SMT. MOHINI DEVI AGRAWAL L/H OF LATE SHRI KISHAN LAL AGRAWAL, ,DHAMTARI vs. INCOME TAX OFFICER, WARD, DHAMTARI

The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-1, Raipur, dated 29.09.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 11.08.2016 for the assessment year 2014-15. The assessee has assailed the impugned order on the following grounds of appeal: “a) That on the fact and circumstances of the case and in law, learned assessing officer and honorable CIT(A) has been erred in taking long term capital gain on sale of undiverted land at Rs.11,74,870/-instead of long term capital loss of Rs.96,65,875/- as worked out by the appellant, Without appreciating the fact of the case, that the assessee has arrived at the fair market value as on 1/4/1981 by following the govt. guidelines and govt. value prescribed for the area in which the capital asset was located. Whereas the learned assessing officer determined the fair market value purely on arbitrary basis without any fact and basis. b) That on the fact and circumstances of the case and in law, the learned assessing officer and the honorable CIT(A) has, without appreciating the fact of the case, been erred for relying on the documents without providing the copy of the same to the appellant. c) That on the fact and circumstances of the case and in law, the learned assessing officer and the honorable CIT(A) has been erred for passing an order without giving sufficient opportunity of being heard to the appellant The appellant craves leave to substantiate above ground at the time of hearing.”

Succinctly stated, the assessee who is deriving income from petty job works and other sources had filed her return of income for the assessment year 2014-15 on 28.03.2015, declaring an income of Rs.1,20,000/-. The return of income filed by the assessee was processed as such u/s.143(1) of the Act. Subsequently the case of the assessee was selected for limited scrutiny u/s. 143(2) of the Act.

During the course of the assessment proceedings, it was observed by the A.O that the assessee had, inter alia, disclosed Long Term Capital Gain (LTCG) and Short-Term Capital Loss (STCL) on sale of property as under:

Observing, that as most of the lands at Dhamtari and nearby areas were since long being used for paddy crop, therefore, the A.O was of the view that the guideline rates provided by the Dy. Registrar, Dhamtari for agricultural land at Dhamtari of Rs.4500/- per acre for F.Y.1985-86 could safely be adopted as a yardstick for arriving at the guideline rates as on 01.04.1981. Accordingly, the A.O on the basis of the aforesaid facts took the guideline rate on 01.04.1981 for the agricultural land at Dhamtari at Rs.4500/- per acre. Also, it was observed by the A.O that in case the aforesaid land in question was treated as Bharri and Bhata, then, the rates of non-agricultural land would be as low as Rs.2000/- per acre and Rs.1500/- per acre in the year 1985-86, i.e., as per guideline rates issued by the Dy. Registrar, Dhamtari, as a result whereof the LTCG would work out at a substantial higher amount. However, the A.O in all fairness by adopting the guideline rate of Rs.4500/- per acre as was provided by the Dy. Registrar, Dhamtari for FY 1985-86, therein, worked out the LTCG on sale of 1.440 hectare of land situated at Hatkeshwar Ward, Dhamtari (C.G.), as under:

Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.

At the time of hearing of the appeal, it was vehemently averred by the Ld. Authorized Representative (for short ‘AR’) for the assessee that the A.O had grossly erred in law and facts of the case in relying at the back of the assessee on certain guideline rate that was stated to have been provided by the Dy. Registrar, Dhamtari for the F.Y.1985- 86. It was submitted by the Ld. AR that the assessee had repeatedly requested the A.O to provide a copy of the guideline rate that was being acted upon by him, but all his requests had gone in vain. Our attention was drawn by the Ld. AR to a letter dated 14.08.2017, Page 1 of APB wherein the assesee had requested the ITO, Ward: Dhamtari to make available a copy of the guideline rate that was stated by him to have 7 Smt. Mohini Devi Agarwal L/s. Late Shri Kishan Lal Agrawal been obtained from the Sub-registrar, Dhamtari. It was submitted by the Ld. AR that despite repeated requests the copy of the guideline rate was not made available to the assessee, and the A.O had most arbitrarily by relying on such details that were gathered at the back of the assesseee drawn adverse inferences in the latters hands. Rebutting the guideline rate that were applied by the A.O, it was submitted by the Ld. AR that the assessee had computed the indexed cost of acquisition of the agricultural land at Hatkeshwar Ward, Dhamtari on the basis of the guideline rates which were obtained by him from the Dy. Registrar, Dhamtari. The Ld. A.R in order to fortify his aforesaid claim had taken me through a letter dated 29.06.2016 a/w. copy of the extract of the guideline rates that were obtained by the assessee from the Dy. Registrar, Dhamtari, Page 4 to 7 of APB. It was the claim of the Ld. AR that as the A.O had acted upon certain information which was collected at the back of the assessee, i.e, without confronting the same despite persistent requests, therefore, the addition so made by him on such basis could not be sustained and was liable to be vacated.

Per contra, the Ld. Departmental Representative (for short ‘DR’) took me though the relevant extracts of the assessment order. It was submitted by the Ld. DR that though as per the guideline rates obtained by the A.O from the Dy. Registrar, Dhamtari the FMV of the land at Hatkeshwar Ward, Dhamtari during F.Y.1985-86 was 10 paisa

I have given a thoughtful consideration to the issue in hand, and would not mince any words in observing that the FMV of Rs.4500/- per sq. feet of the land at Hatkeshwar Ward, Dhamtari, as had been adopted by the assessee for computing the indexed cost of acquisition, as against the FMV of 10 paisa per square feet as had been taken by the A.O, is beyond comprehension. Although the Ld. AR has taken me through the guideline rates issued by the Dy. Registrar, Dhamtari for F.Y. 1985-86, Page 3 of APB, however, the same in itself is not free from doubts. On a careful perusal of the guidelines rate of 9 Smt. Mohini Devi Agarwal L/s. Late Shri Kishan Lal Agrawal Rs.20/- per square feet of non-converted i.e. agricultural land that had been pressed into service by the Ld. AR to drive home his aforesaid claim, I find that the same clearly makes a reference to land situated/subjected to a commercial purpose/area. Be that as it may, I find substance in the claim of the Ld. AR that as the assessee despite specific request vide his letter dated 14.08.2017 was not supplied with a copy of the guideline rate as was obtained by the A.O from the sub- registrar, Dhamtari, on the basis of which the latter had computed the indexed cost of acquisition, therefore, drawing of such adverse inferences at the back of the assessee on the basis of material collected by the A.O cannot not be endorsed on my part. Considering the aforesaid facts, I am of the considered view that in all fairness the matter requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue after affording a reasonable opportunity of being heard to the assessee on the issue in hand. Needless to say, the A.O shall in the course of the set-aside proceeding make available a copy of the guideline rates that were obtained by him from the Sub- Registrar, Dhamtari, as well as consider the guideline rates which the assessee is stated to have obtained from the Dy. Registrar, Dhamtari. I may herein clarify that the A.O in the course of the set-aside proceeding shall remain at a liberty to carry out any further verification, and also call for any such information as he may deem

In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations.