TMI Blog2015 (12) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in the re-assessment proceedings confirmed the assessment order under S.143(3). Thus, as rightly pointed out by the assessee in his grounds of appeal, the assessment order under S.143(3) got merged with the assessment order under S.143(3) read with S.147 of the Act and the assessee’s challenge against the same before the CIT(A) is maintainable and the CIT(A)’s observations are not sustainable. Therefore, the order of the CIT(A) is set aside. However, since the common issue of computation of capital gains is arising in the case of all the co-owners including the assessee, we are of the opinion that no useful purpose would be served in remanding this case back to the file of the CIT(A). Therefore, we remand this case also to the file of the Assessing Officer for re-computation of capital gains in the hands of this assessee also in the light of the decision of this Tribunal in the case of other co-owners. - Decided in favour of assessee for statistical purposes - ITA No. 1942, 1943, 1944, 1945, 1946, 1947, 1948, 1949, 1950, 1951, 1952, 1953, 1954/Hyd.2014 - - - Dated:- 27-11-2015 - SMT P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER For The Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee s case. 4. The CIT(Appeals) is wrong in ignoring the fact that the registration of Sale Deed, finally, is only fulfilment of a contractual obligation imposed upon the assessee by virtue of the sale agreement. 5. The CIT(A) is wrong in rejecting the assessee s plea that the District Valuation Officer, Valuation Cell, has completely ignored the submission made by the assessee and the evidence produced before him and wrongly estimated the lieu of the property by applying the rates which were prevalent after the cut off date, i.e. 20-05-2005, and by taking into consideration properties which are located in a different area and also by applying the rates applicable to commercial area, though it is in residential area. 6. The CIT(A) is wrong in rejecting the assessee s objection to the huge addition of ₹ 9,724/- per square yard, made by the District Valuation Officer, to the average price of ₹ 19,447/- per sq. yard, which was worked out by him by taking into consideration the values fixed by the registration department because such values are fixed only after taking into consideration all aspects including location of the property. 7. Any other ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, notices under S.148 were issued to all the assessees in response to which the assessees have filed their returns of income, admitting the same incomes, which were admitted in the original returns of income. During the reassessment proceedings, the assessees have filed their written objections vide letter dated 6.6.2013 stating that following were the factors relating to the property due to which the sale consideration at which the property was sold was ₹ 3,35,60,000 and ₹ 3,54,40,000 only and not ₹ 4,50,62,000/- :- (a) that the property sold is located in residential area on Road No.3 Banjara Hills, Hyderabad; (b) that the shape of the property is odd and this fact has been clearly mentioned on page 3 of the sale deed; (c) that there is no passage or approach road for individual plots and the property is not abutting the main road; (d) that there occurred certain deaths in the family after the purchase of the property, due to which it was decided to dispose of the property, as soon as possible and that no one was prepared to buy the property and no one was coming forward to buy the property knowing that the property is against Vastu and is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Fair Market Value of the property as on the date of transfer. The DVO, after inspection of the property and verification of the relevant documents proceeded to estimate the market value of the property at ₹ 4,51,71,285 and a show cause was accordingly issued to the assessees. The assessees filed their objections to the proposed valuation stating that (1) The DVO has taken properties situated in Jubilee Hills, Nandagiri Hills and MLA Colony in Banjara Hills Road No.12, which are not comparable to the assessee s property, which is situated at Road No.3, Banjara Hills; (2) The location of some of the properties is on the 80 Ft. main road, as against the location of assessee s property on side road location without proper approach and having odd shape; (3) The properties were sold on dates much later to the sale of properties by the assessees; (4) The plots sold by the assessee were still undeveloped even after eight years of sale which shows that there was no development potential as on the date of sale and therefore, the addition of the development potential at 50% of the average rate of sale instances is not correct; (5) The DVO erred in not considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 for commercial areas whereas the land was residential in nature. j. In accordance with the first proviso to sec.56(2)(vii)(b), the SRO rate prevailing on the date of MOU, i.e. on 20.5.2005 should be adopted u/s. 50C. Thus, according to the assessees, the SRO value of the property as on the date of agreement has to be considered and not as on the date of the transfer of the property. The assessee also relied on the first proviso to S.56(2)(vii)(b) of the Act which provides that for the purposes of S.50C of the Act, where the SRO value on the date of agreement fixing the amount of consideration for the transfer of the immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of that section. In support of the contention that this provision is applicable to the case of the assessee, reliance was placed upon the judgment of Hon'ble Supreme Court in the case of Sanjeev Lal and Smt. Shanti Lal V/s. CIT (2014) 365 ITR 389 (SC) for the proposition that the SRO value as on the date of agreement is to be considered. The CIT(A) however, distinguished the said judgment, stating that the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. 13. Having regard to the rival contentions and the material available on record, we find that the assessees have contended to have entered into an MOU with the purchaser on 20.5.2005. However, the said document has not been produced either before the authorities below or before us. The only evidence in support of this contention is the recital in the registered sale deeds dated 6.3.2006. At page 3 of the sale deed, we find that there is a recital that the vendors 1 to 8 have entered into an MOU on 20.5.2005 with vendee to sell the said property for a consideration of ₹ 3,35,60,000, out of which the vendors already received ₹ 60,000 as advance and that it is clearly understood by the vendee that the property is not abutting the main road and it is an odd shaped plot more fully described in the schedule and plan annexed to the deed. On page 4 of the sale deed, there is also a recital about the advances paid by the vendee to the vendors, and it is seen that a sum of ₹ 5,40,000 is shown to have been paid by Cheque No.361101 dated 20.5.2005 and 6.2.2006 and all other payments with consecutive cheque Nos.361102 to 361104 and 361124 are made on 6.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vendors are allegedly by consecutive cheques and that cheque Nos.031076 to 31083 dated 4.3.2006 are stated to have been issued by the vendee in favour of the family members of Mohammed Zia Baig at the time of registration, while the subsequent cheques bearing no.361101 to 361104 and 361124 are dated 6.2.2006 and 361120 to 361125 are dated 6.3.2006. He submitted that usually cheque leaves are used by a person in seriatim as and when required and not haphazardly, as seems to have been done in this case. He further submitted that though some of the cheques are allegedly dated 6.2.2006, as seen from the bank account of Abdul Arif Baig, the cheque has been encashed after the execution of registered sale deeds, i.e. 10.3.2006, which clearly shows that the sale consideration was received and possession was given only in March, 2006,. Therefore, he raised a doubt about the execution of MOU dated 20.5.2005. Thus, according to him, the SRO value as on 6.3.2006 was correctly adopted by the authorities below. As regards the date to which the provisions of S.50C are to be made applicable, the Learned Departmental Representative placed reliance upon the orders of the authorities below to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a certain price and before the sale is completed pursuant to the agreement and it is quite well- known that sometimes the competition of the sale may take place even a couple of years after the date of the agreement-the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price by more than 15% of such agreed price. This situation is not at all an uncommon case in an economy of rising prices. It cannot be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfilment of a contractual obligation, the assessee who has sold the property should be liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax in the case of nature. Many other similar situations can be contemplated whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is only the recitals in the sale deed about the MOU dated 20.5.2005 and no other document. The advance of ₹ 60,000/- is allegedly in cash with no evidence in support of the same. Even the certificate of the SRO for market value as on 20.5.2005 is dated 3.11.2011 which is after the filing of the return of income by the respective assessees, but before the issuance of notice under S.148 dated 1.3.2013 for initiation of re-assessment proceedings Since no concrete material is filed before us in support of the MOU dated 20.5.2005, we are not inclined to accept the same, particularly, since there was a revision of guideline values of the properties in 2006. The SRO has taken the revised guideline value and the date on which such revision has taken place also is not available on record. 21. The next question is the nature of the property for valuation under S.50C, because, according to the assessee, even if the date of registered sale deed is considered for determination of the fair market value under S.50C, the SRO value should be taken for residential area and not commercial area. He submitted that if the value of the residential area as on 1.4.2006 i.e. ₹ 10,000 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned relevant authority is relevant to determine the nature of the property. It is also a fact that even in a residential zone, one may put a property to commercial use by which it would fetch commercial value when sold. But in the case before us, there is no such allegation by the revenue. But, in fact, the contention of the assessee that the property remained as it is even after eight years of sale also confirms this position, as no person would keep such a property idle when there was ample development potential. The above fact of the land remaining as it is has not been controverted by the authorities below. Therefore, for want of any evidence to the contrary, we hold that the property in question was in residential zone on the date of transfer and therefore, the SRO value for residential property as on 6.3.2006 or the sale consideration received by the assessee whichever is higher is to be adopted under S.50C of the Act. Assessing Officer is directed to compute the capital gains in the hands of the respective assessees accordingly. 23. As regards the reliance of the assessee on the proviso to S.56(2)(vii)(b) of the Act, we find that the said proviso has been brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order u/s. 143(3) r.w.s. 147 of the I.T. Act, dt. 10-03-2014, but rejected the assessee s appeal sating that no additions or disallowances were made in the Order appealed against. The CIT(A) is wrong in not adjudicating the Grounds urged by the assessee in the Grounds of Appeal filed. 3. The assessee can make any claim at any stage of the reassessment proceedings or during the course of appeal proceedings, and therefore, the CIT(A) erred in not adjudicating the grounds urged by the Appellant. 5. Any other ground or grounds that may be urged at or before the time of hearing. 27. Having heard both the parties and having regard to the rival contentions, we find that during the assessment proceedings under S.143(3) the capital gains was computed by taking the SRO value and the assessment order was reopened u/s. 147 of the Act for the very same reason, i.e. to consider the DVO report for adopting the value u/s. 50C of the Act. We find that after considering the fact that the DVO value was more than the SRO value, and hence the SRO value is to be adopted u/s. 50C of the Act, the Assessing Officer in the re-assessment proceedings confirmed the assessment order under S.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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