Ranjita Rangnath Mhatre Vs ITO (ITAT Mumbai)
ITAT Mumbai held that adoption of stamp duty valuation invoking provisions of section 50C of the Income Tax Act without making reference to District Valuation Officer (DVO) unsustainable. Accordingly, matter remanded for de novo proceedings.
Facts-
The assessee is an individual and is a housewife dependant on her son. During the year under consideration the assessee relinquished her share of 14,28% in the hereditary rights in a land inherited from her father in favour of her brother Shri Anil Krishna Kawale in lieu of which she received a sum of Rs.8,00,000 towards her share.
The assessee did not file the return of income for the reason that the land sold is an agricultural land. AO issued a notice u/s. 148 based on the information available in the ITB portal. The assessing officer was of the opinion that the value of the asset transferred is Rs.1,92,87,500 as per the stamp duty valuation and accordingly invoked the provisions of section 50C. AO held that 54% of the land is not used for agricultural purposes and therefore would fall within the definition of capital asset u/s. 2(14) of the Act. Accordingly, AO made an addition of Rs.14,87,298.
CIT(A) dismissed the appeal exparte. Being aggrieved, the present appeal is filed.
Conclusion-
Held that the CIT(A) has passed an exparte order dismissing the appeal. The ld AR contended that the assessee being a senior citizen does not have the technical knowledge to access the ITB portal and had no knowledge of the notices which were sent to the email id of son / daughter who were also not well educated. We take into consideration the affidavit filed by the assessee in this regard. It is also contended by the ld AR that the assessing officer has adopted the stamp duty valuation without making reference to DVO. Considering the facts of the present case, in the interest of justice and fair play, we are of the view that the assessee should be given one more opportunity to represent the case before the assessing officer. Accordingly we remit the issue back to the assessing officer for a de novo consideration afresh with a direction to consider the various contentions of the assessee with regard to reference to DVO, cost of acquisition being taken at NIL etc. The assessee is directed to submit all the relevant details as may be called for by the assessing officer and cooperate with the proceedings. It is ordered accordingly.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is against the order of the Commissioner of Income Tax (Appeals) (CIT(A) in short) dated 27.05.2023 for assessment year 201 3-14
2. The assessee raised the following grounds of appeal –
“1 The Hon. CIT(A) erred in dismissing the appeal ex-parte, for alleged non-compliance to appeal notices, inspite of the appellant being not aware of the notices issued and for this reason the order dismissing the appeal was not justified and may kindly be over turned and set aside.
2.The Hon. CIT (A) erred in dismissing the appeal ex-parte, for alleged non-compliance to hearing notices, without deciding the appeal on the merits and for this reason also the order of the Hon. CIT(A) is bad-in-law and required to be set aside.
3.The Hon. CIT (A) erred in upholding the addition of 14,8 7,298/- made by Id AO by holding that long term capital gain of the said amount arose in the hands of the appellant, on sale of share in agricultural land bearing Gat no. 319 at Mauje Tekali-Aawas, Tal. Alibag, Dist. Raigad, not appreciating that the land sold was agricultural land and therefore not a capital asset as per exception contained in section 2 (1 4) (iii) of the I T Act 1961 and accordingly the surplus arising on sale of such land was not liable to tax.
4 The Hon. CIT(A) erred in confirming the addition of 14,8 7,298/- made by Id AO by holding that long term capital gain of the said amount arose in the hands of the appellant, on sale of share in agricultural land bearing Gat no. 319 at Mauje Tekali-Aawas, Tal. Alibag, Dist. Raigad, by adopting the deemed sale consideration of Rs.27,54,255/- as appellant’s share, being the market value as per stamp valuation authorities in place of actual share of appellant in sale consideration of Rs. 8,00,000/-, by relying upon the provisions of section 50C of the I. T Act 1961, which addition is not appropriate by law and by facts.
5. The Hon. CIT(A) erred in confirming the addition of 14,8 7,298/- without referring the valuation of the asset transferred to a valuation officer as provided u/s 50C(2) of the I T Act 1961 but imposing the value as per stamp valuation authorities to be the deemed sale consideration. The appellant prays that the asset transferred may kindly be referred for valuation as provided u/s 50C(2) of the 1 T Act 1961.
6. The Hon. CIT(A) erred in confirming addition of Rs.14,87,298/- as long term capital gains on sale of agricultural land bearing Gat no. 319 at Mauje Tekali-Aawas, Tal. Alibag, Dist. Raigad, without granting deduction for indexed cost of acquisition of the said land and erroneously computing the long term capital gains.”
3. The assessee is an individual and is a housewife dependant on her son. During the year under consideration the assessee relinquished her share of 14,28% in the hereditary rights in a land inherited from her father in favour of her brother Shri Anil Krishna Kawale in lieu of which she received a sum of Rs.8,00,000 towards her share. The assessee did not file the return of income for the reason that the land sold is an agricultural land. The assessing officer issued a notice under section 148 based on the information available in the ITB portal. In response to the notice the assessee filed the return of income declaring Rs.8,00,000 as agricultural income and Rs.9,143 as interest income. The assessing officer issued notice under section 142(1) calling on the assessee to furnish bank account details and also details pertaining to purchase/sale of capital asset. The assessee furnished the documents pertaining to the property transaction. The assessing officer issued a summons under section 131 of the Income Tax Act (the Act) to Shri Anil Krishna Kawale, who, in response, submitted that the said land was purchased by his father in the year 1965 and after the demise of the father there were 9 nominees, out of whom, the assessee is one. It was further submitted that Shri Anil Krishna Kawale has paid a total sum of Rs.56,00,000 to the nominees (assessee’s share being Rs.8,00,000) who relinquished their rights in the inherited property in favour of Shri Anil Krishna Kawale.
4. The assessing officer was of the opinion that the value of the asset transferred is Rs.1,92,87,500 as per the stamp duty valuation and accordingly invoked the provisions of section 50C. The assessee submitted before the assessing officer that the said land is a rural agricultural land and does not fall within the definition of capital asset under section 2(14) of the Act. The assessee prayed that the assessee be allowed exemption under section 10(37) of the Act towards the amount received as her share in the transaction i.e.Rs.8,00,000. The assessing officer held that 54% of the land is not used for agricultural purposes and therefore would fall within the definition of capital asset under section 2(14) of the Act. The assessing officer proceeded compute the capital gain in the hands of the assessee and made an addition of Rs.14,87,298 computed as under –
