Valuation Officer in the case of another co-owner, after considering the locality, circle rate / guideline value and other factors, admittedly estimated the fair market value as on 01.04.1981 at ₹654/- per sq.mtr. Subsequently, he modified this report and filed a revised estimate at ₹82.06 per sq.mtr. The reason for such modification / revision is that the DVO came across a comparable sale instance as on 16.03.1981. Admittedly, the assessee’s land is situated at Khasra No.216. The comparable sale instance referred by the Departmental Valuation Officer is situated at Khasra No.540, 541 and 544. Therefore, it is not adjacent to the assessee’s land.
The distance between the assessee’s land and comparable sale instance referred by the Departmental Valuation Officer was not brought on record by both the Assessing Officer and by the Departmental Valuation Officer.
The Departmental Valuation Officer himself claims that the subject land is situated on the Main Road, namely, Khatena Road adjoining Jaipur House Colony and 200 mtr distance from Police Station. The Departmental Valuation Officer has also indicated that the land at present is surrounded on both sides by commercial / business premises, railway station, colleges, hospitals, malls, etc.
Therefore, it is obvious that the land in question is situated at a prime location at Agra. No doubt, comparable sale instance in the very same locality is also one of the factors to be taken into consideration for estimating fair market value as on 01.04.1981. At the very same time, other factors such as potential for future development, infrastructure facilities available around the land, access to the public road, etc. cannot be ignored. In this case, admittedly, the land in question is situated on the Khatena Main Road and there is a potential for future development. In fact, there are commercial complexes / malls have come up at present. Therefore, this Tribunal is of the considered opinion that ₹450/- per sq.mtr. would be very reasonable after considering the locality of the land, potential for future development, infrastructure facilities available around the land, circle rate / guideline value, etc.
Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority in respect of the valuation as on 01.04.1981 and accordingly the same is confirmed.
Now coming to the cross-objection filed by the assessee, the first issue is with regard to reopening of assessment. According to the Ld. representative, notice under Section 148 of the Income-tax Act, 1961 (in short 'the Act') was not served on the assessee.
Therefore, the reopening itself is invalid, hence, there cannot be any assessment.
On the contrary, Shri R. Clement Ramesh Kumar, the Ld. D.R., after verifying the original file, submitted that the notice under Section 148 of the Act was served on the assessee and there is a postal acknowledgement available on record as a proof of service of notice on the assessee. In view of the above, according to the Ld. D.R., the notice under Section 148 of the Act was actually served on the assessee, hence, the assessment was reopened after following the procedure.
By way of rejoinder, the Ld. representative for the assessee submitted that the assessment order is barred by limitation.
According to the Ld. representative, after the notice said to be issued under Section 148 of the Act, the return of income was not filed and the Assessing Officer referred only the return said to be filed on 29.03.2014. Therefore, according to the Ld. representative, the notice issued on 22.07.2016 on the basis of the return filed on 29.03.2014 is not valid. In other words, according to the Ld. representative, time limit for issue of notice on the basis of the return filed on 29.03.2014 has already expired, hence, there cannot be any valid assessment.
On the contrary, Shri R. Clement Ramesh Kumar, the Ld. D.R. submitted that after the receipt of notice under Section 148 of the Act, no doubt, the assessee has not filed any return of income, therefore, the Assessing Officer issued notice for appearance of the assessee. In the notice, the Assessing Officer referred to Section 143(2) of the Act. However, according to the Ld. D.R., it is for assessment. The assessee appeared in person and co-operated with the Department in completing the assessment. Therefore, according to the Ld. D.R., it cannot be said that the order was barred by limitation.
We have considered the rival submissions on either side and perused the relevant material available on record. The notice issued by the Assessing Officer referred to Section 143(2) of the Act. This Tribunal is of the considered opinion that mere mentioning of wrong provision of law cannot be a reason to invalidate a notice of hearing issued by the Assessing Officer. After reopening assessment, the Assessing Officer proceeded further to complete the assessment. At the best, we may say that it is a notice issued under Section 144 of the Act for completion of assessment. The assessee, in fact, participated in the assessment proceeding and filed all the material required for completing the assessment.
Therefore, at this stage, the assessee cannot say that the order of the Assessing Officer is barred by limitation. The notice issued under Section 148 of the Act was served on the assessee and postal acknowledgement is available on the assessment record.
Therefore, the assessment was validly reopened.
The assessee has also raised one more ground with regard to improvement made to the property during the years 1982-83, 1983-84, 1984-85 and 1985-86. The Assessing Officer allowed 10% of cost of improvement claimed by the assessee in each financial year. However, the CIT(Appeals) allowed 25% of the cost of improvement claimed instead of 10% allowed by the Assessing Officer.
Having heard the Ld. representative for the assessee and the Ld. D.R., we also perused the material available on record. The expenditure said to be incurred for improvement is not in dispute.
What is in dispute is quantum of the amount. This Tribunal is of the considered opinion that 50% of cost of improvement claimed by the assessee has to be allowed while computing indexation and capital gain. In view of this, orders of both the authorities below are modified and the Assessing Officer is directed to allow 50% of the cost of improvement.
In the result, the appeal of the Revenue is dismissed and the cross-objection of the assessee is partly allowed.
Order pronounced in the court on 18th July, 2019 at Chennai.