TMI Blog2016 (5) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 22-4-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant by : Shri J.P. Bairagra For The Respondent : Shri S.K. Rastogi ORDER PER R.K. PANDA, AM : The above appeals filed by the respective assessees are directed against the separate orders dated 25-03-2015 passed u/s.263 by the Principal CIT-I, Aurangabad relating to Assessment Year 2010-11. ITA No.808/PN/2015 (Shri Dhirendra Mahendraprasad Mehra) : 2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 18-08-2011 declaring total income at ₹ 12,25,500/-. The AO completed the assessment u/s.143(3) on 04-03-2013 determining the total income at ₹ 78,94,210/-. Subsequently, the Ld.CIT on verification of the record, observed that the AO has wrongly accepted the valuation u/s.50C(1) of ₹ 65,97,200/- against assessable value of ₹ 90,20,200/- as per ready reckoner rate and thus the capital gain of ₹ 24,23,000/- has been left to be added. According to him, the assessee along with Mr. Surendra S. Mehra had individually and independently acquired the ancestral land out of Survey Nos. 44 and 45 to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to explain as to why the assessment orders shall not be set aside u/s.263 of the I.T. Act since the order passed by the AO is erroneous and prejudicial to the interest of the revenue. Rejecting the various explanations given by the assessee the Ld.CIT assumed jurisdiction u/s.263 by setting aside the order of the AO with a direction to re-frame the same as per the provisions of law after giving due opportunity of being heard to the assessee. The relevant observation of the Ld.CIT at Para 3.1.1 to para 4 of the order read as under : 3.1.1 The submissions of the AR of the assessee are considered. From the above submissions of the assessee it is clear that he has not challenged the stamp duty valuation as per the show cause notice on facts. Therefore, there is no doubt that the stamp duty valuation has been understated. To determine the value of land for the purpose of income, the provision of section 50C(1) are applicable, according to which where sale consideration received or accruing as a result of the transfer of a capital asset, being land or building or both in less than the value adopted or assessed (or assessable) w.e.f. 01-20-2009 shall, for the purposes of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erted to cover the cases where the sale document is not registered and therefore value of property as per stamp duty authorities is not available. 4. The Ld. CIT further erred in adopting value of land sold by the appellant u/s.50C by calculating in its own way as against value of sale as per the registered sale deed which was examined by the AO during the assessment proceedings and adopted the same for calculating capital gain. Thereby, it is merely change of opinion which is not permitted to set aside the order of AO u/ s. 263 of the Act. 5. The Ld. CIT further erred in passing the order u/s. 263 when the assessment order passed by AO had been subject matter of appeal before CIT(Appeals), thereby no order can be passed u/s. 263 of the Act. 6. The appellant craves to add to, alter or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing. 5. The Ld. Counsel for the assessee strongly objected to the action of the Ld.CIT assuming jurisdiction u/s.263 of the I.T. Act. He submitted that the assessee during the impugned assessment order has sold the ancestral property. For the purpose of calculating the long term capital gain the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration received or accruing as a result of such transfer for computing capital gain. 23.3 Further, Explanation 2 has been inserted in the sub-section (2) of the section 50C, so as to clarify the meaning of the term assessable . 23.4 Applicability These amendments have been made applicable with effect from Ist October, 2009 and will accordingly apply in relation to transactions undertaken on or after such date. 8. Referring to the decision of Hon ble Madras High Court in the case of CIT Vs. R. Sugantha Ravindran reported in 352 ITR 488 the Ld. Counsel for the assessee drew the attention of the Bench to the following observation of the Hon ble High Court (Short Notes) : The insertion of the words or assessable in section 50C of the Income-tax Act, 1961, with effect from October 1, 2009, is neither a clarification nor an explanation to the existing provision and it is only an inclusion of new class of transactions, namely, the transfer of properties without or before registration. Before the amendment, only transfer of properties where the value was adopted or assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of execution for which the value adopted by the Sub-Registrar at ₹ 2,16,15,000/- is correct and need no further interference, the Ld.CIT, without any evidence at his disposal restored the issue to the file of the AO with a direction to get the computation endorsed by the stamp duty authorities and recompute the consideration. He submitted that it is only a change of opinion and the action of the CIT is not at all permissible in absence of any evidence at his disposal. He accordingly submitted that on all counts assumption of jurisdiction by the CIT u/s.263 is illegal and has to be set aside. 11. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT. He submitted that the theory of doctrine of merger is not applicable to the facts of the present case since the issue before the Ld.CIT(A) was cost of acquisition and sale consideration was not the issue before the Ld.CIT(A). Therefore, the argument of the Ld. Counsel for the assessee regarding theory of merger is not applicable to the facts of the present case. He submitted that the Ld.CIT s order is based on facts which the AO while passing the order has not considered, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and set aside the order u/s.263 by giving a direction to the AO to get the computation endorsed by the stamp duty authorities and recompute the consideration. 14. It is the submission of the Ld. Counsel for the assessee that in absence of any material before the Ld.CIT that assessable value is more than the assessed value the Ld.CIT has invoked jurisdiction. Further, the Ld.CIT has misconstrued the word assessable which is applicable only to cases of transfer of properties without or before registration. 15. We find merit in the above arguments of the Ld. Counsel for the assessee. The provisions of sub-section(1) of section 50C read as under : 50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of reaching of BPV or BSV, whichever is earlier, as is pleaded on behalf of the first respondent. It is trite law that circulars issued by the Revenue are binding on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. 22. In Paper Products Ltd. Vs. Commissioner of Central Excise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), while interpreting Section 37B of the Central Excise Act, 1944, which is in pari materia with Section 28A of the TNGST Act, this Court had held that the circulars issued by the Central Board of Excise and Customs are binding on the Department and the Department is precluded from challenging the correctness of the said circulars, even on the ground of the same being inconsistent with the statutory provision. It was further held that the Department is precluded from the right to file an appeal against the correctness of the binding nature of the circulars and the Department's action has to be consistent with the circular which is in force at the relevant point of time. 10. Even otherwise, we are of the firm view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty (as per the table, page 3 of the notice) is ₹ 90,20,000/- I have declared my sales consideration in my returned income at ₹ 88,65,000/-. The difference in arithmetic computation of Assessable value and Assessed sales value is ₹ 1,55,000/- and not ₹ 24,23,000/- as alleged in the notice. 20. Nothing has been brought on record that the Ld.CIT had some material before him that the assessable value is more and that the stamp valuation authorities have raised additional demand on account of stamp duty/additional stamp duty till the date of passing of the order although substantial time has elapsed from the date of registration (25-02-2010) and passing of the order u/s.263 (25-03-2015). 21. The Hon ble Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT reported in 243 ITR has held as under (short notes) : A bare reading of provisions of section 263 makes it clear that the perquisite to exercise jurisdiction by the CIT suo motu under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the Revenue. The CIT has to be satisfied of twin conditions, namely (i) the order of the AO sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of land calculated by him on the basis of Government of Maharashtra's ready reckoner as against the value adopted by AO on the basis of stamp duty value assessed by the Stamp Duty Authorities for payment of stamp duty as per provisions of section 50C of the Act. 3. The Ld. CIT further erred in holding that provisions of section 50C after the word or assessable inserted by the Finance Act, 2009 w.e.f. 01-10-2009 are applicable even in respect of sale document registered by paying stamp duty on the value determined by stamp duty authorities. It is submitted that the word or a ssessab l e is inserted to cover the cases where the sale document is not registered and therefore value of property as per stamp duty authorities is not available. 4. The Ld. CIT further erred in adopting value of land sold by the appellant u/s.50C by calculating in its own way as against value of sale as per the registered sale deed which was examined by the AO during the assessment proceedings and adopted the same for calculating capital gain. Thereby, it is merely change of opinion which is not permitted to set aside the order of AO u/s. 263 of the Act. 5. The Ld. CIT further er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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