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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI ASHWANI TANEJA (ACOUNTANT MEMBER)
Per ASHWANI TANEJA, AM:
This appeal has been filed by the assessee against the order of Commissioner of Income-tax (Appeals) [hereinafter called CIT(A)] dt 18-11-2010 for A.Y. 2008-09 on the following grounds: “1. Under the facts & in the circumstances of the case & in law, the Id. Commissioner of Income tax (Appeals) was not justified in confirming the increase in Sale consideration by Rs 70.27 lacs done by AO by applying provisions of Sec. 50C of Income tax Act for calculating Long Term Capital Gains on sale of Plot of Land.
2. Under the facts & in the circumstances of the case & in law, the Id CIT(A) and AO were not justified in rejecting the valuation report of Government Registered valuer valuing the entire property at Rs. 1.84 crore instead of Rs. 3.07 crore.
3. Under the facts & in the circumstances of the case & in law, the Id CIT(A) and AO were not justified in not considering that the appellant had sold an unfinished dilapidated structure whereas the stamp officer had wrongly valued it higher as a complete finished building. 4. Under the facts & in the circumstances of the case & in law, the Id CIT(A) and AO were not justified in not considering the breakup of the value of land & building given by the stamp officer with the original agreement itself.
5. Under the facts & in the circumstances of the case & in law, the Id CIT(A) and AO were not justified in stating that appellant never objected to the value adopted by the A.O. u/s 50 C(2) during assessment proceeding when the appellant had already objected to it and said fact also mentioned by A.O. himself on page 2, para 3 of his order.
6. Under the facts & in the circumstances of the case & in law, the Id CIT(A) and AO were not justified in not granting deduction u/s 54F of the I. Tax Act from Long Term Capital gains for the investment in residential house.”
2. Grounds 1 – 5 : These grounds deal with grievance of the assessee in estimating the sale consideration of the plot of land sold by the assessee at Rs.70.27 by applying provisions of section 50C of the Act, that too, without considering the objection of the assessee and request of the assessee for referring the matter to the valuation officer.
2.1. It was submitted during the course of hearing that in this case, assessee had objected to the valuation adopted by the stamp valuation authority and, therefore, AO was duty bound to refer the matter to the valuation officer. 2.2. Ld. DR relied upon the orders of the authorities below and did not rebut the factual submission made by the assessee. 2.3. With the assistance of the parties, it is noted from the perusal of the assessment order that assessee had clearly mentioned in its reply dt 8-11-2010 that assessee did not accept the market value adopted by the stamp valuation officer for stamp duty purpose. The assessee also made a request that if the sale consideration was to be adopted at market value in line with the stamp duty valuation, then, for the purpose of cost of acquisition also, the market value adopted by the stamp valuation department should be considered as cost of acquisition of the assessee and accordingly, the same should be indexed, to be considered for computing capital gains. Further, the assessee also submitted copy of letter of stamp duty department mentioning about cost of acquisition of the assessee, stamp duty paid by the assessee at that time and also market value as per stamp valuation authority. Thus, on the basis of all these submissions, it can be clearly said that assessee had objected to the value adopted by the stamp valuation authority. Ld. CIT(A) has wrongly stated that the assessee did not object to the value adopted by the stamp valuation authority. Thus, order of Ld. CIT(A) is based upon incorrect facts and findings. Further, the deeming provisions of section 50C can prove to be quite harsh at times. Thus, in the interest of justice and fairness, it is expected from the revenue authorities to offer full opportunity to the assessee to rebut all the allegations to avoid any unjust or harsh assessment. Under these circumstances, the principles of natural justice demand that in case the assessee does not accept valuation of the stamp valuation authority, then, the matter should be referred to the DVO and thereafter valuation report should be confronted to the assessee to seek reply of the assessee. The assessee would be free to submit evidences in support of his reply, and shall be free to raise all the legal and factual issues. Thus, we restore these grounds back to the file of the AO to comply with our direction as stated above. The AO shall decide this issue afresh after taking into account all details and evidences on objective basis as may be brought by the assessee before the AO for which adequate opportunity shall be given. Thus, with these directions, these grounds are sent back to the file of the AO and may be treated as allowed for statistical purposes.
Ground 6: In this ground, the assessee has contested the action of the Lower authorities in not granting benefit of deduction u/s 54F against the long term capital gains on account of the investment made in residential house. 3.1. The brief facts are that the assessee did not make claim of deduction u/s 54F in the original return of income. Subsequently, before the Ld. CIT(A), assessee made the claim and also filed additional evidences to prove the acquisition of new residential property. These were sent by the Ld. CIT(A) to the AO for examination and furnishing remand report. The AO examined the evidences and did not find anything wrong. Ld. CIT(A) denied the claim on the ground that no claim was made in the original return of income, and therefore, the same cannot be granted to the assessee in view of judgement of Hon’ble Supreme Court in the case of Goetze India Ltd 284 ITR 323 (SC). 3.2. During the course of hearing before us, ld. Counsel submitted that it is a worth noting that these evidences have already been examined by the AO, and therefore, the benefit of claim should not be denied merely because the claim was omitted to be made in the return of income. It was further submitted that in any case, the appellate authorities have ample powers under the law to direct the AO to grant this claim. Reliance has been placed in this regard on the judgement of the Hon’ble Bombay High Court in the case of CIT vs Prithvi Brokers & Shares Pvt Ltd (order dt 21-6-2012 of 2010). Per contra, the Ld. DR relied upon the orders of lower authorities. 3.3. We have considered the submissions of the assessee and also gone through the judgement of Hon’ble Bombay High Court in the case of CIT vs Prithvi Brokers & Shares Pvt Ltd (supra) wherein it has been held that there was no prohibition on the powers of the Tribunal to entertain an additional claim and that Hon’ble Supreme Court in the case of Goetze India Ltd (supra) made it clear that the said judgement of the Hon’ble Supreme Court does not impinge upon the powers of the Tribunal u/s 254. It is further noticed by us that in the assessment order, the AO enhanced the income of the assessee by increasing the sale consideration on deemed basis by applying the provisions of section 50C. Under such a scenario specifically, the assessee should also have all the rights to make a legal claim under the law. It is well settled position of law that tax should not be collected except with the authority of law. The revenue authorities are obliged under the law to make a fair assessment of taxable income and tax payable thereon, as per the provisions of the Act. They are not expected to take undue advantage of ignorance of the assessee. In our opinion the doors of justice should not have been shut in this manner. Therefore, we send this issue back to the file of the AO, who shall give adequate opportunity of hearing to the assessee to furnish all requisite evidence in support of its claim u/s 54F. With these directions, this ground is also sent back to the file of the AO.
In the result, appeal is treated as allowed for statistical purposes.
Order pronounced in the court on this _27th _ day of July, 2016.