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Income Tax Appellate Tribunal, “H”
Before: SHRI R. C. SHARMA, AM &
IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI BEFORE SHRI R. C. SHARMA, AM & SH. SANDEEP GOSAIN, JM आयकरअपीलसं./ I.T.A. No. 3143/Mum/2016 (निर्धारणवर्ा / Assessment Year: 2011-12)
ZoebAbbasbhaiKudrati, ITO (WD)-13(3)(4) बिधम/ General Trade Centre, 63, Mumbai Pin- Nizam Street, Nul Bazar, Vs. Mumbai-400003 स्थायीलेखासं./जीआइआरसं./PAN No. AACPK5289K (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Shri Chetan A. Karia, AR प्रत्यथीकीओरसे/Respondentby : Shri M. C. Omi Ningshen, DR
सुनवाईकीतारीख/ : 10.04.2018 Date of Hearing घोषणाकीतारीख / : 16.05.18 Date of Pronouncement आदेश / O R D E R Per Sandeep Gosain, Judicial Member: The presentAppeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-28, Mumbai, dated 19.02.16for A.Y. 2011-12.
2 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati 2. At the very outset, Ld. AR appearing on behalf of the assessee drawn our attention to letter dated 17.02.18, which relates to condonation of delay for one day in filing appeal before Hon’ble ITAT because of illhealth of assessee and due to which, there was a delay of one day in filing the present appeal. 3. On the other hand, Ld. DR requested for dismissal of the said application. 4. We have heard the counsels for both the parties on this application for seeking condonation of delay and while taking into consideration the contents of application filed by the assessee and following the principles laid down by Hon’ble Supreme Court in case of “Land Acquisition Collector Vrs. MstKitzi, AIR 1987 S.C. 1353/(1987) 167 ITR 471 (SC), we condone the delay of one day in filing the appeal. Resultantly, this application for seeking condonation in filing appeal is allowed and appeal is admitted to be heard on merits.
Ld. AR also drawn our attention to application dated 19.02.18, wherein it has been alleged that since the original
3 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati appellant i.e. Zoeb Abbasbhai Kudrati had expired on 06.03.17 and now this appeal is being represent by all the legal heir of Late Zoeb Abbasbhai Kudrati. It was further pointed out that there are certain errors in the grounds of appeal raised before the Tribunal and therefore permission was sought for filing revised grounds of appeal.
We have heard the counsels for both the parties and after perusing the affidavit and death certificate of Shri Zoeb Abbasbhai Kudrati as well as considering the contents of the application, we allow the present appellants to raise the revised grounds.
The revised ground of appeal filed by Shri Aliasgar Zoeb Kudrati (legal heir of Late Zoeb Abbasbhai Kudarati) are mentioned herein below:- 1. The Learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to adopt the full value of consideration of the property sold at Rs.3.09,77,000/- as valued by the Department
4 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati Valuation Officer (DVO) and accepting report furnished by the Department valuation officer.
The Learned Commissioner of Income Tax (Appeals) failed to appreciate that provisions of section 50C requires to determine whether actual sale consideration of the property at Rs.2,40,00,000/- is the correct amount received.
The /Appellant prays that:
i) The report of the Department valuation officer may be ignored due to errors and inconsistencies in the same;
ii) Amount of Rs.2,40,00,000/- may be directed to be adopted for computation of capital gains;
iii) Any other relief Your Honours may deem fit.
The appellant craves leave to add, amend alter or delete any of the above grounds.
As per the facts of the present case, the assessee is individual and engaged in the business of supply of hand tools. The return of income was filed on 17.08.11 declaring total income of Rs. 1,91,648/-. In the return of income, the assessee
5 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati has shown long term capital gain on sale of immovable property.AO found that the property ‘Zeinab Niwas’ at Dadar, Mumbai was sold for Rs.2,40,00,000, in which the assessee held 25% share. However, the AO noted that the market value of the property as per the stamp valuation authority is Rs.4,72,10,500. Subsequently, a reference was made to the Valuation Officer to ascertain the market value of the property. But the report of the Valuation Officer could not be received in time and since the assessment was getting barred by limitation of time, the AO adopted the value as per the Stamp Valuation Authority. Though the assessee had deposited Rs.60,00,000 in Union Bank of India u/s.54(2) but he had not purchased a new asset. Accordingly, the AO worked out the long term capital gain at Rs.58,02,625/-. Aggrieved by the order of AO, the assessee preferred appeal before Ld. CIT(A) and the Ld. CIT(A) after considering the case of parties, partly allowed the appeal of the assessee. Aggrieved by the order of Ld. CIT(A), the assessee has preferred the present appeal before us.
6 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati Ground No. 1 to 3. 9. These grounds raised by the assessee are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in directing the Assessing Officer to adopt the full value of consideration of the property sold at Rs.3.09,77,000/- as valued by the Department Valuation Officer (DVO) and accepting report furnished by the Department valuation officer and also to appreciate that provisions of section 50C requires to determine, whether actual sale consideration of the property at Rs.2,40,00,000/- is the correct amount received, therefore we thought it fit to dispose of the same by this common order.
At the outset, Ld. AR appearing on behalf of the assessee submitted that assessee had earned Long Term Capital Gains on sale of immovable property wherein the appellant was 25% owner of the building sold.The total sale consideration of the entire property was Rs.2,40,00,000/-, the stamp duty valuation was Rs.4,72,10,500/- and the valuation as arrived by the DVO was Rs.3,09,77,000/-. Ld. AR further submitted that the building sold was an old tenanted building fully occupied by tenants and
7 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati the tenancy rights of such tenants were protected under the Bombay Rent Control Act. Therefore, the same was sold for a total consideration of Rs. 2,40,00,0000/-. It was further submitted by Ld. AR that the assessee had objected to the stamp duty valuation and case was referred to DVO, the assessing officer proceeded to confirm the capital gains without the DVO's valuation since the same was not received before the completion of assessment. The DVO report was received while appeal was pending before CIT(A) and CIT(A) confirmed the value of property at Rs.3,09,77,000/- as derived in the valuation report of DVO. 10. Now before us, the appellant have challenged the order of Ld. CIT(A) in confirming the valuation of DVO of Rs.3,09,77,000/-. Ld. AR also drawn our attention to Section 50C (2) - (a) "When the assesse claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub section (1) exceeds the fair market value of the property as on the date of transfer......
8 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati The assessing officer may refer the valuation of the capital asset to a valuation officer and where any such reference is made, the provisions of sub section (2),(3),(4),(5) and (6) of section 16,4, clause (I) of sub-section (1) and subsection (6) & (7) of section 23A, sub section (5) of section 24, section 34AA, section 35 and section 37 of Wealth Tax Act, 1957 shall with necessary modifications apply in relation to a reference made by the Assessing Officer under sub section (1) of section 16A of the Act”.
On the other hand, Ld. DR relied upon the orders passed by revenue authorities.
We have heard counsels for both the parties at length and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the assessee in itsorder.
9 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati The operative portion of the order of Ld. CIT(A) is contained in para no. 5 & 6 of its order and the same is reproduced below:-
DECISION: I have carefully considered the facts or the case. grounds of appeal and written submissions made beforestamp duty valuation as the full value of consideration. The facts are not in dispute. The appellant sold his old building for a stated consideration of Rs 2.40.00.000. The Index 11 Valuation i.e. the stamp duty valuation of the same was Rs 4.72.10.500. The appellant objected to this valuation before the AO who then referred the property to the DVO for valuation. The valuation report was not received till the end of the assessment and hence the AO adopted the stamp duty valuation as full value of consideration u/s SOC. Before me also the same arguments were repeated as before the AO. The appellant submitted that he has sold his tenanted building and the rights of the tenants were protected by the Bombay Rent Control Act. With a lot of efforts, the appellant has been able to sell the property at the best price prevalent at the time. I am afraid this argument of the appellant cannot be accepted as the provisions of' see 50C are clear in the matter. Admittedly a capital asset has been sold. and the stated consideration is less than the stamp duty valuation.
10 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati The matter was referred to the DVO at the specific request of the appellant. The DVO has now submitted his valuation report valuing the property at Rs3,09,77,00. This report is now binding on the AO. I have also perused the valuation report of the DVO. I find that the DVO in his report has considered all the objections of the appellant raised before me as well as before the AO. The DVO has also considered the valuation report obtained independently by the appellant. The DVO has further analyzed the sale instances in and around the locality. The order of the DVO is a speaking order and meets the objections of the appellant. In the circumstances, I direct the AOtoadopt the full value of consideration at Rs 3.09.77.000 as valued by the DVO and assess capital gains in the hands of the appellant relevant to his share. accordingly. 6. In the result., the appeal is partly allowed.
After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by both the parties, we find that as per Section 50C(2) of the I.T. Act, it has categorically been mentioned that the AOmay refer the valuation of the capital asset to a valuation
11 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati officer and where any such reference is made, the provisions of sub section (2),(3),(4),(5) and (6) of section 16A, clause (i) of sub-section (1) and subsection (6) & (7) of section 23A, sub section (5) of section 24, section 34AA, section 35 and section 37 of Wealth Tax Act, 1957 shall with necessary modifications apply in relation to a reference made by the Assessing Officer under sub section (1) of section 16A of the Act. As per the facts of the present case, although the assessee has objected to the valuation of the asset, hence in these circumstances, as per sub-section (6) & (7) of section 23A of Wealth Tax Act, 1957 are applicable and as per the mandatory provisions of sub-section 6(a) of section 23A, the opportunity of being heard to the valuation officer is a ‘must’ by Ld. CIT(A). However, no such opportunity has ever been granted by Ld. CIT(A) to the Valuation Officer before reaching to any conclusion. Which according to our view is a violation of the mandatory provisions of the Act. Be that as it may, considering the facts and circumstances of the present case, we are of the considered, view that the ends of justice would be met only, when we restore the matter back to
12 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati the file of Ld. CIT(A) for fresh decision after providing opportunity of being heard, while complying with the provision of Sub Section 6(a) of Section 23A. It is needless here to mention that before passing the order, the Ld. CIT(A) shall also provide opportunity to the assessee. Before parting, we may make it clear that our decision to restore the matter back to the file of Ld CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(A) independently in accordance with law. Resultantly these grounds raised by the assessee are allowed for statistical purposes. Ground No. 4 13. This ground is general in nature, thus requires no specific adjudication. 14. In the net result the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 16th May, 2018. Sd/- Sd/- (R. C. Sharma) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 16.05.2018
13 I.T.A. No. 3143/Mum/2016 Zoeb Abbasbhai Kudrati Sr.PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant प्रत्यथी/ The Respondent 2. 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned यवभागीयप्रयतयनयि, आयकरअपीलीयअयिकरण, मुंबई/ DR, ITAT, 5. Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER,
.उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai