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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: Shri Pramod Kumar]
SMC-ITA No. 2703/Ahd/2015 Hi-Tech Auto Vs. ACIT Assessment year: 2012-13 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD [ Before Shri Pramod Kumar, Accountant Member ] ITA No. 2703/Ahd/2015 Assessment Year : 2012-13
Hi-Tech Auto ......…………......Appellant Nr. Khari River Bridge Highway, Mehsana-384002 [PAN – AACFH 4949 M] Vs.
ACIT .......................Respondent Mehsana Circle Mehsana Appearances by: None for the appellant Santosh Karnani for the respondent Date of concluding the hearing : 22.11.2017 Date of pronouncing the order : 22.11.2017
D I C T A T E D O R D E R
By way of this appeal, the assessee appellant challenges correctness of order dated 07.08.2015 passed by the CIT(A), Gandhinagar, Ahmedabad in the matter of assessment under Section 143(3) the Income-tax Act, 1961, for the assessment year 2012-13.
In the first ground of appeal, the assessee has raised following grievance:-
“1. Learned CIT(A) had erred in law and facts in confirming addition of income by disallowing expenses of Rs.87,438/- by assuming 1/6th of vehicle, telephone and tea expense for personal nature” 3. So far as this grievance of the assessee is concerned, it is sufficient to take note of the fact that during the course of assessment proceedings the Assessing Officer has disallowed 1/6th of the vehicle, telephone and tea expenses on the ground that these expenses were not fully verifiable and that non business use of such expenses could not be ruled out. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without any success. Assessee is not satisfied and is in second appeal before me.
Having heard the learned Departmental Representative and having perused the material on record, I do not see any reason to interfere with the order of the ld.
SMC-ITA No. 2703/Ahd/2015 Hi-Tech Auto Vs. ACIT Assessment year: 2012-13 Page 2 of 4 CIT(A) so far as this disallowance is concerned. Once it is not in dispute that the supporting evidence for expenses is less than satisfactory and the assessee has not done adequate documentation to support business use of the expenses, a small portion of these expenses disallowed by the Assessing Officer appears to be in order. In any way, there was no document, material or justification for deletion of this disallowance. I, therefore, confirm the order of the authorities below on this point. Ground No.1 is thus dismissed.
In the second ground of appeal, the assessee has raised following grievance:- “2. Learned CIT(A) had erred in law and facts in confirming addition of income by way of disallowance of Rs.16,19,409/- on account of LTCG u/s 50C of IT Act by taking difference in value between sale agreement and jantri rates as well as difference in cost of acquisition of land.” 6. The relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noted that, while the assessee has shown sale consideration, for the purpose of capital gains, at Rs.16,49,500/-, the stamp duty valuation for the said property was Rs.31,63,265/-. Accordingly, he recomputed the capital gains on the basis of stamp duty valuation for the property in respect of which capital gains was being computed. Aggrieved, the assessee carried the matter in appeal before the CIT(A). One of the contentions of the assessee before the learned CIT(A) was that the Assessing Officer ought to have referred the matter to the DVO as required by the scheme of Section 50C(2) of the Act. Learned CIT(A), however, negated this contention and observed that “even the appellant has not submitted any Valuation Report of the property from his side from an independent Registered Valuer either before the AO or before me during the appellate proceedings”. It was noted that the learned Counsel for the assessee was requested vide order sheet entry dated 03.08.2015 to furnish Valuation Report of the property, but this request was not complied with. Learned CIT(A) then held that “the appellant has accepted the addition made by the AO” and that no reference to the DVO under Section 50C(2) is required. Aggrieved by the order of the ld. CIT(A), the assessee is now in appeal before me.
Having heard the learned Departmental Representative and having perused the material on record, I find that this issue is now squarely covered in favour of the assessee by various decisions of the division benches, including the case of Raj Kumari Agarwal Vs DCIT, reported in 150 ITD 597, wherein following the views of the Hon’ble Calcutta High Court’s judgment in the case of Sunil Kumar Agarwal vs. CIT (GA No 3686/2013 in ITAT No 221/ 2013; judgment dated 13th March 2014), the division bench has held that “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.” In the present case, the Assessing Officer has specifically requested for reference being made to the DVO, but this request has
SMC-ITA No. 2703/Ahd/2015 Hi-Tech Auto Vs. ACIT Assessment year: 2012-13 Page 3 of 4 been declined on the ground that the assessee has not produced any verification by independent valuer. The rejection of the assessee’s request is based on the considerations which are not at all relevant or germane to this context. Whether the assessee provides an independent valuation report or not, once the assessee specifically requests for a reference is being made to the DVO, as in this case, such a reference cannot be declined on the ground that there is no material to doubt the Stamp Duty Valuation Report. It is in this backdrop that I may reproduce, for ready reference, the observations made by the Tribunal in the case of Raj Kumari Agarwal (supra) as follows:- “6. We find that here is a case in which the assessee has specifically objected to the adoption of stamp duty valuation rate. The mere fact that the appellant has not challenged the stamp duty valuation cannot be put against the assessee. The authority for the this proposition is contained in, Hon’ble jurisdictional High Court’s judgment, in the case of CIT Vs Chandra Narain Chaudhuri ([2013] 38 taxmann.com 275 (Allahabad), wherein Their Lordships have observed that, “The question as to whether the assessee filed any objections before the Stamp Valuation Authority to dispute the valuation, or filed appeal or revision or made reference before any authority, court or the High Court under sub section (2) (b) of Section 50 C of the Act is not of any relevance in this case, as the AO himself observed that the assessee did not dispute the stamp valuation before the Stamp Valuation Authority. There may be several reasons for the purchaser not to file such objection. A purchaser may not go into litigation, and pay stamp duty, as fixed by the Stamp Valuation Authority, which may be over and above the fair market value of the property, as on the date of transfer, though the amount so determined has not been actually received by owner of the property”. The position as to whether reference should be made to the DVO, even when there is no specific plea to that effect by the assessee, is now well set out in Hon’ble Calcutta High Court’s judgment in the case of Sunil Kumar Agarwal CIT ( GA No 3686/2013 in ITAT No 221/ 2013; judgment dated 13th March 2014), wherein Their Lordships have, inter alia, observed as follows:-
“….we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, 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.”
SMC-ITA No. 2703/Ahd/2015 Hi-Tech Auto Vs. ACIT Assessment year: 2012-13 Page 4 of 4 7. As there is no binding judicial precedent contrary to what has been held by Hon’ble Calcutta High Court, as above, the esteemed views of Their Lordships, even though from a non jurisdictional High Court, bind us as well.
In the light of the above legal position, the plea of the assessee, as set out in the ground of appeal, is indeed well taken. The prevailing legal position is now like this. Once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities, it is incumbent upon the Assessing Officer to refer the valuation of said land or building to the departmental valuation officer. In the present case, the Assessing Officer has not done so. In view of this factual position, and in the light of the discussions above, we deem it fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo after making a reference to the DVO, and completing the assessment on the basis of the valuation so received from the DVO. While so deciding the matter afresh, the Assessing Officer will decide the matter in accordance with the law, by way of a speaking order and after giving a reasonable opportunity of hearing to the assessee. We direct so.”
In view of the above discussion and bearing in mind the entirety of the case, I uphold the grievance of the assessee to the extent that a reference is required to be made to the DVO on the scheme of Section 50C(2) of the Act and, for that limited purpose, I remit the matter back to the file of Assessing Officer for further action in accordance with law. Ground No.2 is thus allowed for statistical purposes.
In the result, the appeal is partly allowed for statistical purposes. Dictated and pronounced in the open court today on the 22nd November, 2017.
Sd/-
Pramod Kumar (Accountant Member) Ahmedabad, the 22nd day of November, 2017 **bt Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad