Urvashidevi P.Chauhan, Ahmedabad v. The Income tax Officer, Ward-2(2),, Baroda

ITA 2632/AHD/2007 | 2001-2002
Pronouncement Date: 01-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 263220514 RSA 2007
Assessee PAN AICPM0240I
Bench Ahmedabad
Appeal Number ITA 2632/AHD/2007
Duration Of Justice 3 year(s) 3 month(s) 18 day(s)
Appellant Urvashidevi P.Chauhan, Ahmedabad
Respondent The Income tax Officer, Ward-2(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 01-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 01-10-2010
Date Of Final Hearing 17-08-2010
Next Hearing Date 17-08-2010
Assessment Year 2001-2002
Appeal Filed On 13-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL V.P.(AZ) & HON BLE SHRI T.K. SHARMA J.M. ) I.T.A. NO. 2612/AHD./2007 ASSESSMENT YEAR : 2001-2002 VRUSHALIDEVI Y. MAHADIK BARODA -VS.- INCOME TAX OFFICER WARD-2(2) BARODA (PAN : AICPM 0240 I) (APPELLANT) (RESPONDENT) & I.T.A. NO. 2632/AHD/2007 ASSESSMENT YEAR : 2001-2002 URVASHIDEVI P. CHAUHAN BARODA -VS.- INCOME TAX OFFICER WARD-2(2) BARODA (PAN : AEDOC 8028 C) (APPELLANT) (RESPONDENT) ASSESSEES BY : SHRI ANIL R. SHAH DEPARTMENT BY : SHRI ANIL KUMAR SR. D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE TWO APPEALS FILED BY TWO DIFFERENT ASSESSEES ARE AGAINST THE COMMON ORDER DATED 16.03.2007 OF LEARNED COMMISSIONER OF INCOME TAX-II BARODA FOR THE ASSESSMENT YEAR 2001- 02. BOTH THESE APPEALS WERE HEARD ON THE SAME DATE INVOLVED COMMON ISSUE AND ARGUED BY COMMON LD. REPRESENTATIVE THEREFORE THESE ARE DEC IDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED THE FACTS ARE THAT BOTH THE ASSES SEES FILED THE RETURN OF INCOME ON 31.03.2002. SMT. URVESHIDEVI PRADIPSINH CHAUHAN DEC LARED TOTAL INCOME OF RS.9 982/- AND LONG- TERM CAPITAL LOSS OF RS.28 800/- AS HER SHARE OF LO SS ON SALE OF 1/3 RD SHARE OF LAND. SMT. VRUSHALIDEVI YASHVANTRAO MAHADIK DECLARED TOTAL INC OME OF RS.85 500/- AND LONG-TERM CAPITAL LOSS OF RS.28 800/- AS HER SHARE OF LOSS ON SALE OF 1/3 RD SHARE OF LAND. FOR BOTH THE ASSESSEES THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 B ECAUSE AS PER AGREEMENT DATED 30.10.1999 BOTH THE ASSESSEES HAD AGREED TO SELL THE PLOT OF L AND @ RS.300/- PER SQ. FT. WHICH WAS SUBSEQUENTLY REDUCED TO RS.240/- PER SQ.FT. BY WAY OF AN ADDENDUM TO THE AFORESAID AGREEMENT. 2 ITA NOS . 2612 & 2632/AHD/2007 THE ASSESSING OFFICER EXAMINED THE REASONS GIVEN IN THE ADDENDUM FOR REDUCTION IN SALE CONSIDERATION AND FOUND THAT THE SAID REASONS DID N OT JUSTIFY A REDUCTION IN THE SALE CONSIDERATION AND HENCE THE AFORESAID ADDENDUM APPEARED TO HIM JUST A GIMMICK CREATED TO AVOID LONG-TERM CAPITAL GAIN LIABILITY ARISING ON ACCOUNT OF THE FI RST AGREEMENT OF SALE. ANOTHER REASON FOR REOPENING AS RECORDED BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD NOT GIVEN ANY BASIS FOR ADOPTING THE COST OF ACQUISITION OF THE SAID PLOT A T RS.60/- PER SQ.FT. AS ON 1.4.1981. THE ASSESSING OFFICER THEREFORE REOPENED AND REFRAMED THE ASSESSMENT IN RESPECT OF BOTH THE ASSESSEES UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE ACT ON 14.03.2006 WHEREIN HE RE- COMPUTED LONG-TERM CAPITAL GAIN IN EACH OF THE ASSE SSEES AT RS.19 32 288/- AS UNDER :- AREA SOLD AS PER WORKING PROVIDED IN THE RETURN OF INCOME 8000 SQ.FT. SALE CONSIDERATION AT THE RATE OF RS.300/- PER SQ.FT. AS DISCUSSED IN ABOVE PARA 5.1 [8000 X 300] RS.24 00 000/- COST OF ACQUISITION AS DISCUSSED IN ABOVE PARA 5.4 VALUATION AS ON 1.4.1981 AS DISCUSSED ABOVE AT THE RATE OF RS.14.40 PER SQ.FT. COST [8000 X 14.4.] RS.1 15 200 INDEXED COST (FY 2000-01) 1 15 200 X 406/ 100 4 67 712/- LONG TERM CAPITAL GAIN= TOTAL SALE CONSIDERATION INDEXED COST RS.24 00 000/- MINUS RS.4 67 712/- RS.19 32 288/- 3. WHILE COMPUTING THE CAPITAL GAIN OF BOTH THE ASS ESSEES THE ASSESSING OFFICER ADOPTED THE SALE RATE OF RS.300/- PER SQ. FT. AS AGAINST RS.240 /- PER SQ.FT. DECLARED BY THE ASSESSEE IN RESPECT O F SALE OF LAND BEARING CITY SURVEY NO. 2537 SITUATED AT MAKARPURA ROAD VADODARA. FURTHER THE ASSESSING OFFICER ADOPTED THE DEEMED COST OF ACQUIS ITION OF RS.14.40 PER SQ.FT. AS AGAINST RS.60/- PER SQ.FT. ADOPTED BY THE ASSESSEE IN RESPECT OF SA LE OF LAND AT VADODARA. BEING AGGRIEVED BOTH THE ASSESSEES PREFERRED APPEALS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE FOLLOWING GROUNDS :- 3 ITA NOS . 2612 & 2632/AHD/2007 (1) THE ASSESSING OFFICER ERRED IN RE-OPENING THE A SSESSMENT UNDER SECTION 147 OF THE I.T. ACT 1961. THE ASSESSMENT REOPENED BY THE ASSESSING OFFICER WITHOUT ANY APPROPRIATE REASON TO BELIEVE IS BAD IN LAW AND THE SAME DESERVES TO BE QUASHED. (2) THE ASSESSING OFFICER WHILE COMPUTING LONG TERM CAPITAL GAIN ERRED IN ADOPTING THE SALE RATE OF RS.300/- PER SQ.FT. AS AG AINST RS.240/- PER SQ.FT. ADOPTED BY YOUR APPELLANT IN RESPECT OF THE SALE OF LAND BE ARING CITY SURVEY NO. 2537 SITUATED AT MAKARPURA ROAD VADODARA. (3) THE ASSESSING OFFICER WHILE COMPUTING LONG-TERM CAPITAL GAIN ERRED IN ADOPTING THE DEEMED COST OF ACQUISITION OF RS.14.40 PER SQ.FT. AS AGAINST RS.60/- PER SQ.FT. ADOPTED BY THE APPELLANT IN RESPECT OF S ALE OF LAND BEARING CITY SURVEY NO. 2537 SITUATED AT MAKARPURA ROAD VADODARA. (4) THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT 1961. 4. IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF ASSESSING OFFICER IN RESPECT OF BOTH THE ASSESSEES IN REOPENING THE ASSESSMENT UNDER SECTION 148 AND ADOPTION OF SALE RATE OF RS.300/- P ER SQ.FT. AS WELL AS DEEMED COST OF ACQUISITION OF RS.14.40 PER SQ.FT. AS ON 1.4.1981. AGGRIEVED WI TH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BOTH THE ASSESSEES ARE IN APP EALS BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS :- (1) THE CIT(A.) HAS ERRED IN CONFIRMING THAT THE AS SESSMENT IS CORRECTLY REOPENED U/S. 147. IT IS ADMITTED THAT THE PROCEEDINGS U/S. 147 AND THE NOTICE U/S. 148 ARE BAD IN LAW VOID THEY SUFFER FROM INHERENT TECHNIC AL DEFECTS AND EVEN ON MERIT PROVISION OF SEC. 147 ARE NOT APPLICABLE. (2) WITHOUT PREJUDICE TO ABOVE THE CIT(A.) HAS ERR ED IN CONFIRMING THAT SALE PRICE OF THE LAND IS RS.300/- PER SQ.FT. AND NOT 24 0/- PER SQ.FT. IT IS SUBMITTED THAT AS PER THE PROVISION OF SEC. 48 FULL VALUE OF THE CONSIDERATION OUGHT TO HAVE BEEN ACCEPTED AT RS.240/- PER SQ.FT. (3) THE CIT(A.) HAS ERRED IN CONFIRMING THAT MARKET VALUE OF THE LAND AS ON 1.4.1981 IS RS.50 PER SQ.FT. AND NOT RS.14.40 PER S Q.FT. IT IS SUBMITTED THAT THE VALUE CLEARED BY THE APPELLANT AT RS.14.40 PER SQ.F T. WHICH IS BASED UPON REPORT OF REPORT OF A REGISTERED VALUED OUGHT TO HAVE BEEN AC CEPTED ESPECIALLY IN VIEW OF SEC. 55A. 4 ITA NOS . 2612 & 2632/AHD/2007 (4) THE INCOME TAX OFFICER HAS ERRED IN CHARGING IN TEREST U/S. 234 PARTICULARLY BECAUSE HIS ORDER IS VAGUE AND CLEAR. ON FACTS OF THE CASE YOUR APPELLANT AT THE TIME OF MAKING ESTIMATE OF ADVANCE TAX AND PAYING ADVANCE TAX HAD NOT BELIEVED THAT THE SA ME WOULD BE UNTRUE AND HUGE ADDITION WAS NOT ANTICIPATED. 5. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI ANIL R. SHAH LD. COUNSEL APPEARED AND CONTENDED THAT BOTH THE ASSESSEES HAVE RAISED ADDITIONAL GROUNDS OF APPEAL. THESE ARE NOT PRESSED AT THE TIME OF HEARING. WITH REGARD TO GROUND NO. 1 OF BOTH THE APPEALS CHALLENGING THE RE-OPENING OF ASSESSMENT UNDER SECT ION 147 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS GROUND OF APPEAL IS NOT PRESSED . IN VIEW OF THIS GROUND NO. 1 OF BOTH THE ASSESSEES IN APPEALS CHALLENGING RE-OPENING OF ASSE SSMENT UNDER SECTION 147 IS DISMISSED BEING NOT PRESSED. 6. WITH REGARD TO GROUND NO. 2 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT BOTH THE ASSESSEES HAD SHOWN IN THEIR RETURNS OF INCOME LONG -TERM CAPITAL LOSS ON SALE OF LAND SITUATED AT MAKARPURA ROAD VADODARA WHICH WAS SOLD TO ONE M/S . GAYATRI ASSOCIATES OF BARODA. EACH OF THE ASSESSEES HAD 1/3 RD SHARE IN THE PROPERTY. THE LD. COUNSEL OF THE ASSE SSEE FAIRLY ADMITTED THAT AS PER COPY OF AGREEMENT OF SALE DATED 30.10.1999 A ND ADDENDUM THERETO DATED 1.3.2001 THE BUYER HAD TO INCUR CONSIDERABLE AMOUNT AND IN ORDER TO COMPENSATE THE BUYER THE ORIGINAL AGREED RATE OF RS.300/- PER SQ.FT. WAS REDUCED TO RS.240/- PER SQ.FT. IT WAS CONTENDED THAT THERE WAS A DISPUTE BETWEEN THE ASSESSEES AND ONE M/S. SHIVRAJ ENCLAVES REGARDING THE APPROACH ROAD AND A CIVIL SUIT WAS LODGED AGAINST THE ASSESSEES BY M/S. SHIVRAJ ENCLAVES. IT WAS SUBMITTED THAT ON GETTING REFERENCE OF THE AFORESAID SUIT THE BUYER B ECAME SKEPTICAL ABOUT THE ASSESSEES OWNERSHIP ON THE APPROACH ROAD AND FOR THIS THE BUYER HELD TH E ASSESSEES RESPONSIBLE AND UNDER THESE CIRCUMSTANCES THE ASSESSEES FELT NECESSARY TO ALLO W SOME CONCESSION TO THE BUYER TO SAVE THE CONTRACT ON SALE FROM FAILURE. IT WAS CONTENDED THA T REDUCTION OF SALE CONSIDERATION WAS BONA FIDE. 6.1. THE LD. COUNSEL OF THE ASSESSEE ALSO CONTENDED THAT REVENUE CANNOT TAX AN INCOME WHICH HAS NOT BEEN RECEIVED OR ACCRUED BY/ TO THE ASSESSE E. FOR THIS PROPOSITION RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS :- (I) K.P. VARGHESE VS.- ITO 24 CTR 358 (SC); (II) CIT VS.- MANA G. SARBHAI 111 CTR 142 (GUJ.) . 5 ITA NOS . 2612 & 2632/AHD/2007 6.2. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) REJECTED THE AF ORESAID CONTENTION ON DOUBTS AND SUSPICION THEREFORE THE ASSESSING OFFICER BE DIRE CTED TO COMPUTE THE CAPITAL GAIN BY ADOPTING ACTUAL SALE CONSIDERATION RECEIPT @ RS.240/- PER SQ .FT. 7. ON THE OTHER HAND SHRI ANIL KUMAR LD. SR. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). THE LD. D.R. POINTED OUT THAT FOR REJECTING THE AFORESAID CONTEN TION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASONS WHICH ARE CO NTAINED IN PARA 4.3.4 ON PAGES 10 TO 14 OF THE IMPUGNED COMMON ORDER THEREFORE THE VIEW TAKE N BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. IT WAS ALSO SUBMITTED THAT AS PER CLAUSE 1.4 13 & 16 OF THE ORIGINAL AGREEMENT THE RATE PER SQ.FT. WAS FIXED AT RS.300/ - PER SQ.FT. AND UNDERSTOOD TO BE THE RATE EVEN IF THE AREA SOLD VARIES IN SQ.FT. AT A LATER DATE A S PER THIS AGREEMENT. THE ASSESSEES (SELLER) GAVE A N UNDERTAKING THAT SHE WILL COOPERATE IN CONVERSION O F LAND TO NA AND THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE DID NOT COOPERATE AND THE CO ST TO THE BUILDER INCREASED. THE LD. D.R. FURTHER SUBMITTED THAT THE ADDENDUM IS LIABLE TO BE REJECTED/ DISBELIEVED FOR THE FOLLOWING REASONS :- (I) ASSESSEE DID NOT BRING ANY EVIDENCE ON RECORD T O SHOW THAT ANY HUGE/ ADDITIONAL EXPENDITURE WAS INCURRED IN CONVERSION O F LAND TO NA WHICH NECESSITATED SUCH DOWNWARD REVISION OF SALE CONSIDE RATION AT THE FAG END OF THE DEAL ESPECIALLY AFTER MAJOR PORTION OF CONSIDERATI ON WAS PAID/ RECEIVED. (II) THE CLAIM OF DISPUTE WITH SHIVRAJ ENCLAVE FOR APPROACH ROAD IS A LATER DEVELOPMENT (2002) WHICH WAS NOT THERE IN 1999 OR 2 001 (AT THE TIME OF AGREEMENT OR AT THE TIME OF ALLEGED ADDENDUM AS THE RE IS NO MENTION). THEREFORE THE SAME CANNOT BE REASON FOR DOWNWARD REVISION. (III) THE RATE OF AN AREA ALWAYS INCREASES RS.300 PER SQ.FT. IN THE YEAR 1999 CANNOT COME DOWN TO 240 SQ.FT. IN 2001. THIS IS AGA INST THE REALITY ON THE GROUND. (IV) THE CLAIM OF THE ASSESSEE THAT RATE WAS LOW IN 2001 (COMPARED TO 1999) IS FALSE AND CONTRADICTORY TO THE INFORMATION ON RECOR D. THE VALUER HAS DESCRIBED THE LOCATION OF PLOT AND SURROUNDING OF THE PLOT AS HECTIC AND HAPPENING AREA ON THE DATE OF VISIT IN 2001. 6 ITA NOS . 2612 & 2632/AHD/2007 7.1. TO SUM UP THE LD. D.R. POINTED OUT THAT THE A DDENDUM ALLEGEDLY ENTERED IN 2001 FOR DOWNWARD REVISION OF THE ACCEPTED SALE RATE FROM RS .300/- PER SQ.FT. TO RS.240/- PER SQ.FT. IS A SELF-SERVING DOCUMENT TO REDUCE THE INCIDENCE OF CA PITAL GAINS. THEREFORE THE ASSESSING OFFICER RIGHTLY ADOPTED THE RATE @ RS.300/- PER SQ. FT. FOR THE PURPOSE OF COMPUTING LONG-TERM CAPITAL GAINS. 8. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE REASONING WHICH ARE RELIED BY THE LD. L EARNED COMMISSIONER OF INCOME TAX(APPEALS) AS CONTAINED IN PARA 4.3 TO 4.3.4 OF T HE IMPUGNED ORDER READS AS UNDER :- 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. C OUNSEL AND FACTS OF THE CASE. AS OBSERVED EARLIER THOUGH A SPECIFIC QUERY WAS RAISE D BY THE ASSESSING OFFICER ON THIS ISSUE THE APPELLANTS CHOSE TO REMAIN SILENT AND TH E ARGUMENTS NOW PLEADED DURING APPELLATE PROCEEDINGS WERE NEVER PLACED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. 4.3.1. THE CONTENTION RAISED THAT THE REDUCTION IN THE SALE RATE WAS DUE TO SPENDING OF CONSIDERABLE AMOUNT BY THE BUYER IN GETTING THE N.A . PERMISSION IS NOT SUBSTANTIATED BY ANY EVIDENCE. IT IS NOT BROUGHT ON RECORD AS TO HO W MUCH WAS SPENT BY THE BUYER IN GETTING THE N. A. PERMISSION WHICH NECESSITATED TH E REDUCTION OF SALE RATE BY AS MUCH AS 20% OF THE ORIGINAL AGREED PRICE. AS REGARDS DISP UTING ABOUT THE 'APPROACH ROAD IT HAS BEEN ALREADY OBSERVED AS ABOVE THAT THE SUIT BY M/S. SHIVRAJ ENCLAVES WAS FILED IN THE YEAR 2002 WHEREAS THE AGREEMENT AS WELL T HE ADDENDUM THERETO WERE DRAWN IN THE YEARS 1999 AND 2001 RESPECTIVELY. THEREFORE AS ON THE DATE OF ADDENDUM THE CIVIL SUIT FILED BY M/S. SHIVRAJ ENCLAVES AGAINST THE APP ELLANTS WAS NOT IN EXISTENCE AND OBVIOUSLY THE BUYER COULD NOT HAVE GOT REFERENCE OF AN EVENT YET TO BE HAPPEN IN FUTURE AS CLAIMED BY THE APPELLANTS. 4.3.2. IT IS SEEN THAT THE BUYER OF THE LAND IN QUE STION IS ONE M/S. GAYATRI ASSOCIATES WHO IS IN THE BUSINESS OF DEVELOPING OF RESIDENTIAL PRO JECTS. IT IS QUITE UNLIKELY THAT SUCH A BUYER WHO IS IN THE BUSINESS OF DEVELOPMENT OF PRO JECTS WOULD NOT HAVE EXAMINED ALL THE ASPECTS OF LAND INCLUDING THE TITLE OF THE LAND BEF ORE ENTERING INTO AGREEMENT FIXING THE SALE CONSIDERATION @ RS 300/- PER SQUARE FEET. THER EFORE THE ARGUMENTS NOW PUT FORTH BY THE APPELLANTS FOR AGREEING TO REDUCTION OF SALE CO NSIDERATION DO NOT APPEAR TO BE CONVINCING ESPECIALLY KEEPING IN VIEW THE SITUATION AND LOCATION OF THE AFORESAID PLOT OF LAND AS MORE APTLY DESCRIBED IN DETAIL BY THE REGIS TERED VALUER HIMSELF. THE AREA WHERE THE SAID PLOT IS SITUATED IS DESCRIBED AS 'RESIDENT IAL CUM COMMERCIAL AREA' AS PER ITEM NO.8 OF THE VALUATION REPORT. THE PAGE 4 OF THE AFO RESAID VALUATION REPORT CLEARLY BRINGS OUT THE FACT AS TO THE PRIME LOCATION OF THE AFORES AID PLOT. THE RELEVANT PORTIONS OF THE VALUATION REPORT ARE EXTRACTED BELOW FOR READY REFE RENCE : 'IMMOVABLE PROPERTY VALUED HEROIN AS ON 1.4.1981 IS OPEN RESIDENTIAL SUB-PLOT 'C' IN MADHAVBAUG AREA IN VADODARA VIBHAG 4 SHEET NO. 145 C.S. NO 2537 (PAIKI) AND VADODARA KASBA R.S. NO 361 (PAIKI) H _OPP O N G C. WESTERRN REGIONAL HQ COMPLEX AT MAKARPURA ROAD (LINKING MANDI - HEART OF BARODA CITY - AND PRATAPNAGAR WITH MAKARPURA AND 7 ITA NOS . 2612 & 2632/AHD/2007 SOUTH BARODA DEVELOPMENTS INCLUDING GIDC INDUSTRIA L ESTATE AND IAF STATION) 36 METER WIDE MAKARPURA ROAD CATERS FOR H IGH TRAFFIC DENSITY PLYING TO AND FROM MANDI (COMMERCIAL HEART OF BAR ODA CITY] ARID TO AND FROM G.I D C. INDUSTRIAL ESTATE AT MAKARPURA R OAD AND SOUTH BARODA RESIDENCIAL SOCIETIES' AND COLONIES. AS SUCH OPEN _PLOTS OF RESIDENTIAL LANDS AT MAKARPURA ROAD WHICH ARE WITH IN 3 TO 4 KM. FROM MANDVI (COMMERCIAL HEART OF BARODA CITY) HAVE BEEN COMMANDING HIGH DEMAND AND PRICES EVEN IN 1981. SUBJECT SUB-PLOT C IN MADHAVBAUG AREA IS LOCATED WITH FRONTAGE ON MAKARPURA ROAD IN EAST; AND BARODA DAIRY BHAVANS SCHOOL ONGC WESTERN REGIONAL HQ COMPLEX E TC. RAE WITHIN 10 MINUTS WALK FROM THIS LAND LOCAL SHOPPING FACIL ITIES WERE ALSO AVAILABLE WITHIN 10 MINUTES WALK FROM THE SUBJECT L AND IN 1981. CITY BUSES AND AUTORICKSHAWS WERE ALSO PLYING AT MAKARPURA ROA D IN 1981 AND WERE AVAILABLE WITHIN 5 MINUTS WALK FROM THE SUBJEC T LAND IN MAHAVBAUG AREA BARODA RAILWAY DIVISION HQ AND ITS ALLIED OFF ICES INCLUDING RAILWAY STAFF COLLEGE FOR TRAINING OF PROBATIONERY CLASS I DIRECT RECRUITS TO RAILWAY SERVICES ETC. ARE WITHIN 3 KM. FROM THE SUBJECT LAND. CONSIDERING SIZE SHAPE SITUATION OF THE SUB-PLOT OF LAND IN PROXIMITY OF 36 M. WIDE BUSY TRAFFIC ARTERY LINKING MANDVI (HEAR T OF BARODA CITY) WITH MAKARPURA AND SOUTH BARODA DEVELOPMENTS OF GIDC IND USTRIAL ESTATE AND INNUMERABLE HOUSING SOCIETIES SCHOOLS AREA BR OWN BOVERI FACTORY ETC. AVAILABILITY OF CIVIL AMENITIES IN PROXIMITY OF WITHIN 3 KM. FROM THE SUBJECT LAND AND THEN PREVAILING PRICES OF PLOTTED RESIDENTIAL LANDS IN MADHAVBAUG AREA ETC. I ESTIMATE THAT FAIR MARKET V ALUE OF THE SUBJECT SUB-PLOT C IN MADHAVBAUG AREA OF MAKARPURA ROAD BARODA AS O 1.4.1981 WAS RS.4 70 000/-. 4.3.3. THE FINDING GIVEN BY THE ASSESSING OFFICER W HILE RECORDING REASONS FOR REOPENING OF ASSESSMENT THAT AS PER THE ORIGINAL AGREEMENT OF SALE THE APPELLANTS HAD ALREADY RECEIVED HUGE AMOUNT OF MONEY AND AFTER HAVING ALRE ADY RECEIVED THE MAJOR CHUNK OF MONEY AGREEING TO REDUCE THE SAFE CONSIDERATION AP PEARED TO BE MALA-FIDE HAS NOT BEEN REBUTTED BY THE APPELLANTS. THE COMPULSIONS ON THE PART OF THE APPELLANTS FOR AGREEING FOR REDUCTION OF PRICE HAVE NOT BEEN PLACED ON RECORD B Y THE APPELLANTS ESPECIALLY IN VIEW OF THE FACTS THAT A LARGE PORTION OF THE SALE CONSIDER ATION HAD ALREADY BEEN RECEIVED AND ALSO THE PRIME LOCATION OF THE PLOT OF LAND WOULD H AVE BROUGHT THEM A STILL HIGHER PRICE THAN RS 300/- PER SQUARE FEET AS ORIGINALLY AGREED IN 1999 IN CASE THE BUYER WANTED TO TERMINATE THE AGREEMENT IN THE YEAR 2001. 4.3.4 IN VIEW OF THE DISCUSSIONS GIVEN ABOVE I IN TEND TO AGREE WITH THE ASSESSING OFFICER THAT THE ADDENDUM DATED 1 ST MARCH 2001 REDUCING THE SALE CONSIDERATION PRICE F ROM RS.300/- TO RS.240/- PER SQUARE FEET IS NOTHING BUT A COLLUSIVE AND MAKE-BELIEVE ARRANGEMENT BETWEEN THE APPELLANTS AND THE BUYER. A CCORDINGLY THE SALE CONSIDERATION COMPUTED BY THE ASSESSING OFFICER BY ADOPTING THE R ATE OF RS.300/- PER SQUARE FEET IS IN ORDER AND HENCE THIS GROUND OF APPEAL FAILS. 9. ON GOING THROUGH THE AFORESAID REASONING OF LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) WE ARE CONVINCED THAT BOTH THE DEPARTMEN TAL AUTHORITIES BELOW REJECTED THE 8 ITA NOS . 2612 & 2632/AHD/2007 EXPLANATION OF THE ASSESSEE ON DOUBTS AND SUSPICION . THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH INDICATES THAT THE ASSESSE E HAS RECEIVED SINGLE PENNY MORE THAN RS.240/- PER SQ.FT. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT IT WILL MEET THE END OF JUSTICE IF THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE S ALE CONSIDERATION BY APPLYING ACTUAL AMOUNT OF RS.240/- PER SQ.FT. ACTUALLY RECEIVED BY THE ASSESS EE. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. RESULTANTLY GROUND NO. 2 OF BOTH THE APPEALS IS ALLOWED. 10. THE FACTS RELATING TO CONTROVERSY INVOLVED IN G ROUND NO. 3 ARE THAT THIS ISSUE IS DEALT WITH AT PARA 5.4 OF THE ASSESSMENT ORDER. THE REPLY OF T HE ASSESSEES TO THE SHOW-CAUSE NOTICE ON THIS ISSUE IS EXTRACTED AT PARA 5.3 (PAGE 5) OF THE ASSE SSMENT ORDER. THE ASSESSING OFFICER NOTICED THAT THE LAND IN QUESTION WAS SOLD AS AGRICULTURAL LAND AS PER THE SALE DEED AND THE NA PERMISSION WAS NOT OBTAINED AT THE TIME OF SALE OF LAND. ON THE OT HER HAND THE VALUATION REPORT OF THE REGISTERED VALUER DID NOT TREAT THE LAND AS AGRICULTURAL LAND AND THEREFORE THE RATE OF RS.60/- PER SQ.FT. AS O N 1.4.1981 ESTIMATED BY THE REGISTERED VALUER WAS IN RESPECT OF NON-AGRICULTURAL LAND THEREFORE IT WAS ON HIGHER SIDE. BEFORE THE ASSESSING OFFICER T HE ASSESSEE PLEADED THAT THE LAND IN QUESTION WAS FULLY SURROUNDED BY THE HOUSING SOCIETIES AND W AS IN CLOSE PROXIMITY TO WESTERN REGIONAL HEAD QUARTERS OF ONGC BARODA DAIRY LOCAL SHOPPING FACILITIES AND OTHER CIVIC FACILITIES AND THEREFORE THE SAID LAND SHOULD BE VALUED AS ON 1.4 .1981 AS NON-AGRICULTURAL LAND FOR THE PURPOSE OF ASSESSMENT OF LONG-TERM CAPITAL GAINS TAX. 11. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER OBSERVED THAT PREVALENT AVERAGE RATE OF LAND WAS RS.14.4 PER SQ.FT. AS ON 1.4.1981 AS PER T HE INFORMATION OBTAINED FROM TALATI VADODARA KASBA. THE INFORMATION GATHERED BY THE ASSESSING OF FICER WAS DULY CONFRONTED TO THE ASSESSEES AND THEIR REPLY EXTRACTED AT PARA 5 OF THE ASSESSME NT ORDER. THE ASSESSING OFFICER REJECTED THE REPLY OF THE ASSESSEE AT PARA 5.4 OF THE ASSESSMENT ORDER AND THE SAME IS EXTRACTED AS UNDER :- '5 4. THE SUBMISSION OF THE ASSESSEE IS NOT ACCEPTA BLE MERELY ON THE GROUND THAT AVERAGE PRICE OBTAINED FROM TALATI VADODARA KASBA WAS FOR THE YEAR 1983 TO 1987. THE SALE PRICE FURNISHED BY THE TALATI OF VAD ODARA KASBA WERE OF 1980- 81 ALSO AND EVER OTHERWISE THE SALE PRICE FOR LATER PERIOD WILL NOT BE LESS IN ANY CONDITION. FURTHER THE ASSESSEE FAILED TO FURNISH A NY INSTANCE FROM REVENUE RECORDS IN SUPPORT OF HER CLAIM FOR THE VALUE OF AC QUISITION OF LAND AS ON 01.04.1981. THEREFORE IN ABSENCE OF ANY SUPPORTING EVIDENCE FROM THE SIDE OF THE ASSESSEE FROM REVENUE RECORDS REGARDING RATE OF THE LAND I HAVE NO ALTERNATE BUT TO CONSIDER THE COST OF LAND AS REFLECTED IN TH E REVENUE RECORDS WHICH ARE SUPPLIED BY THE TALATI VADODARA KASBA I.E. AT TH E RATE OF RS. 14.4 PER SQ. FT.'. 9 ITA NOS . 2612 & 2632/AHD/2007 12. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IT WAS CONTENDED THAT SALE INSTANCES AS PER REPORT OF THE TALATI WER E IN RESPECT OF AGRICULTURAL LAND WHICH CANNOT BE APPLIED TO THE LAND IN QUESTION BECAUSE IT WAS NOT USED FOR AGRICULTURAL PURPOSES WAS SURROUNDED BY HOUSING SOCIETIES AND THEREFORE WAS FULLY CONVE RTIBLE INTO NON-AGRICULTURAL LAND ON ANY DAY THE ASSESSEES DESIRED TO DO SO. FOR THIS RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RASIKLAL CHIMANLA L NAGRI VS.- CWT 56 ITR 608. 12.1. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IT WAS ALSO CONTENDED THAT SALE INSTANCES AS MENTIONED IN THE TALATIS REPORT WERE SITUATED IN A SLUM-LIKE LOCALITY INHABITED BY ECONOMICALLY POOR AND MIDDLE INCOME GROUP PEOPLE INCLUDING SOME ANTI-SOCIAL ELEMENTS ABOUT 1 AND KG. AWAY FROM THE LAND IN QUESTION AN D THEREFORE THE SALE INSTANCES WERE NOT COMPARABLE TO THE LAND IN QUESTION. 13. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTI ON OF ASSESSING OFFICER REGARDING ADOPTING OF COST OF ACQUISITION AS ON 1.4.1981 @ RS .14.40 PER SQ.FT. FOR THE DETAILED REASONS GIVEN IN PARA 5.3 TO 5.3.2 WHICH READS AS UNDER :- 5.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL AND FACTS OF THE FACT. NO EVIDENCE IS PRODUCED TO SUBSTANTIATE THE C LAIM THAT THE SALE INSTANCES AS PER TALATIS REPORT ARE IN RESPECT OF SLUM LIKE LOCALITY INHABITED BY POOR PEOPLE INCLUDING ANTI-SOCIAL ELEM ENTS. THE FINDING GIVEN BY THE ASSESSING OFFICER AS PER THE SALE AGREEMENT THE APPELLANTS THEMSELVES HAD TREATED THE LAND IN QUESTION AS AGRI CULTURAL LAND HAS NOT BEEN REBUTTED THEREFORE THE CONTENTION OF THE LD. COUNSEL THAT NO COMPARISON CAN BE MADE WITH THE SALE INSTANCES OF T HE TALATIS REPORT DOES NOT HOLD GOOD. IN THE CASE OF RASIKLAL CHIMANLAL NA GRI (SUPRA) RELIED UPON BY THE LD. CUONEL THE HON'BLE GUJARAT HIGH COURT W ASQ CONCERNED WITH THE MEANING OF AGRICULTURAL LAND U/S. 2(E)(I) OF THE WE ALTH TAX ACT. IN THE PRESENT CASE WE ARE NOT CONCERNED WITH THE ISSUE D EALT WITH BY THE HON'BLE GUJARAT HIGH COURT VIZ. WHETHER A PARTICULAR LAND W AS AGRICULTURAL LAND OR NOT WITHIN THE MEANING OF SECTION 2(E)(I) OF THE WE ALTH TAX ACT. 5.3.1. EVEN THE VALUATION REPORT OF THE REGISTERED VALUER IS OF NO HELP TO THE APPELLANT SINCE HE HAS JUST ESTIMATED THE FAIR MARKET VALUE OF THE PLOT OF LAND @ RS.60/- PER SQUARE FEET WITHOUT ANY BASIS OR WITHOUT QUOTING ANY INSTANCES OF COMPARABLE SALES. AS PER COL. NO. 40 O F HIS REPORT THE RATE IS 10 ITA NOS . 2612 & 2632/AHD/2007 BASED ON ENQUIRIES ABOUT PREVAILING PRICES IN MADHA V BAUG AREA. THERE IS NO DISCUSSION AS TO THE ENQUIRIES MADE BY HIM AND T HE PREVAILING RATES ON WHICH HE HAS BASED HIS ESTIMATE. 5.3.2. IN VIEW OF THE DISCUSSIONS GIVEN ABOVE I I NTEND TO AGREE WITH THE ASSESSING OFFICER THAT IN THE ABSENCE OF A NY EVIDENCE FURNISHED BY THE APPELLANT IN SUPPORT OF THE CLAIM OF COST OF RS .60/- PER SQUARE FEET THE BEST OPTION AVAILABLE IS THE AVERAGE RATE OF RS.14. 40 PER SQUARE FEET AS PER THE SPECIFIC SALE INSTANCES OBTAINED FROM TALATI VA DODARA KASBA. ACCORDINGLY THE RATE ADOPTED BY THE ASSESSING OFFI CER IS SUSTAINED AND THIS GROUND OF APPEAL FAILS. AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEES ARE IN APPEALS BEFORE THE TRIBUNAL. 14. AT THE TIME OF HEARING BEFORE US ON BEHALF OF ASSESSEES SHRI ANIL R. SHAH LD. COUNSEL APPEARED AND REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COUNSEL POINTED OUT THAT THE ASS ESSEE PRODUCED THE REPORT OF REGISTERED VALUER FOR VALUING LAND AS ON 1.4.1981. AS PER THIS REPORT THE ASSESSEE ARRIVED AT COST OF ACQUISITION AS ON 1.4.1981 AT RS.4 70 000/- @ RS.60/- PER SQ.FT. T HE ASSESSING OFFICER REJECTED THE VALUATION REPORT OF REGISTERED VALUER WITOUT MAKING ANY REFER ENCE TO THE GOVERNMENT VALUER THEREFORE HE BE DIRECTED TO ACCEPT THE VALUATION REPORT OF GOVER NMENT APPROVED VALUER. 15. ON THE OTHER HAND SHRI ANIL KUMAR LD. SR. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS). HE POINTED OUT THAT THE VALUE OF RS.4 70 000/- FOR THE PLOT OF LAND HAS BEEN ARBITRARILY ARRIVED BY THE VALUER. THE SAID VALUER HAS NOT ENQUIRED FROM THE OFFICE OF SUB-REGISTRAR OFFICE OR TALATI. HE TOOK INTO CONSIDERATION THE PRESENT SURROUNDINGS AND DESCRIBE D THE SAME AS WERE EXISTED IN 1981. 15.1. NOW COMING TO THE RATE ADOPTED BY THE ASSESSI NG OFFICER THE LD. D.R. POINTED OUT THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND IN 19 81 AND IT WAS CONVERTED TO NON-AGRICULTURAL ONLY AFTER THE PRESENT TRANSACTION IN 1999/2000. IT IS EVERYONES KNOWLEDGE THAT COST OF AGRICULTURAL LAND IS ALWAYS LESSER THAN THE NON AGR ICULTURAL LAND. THE ASSESSING OFFICER HAS CALLED FOR SALE INSTANCES OF THE AREA AND NEAR BY AREA AS DESCRIBED IN THE ASSESSMENT ORDER FROM CONCERNED TALATI. HE HAD TAKEN ON AVERAGE VALUE FOR THE INSTANCES AVAILABLE FROM THE RECORD AND 11 ITA NOS . 2612 & 2632/AHD/2007 DETERMINED THE VALUE AS ON 1.4.1981 AT THE RATE OF RS.14.40 PER SQ.FT. WHICH IS MORE NEARER TO THE TRUTH AND RELIABLE BECAUSE IT IS THE AVERAGE OF THE RECORDED TRANSACTION FROM THE GOVERNMENT RECORDS FOR AN AREA NEAR TO THE LAND IN QUESTION. L D. A.R. SUBMITTED THAT THE RATES OBTAINED FROM THE TALATI BELONG TO AN AREA WHERE POOR PEOPLE LIVE IS UNFOUNDED. IT IS NOT KNOWN WHETHER THERE WAS ANY HABITATION AT ALL THREE IN THAT AREA IN 198 1. CALLING AN AREA AREA OF THE POOR WITHOUT HAVING ANY EVIDENCE FROM THE SITUATION OF THE PAST (20 YEARS BACK) IS BEYOND COMPREHENSION. THEREFORE THE COST OF THE LAND DETERMINED BY THE A SSESSING OFFICER TAKING INTO ACCOUNT NUMEROUS SALE INSTANCES AS AFFIRMED BY THE CIT(A.) ARE NEAR TO TRUTH AND DESERVE TO BE ACCEPTED. RELIANCE IS PLACED ON DAYASINGH VS.- CIT & ANV. (P &H) REPORTED IN [2009] 18 DTR 287. 16. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSING O FFICER TAKEN AN AVERAGE VALUE FOR THE INSTANCES AVAILABLE ON RECORD AND DETERMINED THE VALUE AS ON 1.4.1981 AT RS.14.40 PER SQ.FT. WHICH IS MORE NEARER TO THE TRUTH AND RELIABLE BECAUSE IT IS THE AVERAGE OF THE RECORDED TRANSACTION FROM THE GOVERNMENT RECORDS FOR AN AREA NEAR TO THE LAND IN QUESTION. IN THESE CIRCUMSTANCES IN OUR OPINION THREE WAS NO NECESSITY FOR MAKING ANY REFE RENCE WHEN GOVERNMENT APPROVED VALUER VALUED THE LAND IN QUESTION @ RS.14.40 PER SQ.FT. F OR THE PURPOSE OF FINDING OUT THE ESTIMATED VALUE OF THE LAND IN QUESTION AS ON 1.4.1981. WE T HEREFORE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESP ECT OF BOTH THE ASSESSEES. RESULTANTLY GROUND NO. 3 OF BOTH THE APPEALS IS REJECTED. 17. GROUND NO. 4 IS REGARDING LEVY OF INTEREST UNDE R SECTION 234. LEVY OF INTEREST UNDER SECTION 234 IS MANDATORY. HOWEVER THE ASSESSING OF FICER WILL ALLOW CONSEQUENTIAL RELIEF IN LEVYING INTEREST UNDER SECTION 234 OF THE ACT. 18. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEES ARE PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 01.10.201 0 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 01 /10 / 2010 12 ITA NOS . 2612 & 2632/AHD/2007 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR ITAT AHMEDABAD LAHA/SR.P.S.