TMI Blog2018 (10) TMI 1849X X X X Extracts X X X X X X X X Extracts X X X X ..... he lacunae and shortcomings of the assessment order, and putting the assessee virtually to face a re-trial for no fault of hisandto again put him to prove before the AO that the sale consideration was the fair market value of the property sold by him. This would amount to giving life to an order which on the basis of facts on records is unsustainable in law. In view of our findings in the cases of Tarun Agarwal [ 2018 (8) TMI 1989 - ITAT AGRA] and Dr. Sanjay Chaubey (HUF) [ 2018 (7) TMI 133 - ITAT AGRA] and ANIMA INVESTMENT LTD. [ 2000 (1) TMI 150 - ITAT DELHI-D] with LALITHA KARAN, HYDERABAD [ 2017 (1) TMI 505 - ITAT HYDERABAD] we hold that at this stage, the AO cannot be allowed a second inning, by sending the matter back enabling him to make good his own shortcomings and putting the assessee virtually to face a re-trial for no fault on his part and to again prove before the AO that the sale consideration was the fair market value of the property sold by him. This would amount to giving a lease of life to an order which on the basis of facts on records is unsustainable in law. Failure of the AO to follow the procedure as prescribed under section 50C(2) in particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court) too (mainly relied upon by CIT(A) in assessee's case under question), Hon'ble Court, like Hon'ble Allahabad High Court, remanded the matter to the AO to make assessment de novo in accordance with law after valuation by DVO. (e) Findings of Hon'ble High Court as pointed out above in (d) have been misread by the CIT(A), and consequently instead of exercising his conferred upon him by provisions of section 250(4) of I.T. Act 1961 has granted relief allowed the appeal of the assessee out-rightly. 2. In view of above, the order of the learned CIT(Appeals) being erroneous in law and on facts deserved to be quashed and that the order of the AO to be restored. 3. Notwithstanding grounds above, alternatively, it is prayed that respectfully following the decisions of Hon'ble High Courts in theabove mentioned cases of CIT Vs Chandra NarainChaudhary (Allahabad High Court) Sunil Kumar Agarwal Vs CIT 372 ITR 83 (Calcutta High Court), the matter be remanded to the AO to make assessment de novo in accordance with law after valuation by DVO. 4. The appellant craves leave to add or alter any or more ground or grounds of Appeal as may be deemed fit at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and the legal position in this regard. As regards the issue of applicability of section 50C for the purpose of computing long term capital gain in this case, the relevant fact in this case is that the appellant, vide its replies dated 15.01.2016 and 08.03.2016, 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 gains arising out of its property were provided by it 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 the Valuation Officer and proceeded to rebut some of those grounds on his own, and thereafter determined the capital gains on the stamp value in accordance with the provisions of section 50C of the Act. A perusal of the judicial precedents cited by the appellant indicates that in this case, the A.O. was not legally justified not to refer the matter to the Valuation Officer, Hon'ble Calcutta High Court's has held in the case of Sunil Kumar Agarwal V. CIT (372 ITR 83) that the AO, discharging a quasi-judicial function, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of section 50C(2) which requires that the AO may refer the valuation of the capital assets to a Valuation Officer. According to the submission of the Ld. D.R It indicates that intent of the legislature is that it is not necessary for the AO to refer the valuation of the capital asset to a valuation Officer in all cases. The AO may refer to DVO, if he deems fit and, therefore, according to Ld. Sr. D.R, it is discretion of the AO to refer or not to refer to DVO for valuation.It was also submitted by the Ld. Sr. D.R that the Ld. CIT(A) has allowed relief to the assessee placing reliance upon the Judgment of CIT Vs Chandra Narain Chaudhary ignoring to take note that the case was decided in favour of the revenue where instead of giving outright relief to the assessee, the Hon'ble Court remanded the matter to the AO to decide the valuation of the capital asset. In the case of Sunil Kumar Agarwal Vs CIT 372 ITR 83 the Hon'ble Calcutta High Court like the Hon ble Allahabad High Court, remanded the matter to the AO to make assessment de-novo after valuation by DVO. Thus, it was prayed that the case be set-aside for reference to the DVO. 8. The Ld. A.R of the assessee pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth. 2. He did not pay rent from 01.11.1974 hence notice dated 17.12.1975 was sent to him for payment of rent and vacating the premises. 3. The tenancy was terminated by notice dated 17.12.1975 and suit was filed. 4. The Court decreed the suit vide order dated 10.08.79(Case No. S.C.C. 295/76) decree dated 22.08.79. 5. Pt. Uma Dutt filed revision against above vide S.C.C. revision No. 43/79. The revision was dismissed with costs vide order dated 31.08.1988. 6. Pt. Uma Dutt filed a Writ in Allahabad High Court (Writ No 18814 of 1988) and the Petition was dismissed by the High Court vide order dated 02.04.2003. 7. Thereafter for the execution of High Court order Suit was filed in the Court of Civil S.C.C.,Etah vide case No. S.C.C. Ex. 3/03 which remained pending for long, since we had no family member living in Etah and the Tenants were local and were getting the judgment onthe case postponed on one or the other pretext, we remained unsuccessful for a long time. 8. Due to long litigation over the property nobody had the courage to buy the property belonging to Dr. Ramesh Chand Kulshreshtha Brothers HUF. 9. Under the aforementioned, very briefly stated circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and houses at Etah. The property was illegally occupied by tenants almost since 1965 were neither vacating nor purchasing it. Cases of eviction filed against tenants in 1975/76 and after long litigant they last cases at district level. Tenants [Illegal] filed writ petition in Allahabad High Court in 1988, and it was dismissed on 2003 due to death of writ filer. During the pendency of litigation someone filed a WILL purported to be from a lady our HUF wishing all giving to the person named in the WILL. Case is still pending. In the meantime a local man approached us to buy the property under dispute and agreed to make registry after settlement of dispute by our Karta [Dr. R.C. Kulshrestha]. Unfortunately one Karta expired on 31/08/2012, In the meantime some of tenants tempered the records In municipal records at Etah. So due to the unavoidable conditions and in the meantime circle rates increased very high and the stamp duty had to be paid at the current circle rate prevailing although the price paid on distress sale was a very small. But keeping in view the above circumstances, we have sold our property hurriedly and received ₹ 36,00,000/- from sale of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime since no member of theHUF resides in Etah to follow up the suit; thatadjoining the property there existed a Temple, one person claiming himself to be Sarvarkar of the Temple also filed a Suit in the Court of Additional District Judge, Etah which was dismissed against which matter was carried up by him to the Hon ble High Court which also got rejected by the Hon ble High Court; thatin the meantime a Will was executed by a member of the HUF desiring the transfer of property in favor of the third person;and that according to the assessee, the purchaser of the property Shri. Avinash Sharma has still been able to get physical possession of the property till today as the Karta of HUF was expired before the transfer of property. Since, it was under the aforementioned circumstances the Seller had virtually no option to be able to command for the sale price and had to satisfy himself with whatever was coming to hand. Thus, according to the submission of the assessee the property has no market price much less the price notified by the Government for payment of Stamp duty. Evidences in respect of the litigation mentioned above was also brought on records of the AO, which all were summaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property to the Valuation Officer.Hon bleCalcutta High Court, in the case of Sunil Kumar Agarwal Vs. CIT ,(2015) reported in 372 ITR 83 has clearly held that the AO, discharging quasi- judicial function, has the bounden duty to act fairly and to follow the course provided by law, which in that case, was the reference to the valuation officer.In the present case, inv view of the assessee s specific request and claim before the AO that stamp valuation of the property sold was not its fair market value , it was the bounden duty of the AO to have referredthe matter to the Valuation Officer which, for the reasons not borne out from the records, was not done. 19. Now, being aggrieved the revenue contends that, as the legislaturevide section 50C(2) has used the term may and, therefore, the intent of legislature is that reference to valuation cell is dependent upon the sweet will of the AO and it is not necessary for the AO to refer to valuation cell in all cases. This stand of the revenue is in direct conflict with the view propounded by the Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs CIT , (2015) 372 ITR 83 (Calcutta) wherein examining the similar issue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout referring the matter to the DVO made the impugned addition without dealing with the submission/objection raised by the assessee. The Bench after due consideration of precedents available on the issue and in the light of facts of the case held as under: 8. We have no hesitation to hold that the order as passed by the AO is an epitome of a non-speaking orderwhich itself cannot be appreciated in law. In the light of facts submitted by the assessee that had impacted thefair market value of the property sold if the AO intended to go ahead with the proposed action of substitutingthe value as provided under section 50C of the Act he 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 forrejection. In the matter of valuation, law is fairly well settled that value mentioned in the registered documentcan be substituted by following the process prescribed under the law. The assessment order is silent on thismaterial aspect. 9. Appellant has a statutory right and is fully entitled to know the reason for disagreement on the detailedsubmissions filed during the course of assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision mind has been applied reasonably, relevantly and rationally. The mandate of giving reasons orpassing a reasoned order or giving a reasoned decision is not only a part of natural justice, but it is a safeguardagainst arbitrariness. When an adjudicator is obliged to give his reasons for conclusions, it will make itnecessary for him to consider the matter carefully. The compulsion to give reasons introduces clarity in theorder 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 compelledthe authority to take a decision in question are germane to the contents and scope of power vested in theauthority. Therefore, giving of reasons by an adjudicating authority goes to the very root of the process ofdecision-making or adjudication and, therefore, it is not just a formal requirement, but indicates that theadjudicating authority has applied its mind to the merits of the case and also to avoid any doubt as to anyperfunctory approach. The Assessing Officer being a quasi-judicial authority, the assessment order passed byhim must be a spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been disputed in any appeal or revision or no reference has been made before any otherauthority, court or the High Court, the Assessing Officer may refer the valuation of the capital assetto 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 section23A, 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 theyapply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16Aof that Act. Explanation 1.-For the purposes of this section, Valuation Officer shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.-For the purposes of this section, the expression assessable means the price which thestamp valuation authority would have, notwithstanding anything to the contrary contained in any otherlaw for the time being in force, adopted or assessed, if it were referred to such authority for the purposesof t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4. Even if the learned CIT(A) was of the view that the matter should have been referred to theValuation Officer under s. 50C (2)(a) of IT. Act, 1961, he might have directed the AO to makevaluation 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 ofreferring the case to Valuation Officer is concerned. The matter may be set aside to the file of theAO 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 down under s. 50C of the Act reproduced herein above, wefully concur with the finding of the learned CIT(A) that when the assessee in the present case hadclaimed before AO that the value adopted or assessed by the stamp valuation authority under sub-s. (1)exceeds the fair market value of the property as on the date of transfer, the AO should have referred thevaluation of the capital asset to a Valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in assessing thevaluation of property for calculating the capital gain. The deeming provision under Section 50 C (1) of theAct 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 considerationthe attributes of the property for determining the fair market value in the condition the property is a offeredfor sale and is purchased. He is required to value the property in accordance with the circle rates fixed by theCollector. The object of the valuation by the Stamp Valuation Authority is to secure revenue on such sale andnot to determine the true, correct and fair market value on which it may be purchased by a willing purchasersubject to and taking into consideration its situation, condition and other attributes such as it occupation bytenant, any charge or legal encumbrances. 16. Hon'ble Jurisdictional High Court of Allahabad in the case of Dr. Shashi Kant Garg v. CIT [2006] 152Taxman 308/285 ITR 158 has also observed that if under the provisions of the Act an authority is required toexercise power or do an act in a particular manner, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, a party guilty of remissness and gross negligence is not entitled toindulgence being shown. In this context, I would like to make a reference to a decision of the ChennaiBench of the Tribunal in the case of Tatia Skyline Health Farms Ltd. v. Asstt. CIT (2000) 66 TTJ(Chennai) 203 : (1999) 70 ITD 387 (Chennai). In this decision, on the assessee's request that the case besent back to the AO for another round of enquiry and fresh assessment in accordance with law. TheBench, rejecting the assessee's request has held that the remand order should be made in very rare andexceptional case, for example, if at original stage, patently grave error was committed by the originalauthority or that the order was made in haste owning to the limitation or that the first appellate authorityhad violated the rules of natural justice. Nothing like this has happened on the present case. The Benchhas further observed that the Courts have also cautioned the Appellate Authorities by holding thatremand should be made only in those cases where the original authorities have not passed orders inaccordance with law but in no case, remand should be made only in those cases where the originalauth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1]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 areentrusted with the task of calculating and realising that price should familiarise themselves with the relevantprovisions and become well-versed with the law on the subject. Any remissness on their part can only be atthe cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have tobear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that staleissues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (emphasissupplied) 24. Recently, this Bench in the case of Dr. Sanjay Chobey (HUF) v. ACIT [IT Appeal No. 140 (Agr.) of 2018,dated 2-7-2018], in the pariMateriaof facts allowed the assessee's appeal by observing, vide para 14, as under: The lower authorities passed the order in summery manner without going into the merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 judicial and quasi-judicial controversies as it must in other spheres of human activity. 24. Revenue, has placed reliance on the case of Sunil Kumar Agarwal Vs CIT , (2014) 47 taxmann.com 158 (Calcutta). Thesaid case is distinguishable on facts for the very reason that in the case referred no such request was made by the assessee before the AO. Requirement of clauses (a) and (b) of sub-Section (2) of Section 50C are also not met by the assessee. In the case under consideration assessee vide Reply dated 05.02.2016 made a specific request before the AO to refer the matter to the DVO, which request was not acceded to. Assessee thus has complied with the condition laid down in clause (a) of sub-section (2) to Section 50C of the Act. Further, in the referred case the relief sought by the assessee was that the order under challenge should be set aside and the matter should be referred to the valuation officer. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an order which is otherwise unsustainable in law. 28. 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 required U/s 50C(2) of the Act despite specific prayer made by the assessee at the first stage. The AO has also not found or alleged that the assessee received any excess amount over the sale consideration mentioned in the deeds. In the light of these facts and particularly on the failure of the AO to follow the course as prescribed under section 50C(2) and respectfully following various decisions discussed above, we do not find any infirmity in the order of the CIT(A) in quashing the addition made by the AO. We are also of the considered opinion that the department cannot be allowed a second inning, by sending the matter back to AO, enabling it to fill in the lacunae and shortcomings of the assessment order, and putting the assessee virtually to face a re-trial for no fault of hisandto again put him to prove before the AO that the sale consideration was the fair market value of the property sold b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
