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Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
This appeal by the assessee is directed against an order dated 27.01.2016 of the ld. Commissioner of Income Tax (Appeals)- 13, Chennai.
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Assessee has filed this appeal with a delay of ninety days.
Condonation petition has been filed. Reasons shown for the delay seems to be justified. Ld. Departmental Representative did not raise any serious objections. Delay is condoned. Appeal is admitted.
Facts apropos are that assessee had filed his return for the impugned assessment year declaring income of �4,25,450/-. Ld. Assessing Officer was having Annual Information Report (AIR) which reflected sale of a property situated at Old No.5, New No.9, North Gopalapuram Second Street, Chennai 600 086. As per Assessing Officer ground floor of the building was sold for �1.06 crores whereas first floor was sold for a much lower figures be �53 lakhs. Ld. Assessing Officer required assessee to show cause why the capital gains arising from the sale of first floor, considering its sale price as �1.06 Crores, should not be taxed. Reply of the assessee was that ground floor of the building belonged to his parents and was sold by his parents and he had no right over that. As per the assessee, the first floor was jointly held by the him with his brother. As per assessee, sale of first floor fetched him only �51.50 lakhs, despite the cost of land, plinth areas of the ground floor and first floor and age of the building all being same. Reply of the assessee on this issue is reproduced hereunder:-
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‘’the difference in the sale consideration between the two flats mentioned above, namely ground floor and first floor, it is submitted that the first floor was violently attacked by termites & white ants with the result all the wood work were destroyed totally and had not any value at all. According to vastu expertise the premises, was defective regarding the position of kitchen, bath room etc., was not in proper place in accordance in vastu science. The Sub-Registrar also inspected the property and was convince that the consideration was fair and reasonable and no additional stamp duty was charged from the purchaser. Apart from this the property was in the stage of being auctioned by Visalam Chit Funds Ltd for the dues. Therefore the same sold �51,50,000/-‘’.
However, ld. Assessing Officer did not accept the above reply. According to him, land value shown by him in the sale deed was �37,01,100/- whereas for the very same land the value shown in the sale deed for the ground floor was �51,24,600/-. Further, as per ld. Assessing Officer value of the first floor building was given as �14,48,900/- in the sale deed, whereas similar value for ground floor was shown at �54,75,400/-. As per the Ld. Assessing Officer no prudent person would sell the first floor at a price less than 50% of the ground floor. Though assessee made a further submission that first floor was under violent attack of termites and white ants, ld. Assessing Officer did not accept this, for want of evidence. He also mentioned that it was not probable for such a pest attack in first floor alone, leaving the ground floor. He reworked capital gains for sale of ITA No.2351/Mds/2016 :- 4 -:
first floor substituting the sale price of Rs.1.06 Crores against �51.50 lakhs shown by the assessee
Aggrieved, assessee moved in appeal before the ld. Commissioner of Income Tax (Appeals). However, ld. Commissioner of Income Tax (Appeals) confirmed the order of the ld. Assessing Officer noting that assessee could not furnish any evidence for distress sale and could not show any valid reason for selling the first floor at price much lower than the ground floor, when both the sales were spaced in close proximity to each other.
Now before us, the ld. Authorised Representative strongly 6. assailing the orders of the lower authorities submitted that assessee could not be held liable for higher price realized by his parents for the sale of the ground floor. According to him, office of the Sub-Registrar had accepted the values mentioned in the sale deed. Argument of the ld. Authorised Representative was that sale was effected at fair market price and Sec. 50C of the Income Tax Act, 1961 had no application.
Just because ground floor realized much more amount when sold would not be a reason, as per ld. Authorised Representative, to substitute the fair market value shown by the assessee by a fictitious amount.
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Per contra, the ld. Departmental Representative strongly 7.
supported the orders of the authorities below.
We have perused the orders and heard the rival contentions.
Ld. Assessing Officer has given a clear finding that area of the first floor which was sold by the assessee, and the ground floor which was sold by his parents were the very same. Nevertheless, ld. Assessing Officer did not make a detailed analysis of the sale deed of the ground floor, price of which was adopted by him for computing the capital gains of the assessee. No doubt assessee’s claim that there was a violent attack of termites and white ants in the first floor alone leaving ground floor intact is against preponderance of probability. However, the Ld. Assessing Officer in our opinion ought have examined the purchaser of the first floor of the property to ascertain whether any consideration in excess of what was mentioned in the sale deed was paid. Considering all these aspects, we are of the opinion that matter requires a fresh look by the ld. Assessing Officer. We set aside the orders of the lower authorities and remit the issue regarding computation of long term capital gains back to the file of the Assessing
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Officer for fresh consideration in accordance with law.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced on Wednesday, the 23rd day of November, 2016, at Chennai.