SMT. AMENABATUL,,NANDED vs. INCOME-TAX OFFICER,,

आदेश / ORDER

PER S.S. VISWANETHRA RAVI, JM :

This appeal by the assessee against the order dated 30-12-2015 passed by the Commissioner of Income Tax (Appeals)-1, Aurangabad [„CIT(A)‟] for assessment year 2009-10.

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Government of Maharashtra is more than the total consideration received or reflecting in the sale deed. The AO issued notices u/s. 143(2)/142(1) of the Act seeking explanation from the assessee why the provisions u/s. 50C of the Act should not be invoked. We note that the AO has given 12 opportunities for explanation sought in the notices u/s. 143(2)/142(1) of the Act, but no compliance has been made by the assessee which is reflected in Page Nos. 2 and 3 of the assessment order. Therefore, having no appearance of assessee nor any assistance from the Authorized Representative of the assessee the AO proceeded to assess the income of the assessee best of his judgment and determined the total income of the assessee at Rs.88,36,320/- by adopting sale consideration as per the provisions u/s. 50C of the Act vide this order dated 13-03-2013 passed u/s. 144 r.w.s. 147 of the Act. Before the CIT(A) it was argued that the land sold by the assessee is an agricultural land and no Capital Gains was assessable on the sale of such land. Further, it was argued that the land in question had been sold on 09-05-1997 through first sauda chitti (agreement to sale) and registration was effected on 13-08-2008. The assessee also raised objections apart from arguments as noted above. Considering the submissions of assessee and also the procedure contemplated u/s. 50C of the Act, the CIT(A) adopted valuation at Rs.77,94,000/- as per the AVO‟s report as against Rs.1,03,20,000/- adopted by the AO. For ready reference the finding of CIT(A) at Para No. 5 is reproduced here-in-below :

“5. I have duly considered the submissions of the appellant. The facts of the case are that the assessee has sold her land at Gut no.196, admeasuring one hectare and 40 R situated under the Nanded Waghala Municipal Council vide sale deed dated 13.08.2008 to Shri Devrao Tukaram Deshmukh and 4 other co-purchasers for a sale consideration of Rs.11,75,000/-. However the stamp duty

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valuation of the property in question was made at higher value of Rs.1,03,20,000/-. The son of the appellant initially appeared before the AO and also filed copy of sale deed dated 13.08.2008. But subsequently after noticing higher valuation by the stamp duty authority, the assessee chose to be non compliant and did not appear on many dates of hearing as fixed by the AO. The AO had given details of non compliance by the appellant on 12 occasions as mentioned on page 2 & 3 of the assessment order. In such circumstances, it was clear that the appellant had not objected to the said valuation by the stamp duty authority. Therefore the AO was right in not making any reference to the DVO since the appellant had not objected to the valuation made by the stamp duty authority. The AO accordingly adopted the value assessed by the stamp duty authority of Rs.1,03,20,000/- as deemed sale consideration and after allowing indexed cost of acquisition of Rs.2,24,000/- indexed to Rs.13,03,680/-, computed the long term capital gains at Rs.90,16,320/-. On the other hand, neither the assessee had declared any capital gains nor filed any return of income. However my predecessor vide his letter no.ABD/CIT(A)- 1/Mrs.Amenabatul/Report/2014-1S dated 04.03.2015 directed the AO to make a reference to the DVO which was duly complied with by the AO. Accordingly in terms of provisions of section 50C(2) of the Income Tax Act, the AO referred the matter to DVO, Nagpur for ascertaining fair market value of the land in question. Therefore the second ground of appeal relating to not making a reference to DVO has become redundant and same is accordingly dismissed. The assessee had not filed her return of income for the year under consideration and no such capital gains on sale of land was allegedly offered to tax. It was clear that the assessee did not intend to disclose the transaction but for the information received from CIB, the transaction would have never been disclosed by the assessee. In spite of notice U/s 148 of the Income Tax Act being issued, the assessee did not file her return of income. On a reference made by the AO, the AVO Nagpur determined the value of property in question at Rs.77,94,000/- vide his report dated 28.10.2015. During the course of present appellate proceedings, the counsel of the appellant has argued before me that the land in question was an agricultural land. Therefore, no capital gain was exigible on the sale of such land. It was further argued that the land in question had been sold on 09.05.1997 through first sauda chitti (agreement to sale) however the date of registration of the document was 13.08.2008. Since there was a gap of 10 years therefore the valuation made by stamp duty authority in 2008 was not right. I have carefully examined the contentions of the appellant. However these are not tenable for the following reasons. It is seen that the agreement to sale dated 09.05.1997 (sauda chitti) is only signed by the appellant and not by the five co-purchasers including Shri Devrao Tukaram Deshmukh. It is not understood as to why this agreement to sale was not signed by the purchasers and and the appellant is also guilty of not explaining the same. Though it is signed by two witnesses however their complete addresses have not been given. Since the agreement to sale is not signed by the purchasers, I am not able to accord any cognizance to it. Further the amount of Rs.11,25,000/- out of total sale consideration of Rs.11,75,000/- was purportedly paid in cash as per sauda chittis. Had the amount been paid through cheques, it could have formed some corroborative

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evidence. It is also not known as to when the balance amount of Rs.50,000/- was paid. The agreement to sale was made on a stamp paper of Rs.5/-. On the other hand, the sale deed dated 19.04.2008 categorically mentions that amount of Rs.11,25,000/- has been paid on the same day to the assessee and balance amount of Rs.50,000/- was be paid at the time of registration. In this sale deed, there was no mention of the agreement to sale dated 09.05.1997. The registration of agreement took place on 13.08.2008 which meant that amount of Rs.11,25,000/- had been paid on 19.04.2008 and not on 09.05.1997 as alleged by the appellant. Further the amount of Rs.50,000/- was received by the appellant between 19.04.2008 to 13.08.2008. In light of above findings, I am constrained to reject the agreement to sale dated 09.05.1997. The appellant has further not agreed to the valuation of Rs.77,94,000/- done by the AVO, Nagpur and instead submitted another valuation report dated 05.06.2015 from M/s Vastukala Consultants (I) Pvt. Ltd. wherein FMV of the impugned land was determined at Rs.37,24,000/- in 2008. On careful consideration of facts & circumstances in the present case, I am unable to accept the arguments of the appellant. The provisions of section 50C(1) of the Act are unambiguous and the AO is bound to take the rate as per the stamp valuation authorities. In case where the assessee objects to the valuation by the stamp duty authority and a reference is made to the DVO for valuation then AO is not empowered to go beyond the valuation made by the DVO if it is found to be lower than the stamp duty valuation. In the present case, it was obvious that AO had referred the valuation to the DVO at the instance of the CIT(Appeal) after she raised objections against the valuation as excessive during the appellate proceedings. In these circumstances, both from the point of view of law and appellant's conduct in making the request for the reference, the valuation ascertained by the AVO has to be adopted. It is apparent that the assessee had not offered any capital gains to tax on account of land being alleged to be agricultural in nature, As per sale deed dated 13.08.2008, the land in question was situated within Nanded Waghala Municipal Corporation. Accordingly it is a capital asset as per section 2(14)(iii) of Income Tax Act and on the sale of it, capital gain is exigible to tax in the hands of appellant. It was open and freehold land. Further when the AVO, Nagpur issued notice No.AVQ- NGP/NDD/CG/SOC/01/2015-16/147 dated 23.09.2015 to the assessee, she raised no objections against the assessment at Rs.77,94,000/- in writing or person and this prompted the DVO to finalize the same at Rs.77,94,000/-. The DVO has also considered the valuation report of M/s Vastukala Consultants (I) Pvt. Ltd. dated 05.06.2015 wherein the FMV of the land in question was taken at Rs.37,24,000/-. Since the DVO has already considered the valuation report of M/s Vastukala Consultants (I) Pvt. Ltd., I do not need to consider the same again. The following comments were made by the AVO, Nagpur in respect of valuation report of M/s Vastukala Consultant Pvt. Ltd. submitted by the appellant.

i) The valuer had not quoted any registered sale transactions during relevant period although there were many sale transactions recorded and had taken place in same locality.

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ii) As done by the A VG, the approved valuer of the appellant had also considered that the entire land would be developed into smaller plots and sold thereafter to different purchaser. However he had considered different types of superfluous deductions in different proportions from total land area which were not at all mandatory & stipulated by Municipal Corporation while allowing the development of large piece of land. The approved valuer had considered 35% of gross area for layout roads, 10% for open space and 5% for amenity space. It was also clarified that the mandatory provision under municipal by-laws was for 10% of gross land area for open space and 10 to 15% for internal roads.

iii) The cost of development was considered @ Rs.500/- per sqm by the approved valuer of the appellant without any basis and hence it was adjudged to be exorbitantly on higher side.

iv) The approved valuer had adopted properties ready reckoner rate on base rate whereas there were many transactions which took place at a much higher rate than the rate adopted by him.

v) It was also stated that the valuation carried out by the A VG, Nagpur was based on well established development method for which authenticated data and mandatory requirement under municipal bylaws had been adopted.

It was noticed by the AVO, Nagpur that the land in question was under Nanded Waghala Municipal Corporation. The surrounding area was developed with many residential bungalows. It was diametrically opposite to Shrikrishna Mangal Karyalaya and near Sandeepani Public School. It was stated to be freehold land. In such circumstances, the valuation adopted by AVO, Nagpur is absolutely correct and proper. Accordingly I have no reason to interfere with his valuation report in spite of considering the request of the appellant sympathetically. Section 50C of the Income-tax Act which states that the guideline value shall be deemed to be the full value of the consideration where the consideration stated by the assessee is less than the guideline value, is a deeming provision. It is a settled law that a deeming provision has to be strictly applied without widening its scope. It is also equally important to note that a deeming provision is inflexible. Where a deeming provision states a particular mode of operation, that mode should be adopted and it cannot be diluted or distinguished or differentiated. Following the above preposition, since section 50C is a deeming provision, any relief granted to an assessee must be on the basis of reasons. The reasons must be within the four corners of law. Whatever may be the problems suffered by an assessee, in reality those reasons cannot be permitted to go beyond the scope of section50C. While considering the report of the Valuation Officer, it is not permissible for the appellate authorities to consider personal and individual reasons, The relief granted by the appellate authority should be on the

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basis of apparent features of the property in question. The difficulties faced by the" assessee or the matter of distress sale, cannot be the grounds to modify the valuation. Considering the above facts & circumstances, I direct the AO to adopt the sale consideration of Rs.77,94,000/- as per AVO's report instead of Rs.1,03,20,000/- taken by the AO and re-compute the capital gains. These grounds of appeal are partly allowed.”

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the valuation adopted by the AVO is correct and proper. Therefore, we are of the view that the CIT(A) considered all the submissions and contentions of the assessee and also the mandate contemplated under the provisions of section 50C of the Act in determining the valuation of the subject land for computation of Capital Gains. Thus, we agree with the reasons recorded by the CIT(A) in this regard in Para No. 5 of the impugned order. Therefore, the grounds raised by the assessee are fails and are dismissed.

Order pronounced in the open court on 12th August, 2021.

Sd/- Sd/- (R.S. Syal) (S.S. Viswanethra Ravi) VICE PRESIDENT JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 12th August, 2021. RK आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(A)-1, Aurangabad 4. The Pr. CIT-1, Aurangabad ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रतत// True Copy// आदेशानुसार / BY ORDER,

तनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune