TMI Blog2018 (8) TMI 1989X X X X Extracts X X X X X X X X Extracts X X X X ..... as a statutory right and is fully entitled to know the reason for disagreement on the detailed submissions filed during the course of assessment proceedings before the AO. AO being a quasi-judicial authority, the assessment order passed by him must be a speaking order, giving full reasons for the conclusions arrived at. This requirement derives its authority from the maxim that justice should not only be done but also be seen to be done. Thus, the impugned order passed by the AO does not meet the requirement of law and cannot be allowed to stand. AO not only passed a cryptic order without disputing any of the grounds of dispute raised by the assessee but also failed to follow the procedure prescribed in law i.e. making of a reference to the DVO as mandated by section 50C (2) of the Act.Therefore, the addition made by the AO cannot be approved. Whether the case be set aside to the AO for following the said procedure and then pass fresh order? - In the present case, it is noted that the Assessing Officer neither discussed the contentions of the assessee for taking actual consideration as fair market value of the property sold nor referred the matter to the DVO as was requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,00,08,000/- and 1,36,00,000/- respectively. Thus, the total sale consideration fell short by ₹ 56,08,000/- in comparison to values adopted for stamp value purposes which the Ld AO added to the income of the assessee under the deeming provision of section 50C of the Act. 3. Being aggrieved, assessee carried the matter in appeal before the Ld CIT(A) who quashed the addition observing vide para 7.3 as under: I have carefully considered the appellant s submission, the facts of the case and the legal position in this regard. The undisputed fact in this case is that the appellant had taken objection against the A.O. s proposed action of applying the provisions of section 50C and certain reasonable grounds for not accepting the stamp value for the purpose of computation of capital gain arising out of his property were provided by the appellant to the A.O. during the assessment proceedings. Also it is an undisputed fact that the A.O. has chosen not to refer the matter to Valuation Officer and without even rebutting those grounds, determined the capital gains on the stamp value in accordance with the provisions of section 50C of the Act. A perusal of the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have a fair market value to the extent as worked out for stamp purposes as per circle rates. In this respect following factors, that impacted the fair market value of the property sold, are highlighted: 1. The factory building admeasuring 1248.58 Sq. mtrs was standing on a land of 17860 Sq. Mtrs. A buyer would not easily be available for such a vast area. 2. In the factory building assessee was having a shoe manufacturing unit and it was constructed accordingly. Therefore, only a person interested to set up similar unit would have been interested in the purchase of the property in same condition. This factor limited the scope for its sale in an open market. 3. As may be noted from the sale deed, the factory building had finished as well as semifinished constructions. While in the circle rates there is no consideration for such factors, any buyer would definitely consider the fair market value on the basis of building s condition. Thus a building not in fully finished condition would not have a value to the extent as worked out as per circle rates. 4. The factory building was a RBC structure which has a maximum expected life of 30- 40 years. In this respect assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. On perusal of sale deed it was noticed that the actual value as per the circle rate and the statutory norms for cost of constructions it is shown as ₹ 6,36,08,000/- and stamp duly has been paid accordingly. The assessee vide a show cause notice dated 17.02.2016 was required to clarify as to why this difference should not be added to the income of the assessee. The assessee furnished written submission dated nil in this regard. Considering the reply of the assessee and in view of section 50C of the I.T.Act, 1961, ₹ 56,08,000/- is being added to the income of the assessee. (emphasis supplied by us) 8. We have no hesitation to hold that theorder as passed by the AO is an epitome of a non-speaking order which itself cannot be appreciated in law. In the light of factssubmitted by the assessee that had impacted the fair market value of the property sold if the AO intended to go ahead with the proposed action of substituting the value as provided under section 50C of the Acthe was duty bound to have demonstrated with reasons, evidences and legal position as to how the facts as stated by the assessee are unbelievable or calls for rejection. In the matter of valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king order is all the more necessary, if appeal is provided against it. It enables the appellate authority to know the reasons for it and to test the validity of the order. A speaking order indicates the mind of the author of the order as well as reasons for the findings arrived at and is necessary for knowing the reasons for the decision arrived at and to indicate whether in coming to the decision mind has been applied reasonably, relevantly and rationally. The mandate of giving reasons or passing a reasoned order or giving a reasoned decision is not only a part of natural justice, but it is a safeguard against arbitrariness. When an adjudicator is obliged to give his reasons for conclusions, it will make it necessary for him to consider the matter carefully. The compulsion to give reasons introduces clarity in the order and minimizes chances of irrelevant consideration from entering into a decisional process. In fact, recording of reasons ensures that the authority has applied its mind to the case and the reasons that compelled the authority to take a decision in question are germane to the contents and scope of power vested in the authority. Therefore, giving of reasons by an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer. (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 or assessable 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 or assessable by the stamp valuation authority under subsection (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 sub-section (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 1.-For the purposes of this section, Valuation Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of learned CIT(A) is erroneous and bad in law and deserves to be cancelled and the order passed by the AO deserves to be sustained on the facts of the case. 3. The spirit of s. 50C regarding full value of consideration has not been appreciated by the learned CIT(A). The full value of consideration and indexed cost of acquisition were rightly adopted by the AO in respect of both the properties. 4. Even if the learned CIT(A) was of the view that the matter should have been referred to the Valuation Officer under s. 50C (2)(a) of IT. Act, 1961, he might have directed the AO to make valuation after referring to Valuation Officer, if AO has made valuation without any such reference. 5. The order of the learned CIT(A) in annulling the assessment is not acceptable as far as the matter of referring the case to Valuation Officer is concerned. The matter may be set aside to the file of the AO for referring the case to valuation officer as required under s. 50C (2)(a) of the I. T. Act, 1961. 14.1 The ITAT, Delhi rejected all the grounds raised by the revenue and approved the order passed by the Ld. CIT (Appeals) holding as under: On the very perusal of the provisions laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee. The Hon ble High Court further held that Section 50-C of the Act is a rule of evidence in assessing the valuation of property for calculating the capital gain. The deeming provision under Section 50 C (1) of the Act is rebuttable. It is well known that an immovable property may have various attributes, charges, encumbrances, limitations and conditions. The Stamp Valuation Authority does not take into consideration the attributes of the property for determining the fair market value in the condition the property is a offered for sale and is purchased. He is required to value the property in accordance with the circle rates fixed by the Collector. The object of the valuation by the Stamp Valuation Authority is to secure revenue on such sale and not to determine the true, correct and fair market value on which it may be purchased by a willing purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price declared by her is reasonable. 21. In the case of ACIT Vs Anima Investment Ltd [ 73 ITD 0125] Third Member, ITAT, Delhi observed in para 13 of the order as under: The powers of the Tribunal in the matter of setting aside an assessment are large and wide, but these cannot be exercised to allow the AO an opportunity to patch up the weak part of his case and to fill up the omission. In my opinion, a party guilty of remissness and gross negligence is not entitled to indulgence being shown. In this context, I would like to make a reference to a decision of the Chennai Bench of the Tribunal in the case of Tatia Skyline Health Farms Ltd. vs. Asstt. CIT (2000) 66 TTJ (Chennai) 203 : (1999) 70 ITD 387 (Chennai). In this decision, on the assessee s request that the case be sent back to the AO for another round of enquiry and fresh assessment in accordance with law. the Bench, rejecting the assessee s request has held that the remand order should be made in very rare and exceptional case, for example, if at original stage, patently grave error was committed by the original authority or that the order was made in haste owning to the limitation or that the first appellate autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal is whether the addition or disallowance sustained was in accordance with law and supported by material. If there is no sufficient material, the addition must be deleted. The Tribunal cannot order further enquiry with a view to sustain the addition. This will amount to taking sides with the parties which is not the function of a judicial authority like the Tribunal. 23. Hon ble Supreme Court also in the case of Parusram Pottery Works Co. Ltd Vs ITO , 106 ITR 0001 (SC)]observed as follows: - It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
