Ajay Kumar Jain Vs ITO (ITAT Jaipur)
Introduction: In the case of Ajay Kumar Jain vs ITO, adjudicated by the Income Tax Appellate Tribunal (ITAT) Jaipur, a significant decision was made regarding the application of Section 50C of the Income Tax Act. The tribunal allowed a 25% reduction in the District Level Committee (DLC) Rate based on restrictions imposed on land use. This resulted in the deletion of the Section 50C addition. This article provides an analysis of the case details, arguments presented, and the final ruling by the ITAT.
Analysis: The case revolved around an assessee who sold a property at a certain consideration. The Assessing Officer (AO) invoked Section 50C, adding the difference between the sale consideration and the DLC rate as income. The assessee contested the valuation, highlighting the presence of an Indian Oil Corporation Limited (IOCL) gas pipeline passing through the land and additional restrictions imposed by the State Government. The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who directed the matter to the District Valuation Officer (DVO). The DVO valued the property at the same rate but did not grant the 25% reduction based on certain assumptions.
The appellant argued that the DVO overlooked the specific disadvantages related to the IOCL pipeline and state-imposed restrictions. The appellant’s valuer had justified a 25% reduction in the DLC rate. The appellant’s conduct in seeking valuation before the sale and agreeing with the valuation report supported their claim. The appellant emphasized that they were not attempting to evade Section 50C but were genuinely disadvantaged due to the land’s conditions.
Conclusion: Upon thorough examination of the facts, the ITAT concluded that the appellant’s claim of a 25% reduction in the DLC rate was reasonable and justifiable. The tribunal considered the disadvantageous conditions caused by the IOCL pipeline and government restrictions. This decision aligns with previous judicial precedents where similar disadvantages were recognized and relief was granted. Consequently, the Section 50C addition was deleted, acknowledging the legitimate impact of land use restrictions on property valuation.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 23/03/2023 [here in after (NFAC)] for assessment year 2013-14, which in turn arise from the order of the ITO Ward 5(2), Jaipur dated 13.01.2016 passed under 143(3) of the Income Tax Act, [ here in after referred to as Act ].
2. The assessee has marched this appeal on the following grounds:-
“1. That on the law and in the facts and in the circumstances of the case, the ld CIT(A) grossly erred in confirming the addition of Rs.44, 13,704/- made by the Id. Assessing Officer u/s 50C of the Act.
1.2. That on the law and in the facts and in the circumstances of the case the Id. CIT(A) grossly erred in not providing the opportunity of hearing and to submit objection on the valuation report dated 04.05.2018 issued by Divisional Valuation Officer.
1.3. That on the law and in the facts and in the circumstances of the case the ld. CIT(A) grossly erred in relying upon the valuation report 04.05.2018 issued by the Id. Divisional Valuation Officer without considering the drawback factor i.e. IOCL Gas Line passing through middle of the Land.
1.4. That on the law and in the facts and in the circumstances of the case the ld. DVO grossly erred in taking the Value of agriculture land at Rs 1,69,13,700/- against Rs 1,25,00,000/- by holding that P & MP Act do not put any restriction on use of land whereas proviso of sub clause 1 of section 9 of P & MP Act 1962 imposed restriction, i.e., any construction over land, any construction or excavate of well, reservoir or dam or plant any tree.
2. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.”
3. The fact as culled out from the records is that the assessee has filed return of income on 27.09.2013 at Rs. 4,19,770/-. The case of the assessee was selected under CASS and therefore, notices were issued from time to time in compliance the notices, the assessee filed various details as called for by the ld. AO. During assessment proceedings, the Assessing Officer has observed from the return of income that the assessee the assessee sod a property for a sale consideration at Rs. 1,25,00,000/-. The DLC rate of that property was at Rs. 1,69,13,704/-. Therefore, assessee was issued a show cause notice requesting him to show cause as to why the difference of Rs. 44,13,704/- [ 1,69,13,704/-less 1,25,00,000/- ] be not added as per provision of section 50C of the Act. The assessee has filed detailed reply but ld. AO did not find the reply satisfactory and finally completed the assessment making addition of Rs. 44,13,704/- u/s 50C of the Act.
4. Aggrieved from the said order of the Assessing Officer, the assessee has preferred an appeal before the ld. CIT(A) raising this issue as the assessee has raised the contentions that the valuation of property need to be evaluated by the DVO considering the peculiar set of fact. The being so that in the impugned land sold by the assessee which though agricultural land but from the middly of the said land IOCL Gaspipeline passing to the property and therefore, the assessee justify the reference to the DVO. Based on the detailed facts and record placed before the ld. CIT(A), he has in the appellate proceeding directed the AO to refer the matter to the DVO. DVO made the valuation of the property as on the date of sale i.e. 20.02.2018 at Rs. 1,69,13,700/-. The DVO adopted the same rate as the assessee has submitted in his valuation report but has not granted the benefit of 25% lessor market value based on the reason. The ld. CIT(A) given the DVO’s report to the assessee for his comments. But the assessee did not controvert the finding of the DVO and has not filed any submission. The ld. CIT(A) also confirm that the consideration be adopted at Rs. 1,69,13,700/- and the appeal of the assessee was decided and the relevant observation of the ld. CIT(A) is reiterated here in below:
“5.2 The addition of Rs.44,13,704/- made u/s.50C of the Act and the submissions made by the appellant have been perused. During the course of appeal proceedings, the erstwhile CIT(A)-2, Jaipur’s letter vide No.3345 dated 16.02.2018 directed the AO to refer the matter of cost of property to the DVO for correct valuation of the property. Accordingly, the AO vide his letter No. ITO/W-5(2)/JPR/2017-18/2157 dated 22.02.2018 made a reference to the DVO to make valuation of the property as on the date of transfer i.e. 20.02.2018. In view of the above reference, the Valuation Officer, Income Tax Department, Jaipur vide his letter dated 03.05.2018 forwarded the report wherein the said property was estimated by Valuation Cell at Rs.1,69,13,700/- as against declared by the appellant at Rs.1,25,00,000/-. The said valuation was made by the team of Valuation Office, Jaipur on 18.04.2018 in the presence of the appellant and the AO forwarded the Valuation Report vide his letter dated 04.05.2018 to the CIT(Appeals)-2, Jaipur.
5.3 In view of the above, the report of the Valuation Cell was forwarded to the appellant for his comments/objections. However, there was no compliance from the appellant on the Valuation Report. Thus, it is clear that the property under consideration is valued at Rs.1,69,13,700/- which is the same as per the Sub- Registrar, Amer, Jaipur. Therefore, the action of the Assessing Officer is upheld and Ground No. 1 is dismissed.”
5. Feeling dissatisfied with the order of the ld. CIT(A), the assessee has preferred present appeal before this tribunal on the grounds as raised in para 2 above. To support the various contentions so raised, the ld. AR of the assessee has filed a paper books containing following evidences and cases laws :
