SMT. VIMLA SHARMA,JAIPUR vs. ITO, WARD 1(1), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR MkWa- ,l-lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ fu/kZkj.k o"kZ@Assessment Years : 2009-10 cuke Smt. Vimla Sharma ITO, Vs. 83A, Sanjay Nagar, Joshi Marg, Ward-1(1), Jaipur. Kalwar Road, Jhotwara, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BAJPS 4630 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mukesh Khandelwal (C.A.) jktLo dh vksj ls@ Revenue by : Ms Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing 01/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 13/03/2023 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [ herein after referred as ld. “NFAC/CIT(A)”] for the assessment year 2009-10 dated 11.01.2023, which in turn arises from the order passed by the Income Tax Officer, Ward-3(1), Jaipur under Section Smt. Vimla Sharma vs. ITO 143(3)/147 of the Income Tax Act, 1961 (in short 'the Act') dated 23.12.2016.

2. The assessee has marched the present appeal on the following ground of appeals: “1. That under the facts and circumstances of the case the ld. CIT(A) has erred seriously in sustaining the action of the ld. AO in discarding the valuation report of an approved valuer on mere technical grounds and working out capital gain as per his own whims.

2. That under the facts and circumstances of the case, the ld. CIT(A) has erred seriously in dismissing the appeal of the appellant by mentioning that no reply was filed by the appellant on various notices issued whereas the appellant had already submitted her submissions on 28.09.2021.”

3. The fact as culled out from the records is that the case of the assessee was reopened based on the information received from sub registrar about sale of a property by the assessee which was not declared in the original return. In pursuance to notice u/s 148 the appellant filed a return declaring the gain earned on sale of property. The appellant had declared the gain and claimed the cost of acquisition based on valuation report obtained from a valuer who is approved by the revenue department. The ld. AO had some Smt. Vimla Sharma vs. ITO doubts about the content of the valuation report and hence he summoned the valuer in the assessment proceeding in the case of the assessee. The statement of the valuer was recorded and he has given the explanation of the questions raised before him. The AO has alleged that there are some discrepancies in the valuation report and therefore, discarded the same and assessed the capital gain as per his own working which resulted into a addition of Rs. 5,26,096/- under the head short term capital gain.

4 Aggrieved, from the said order of assessment the assessee has filed the appeal before the ld. CIT(A) who after hearing the contention of the assessee dismissed the appeal of the assessee by giving his following findings on the issue:- “5.1 The assessee did not file any response to 148 notice and showed capital gain of Rs. 5,26,096/-. The case of the AO is that the Cost of the property has been shown more than actual cost. The AO disallowed the value of furniture & fixture for not filing Bills and Vouchers expenses in this regard. The AO also disallowed 20% of premium of Rs. 3,01,487/- which was taken on total construction by the Valuation Officer. The AO found that the valuation report mentioned the value of property as on 15.03.2008 while the constructed property was sold on 02.12.2008 to Sh. Paramjeet Daweta. 5.2 In the instant case the property was purchase on 26.02.2008 Registered on 30.03.2008 Construction completed and sold on 02.12.2008 Smt. Vimla Sharma vs. ITO Valuation report prepared by the Valuation Officer on 15.03.2008 (copy pasted below)

5.3 I have gone through all the doduments, submitted before me and found that property was purchased by assessee vide JDA patta which was handed over to Smt. Vimla Sharma on 26.02.2008 Property registered in the name of assessee on 30.03.2008. The property was sold to Sh. Paramjeet Daweta on 02.12.2008. Valuation of constructed property was done on 15.03.2008 by the Valuation Officer. It is unbelievable and impossible to understand that both ground floor and first floor of the house was completed within a span of 17 days that also before the registration of the property to the name of the valuation done on 15.03.2008 does not stand the test of reliability.

Smt. Vimla Sharma vs. ITO The property was valued even before the registration in the name of the assessee. It is apparently cleared that when the property was valued it was not constructed/or the construction was not complete. 5.4 There is no evidence filed by the assessee during the appellate proceedings that the construction of the property was started before the registration of the property in the name of the assessee. In such circumstances the valuation report filed by the assessee has no evidenciary value being prepared prematurely before the construction was complete/started. The AO has correctly rejected the valuation done by Valuation Officer and estimated the cost on the basis of his best judgment. In such circumstances of the case, I find no reason to interfere with the order of the AO.

6. To support the various grounds so raised by the assessee the ld. AR of the assessee relied upon the written submission filed by him and the same is reiterated here in below:- “The appellant had purchased a piece of land admeasuring 187.31 sq. yards situated at Ashok Nagar, Niwaru Road, Jhotwara, Jaipur through registered sale deed dated 11.10.2007 (APB 13-21). Immediately thereafter the appellant started construction thereon and such construction was completed by 15th March, 2008. A total construction of 1430.53 sq. ft was got done by the appellant. The said land and constructed house thereon was sold through a registered sale deed dated 02.12.2008 for an apparent sale consideration of Rs. 22,15,000 (APB 22-33). Admittedly the appellant did not file a ROI for the AY 2009-10 and hence whatever capital gain had been earned by her remained undisclosed. The AO on receiving information about such sale of property and non filing of ITR issued notice u/s 148 of the Income Tax Act, 1961 on 17.03.2016. An ROI was filed in response thereto on 05.12.2016 wherein capital gain on above transaction was duly disclosed. In the ROI the appellant had disclosed STCG on above transaction as under :-

Smt. Vimla Sharma vs. ITO Sale Consideration 22,15,000 Less : Cost of Land 2,00,000 Cost of construction 18,09,000 Registry Charges 15,200 JDA Patta Charges 14,678 ------------ 20,38,878 -------------- STCG 1,76,122 -------------- Notices were issued u/s 143(2) and 142(1) during the assessment proceedings which were duly complied with. The appellant had supported the cost of construction of the house with report of a registered valuer (APB 5-12). The ld. AO had doubts about the same and hence the Valuer was summoned who appeared before him and replied to the queries of the ld. AO and his statements were also recorded. Not convinced with the replies the ld. AO considered cost of construction at Rs. 12,83,904 in place of Rs. 18,09,000 and he also disallowed a sum of Rs. 1,000 out of claim of the appellant towards cost of Registration paid by him for Rs. 15,200 on purchase of land and hence disallowance of Rs. 5,26,096 was made by him resulting into assessment of STCG at Rs. 7,02,218 as against Rs. 1,76,122 declared by the appellant. An appeal against the assessment order so framed by ld. AO was preferred before the ld. CIT (A)- 1, Jaipur which was later on transmitted to CIT (A), NFAC. First Appeal The ld. CIT (A) dismissed the appeal of the appellant by relying completely on the observations of the ld. AO and without considering the submissions given by the appellant. Hence this appeal Ground wise submissions are as under Ground No. 1 : That under the facts and circumstances of the case the ld. CIT (A) has erred seriously in sustaining the action of the ld. AO in discarding the valuation report of an approved valuer on mere technical grounds and working out capital gain as per his own whims.. The ld. CIT (A) has sustained the action of the ld. AO whereby he discarded the valuation report of a registered valuer. The ld. AO had summoned the valuer and recorded his statements and while rejecting the report he has alleged as under :-

Smt. Vimla Sharma vs. ITO 1. The valuer has valued furniture and fixture at Rs. 4,00,000 whereas there is no mention about any furniture and fixture in the sale deed executed by the assessee and hence the valuation of furniture and fixture is wrong.

1.

2. The valuer had clearly stated in response to question no. 5 (as appearing on page 3 of the AO order) that he had valued the wardrobes, show cases in drawing room, kitchen and other wooden items affixed in the structure. He has further stated in response to question no. 6 that fixed furniture is part of immoveable property and hence the same had been valued separately. The ld. AO seems to had considered furniture and fixture as comprising of dining table, sofas, tables etc. which is not the position in present case. In this regard it is also further submitted that the registered valuer while applying BSR rates adopted only value for building structure in finished shape without having any fixed furniture items such as wardrobes, show cases etc.. It is also further submitted that this is not a case wherein the value of furniture has been considered twice. Therefore this objection of the ld. AO is also without any basis and deserves to be rejected.

3. The valuer had adopted the structure rates as per standing orders of state PWD for the year 2006 and applied escalation @ 10% per year to reach on the cost for the year 2008. The valuer had clearly stated in response to Smt. Vimla Sharma vs. ITO question no. 8 that he had taken the rates as per standing order no. x-3/2006. Therefore adoption of such escalation percentage is fully justified. The ld. AO applying his little knowledge rejected such escalation without any basis and hence his observation on this issue is also liable to be rejected.

Smt. Vimla Sharma vs. ITO Ground No. 2 : That the ld. AO as well as ld. CIT (A) erred seriously in analysing the available information as per their whims without considering the replies of the appellant. The ld. AO as well as ld. CIT (A) erred very seriously in deeming the date of purchase of land by the appellant on 26.02.2008 (Page 5 of CIT A order). The correct fact is that the appellant had purchased the land through registered sale deed dated 11.10.2007 (APB 13-21). The above stated date 26.02.20087 was the date on which Jaipur Development Authority had issued Patta. Only because of this reason the ld. CIT (A) states in his order at page 6 in first para (7th line) that it is hard to believe that construction of ground floor as well as first floor was completed within a span of only 17 days i.e. gap between 15.02.2008 and 26.02.2008 whereas correct availability of days was 156 days i.e. gap between 11.10.2007 and 15.03.2008. Therefore this contention is wrong. The registered purchase deed was submitted to ld. AO and it was clearly mentioned in the submissions given to him (appearing at page 6 of the assessment order also). The ld. CIT (A) seems to had copies the version of the ld. AO without verifying the documents and submissions given to him. Regarding availability of bills of furniture fixture are concerned the appellant could not produce the bills due to time gap as the assessee got construction work during 2007-08 whereas the assessment proceedings took place during 2016-17 and the assessee had already sold the property during 2008-09 and might had delivered the same to the buyer. Alternatively itis also submitted that the valuer had only considered the cost of wooden work of those items which were affixed in the walls and were not moveable in nature and the work of the same might had been done by a carpenter brought by the contractor of the assessee. Therefore the action of both the authorities in basing their decision on above reason is wrong and unjustified. Regarding disallowance of Rs. 1,000 out of registration charges of registered sale deed for purchase of land dated 11.10.2007 the total amount claimed for Rs. 15,200 stands duly verified with stamp paper of Rs. 1000 used for sale deed (APB 15) and endorsement on back side of APB 16 (Rs. 14,200) whereas the ld. AO as well as ld. CIT (A) only allowed deduction on the basis of endorsement at back page of APB 16 without noting that this was the amount worked out by registering authority as balance payable. Therefore such disallowance is also without any basis and deserves to be deleted. Your honour is sincerely requested to allow the appeal and oblige.”

6.1. In addition to the above written submission, the ld. AR of the assessee submitted that the assessee has purchased Smt. Vimla Sharma vs. ITO the land in 2007 constructed the house and after constructing the same has been sold within 18 months of the construction. The assessee has offered the short-term capital gain and has also filed report of approved valuer in support of the claim of cost of acquisition. As the assessee being individual has not kept the relevant bills and vouchers to support the cost of constructions incurred she has submitted a report of valuer to support the cost of construction. As the assessment was reopened at the fag end of 6th year and assessee has no supporting proof or records to support the cost of acquisition she has relied upon the report of the valuer in connection with the construction of the house so sold by her. The ld. Assessing Officer, during the course of assessment proceedings summoned the valuer called for explanation required the ld. Assessing Officer has not observed anything adverse from the statement of valuer and the Assessing Officer is not technically competent enough to comment upon the method of valuation adopted by the expert. Now based on the valuation report filed by the Assessing Officer, he is of the Smt. Vimla Sharma vs. ITO view that the valuation report given by the valuer is not in accordance with law and has summoned the valuer and his statement was recorded. The learned Assessing Officer being not technically qualified and if he is not satisfied with the report of the valuation he must have referred the matter to Department Valuation Cell but he is not permitted to make any adjustment in the valuation report. If in any case if the ld. Assessing Officer is of the strong view about the correctness of the same then he could have referred the matter to departmental valuation officer but he having not qualified cannot make adjustment on the valuation report submitted by the technical export approved by the revenue. The ld. AR of the assessee further submitted that the valuer has already specified in the statement recorded before the ld. Assessing Officer that the valuation of furniture consist the fixed furniture which is part of the immovable property which has not been disproved placing anything contrary. The valuer being third party expert the statement cannot be disproved by the ld. Assessing Officer without not bringing anything contrary on record. The ld. Assessing Officer Smt. Vimla Sharma vs. ITO further adjusted the premium workout @ 20% which is also not the domain of the ld. Assessing Officer these issue as categorically covered in question No. 8 wherein the valuer has specifically justified the technical rate and has referred the order No. x-3/2006 which has not been controverted by the ld. Assessing Officer. Therefore, the adjustment made by the ld. Assessing Officer is outside the scope of his domain and the addition made is required to be deleted.

Smt. Vimla Sharma vs. ITO 8. In the rejoinder, the ld. AR of the assessee submitted that the assessee has filed her return after 6 years of passage of time wherein the assessee being not technically competent enough being a lady to keep all the records to prove the cost of construction of his small house that she builds on the plot. Due to these personal reasons and the same was sold immediately. The notice u/s 148 of the Act was issued on 17.03.2016. The assessee has to support the cost of construction and as she has not kept all the documents related to cost of construction she has deem it fit to claim the cost of construction based on technical report of valuer who has issued a report who is registered with the office of the Chief Commissioner of Income Tax, Jaipur. He being technical expert estimated the cost of construction for the house that she sold. As regard the allegation as reiterated that the findings of the ld, CIT(A) as relied upon the ld. DR, ld. AR submitted that it is not disputed that the impugned land is purchased by the assessee in 2007 as it is evidently clear in the computation appearing at page No. 10 of the assessment order. Only the Patta was issued by the Smt. Vimla Sharma vs. ITO Jaipur Development Authority (JDA) in 2008 whereas the purchase of land is completed on 11.10.2007, therefore, the issue of patta is merely formalities the assessee is having due possession of land and therefore, the contention raised by the ld. CIT(A) that the property was purchased by the assessee on 26.02.2008 and the property was sold on 02.12.2008 is incorrect. The ld. CIT(A) based on this finding ignored the fact that the property was acquired in 2007 but only patta was issued in February, 2008 the assessee has also started construction and sold the house as it is evident from the sale deed placed on record. Therefore, merely of formalities done latter on the construction work done cannot be doubted. The ld. CIT(A) not doubted any of the part of valuation report and the confirmed the findings without mentioning any defect and therefore the contention of ld. CIT(A) is also against the provisions of law.

Smt. Vimla Sharma vs. ITO 10. In terms of these observation both the ground raised by the assessee are allowed.