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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 621/JP/2019
ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income Tax (Appeals), Alwar [herein after referred as Ld. CIT(A) ] for the assessment year 2014-15 dated 26.02.2019, which in turn arises from the order passed by the Income Tax Officer, Ward-3(3), Jaipur passed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') dated 06.12.2016. Earlier the appeal was rejected on the ground of non prosecution by the assessee.
The assessee has marched this appeal on the following grounds of appeal:-
“1.Thatthe ITO, Ward-3(3), Jaipur had erred in assuming the role of AO without valid transfer order u/s 127.
2. That the Ld. AO has erred in making addition of Rs. 7,97,015/- on account of unexplained investment. Assessee had duly submitted the valuation report of the registered valuer but Assessing Officer did not accepted the same nor referred the case to valuation Officer, which is bad in law.
3. That the appellant craves the right to add, amend or delete any of the grounds of appeal either before or at the time of hearing of appeal.”
The brief facts of the case are that the assesseeis deriving rental income, income from business and interest income during the year under consideration. The assessee filed his return of income on 07.02.2015 declaring total income of Rs. 2,18,770/- after claiming deduction under chapter VIA of Rs. 1.037/-. The case was selected for limited scrutiny under CASS, and accordingly a formal notice u/s 143(2) was issued to the assessee on 31.08.2015. Assessee had purchased a property jointly with Sh. Nazar Mohd during the year having DLC value of Rs. 43,94,029/- for purchase consideration of Rs. 28,00,000/-. Assessee's share was 50% in above property.
3 Mr. Imran Khan Assessing officer added the half of difference amount of Rs. 7,97,015/- in total income of the assessee treating it as unexplained income. The addition so made by the Id. AO was challenged by the assessee before the Id. CIT(A) who rejected the same via order dated 26.02.2019. Now the assessee has filed appeal before us.
The AO observed that during the year under consideration assessee had purchased a plot Chondpole Bazar, Jaipur. The said property has been purchased jointly by the assessee and Sh. Nazar Mohd. In the F.Y. 2013-14 dated 24.05.2013. the plot has been purchased in amount to Rs. 28,00,000/- in which the share of the assessee is 50%. The assessee has paid against the share of plot an amount of Rs. 14,00,000/- against the purchase cost and transfer expenses separately as per his share. But the value as per Stamp Authority of property purchase is Rs. 43,94,029/- & share of the assessee in the above property is 50 % that comes to Rs. Rs. 21,97,015/-, which is more than by Rs. 7,97,015/- in comparison to actual purchase consideration Rs. 14,00,000/-. Therefore difference amount of Rs. 7,97,015/- is hereby added to the total income of the assessee as undisclosed income during the year under consideration. As per provisions of Income-tax Act, value as per Stamp Authority of property purchases should be taken and shown in the original return but the assessee has not shown the same in his original return filed on 07.02.2015,
4 Mr. Imran Khan therefore penalty proceedings u/s 271(1)(c) r.w.s. 274 have been initiated separately of the Income Tax Act, 1961 for concealment of income and furnishing of inaccurate particulars of income.
Before the ld. CIT(A), the assessee has reiterated its arguments. The ld. CIT(A) for the reasons stated in his order has rejected the arguments and submissions made by the assessee. The ld. CIT(A) has confirmed the action of the AO by observing as under:-
“5.3 I have perused the assessment order as well as submissions filed by the appellant. The A.P. has rightly calculated the purchase amount of the property as per the valuation of the Stamp duty Authority as per provision of Section 56(2)(vii)(b) of the Act as applicable w.e.f. 2014-15. Accordingly, the addition of Rs. 7,97,015/- is sustained and the appellant’s ground of appeal on the issue is dismissed.
6. Aggrieved by the CIT(A) order, the assessee filed appeal before us. The assessee filed his written submissions in this regard which is reproduced as under:-
“Ground No. 1: THAT THE ITO, WARD 3(3), JAIPUR HAD ERRED IN ASSUMING THE ROLE OF AO WITHOUT VALID TRANSFER ORDER U/S 127: As per sec. 127, (1) The principal director or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is 5 Mr. Imran Khan possible to do so, and after recording his reasons for doing so, transfer any case from one or more assessing officers subordinate to him (whether with or without concurrent . jurisdiction) to any other Assessing officer or Assessing officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) ………………..
In the present case, notice u/s 143(2) for the A.Y. 14-15 was issued by ITO Ward 3(4), Jaipur and thereafter the case transferred to ITO, Ward 3(3), Jaipur. The case was transferred via transfer Memo dated 18.05.2016 [PB 1] without a transfer order u/s 127.
It has been held in various case laws that transfer of assessment proceedings without order u/s 127 are null and void. Some of the case laws are as under: 1. Brijesh Sharma vs. DCIT [IT(IT)A. No. 06/JP/2022] [PB 2-23] 2. Vijay Vikram Dande Kurnool vs. ADIT (Int. Taxation) [ITA 947/Hyd/2016] Since, no transfer order u/s 127 was made, therefore, whole of the resultant proceedings are null and void resulting into quashing of the assessment proceedings Ground No. 2: THAT THE LD. AO HAD ERRED IN MAKING ADDITION OF RS. 7,97,015/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. ASSESSEE HAD DULY SUBMITTED THE VALUATION REPORT OF THE REGISTERED VALUER BUT ASSESSING OFFICER DID NOT ACCEPT THE SAME NOR REFERRED THE CASE TO VALUATION OFFICER, WHICH IS BAD IN LAW: Assessee had purchased a residential house at Bhopji Ka Dera, Khetri House Road, Chandpole Bazar, Jaipur for Rs. 28,00,000/- jointly with Mr. Nazar Mohd which has DLC value of Rs. 43,94,029/-. [PB 24-32] Assessee's share in above property was 50%.
6 Mr. Imran Khan During the assessment proceedings, assessee submitted the valuation report from the registered valuer [PB 33-42] to AO as evident from the note sheet of the department. [PB 4345] Further, assessee had submitted the calculation sheet obtained from registration department from where it can be found that how the calculation of DLC value of Rs. 43,94,029/- [PB 46-49] was arrived on date of transaction.
From the perusal of above calculation sheet, it can be found that registrar department has made valuation for the above property considering it to be commercial property whereas the same was residential property. Further, assessee had sold above property on 05.02.2015 [PB 50-59] where the valuation of same half portion of property was made by registration department at Rs. 17,17,516/-. CalCulation sheet of DLC value for Rs. 17,17,516/- [PB 60-61] was also provided to assessing officer from which it can be found out that valuation was made by the registrar department considering it to be residential property. Further, value of property as on 05.02.2015 was Rs. 17,17,516/- so value for the same property on 07.05.2013 will always be less than Rs. 17,17,516/- and can never be more than that. Assessee had also submitted an affidavit in support of his contention [PB 62]. However, assessing officer did not consider the submissions and passed assessment order adding the whoie amount of difference in income of the assessee.
However, the revised valuation of the above property considering it to be a residential on the basis of rates prescribed by the state government is as follows:
Land cost at the rate of 13760 per Sq. Mtr for 209.03 Sq. Mtrs (As Per DLC Rate) 28,76,252/- Construction Cost (As evaluated by stamps deptt.) 98,715/- Deemed income to be added u/s 56 87,484/- However, since, the difference between fair market value of property and actual consideration is less than 10% of the actual consideration, therefore the same should be ignored and no addition should be made u/s 56 as held by Bangalore ITAT in Sandeep Patil vs. ITO [924/BANG/2019] and Jaipur ITAT in Sita Bai Khetan vs. ITO [826/JP/2013] Further, assessee had claimed before assessing officer that value adopted by stamp valuation authority exceeds the fair market value of the property, therefore assessing officer should have referred the matter to Department valuation officer instated of adopting the value taken by the stamp valuation authorities and failure to do so will result in deleting the addition as held in case of a. ITO vs. M/s Aditya Narain Verma (HUF) 4166/Del/2013 (PB 63-72) b. ITO vs. Estate of Maharaja Karni Singh of Bikaner [241/JODH/2017/ 166 DTR 29 (Jodh. Trib.)] In view of above addition of Rs. 7,97,015/- deserved to be deleted.”
The ld. DR is heard who has relied on the findings of the lower authorities. He contended that the AO has made the addition based the Registration papers. It was of the satisfaction of the AO and observed that during the year under consideration assessee has purchased a plot Chandpole Bazar, Jaipur. The said
8 Mr. Imran Khan property has been purchased jointly by the assessee and Sh. Nazar Mohd. in the F.Y. 2013-14 dated 24.05.2013. The plot has been purchased in amount to Rs. 28,00,000/- in which the share of the assessee is 50%. The assessee has paid against the share of plot an amount of Rs. 14,00,000/- against the purchase cost and transfer expenses separately as per his share. But the value as per Stamp Authority of property purchase is Rs. 43,94,029/-& share of the assessee in the above property is 50% that comes to Rs. 21,97,015/-, which is more than by Rs. 7,97,015/- in comparison to actual purchase consideration Rs. 14,00,000/-. Therefore difference amount of Rs. 7,97,015/- is herby added to the total income of the assessee as undisclosed income during the year under consideration.
We have heard both the parties and perused the materials available on record. The ld. AR for the assessee made his submission that ground No. 1, relying on U/s 127 of the Act and case laws. We observed that the transfer of assessment record u/s 127 of the Act the ITO has the power to transfer within Ward as per the territorial jurisdiction, the above said transfer of record has been within the same Ward where the territorial jurisdiction where the case lies with ITO, Ward-3(3), Jaipur and transfer is done to ITO, Ward -3(3).The Citation where the ld. AR for the assessee submitted before us is not relevant to his case. We arrived at the conclusion that as per sec127(3) and the decision of the Apex court in the case
9 Mr. Imran Khan Kashiram Aggarwalla V Union of India and Others (1965) 56 ITR 14 (SC), Where the transfer of jurisdiction only involves Assessing Officer situated in the same city [Section 127(3)] Section 127(3) makes it clear that no opportunity is required to be given in respect of transfer of jurisdiction within the same city. It was held that the mandatory requirement of recording reasons was not to be applicable, as the transfer orders were in the same city and only wards were changed but the court did observe about the nature of transfer orders under section 127. Hence, ground No. 1 of the assessee appeal is dismissed.
In ground No. 2, taking into merits of the case, the ld. AR for the assessee has purchased a residential house for Rs. 28,00,000/- jointly with Mr. Nazar Modh which had DLC value of Rs. 43,94,029/-, where the assessee is holding 50% of the property value. The ld. AO has failed to consider the submission made by the assessee that the valuation report from the registered valuer is an evident where the calculation sheet obtained from registration department from where it can be found that how the calculation of DLC value of Rs. 43,94,029/- was arrived on the date of transaction. The ld. AO and the ld. CIT(A) has failed to note that the assessee has sold the above property on 05.02.2015 where the valuation of same half portion of the property was made by Registration Department at Rs. 17,17,516/- . The ld. AO
10 Mr. Imran Khan failed to consider the submission made by the assessee where the assessee has submitted the valuation sheet of DLC value which was made by the Registrar Department considering it to be a residential property. The ld. AO and ld. CIT(A) has failed to consider that the AO submitted an affidavit in support of his contention. Further the main question is arrived whether the property is commercial property or residential property, we observed that the Registrar Department has made valuation for the property considering it be a commercial property, where as the same was residential property from the documents furnished. We observed that the assessee has sold the above property on 05.02.2015 where the valuation of same half portion of the property was made by the Registration Department at Rs. 17,17,516/-. Further perusing the calculation sheet of DLC value, the Assessing Officer failed to note that the valuation was made by the Registrar Department considering it to be a residential property which is reproduced as under:-
13 Mr. Imran Khan Further, we observed that the value of property as on 05.02.2015 wasRs. 17,17,516/- so value for the same property on 07.05.2013 will be less than Rs. 17,17,516/-. The ld. AR for the assessee submitted that the revised value of the above property considering it to be a residential on the basis of rates prescribed by the State Government is as follows:-
Land cost at the rate of 13760 per Sq. Mtr for 209.03 Sq. Mtrs ( as per DLC rate) Rs. 28,76,252/- Construction Cost (as evaluated by stamps deptt.) Rs. 98,715/- Total (as evident from the val. Report obtained from stamps & reg. deptt) Rs. 29,74,976/- Assessee’s share ( I.e. 50%) Rs. 14,87,484/- Purchase consideration Rs. 14,00,000/- Deemed income to be added u/s 56 Rs. 87,484/- However, since, the difference between fair market value of property and actual consideration is less than 10% of the actual consideration, therefore the same should be ignored and no addition should be made u/s 56 as held by Bangalore ITAT in Sandeep Patil vs. ITO [924/BANG/2019] and Jaipur ITAT in Sita Bai Khetan vs. ITO [826/JP/2013] The Ld AO and CIT (A ) erred in not appreciating the facts that Valuation Report of sub registration was submitted and perused by the lower Authorities . The property was sold before the Assessment Year. On perusing the Sale deed which is mentioned in page 11 of this order clearly mentioned has residential property.
The ld. AR for the assessee relied upon order of the Coordinate Bench in case of Income Tax Officer vs. M/s Aditya Narain Verma (HUF) “4.1 On the very perusal of the provisions laid down under section 50C of the Act reproduced hereinabove, we fully concur with the finding of the ld. CIT (Appeals) that when the assessee in the present case had claimed before 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, the Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. The very purpose of the Legislature behind the provisions laid down under sub section (2) to section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified. The Hon'ble jurisdictional High Court of Allahabad in the case of Shashi Kant Garg (supra) has been pleased to hold that it is well settled that if under the provisions of the Act an authority is required to exercise powers or to do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any other manner. Similar view has been-expressed by the other decisions cited by the ld. AR in this regard hereinabove. The first appellate order on the issue is thus upheld. The grounds are accordingly rejected.”
Hence, ground No. 2 of the appeal of the assessee is allowed on merit.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 19/12/2022.