HIRAK SARKAR,HOOGHLY vs. ACIT, CIR. 23(1), HOOGHLY
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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Per Sonjoy Sarma, Judicial Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2016-17 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by the National Faceless Appeal Centre (NFAC), Delhi, dated 27.02.2024 arising out of Assessment Order dated 06.12.2018, passed under Section 143(3) of the Act. 2. The Assessee has raised the following grounds of appeal: “1. For that in the facts and circumstances of the case the Assessment order passed was perverse and without jurisdiction and also in violation of principles of natural justice hence is bad in law and be quashed. 2. For that the assessee sought for adjournments during the appellate proceedings before the Ld CIT(Appeals) as his mother was not well because of prolonged disease was going under medical supervision and
I.T.A. No. 892/Kol/2024 Hirak Sarkar ultimately she expired on 29/02/2024. Thus the assessee was unable to devote proper attention towards appellate proceedings and the Appellate order was passed and proper opportunity of hearing was not provided to the assessee.
For that the assessment order passed u/s 143(3) of the Income Tax Act, 1961 was without jurisdiction and hence the Ld CIT(A) erred in confirming the assessment order. The assessment order was bad in law and should be quashed.
For that in the facts and circumstance of the case Ld. Commissioner of Income Tax Appeals erred in upholding and confirming the addition of Rs.7,71,667 and Rs.20,93,333 (on protective basis) as alleged undisclosed long term capital gains without considering the facts that the transaction of sale of property was not only of the assessee but also other persons. The addition is not called for hence the same be reversed.
For that in the facts and circumstance of the case the computation of capital gains made by the Ld Assessing Officer is incorrect and the same be made as per law.
For that in the facts and circumstance of the case Ld. Commissioner of Income Tax Appeals erred in upholding and confirming the addition of Rs.43,61,031 as addition u/s 56(2)(vii)(b)(ii) of the Income Tax Act, 1961. The addition is not called for hence the same be reversed. 7. For that in the facts and circumstance of the case Ld. Commissioner of Income Tax Appeals erred in upholding and confirming the addition of Rs. 17,25,580 and Rs.17,25,580 on protective basis. The addition is not called for hence the same be reversed.
Without prejudice to the above, the reference u/s 50C(2) of the Income Tax Act, 1961 for the valuation of all the said property involved above, which is
mandatory as per law be directed in this case.
For that the facts and circumstances of the case the notice issued and order passed under the Income Tax Act 1961 was without jurisdiction and bad in law and hence the entire assessment is bad in law and the same should be quashed.
For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding that the material based on which the Ld Assessment Officer passed the assessment order are collected behind the back of the assessee and which were not provided during the course of assessment proceeding, thus material should be excluded/ignored for the purpose of this case. 2
I.T.A. No. 892/Kol/2024 Hirak Sarkar
For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding that the statement of third parties on which the Ld Assessment officer relied during the course of assessment proceeding were not subjected to cross examination for the assessee, thus the third party statement relied upon should be excluded/ignored for the purpose of this case. 12. For that the facts and circumstances of the case the notice u/s 143(2) of the Income Tax Act 1961 was without jurisdiction and bad in law and hence the entire assessment order is bad in law and the same should be quashed. 13. The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 14. For that the facts and circumstances of the case the interest computed u/s 234 A/B/C/D of the IT Act 1961 is over charged and wrongly calculated and or is not applicable to the assessee case hence the interest be deleted and or correctly computed. 15. The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal.” 3. Brief facts of the case are that the assessee filed a return of income for the assessment year 2016-17 by declaring a total income of Rs. 1,13,02,000/-. The case was selected for scrutiny under the CASS system followed by notices were issued under sections 143(2) and 142(1) of the Act. The assessee reported a long- term capital gain of Rs. 40,162/-. The reported sale value of the property was Rs. 2,75,000/- and the indexed cost of acquisition was Rs. 2,34,838/-. According to details from the AR and the ITS database, the property was registered at a market value of Rs. 1,40,000/-, as confirmed by the registration deed dated 04.03.2016. However, from the sale deed the total sale value reported was Rs. 9,40,500/-. 4. The Ld. AO asked assessee to explain why the sale value was reported at Rs. 2,75,000/- instead of the market value of Rs. 31,40,000, and why the provisions of Section 50C of the Act were not applicable. The assessee had submitted its reply before Ld. A.O. However, submission made by assessee were not acceptable and Ld. AO considered the ratio proportionate sale value against 3
I.T.A. No. 892/Kol/2024 Hirak Sarkar the total market value of property at Rs. 31,40,000/-, resulting in a proportionate sale value of Rs. 9,18,129/-. The indexed cost of acquisition was 2,34,838, leading to a calculated LTCG of Rs. 6,83,291 (Rs. 9,18,129/- (-) Rs. 2,34,838/-). The difference of Rs. 6,43,129/- between the reported LTCG and the calculated LTCG was added to the assessees total income as unreported LTCG. 5. Moreover, Ld. A.O. also found that the property sold had three owners i.e. assessee Sri Hira Sarkar, Smt. Malya Mukherjee and Sri Basab Chatterjee. However, the shares of each owner were not specified in the deed, nor provided by assessee. The Ld. AO, therefore, considered an equal one-third share for each owner. Consequently, an additional sum of Rs. 20,93,333/- was also added to the income of the assessee, reflecting their share in the property value. 6. It was noticed during the assessment proceedings that assessee had purchased two immovable properties. Discrepancies were found between the registered deed values and the market values as per the registration authority: First Property Deed Value Rs. 9,81,450/- Market Value 43,61,031/- Purchaser Sri Hira Sarkar Difference 33,79,581
Second Property Deed Value Rs. 5,04,300/- Market Value 34,50,116/- Purchaser Sri Hira Sarkar and Smt. Madhushree Sarkar Difference Rs. 29,45,860/-
The Ld. A.O found the discrepancy between the deed value and market value and estimated that the properties were purchased below market value, which could trigger the provisions of Section56(2)(vii)(b)(ii) of the Act. 4
I.T.A. No. 892/Kol/2024 Hirak Sarkar Accordingly, Rs.43,61,031/- was added to the income of the assessee in the case of first property and in the case of 2nd property the assessee had failed to furnish any details of the transactions in the name of joint owner i.e. Smt. Madhushree Sarkar. Therefore 50% of the total value of Rs.34,51,160 i.e. Rs 17,25,580/- was also added in the hands of the assessee protectively as income from other source under section 56(2)(vii)(b)(ii) of the Act. 8. Aggrieved by the above order, the assessee went into appeal before Ld. CIT(A) where the appeal of the assessee was dismissed. 9. Dissatisfied with the above order, assessee is in appeal before this Tribunal raising multiple grounds of appeal. 10. At the time of hearing, the Ld. AR stated that while deciding the case of the assessee, the Ld. AO has failed to follow the procedure prescribed under the law and has proceeded to make additions without making reference to DVO as mandated by section 50(2) of the Act. Therefore, the alleged addition made by the AO cannot be justified. Similarly, while doing so, the Ld. AO also made the protective assessment in the hands of the assessee in respect of transfer of property which was in the name of assessee and Malaya Mukherjee & Basab Chatterjee. It has been argued that therefore, such addition made in the hands of the assessee is not correct. Therefore, it is felt that the instant issue needs to be re-examined by the AO. Similarly, in respect of purchase of two immovable properties, the Ld. AO never called for DVO’s report in order to examine the valuation of property. Therefore, it is necessary to remand back the whole issue to the file of AO with a direction to call DVO’s report on the issues involved in order to determine the correct value of the property by calculating the long term capital gains of the assessee. We have heard the rival submissions of the parties and after perusing the material available on record, we find that in the instant appeal, the Ld. AO did not call any for DVO’s report while framing the assessment order after determining the long term capital gains in the hands of the assessee. In fact, such calculation was made by the AO by simply taking stamp value and 5
I.T.A. No. 892/Kol/2024 Hirak Sarkar calculating the long term capital gains in the hands of the assessee. Therefore, in the interest of justice and fair play, it is necessary to remand back the whole issue to the file of AO with a direction to call a report from the DVO to arrive at a correct calculation of the long term capital gain as well as purchase of two property by the assessee during the assessment year in question. Also, the AO needs to ascertain whether the persons whose share of property has been protectively assessed in the hands of the assessee, are independently assessed to tax and hence the capital gain, if any, arising with respect to their share would need to be assessed in their hands and not in the hands of this assessee. In doing so, Ld. AO must issue necessary notice to the assessee enable him to represent its case properly. In terms of the above, appeal of the assessee is allowed for statistical purposes. 11. In the result, appeal of the assessee is allowed for statistical purposes. Kolkata, the 26th July, 2024.
Sd/- Sd/- [Sanjay Awasthi] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 26.07.2024. Alindra, PS
I.T.A. No. 892/Kol/2024 Hirak Sarkar Copy of the order forwarded to: 1 Hirak Sarkar 2. ACIT, Circle 23(1), Hooghly 3. CIT(A)- 4. CIT- 5. CIT(DR),
//True copy// By order Assistant Registrar, Kolkata Benches
