Case Law Details
IN THE ITAT BANGALORE BENCH ‘A’
Smt. T.V. Nagasena
V/s.
Income-tax Officer, Ward 13(1), Bangalore
IT Appeal No. 296 (Bang.) of 2011
[Assessment year 2008-09]
May 31, 2012
ORDER
Jason P. Boaz, Accountant Member
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-V, Bangalore dated 4.3.2011 for the Assessment Year 2008-09.
2. The facts of the case, in brief, are as under :
The assessee, an individual, employed as Stenographer with the office of the Accountant General (A&E), Bangalore filed her return of income for Assessment Year 2008-09 on 17.7.2008 declaring total income at Rs. 79,410. On the basis of AIR information, that the assessee had in the relevant period sold a property measuring 30 × 40 Sq. ft. situated at Ward 34, Railway Pipe Line Chord Road Layout B ASO Association, House No.358, Bangalore on 3.7.2007 to M/s. Gravity India Technologies Pvt Ltd, Bangalore for a sum of Rs. 8 lakhs, scrutiny proceedings were initiated by issue of notice under section 143(2) on 13.8.2009. On the basis of the details in the sale deed and on information obtained by the Assessing Officer from the Sub-Registrar’s Office, Vijayanagar, the guideline value for the property for stamp duty purposes on that date was Rs. 27,60,000. The Assessing Officer invoked the provisions of section 50C of the Income Tax Act, 1961 (herein after referred as ‘the Act’) rejected the assessee’s objections to substituting the sale consideration with the guideline value of the property and computed the Long Term Capital Gains (LTCG) on the sale of the property at Rs. 17,96,160. The Assessing Officer on examination of the assessee’s bank account with Karnataka Bank Ltd found that there was several cash deposits therein and on this count brought to tax in the assessee’s hands an amount of Rs. 1,77,000 as unexplained cash deposits. The Assessing Officer accordingly completed the assessment by an order under section 143(3) of the Act on 22.4.2010 determining the income of the assessee at Rs. 20,25,570. On appeal, the learned CIT(A) substantially upheld the order of the Assessing Officer allowing marginal relief to the assessee.
3. The assessee is now in appeal before us. Initially the assessee raised grounds of appeal but subsequently on 18.5.2012 amended grounds of appeal were filed which are as under :
“1. The learned CIT(A) erred in confirming the order of the learned Assessing Officer in appellant’s case for the Assessment Year 2008-09.
2. The learned CIT(A) erred in confirming the addition under long term capital gains, when it is on record that learned Assessing Officer has not issued notice to invoke the provisions of section 50C of the Act.
3. The learned CIT(A) ought to have remitted the matter to the learned Assessing Officer with a direction to provide an opportunity to the appellant before the provisions of section 50C of the Act are invoked.
4. The CIT(A) ought to have referred the issue of determination of market value to the Valuation Officer, in accordance with provisions of section 50C of the Act.
5. The learned CIT(A) erred in confirming the addition made by the learned Assessing Officer of Rs. 1,77,000 under ‘other sources’ in respect of deposits in Savings Bank A/c., ignoring the explanation and also without considering whether the circumstances of the appellant’s case warrants such an addition, keeping in view that the appellant is an employee in the office of the Accountant Generals Office and has to other source of income.
6. The learned CIT(A) erred in confirming the additions, which are unwarranted and excessive.
7. The learned CIT(A) erred in confirming the levy of interest under section 234B of the Act, since the additions made to returned income are not in the nature of current income, which are to be considered for the purposes of computation of Advance Tax.”
4. The grounds of appeal raised at S.Nos.1 and 6 are general in nature and therefore no adjudication is called for thereon.
5. The ground raised at S.No.7 in respect of charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. In this view of the matter, the Assessing Officer’s action is held to be in order.
6.1 In the grounds raised at S.Nos.2 to 4, the assessee challenges the CIT(A)’s action in confirming the computation of LTCG by the Assessing Officer.
6.2 The learned counsel for the assessee submitted that while it is true that in the relevant period, the assessee, a lady, had sold a 30 × 40 sq. ft. property by Registered Sale Deed dt.3.7.2007 for a consideration of Rs. 8 lakhs, since as per the assessee’s calculation, after indexation, no LTCG was payable, no claim was made. It is submitted that the assessee was not aware that the purchaser had paid stamp duty on the guide line value of Rs. 26,40,000 nor of the consequences thereof. The learned counsel for the assessee further submitted that when the assessee’s objection to computation of LTCG adopting the stamp duty valuation of Rs. 26,40,000 in place of the actual sale consideration of Rs. 8 lakhs as per sale deed was rejected by the Assessing Officer, he ought to have (i) provided the assessee an opportunity of being heard and put on notice before invoking the provisions of section 50C of the Act and (ii) in view of the assessee’s objections the Assessing Officer should have referred the property for valuation in accordance with the provisions of section 50C(2)(a) of the Act. In these circumstances, it was prayed that the matter of computation of LTCG on sale of the concerned property sold by the assessee on 3.7.2007 be remitted back to the file of the Assessing Officer for recomputation afresh after referring the said property for valuation by the Valuation Officer of the Income Tax Department.
6.3 The learned Departmental Representative strongly opposed the arguments put forth by the learned counsel for the assessee, submitting that there was no requirement in the Act that the Assessing Officer was to put the assessee on notice before invoking the provisions of section 50C of the Act. He further contended that the action of the Assessing Officer in computing the LTCG on sale of the said property by substituting the guide line value for stamp duty payment in place of the stated consideration in the sale deed was in accordance with the provisions of section 50C of the Act and was therefore fully justified. In this view of the matter, he supported the finding of the authorities below and prayed the order of the learned CIT(A) be upheld.
6.4 We have heard both parties and have carefully perused and considered the material on record. There is no disputing the fact that the assessee sold a 30×40 sq. ft property for a consideration of Rs. 8 lakhs as per sale deed dt.3.7.2007 whereas the guideline value of the property for stamp duty purposes was Rs. 26,40,000. The assessee’s contention that the Assessing Officer should have issued notice and given an opportunity to the assessee before invoking the provisions of section 50C of the Act is, in our view, not tenable. On this point, we are in agreement with the learned Departmental Representative that there is no requirement in the Act for the Assessing Officer to put the assessee on notice before invoking the provisions of section 50C. However, a careful reading of the provisions of section 50C of the Act and more particularly sub-section (2) thereof holds relevance in the instant case and therefore it would be in the fitness of things that the provisions of the section be reproduced hereunder for the sake of clarity.
“50C (1) ……
(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 sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court,
The Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-section (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section(5) of section 24, section 34AA, section 35 and section 37 of the Wealth Tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under subsection (1) of section 16A of that Act.
(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed [or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.”
From a reading of the provisions of section 50C(2), it is clearly mandated that should an assessee challenge or object to the Assessing Officer adopting the guideline value of the property for stamp duty purposes in place of the stated consideration in the sale deed for the purposes of computing LTCG, then the Assessing Officer ought to refer the property for valuation to the Valuation Officer of the Income Tax Department. In the instant case, it is seen that the assessee’s objection, to the Assessing Officer’s adoption of the guideline value of Rs. 26,40,000 in place of the stated consideration of Rs. 8 lakhs in the sale deed, were rejected by the Assessing Officer and therefore we are of the view that in accordance with the provisions of section 50C(2)(a), he should have made a reference to the Valuation Officer of the Income Tax Department for valuation of the said property. The provisions of section 50C(3), then come into play stipulating the circumstances and manner for adopting the value of the property (i.e. guideline value or as per valuation report) in computing the LTCG. The Assessing Officer in not complying with the express provisions of section 50C(2)(a) of the Act of making a reference to the Valuation Officer for valuation of the property and the learned CIT(A) is not directing him to do so when the matter was in appeal, in our opinion, have by such action denied the assessee her right to have the property valued by the Valuation Officer of the Income Tax Department. We are of the considered opinion that this action by the Assessing Officer is violative of the provisions of section 50C(2) of the Act. Since this goes to the very root of the matter in the instant case, we, in the interest of justice and equity remit the issue of computation of LTCG on sale of property by the assessee on 3.7.2007 to the file of the Assessing Officer for de novo consideration by making a reference to the Valuation Officer of the Income Tax Department to value the said property and to compute the LTCG after receipt of the Valuation Report of the said property. The assessee is directed to co-operate with the Assessing Officer and the valuation cell of the Department to get the valuation carried out expeditiously.
7.1 The ground of appeal raised at S.No.5 challenges the action of the learned CIT(A) in confirming the addition of Rs. 1,77,000 made by the Assessing Officer in respect of cash deposits in the assessee’s bank account in Karnataka Bank Ltd, Amarjyothi Nagar, Bangalore in the relevant period on the ground that the assessee failed to furnish details regarding the source of such deposits. It was submitted by the learned counsel for the assessee that the Assessing Officer and learned CIT(A) erred in summarily rejecting and not accepting the explanation that these cash deposits were out of savings from money given by the assessee’s husband Sri Shivaramaiah, who is an assessed to tax and carried on business in the name and style of M/s. S.V.B.S. Polymers at Kamakshipalya, Bangalore with a turnover of nearly Rs. 1.25 Crore, without examining the matter further in respect of the sources of income of the assessee’s husband if he had any doubts about them.
7.2 The learned Departmental Representative supported the orders of the authorities below and prayed that they be confirmed as the assessee has not been able to prove the sources of the cash deposits in her bank account with Karnataka Bank.
7.3 We have heard both parties and carefully perused and considered the material on record. There is no disputing the fact that the Assessing Officer on examination of the assessee’s bank account with Karnataka Bank found that there were a number of cash deposits therein and bringing to tax a sum of Rs. 1,77,000 as unexplained cash credits since the assessee failed to furnish the details regarding source thereof. We find that before the learned CIT(A), the assessee submitted that these cash deposits are savings out of money given to the assessee for expenses by her husband who is assessed to tax. It is seen that the learned CIT(A) without examining the veracity of the assessee’s claim brushed it aside, merely stating that as no further evidence is produced, the action of the Assessing Officer is confirmed. We find it strange that no report in the matter was called from the Assessing Officer regarding the genuineness of the assessee’s claim as to the source of these cash deposits. In this view of the matter, we are of the opinion that the issue of cash deposits in the assessee’s bank account with Karnataka Bank in the relevant period has not been examined properly by the authorities below and therefore remit this issue to the file of the Assessing Officer for re-examination and reconsideration as to the explanation furnished by the assessee that the sources of the cash deposits are out of savings from money given to her for expenses by her husband. It is ordered accordingly.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
