D.b. Income Tax Appeal v. Smt Pushpa Kalra, E

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 161 / 2012COMMISSIONER OF INCOME TAX, JAIPUR-II ,JAIPUR ----Appellant Versus SMT PUSHPA KALRA, E-29, LAJPAT MARG, C-SCHEME, JAIPUR ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. MathurFor Respondent(s) : Mr. Gunjan Pathak with Mr. Aditya Bohra _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE INDERJEET SINGHOrder 11/09/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the assessee reversing the view taken bythe CIT(A). 2.This Court while admitting the matter framed the followingsubstantial questions of law:- “i) Whether in the facts and circumstances ofthe case, the ITAT was justified in law inholding that provisions of Section 50C are notapplicable in this case the property wastransferred by unregistered agreement withoutappreciating that the agreement wasregistered later on and valuation was made?ii) Whether in the facts and circumstances ofthe case, the ITAT was justified of the case,the ITAT was justified in law in holding thatthe right of the assessee is protected by the provisions of Section 50C(2) wherebyassessee can challenge valuation withoutappreciating that in this case, valuation has tobe challenged by the assessee and Section50C(2)(b) is applicable so no reference to DVOcould be made. Further the assessee did notchallenge the valuation.?” 3.The facts of the case are that the assessee sold a piece of land to Ms. Hardevi vide unregistered sale agreement dated06.09.2002. The sale consideration of this property was shown atRs. 18,00,000/- in the return of income. Later on the purchasergot sale deed register in her favour from assessee on 06.05.2007in pursuance to said agreement and the Sub-Registrar, Jaipurvalued the property at Rs. 2,58,44,260/-. thus, there wasdifference of Rs. 2,40,44,260/-. On the basis of this informationAssessing Officer reopened the case u/s 148 of the Act and madeassessment u/s 143(3)/147. the assessee did not object that thevalue adopted or assesseed exceeds the fair market value of theproperty as on the date of transfer. The assessee has not evensubmitted whether the valuation was disputed in appeal orrevision or reference before any authority or court. Hence, the AOapplied provisions of Section 50C and adopted the final valuetaken by the Sub-Registrar of Rs.2,58,44,260/- as saleconsideration value and after allowing index cost of acquisitionand exemption u/s 54EC for investment in REC bonds, worked outlong term capital gain of Rs. 2,40,39,372/- and added the same inher total income. 4.The AO after considering the evidence on record hasassessed income on the basis of MOU and considered income forthe relevant year 2003-04. Even CIT(A) has confirmed the same, the Tribunal while considering the same has observed as under:- “Regarding calculating capital gain of Rs.2,40,39,372/- on transfer of said plot of landwithout considering the provisions of Section50C(2), the following submissions have beenmade by ld. A/R:-. 4.The AO after considering the evidence on record hasassessed income on the basis of MOU and considered income forthe relevant year 2003-04. Even CIT(A) has confirmed the same, the Tribunal while considering the same has observed as under:- “Regarding calculating capital gain of Rs.2,40,39,372/- on transfer of said plot of landwithout considering the provisions of Section50C(2), the following submissions have beenmade by ld. A/R:-. “It is evident from facts stated above that valueassessed by stamp valuation authority is as ondate of execution and registration of sale deed.In law the ld. A. O. could accept the declaredconsideration r adobt the value assessed bystamp valuation authority (assessable w.e.f.transactions effected from 1.09.09) as on dateof transaction giving rise to capital gains if lateris more. Thus for the purpose of application ofSection 50C the rates prevailing as on the dateagreement are to be adopted that too if it wasso assessed by stamp valuation authority(assessable w.e.f. 1-10-09 and not the ratesprevailing on the date of registration of saledeed of property. This legal view is supportedfrom the judgment in case of Mooli Rami ReddyVs. I.T.O. WD-1(2) Vishakhapatnam 2011-TIOL-135 ITAT-VIZAG (P.B Page 25-29) The ld. CIT(A) has wrongly brushed aside theabove referred judgment holding that facts ofthe case were different. It is submitted that inthe case of question of law was decided andfacts were only referred. The judgment is noton the facts of the case but is an interpretationof law. The judgment is clearly applicable in thecase of assessee also. The impugned plot of land measuring to 1400Sq. Yds (1170.55 Sq.mt) was situated in PrithviRaj nagar (entire are is Land being agriculturaland under Court orders land held as acquired byState Govt.) which is not regularlized andcarved out of such acquired agricultural landand thus not even a residential plot of land forwhich notified DLC rate as on date of transferwas Rs. 1300/- per Sq.mt. (P.B Page 7-11) andthus by no stretch of imagination it can bevalued at Rs. 2,58,44,260/- except in an grosslyarbitrary manner. The purchaser is contestingthe demand of stamp duty raised by such grossarbitrary manner and Hon’ble Supreme Courthas granted a blanket stay of said arbitrarydemand (P.B.Page 46). that the alleged value if adopted or assessed atall by Stamp Valuation Authority then it exceedsthe fair market value of the property as on dateof transfer and, therefore, it was the requirement of law u/s 50C(2) that the ld. A. O.should have referred the matter to valuationofficer. The valuation of property was referredby A.O. in case of purchaser and the assesseealso made reference of that A. O. in course ofassessment proceedings which was ignored byld. A. O. the ld. A. O. is thus wrong and haserred in law in brushing aside valuation reportmade by Valuation officer (I.T. Dept) of he saidsame property in case of purchaser eventhough it have the same effect as that havingbeen prepared u/s 50C(2) and so the saidreport was binding on A. O. The D. V. O. valuedthe property at 32,01,100/- and in appeal theld. CIT(A) accepted the declared value of Rs.18,00,000/-- (P.B. Page 30-36) requirement of law u/s 50C(2) that the ld. A. O.should have referred the matter to valuationofficer. The valuation of property was referredby A.O. in case of purchaser and the assesseealso made reference of that A. O. in course ofassessment proceedings which was ignored byld. A. O. the ld. A. O. is thus wrong and haserred in law in brushing aside valuation reportmade by Valuation officer (I.T. Dept) of he saidsame property in case of purchaser eventhough it have the same effect as that havingbeen prepared u/s 50C(2) and so the saidreport was binding on A. O. The D. V. O. valuedthe property at 32,01,100/- and in appeal theld. CIT(A) accepted the declared value of Rs.18,00,000/-- (P.B. Page 30-36) The ld. CIT(A) held that assessee did not raisedobjection before ld. A. O. so as to invokesection 50C(2) by him and refer the case tovaluation officer for valuation of property. It issubmitted that assessee raised objection as isevident from assessment order but as there wasalready a valuation report of Valuation Officer(IT Dept.) of the said property it referred to thesame as well as filed copy of appeal order ofCIT(A) in case of purchaser. The ld. A. O. shouldhave considered the same as he is not expectedto take advantage of technical mistake of anignorant lady assessee moreso when relevantmaterial is made available to him. The ld.CIT(A) also held that A.O. is not bound toaccept valuation adopted by the VO in othercases. In this connection it is submitted thatvaluation is always of property and it is notrelevant in whose name it is done. Event hereference to Valuation officer (IT Dept.) is madeu/s 50C(2) in case of assessee is made eventhe same valuation is bound to come fromvaluation officer as in law the valuation is ofsame property for same date which cannotchange. Thus order of CIT(A) is not correct inlaw. The ld. CIT(A) also discussed in detail theprovisions of stamp law etc. but the same arenot relevant due to wide definition of transferu/s 2(47) specially clause (v) of said sectionand further that the ld. AO assessed capital gainin A.Y. 2003-04 on the basis of agreement tosale dated 06.09.02 and ld. CIT(A) alsoconfirmed the same in appeal order. The husband of assessee Shri Madhav Kalra hasalso sold that adjacent plot NO. A-6 (frontportion plot A-6 and back portion was plot No. A-7) for Rs. 22,00,000/- on same date i.e.06.09.02 by agreement to sale and registrationof sale deed of it was also done on same datei.e. 16.05.07. The same Inspector valued theproperty arbitrarily in same way determiningvalue of Rs. 2,59,33,450/-. The A.O. similarlyinitiated reassessment proceedings for A.Y.2003-04 in this case but after considering thelegal position as stated above dropped theproceedings initiated u/s 148. In view of this itis submitted that in law two assessee cannot betreated differently in assessment on exactly thesame facts.” 5.We have heard counsel for both the sides. 6.Taking into consideration, the Tribunal has come to theright conclusion regarding encashment by 6[th] April, 2003. 7.In that view of the matter, the income can be consideredfor A.Y 2004-05 not for 2003-04 and it has not committed anyerror in observing as under:- 5.We have heard counsel for both the sides. 6.Taking into consideration, the Tribunal has come to theright conclusion regarding encashment by 6[th] April, 2003. 7.In that view of the matter, the income can be consideredfor A.Y 2004-05 not for 2003-04 and it has not committed anyerror in observing as under:- “13.2. For the sake of further clarification, wenoticed that in case of purchaser of the propertyin question, the matter was referred by the AOto the DVO who has valued this property at Rs.32,01,100/- and in accordance with the DVO’sreport the AO took value of this property at Rs.32,01,100. the assessee filed appeal before ld.CIT(A) who deleted the addition made by AO byholding that there was no material before the AOthat purchaser has paid any payment over andabove the consideration shown in saleagreement. Copy of the order of ld. CIT(A) incase of purchaser i.e. Smt. Hardevi Asnani isplaced in the paper book at pages 30 to 36. Forthis reason also no addition can be made in thehands of assessee as the departmental valuerhas valued the property at Rs. 32 lakhs or oddwhich has already been deleted by ld. CIT(A) inthe case of purchaser. This appeal was alsobrought to the notice of ld. CIT(A). However, hehas not taken into consideration.” 8.The Tribunal while considering the matter has given findingwhich reads as under:- “14.2. The cases on which reliance has beenplaced by ld. A/R i.e. in case of Navneet KumarThakkar and in case of Mooli Ram Reddy aresquarely applicable on the facts of the case. Inthis case, as discussed above, have clearly heldthat where the property was sold throughunregistered sale agreement, provisions ofsection 50C are not applicable and, therefore, AOwas not justified in referring the matter to theDVO. Even and otherwise, if the Stamp DutyAuthority has assessed some value for thepurpose of stamp duty, the right of the assesseeis protected by provisions of section 50C(2)whereby assessee can challenge the valuationadopted by the AO in view of provisions ofsection 50C. In support of this contention theassessee has filed a report of DVO obtained incase of purchaser who has valued the property atRs. 32,01,100/- and impugned addition wasmade in the hands of purchaser by the AO andthe same has been deleted by ld. CIT(A).Therefore, for this reason also it can be said thataddition made by AO which confirmed by ld.CIT(A) was not justified.” 9.Taking into consideration, both the issues are answered infavour of the assessee against the department. 10.The appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/51