Prafulchandra Bhaichandbhai Patel Vs ITO (ITAT Surat)
Held that tribunal in assessee’s co-owner case has taken holistic view in adoption of fair market value as DVO has himself stated in his report that the impugned land was situated at a more appropriate location as compared to sale instances considered by him.
Facts-
The appellant contended that CIT(A) has erred in confirming the action of the assessing officer in making addition on account of cost of indexation claimed by the appellant by adopting cost of indexation at INR 200 per sq. mtr. instead of INR 825 per sq. mtr.
Conclusion-
Division bench of Tribunal in assessee’s co-owner case has held that the dispute between the assessee and the assessing officer is the rate of Rs. 825/- per square meter, as fair market value as on 01.04.1981, whereas the DVO has estimated the fair market value at the rate of Rs. 114.30 per square meter. DVO has himself stated in his report that the impugned land was situated at a more appropriate location as compared to sale instances considered by him. Therefore, considering the entirety of the facts and taking a holistic view the fair market value at Rs. 607 per square meter should be adopted to meet the end of justice. Accordingly, the AO was directed to apply the rate of Rs. 607 per sq. meter for the calculation of the indexed cost of acquisition for the purpose of computation of long-term capital gain in the hands of the assessee.
Held that as the issue in the current case is similar and is squarely covered in favour of the assessee by the decision of the Coordinate
Bench and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. The tribunal found no reason to interfere in the said order of the Coordinate Bench and followed the binding judgment. Thus, the addition made by AO was deleted.
FULL TEXT OF THE ORDER OF ITAT SURAT
Captioned appeal filed by the assessee, pertaining to assessment year 201314, is directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-1, Surat [ ‘CIT(A)’ for short], dated 20.03.2017, which in turn arises out of an assessment order passed by the Assessing Officer (‘AO’ for short) under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide order dated 29.03.2016.
2. Grounds of appeal raised by the assessee are as follows:
“1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in partly confirming the action of assessing officer in making addition of Rs.55,99,666/- on account of cost of indexation claimed by the assessee by adopting cost of indexation at Rs.200 per sq.mtr instead of Rs.825 per sq.mtr claimed by the assessee.”
3. The appeal filed by assessee for Assessment Year 2013-14, is barred by limitation by 1457 days. The assessee has moved a petition requesting the Bench to condone the delay. The assessee has filed an affidavit explaining the reasons of delay, which is reproduced below:
“1) The assessee begs to prefer this application for condonation of delay in relation to appeal filed against the order of the Commissioner of Income Tax (Appeals) which is received by the assessee on 05.04.2017. There is a delay of 1457 days in filing the appeal before Honnorable Tribunal against the order passed by CIT(A)-I, Surat.
2) The assessee’s brother namely Shri Dharmendra Bhaichand Patel, who is the co-owner of the land sold; filed the appeal bearing ITA No.55/SRT/2018 before the Honorable Tribunal on the same issue. The assessee was under the honest belief that his appeal was also filed.
3) However, at the time of conducting the appeal of assessee’s brother Shri Dharmendra Bhaichand Patel, it was found by assessee’s AR CA Mehul Shah that the appeal in the case of assessee was not filed involving same facts and same quantum through inadvertence.
4) Thereafter, assessee’s AR CA Mehul Shah suggested the assessee to file the appeal after the expiry of limitation period before the Honorable Tribunal as the appeal in case of assessee’s brother Shri Dharmendra Bhaichand Patel bearing ITA No.55/SRT/2018 was conducted on 20.05.2021. There after, the appeal was immediately filed by assessee on 31.05.2021.
5) Accordingly, appeal was filed before the Honorable Tribunal belatedly with delay of 1457 days.
6) The assessee submits that the case is a meritorious one and requires consideration. Assessee’s case is squarely covered by the decision of Honorable Tribunal in case of assessee’s brother Shri Dharmendra Bhaichand Patel beaeringITANo.55/SRT/2018. If the delay is not condoned, it would cause irreparable loss to the applicant.”
4. Apart from this, ld Counsel submits that delay has occurred because of mistake committed by the Authorized Representative of the assessee. Authorized Representative of the assessee could not take the initiative to file the appeal of the assessee on time. Therefore, ld Counsel prays the Bench that in the interest of justice, the delay may be condoned.
5. On the other hand, Ld. Senior Departmental Representative (Sr.DR) for the Revenue has strongly objected the prayer for condonation of delay. She pointed out that appeal was filed by the assessee, after the decision in case of assessee`s brother, Shri Dharmendra Bhaichand Patel, in ITA No.55/SRT/2018 was pronounced by the Tribunal, that is, after knowing the fact that assessee`s brother has won the case, therefore, assessee has filed the appeal to take the advantage of the assessee`s brother case ( Co-owner), hence assessee has a mala-fide intention to defraud revenue. She submitted that delay should not be condoned merely because assessee`s Authorized Representative, had committed mistake in filing the appeal therefore, she prays the Bench that appeal of the assessee should be dismissed.
6. We have heard both the parties on this preliminary issue. First, we deal with the submissions made by ld DR for the Revenue to the effect that assessee has filed the appeal to defraud the Revenue. We note that in case of assessee’s brother, Shri Dharmendra Bhaichand Patel, (co-owner) the appeal was heard on similar and identical facts, vide ITA No.55/SRT/2018 on 20.05.2021. Thereafter, the appeal was immediately filed by the assessee on 31.05.2021. However, the decision in case of assessee`s brother, Shri Dharmendra Bhaichand Patel, in ITA No.55/SRT/2018 was pronounced by the Tribunal on 30.06.2021, therefore, we note that there was no information before the assessee that his co-owner has won the case, therefore, we do not find merit in the arguments of ld DR to the effect that assessee`s co-owner has won the case therefore assessee has filed the appeal to take the advantage of assessee`s co-owner case.
7. To condone the delay, we have to examine whether sufficient ground had been made out by the assessee entitling him to condonation of delay. We note that the words ‘sufficient cause’ should receive a liberal construction so as to advance substantial justice where no negligence nor inaction nor want of bona fides is imputable to the assessee. [Bharat Auto Center v. CIT 282 ITR 366]. The mistake of the lawyer or accountant may be a good reason for condoning delay.
8. In considering the condonation petition, it is to be remembered that statutes conferring a right of appeal must be construed in furtherance of justice and the provision limiting the time for bringing an appeal must be liberally interpreted, so that the party pursuing such remedy allowed to him by the law is not non-suited on mere technicalities [Chaman Lal Bros. P. Ltd. v. The Punjab State, (1961) 12 STC 643 (Punj)]. In deciding what is sufficient cause for delay in filing the appeal, the true guide is whether the assessee has acted with reasonable diligence in the prosecution of his appeal. We note that in assessee`s case the appeal could not be filed on time because of mistake and negligence of the lawyer or AR of the assessee, therefore, the assessee should not be penalized. Reliance is also placed on the decision of I.T.A.T., ‘C’ Bench, Kolkata in the case of M/s. Garg Bros. Pvt. Ltd. & Others vs. DCIT [ITA Nos.2519 to 2521/Kol/2017, order dated 18.04.2018], wherein under similar set of facts and reasons, the Hon’ble Tribunal was pleased to condone the delay of 211 days by holding as under:
“3. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the application for condonation of delay, we are of the considered opinion that assessee was under a bona fide belief that the impugned order of Pr. CIT was not appealable before this Tribunal since they were not advised by their Tax Consultants about this legal right. Later on, when a Senior Lawyer advised them to file an appeal, the assessees immediately took steps to file the appeals. Therefore. the delay caused. we note. was because of the wrong advice of the Tax Professional for which assessees cannot be penalized. For the ends of justice, we condone the delay and admit the appeal for hearing.”
9. Hon`ble High Court of Madras, in the case of Areva T & D India Ltd.[2006] 287 ITR 555 (Madras) has explained the theory of pragmatic approach to advance the justice. The findings of the Hon`ble Court is reproduced below:
“4. It is apparent on the face of the record that the appellant/assessee could not prefer the appeal within the time on account of the advice alleged to have been given by his counsel, and the assessee could not get an affidavit from counsel, as insisted by the Appellate Tribunal. But, at the same time, it is not in dispute that the director of the assessee-company has sworn to an affidavit. The Appellate Tribunal has not given any reason for not believing the affidavit sworn to by the director of the assessee-company.
5. It is a well-settled law that in exercising discretion under section 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause”, the principle of advancing substantial justice is of prime importance. (VideVedabai alias Vaijaya-natabai Baburao Patil v. Shanta-ram Baburao Patil [2002] 253 ITR 798 (SC.))
6. A Division Bench of this court in which one of us was a party (P. D. Dinakaran J.) in Sreenivas Charitable Trust v. Deputy CIT [2006] 280 ITR 357 has also held that no hard and fast rule can be laid down in the matter of condonation of delay and the courts should adopt a pragmatic approach and the courts should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression, “sufficient cause” should receive a liberal construction.
7. If that be so, the Tribunal ought to have given a finding whether the assessee has given sufficient cause in the affidavit sworn to by the director of the company, instead of refusing to accept the affidavit itself. In the absence of any finding by the Appellate Tribunal as to the “sufficient cause” for the alleged delay, we are convinced that the Appellate Tribunal has erred in refusing to exercise the discretion under section 5 of the Limitation Act. We are of the view that the Appellate Tribunal was not correct in dismissing the appeal on account of limitation without giving a finding that there was no sufficient cause for the delay. Hence, we answer the first question of law in favour of the assessee.”
10. Therefore, we are of the view that explanation for the delay in the filing of the appeal would stand fully substantiated and therefore, having regard to the reasons given in the petition and arguments made by ld Counsel, we condone the delay and admit the appeal for hearing.
11. Coming to the merits of the case, the brief facts qua the assessee are that assessee before us is an individual and has shown in his return of income, salary income, long term capital gains (LTCG) from sale of immovable property and income from other sources. On verification of the details filed during the course of assessment proceedings, it was noticed by the assessing officer that during the year, the assessee alongwith other co-owners have sold immovable property being land bearing S.No.18/1 + 19/4, Block No.59, I.P. Scheme No.13, Final Plot No.36, Bhestan, Vesu, Surat admeasuring 4451 sq. mtr. for a consideration of Rs.4,00,00,000/- on 07.11.2012. In the computation of total income, the assessee has shown his share from the sale consideration at Rs.1,79,50,00/- i.e. 44.87% and after deducting the cost of indexation and other deductions i.e. deduction u/s 54B and 54F, the assessee has disclosed net long term capital gain (LTCG) at Rs. Nil. During the course of assessment, the assessee was asked to furnish the basis of the cost of indexation taken by him. In response, the assessee has filed valuation report dated 24.03.2013 of Shri P.K Desai, approved valuer. The approved valuer has taken the fair market value of the land in question as on 1.4.1981 at Rs. 825/- per sq. mtr. which was found on higher side, as compared to the sale instances obtained from Sub-Registrar in the same/nearby area i.e. @ Rs.2.85 to 6.45 per sq. mtr. In view of the huge variance found in the fair market value shown by the assessee and obtained by the Department, the matter has been referred to the Valuation Officer to determine the correct value as on 1.4.1981 vide reference dated 03.10.2015.
In response to the above reference, the Valuation Officer, has submitted valuation report vide No.6(49)/VOS/15-16 dated 15.03.2016 in which he has valued the fair market value of the entire land as on 01.04.21981 at Rs.5,08,750/- i.e. @ Rs.114.30 per sq. mtr. Instead of the declared value by the approved valuer at Rs.36,72,000/-@ Rs.825/- per sq.mtr.). The assessing officer, after considering the assessee`s submission, worked out the long term capital gain, on the basis of the report of the Valuation Officer, as under:-
