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Assessee cannot adopt valuation of DVO after adopting stamp value

When assessee himself had adopted value of land as per Stamp Duty Authority for computation of long-term capital gain, then he could not claim adoption of the value of land as estimated by DVO, as he filed return of income and paid taxes, also there was no scope of reduction.

Narendra Singh Vs. ACIT (ITAT Jaipur)

Assessee himself adopted the value at Rs. 52,40,700 and filed the return of income in response to notice under section 148 of the Act. The assessing officer adopted the value at Rs. 1,56,95,100 as adopted by the DIG (Stamps). The assessee has only challenged the valuation adopted by the assessing officer at Rs. 1,56,95,100 before the learned Commissioner (Appeals). The learned Commissioner (Appeals) has granted the relief sought for by the assessee in his appeal. Now what is claimed in the appeal of the assessee is not a justified claimed. He himself has adopted the value for working out the capital gain at Rs. 52,40,700. Only enhancement was challenged before the learned Commissioner (Appeals). At the stage of Commissioner (Appeals), the matter was referred the matter to the District Valuation Officer, who has valued it around Rs. 29,83,500. Now the assessee’s Authorized Representative claims that this value should be substituted for the value declared by him in his return of income. On this issue, we are of the view that once the assessee has himself has offered the value adopted by the Registering Officer at Rs. 52,40,700 and filed the return of income and paid the taxes. Then there is no scope for reduction. He has also not agitated this valuation before the learned Commissioner (Appeals) in any of his grounds of appeal. Only plea was to adopt the value at Rs. 52,40,700 in place of Rs. 1,56,95,100, therefore, we find no merit in this plea of the learned Authorized Representative of the assessee.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

Both these appeals are the cross appeals, one by the assessee and another by the revenue emanates from the order of the learned Commissioner (Appeals)- Ajmer dated 29-1-2015 for the assessment year 2010-11.

2. The brief facts of the case are that the assessee had sold a land ad measuring 13068 Sq.ft. bearing Khasra No. 1834 situated at Thok Teliya, Ajmer on 6-1-2010. The declared consideration was Rs. 8.00 lacs. The Sub-registrar-cum-Stamp Duty Authority adopted the value of land at Rs. 52,40,700. The DIG (Stamps) enhanced the value of land at Rs. 1,56,95,100. The notice under section 148 of the Income Tax Act, 1961 (in short the Act) was issued on 25-2-2013 after recording the reasons. The assessee filed return of income on 30-3-2013 showing income from various heads including the income from capital gain on the sale of land ad measuring 13068 Sq.Ft. bearing Khasra No. 1834 at Ajmer. In the return of income, the assessee has adopted the value of transfer at Rs. 52,40,700 and worked out the capital gain of Rs. 46,25,457 after taking benefit of indexation and also for land improvement. The assessing officer worked out the long term capital gain on the basis Rs. 1,56,95,100 as valued by the DIG(Stamps). Assessee filed appeal before the learned Commissioner (Appeals) The grounds of appeal taken by the assessee before the learned Commissioner (Appeals) are as under:

1. That on the facts and in law the learned Assistant Commissioner has wrongly taken the sale value of the property at Rs. 1,56,95,100 as against Rs. 52,40,700.

2. That the order of the learned Income Tax Officer is erroneous both in point of law and on facts.

3. That the appellant prays for being permitted to raise fresh grounds of appeal or to alter, amend or withdraw any of the grounds of appeal on or before the date of hearing.

4. It is, therefore, prayed that the order of the Income Tax Officer be modified accordingly and the income of the appellant be reduced.”

The above grounds taken by the assessee before the learned Commissioner (Appeals) make it clear that the assessee has challenged the adopting the value at Rs. 1,56,95,100 as against Rs. 52,40,700 declared by the assessee in his return of income filed in response to notice under section 148 of the Act. Thus, the assessee had disputed the enhancement of value from Rs. 52,40,700 to Rs. 1,56,95,100.

3. Now the assessee and the revenue are in appeals before the ITAT by taking following grounds of appeal:

Grounds of assessee’s appeal:

(i) The very action taken under section 147 row with 148 is bad in law without jurisdiction and being void-ab-initio, the same kindly be quashed. Consequently the impugned assessment framed under section 144/147 dated 2-2-2015 also kindly be quashed.

(ii) Rs. 16,00,000 : The learned Commissioner (Appeals) erred in law as well as on the facts of the case in not considering the estimated market value of the subjected property at Rs. 24,18,000 or Rs. 29,83,500 estimated by the Registered Valuer Departmental Valuation Officer (DVO) respectively for the purpose of sec.45 row with sec.50C so as to compute the legally correct amount of the sale consideration and consequently to compute the correct amount of the resultant capital gain there from. The decision of the learned Commissioner (Appeals) to consider the deemed sale consideration at Rs. 52,42,700 for the purpose of section 45 row with section 50C and thereby consequently confirming the amount of capital gain higher by the amount of Rs. 16 lacs approx., being totally contrary to the provisions of law and facts on the record, the sale consideration estimated at the lowest by the Registered Valuer be directed to be taken.

(iii) Rs. 16,00,000 : The learned Commissioner (Appeals) further erred in law as well as on the facts of the case in rejecting the claim made by the assessee of adopting the lowest estimation of the sale consideration at Rs. 24,18,000 made by the registered valuer merely because the appellant itself had accepted the deemed sale consideration at Rs. 52,42,700 in as much as there is no estoppel against the statute. It was the duty on the part of the learned Commissioner (Appeals) to assess the true and correct income only based on the facts and evidences available on record as against confirming hypothetical income. The learned Commissioner (Appeals) even ignored / failed to give effect to the report of the learned DVO who estimated the sale consideration at Rs. 29,83,500 only as against Rs. 52,42,700. The order of learned Commissioner (Appeals) therefore, suffers from serious legal and factual infirmities and hence the lower authorities kindly be direct to adopt the lowest sale consideration for the purposes sec.45 row with section 50C of the Act.

(iv) The learned assessing officer further erred in law as well as on the facts of the case in charging interest under section 234B & 234C of the Act. The appellant totally denies its liability of charging. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.

(v) The appellant prays your honours indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.”

Grounds of revenue’s appeal:

In view of the facts and circumstances of the case the learned Commissioner (Appeals), Ajmer has erred in:

1. Deleting the addition of Rs. 1,04,54,400 made by the assessing officer on account of long term capital gain, without appreciating the facts that the value adopted by the Collector (stamps) was rightly considered by the assessing officer in view of deeming provisions of section 50C of the Income Tax Act, 1961;

2. The appellant craves to add, amend, alter, delete or modify the above grounds.”

4. Ground No. 1 of the assessee’s appeal was not pressed at the time of hearing, therefore, the same stands dismissed as not pressed.

5. Ground No. 5 of the assessee’s appeal and ground No. 2 of the revenue’s appeal are general in nature and do not require any adjudication. The same are dismissed.

6. Ground No. 4 of the assessee’s appeal is regarding charging of the interest under section 23B & 23C of the Act. In this regard, we hold that the charging the interest is mandatory, hence this ground of the appeal is dismissed.

7. In the grounds No. 2 and 3 of the assessee’s appeal, the only issue involved is challenging the value adopted by the learned Commissioner (Appeals). The assessee has also submitted modified ground wherein the figure of Rs. 16.00 lacs appearing in grounds No. 2 and 3 is requested to be replaced by the figures of Rs. 28,22,700. Being this is a factual error, the Bench allow to modify the ground to that extent. IN revenue’s appeal ground No. 1 is against deleting the addition of Rs. 1,04,54,400.

8. The learned Commissioner (Appeals) has decided this issue by allowing part relief to the assessee by holding as under:

3.3 I have considered the contention of the appellant as well as the assessment order, valuation report, comments of the assessing officer thereon and comments of the Valuation Officer vide letter dated 27-1-2015. It is seen that assessee had sold the land measuring 1368 Sq. Ft. bearing Khasra No. 1834 on 6-1-2010 for Rs. 8 lacs to Shri Rajkumar Kulshresth. The said property was valued at Rs. 52,40,700 by Sub-Registrar Ajmer for stamp duty purposes. Later on, Collector (Stamps) enhanced the value of the said property at Rs. 1,56,95,100 and purchasing party paid the stamp duty.

The assessee has claimed that the said property was sold for Rs. 8 lacs only as this was under unauthorized possession of Shri Rajkumar Kulshresth and various other constraints i.e. said property was on a hillock having no direct access from the main road, land use of the land in the master plan was for social cultural activities only and no residential or commercial activity was legally permissible on the above property. The approved valuer has valued this property at Rs. 24,18,000 only while the Stamp Valuation Authorities has initially adopted the value at Rs. 52,40,700 which was later on enhanced to Rs. 1,56,95,100 holding the same as commercial property while it was sold as agricultural land. It is seen that the section 50C(2) and section 50C(3) are as under:

“(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 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 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-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of subsection (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 sub-section (1) of section 16A of that Act.

Explanation. : For the purposes of this section , “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth Tax Act, 1957 (27 of 1957).

(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 by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. ”

As such, where the assessee disputes the value adopted by Stamp Valuation Authority and no appeal, revisions or reference has been filed by the assessee before any other authority, Court or High Court, the assessing officer may refer the valuation of the capital asset to the Valuation Officer for determining fair market value and the provisions of section 50C(2) & 50C(3) are applicable in the case of the appellant.

In the present case, the Departmental Valuation Officer has determined the fair market value of the property at Rs. 29,83,500 and has mentioned that the Collector (Stamps) has considered the property as commercial property and adopted the value of Rs. 1,56,95,100. The said property cannot be considered as commercial land in view of following points:

(a) Shri Sardar Narendra Singh sold a land measuring 13068 sft. Bearing Khasra no. 1834 for consideration of Rs. Eight lacs to Shri Shiv Raj Kumar Kulshetra, who was having the unauthorized possession thereon.

(b) This property is situated at hillock having no axis from the main road. For this peculiar type of land on revenue records a copy of letter dated 23-1-2015 of concerned Patwari is enclosed herewith as annex-III).

(c) As per Master Plan of Ajmer for land use plan 2023 of the Town Planning Department Rajasthan (copy enclosed as annex-IV) this evaluated land is for Social or Cultural activity.

(d) This property is situated to the archeological area from north side therefore no construction can be done within 100 meters as per the directives of the Central Govt. vide Gazette notification dated 30-3-2010 (copy enclosed as annexure- V).”

In above case, though the Departmental Valuation Officer has valued the property at Rs. 29,83,500, the sale consideration offered by the assessee himself in the return of income filed in response to section 148 of the Income Tax Act (the proceedings which are for benefit for revenue only to tax escaped income) is at Rs. 52,42,700

The only ground raised by the assessee is that sale consideration offered by the assessee should be accepted. Accordingly the sale consideration for the purpose of long term capital gains i.e. Rs. 52,42,700 offered by the assessee is liable to be accepted. Accordingly the addition made by the assessing officer is deleted.

9. We have heard both the sides on this issue, perused the material available on the record, also considered the various case laws relied upon by both sides and also considered the factual aspects of the issue. We find that the assessee himself adopted the value at Rs. 52,40,700 and filed the return of income in response to notice under section 148 of the Act. The assessing officer adopted the value at Rs. 1,56,95,100 as adopted by the DIG (Stamps). The assessee has only challenged the valuation adopted by the assessing officer at Rs. 1,56,95,100 before the learned Commissioner (Appeals). The learned Commissioner (Appeals) has granted the relief sought for by the assessee in his appeal. Now what is claimed in the appeal of the assessee is not a justified claimed. He himself has adopted the value for working out the capital gain at Rs. 52,40,700. Only enhancement was challenged before the learned Commissioner (Appeals). At the stage of Commissioner (Appeals), the matter was referred the matter to the District Valuation Officer, who has valued it around Rs. 29,83,500. Now the assessee’s Authorized Representative claims that this value should be substituted for the value declared by him in his return of income. On this issue, we are of the view that once the assessee has himself has offered the value adopted by the Registering Officer at Rs. 52,40,700 and filed the return of income and paid the taxes. Then there is no scope for reduction. He has also not agitated this valuation before the learned Commissioner (Appeals) in any of his grounds of appeal. Only plea was to adopt the value at Rs. 52,40,700 in place of Rs. 1,56,95,100, therefore, we find no merit in this plea of the learned Authorized Representative of the assessee. After considering all the aspects of the matter, we sustain the order of the learned Commissioner (Appeals).

10. In the result, both the appeals i.e. appeal of the assessee as well as appeal of the revenue stand dismissed.

Categories: Income Tax
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