TMI Blog2021 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue back to the file of the AO with a direction to determine the market value of the property as on the date of transfer of capital asset in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to produce all the relevant documents before the AO to substantiate its claim. CIT(A) power to take up this issue as not born out of the assessment order - Transfer expenses disallowance - HELD THAT:- We find that the AO has accepted the transfer expenses which was not a subject matter of appeal before the CIT(A). CIT(A) cannot be taken up this issue which was not born out of the assessment order. In this connection, we rely on the decision of the ITAT, Pune in the case of NARESH SUNDERLAL CHUG [ 2018 (6) TMI 351 - ITAT PUNE] and THE UNITED PROVINCES SUGAR COMPANY LTD. [ 2021 (4) TMI 633 - ITAT KOLKATA] - Order of CIT(A) set aside. - Decided in favor of assessee. - ITA No. 300/H/2017 - - - Dated:- 27-8-2021 - Shri Satbeer Singh Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri P. Murali Mohan Rao For the Revenue : Shri Rajat Mitra ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Industries vs CIT vide Civil Appeal No.4228 of 2006. 11. The appellant may add or alter or amend or modify or substitute or delete or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. 12. As per the ratio laid down by the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd vs. CIT (1998) 229 ITR 383 (SC) the IT AT has jurisdiction to examine the question of law though not arisen before the CIT (A) but has arisen before the ITAT for the first time. 13. The Id. CIT(A) ought to have well appreciated that there was an oral agreement for sale of the impugned property on 27/05/2010 against which the vendee has paid the part consideration for sum of ₹ 9 lakhs 14. The Ld. CIT (A) ought to have considered the legal position that agreement of sale can also be oral and that the payment of advance through cheque being part performance of agreement. 15. The Ld. CIT(A) has erred in not properly appreciating the legal position that J the oral agreement for sale transaction is binding agreement on the date on which the advance sale consideration is paid . 16. The Id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to show cause as to why the amount of ₹ 17,68,83,850/- adopted by the SRO as market value should not be taken into account for computing the long term capital gains. After rejecting the submissions of the assessee, the AO observed that the assessee should have adopted ₹ 17,68,83,850/- as the sale consideration when the expenditure of ₹ 1,35,00,000/- claimed as transfer expenses. He, therefore, completed the assessment u/s 143(3) on 28/03/2014 determining taxable income at ₹ 10,81,94,948/-. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) while dismissing the appeal of the assessee, disallowed the expenditure of ₹ 1,35,00,000/- claimed by the assessee for sale of land. 4. Aggrieved, the assessee is in appeal before the ITAT. 5. Before us, the ld. AR submitted that there was a dispute in the property and the amounts thereon was paid in vacating the tenants from the property. He submitted that the CIT(A) has not justified to make enhancement as the power assigned to him without giving any opportunity to the assessee as he has not accepted ₹ 1.35 crores paid to M/s Hyderabad Supplying Company, which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of property as per section 2(47) of the Act should be taken as the date of execution of the documents and not the first payment received by the assessee on 27/05/2010. He submitted that unless some material consideration is received by the owner of the property, the owner cannot sell the property. He submitted that there was a different in the SRO value and net sale consideration declared by the assessee and, therefore, the authorities below were justified to take the SRO value of the property for computing capital gains tax. He finally submitted that the case law relied on by the ld. AR of the assessee are not applicable to the facts of the case of the assessee. 7. After considering the rival submissions and perusing the material on record as well as the orders of revenue authorities and the documents submitted by the assessee as well as additional evidence filed by the AR of the assessee, we observe that the agreement of sale cum GPA was executed on 24/01/2011 at ₹ 15 crores in favour of the vendee. The assessee started receiving the payment from 27/05/2010 and onwards. The difference which has been culled out in the agreement of sale cum GPA and the total considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 80 lakhs and computed LTCG thereon at ₹ 2,94,164/-. In the course of assessment proceedings, the AO noticed that stamp duty was paid by the purchaser as per stamp authorities' valuation of the property at ₹ 1,30,68,000/-; while the assessee had only offered ₹ 80 lakhs as sale consideration in the sale agreement. The AO states that in view of the above, the provisions of section 50C of the Act were invoked taking ₹ 1,30,68,000/- as the sale consideration and the LTCG was re-computed at ₹ 50,68,000/-. 3.4.2 In the 'statement of facts' filed by the assessee, in its appeal before the CIT(A) and which the CIT(A) purportedly utilized to dispose of the assessee's appeal ex-parte for non-prosecution, the assessee has submitted as under:- Since the market value mentioned in the sale deed was not the actual consideration, the appellant objected to the adoption of market value for capital gains purposes during the scrutiny proceedings before the Assessing Officer, and insisted upon not taking the deemed sale consideration as per Section 50C. By virtue of the power vested in him under section . 1.42A of the Income tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars to the Valuation Officer, study his proposal and obtain a final Valuation Report. The order of the Assessing Officer is, therefore, opposed to principles of natural justice. 3.4.3 In the impugned order the CIT(A) has dismissed the assessee's appeal holding as under at para 4.7 of the impugned order:- 4.7 The claim of the appellant during appellate proceedings (as in the statement afflicts) that he had made a request to the AO to refer the matter to Valuation Officer is without any basis as neither any such documents have been produced by the appellant during appellate proceedings nor there are any such documents on the assessment ITA No. 1086/Bang/2019 records which support the claim of the appellant. el The order sheet notings available on the assessment records also do not show that any such claim was ever made by the appellant before the AO. So the contention of the appellant that the AO should have waited for the valuation report is without any merit. In the case of Amhattur Clothing Company Limited vs ACIT, 2010 326 IT1? 245 (Madras), the High Court held that the AO is bound to follow the mandate of law and if the assessee has not availed the oppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the capital gains should be fixed merely on the basis of the valuation to be made by the District Sub-Registrar for the purpose of stamp duty. There is no reason why the machinery provided by Legislature should not be used and the benefit thereof refused, even in a case where no prayer has been made by the assessee, who may not have been properly instructed. Since the AO, discharging a quasi-judicial function, has the bounden duty to act fairly; he should in all fairness make a reference to the DVO to have the valuation of the said property contemplated under section 50C of the Act. In this regard, the Hon'ble Calcutta High Court finally at paras 9 to 11 thereof has held as under:- ......................We are of the opinion that the valuation by the Departmental Valuation Officer, contemplated under section 50C is required to avoid miscarriage of justice. The Legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub- Registrar for the purpose of stamp duty. The Legislature has taken care to provide adequate machinery to give a fair treatment to the citizen / taxpayer. There is no reason why t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port, we hold that the decision of the Hon'ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT (2015) 372 ITR 83 (Cal) is to be followed and applied and do so. In this view of the matter, the orders passed by the authorities below i.e., CIT(A) and AO are set aside and we restore the matter of computation of LTCG on sale of the said property by the assessee to the file of the AO. The AO shall obtain the DVO's Valuation Report, as called for by him in his reference dated 13.12.2016 , and after such valuation is made by the DVO, the computation of LTCG shall be made on this issue, de novo in accordance with law and after affording the assessee adequate opportunity of being heard in the matter by both the DVO for valuation proceedings and the AO and to file details required which shall be duly considered by the DVO / AO before deciding the issue. We hold and direct accordingly. Consequently, the grounds raised by the assessee are allowed for statistical purposes. 7.1 Therefore, considering the above judgments, we deem it fit and proper to remit the issue back to the file of the AO with a direction to determine the market value of the property as on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstanding that such matter was not raised before the CIT (A) by the appellant. In view of the said provisions, the CIT (A) has power to decide any matter arising out of the proceedings but the said power has to be exercised after giving reasonable opportunity to the assessee to show cause against such enhancement or reduction. The CIT (A) was not only changing the head of income but was also enhancing the assessment, since income which is assessed in the hands of assessee as per direction of CIT (A) had worked out at ₹ 49,41,225/- as against income assessed by the Assessing Officer under the head Long Term Capital Gain at ₹ 48,75,610/- The second aspect is rate of tax. In case income is assessed under the head Long Term Capital Gain, the rate of tax is lower than the rate applied when the income is being assessed as business income. In view thereof in not giving an opportunity or any show cause notice of enhancement as required under section 251(2) of the Act, the order of CIT (A) suffers from infirmity and the same cannot be sustained. 8.1 In the case of United Provinces Sugar Company Ltd Vs ITO (ITAT Kolkata) in ITA No. 1956/Kol/2018, order dated 01/04/2021, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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