TaxTMI 
TaxTMI 
2018 (10) TMI 1849
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fir/necessary. (b) The order dated 28.02.2017 of CIT(A)-1, Agra in the case of Smt. Hazra Begum Vs ITO-1(2) Agra in ITA No. 52/CIT(A)-1/Agra/ITO-1(2), Agra/2013-14 cited by the assessee, through not accepted in principle, was not contested by the department due to amount of disputed tax being below the monitory limit prescribed in instruction no. 21/2015 dated 10.12.2015 for fitting of appeal u/s 254. (c) The facts of above case of Smt. Hazra Begum Vs ITO-1(2) Agra are different from the case of the assessee. Also the facts of cases of CIT Vs Chandra NarainChaudhary (Allahabad High Court) and case of CIT Vs Chandra NarainChaudhary (Allahabad High Court) relied upon in above case relied upon in above case are different from the case of the assessee, as explained in annexure. (d) Even otherwise, the question of law in the case of CIT Vs Chandra NarainChaudhary (Allahabad High Court) was decided in favour of the revenue and instead of giving outright relief to the assessee, Hon'ble Court remanded the matter to the AO to decide the valuation of the capital asset in accordance with law as explained by it. Similarly, In addition to the facts being differen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t had purchased a residential house in Radha Florence, Vrindavan for a consideration of Rs. 44,00,000/- and therefore, no liability got worked out under the head 'Long Term Capital Gain' ('LTCG').However, the Ld. AO,noted that the total sale consideration in view of the deeming provisions of section 50-C of the Act aggregating to Rs. 3,06,86,000/- is to be adopted as against Rs. 36,00,000/- shown in the Registered Deed and thus the consideration fell short by Rs. 2,70,86,000/- in comparison to value adopted for stamp value purposes which the Ld AO added to the income of the assessee relying on deeming provision of section 50C of the Act. 5. Being aggrieved, assessee carried the matter in appeal before the Ld CIT(A)-I, Agra whoafter consideration of the matter and submission made by the assessee quashed the addition observing vide para-7as under: "I have carefully considered the appellant's submissions, facts of the case and the legal position in this regard. As regards the issue of applicability of section 50C for the purpose of computing long term capital gain in this case, the relevant fact in this case is that the appellant, vide its replies dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Hon'ble judicial authorities cited by the appellant in its submission above, I am convinced that the fiction of section 50C cannot be carried to the provisions of section 54F while arriving at the figures of capital gain. and 'net consideration'. Ground no. 4 is accordingly allowed and the A.O. is directed to compute the deduction under section 54F accordingly". 6. While taking the aforesaid grounds of appeal against the order of the ld. CIT(A), the revenue has notchallenged the findings of the Ld. CIT(A) with regard to quantum of deduction allowable to the appellant assessee under section 54F of the Act holding that deeming fiction under section 50-C of the Act cannot be imported in such a case where assessee has invested the consideration in purchase of residential house and claimed deduction under section 54-F of the Act. 7. The Ld. Sr. D.R in his arguments stated that the first appellate authority has clearly misread the provision of section 50C(2) which requires that the AO 'may' refer the valuation of the capital assets to a Valuation Officer. According to the submission of the Ld. D.R It indicates that intent of the legislature is that it i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esidential house then the capital gain is exempted from tax. Fact wise the property sold by the assessee was under so much dispute that it was highly impossible to find a buyer for such property occupied by the tenants who were not ready to vacate and any how wish to remain in occupation of the property evidences are enclosed. [In support of claim] If you are not satisfied until the reply and evidences, it would be requested to refer it to the Valuation officer of the Income Tax Department for Valuation." 11. Vide the said Reply filed before the Ld. AO, it was demonstrated that the subject property was under illegal occupation of tenants since 1975. The assessee also furnished a detailed Note alongwith related evidences in evidence thereof and stated as under: (APB-122-158) BRIEF SUMMARY OF DISPUTE 1. Pandit Uma Dutt S/o Sh. Jamuna Prasad was a tenant of the premises since long @ Rs. 20 per month which was subsequently increased to Rs. 40 per month. 2. He did not pay rent from 01.11.1974 hence notice dated 17.12.1975 was sent to him for payment of rent and vacating the premises. 3. The tenancy was terminated by notice date....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on to the above, some local people and other tenants of HUF property also filed false cases to grab the property, HUF owned a Temple of Lord Shiva adjoining the Land under dispute. Mr. Rajendra Sharma a tenant on the adjoining land near Temple raised a claim as Sarvarkar of the Temple. He filed a Sit (O/s No. 01/2010) in the Court of Additional District Judhe/Special Judge (E.C Act) Etah but the Suit was finally struck off by order dated 29.03.2011.Ultimately Mr. Rajendra Sharma filed an Appeal before the Hon'ble High Court but remained unsuccessful. 12. Mr. Satish Chandra revised a claim that Smt. Kalawati Devi (Mother of Ramesh Chand Kulshreshtha Karta of HUF) executed a will dated 09.01.2000 giving her share in HUF property to Mr. Satish Chandra and filed a suit No. 48/2007, but ultimately he did not get any relief. 12. During the course of assessment proceedings before the AO, finally vide Reply dated 02.03.2016(APB-159-160)assessee submitted as under: "That our property (ancestral) was more than 100 years consisting of temple, land and houses at Etah. The property was illegally occupied by tenants almost since 1965 were neither vacating nor purchasing it. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad to adopt the Circle valuation of the property, which action of the AO has clearly no approval in law. 15. There is no dispute that the submissions as referred above raising objection for substituting the value of immovable property on circle rate against real consideration were filed before the Ld. AO during the course of assessment proceedings. Thus, as a matter of fact detailed reasons alongwith sufficient evidences were filed before the Ld. AO to demonstrate that it is a case of distress sale where the questioned property was subject matter of vigorous litigation reaching upto the stage of Hon'ble High Court; that Property was let out to tenants against whom eviction suit was filed and decreed by the competent court against which revision was also filed which was dismissed by the Hon'ble Court against which Writ was filedbefore the Hon'ble Allahabad High Court bearing Writ No. 18814 of 1988 which was dismissed by the Hon'ble High Court on 02.04.2003; thatfor the execution of the order Suit was filed in the Court of Civil S.C.C, Etah which also remained pending for a long time since no member of theHUF resides in Etah to follow up the suit; thatadjoining the property there ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n any particular point, he can require the assessee to produce further evidences on that point. If the AO intended to go ahead with the proposed action of substituting the value as provided under section 50C of the Act, he was duty bound to have demonstrated with reasons, evidences and legal position as to how the facts as stated by the assessee are unbelievable or calls for rejection. In the matter of valuation, law is fairly well settled that value mentioned in the registered document can be substituted by following the process prescribed under the law. The assessment order is silent on this material aspect. 18. Now, coming to the merits of the addition which has been made taking the aid of the deeming provisions of section 50C of the Act, it is considered expedient to have a look over the provisions of the said section. Sub-section (2) clearly mandates that where the assessee claims that the value adopted or assessed or assessable by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer the AO would refer the valuation of such property to the Valuation Officer.Hon'bleCalcutta High Court, in the case of 'Sunil Kumar Agarwal Vs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry function is for no apparent reason brought on record before us much less attributable to any conduct on part of the assessee. 21. It is also noteworthy to mention that in the first place the case of the revenue is that AO committed no wrong in making the assessment without referring the matter to the DVO. Still the Department prays for setting aside of assessment solely for referring to the DVO. 22. Under identical circumstances the co-ordinate Bench in ITA No. 343/Agra/2017in the case of ACIT, Circle-1, Agra Vs.Shri. Tarun Agarwal vide order dated 28th, August 2018 (APB-170-187), reported at (2018) 97 taxmann.com 346 (Agra - Trib.)had the occasion to consider the identical situation in the light of law laid down by the Hon'ble Allahabad High Court in the case of Chandra NarainChaudhary (supra).In the case of TarunAgarwal (supra) too assessee, 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 and without referring the matter to the DVO made the impugned addition without dealing with the submiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the party concerned operates as adeterrent against possible arbitrary action by the quasi-judicial or the executive authority investedwith judicial power. 11. This concept has been made an essential component of the concept of natural justice as no justice can besaid to have been dispensed with, if the reasons for the decisions reached are not mentioned and apparent inthe order passed. Further, it is only a speaking order that can indicate whether the decision maker has actedlawfully and in just and fair manner. This is necessary to inspire confidence of the taxpayer and to make himaware the grounds which weighed in the mind of AO in determining the questions of facts and law arising fordetermination. The requirement of the speaking order is all the more necessary, if appeal is provided againstit. It enables the appellate authority to know the reasons for it and to test the validity of the order. A speakingorder indicates the mind of the author of the order as well as reasons for the findings arrived at and isnecessary for knowing the reasons for the decision arrived at and to indicate whether in coming to thedecision mind has been applied reasonably, relevantly and rat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of theconsideration received or accruing as a result of such transfer : Provided that where the date of the agreement fixing the amount of consideration and the date ofregistration for the transfer of the capital asset are not the same, the value adopted or assessed orassessable by the stamp valuation authority on the date of agreement may be taken for the purposes ofcomputing 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 apart thereof, has been received by way of an account payee cheque or account payee bank draft or by useof 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 assessableby the stamp valuation authority under sub-section (1) exceeds the fair market value of the propertyas on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the propertysold was not its "fair market value", it was the bounden duty of the AO to have referred to the ValuationOfficer which, for the reasons not borne on records, was not made. 14. On the similar facts and circumstances, the ITAT, Delhi Bench in the case of ITO v. Aditya Narain Verma(HUF) [2017] 88 taxmann.com 840, upheld the order passed by the Ld CIT (Appeals), who annulled theassessment order where assessee stated before the AO that the stamp valuation cannot be applied as the salewas made under distressing circumstances. The Revenue challenged the action of the Ld. CIT (Appeals) onthe 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 annulling the orderpassed by the AO 2. The order of learned CIT(A) is erroneous and bad in law and deserves to be cancelled and the orderpassed 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 learnedCIT(A). The full value of consideration and indexed cost of acquisition were ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court in the case of CIT v. Chandra Narain Chaudhri[2013] 38 taxmann.com275/219 Taxman 60 in a case, though having different facts where assessee therein had filed more than onevaluation Report, in the context of section 50C of the Act, held that "whenever objection is taken or claim ismade before AO, that the value adopted or assessed or assessable by the Stamp Valuation Authority undersub-section(1) of Section 50-C exceeds the fair market value of the property on the date of transfer, the AOhas to apply his mind on the validity of the objection of the assessee. He may either accept the valuation ofthe 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 thereport of approved valuer submitted by the assessee.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion cell,suffice would be to observe that assessee has no obligation to instruct the AO to follow the law. 20. Deciding similar issue, ITAT, Hyderabad in the case of ACIT v. Lalitha Karan [IT Appeal No. 1130(Hyd.) of 2015, dated 4-1-2017] (copy placed in assessee's compilation on Pgs. 7 - 15) has observed in para7.1 - "when deeming provision was to be invoked, the same has to be construed strictly and it has to be takento its logical conclusion i.e. upon not following the proper procedure prescribed therein, particularly, inthe 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'sreport, asssessee cannot be put to the trouble of facing a virtual trial even after five years of appearingbefore AO/DVO at this stage to prove the sale price declared by her is reasonable." 21. In the case of Asstt. CIT v. Anima Investment Ltd. [2000] 73 ITD 125 Third Member, ITAT, Delhiobserved in para 13 of the order as under: "The powers of the Tribunal in the matter of setting aside an assessment are large an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icer and whether the appellate order appealed against was according to law and properly framed onfacts and whether there was sufficient material to support it. When there is no material to support it andwhen as observed by the learned Accountant Member the additions made by the Assessing Officer couldnot be sustained, it is not for the Tribunal to start investigations suo-moto and supply the evidence for theDepartment. If the additions are not supported by evidence, the only course open to the Tribunal is todelete the additions pointing out how the additions made could not be sustained for want of adequatesupporting material. It is for the Department to gather the material and make proper assessments and theTribunal 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 beforethe Tribunal is whether the addition or disallowance sustained was in accordance with law and supportedby material. If there is no sufficient material, the addition must be deleted. The Tribunal cannot orderfurther enquiry with a view to sustain the addition. This wil....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are of the considered opinion that the department cannot be allowed a second inning, by sending thematter back to AO, enabling it to fill the lacunae and shortcomings and putting the assessee virtually to face are-trial for no fault of him and to again prove before the AO that the sale consideration was the "fair marketvalue" of the property sold by him. This would amount to giving a lease of life to an order which on the basisof facts on records is unsustainable in law.Therefore, in the light of these facts and the failure of the AO tofollow the procedure as prescribed under section 50C (2) in particular, we do not find any infirmity in theorder of the CIT(A) in quashing the addition made by the AO. 27. In view of the above, the order passed by the Ld. CIT(A) is upheld and resultantly appeal of thedepartment is dismissed." 23. The Hon'ble Supreme Court in its Judgment in the case of 'Parusram Pottery Works Co. Ltd Vs ITO', 106 ITR 0001 (SC)] observed that- "It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarize them....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alue of the property. The third valuation report was prepared during theproceedings before AO. The assessee however did not choose it to file thesame before AO in remand proceedings, and filed it as an additional evidence in appeal which was rejected by the CIT (A) after considering the report of AO on remand, and such rejection was upheld by the Hon'ble ITAT. 27. The Hon'ble High Court's findings are to be seen in the light of attending facts of the case where on the face of the valuation Reports and in view of the findings recorded by the Ld CIT(A) in Para- 5.2 of its order as also reproduced by the Hon'ble High Court, wherein the Ld CIT(A) held that the facts of the case warrant and compel the AO to have made reference to the DVO as assessee had furnished report from the approved valuer and relied upon the same and that the Hon'ble High Court set-aside the matter to the AO for deciding afresh after referring the question of valuation to the DVO. Since, the Report of a technical expert (Approved Valuer) brought on records by the assessee could only be discredited or disputed by Report of another technical expert (Departmental Valuation officer, DVO). Therefore, in such a case ....