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Income Tax Appellate Tribunal, ‘D’BENCH,
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals),7, Kolkata dated 22-02-2016 for the assessment year 2010-11.
The only effective issue is to be decided in this appeal as to whether the CIT-A justified in confirming the addition made by the AO on account of determination of capital gain of Rs.5,17,400/- in the facts and circumstances of the case.
The brief facts of the case are that the assessee is an individual and derives her income from profession, capital gain and other sources. The assessee filed her return of income on online declaring total income of Rs.42,270/- for the A.Y under Smt. Angana Dutta 1 consideration on 26-04-2011. Under scrutiny notices u/s. 143(2) & 142(1) of the Act were issued. Against which the assessee filed requisite details as per requisitions of the AO.
During the scrutiny proceedings the AO found that the assessee sold a property under jurisdiction of Addl. District Sub Registrar, Asansol and such property was valued for the purpose of stamp duty at Rs.58,89,657/-. From the details and information of AIR, the AO was of the view that the assessee and one of the directors of M/s. Ceascon Engineering Services Pvt. Ltd executed a joint venture agreement dated 11-04-2002 with the land lords of the premises at Rupnarayanpur, Asansol for developing G+3 building. The ratio of share between the land lord and the said company was 27.5% and 72.5% as per said joint venture agreement. During the year under consideration the assessee sold the aforesaid incomplete property to Sri Hara Prasad Das and Sri Shyamal Mondal for a consideration of Rs.25,75,000/- and the Addl. District Sub- Registrar, Asansol valued the such property at Rs.58,89,657/- for the purpose of stamp duty. As per Section 50C(1) of the Act, a show cause notice was issued by the AO to assessee explaining that why profit on transfer of capital assets should not be treated as capital gain as per provisions of section 50C of the Act. The assessee could not file any explanation, but as per the AO the ld.AR of the assessee accepted the same as show caused by the AO. Accordingly, the AO determined the total capital gain at Rs.5,17,400/- by following the formula of cost of inflation and then deducting the sale consolidation @
ITA No. 913/Kol/16 Smt. Angana Dutta 2 72.5% of Rs.58,89,657/, thereby added the amount of Rs.5,17,400/-being capital gain.
Before the CIT-A the assessee contended that the AO had taken the valuation of such property at Rs.58,89,657/- as valued by the Stamp Valuation Authority. Before him the assessee also agitated that the AO did not follow consistent and systematic way in taking the value for the sale and purchase of the assessee. The AO did not adopt the uniform procedure in determining the long term capital gain and also did not follow the procedure as contemplated u/s. 50C of the Act by referring the matter to the DVO for the valuation of such property for the period i.e. at the time of acquisition and disposal the property by way of sale.. The AO determined the capital gain on his own accord, which is an arbitrary and without application of mind. The same is liable to be quashed.
The CIT-A was of the opinion that the assessee did not produce any evidence to show that the company who had transferred the property to assessee on valuation of Rs.15,02,600/- on the date of purchase i.e. 18-02-2005. The assessee has also never disputed the stamp duty value of the property. The assessee accepted the valuation of the property for the purpose of long term capital gains u/s. 50C of the Act and the AO has rightly assessed the capital gain as per Section 50C of the Act in adopting the stamp duty value and confirmed the valuation of long term capital gain at Rs.5,17,400/- by the AO. Relevant observation of the CIT-A in doing so is reproduced herein below:-
ITA No. 913/Kol/16 Smt. Angana Dutta 3
I have gone through the submissions made by the appellant and the assessment order. As per the deed of indenture dt. 18.02.2005 the company M/s Ceascon Engineering Services Pvt. Ltd. registered part of the flats of the aforesaid premises in the name of Sri Jaganath Datta, Smt. Angana Datta and Smt. Rina Chakraborty at a consideration of Rs. 4,27,200/- Rs. 1,00,000/- and Rs. 1,30,560/- respectively. During the FY 2009-10 the aforesaid incomplete property was sold to Sri Hara Prasad Das and Sri Shyamal Mondal at a consideration of Rs.11,00,000/-only. The Addl. District Sub-Registrar, Asansol valued the said property at Rs.58,89,657/- for the purpose of stamp duty. The appellant has not disputed the fact that the property was valued at Rs.58,89,657/- as per section 50C of the IT Act. The appellant's only contention was to adopt the stamp duty value for purchase and sale of property for the purpose of long term capital gain. As per the appellant's own admission the stamp duty value of the property at the time of purchase was Rs.50,83,850/- and at the time of sale was of Rs.58,89,657/-. From the above it is seen that the appellant has registered the property only with an intention to evade the income tax. Though the appellant's share of property was valued at Rs.15,02,600/- on the date of purchase i.e 18.02.2005 she got it registered only for Rs.1,00,000/- at nominal value in spite of the fact that she was a director of the Company, which had transferred the property to the appellant to a lesser value with an intention to evade the tax in the hands of the Company. The appellant has not produced any evidence to show that the Company has admitted the sale consideration at Rs.15,02,600/- towards the share of the appellant. Similarly, the appellant also did not furnish any evidence having admitted the dividend income as per section 2(22)( e) of IT. Act. The appellant has never disputed the stamp duty value of the property. In fact the appellant's A/R has accepted the valuation of property as per section 50C for the purpose of Long term capital gains. Therefore, the AO has rightly assessed the capital gain as per section 50C of IT act adopting the stamp duty value. The total consideration of the property was of Rs.11,00,000/- and stamp duty value was of Rs.58,89,657/- relating to t e three co-owners Smt. Angana Dutta, Smt. Rina chakraborty and Shri Jagannath Dutta. The appellant's share of 15.20% of capital gain worked out to Rs.5,17,400/- which was assessed by the AO. The addition made by the AO is confirmed.
Before us the ld.AR of the assessee has reiterated the same submissions as made before the CIT-A. Further, he submits that observation of the AO is, wrong in finding the provisions as contemplated u/s. 50C of the Act is not applicable to the present issue. In support of his submissions/contentions the ld.AR of the assessee has relied on the following decisions:- a) Sunil Kumar Agarwl Vs. CIT reported in 2015 327 ITR 83(Cal), wherein he argued that the AO has duty to refer the matter to the DVO for the purpose of determining the fair market value of the property b) Indore Malwa United Mills Ltd Vs. State of MP & Ors reported in 1966 60 ITR 41(SC) and argued that the direction may be given to AO to consider the case afresh in pursuance of provisions of section 50C of the Act
In reply, the ld.DR relied on the orders of the authorities below.
Smt. Angana Dutta 4
Heard rival submissions and perused the material available on record. We find that the AO adopted the method of taking the same value in respect of sale and purchase consideration of the property as adopted by the Stamp Valuation Authority. Therefore, there was no uniformity in the procedure as adopted by the AO in determining the long term capital gain. It is also observed from the impugned order of the CIT-A that the assessee made the submissions before him that the AO has not followed the procedure as contemplated u/s. 50C of the Act in referring the issue to the DVO. In our opinion that the CIT-A did not consider the same. We find that in the case of Sunil Kumar of the Hon’ble Calcutta high Court has held that AO has the bounden duty to act fairly and to give a fair treatment giving him an option to follow the procedure provided by law. Relevant fining at para 9 is reproduced herein below for better understanding:- 9. For the aforesaid reasons, we are of the opinion that the valuation by the Departmental Valuation Officer, contemplated under section sac, is required to avoid miscarriage of justice. The Legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub-Registrar for the purpose of stamp duty. The Legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the Legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the Assessing Officer, discharging a quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.
10. For the aforesaid reasons, the order under challenge is set aside.
In the case of Indore Malwa United Mills Ltd, supra the Hon’ble Supreme Court was pleased to observe that the Tribunal being fact fining authority, duty was there to consider the arguments as advanced and explanation given by the parties, and come to their own conclusion. The Hon’ble Court has remanded the issue to the Assessing officer to consider the Smt. Angana Dutta 5 same afresh entire material. Relevant finding of the Hon’ble Supreme Court is reproduced herein below:-
“In the absence of any such finding, it was not open to them to pick and choose some of the registers which were more favourable to the revenue. In choosing the Sale Contract Register, where only nominal weight was given, and ignoring the actuals register, they had accepted notional figures in preference to the actuals without holding that the actuals were not true figures. In accepting the figures in the Daily Yarn Production Register they had not considered the reasons given by the assessee why inflated figures were shown therein. They could accept the assessee's explanations or reject them or they could check the entries therein with reference to the other registers. But they had done none of these things. They had also not considered the explanation offered by the assessee why the weights in the Sale Contract Register would necessarily be less than the weights given in the Actual Cloth Production Register. Being tribunals of fact, it was their duty to consider all the accounts, having regard to the arguments advanced and the explanations given by the parties, and come to their own conclusion. But as they had not done so, we think that this is a fit case to give them another opportunity to do so. The High Court remanded the matter to the Assessing Officer and directed him to give opportunity to the appellant-company to produce materials with reference to the three points mentioned in its judgment. In the aforesaid circumstances, we think that the scope of the enquiry before the Assessing Officer should not be limited in the manner suggested by the High Court. The Assessing Officer is directed to consider afresh the entire material that has already been placed before him, and such other material, such as registers which have been maintained but are admittedly not produced, and other relevant evidence as may be brought before him, and come to a conclusion in regard to the question of unaccounted yarn in the light of the directions given by this court and those given by the High Court in other matters. The Assessing Officer shall not in any case increase the tax liability on this point over and above that he has initially assessed.”
In view of above observations of the Hon’ble Calcutta High Court and Hon’ble Supreme Court that the assessee made the submissions before the CIT-A to refer the matter to DVO, but no such steps have been taken either by the AO/CIT-A. The AO also did not follow the procedure as contemplated in section 50C of the Act. We also find that the Hon’ble High Court has remanded the issue to the AO with the direction that AO shall refer the matter to the DVO in accordance with law. Therefore, we find that the ratio of judgment of the Hon’ble Calcutta High Court is squarely applicable to the present case also. Respectfully following the above, we deem it fit and proper to remand the issue to the file of the AO to do so afresh in accordance with law by following the procedures as Smt. Angana Dutta 6 contemplated u/s. 50C of the Act. The assessee shall be at liberty to file requisite evidences, if any, to substantiate her claim.
In the result, the appeal of assessee is allowed for statistical purpose. ORDER PRONOUNCED IN OPEN COURT ON 08/02/2017 Sd/- Sd/- Waseem Ahmed S.S. Viswanethra Ravi Accountant Member Judicial Member Dated 08 -02-2017 *PP/SPS: Copy of the order forwarded to: 1. The Appellant/Assessee : Smt. Angana Dutta 74 Sarat Chatterjee Road, Kolkata-89. 2 The Respondent/Department- The Income Tax Officer Ward 11(4), Aaykar Bhawan, P-7 Chowringhee Square, Kolkata-700 069. 3 The CIT(A) The CIT 4. DR, Kolkata Bench 5.