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Income Tax Appellate Tribunal, ‘ D’ BENCH : CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G.PAVAN KUMAR
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-V, Chennai dated 07.05.2014 pertaining to assessment year 2005-06.
ITA No.1993/Mds./2014 :- 2 -:
The first ground in this appeal is with regard to reopening of assessment for the purpose of application of provisions of the section 50C of the Act i.e. adopting guideline value for registration of the property.
The brief facts of the case are that the assessee is a firm, filed its return of income on 31.01.2005 for assessment year 2005-06. The return of income was processed u/s.143(1) of the Act. Subsequently, it was seen from the AIR that the assessee sold an immovable property for a sale consideration of `40,86,800/-. Since no documentary proof was available on the records to verify the applicability of sec.50C of the Act, this case was reopened and a notice u/s.148 was issued. The assessment has been framed by the AO on 08.03.2013 u/s.143(3) r.w.s.147 of the Act. In the assessment order, the AO had assessed the capital gain arising on the sale of the immovable property of `29,48,099/-. While framing the assessment order, the AO had adopted he sale consideration in respect of the sale of the property at `40,86,800/- adopting the stamp duty valuation by invoking the provisions of the section 50C whereas the actual sale consideration by the assessee was only `29,50,000/-.
ITA No.1993/Mds./2014 :- 3 -:
3.1 On perusal of sale deed, the AO found that the assessee had sold an immovable property at 173, SIDCO, Industrial Estate, Ambattur, Chennai for a sale consideration of `40,86,800/- i.e. (For land `38,36,800/- and for the work shed `2,50,000/-). However, the assessee had considered the net consideration of `31,00,000/- i.e. (land 8800 sq.ft for a sale consideration of 28,50,000/-, sale consideration of 1,00,000 for the work shed measuring 2500 sq.ft. and sale consideration of 1,50,000/- towards Electricity Deposit with TNEB) for capital gain purpose and accordingly, the long term capital gains was computed at 18,11,299/- and the assessee paid the tax thereof.
When the assessee was asked about the applicability of sec.50C for capital gains purpose, the assessee made a request to the AO to refer the matter to the Valuation Officer for determining the market value of the property. As requested by the assessee, the matter has been referred to the valuation officer in the course of assessment proceedings. Since the completion of original assessment was getting time barred, the AO completed the assessment u/s.143(3) rws 147 of the Act on 08.03.2013 by adopting the value of the property as per stamp duty authority valuation. The ld.A.R emphaised that the AO cannot pass the order adopting stamp duty value and he has to wait till the Valuation officer’s report before finalizing the assessment order an ld.A.R placed reliance in the case of N.Meenakshi Vs. CIT reported
ITA No.1993/Mds./2014 :- 4 -: in 326 ITR 229 wherein held that an order passed by invoking the provisions of the section 50C of the Act without referring to the valuation cell for obtaining valuation report, is not valid order. Against this, the assessee carried the appeal before the Ld.CIT(A).
3.2 During the course of appellate proceedings, the Valuation officer has given a report dated 29.11.2013 that the valuation of the property as on 15.12.2004 was at `40,66,000/- (valued the land at `34,53,000/- and building at `6,13,000/-). The Ld.CIT(A) observed that in the case of assessee, the AO has to adopt the value given by the Valuation Officer at `40,66,000/- as on 15.12.2004, accordingly AO is directed to adopt the Valuation Officer value. The Ld.CIT(A) observed that regarding reopening of assessment, the AO has reopened the assessment as per AIR information to verify the applicability of sec.50C of the Act, since no documentary proof was available on record. Hence, Ld.CIT(A) observed that reopening of assessment u/s.148 is valid. Against this, the assessee is in appeal before us.
The ld.A.R submitted that that the reopening of assessment in this case is bad in law, as it is only based for the purpose of considering the application of sec.50C of the Act i.e. adoption of guideline value for registration.
ITA No.1993/Mds./2014 :- 5 -:
We have heard both the parties and perused the material on record. In this case, originally there is no assessment u/s.143(3) of the Act. The return was processed u/s.143(1) of the Act on 16.03.2007.
The assessment was reopened u/s.147 of the Act by issuing notice u/s.148 of the Act on 31.03.2012 i.e. after four years from the end of the relevant assessment year, however, within 6 years from the end of relevant assessment year. Since there was no original assessment u/s.143(3) of the Act, reopened after 4 years from the end of the relevant assessment year and within 6 years from the end of the relevant assessment year for the purpose of applying sec.50C cannot be invalid. The valuation of the Stamp Valuation Authority constitutes sufficient material evidence available on record leading to the reasonable interference that value of asset is more than shown by the assessee in its return of income. On account of direct dependence on sec.50C of the Act on stamp valuation, it cannot be argued that the valuation made by the Sub Registrar is merely and only restricted purpose of stamp duty. Accordingly, we dismiss the grounds relating to the reopening of assessment.
The next ground by the assessee is with regard to adoption of valuation report submitted by the DVO. According to ld.A.R, the valuation report submitted by the DVO suffers from inherent defects
ITA No.1993/Mds./2014 :- 6 -: and methodology followed by the DVO is not appropriate and he prayed for an opportunity to comment on DVO report, which was not given to him by lower authorities. The AO, though he referred the matter to ascertain the valuation to DVO, it was not received in time and he adopted the guideline value u/s.50C of the Act and finally, the assessment proceedings as per provisions of Sec.50C of the Act was framed. The CIT(A) observed that since value of the DVO coincided with the value as per Sec.50C of the Act guideline value, CIT(A) rejected the claim of assessee regarding to furnish the comments on DVO report.
We have heard both the parties and perused the material on record. In our opinion, provisions of the section 50C(2) if for the benefit of the assessee, whenever the assessee is having grievance regarding guideline value for the purpose of Sec.50C(1) of the Act, he can request the AO to refer the matter to DVO for valuation u/s.50C(2) of the Act. Once the AO received the report from the DVO, he shall put it to assessee for his comments. This methodology is not followed by the AO. Hence, we remit the issue to the file of AO to give a copy of DVO report to assessee and call for assessee’s comment. Thereafter, AO decides the issue in accordance with law. With this observation, we remit the issue to the file of AO for fresh consideration.
ITA No.1993/Mds./2014 :- 7 -:
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced on 06th July, 2016, at Chennai.