TMI Blog2021 (5) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned capital gains addition without determination of the nature of the corresponding capital asset. The Revenue further fails to dispute that the case law Sunil Kumar Agarwal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] holds that Section 50C(2) reference is mandatory even if there is no such prayer from the assessee s side before the Assessing Officer. And that there is no indication about the nearest municipality under Article 243T r.w. Article 243P of the Constitution of India. We thus accept the assessee s identical latter grounds of Section 50C addition and restore the same back to the Assessing Officer for his afresh adjudication after making the necessary reference to the DVO u/s.50C(2) of the Act. Ordered Accordingly. - ITA No. 1685/Hyd/17, 1686/Hyd/17 - - - Dated:- 30-4-2021 - Shri S.S.Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri M.V.Anil Kumar, AR For the Revenue : Shri Rohit Mujumdar, DR ORDER PER S.S.GODARA, J.M. : These two assessees appeals for AY.2007-08 arise from the CIT(A)-2, Hyderabad s orders dated 30-06-2017 passed in appeal Nos.0095 0094/2015-16; in proceedings u/s.143(3) r.w.s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from House Property ₹ 10,92,938/- Capital Gains ₹ 21,59,554/- Income from Other Sources ₹ 21,710/- Gross Total Income ₹ 45,60,602/- 4.0. The long term capital gain admitted by the assessee was offered on the sale of his share of property of land admeasuring Ac 4.14 Gts (which the assessee jointly owned Sri. G. Siva Sankar Reddy) situated at Survey No. 124/1, Shamshabad Village Grampanchayat, Shamshabad Mandal, Rangareddy Dist, Vide sale deed no. 15085/2006. 4.1. Subsequently, it was observed that the assessee has failed to disclose in the return of income filed by him, the material tact that the value adopted by the concerned authorities) for the purpose of stamp duty is ₹ 1,38,75,000/- as against. the full value consideration of Rs.(64,75,000/- adopted by the assessee for the computation of capital gain for A.Y.2007-08. As per the provisions of Sec.50C of the Act; the value adopted for the purpose of stamp duty should be deemed as the full value consideration received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome the sale of agricultural land was inadvertently computed as long term capital gain and tax paid. However, on receipt of the notice u/s. 148, realized that the sale was in respect of agricultural lands and the same are exempt from tax. The land being agricultural land within the meaning of Sec.2(14)(iii) of the I.T.Act is exempt from tax. Hence, accordingly in the return of income in response to notice u/s.148, the exemption of agricultural land was claimed. The provisions of Sec.50C of the I.T.Act are not applicable to agricultural lands for the reason that agricultural lands do not come under the definition of 'capital asset . We bring to your kind attention that the assessment was completed under Sec 153A rws 143(3) of the I.T.Act. The then Assessing Officer has in fact verified the sale deed and took into account all the materials available on record. Therefore there is no fresh material brought on record . 5.0.The assesssee's submissions were considered and found to be not acceptable for the following facts. 5.1. The assessee has submitted that the land on which capital gain was offered In the Original return is actually an agricultural land. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, it is not correct on the part of the assessee to state that the market value of property was low and S.50C of the Act, should not be applied, from the layout of the property (enclosed to the sale deed) it was further observed that, the same is not completely surrounded by the lands of neighbors from all sides but in fact, to the northern corner of the land, leads towards west. In view of the above facts, there is no merit in the submission of the assessee that the land is lacking proper approach roads and hence it was sold for a value below the market value. In light of the above facts, the question of referring the valuation of the property to Department valuation officer does not arise. It should be further noted that the language used in S.50C of the Act is as follows: .... the Assessing officer may refer the valuation of the capital asset to a valuation officer. As discussed above, the facts of the instant case does not warrant reference to the valuation officer. 5.4. The assessee has further submitted that during the assessment proceedings u/s.143(3) r.w.s.153A the assessing officer verified all the materials and hence notice u/s. 148 of the Act cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Value consideration as admitted by the assessee for the purpose of computation of LTCG: ₹ 64,75,000/- Difference between (a) and (b) ₹ 74,00,000/- Assessee's share On the said property 50% on ₹ 74,00,000/- ₹ 37,00,000/- In view of the above discussion, an amount of ₹ 37,00,000/- being 50% share of the value adopted for the purpose of stamp duty in excess of full value consideration admitted by the assessee is added to the income of the assessee Addition: ₹ 37,00,000/- 8.0. It is pertinent here to mention that the object, scope and ambit of section 147 of the Act is well settled by the decision of the Hon'ble Supreme Court in CIT v Sun Engineering Works P. Ltd, [1992] 198 ITR 297. The Supreme Court, held as under : As a result of the aforesaid discussion, we find that, in proceedings under section 147 of the Act, the Income-tax Officer may bring to charge items of income which escaped assessment other than or in addition to that item or items which have led to the issuance of the notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to escaped income and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings relating to the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. 8.1. In view of the ratio held in the above judgment, it is clear that the assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items not claimed in the original assessment proceedings. As mentioned above, consequent to the search operation, the assessee admitted ₹ 60,00,000/- as his income vide his deposition dtd: 12.09.2008 and the same was assessed his income u/s. 143(3) r.w.s. 153A of the Act, which in turn was confirmed by the ITAT to an extent of ₹ 45,60,000 (i.e. income as per consequential order dtd: 11.06.2012). This being the case, the assesses cannot utilize the occasion of reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easuring Ac 4.14 Gts, situated at survey no.124/1, Shamshabad village Grampanchayat, Shamshabad Mandal, Ranga Reddy Dist. Vide sale deed no. 15085/2006,. The then assessing Officer had obtained all the information including the copies of the sale and purchase deeds; The then Assessing Officer at the time of original assessment as well as the Assessing officer at the time of re-assessment relied on the same sale deed on record. There is no other evidence brought on record to say that income has escaped assessment . Your Appellant filed a return in response to the notice under section 148 on 23-01-2015, admitting an income of ₹ 24,01,048/- after reducing the long term capital gains of ₹ 21,59,554/- on the ground that it is sale at. agricultural lands being exempt from tax. Your Appellant also called for the reasons for issue of the said notice. The Assessing Officer provided the reasons and your Appellant filed objections for the same. The objections of your appellant have not been disposed of by an order as laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts 259 ITR 19 (SC). Your Appellalnt therefore submits that the assessment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modification, 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 the Act. Explanation. -For the purposes of this section, Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Your Appellant submits that from the reading of section 50C(2) (a) and (b) it is clear that on the request of the Assessee, the Assessing Officer may refer the property to the valuation officer, in the instant case the Assessing Officer has not referred the matter on the ground that there is no dispute before the SRO, which is not required by the Act. Therefore, the addition is not warranted. Further, it is well settled principals of law that even if by mistake any income is admitted to tax which is otherwise not taxable, this can be rectified, during the assessment proceedings or re-assessment proceedings. Therefore, the claim of your Appellant that the land is agricultural land and exempt from income tax being beyond 5 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's contention that the land that was sold by the assessee during F.Y.2005-07 is an agricultural one, Hence, the provisions of S. 50C of the Act is applicable to the assessee's case. 5.3. Further the assessee has submitted that since the agricultural land that was sold by the assessee was not having a proper approach road and the land was surrounded by the lands of the neighbors from all the sides, the land was sold for a price less than the market value fixed by the SRO. The assessee has further requested to refer the issue to the Department Valuation Officer to determine the fair market value of the land as on the date of sale. This submission of the assessee is not acceptable for the fact that the assessee has not disputed the value adopted for the purpose of stamp duty before SRO. The assessee has paid a stamp duty of ₹ 12,54,800/- on the value adopted for the purpose of stamp duty of ₹ 1,38,75,000/-. When this is the case, it is not correct on the part of the assessee to state that the market value of property was low and S.50C of the Act, should not be applied, From the layout of the property (enclosed to the sale deed) it was further o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to this effect. The assessee s former grievance identical in both appeals stand rejected. 7. Next comes the latter issue of Section 50C addition on merits. The Revenue s only argument quote CIT Vs. Sun Engineering Works P. Ltd, (1992) [198 ITR 297] (SC) that the issue of assessee s land sold not forming a capital asset u/s.2(14) of the Act ought not to be allowed to be raised in Section 148/147 proceedings since the same is meant for the specific purpose to tax the income escaping assessment for the benefit of the department only. This argument fails to evolve our concurrence since applicability of Section 2(14) herein qua the assessee s land sold goes to the very root of the matter. And also it might lead to the impugned capital gains addition without determination of the nature of the corresponding capital asset. The Revenue further fails to dispute that the case law Sunil Kumar Agarwal Vs. CIT (2014) [372 ITR 83] (Cal) holds that Section 50C(2) reference is mandatory even if there is no such prayer from the assessee s side before the Assessing Officer. And that there is no indication about the nearest municipality under Article 243T r.w. Article 243P of the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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