TaxTMI 
TaxTMI 
2018 (8) TMI 1989
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....see. 3. That the appellant craves leave to add or delete or alter or modify any or more ground(s) of appeal during the appellate proceedings. 4. That the order of the Ld CIT(A)-1, Agra, being erroneous in law and on facts be set aside and the order of the Assessing Officer be restored. 2. Facts of the case are that during the Financial Year 2012-13 relevant to the Assessment Year 2013-14,the assessee has sold his factory building realizingaconsideration of Rs. 5,00,00,000/- towards the land and Rs. 80,00,000/- towards the construction as against the circle values of Rs. 5,00,08,000/- and 1,36,00,000/- respectively. Thus, the total sale consideration fell short by Rs. 56,08,000/- in comparison to values adopted for stamp value purposes which the Ld AO added to the income of the assessee under the deeming provision of section 50C of the Act. 3. Being aggrieved, assessee carried the matter in appeal before the Ld CIT(A) who quashed the addition observing vide para 7.3 as under: "I have carefully considered the appellant's submission, the facts of the case and the legal position in this regard. The undisputed fact in this case is that the appel....
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....xing the circle rates. While circle rate of all properties in a particular area would be same, individual properties may have different fair market values depending on their location, approach, use, condition, expected remaining useful life and other impediments. A property shrouded with litigation would not fetch as much value as a clean property. Similarly, just a day prior to fixation of circle rates, value of property would be different and on the next day it would be different; while in actual its fair market value would be same on both days. The factory building sold by the assessee too did not have a fair market value to the extent as worked out for stamp purposes as per circle rates. In this respect following factors, that impacted the fair market value of the property sold, are highlighted: 1. The factory building admeasuring 1248.58 Sq. mtrs was standing on a land of 17860 Sq. Mtrs. A buyer would not easily be available for such a vast area. 2. In the factory building assessee was having a shoe manufacturing unit and it was constructed accordingly. Therefore, only a person interested to set up similar unit would have been interested in the purch....
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....ssee, by giving various reasons, specifically claimed that the stamp valuation adopted for the property sold was not its "fair market value". However, it is noted that the AO without disputing any of the reasons given by the assessee made the impugned addition in a cryptic manner observing in Para 3 as under: "During the course of assessment, it was noticed that the assessee sold his factory including the land and constructions, for which he received total sale consideration Rs. 5,80,00,000/-. The capital gain worked out by the assessee as per his return of is shown at Rs. 33,00,201/- which was calculated on the basis of actual sale consideration. On perusal of sale deed it was noticed that the actual value as per the circle rate and the statutory norms for cost of constructions it is shown as Rs. 6,36,08,000/- and stamp duly has been paid accordingly. The assessee vide a show cause notice dated 17.02.2016 was required to clarify as to why this difference should not be added to the income of the assessee. The assessee furnished written submission dated nil in this regard. Considering the reply of the assessee and in view of section 50C of the I.T.Act, 1961, Rs. 56....
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....y the quasi-judicial or the executive authority invested with judicial power. 11. This concept has been made an essential component of the concept of natural justice as no justice can be said to have been dispensed with, if the reasons for the decisions reached are not mentioned and apparent in the order passed. Further, it is only a speaking order that can indicate whether the decision maker has acted lawfully and in just and fair manner. This is necessary to inspire confidence of the taxpayer and to make him aware the grounds which weighed in the mind of AO in determining the questions of facts and law arising for determination. The requirement of the speaking order is all the more necessary, if appeal is provided against it. It enables the appellate authority to know the reasons for it and to test the validity of the order. A speaking order indicates the mind of the author of the order as well as reasons for the findings arrived at and is necessary for knowing the reasons for the decision arrived at and to indicate whether in coming to the decision mind has been applied reasonably, relevantly and rationally. The mandate of giving reasons or passing a reasoned order or giving ....
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....ransfer : Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under subsection (1) has not been disputed in any appeal or revision or no reference ha....
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.... the Valuation Officer which, for the reasons not borne on records, was not made. 14. On the similar facts and circumstances, the ITAT, Delhi Bench in ITA No.4166/Del/2013 in the case of 'ITO, Moradabad Vs M/s AdityaNarainVerma (HUF)',upheld the order passed by the LdCIT(Appeals),who annulled the assessment order where assessee stated before the AO that the stamp valuation cannot be applied as the sale was made under distressing circumstances. The Revenue challenged the action of the Ld. CIT(Appeals) on the grounds as mentioned in the order passed by the Hon'ble ITAT, which were as under: "1. The learned CIT(A) has erred in law in allowing the assessee's appeal and annullingthe order passed by the AO. 2. The order of learned CIT(A) is erroneous and bad in law and deserves to be cancelled and the order passed by the AO deserves to be sustained on the facts of the case. 3. The spirit of s. 50C regarding full value of consideration has not been appreciated by the learned CIT(A). The full value of consideration and indexed cost of acquisition were rightly adopted by the AO in respect of both the properties. 4. Even if the learned CIT(A) was of....
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....se, though having different facts where assessee therein had filed more than one valuation Report, in the context of section 50C of the Act, held that "whenever objection is taken or claim is made before AO, that the value adopted or assessed or assessable by the Stamp Valuation Authority under sub-section(1) of Section 50- C exceeds the fair market value of the property on the date of transfer, the AO has to apply his mind on the validity of the objection of the assessee. He may either accept the valuation of the property on the basis of the report of the approved valuer filed by the assessee, or invite objection from the department and refer the question of valuation of the capital asset to DVO in accordance with Section 55-A of the Act. In all these events, the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee. The Hon'ble High Court further held that Section 50-C of the Act is a rule of evidence ....
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....ng similar issue, ITAT, Hyderabad in the case of ACIT V. Lalitha Karan, ITA No. 1130/Hyd/2015, order dated 04/01/2017 (copy placed in assessee's compilation on Pgs. 7 - 15) has observed in para 7.1 - "when deeming provision was to be invoked, the same has to be construed strictly and it has to be taken to its logical conclusion i.e. upon not following the proper procedure prescribed therein, particularly, in the backdrop of the fact that the assessee has prima-facia shown that it was a tenanted property and, therefore, subject to certain encumbrances and also the fact the in the absence of obtaining a DVO's report, asssessee cannot be put to the trouble of facing a virtual trial even after five years of appearing before AO/DVO at this stage to prove the sale price declared by her is reasonable." 21. In the case of ACIT Vs Anima Investment Ltd [ 73 ITD 0125] Third Member, ITAT, Delhi observed in para 13 of the order as under: "The powers of the Tribunal in the matter of setting aside an assessment are large and wide, but these cannot be exercised to allow the AO an opportunity to patch up the weak part of his case and to fill up the omission. In my opinion, a pa....
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.... support it. When there is no material to support it and when as observed by the learned Accountant Member the additions made by the Assessing Officer could not be sustained, it is not for the Tribunal to start investigations suo-moto and supply the evidence for the Department. If the additions are not supported by evidence, the only course open to the Tribunal is to delete the additions pointing out how the additions made could not be sustained for want of adequate supporting material. It is for the Department to gather the material and make proper assessments and the Tribunal is not in that fashion an IT authority. Under the IT authorities stipulated under the IT Act, the Tribunal is not one of them. It is purely an appellate authority. Therefore, the object of the appeal before the Tribunal is whether the addition or disallowance sustained was in accordance with law and supported by material. If there is no sufficient material, the addition must be deleted. The Tribunal cannot order further enquiry with a view to sustain the addition. This will amount to taking sides with the parties which is not the function of a judicial authority like the Tribunal." 23. Hon'ble Supreme Cou....