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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by the assessee against the order of the ld CIT(A)-Rohtak dated 27.01.2012 wherein, following grounds of appeal has been raised: “1. That the orders of the authorities below i.e Ld. Commissioner of Income Tax(Appeals), Rohtak and that of DCIT, Hisar are against law and facts of the case and same are liable to quashed being arbitrary, illegal, without jurisdiction and any justification.
2. That the authorities below Assessing Officer, DCIT, Hisar Range, Hisar and Ld. CIT(A), Rohtak were wrong in holding that the assessee has not returned full value of consideration of Plot No. 1657P, Sector 13, Hisar transferred during the assessment year 2008-09 in which the appellant was having 2 1/3 share and thereby erred in effecting an arbitrary and illegal impugned addition of Rs. 5,18,000.00 to the returned capital gain of his 1/3 share. Since the impugned additions were effected on mere change of opinion and misapplication of law and facts, by rejecting the evidence adduced by the appellant, the impugned additions of Rs. 5,18,000.00 effected to the income returned deserves to be deleted on all force.
3. That the Ld. Appellate Authority, CIT(A) was also wrong in not following the strict interpretation of Sec. 50C of the Act, and in applying the technical interpretation of the provisions of Sec. 50C of the Act, which is purely based on fiction and deeming provisions even without asserting the fair market value of the transferred Plot by merely rejecting the objections, just and bonafide explanations and related evidence adduced before the Assessing Officer at the time of assessment, accordingly the impugned additions of Rs. 5,18,000.00 referred ibid requires to be annulled.
4. That the CIT(A) was wrong in law and on facts of the case in sustaining the Assessing Officer's adopted sale considerations of plot no. 1657P, Sector 13, Hisar at Rs.60,54,000.00 being value taken by the stamp valuation authorities as against the sale consideration actually received at Rs. 45,00,000.00 by applying the provisions of Sec. 50C of the Income Tax Act 1961, that without prejudice to the aforesaid grievance the CIT(A) ought to have adopted the actual sale consideration of the said plot at Rs. 45,00,000.00 in which appellant assessee was having 1/3rd share only and the relief is prayed to be granted.
The additional grounds of appeal is prayed to be taken into consideration while adjudicating the matter , since the same escaped to be raised earlier as the same goes to the roots of the case and had a great bearing to the matter involved in this appeal which read as under: "Because the transfer of said plot was mutually agreed between the parties prior to 31st March 2007(A.Y 2007- 08) at the time when the collectorrate rate viz. a viz. fair market value were quite on the lower side as alleged and compared to the Assessment Year 2008- 09(enhanced quite disproportionately), accordingly the fair market value of the said plot stand at Rs. 45,00,000.00 the actual consideration passed on between the parties and ought to have been accepted by the authorities below."
3 6. That the Assessing Officer below was further wrong in holding that the appellant assessee had deliberately shown lesser capital gain in his return and elements of mensrea is in existence even without appreciating the actual consideration received at Rs. 45,00,000.00 stand duly mentioned in the transfer deed registered by the Registrar and holding further that it as a fit case for initiating penalty proceedings u/s. 271(l)(c) of the Act, for furnishing inaccurate particulars of income, the balled and unsustainable findings deserves to be annulled merely being based on change of opinion 7. That the orders under this appeal are also liable to be quashed to the extent being an order based on surmises and conjectures and on mere change of opinion. On the facts and in the circumstances of the matter under this appeal it is prayed that the contentions of the appellant may kindly be accepted and necessary relief as prayed be granted, subject to the rights to amend or to raise any additional statement of facts and/or grounds of appeal before or at the time of its hearing, any other consequential relief to which the appellant assessee is found entitled may please also be granted as may please your goodself.”
2. Though, the assessee has raised in all seven grounds of appeal but the main issue is with respect applicability of section 50C of the Income Tax Act that the assessee sold property for Rs. 45 lakhs and stamp duty value of the property is Rs.60.54 lakhs thereby, as the assessee is having 1/3 share only addition in the hand of the assessee of Rs. 5.18 lakhs is confirmed.
3. The brief facts of the case is that the assessee is an individual who was owning a property along with two others at Hisar, Haryana which has been sold during the year for Rs. 45 lakhs. The assessee who filed his return of income on 31.01.2009 declaring income of Rs. 1131270/- included the capital gain of Rs. 1024412/-. The ld Assessing Officer noted that stamp duty value of the property is Rs. 60.54 lakhs and therefore the provisions of section 50C is applicable. Therefore, on 27.11.2010 the assessee was asked to show cause which was replied on 4 14.12.2010 stating that actual sale consideration is the correct amount of consideration. It was further submitted as under:- “With reference to the capital gain accrued/ arosed on transfer of plot bearing No. 1657-P section 013-P, Huda Hisar of which the assessee was the owner of 1/3rd share say about 336 sq yards. The assessee received Rs. 1500000/- on account of this 1/3rd share, since the total consideration was received through bank drafts as mentioned in the above referred transfer deed which was registered by the registration authority Sub-Registrar Hisar. However, the value of the said plot was deemed at Rs. 6054000/- by the stamp valuation registration authority in respect of the said transferred plot, contrary to the fact that the actual consideration received by the transferor was 15 laks (1/3 share of 4500000/0) and it is quite immaterial that the sub-registrar/ stamp valuation authority valued the said plot at the so called collector rate which are imposed at the whims and arbitrary decisions of the state officials and are subject to discretionary relief by the SDM/ collector and the commissioner when contested, meaning thereby there is no hard and far yard stick for fixing the stamp valuation for the registration. In as much as there is hardly any justification for fixing collector rate nor any provisions exists under the valid provisions of any act in force in the country. Also in the same vicinity and sector the plots of the same area have been transferred even for less or consideration. Copies of the instruction letter as regards to the collectorate stamp duty rates issued by the Haryana Govt. is also being annexed for your kind perusal and necessary consideration along with an affidavit of the assessee. On the facts and in the circumstances, it is prayed that the actual consideration received by the assessee viz a viz transfer of the said plot 1/3rd share be taken at Rs. 1500000/- for all purposes and intent, including capital gain tax respective of the arbitrary and illegal excess amount of stamp duty demanded and charged by the registration authority, Hisar. Please grant the required relief and assessment may please be completed as per the return of Income Tax furnished for the AY. 2008-09.”
4. However, the ld AO rejected the contention of the assessee and computed the capital gain applying the stamp duty rate.
5 Consequently, the assessment u/s 143(3) was made on 06.12.2010 computing the total income of assessee at Rs. 1684280/- including therein the addition on account of applicability of section 50C of Rs. Rs. 5.18 lakh. The assessee being aggrieved with the order of the ld Assessing Officer has preferred an appeal before the ld CIT(A), who confirmed the addition holding as under:- “2. Brief facts of the case are as under- 2.1 The appellant, partner in two firms namely M/s Telmos Electronics and M/s Telmos Associates, deriving interest on capital and remuneration, filed return of income declaring total income of 11,31,270/-. The appellant having l/3rd share in plot no. 1657P, Sector-13, Hisar sold the same for a consideration of C 45.00 lacs in which his share comes to C 15.00 lacs. After claiming deduction of indexed cost of acquisition at Rs. 4,75,588/- from the sale consideration of C 15.00 lacs, Long Term Capital Gains(LTCG) of € 10,24,412/- was declared. 2.2 The AO noted from the registered sale deed no. 6807 dated 10.09.2007, though the actual consideration was C 45.00 lacs, the Fair the Stamp Valuation Authority assessed the value at C 60,54,000/- and Stamp Duty of Rs. 3,63,240/- was paid on the aforesaid value of Rs. 60,54,000/-. In view of the provisions of section 50C of the Act, the AO issued show cause as to why the sale consideration should not be taken at Rs. 60,54,OOO/- as against C 45.00 lacs declared for the purpose of computation of capital gains. In response, the assessee contended before the AO that the actual sale consideration was only C 45.00 lacs and it is immaterial that Stamp Valuation Authority valued the said plot at the so called Collector's rate which are imposed at the whims and arbitrary decisions of the State officials and are subject to discretionary relief by the SDM/Collector when contested in appeal, meaning thereby that there is no hard and fast yard stick for fixing the stamp valuation for registration. 2.3 Relying upon the provisions of section 50C and the intent of Legislature in insertion of this section by Finance Act, 2002 w.e.f. 1.4.2003, the AO rejected the contention of the assessee. The AO concluded that had there been any grievance to the assessee from the Registration Authorities, 6 he would certainly preferred appeal to the concerned authorities, but nothing has been submitted to show that such appeal was filed. The AO further discarded the affidavit furnished by the assessee in support of the contention as nothing more than a self serving evidence. The AO therefore adopted the self consideration at Rs. 6054000/- as per the provisions of section 50C and made an addition of Rs. 518,000/-.
Ground no. 1 of appeal is general in nature and does not require any adjudication as such. The above action of the AO was contested in grounds no. 2 & 3 of appeal. The submissions made by the AR before me are summarized as under: - 3.1 In the sale deed registered with Sub-Registrar, Hisar dated 10.09.2007, it was specifically mentioned therein that the actual consideration as agreed and received by the transferers from the transferee against the said plot was only C 45.00 lacs though the stamp duty was paid by the purchaser on the amount of Rs. 60,54,000/- since the Sub- Registrar refused registration to transfer the said plot at the agreed consideration on the date of transfer. It may be mentioned that the stamp duty is always paid by the purchaser of the property, beyond the control of the transferer. The proposed adoption of Rs. 60,54,000/- by the AO as sale consideration u/s 50C for the purpose of capital gains was explained by the assessee vide letter dated 14.12.2010 wherein it was submitted that the Collector rates are not hard and fast yard stick for enhancing the actually agreed and received consideration. An affidavit dated 14.12.2010 was furnished alongwith a copy of memo no. 2833-STR-I-98/5075 dated 12.05.1998 of Financial Commissioner & Secretary, Revenue Department, Haryana regarding the rates fixed by Collector for registration. 3.2 As per provisions of section 50C, if the assessee objects or claims that the value adopted or assessed by the Stamp Valuation Authority under sub-section (1) exceeds the Fair Market Value (FMV) of the property as on the date of transfer, the AO may refer the valuation of the capital asset to Valuation Officer. The word 'may' in the section has to be read as 'should' so that the provision is not rendered redundant. In the instance case, as the assessee objected to the value adopted by Stamp Valuation Authority, the AO was bound to ascertain the value of the asset by referring the 7 valuation to the Valuation Officer as held by Hon'ble ITAT Jodhpur Bench in the case of Meghraj Baid Vs ITO [2008] 114 TTJ 841 (Jd.), which has not been done in the instant case. The AR further relied upon the case law of jurisdictional High Court in CIT Vs Chandni Bhuchar [2010] 229 CTR 190 (P&H) wherein it was held that in the absence of any admissible evidence, valuation done by Stamp Duty Authorities could not be taken as actual sale consideration and the value shown in the sale deed has to be accepted. In the instance case the AO failed to bring any positive evidence on record indicating that the assessee has paid anything more than the amount disclosed in the sale deed.
I have considered the issue and the submissions made by the AR. It is not in dispute that the Sub-Registrar assessed the value of the asset at Rs. 60,54,000/- as against sale consideration of C 45.00 lacs shown in the sale deed. It was stated by the AR himself that the Sub-Registrar refused registration to transfer the plot at the agreed consideration. I have perused the memo issued by Financial Commissioner & Secretary, Revenue Department, Haryana. The gist of the memo is that the Deputy Commissioners have to constitute committees to undertake valuation of different categories of land in rural and urban areas and thereafter issue suitable guidelines to the Registration Officers. It was clarified that the rates proposed by the Committee will be only for the guidelines of Registration Authorities and there shall be no binding on the Registration Authorities to follow such rates strictly from the legal point of view and that if any Registration Authority finds that the rates of any particular land/property given in the deeds are lower than the rates proposed by the Committee, the Sub-Registrars should examine such cases on merits; if necessary, visit the site, and then pass in each case, a specific speaking order while referring the case to the Collector u/s 47-A of the Indian Stamps Act, 1899 for proper valuation of the property, 4.1 From the copy of sale deed furnished by the AR, it is not evident as to how the value of the asset was determined at Rs. 60,54,000/- by the Registration Authority. Neither the order of the Sub-Registrar nor the order of Collector determining the value of the property, as per the directions contained in Memo mentioned above, were furnished by the AR before me. It is evident from the submissions of the AR that the Sub-Registrar refused registration at the consideration shown in the sale deed and that the Sub- 8 Registrar assessed the value of the asset having regard to location and other parameters of the property. It has not been shown by the AR that the assessment made by Sub-Registrar was challenged / before the higher authorities meaning thereby that the assessee accepted the value assessed by the Registrar. 4.2 As regards the contention of the appellant that the AO should have referred the asset for valuation to a Valuation Officer in case of objection by the assessee, I would like to disagree with the ratio of Hon'ble ITAT Jodhpur Bench (supra) since in the present case, the appellant could not make out any case that the value assessed by the Stamp Valuation Authority exceeds the FMV of the property, as evident from the objection filed before the AO dated 14.12.20JJL The reliance of AR on the case law of CIT Vs Chandni Bhuchar is misplaced as in that case the issue was that of assessment of difference between the value of the property assessed for the purpose of stamp duty and the actual sale consideration in the hands of the purchaser as unaccounted investment. 4.3 Section 50C has been inserted w.e.f. 1.4.2003 as deeming provision for the purpose of computation of capital gains as it is common knowledge that significant part of the real estate transactions are transacted in cash and not reported. It is with the intention of levying and collecting correct capital gains tax, this deeming provision was introduced. In the facts of the present case, the property has been assessed by the Sub-Registrar as per the extant provisions and the Memo of the Govt. of Haryana and no case has been made out by the assessee that the value assessed by Sub-Registrar exceeds the FMV. Therefore, the action of the AO in adopting the value assessed by the Sub- Registrar for the purpose of computation of capital gains as per the provisions of section 50C is upheld and the grounds of appeal
are dismissed.” Therefore, the assessee has preferred an appeal before us.
5. The ld AR has reiterated the same contention which were raised before the lower authorities. He further stressed upon the page No. 15 of the paper book wherein, the objection has been raised. He further submitted that the assessee is merely 1/3rd owner of the property and in case of other two owners no action has been 9 taken by the revenue and therefore on the principle of consistency the addition should not be made.
The Ld. DR vehemently contested the claim of the assessee and submitted that the letter dated 14/12/2010 cannot be considered as an objection in terms of provisions of section 50 C (2) of the act as assessee has not stated its fair market value therein. He therefore submitted that merely stating that stamp duty rates should not be applied in his case without giving any cogent reason cannot be said to be an objection before the Ld. assessing officer. He further referred to the decision of the coordinate bench in case of Ravi Kant versus ITO hundred and 10 TTJ 297 (DEL) as well as the decision of Sunil Kumar Aggarwal versus CIT 272 CTR 332.
We have carefully considered the rival contentions and also per used the orders of the lower authority. In the present case the assessee has contested that the stem duty rates cannot be applied in the case of assessee as in the same vicinity and sector the plots of the same area have been transferred even for lesser consideration. He also stated at the rate at which the property have been sold by the assessee is the correct rate and capital gain is required to be computed on that. In view of this according to us it satisfies the provisions of section 50 C (2) of the act as assessee has claimed before the assessing officer that the value so adopted by the stem valuation authority is exceeding the actual transaction value of the property is on the date of the transfer. It is not so that he has merely stated that the stem duty rates are fixed on the whims and fancies of the rate fixing authority but has also stated that in the same vicinity in sector the plots of the same area have been transferred even for lesser consideration. In view of this we are of the opinion that the 10 assessing officer should have referred the matter to the valuation cell and determined the capital gain in accordance with the provisions of section 50 C (2) of the act. The decision of the coordinate bench relied by the Ld. departmental representative in case of Ravi Kant versus ITO (supra) was on the facts that that the departmental representative have given the valuation report in that case and which was also based on some extraneous observation. Furthermore Hon’ble Calcutta High Court in Sunil Kumar Aggarwal versus CIT 272 CTR 332 has held that that no inference can be made that the assessee has accepted the price fixed by the District Sub Registrar for stamp duty purposes as the fair market value of the property because the assessee has nothing to do in the matter. Stamp duty is payable by the purchaser & it is for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the AO should, in fairness, have given an option to the assessee to have the valuation made by the Departmental Valuation Officer (DVO) contemplated u/ s 50C. Therefore as a matter of course, in all such cases the AO should give an option to the assessee to have the valuation made by the DVO. The valuation by the DVO is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate