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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
(PAN : AAACV4056G) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri S.C. Singhal, CA REVENUE BY : Shri Shravan Gotru, Senior DR Date of Hearing : 11.07.2016 Date of Order : 13.07.2016 O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, M/s. Viraj Clean Sea Enterprises Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 07.10.2013 passed by the Commissioner of Income-tax (Appeals)-19, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :- “1. The authorities below has erred in law and in facts in holding short term Capital gain of Rs.38,09,360/- which consisted of land and superstructure situated at plot no. 1/402, Vaishali, Ghaziabad by invoking of section 50C of the Income Tax Act,1961 was transferred on 31.03.2007.
The sale deed of the said property was executed for the relevant Asst Year 2009-10. The Actual Transfer And payment was executed Prior to this Asst Year 3. The valuation made by the architects Mr. Rameshwar Dayal dated 17.04.2007 who has valued the portion of Super structure and land sold to the Assessee company has determined capital loss of Rs.27100/-.
4. The assessing officer has determined gain invoking of section 50C of the I T Act assessed entire gain short term capital gain. The land was not subjected to depreciable assets which to be considered long term gain.
The authorities below has rejected valuation report which was submitted before the learned CIT(A) with an application as per rule 46A alleged that the additional is not admitted which failed the rule 46A whereas the applicant company did not avail the opportunity in furnishing the valuation report in the course of assessment proceedings.
The authorities below have erred in law and in facts in disallowing Rs.275563/- which was paid in relation to the transfer of property 7. The honble bench is requested that confirming the order of the Assessing Officer which is erroneous may kindly be reserved 8. The Initiation of penalty proceedings in terms of section 271(1)(c) be directed to drop as full particulars of income of the assessed has been disclosed Thus no income has been concealed or furnished.”
2. Briefly stated the facts of this case are : pursuant to the notice issued during the scrutiny proceedings, Shri Neeraj Mittal, AR of the assessee put in appearance, filed requisite details, books of accounts which were examined on test check basis by the AO.
Assessee is into the business of turnkey operator in the field of Marine Engineering Shipping and environment, including survey, report, consultation, supply, operation and maintenance, repair AMC and hiring of products and services completely or in parts thereof.
As per AIR information, assessee shown to have sold a flat at Vaishali for which transaction was registered in the office of Sub-Registrar-IV, Ghaziabad on 28.11.2008 and assessee was asked to explain as to why capital gain derived on this transaction of sale has not been shown. Assessee company stated to have sold the property in question for Rs.8,78,000/- and received the sale proceeds by way of cheque from Shri Rajiv Ranjan, however the value for the purpose of stamp duty has been calculated at Rs.46,21,000/- (both land and building) and as such, the total sale proceeds of the transfer of property is taken at Rs.46,21,000/-. AO by invoking the provisions contained under section 50 of the Income-tax Act, 1961 (for short ‘the Act’) made an addition of Rs.38,09,360/- on account of short term capital gain. AO also disallowed the legal expenses debited in the profit & loss account to the tune of Rs.2,75,563/- being not related to the business and assessed the total income at Rs.56,50,030/-.
Assessee carried the matter before the ld. CIT (A) by filing an appeal who has affirmed the findings returned by the AO and dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Before initiating the argument on the present appeal, ld. AR for the assessee has come up with an application raising additional grounds of appeal
which are to the following effect :- “(a) The transaction of sale of asset is dated 31/03/2007 vide an agreement, possession and payment on that date itself. Merely it was registered with sub- register on 28/11/2008, the sale will not belong to asst. year 2009-10 (as done by the ITO) but to asst. year 2007-08. Case laws and precedents are there to confirm that in case of sale of property, registration thereof is not essential and only the handing over of possession in part performance of a contract and payment of sale consideration are sufficient to treat it sale in income tax proceedings. (b) That the stamp duty rate u/s 50. C of the Income Tax Act should be the rate as applicable on the date of sale agreement and not the rate applicable at the time of registry. The ITO in this case has adopted the rate as on 28/11/2008 and not as on 31/03/2007 which is improper and bad in law. (c) That in addition to case laws on point (b) above, the amendment done by Finance Act, 2016 by introduction of a clause in section 50 C w.e.f. asst. year 2017-18, is as curative and benevolent to the tax-payer and be treated as applicable to all earlier years since section 50 C was introduced.” on the ground that these grounds are necessary to change the entire factual matrix to decide the controversy at hand.
7. Without entering into the merits of the case, we are of the considered view that additional grounds sought to be raised by the assessee, which are legal as well as factual, are required to be incorporated for complete adjudication of controversy at hand as the sale deed executed and registered in this case is required to be examined in the light of the agreement to sell entered into between the parties. So, we hereby allow the present application and of the considered view that all these grounds are required to be decided by ld. CIT (A).
8. The first contention raised by ld. AR for the assessee that the CIT (A) has erred in denying an opportunity of being heard to the assessee to place on record the valuation report by filing application under Rule 46A is tenable because bare perusal of the findings returned by ld. CIT (A) challenged vide ground no.5 of the present appeal go to prove that the proper opportunity of being heard has not been provided by the ld. CIT (A) to the assessee rather rejected the application filed under Rule 46A on the ground that, “no reason has been given as to why the valuation report was not produced during the assessment proceedings”, which may be due to ignorance or negligence on the part of the assessee as well as its authorized representative. So, we are of the considered view that the ld. CIT (A) being a quasi-judicial authority is required to decide application moved under Rule 46A afresh by providing an opportunity of being heard to the assessee. So, the matter is required to be restored to the CIT (A) to determine ground no.5 afresh by providing an opportunity of being heard to the assessee.
9. In view of what has been discussed above, we hereby set aside the impugned order passed by ld. CIT (A) and restore the case to decide ground no.5 afresh and additional grounds raised by the assessee by providing an opportunity of being heard to the assessee. Consequently, the appeal is hereby allowed for statistical purposes. Order pronounced in open court on this 13th day of July, 2016. Sd/- sd/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 13th day of July, 2016 TS