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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ C ’
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the revenue is directed against the order of dt. 31/08/2050 of Commissioner of Income Tax (Appeals) for the Assessment Year 2008-09. 2. The revenue has raised the following grounds:
“1. The order of the CIT (Appeals), Danvangere, is opposed to the law and not on the facts and circumstances of the case.
The CIT (Appeals), Davangere erred in granting relief to the assessee by admitting fresh evidence and not remanding the matter to the file of the A.O.
For these and other grounds that may be urged upon, the order of the CIT (Appeals) may be reversed and that assessment order be restored.
The appellant craves leave to add, alter, amend or delete any other grounds on or before hearing of the appeal.”
3. The assessee is one of the ten legal heirs of Late Sri T.M. Shadaksharaiah, one of the co-parceners of Late Sri TM Maheshwaraiah, HUF. The assessee filed her return of income on 31/03/2009 for the assessment year under consideration declaring Rs.86,306/- under the head ‘income from house property’, under the head ‘income from capital gains’ at nil and under the head ‘income from other sources’ at Rs.22,130/-, total amounting to Rs.1,08,436/-. The return of income was processed under section 143 (1) of the Income Tax Act, 1961 (‘the Act) accepting the income returned. Certain information was received by the AO through Range Head to the effect that in the case of one Smt. T.N. Rajeswari Pandit, the guidance value was adopted at Rs.13,62,26,000/- for computing of capital gains under section 50C in place of the document consideration of Rs.5,45,00,001/- in respect of the property sold during the year. The assessee is one of the ten owners of the said property therefore, the assessee admitted the sale consideration at Rs.5,45,00,001/-. Accordingly, the case was reopened by issuing notice under section 148 of the Act. In response the assessee filed return of 27/04/2011, declaring the same income of original return at Rs.1,08,440/-. The AO passed the order under section 143(3) of read with section 147 of the Act by making the addition for computing the capital gains as per the valuation of the property adopted under section 50C and consequently a demand of Rs.31,99,390/- was raised. The assessee challenged the action of the A.O. before the CIT(A) and pointed out that the Regional Commissioner, Registration, Bangalore Division vide its order dated 13/02/2013 as determined the value for stamp duty of the property in question at Rs.6,00,60,520/-. By considering the order of Regional Commissioner who has revised the order of sub-registrar, valuation of property for stamp duty, the CIT(A) directed the AO to compute the capital gain tax liability after substituting the value of sale consideration as determined by the Regional Commissioner, Bangalore. Accordingly, the CIT(A) granted part relief to the assessee.
4. Aggrieved by the order of the CIT(A), the revenue has filed the present appeal and the only grievance of the revenue is violation of the rule 46A by the CIT(A) while considering the order of the Regional Commissioner, Bangalore determining the valuation of the property for the purposes of stamp duty. The learned DR has submitted that the CIT(A) has considered fresh material without giving an opportunity to the assessing officer to consider and present his comments on the valuation of the property. Thus, the Ld. DR has contended that the CIT(A) has violated the provisions of rule 46A of the income tax rules while passing the impugned order.
On the other hand, the Learned AR of the assessee has submitted that it was only an order of the competent authority and not an evidence produced by the assessee. Thus, the Ld. AR has submitted that the assessee did not file any fresh evidence in support of the case but it was pointed out that the addition was made by the AO by considering the valuation fixed by the sub registrar which was revised by the Regional Commissioner (Registration), Bangalore Division, Bangalore. Therefore, there is no violation of rule 46A of the Income Tax Rules. He has relied upon the impugned order of the learned CIT(Appeals).
We have considered the rival submissions as well as relevant material on record. The assessment was reopened by the AO after came to know that the valuation of the property for the purpose of stamp duty was determined at Rs.13,62,26,000/- by the sub-registrar against the sale consideration reported at Rs.5,45,00,001 Accordingly, the AO completed the reassessment and made the addition by considering the full value of the sale consideration by invoking the provisions of section 50C. Thus, it was not the decision of the AO by making enquiry or examination of fact but it was based on the value determined by the sub- registrar for the purpose of stamp duty which was considered as deemed full value consideration under Section 50C of the Act. The assessee brought to the notice of the CIT(Appeals) that the said order of the sub registrar determining the value of the property for stamp duty purpose was revised by the Regional Commissioner (Registration), Bangalore
Division, Bangalore vide its order dated 15/03/2013. The CIT(A) after considering the fact and order of the Regional Commissioner (Regn.) has decided this issue in paragraphs 7 and 8 as under: “7. I have gone through the grounds of appeal and the additions. The Assessing Officer has adopted the value of the property as per the information he received through the Addl. Commissioner of Income Tax, Davangere Range to effect that the value of the property under consideration is fixed at Rs.;13,61,26,000 by the Sub-Registrar as against the sale consideration reported in the document at Rs.5,45,00,001 and worked out the assessee's share of capital gains to Rs.91,90,780 as against of Rs.14,70,720 as admitted by the assessee in the return (being 1/10th share).
8. As regards the plea taken on behalf of the assessee that the value as fixed by the Sub-Registrar after taking into consideration the order of the Regional Commissioner, Registration, Bangalore Division, Bangalore should only be considered for quantifying capital gains under Section 50C, I find merit to exist in the plea of the assessee. In view of the facts as brought out above and discussions, I am convinced to agree with the view of the assessee that the value to be adopted for the purpose of computation of capital gains under Section 50C of the Act is the value fixed by the Regional Commissioner, Registration, Bangalore Division, Bangalore, State Govt. of Karnataka. Accordingly the Assessing Officer is hereby directed to recompute the capital gains liable to tax after substituting the value of sale consideration as determined by the Regional Commissioner, Bangalore at Rs.6,00,60,520. The ground, hence, stands partly allowed.”
As it is clear from the finding of the CIT(A) that this fact of order passed by the Regional Commissioner (Registration) is not a new evidence but it was an order of the competent authority in determining the valuation of the property in question for stamp duty purpose as was considered by the AO for the purpose of computing capital gains under section 50C of Act. We are of the view that the order of the competent authority which has revised the order of the Sub-Registrar (Registration) in determining the value of the property for the purpose of stamp duty is not a new evidence. However, since the Assessing Officer was not given an opportunity to verify the said order therefore, we direct the Assessing Officer to verify and consider the order of the Regional Commissioner (Regn.) and then computing the capital gains. The appeal of the revenue is allowed for statistical purpose. In the result, the appeal of the revenue is allowed for statistical purpose.
Order pronounced in the open court on the 25th day of May, 2016.