2020 (7) TMI 327 - AT - Income Tax

Tribunal overturns tax ruling on property sale, emphasizes fair process and valuation methods.

Astik Mondal Versus Income Tax Officer Ward-1 (4), Durgapur

The Tribunal set aside the CIT(A)'s decision to add long-term capital gain due to disputed indexed cost of acquisition in a jointly sold property. The ... Long-term capital gain - FMV determination - HELD THAT:- Fair market value of the property as on 01.04.1981 was claimed by the assessee on the basis of actual sale instance of the comparable property but the same was not accepted by the AO, who adopted the fair market value of the property as on 01.04.1981 on the basis of the valuation made by the Departmental Valuation Officer (DVO). He has contended that the copy of the DVO’s valuation report, however, was never given by the AO to the assessee and even the objections raised by the assessee in respect of the valuation determined by the DVO before the ld. CIT(Appeals) were not properly considered by him. As contended that even the sale instances relied upon by the assessee to justify the fair market value of the property as on 01.04.1981 taken by him were not properly appreciated either by the Assessing Officer or by the ld. CIT(Appeals) - a similar issue involved in the case of co-owner Shri Samaresh Kumar Mondal, brother of the assessee, has already been sent back by the Tribunal to the Assessing Officer for reconsideration - A perusal of the order of the Tribunal passed in the case of Samaresh Kumar Mondal, however, shows that a similar issue involved in the said case in the identical facts and circumstances was remitted by the Tribunal back to the ld. CIT(Appeals) for fresh adjudication - Appeal of the assessee is treated as allowed for statistical purposes. Issues involved: Addition of long-term capital gain due to disputed indexed cost of acquisition.Analysis:1. Background: The appeal pertains to an individual assessee's case against the addition of long-term capital gain amounting to Rs. 12,84,245 made by the Assessing Officer and upheld by the CIT(A). The dispute arose from the indexed cost of acquisition of a jointly sold property.2. Assessment Proceedings: The Assessing Officer reopened the assessment based on information regarding the joint sale of property by the assessee and another individual. The assessee declared a total income of Rs. 5,54,325 in response to the notice under section 148, claiming a long-term capital loss of Rs. 3,86,266. The Assessing Officer, however, disputed the indexed cost of acquisition leading to the addition of long-term capital gain.3. Appellate Proceedings: The CIT(A) upheld the addition, prompting the assessee to appeal before the Tribunal. The assessee argued that the fair market value of the property as on 01.04.1981 was based on actual sale instances, challenging the valuation by the Departmental Valuation Officer (DVO). The Tribunal noted a similar issue in a co-owner's case sent back for reconsideration.4. Tribunal's Decision: After considering the arguments and precedents, the Tribunal set aside the CIT(A)'s order and remitted the matter for fresh adjudication. The Tribunal directed the CIT(A) to provide the assessee with a proper opportunity to be heard and consider the outcome of the co-owner's case for a fair decision.5. Conclusion: The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of a fair hearing and consideration of relevant factors in determining the indexed cost of acquisition. The case highlights the significance of proper valuation methods and due process in tax assessments.Judgment Summary: The Tribunal's decision revolved around the disputed indexed cost of acquisition leading to the addition of long-term capital gain. The Tribunal remitted the matter back to the CIT(A) for fresh adjudication, emphasizing fair consideration and proper opportunity for the assessee.