AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 105
X X X X Extracts X X X X
X X X X Extracts X X X X
....n confirming addition in respect of share of wife in the property. 4. Without prejudice to the above, the Ld.CIT(A) erred in confirming entire addition made by LAO, though the area of flat was in fact less than what the LAO had taken. Both the lower authorities erred in taking the area of flat at a higher figure." 3. Assessee has also raised following additional ground in his appeal: "1. On the facts and circumstances of the case and in law, the addition made u/s 56(2)(viib) of Rs. 1,80,49,999/- is unsustainable and bad in law since Section 56(2)(viib) applies only to immovable properties i.e. property which are fully constructed and not on properties which are under construction. In case of the appellant, the property purchased was under construction which is established by the report of Perfect Valuations & Consultants, being a Govt. Regd. Valuer submitted by the appellant during the course of assessment proceedings." 4. Learned Counsel for the assessee submitted that the additional ground raised in the appeal is purely a legal ground, as to whether the provisions of section 56(2)(viib) apply to the immovable property fully constructed and not for the prop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stamp duty valuation of the flat is Rs..2,20,49,999/- but the assessee shown to have purchased only for Rs..40,00,000/-. The assessee was required to explain as to why the difference is not to be treated as income u/s. 56(2)(vii) of the Act. The assessee filed a valuation report of Perfect Valuation & Consultants, being a Govt. Regd. Valuer who valued the flat at Rs..82.60 lakhs. During the assessment proceedings the assessee filed this valuation report disputing the valuation made by the Stamp Valuation Authority. However, the Assessing Officer did not refer the matter of valuation to the District Valuation Officer, though the valuation of stamp valuation authority was disputed by the assessee by way of valuation report. The Assessing Officer made an addition of Rs..1,80,49,999/- u/s. 56(2)(viib) of the Act in the hands of the assessee. The assessee filed an appeal before the Ld. CIT(A) against the above order. However, the Ld. CIT(A) also did not consider the valuation report submitted by the assessee holding that the assessee had not disputed the valuation made by the stamp valuation authority. Accordingly, the Ld.CIT(A) confirmed the addition made and passed the order agains....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g any appeal or revision before any other authority, court or High Court. 12. Learned Counsel for the assessee submitted that, coming to the facts of the case in hand, it is submitted that both the conditions specified in section 50C(2) of the Act have been satisfied. With regard to the first condition, it is submitted that the stamp valuation authority assessed the value of the Flat at Rs..2,20,49,999/- which is much more than the purchase consideration of Rs..40,00,000/- paid and since the same was not acceptable to the assessee, during the course of assessment proceedings submitted a copy of valuation report of Perfect Valuation & Consultant, being a Govt. Regd. Valuer who valued the flat at Rs..82.60 lakh. The same was filed disputing the valuation made by the stamp valuation authority. Accordingly, the first condition is fulfilled. Ld. Counsel for the assessee submitted that the view taken by Ld.CIT(A) is that the assessee had not submitted a formal letter objecting to the valuation made by Stamp Valuation Authority. In this regard it is submitted that thought the assessee had not filed a formal letter disputing the valuation adopted by the stamp valuation authority, sti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he request of the revenue that the matter be referred to Assessing Officer for the purpose of valuation of the property and directed to delete the addition made by the Assessing Officer. 17. Ld. Counsel for the assessee also placed reliance on the decision of Agra Bench of the Tribunal in the case of Hari Om Garg v. ITO in ITA.No. 342/Agra/2017 dated 31.05.2019 and submitted that the Agra Bench of the Tribunal had considered various decisions on the issue and held that the revenue cannot be allowed a second inning by sending the matter back to the Assessing Officer enabling the revenue to fill the lacunae and shortcomings and putting the assessee virtually to face a re-trail for no fault of him and to again prove before the Assessing Officer that the sale consideration was the fair market value of the property purchased by him. 18. On the other hand, the Ld. DR strongly supported the orders of the lower authorities. Ld. DR further submitted that in case the Tribunal is not agreeing with the decision of the Assessing Officer the matter may be restored to the Assessing Officer for referring the issue to the Valuation Officer. 19. We have heard the rival submissions, perused ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nting to Rs..1,80,49,999/-. While bringing to tax the said difference between Stamp Duty valuation and the actual consideration paid the Assessing Officer observed that in the sale agreement the area of the flat has been shown at 1360 square feet and the same was sold by the developer to the assessee as per agreement though the Registered Valuer has come to the conclusion that only 65% of the construction was completed. 22. On appeal the Ld.CIT(A) sustained the order of the Assessing Officer observing that when the consideration as shown in the conveyance deed is less than market value determined by the Stamp Valuation Authorities for the purpose of charging the stamp duty, the provisions of section 56(2)(vii) are clearly applicable and the Assessing Officer has rightly applied the said provision. We observe from the order of the Ld.CIT(A) that in the course of the appellate proceedings the assessee submitted valuation report of the Valuation Officer-II Mumbai dated 07.10.2016 in respect of Flat No. 601 of the very same Building i.e. Nebula Empress, Mumbai wherein the said flat in the property was valued at Rs..1,00,76,000/-. We observed that even at this stage the Ld.CIT(A) did....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 1,02,50,000/- in the hands of the assessee by following the provisions of section 56(2) of the I.T. Act. We find, in appeal, the ld. CIT(A) deleted the addition, the reasons for which have already been reproduced in the preceding paragraph. It is the submission of the ld. DR that since the ld. CIT(A), instead of calling for a report from the DVO, had deleted the addition on the basis of submissions made by the assessee, therefore, the order of the ld. CIT(A) is not in accordance with law and the order of the ld. CIT(A) be reversed. In his alternate argument it is his submission that the matter should be restored to the file of the Assessing Officer. 15. It the submission of the ld. counsel for the assessee that when the assessee had furnished copy of the registered valuer and has also brought to the notice of the Assessing Officer during the assessment proceedings regarding the arbitrary adoption of circle rate by the stamp valuation authority, the Assessing Officer, instead of referring the matter to the DVO proceeded to make the addition on the basis of the valuation adopted by the stamp valuation authority. Further, during the appellate proceedings, the assessee had ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Date of sale deed Value as per Circle rates (Rs.) Value as registered sale deed 1. 957, Sector G, Narela Indl. Complex, Delhi 350 Sq. Mtrs. 08.11.2015 3,58,57,500/- 70,00,000/- 2. 855, Block E, DSIDC Narela Indl. Area, Delhi 350 Sq. Mtrs 13.07.2013 2,80,00,000/- 90,00,000/- The copy of valuation report in respect of property No.886, Block E, Narela Industrial Area, Delhi dated 07.06.2013 of Captain Suresh Dutt & Associates also filed during the remand stage. The copies of letter by the Industrial Complex Welfare Association to the then Chief Minister of Delhi Smt. Sheila Dixit dated 09.12.2010 and to Shri Arvind Kejriwal dated 30.01.2014,1, stating that the circle rates of industrial plots in Narela Industrial area are much higher than the actual market rates and circle rates are enhanced arbitrarily without any logic were also filed. The submission of AR of assessee has been considered and documents now furnished has been examined and placed on records. The copy of valuation report and the letters written to the Chief Minister were also filed by the AR of assessee during the course of assessment proceedings, but the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, "further inquiry", in terms of sub-section (4) which reads as under:- "The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals)." 39. The further inquiry envisaged under Section 250(4) quoted above is generally by calling what is known as "remand report". The purpose of this enabling clause is essentially to ensure that the matter of assessment reaches finality with all the requisite facts found. The assessment proceedings re- opened on the basis of preliminary satisfaction that some part of the income has escaped assessment, particularly....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce under Section 148 Income Tax Act issued on 18.04.2007 for AY 2004-05 in respect of the assessee would stand remitted to the CIT (Appeals) for fresh consideration/adjudication in accordance with law." 18. However, the facts in the instant case are completely different. The Assessing Officer had not discussed anything about the valuation report filed by the assessee during the course of assessment proceedings. The representations filed by the trade organization before the then Chief Minister of Delhi about the arbitrary adoption of circle rate by the stamp valuation authority was also ignored by the Assessing Officer and instead of referring the matter to the DVO he made addition being the difference between the circle rate and actual sale consideration. When the assessee submitted various details including two sale instances below the circle rate in the same area, the ld. CIT(A) called for a remand report from the Assessing Officer and the Assessing Officer at that time also did not refer the matter to the DVO. Therefore, under these circumstances, the decision of the Hon'ble Delhi High Court in the case of Jansampark Advertising and Marketing Ltd. (supra) as relied on b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....same, we uphold the order of the ld. CIT(A) on this issue and the grounds raised by the Revenue are accordingly dismissed. 25. In the case of Hari Om Garg v. ITO, the Agra Bench of the Tribunal in ITA.No. 342/Agra/2017 dated 31.05.2019 has taken a view that the Department cannot be allowed a second inning by sending the matter back to the Assessing Officer enabling the revenue to fill the lacunae and shortcomings and further putting the assessee to face a re-trail for no fault of him and to prove before the Assessing Officer that the sale consideration was the fair market value of the property purchased by him. While coming to such conclusion the Tribunal considered various decisions of Hon'ble High Courts and Tribunals and the observations of the Tribunal are as under: - "8. In the present case, neither, the AO nor the ld. CIT(A) has made any efforts to crystalize the actual value of investment by the assessee in the purchase of the property by way of bringing material documentary evidence on record to establish the unexplained investment in the property by the assessee. Merely, rejection of the reply of assessee without giving valid reasons can not justify the act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision under Section 50 C (1) of the Act is rebuttable. It is well known that an immovable property may have various attributes, charges, encumbrances, limitations and conditions. The Stamp Valuation Authority does not take into consideration the attributes of the property for determining the fair market value in the condition the property is a offered for sale and is purchased. He is required to value the property in accordance with the circle rates fixed by the Collector. The object of the valuation by the Stamp Valuation Authority is to secure revenue on such sale and not to determine the true, correct and fair market value on which it may be purchased by a willing purchaser subject to and taking into consideration its situation, condition and other attributes such as it occupation by tenant, any charge or legal encumbrances. 11. Hon'ble Jurisdictional High Court of Allahabad in the case of Dr. Shahsi Kant Garg V. CIT 285 ITR 0158 has also observed "that if under the provisions of the Act an authority is required to exercise power or do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lgence being shown. In this context, I would like to make a reference to a decision of the Chennai Bench of the Tribunal in the case of Tatia Skyline & Health Farms Ltd. vs. Asstt. CIT (2000) 66 TTJ (Chennai) 203 : (1999) 70 ITD 387 (Chennai). In this decision, on the assessee's request that the case be sent back to the AO for another round of enquiry and fresh assessment in accordance with law. the Bench, rejecting the assessee's request has held that the remand order should be made in very rare and exceptional case, for example, if at original stage, patently grave error was committed by the original authority or that the order was made in haste owning to the limitation or that the first appellate authority had violated the rules of natural justice. Nothing like this has happened on the present case. The Bench has further observed that the Courts have also cautioned the Appellate Authorities by holding that remand should be made only in those cases where the original authorities have not passed orders in accordance with law but in no case, remand should be made only in those cases where the original authorities have not passed orders in accordance with law but in no case....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Works Co. Ltd Vs. ITO', 106 ITR 0001 (SC)] observed as follows - 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 familiarise themselves with the relevant provisions and become wellversed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (emphasis supplied) 19. The Coordinate Bench in the case of 'Dr. Sanjay Chobey (HUF) Vs ACIT', Circle - 2(3), Jhansi, ITA No 140/Agr/2018 (Order dated 02/07/2018), in almost similar facts allowed the assessee's appeal observing, vide para 14, as under - "The lower authorities passed the order in summery manner without going into the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paid on the said value. In the 'return of income' for the year under consideration, the assessee after specifically referring to the circle value/segment rate of the property, had however adopted the actual sale consideration of Rs. 28 lac for the purpose of computing the LTCG on the sale of the same. Apart therefrom, we find from a perusal of the orders of the lower authorities that the assessee after referring to the locational disadvantages of the property under consideration, had in the course of the assessment proceedings objected to the proposed adoption of the circle value/segment rate by the A.O as the deemed 'sale consideration' for the purpose of computing the LTCG on the sale of the same. Rather, as a matter of fact, documentary evidence in the shape of drawings of the plot and photographs of the property were placed on the record by the assessee in order to fortify his claim that the property under consideration was disadvantageously located. Be that as it may, it remains as a matter of fact borne from the records that the assessee had claimed before the A.O that the value adopted by the stamp valuation authority exceeded the fair market value of the property under cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the property as on the date of transfer, the Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. The very purpose of the Legislature behind the provisions laid down under sub section (2) to section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified. The Hon'ble jurisdictional High Court of Allahabad in the case of Shashi Kant Garg (supra) has been pleased to hold that it is well settled that if under the provisions of the Act an authority is required to exercise powers or to do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any other manner. Similar view has been expressed by the other decisions cited by the ld. AR in this regard hereinabove. The first appellate order on the issue is thu....