KUMAR K. CHHABRIA, MUMBAI v. ITO 19(1)(1), MUMBAI

ITA 5347/MUM/2008 | 2005-2006
Pronouncement Date: 30-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 534719914 RSA 2008
Assessee PAN AAAPC4668A
Bench Mumbai
Appeal Number ITA 5347/MUM/2008
Duration Of Justice 1 year(s) 7 month(s) 4 day(s)
Appellant KUMAR K. CHHABRIA, MUMBAI
Respondent ITO 19(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-03-2010
Date Of Final Hearing 24-02-2010
Next Hearing Date 24-02-2010
Assessment Year 2005-2006
Appeal Filed On 25-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH MUMBAI BEFORE SHRI R.K. GUPTA (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) I.T.A NO.5347/MUM./2008 ASSESSMENT YEAR : 2005-06 DATE OF HEARING: 24.2.2010 KUMAR K. CHHABRIA FLAT NO.10 3 RD FLOOR NEEL NANDINI B BUILDING 69B LINKING ROAD KHAR (WEST) MUMBAI 400 052 PAN AAAPC4668A .. APPELLANT VS INCOME TAX OFFICER WARD 19(1)(1) 3 RD FLOOR PIRAMAL CHAMBER LALBAUG MUMBAI 400 012 RESPONDENT APPELLANT BY : SHRI D.J. SHUKLA RESPONDENT BY : SHRI LAL CHAND O R D E R PER PRAMOD KUMAR A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE LEARNED CIT(A)S ORDER DATED 27 TH JUNE 2008 FOR ASSESSMENT YEAR 2005-06. KUMAR K. CHHABRIA I.T.A. NO.5347/MUM./2008 2 2. THE ASSESSEE IS AN INDIVIDUAL. DURING THE RELEVANT PREVIOUS YEAR ASSESSEE SOLD AN OFFICE PREMISES AT 509 MAKER CHAMBERS-V NARIMAN POINT MUMBAI FOR A STATED CONSIDERATION OF RS.52 50 000/-. THE SALE CONSIDERA TION OF THIS PROPERTY FOR THE PURPOSE OF COMPUTING CAPITAL GAINS WAS TAKEN AT RS.66 34 000/- U/S 50C OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT ) AND THERE IS NO DISPUTE ON THIS ASPECT. THE DISPU TE HOWEVER IS ON THE COST OF ACQUISITION TO BE TAKEN INTO ACCOUNT FOR CO MPUTATION OF CAPITAL GAIN. THE ASSESSEE HAD PURCHASED THE SAID PREMISES FOR RS.69 000/- ON 1 ST OCTOBER 1978 AND THE FAIR MARKET VALUE OF THIS PROPERTY AS ON 1 ST APRIL 1981 WHICH THE ASSESSEE WAS ENTITLED TO ADO PT AS COST OF ACQUISITION FOR COMPUTING CAPITAL GAINS WAS CLA IMED TO BE RS.16 20 000/-. THE SAID CLAIM OF THE ASSESSEE WAS BACKED BY A VALUATION REPORT BY AN APPROVED VALUER. THIS VALUATION REPORT IN TURN RELIED UPON CERTAIN PRESS REPORTS ABOUT PREVAILING MARKET PRICES AND NOT ON ANY COMPARABLE SALE INSTANCES. WHEN THE ASSESSING O FFICER TRIED TO FIND OUT COMPARABLE SALE INSTANCES IN THE SAME SOCIETY HE FOND THE SAME TO BE MUCH LOWER. THE ASSESSEE WAS CONFRONTED WITH THESE COMPARABLE SALES INSTANCES. I T WAS POINTED OUT BY THE ASSESSEE THAT THESE TRANSACTIONS APPARENTLY HAD CASH ELEMENT IN T HE CONSIDERATION AND THAT THE VALUATION OF THE ASSESSEE WAS ALSO IN CONSONANCE WITH INDIAN VALUER DIRECTORY AND REFERENCE BOOK. THE MATTER WAS THEN REFERRED TO THE D.V.O. WHO VALU ED THE PREMISES AT RS.3 00 000/- ON THE BASIS OF CERTAIN SALE TRANSACTIONS AT CUFFE PARADE AREA. ACCORDINGLY THE ASSESSING OFFICER ADOPTED THIS AMOUNT OF RS.3 00 000/- AS F.M.V. OF T HE PROPERTY AS ON 1 ST APRIL 1981 AND COMPUTED CAPITAL GAINS ON THAT BASIS. THE ASSESSEE S OBJECTIONS TO THE D.V.O. REPORT WERE REJECTED ON THE GROUND THAT THIS REPORT IS BINDING ON THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(A) BUT WITHOUT ANY SUCCESS. THE LEARNED CIT(A) REJECTED THE APPEAL OF THE ASSES SEE BY OBSERVING AS FOLLOWS:- 2.4 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. IN THE FIRST PLACE I FIND THAT THE ASSESSING OFFICER IS BOUND BY THE VALUATION GIVEN BY THE DVO-1. THIS IS CLEARLY MANDATED IN SECTION 55A OF T HE INCOME TAX ACT 1961 READ WITH SUB-SECTION (6) OF SECTION 16A OF W.T. ACT 1957. S ECTION 55A OF THE INCOME TAX ACT 1961 CLEARLY MENTIONS THAT WHERE ANY REFERENCE HAS BEEN MADE TO A VALUATION OFFICER UNDER THE SECTION THE PROVISIONS OF SECTION 16A OF THE W.T. ACT 1957 WILL APPLY TO THE PROCEEDINGS U/S 55A OF THE INCOME TAX ACT 1961 TOO . AS MAY BE SEEN SUB SECTION (6) OF SECTION 16A OF THE W.T. ACT 1957 MAKES IT MANDATOR Y FOR THE ASSESSING OFFICER TO PROCEED TO COMPLETE THE ASSESSMENT ON THE ASSET IN QUESTION IN CONFORMITY WITH THE ESTIMATE OF THE VALUATION OFFICER. THIS BEING SO T HERE IS NO CASE FOR ADOPTING ANY OTHER VALUE IN THE CASE. IT IS TO BE FURTHER NOTED THAT T HE ASSESSING OFFICER HAD REFERRED THE KUMAR K. CHHABRIA I.T.A. NO.5347/MUM./2008 3 VALUATION TO THE DVO-I ONLY ON APPELLANTS REQUEST. IN THESE CIRCUMSTANCES BOTH FROM THE POINT OF VIEW OF LAW AND APPELLANTS CONDUCT IN MAKING THE REQUEST FOR THE REFERENCE THE ASSESSING OFFICERS ACTION IS PERFEC TLY IN ORDER. THIS APART I ALSO FOUND THAT THE VALUATION BY THE DVO-I IS BASED ON LIVE IN STANCES OF SALE IN THE SAME LOCALITY. AS AGAINST THIS THE VALUATION ADOPTED BY THE APPELLAN TS VALUER IS BASED MERELY ON PUBLICATION IN THE TIMES OF INDIA WHICH IS WITHOUT ANY SCIENTIFIC BASIS. WHEN WEIGHED AGAINST EACH OTHER I FIND THE VALUATION BY THE DVO -I TO BE BASED ON AN AUTHENTIC BASIS. ACCORDINGLY FROM THE POINT OF VIEW OF MERIT ALSO THE VALUATION SUBMITTED BY THE APPELLANTS VALUER IS FOUND TO BE INACCURATE AND DE VOID OF ANY SCIENTIFIC BASIS. I ALSO FIND THAT DESPITE THERE BEING INSTANCES OF LIVE SAL ES OF PROPERTIES THE APPELLANTS VALUER HAS REFERRED TO HIS INABILITY TO FIND LIVE INSTANCE S OF SALE. THIS IS HIGHLY INCONSISTENT AND ERODES THE CREDIBILITY OF THE APPELLANTS VALUERS REPORT. THE APPELLANTS FURTHER ARGUMENT THAT THE VALUE AS AVAILABLE IN INDIAN VALU ERS DIRECTORY AND REFERENCE BOOK MAY BE TAKEN IS ALSO MISPLACED IN THAT THE APPELLAN T NEVER RELIED ON THIS VALUATION IN HIS RETURN. IT WAS OPEN TO THE APPELLANT TO FOLLOW THIS VALUATION WHICH THE APPELLANT DID NOT CHOOSE TO DO. IN THESE CIRCUMSTANCES ON TH IS SCORE ALSO THE APPELLANTS CLAIM HAS NO MERIT. ANY CHANGE FROM THE STATED POSITION I N THE RETURN OF INCOME HAS TO BE MADE THROUGH A REVISED RETURN. THIS IS THE POSITION OF LAW. AS REGARDS THIS THE HON'BLE SUPREME COURT IN THEIR DECISION IN THE CASE OF GOET Z (INDIA) LTD. VS CIT (2006) 284 ITR 323 HAS HELD THAT A RELIEF IF OMITTED TO BE SOUGHT HAS TO BE CLAIMED ONLY BY FILING A REVISED RETURN AND THAT THIS REQUIREMENT CANNOT BE CIRCUMVENTED BY CLAIMING THE RELIEF IN ANY OTHER FORM. IN THESE CIRCUMSTANCES THE SUBM ISSION ON THIS POINT APPEARS TO ME TO BE MORE AN AFTERTHOUGHT DRIVEN SOLELY BY THE ADV ERSE PROSPECT OF REJECTION OF APPELLANTS VALUATION OF THE PROPERTY. APPELLANTS RELIANCE ON THE DECISION IN THE CASE OF SHRI SUDESH BALARAM RANE VS ACIT MUMBAI IS ALSO M ISPLACED. THE FACTS IN THIS CASE ARE COMPLETELY DIFFERENT FROM APPELLANTS CASE. FIR STLY IN THIS CASE THE MATTER WAS RESTORED TO THE ASSESSING OFFICER BY THE HONBLE TR IBUNAL. BESIDES IN THIS CASE THE COST OF LAND WAS VALUED. IN APPELLANTS CASE THE SUBJEC T MATTER IS SALE OF FLAT FOR WHICH PARAMETERS ARE DIFFERENT. IN LIGHT OF THE FOREGOING FACTS AND CIRCUMSTANCES AND CLEAR POSITION OF LAW THE ASSESSING OFFICERS ACTION IS CONFIRMED AND THE GROUNDS OF APPEAL ARE DISMISSED. 3. NOT SATISFIED WITH THE ORDER OF THE LEARNED CIT(A) THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION AS ALSO TH E FACTUAL MATRIX OF THE CASE. 5. WE HAVE NOTICED THAT IN THE CASE OF BUBAB M. KAZERA NI VS JCIT 91 ITD 429 (TM) A THIRD MEMBER DECISION OF THE TRIBUNAL HAS CONCLUDED THAT REFERENCE TO D.V.O. U/S 55A WHEN VALUE OF THE PROPERTY AS DISCLOSED BY THE ASSE SSEE IS LESS THAN THE FAIR MARKET VALUE AND NOT VICE-VERSA. IN THE PRESENT CASE ON THE CONTRARY ASSESSING OFFICER WAS OF THE PRIMA KUMAR K. CHHABRIA I.T.A. NO.5347/MUM./2008 4 FACIE VIEW THAT THE FAIR MARKET VALUE IS LESS THAN THE VALUE DISCLOSED BY THE ASSESSEE. THUS THE LEARNED CIT(A)S EMPHASIS ON BINDING NATURE OF D.V.O. VALUATION IS WHOLLY DEVOID OF LEGALLY SUSTAINABLE BASIS. THAT APART EVEN ON MERI TS THE D.V.OS VALUATION IS PRIMARILY BASED AS THE D.V.O. HIMSELF PUTS IT COMPARABLE SALE INSTANCES. THE VALUATION IS SAID TO BE ASSESSED RATE BASED ON COMPARABLE SALE INSTANCES . IT IS NOT EVEN IN DISPUTE THAT AT LEAST IN EIGHTI ES IT WAS A COMMON PRACTICE TO PAY A PART OF SALE CONSIDE RATION BY UNACCOUNTED CASH AND IT WAS BECAUSE OF THIS PRACTICE SEVERAL LEGISLATIVE MEASUR ES HAD TO BE TAKEN TO COMBAT TAX EVASION IN PROPERTY SALE TRANSACTIONS. BEARING THIS IN MIND THE RATES GIVEN BY INDEPENDENT MEDIA AND PRESS LIKE TIMES OF INDIA / ACCOMMODATION TIMES IS CERTAINLY MORE RELIABLE INDICATORS OF THE PREVAILING MARKET VALUE OF PROPERTIES. THE M ARKET PRICES GIVEN IN INDIAN VALUER DIRECTORY & REFERENCE BOOK ALSO PARTLY SUPPORTS THE VALUATION BY THE VALUATI ON REPORT AS FILED BY THE ASSESSEE. AS AGAINST ASSESSEES VALUAT ION @ RS.2 700/- PER SQ.FT. THIS DIRECTORY & REFERENCE BOOK STATES THE VALUE OF OFFICE PREMISE S IN NARIMAN POINT AREA @ RS.2 000/- PER SQ.FT. THE VALUATION AS PER ACCOMMODATION TIMES RANGES FROM RS.2 400/- PER SQ.FT. TO RS.3 200/- PER SQ.FT. FOR COMMERCIAL AREA. KEEPING IN MIND ALL THESE FACTORS IN OUR CONSIDERED VIEW IT WILL MEET THE ENDS OF JUSTICE T O ADOPT THE VALUATION OF COMMERCIAL PREMISES @ RS.2 000/- PER SQ.FT. AS AGAINST VALUATI ON @ RS.500/- PER SQ.FT. ADOPTED BY THE D.V.O. AND VALUATION @ RS.2 700/- PER SQ.FT. ADOPTE D BY THE ASSESSEES VALUER. EVEN ACCORDING TO THE ASSESSEE INDIAN VALUER DIRECTORY AND REFERENCE BOOK IS A RELIABLE SOURCE OF INFORMATION AND THESE RATES ARE ADOPTED BY THE G OVERNMENT OF MAHARASHTRA FOR OFFICIAL PURPOSES. WE HAVE ADOPTED THE RATES GIVEN IN THIS R EFERENCER. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE CAPITAL GAINS I N THE LIGHT OF OUR OBSERVATIONS. TO THIS EXTENT GRIEVANCE OF THE ASSESSEE IS UPHELD. 6. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF MARCH 2010. SD/- (R.K. GUPTA) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF MARCH 2010 KUMAR K. CHHABRIA I.T.A. NO.5347/MUM./2008 5 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR A BENCH (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY