Sh. Paramjit Singh, Ludhiana v. ITO, Ludhiana

ITA 326/CHANDI/2011 | 2006-2007
Pronouncement Date: 27-07-2011 | Result: Allowed

Appeal Details

RSA Number 32621514 RSA 2011
Assessee PAN AVMPS2608B
Bench Chandigarh
Appeal Number ITA 326/CHANDI/2011
Duration Of Justice 3 month(s) 30 day(s)
Appellant Sh. Paramjit Singh, Ludhiana
Respondent ITO, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-07-2011
Date Of Final Hearing 14-06-2011
Next Hearing Date 14-06-2011
Assessment Year 2006-2007
Appeal Filed On 28-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 326/CHD/20 (ASSESSMENT YEAR : 2006-07) SH.PARAMJIT SINGH VS. THE INCOME-TAX OFFICER S/O SH.BHAG SINGH R/O H.NO.597 WARD-V(3) VISHKARMPAPURI ST.NO.1 GILL ROAD. LUDHIANA. LUDHIANA. PAN: AVMPS2608B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI N.K.SAINI DR O R D E R PER SUSHMA CHOWLA J.M : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(A) DATED 21.1.2011 RELA TING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UN DER SECTION 147/143(3) OF THE I.T. ACT 1961. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER : 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER (AO) IN ISSUING THE NOTICE U/S 148 OF THE ACT AND REOPENING THE CASE. 2. THAT NOTWITHSTANDING GROUND OF APPEAL IN SL.NO.1 ABOVE IT IS SUBMITTED THAT THE LD. CIT(A) HAS ERRE D IN CONFIRMING THE ACTION OF THE AO IN ASSESSING LONG TERM CAPITAL GAIN AT RS.11 00 125/-. 2 3. THAT THE LD. CIT(A) HAS ERRED TO CONSIDER THAT T HE AO HAS ERRED IN TAKING FAIR MARKET VALUE OF PROPERTY ON THE BASIS OF STAMP DUTY VALUATION IGNORING THE FACT THAT STAMP DUTY VALUATION WOULD NOT IPSO FACTO SUBSTITUTE THE ACTUAL SALE CONSIDERATION IN THE ABSENCE OF ANY POSITIVE EVIDENCE AND THE CIT(A) HAS FAILED TO CONSIDER THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT AS CITED BEFORE HIM AS REPORTED IN 323 ITR 510 AND IN FACT THE WRITTEN SUBMISSIONS AS FILED BEFORE THE CIT(A) DATED 10.1.2011 HAS BEEN IGNORED BY THE CIT(A). 4. THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE ADDITIONAL EVIDENCE FILED BEFORE HIM WHICH HAS NOT BEEN OBJECTED TO BY THE AO REGARDING THE FAIR MARKET VALUE OF PROPERTY AS ON 1.4.1981 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. 5. THAT NOTWITHSTANDING THE ABOVE SAID GROUNDS OF APPEAL THAT THE LD. CIT(A) HAS ALSO ERRED IN ADOPTING THE STAMP DUTY VALUATION WITHOUT REFERRING THE SAME TO THE VALUATION OFFICER FOR THE VALUATION OF THE FAIR MARKET VALUE AS ON DATE OF SALE. 6. THAT THE AO HAS ERRED IN DEMANDING INTEREST U/S 234B WITHOUT THERE BEING SPECIFIC ORDER TO CHARGE THE INTEREST U/S 64B EITHER IN THE ORDER OF IN THE DEMAND NOTICE AND THUS THE ASSESSEE DENIES ITS LIABILITY TO CHARGE INTEREST U/S 234B IN VIEW OF JUDGMENT OF HON'BLE SUPREME COURT AS REPORTED IN 247 ITR 209. 3. GROUND NO.1 RAISED BY THE ASSESSEE IS NOT PRESSE D AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND NOS.2 TO 5 IS AGAINST THE CO MPUTATION OF INCOME FROM LONG TERM CAPITAL GAINS. THE ISSUE RAI SED BY THE ASSESSEE IS TWO FOLDS I.E. A) WITH REGARD TO THE ADOPTION OF SA LE CONSIDERATION AND 3 WORKING OF FAIR MARKET VALUE OF PROPERTY AS ON 1.4. 1981. WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE IS FURTHER AGGR IEVED THAT THE STAMP DUTY VALUATION HAS BEEN ADOPTED BY THE ASSESSING OF FICER WITHOUT REFERRING THE SAME TO THE VALUATION OFFICER. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED ORIGINAL RETURN OF INCOME IN WHICH NO INCOME FROM CAPITAL GA IN WAS DISCLOSED. THE ASSESSING OFFICER NOTICED THE ASSESSEE NOT TO H AVE DISCLOSED INCOME ARISING ON SALE OF INDUSTRIAL PLOT IN LUDHIANA THO UGH THE SALE DEED WAS EXECUTED ON 3.3.2006. THE PROCEEDINGS WERE REOPENE D UNDER SECTION 147/148 OF THE INCOME TAX ACT. THOUGH THE ASSESSEE HAS RAISED GROUND NO.1 AGAINST INVOKING OF PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT BUT THE SAME HAS NOT BEEN PRESSED BY THE LEARN ED A.R. FOR THE ASSESSEE. THE ASSESSING OFFICER NOTICED THAT THE A SSESSEE CLAIMS TO HAVE SOLD HIS SHARE IN THE PROPERTY NO.630 INDUSTRIAL A REA-B LUDHIANA FOR A TOTAL CONSIDERATION OF RS.9 LACS VIDE SALE DEED DAT ED 3.3.2006. THE STATE REVENUE AUTHORITY HAD VALUED THE MARKET VALUE OF THE PROPERTY AT RS.20 LACS AND STAMP DUTY OF RS.1 80 000/- WAS PAID THEREON. SUMMONS WERE ISSUED UNDER SECTION 131 OF THE INCOME TAX ACT TO THE ASSESSEE AND THE FACTS WERE CONFIRMED BY THE ASSESSEE IN REPLY T HERETO. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 50C(1) OF THE ACT AND ADOPTED THE VALUE AT RS.20 LACS AS DETERMINED BY THE REVEN UE AUTHORITIES TO BE THE SALE CONSIDERATION AND AFTER DEDUCTING THE COS T OF PLOT AS SHOWN BY THE ASSESSEE AT RS.1 86 375/- THE INCOME FROM CAPI TAL GAINS (LONG TERM) WAS COMPUTED AT RS.18 13 625/-. FURTHER EXEMPTION WAS ALLOWED UNDER SECTION 54 OF THE ACT AS DECLARED BY THE ASSESSEE A T RS.7 13 500/- AND THE TAXABLE INCOME FROM LONG TERM CAPITAL GAINS WAS COMPUTED AT RS.11 00 125/-. 4 6. BEFORE THE CIT(A) THE ASSESSEE FURNISHED ADDITIO NAL EVIDENCE BEING THE ALLOTMENT LETTER OF THE SAID PLOT IN THE NAME O F THE GRAND FATHER OF THE ASSESSEE WILL OF THE SAID PERSON AND ALSO THE VALUATION REPORT OF THE REGISTERED VALUER DETERMINING THE FAIR MARKET VALUE AS ON 1.4.1981. THE SAID ADDITIONAL EVIDENCE WAS CONFRONTED TO THE ASSE SSING OFFICER WHO IN TURN SUBMITTED ITS REMAND REPORT DATED 13.11.2002. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN ADO PTING THE SALE CONSIDERATION AT RS.20 LACS AS AGAINST RS.9 LACS SH OWN BY THE ASSESSEE. THE CIT(A) FURTHER CONFIRMED THE ORDER OF THE ASSES SING OFFICER IN COMPUTING THE INCOME FROM LONG TERM CAPITAL GAINS A T RS.11 00 125/-. THE ASSESSEE IS IN APPEAL AGAINST THE ABOVESAID ORD ER. 7. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ADDITIONAL EVIDENCE FURNISHED BEFORE THE CIT(A) WAS REFERRED T O THE ASSESSING OFFICER WHO IN TURN FILED HIS REMAND REPORT AND ACC EPTED THE CONTENTION OF THE ASSESSEE. HOWEVER THE CIT(A) HAS FAILED TO REBUT THE SAME. 8. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T FRESH/ADDITIONAL EVIDENCE WAS FURNISHED BEFORE THE CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CL AIMED TO HAVE SOLD HIS SHARE IN PROPERTY NO.630-B INDUSTRIAL AREA-B LUDHIANA VIDE SALE DEED DATED 3.3.2006 FOR TOTAL CONSIDERATION OF RS.9 LACS. THE STAMP VALUATION AUTHORITIES WHILE REGISTERING THE SAID PR OPERTY DETERMINED THE MARKET VALUE OF THE PROPERTY AT RS.20 LACS ON WHICH STAMP DUTY OF RS.1 80 000/- WAS CHARGED. THE SAID PROPERTY IS CL AIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM HIS GRAND FATHER. TH E CONTENTION OF THE ASSESSEE WAS THAT THE SAID PLOT OF LAND WAS ALLOTTE D ON 13.7.1955 BUT WAS REGISTERED BY THE INDUSTRIES DEPARTMENT IN FAVOUR O F SHRI GANGA SINGH 5 ON 6.10.1981. THE ASSESSEE WHILE COMPUTING THE INC OME FROM LONG TERM CAPITAL GAINS FROM THE SALE OF THE LAND HAD SHOWN T HE SALE CONSIDERATION AT RS.9 LACS AND HAD CLAIMED THE COST OF LAND AS DE DUCTION AND THEREAFTER CLAIMED EXEMPTION UNDER SECTION 54 OF THE INCOME TA X ACT. THE ASSESSING OFFICER HOWEVER ADOPTED THE SALE VALUE AT RS.20 LACS AND AFTER ALLOWING THE DEDUCTION ON ACCOUNT OF COST OF PLOT AS DECLARED BY THE ASSESSEE AND THE EXEMPTION UNDER SECTION 54 OF THE ACT HAD COMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS AT RS.11 00 125 /-. THE ASSESSEE HAD FURNISHED REPLY DATED 8.4.2009 BEFORE THE ASSESSING OFFICER IN WHICH IT WAS CLAIMED BY THE ASSESSEE THAT AS HE HAD INVESTED WHOLE AMOUNT OF CAPITAL GAINS IN THE CONSTRUCTION OF THE NEW RESIDE NTIAL HOUSE AND AS SUCH NO TAX WAS TO BE PAID ON ACCOUNT OF CAPITAL GAINS. BEFORE THE CIT(A) HOWEVER THE ASSESSEE FILED AN APPLICATION FOR ADMI SSION OF ADDITIONAL EVIDENCE IN WHICH HE CLAIMED THAT THE FAIR MARKET V ALUE OF THE SAID PROPERTY AS ON 1..4.1981 WAS TO BE ADOPTED FOR COMP UTING THE COST OF ACQUISITION OF THE PROPERTY WHICH AS PER THE ASSES SEE WORKED OUT TO RS.8 13 000/-. THE ASSESSEE HAS FURNISHED THE COPY OF THE SAID LETTER ADDRESSED TO THE CIT(A) AT PAGES 5 TO 7 OF THE PAPE R BOOK ALONGWITH THE ALLOTMENT LETTER COPY OF REGISTERED TITLED DEED C OPY OF WILL OF SHRI GANGA SINGH GRAND FATHER OF THE ASSESSEE AND REPOR T OF REGISTERED VALUER AT PAGES 8 TO 26 OF THE PAPER BOOK. THE ENG LISH VERSION OF THE SAID DOCUMENTS ARE ALSO FILED ON RECORD. THE CIT(A ) HAD FORWARDED THE ABOVE SAID DOCUMENTS TO THE ASSESSING OFFICER WHO H AD COMMENTED UPON THE FACTS AS STATED BY THE ASSESSEE TO BE CORRECT. FURTHER REFERENCE WAS MADE TO THE SALE DEED REGISTERED ON 13.3.2006 UNDER WHICH STAMP DUTY OF RS.1 80 000/- WAS PAID ON RS.20 LACS. REFERENCE WA S MADE TO THE CONSTRUCTION OF THE SAID PLOT BEING MADE BEFORE 24. 10.1977. THE ASSESSING OFFICER POINTED OUT THAT THE COST OF THE CONSTRUCTION WAS SHOWN TO RS.35 000/- BUT IT WAS NOT CLEAR AS TO WHE THER IT WAS FOR HALF 6 SHARE OF THE ASSESSEE OR THE TOTAL COST OF THE CONS TRUCTION OF THE PROPERTY WHICH AS PER THE ASSESSING OFFICER NEEDS TO BE LOOK ED INTO. THE COPY OF THE REMAND REPORT IS PLACED AT PAGE 27 OF THE PAPER BOOK. THEREAFTER THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS DATED 16.12. 2000 AND 10.1.2011 POINTING OUT THE CASE LAWS ON THE ISSUE IN THE CONT EXT OF PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT. THE CIT(A) VIDE PARA 6 MADE OBSERVATION IN CONNECTION WITH THE VALUE DETERMINED BY THE STATE REVENUE AUTHORITIES AND HELD THAT IN THE TOTALITY O F THE FACTS AND CIRCUMSTANCES HE WAS OF THE VIEW THAT THE ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION BY ADOPTING THE VALUE OF PLOT AT RS.20 LACS IN VIEW OF THE PROVISIONS OF SECTION 50C OF THE ACT. THE COMP UTATION OF LONG TERM CAPITAL GAINS THEREAFTER MADE BY THE ASSESSING OFFI CER WAS CONFIRMED BY THE CIT(A). THE ASSESSEE IS AGGRIEVED BY THE NON- CONSIDERATION OF HIS WRITTEN SUBMISSIONS BEFORE THE CIT(A) AND ALSO NON- CONSIDERATION OF THE ADDITIONAL EVIDENCE FURNISHED IN RESPECT OF THE FAI R MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. 10. UNDER THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES AN OPTION IS AVAILABLE TO THE ASSESSEE TO FURNISH ADDI TIONAL EVIDENCE BEFORE THE CIT(A) WHICH WAS NOT FURNISHED BEFORE THE ASSE SSING OFFICER. THE SAID SECTION LAYS DOWN THE PROCEDURE FOR THE FILING OF THE ADDITIONAL EVIDENCE AND ALSO FOR THE SAME BEING CONSIDERED BY THE CIT(A) AFTER THE SAME IS CONFRONTED TO THE ASSESSING OFFICER. THE P OWERS OF THE CIT(A) ARE CO-TERMINUS WITH THE POWERS OF THE ASSESSING OF FICER AND WHILE DECIDING THE ISSUE THE CIT(A) IS EMPOWERED TO BASE ITS DECISION ON ANY OF THE SAID ADDITIONAL EVIDENCE BEING FURNISHED BY THE ASSESSEE IN ORDER TO ADJUDICATE THE ISSUE RAISED BEFORE HIM. IN THE FACTS OF THE PRESENT CASE BEFORE US WE FIND THE ASSESSEE HAD INITIALLY IN THE COMPUTATION OF INCOME FILED BEFORE THE ASSESSING OFFICER DECLARED THE COST OF 7 ACQUISITION OF THE ASSET SOLE AT ITS COST PRICE PAI D IN 1955 AND THE COST OF CONSTRUCTION INCURRED IN 1977. HOWEVER UNDER THE PROVISIONS OF SECTION 48 OF THE INCOME TAX ACT WHILE COMPUTING T HE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS DEDUCTIO N ON ACCOUNT OF COST OF ACQUISITION OF THE ASSET COST OF ANY IMPROVEMEN T THERETO AND EXPENDITURE INCURRED IN CONNECTION WITH THE SAID TR ANSFER IS TO BE DEDUCTED FROM THE FULL VALUE OF CONSIDERATION. WHE RE THE CAPITAL ASSET IS ACQUIRED BY THE ASSESSEE PRIOR TO 1 ST DAY OF APRIL 1981 THE COST OF ACQUISITION OF THE ASSET OR THE FAIR MARKET VALUE O F THE ASSET AS ON 1 ST DAY OF APRIL 1981 AT THE OPTION OF THE ASSESSEE IS T O BE ADOPTED. THE ASSESSEE BEFORE US IN THE RETURN OF INCOME HAD SHOW N THE COST OF ACQUISITION AS ITS ORIGINAL COST. HOWEVER BEFORE THE CIT(A) A PRAYER WAS MADE FOR ADMISSION OF ADDITIONAL EVIDENCE ALONG WITH DOCUMENTS ESTABLISHING THE CLAIM OF THE ASSESSEE OF HAVING AC QUIRED THE SAID PROPERTY PRIOR TO 1 ST APRIL 1981. FURTHER REPORT OF THE REGISTERED VALUER DETERMINING THE FAIR MARKET VALUE AS ON 1.4. 1981 WAS ALSO FURNISHED AS ADDITIONAL EVIDENCE. THE CONTENTION OF THE ASSESSEE IN THIS REGARD WAS THAT THE FAIR MARKET VALUE AS ON 1 ST DAY OF APRIL 1981 IS TO BE ADOPTED AS THE COST OF ACQUISITION UNDER THE PROVIS IONS OF SECTION 48 OF THE ACT. UNDER THE PROVISIONS OF THE ACT ADMITTEDL Y THE ASSESSEE HAS THE OPTION TO ADOPT THE FAIR MARKET VALUE OF THE ASSET AS ON 1.4.1981 AS ITS COST OF ACQUISITION. HOWEVER AS POINTED OUT IN PA RAS HEREINABOVE THE ASSESSEE HAD FAILED TO DO SO IN THE RETURN OF INCOM E FILED BY HIM. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE VIS--VIS A DDITIONAL EVIDENCE FURNISHED BEFORE THE CIT(A) WHEREIN THE ASSESSEE HA D FILED THE EVIDENCE IN RESPECT OF ALLOTMENT OF THE SAID PLOT IN THE NAM E OF THE GRAND FATHER OF THE ASSESSEE IN THE YEAR 1955. THE REGISTERED TITL E DEED IN FAVOUR OF HIS GRAND FATHER WAS EXECUTED IN 1981. FURTHER THE CO PY OF THE WILL OF THE GRAND FATHER HAS ALSO BEEN FILED ON RECORD ALONGWIT H ENGLISH VERSION OF 8 THE ABOVESAID DOCUMENTS. ADMITTEDLY IN ALL SUCH C ASES WHERE THE PROPERTY/ASSET IS ACQUIRED PRIOR TO 1.4.1981 FAIR MARKET VALUE ON 1.4.1981 IS TO BE ADOPTED AND WE HOLD SO. NOW THE QUESTION BEFORE US IS THE DETERMINATION OF FAIR MARKET VALUE AS ON 1.4.19 81. THE ASSESSEE HAS FILED REPORT OF REGISTERED VALUER BUT THE SAME HAS NOT BEEN LOOKED INTO BY THE ASSESSING OFFICER OR THE CIT(A). IN THE IN TEREST OF JUSTICE WE ARE OF THE VIEW THAT THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 1.4.1981 IS TO BE DETERMINED IN THE CASE OF THE ASSESSEE. A CCORDINGLY THE MATTER IS REMITTED BACK TO THE ASSESSING OFFICER TO DETERM INE THE SAME TAKING INTO CONSIDERATION THE REPORT OF REGISTERED VALUER FILED BY THE ASSESSEE. FURTHER AS THE MATTER IS BEING REMITTED BACK TO TH E ASSESSING OFFICER WE ALSO DEEM IT FIT TO RESTORE THE ISSUE OF APPLICABIL ITY OF THE PROVISIONS OF SECTION 50C OF THE ACT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CONSIDER THE ISSUE IN ACCOR DANCE WITH LAW AND IN VIEW OF THE SETTLED PRECEDENTS ON THE SAID ISSUE. REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASS ESSEE BY THE ASSESSING OFFICER. IN VIEW THEREOF THE GROUNDS OF APPEAL RA ISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF JULY 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH JULY 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH 9