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Income Tax Appellate Tribunal, CIRCUIT BENCH, VARANASI
Before: SHRI VIJAY PAL RAO & SHRI RAMIT KOCHAR
IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA.No.05/VNS/2020 Assessment Year 2014-2015 Sri Indra Narayan Tripathi, The ACIT, Range-2, 17, Rajendra Nagar, v. Aayakar Bhawan, Civil Gorakhpur – 273 105 Lines, Gorakhpur. U.P. PAN ABLPT3382Q PIN 273 001. (Appellant) (Respondent) Shri Subhash Chand & For Assessee : Shri Ashutosh Bhardwaj, Advocates For Revenue : Shri A.K. Singh, Sr. D.R. Date of Hearing : 04.07.2022 Date of Pronouncement : 04.07.2022 ORDER PER RAMIT KOCHAR, Accountant Member This appeal filed by assessee in ITA.No.05/VNS/ 2020 for assessment year 2014-15 has arisen from appellate order dated 13.09.2019 passed by learned Commissioner of Income-tax(Appeals) (hereinafter called “the CIT(A)”) in Appeal No.b-70/CIT(A)/ GKP/2016-17, which in turn has arisen from the assessment order dated
2 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 15.12.2016 passed by learned Assessing Officer (hereinafter called “ the AO”) under section 143(3)(ii) of the Income-tax Act, 1961(hereinafter called “the Act”).
The grounds of appeal raised by assessee in Memorandum of Appeal filed with Income Tax Appellate Tribunal, Varanasi Circuit Bench, Varanasi, in ITA No. 05/VNS/2020 for ay:2014-15, reads as under :
“ Because the Ld. Assessing Officer has erred and acted illegally in adopting the circle value without invoking the provision of Section 52C(2)(sic.50C(2)) of the I.T. Act, 1961. The Learned CIT(A) has erred and acted illegally in confirming the same. 2. Because the assessment order is bad both on facts and law and not maintainable.”
2.1. The assessee has also raised additional grounds of appeal, which reads as under :
“1. Because it is fully explained that the Land in question has no approach road rather motorable
3 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 road and any vehicle like tractor cannot be taken on the land moreover the land remains always full of water in rainy season and only one crop is taken from this land. The Learned Assessing Officer has erred and acted illegally in not taking into account these kinds of problems.”
This appeal filed by assessee is late by 34 days. The assessee has stated to have received the appellate order passed by ld. CIT(A) on 07.10.2019 and the appeal was to be filed by 06.12.2019, but, the assessee has filed this appeal on 10.01.2020. Thus, the appeal is late by 34 days, beyond the time prescribed u/s 253(3) of the 1961 Act. The assessee has filed an application for condonation of delay, with prayers to condone the delay in filing this appeal beyond the time prescribed u/s 253(3) of the 1961 Act. The ld. Counsel submitted that the assessee suddenly fell down from roof of his house and he suffered from severe pain and was admitted to hospital, which was the main reason for delay in filing of the appeal. The assessee has enclosed a
4 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 Certificate from Dr. Piyush Kr. Singh dated 15.12.2019 to support that assessee fell down from the roof and was not in a position to file the appeal in time. The condonation application along with Doctor Certificate is placed on record in file.
The Learned Sr. D.R. on the other hand, opposed the application of the assessee for condonation of delay. 5. After hearing both the sides, we are of the considered view that assessee has shown sufficient cause for delay in filing an appeal before the Tribunal , and in view of this we in exercise of powers u/s 253(5) of the 1961 Act condone the delay of 34 days in filing this appeal late beyond the time prescribed u/s 253(3) of the 1961 Act , and we proceed to decide the appeal on merits in accordance with law. It is well settled that if technicalities are pitted against justice, Courts will lean towards advancement of justice, unless malafide is at writ large.
The brief facts of the case are that the assessee is an individual and had filed return of income on 21.10.2014,
5 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 declaring total income at Rs.12,55,150/-. The assessee is engaged in wholesale trading of Galla items i.e., Paddy, Rice and Wheat etc., as a proprietorship concern in the name and style of M/s. Shree Maa Durga Galla Bhandar. The case of the assessee was selected by Revenue for framing limited scrutiny u/s 143(3) of the 1961 Act, to examine the issue of sale consideration of the property in the tax return which was less than the sale consideration of property reported in AIR. The AO issued statutory notices u/s 143(2) and 142(1) of the 1961 Act. The only issue in this appeal is with respect to purchase of the property by the assessee wherein the assessee has purchased an immovable property for a consideration of Rs.10 lakhs which was registered on 13.12.2013, as against the stamp duty value of the property which was Rs.63,79,000/-. The A.O. has invoked the provisions of Section 56(2)(vii)(b) of the 1961 Act , and has made an addition of Rs.53,79,000/- to the returned income of the assessee, as the stamp duty value was much higher than the actual sale consideration shown by the assessee for purchase of immovable property, and the assessee on
6 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 its part failed to give satisfactory reply before the AO w.r.t. explanation called by the AO on the aforesaid differential in the value of the said immovable property, vide assessment order dated 15.12.2016 passed by AO u/s 143(3) of the 1961 Act.
6.1. The assessee being aggrieved filed first appeal before Learned CIT(A). The assessee did not appear before Learned CIT(A) despite as many as seven opportunities of hearings being granted by ld. CIT(A) to the assessee. Since there was no compliance by the assessee, the Learned CIT(A) dismissed the appeal filed by the assessee in limine without discussing the issue’s on merits, by relying on the decision of ITAT, Delhi Bench, Delhi in the case of CIT v., Multiplan India Ltd., reported in 38 ITD 320 (Del.), and also by relying on the decision of Hon’ble Madhya Pradesh High Court in the case of Estate of Late Tukoji Rao Holkar v. CWT reported in [1997] 223 ITR 480 [M.P.], vide appellate order dated 13.09.2019. 7. Aggrieved by appellate order passed by Learned CIT(A), the assessee filed second appeal before tribunal.
7 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15
The Learned Counsel for the assessee at the very outset submitted that the assessee has purchased immovable property for a consideration of Rs.10 lakhs, which was registered on 13.12.2013. It was submitted that the land in question was not having approach road and the value was much lower than the stamp duty value which was Rs.63,79,000/-. The Learned Counsel for the assessee drew the attention of the Bench to the copy of sale deed which was enclosed in the paper book filed by the assessee, at pages 1 to 27. The Learned Counsel for the Assessee drew our attention to the assessment order passed by A.O. and also to the appellate order passed by Learned CIT(A), and submitted that additions have been made by A.O. by invoking provisions of Section 56(2)(vii)(b) of the 1961 Act. It was submitted that Learned A.O. did not refer the matter to DVO before bringing to tax difference between the stamp duty valuation and the purchase price of the immovable property. The Learned Counsel for the assessee submitted that Learned CIT(A) has passed an ex-parte order without discussing the issue on merits which is an infringement of
8 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 Section 250(6) of 1961 Act. The Learned Counsel for the assessee, therefore, prayed that the matter may be set aside and restored to the file of A.O. for fresh adjudication of the issue on merits in accordance with law, with a direction to the A.O. to refer the matter to DVO for valuing the property and thereafter, if there is any difference between the purchase price and the value as determined by DVO, the same can be brought to tax by AO. The Learned Counsel for assessee drew our attention to proviso to Section 56(2)(vii)(b) of the 1961 Act which states that in case stamp duty value is disputed by the assesse, then the matter should be referred by AO to DVO as is provided u/s 50C(2), before making additions u/s 56(2)(vii)(b) of the 1961 Act. In support of his contention, the Learned Counsel for assessee relied upon judgment and order passed by Hon’ble Allahabad High Court in the case of CIT, Allahabad & Another v. Sh Chandra Narain Chaudhri in Income Tax Appeal No.287 of 2011 dated 29.08.2013 and drew attention of the Bench to Para No.14 of the aforesaid judgment and order.
9 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15
8.1. The Learned Counsel for the assessee submitted that it was incumbent upon A.O. to have referred the matter to DVO for valuation keeping in view of provisions of Section 50C(2) of the 1961 Act. The Learned Counsel for the assessee also relied upon the judgment and order passed by Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal v. CIT , reported in [2014] 272 CTR 332 (Cal.).
The Learned Sr. D.R. on the other hand submitted that he has no objection if the matter is restored to the file of A.O. for denovo adjudication of the issue on merits in accordance with law, after referring the matter to DVO, so that additions can be made under section 56(2)(vii)(b) of the 1961 Act read with Section 50C(2) of the 1961 Act, based upon the differential amount between the value as determined by DVO and the purchase price.
We have considered rival contentions and perused the material on record. We have observed that the assessee is an individual who is engaged in wholesale trading of Galla items i.e., Paddy, Rice and Wheat etc., as a
10 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 proprietorship concern in the name and style of M/s. Shree Maa Durga Galla Bhandar. The case of the assessee was selected by Revenue for a limited scrutiny under section 143(3) of the 1961 Act, to examine the sale consideration of the property in the tax return which is less than the sale consideration of property reported in AIR. The statutory notices u/s 143(2) and 142(1) of the 1961 Act were issued by AO to the assessee, and there is no dispute so far issuance of these notices or service of these notices are concerned. We have observed that the assessee has purchased an immovable property for a consideration of Rs.10 lakhs, which was registered on 13.12.2013 in the name of the assessee, copy of the sale deed is enclosed by assessee in paper book filed with the Tribunal (which is placed on record in file), and the value as per stamp duty authorities was Rs.63,79,000/-, and the AO brought to tax the differential value of Rs.53,79,000/- by making addition in the hands of the assessee, by invoking provisions of Section 56(2)(vii)(b) the 1961 Act. The assessee during the assessment proceedings has raised a claim that it is in the
11 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 business of real estate and this property was purchased as stock in trade, but, no such evidence was brought on record by the assessee, and the AO rejected such contentions raised by the assessee. This plea is now abundant by Learned Counsel for the assessee and prayers are made before the Bench that while invoking the provisions of Section 56(2)(vii)(b) of the 1961 Act, matter should have been referred by AO to DVO for valuing the property. Our attention was drawn to proviso to Section 56(2)(vii)(b) and prayers were made that the matter may be set aside and restored to AO, so that the AO can refer the matter to DVO for valuation of the property. The additional grounds are also raised, wherein the assessee is contending that this property does not have approach road, and hence valuation is low. These are all factual matters which requires verification by AO/DVO. The Hon’ble Allahabad High Court in the case of CIT, Allahabad & Another v. Sh Chandra Narain Chaudhri (supra) has observed and held that it is incumbent on the A.O, in such a case where the assessee disputes the valuation, to refer the matter to DVO, before
12 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 additions can be made by AO. Reference is drawn to para 14 of the said judgment and order passed by Hon’ble Allahabad High Court, which reads as under :
“ 14. We are of the view that whenever objection is taken or claim is made before AO, that the value adopted or assessed or assessable by the Stamp Valuation Authority under sub-section (1) of Section 50- C exceeds the fair market value of the property on the date of transfer, the AO has to apply his mind on the validity of the objection of the assessee. He may either accept the valuation of the property on the basis of the report of the approved valuer filed by the assessee, or invite objection from the department and refer the question of valuation of the capital asset to DVO in accordance with Section 55-A of the Act. In all these events, the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course,
13 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 without considering the report of approved valuer submitted by the assessee. In all such cases, the reasons recorded by the AO may be questioned by the assessee or the department as the case may be.”
We have also observed that the assessee has also relied upon the judgment and order passed by Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal(supra), wherein Hon’ble High Court observed that even in cases where the counsel of the assessee has not asked for referring the matter to DVO, the AO is under bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. We have further observed that the Learned CIT(A) has not decided appeal on merits, but, has dismissed the appeal in limine without discussing the issue on merits, which is an infringement of Section 250(6) of the 1961 Act, and hence in any case the appellate order passed by ld. CIT(A) is not sustainable in the eyes of law. The assessee is also equally responsible for its woes, as the assessee has not appeared before Learned
14 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 CIT(A) despite as many as seven opportunity of hearings being granted to the assessee by Learned CIT(A). Even before Learned A.O. there was no proper compliances made by the assessee. The Learned Sr. D.R. has fairly submitted before us that the matter can be restored to the file of A.O. for fresh adjudication on merits in accordance with law, after referring the matter by AO to DVO in set aside remand proceedings for valuing the property purchased by the assesse, so that correct and proper assessment can be made. Keeping in view the entire factual matrix of the case before us, we are of the considered view that the matter can be restored to the file of A.O. for fresh determination of the issue on merits in accordance with law, after referring the matter to DVO by AO in set aside remand proceedings, for submission of valuation report by DVO of the property purchased by the assessee, and accordingly based on the valuation report of DVO, the differential amount between the purchase price and value as determined by the DVO can be brought to tax by AO in set aside remand proceedings, under section 56(2)(vii)(b) of the 1961 Act. With these
15 ITA.No.05/VNS/2020 Sri Indra Narayan Tripathi, Gorakhpur. Assessment Year 2014-15 observations, the appeal of the assessee is allowed for
statistical purposes. We order accordingly.
In the result, appeal filed by the assessee in ITA
No.05/VNS/2020 for ay : 2014-15 is allowed for statistical
purposes.
Order pronounced in the open Court at the
conclusion of the hearing i.e., on 04.07.2022, in the
presence of both the parties.
Sd/- Sd/- VIJAY PAL RAO RAMIT KOCHAR JUDICIAL MEMBER ACCOUNTANT MEMBER
Varanasi, Dated 04th July, 2022
VBP/-
Copy to 1. The Appellant – Shri Indra Narayan Tripathi, 17, Rajendra Nagar, Goorakhpur- 273015, U.P. 2. The Respondent-The Assistant Commissioner of Income-tax, Range-2, Aayakar Bhawan, Civil Lines, Gorakhpur-273001 , U.P. 3. The Learned CIT(A) , Aayakar Bhawan, Civil Lines, Gorakhpur, U.P. 4. The Learned CIT , Aayakar Bhawan, Civil Lines, Gorakhpur, U.P. 5. The Sr. D.R. ITAT, Varanasi Bench, Varanasi. 6. Guard File. //By Order//
Asst. Registrar, ITAT, Varanasi Bench, Varanasi.