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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI ABRAHAM P GEORGE & SHRI G. PAVAN KUMAR
आयकर अपीलीय अिधकरण, ’बी’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI �ी अ�ाहम अ�ाहम अ�ाहम पी अ�ाहम पी पी जॉज� पी जॉज� जॉज�, लेखा जॉज� �ी �ी �ी लेखा लेखा सद�य लेखा सद�य सद�य एवं सद�य एवं एवं �ी एवं �ी �ी जी �ी जी जी. पवन जी पवन पवन कुमार पवन कुमार कुमार, �याियक कुमार �याियक �याियक सद�य �याियक सद�य सद�य केकेकेके सम� सद�य सम� सम� सम� BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER अपील अपील संसंसंसं./ I.T.A.No.2336/Mds/2016 अपील अपील िनधा�रण वष� िनधा�रण वष� / Assessment Year : 2012-13 िनधा�रण िनधा�रण वष� वष� A.M. ARUMUGAM, Assistant Commissioner No. 14/11, Norton 3rd Street, Vs. of Income Tax, Mandaveli, NCC - 11, Chennai - 600 028. Chennai. [PAN: AAFPA 2758N] (अपीलाथ� अपीलाथ� अपीलाथ�/Appellant) अपीलाथ� (��यथ� ��यथ� ��यथ�/Respondent) ��यथ� अपीलाथ� क� ओर से/Appellant by : Shri J. Prabhakar, FCA. ��यथ� क� ओर से/Respondent by : Mr. Supriya Pal, JCIT सुनवाई क� तारीख/Date of Hearing : 28.09.2016 घोषणा क� तारीख/Date of Pronouncement : 21.11.2016 आदेश आदेश आदेश /O R D E R आदेश PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The assessee has filed appeal against the order of CIT(A) for the assessment year 2012-13, dated 18.05.2016 passed u/s. 143(3) and 250 of the Act and the assessee raised the following grounds: 1.1 The CIT(A) is not justified in omitting to adjudicate on the application of section 50C to the facts of the case and attributing contumacious
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1.2 The CIT(A) has no basis to conclude as to the application of section 50C to the facts of the case, in the absence of additional stamp duty levy under the prevention of undervaluation of Instrument Rules of the Stamp Act.
1.3 The CIT(A) is not justified in omitting to refer the matter of valuation cell as mandated by section 50 CIT(A), if the alleged value of Rs.
4,500/- per sq.ft. is indeed referred to in the sale document.
1.4 The CIT(A) is not justified in concurring with Fair Market Value as on 01.04.1981 of impugned property at Rs. 1,00,000/- fixed by the Assessing Officer which has no independent basis or justification.
1.5 The Ld. CIT(A) is not justified in holding that the Fair Market Value as on 01.04.1981 at Rs. 1 Lakh is based on guide line value in 1981 which on facts is farther from the truth.
1.6 The Ld. CIT(A) is not justified in confusing the issue of determining
Fair Market Value for cost purposes and the determination of sale value allegedly u/s. 50C vide page 5, para 1 of his appellate order.
:-3-: I.T.A. No. 2336/Mds/2016 1.7 The CIT(A) is not justified in omitting to grant deduction u/s. 54EC on frivolous reasons by adverting that case laws referred under that subject related to section 54E, which section is in pari-materia with section 54EC.
1.8 The CIT(A) is not justified in upholding the alleged sale value of land at Rs. 66,19,500/- as against the correct market value adopted in transfer deed at Rs. 34,86,270/- to which case section 50C has no factual application.
1.9 The CIT(A) is not justified in upholding the alleged indexed cost at Rs.
7,85,000/- which has no discernible basis but determined on ad-hoc or speculative in nature.
1.10 The CIT(A) is not justified in confirming the long term capital gain at Rs. 58,34,500/- as against long term loss of Rs. 8,31,230/- determined on correct transaction value as reduced by index cost of fair market value as on 01.04.1981.
1.11 The CIT(A) is not justified in alleging contumacious conduct upon the appellant as to failure to work out long term and short term capital gains separately vide para 1, page 4 of the appellate order.
1.12 The CIT(A) failed to notice that the calculation of capital gain on long term and deemed short term asset is subsumed in the computation is :-4-: I.T.A. No. 2336/Mds/2016 view of the exemption available u/s. 54EC of the Act and the artificial splitting by the first appellate authority in this regard is academic.
1.13 In any event the order of the CIT(A) is illegal, arbitrary and devoid of cogent reasons and decided without any regard to the facts and circumstances of the case and the law applicable thereto.
1.14 Your appellant craves indulgence of the Hon'ble Income Tax Appellate
Tribunal to supplement the facts on record by filing additional grounds depending upon the exigencies in the appeal.
At the time of hearing, the Ld. AR filed the petition of additional evidence in respect of Amendment to valuation report for fair market value as on 01.04.1981 the Ld. DR has opposed for the admission of evidence, we considering the petition and argument rejected the additional evidence and heard the case.
The Brief facts of the case are the assessee is engaged in Business of textile export and running, boarding and lodging and marriage hall and bar and filed Return of Income on 22.09.2012 with total income of Rs. 31,54,954/- and the Return of income was processed under 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS and notice u/s. 143(2) was issued. In :-5-: I.T.A. No. 2336/Mds/2016 compliance to the notice Ld. AR appeared and produce information pertaining to bank account statements, details of land sold and evidence for deduction claimed under Chapter VI A and other details.
The Ld. AO verified the documents and found that the assessee has sold business Asset in the financial year 2011-2012 for Rs. 1,25,00,000/- and the property/Asset comprises of land and building used as a business asset in earlier years and the land was valued for sale at Rs. 34,86,270/- and Rs. 90,13,730/- towards the building with fixtures etc. The assessee deducted written down value of the Building and indexed cost of land from the total sale consideration and claimed exemption u/s. 54EC of the Act on investment in capital gains bonds and worked out taxable capital gains of Rs. 6,74,811/-. The Ld. AO found that the assessee has not considered the property value as per the provisions of section 50C of the Act being the guideline value of land at Rs. 4500/- per sq.ft. and worked out at Rs. 66,19,500/- as against Rs. 34,86,270/- determined by the assessee. The assessee considered cost of acquisition of land as per valuer certificate at Rs. 5,50,000/- which is on higher side and claiming indexation is not reasonable. The Assessing Officer observed that the assessee sold the Business asset and the gains are in the nature of short term capital gains and calculated the difference in the index cost of acquisition and the sale value for land applying the provisions of 50C of the Act and made addition of Rs. 66,65,730/- as short term capital gains and allowed deduction u/s. 54EC of the Act to the extent of 50 Lakhs only and passed the Assessment Order dated 31.03.2015. Aggrieved by :-6-: I.T.A. No. 2336/Mds/2016 the order, assessee filed an appeal with the CIT(A). In the appellant proceeding the Ld. AR of the assessee argued the grounds and the reiterated the submissions made in the assessment proceedings. The Ld. CIT(A) considered the findings and views expressed by the Assessing Officer on sale of Land and Building as a Business Asset and confirmed the addition and relied on the judicial decisions. Aggrieved by the order, assessee has filed an appeal.
Before us the Ld. AR of the assessee argued that CIT(A) has endorsed the findings of the Assessing Officer on applicability of provisions of Section 50C of the Act and upheld the sale value of land Rs. 66,19,500/- as against sale value of Rs. 34,86,270/- and restricted the indexed cost of acquisition to Rs. 78,500/-, further the Ld. CIT(A) has not called for any comments on Remand Report from the Assessing Officer. The Ld. AR filed paper book consisting of details of correspondence with Income Tax Department and registered land documents and further referred to page 8 were E-mail sent by Income Tax Department on 28.03.2015 calling for detailed information and also nature of transaction of Vijay Park. In compliance the assessee has furnished reply on 30.03.2015 and the assessment was completed 31.03.2015. The Ld. AR emphasized that the no proper opportunity was provided to explain the facts with evidence as the E-mail was sent two days before the passing of the assessment order and prayed for allowing the assessee's appeal. Contra, the Ld. DR relied on the order of the lower authorities and opposed the grounds.
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We heard the rival submissions and perused the material on record.
The Ld. AR contention that the provisions of section 50C of the Act are not applicable and the Assessing Officer was not justified in overlooking the facts and has calculated the short term capital gains by splitting the sale transaction and applied the guideline value which is not acceptable in the eyes of law. The Ld. CIT(A) has confirmed the order of the Assessing Officer. The notice issued by Revenue though E-mail and calling for information to be submitted positively on 30.03.2015 was a Hurried Action. The assessee does not have sufficient time to explain the facts and complied with available submissions through letter dated 30.03.2015. The Ld. AR drew our attention to paper book Page No. 10 to 34 were details submitted including certificate of value on Fair Market Value as on 01.04.1981. We found that the Assessing Officer should have provided adequate opportunity and has issued E-mail only two days before passing of the order and wanted the information in very short time period. We considered disputed facts and applicability of provisions of section 50C of the Act and the additional evidence produced was rejected as the same was not available to the Assessing Officer for verification in framing the assessment order and restricted time factor for filing the reply were the assessment order dated 31.03.2015 was passed within one day of filing the information called for through E-mail. We, in the interest of justice, are of the opinion that the assessee should be provided with reasonable time to defend the case on merits. Hence, we set aside the order of the CIT(A) and remit the entire issue to the file of Assessing Officer to decide the issue on merits after providing adequate opportunity of hearing and assessee
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In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced on Monday, the 21st day of November, 2016 at Chennai.