Anil kunwar, v. ITO,

ITA 1550/DEL/2002 | 1998-1999
Pronouncement Date: 26-02-2010 | Result: Allowed

Appeal Details

RSA Number 155020114 RSA 2002
Bench Delhi
Appeal Number ITA 1550/DEL/2002
Duration Of Justice 7 year(s) 10 month(s) 6 day(s)
Appellant Anil kunwar,
Respondent ITO,
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-02-2010
Date Of Final Hearing 24-02-2010
Next Hearing Date 24-02-2010
Assessment Year 1998-1999
Appeal Filed On 19-04-2002
Judgment Text
I.T.A. NO.1550 /DEL/02 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P.TOLANI JUDICIALMEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.1550 /DEL/2002 ASSESSMENT YEAR : 1998-99 AND G.T.A. NO.68/DEL/2003 ASSESSMENT YEAR :1998-99 SHRI ANIL KANWAR ITO 40/10 EAST PATEL NAGAR WARD-14 (6) NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL AGARWAL ADVOCATE. RESPONDENT BY : MS. PRATIMA KAUSHIK SR. DR. ORDER PER A.K. GARODIA AM: THERE IS ONE INCOME TAX APPEAL AND ONE GIFT TAX APP EAL FOR ASSESSMENT YEAR 1998-99 AND BOTH ARE FILED BY THE ASSESSEE. T HE INCOME TAX APPEAL IS DIRECTED AGAINST THE ORDER OF LD CIT(A) XXVIII NE W DELHI DATED 27.2.2002 WHEREAS GIFT TAX APPEAL IS DIRECTED AGAINST THE ORD ER OF LD CIT(A) XXVIII NEW DELHI DATED 28.8.2003. SINCE THE ISSUE INVOLVED IS CONNECTED BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE REGARDING INCOME TAX APP EAL ARE THAT DURING THIS YEAR THE ASSESSEE HAS SOLD PROPERTY AT KAROL BAGH NEW DELHI MEASURING 34 SQ. . I.T.A. NO.1550/DEL/02 2/7 YDS. FOR RS.3.50 LAKHS. THE ASSESSING OFFICER WAS O F THE OPINION THAT THE SALE PRICE DISCLOSED BY THE ASSESSEE IS LESS THAN THE PR EVAILING PRICE IN THE LOCALITY. HE DEPUTED AN INSPECTOR TO MAKE LOCAL ENQUIRY AND REPO RT THE LOCAL FAIR MARKET SALE VALUE OF THE PROPERTY. THE INSPECTOR HAS REPORTED T HE FAIR MARKET SALE VALUE OF THE PROPERTY AT RS.5.50 LAKHS. THEREAFTER THE ASSESSI NG OFFICER HAS REFERRED THIS MATTER TO THE VALUATION CELL TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY. IT IS OBSERVED BY THE ASSESSING OFFICER THAT SECTION 55A OF THE INCOME TAX ACT 1961 EMPOWERS THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER TO ASCERTAIN THE FAIR MARKET VALUE OF THE CAPITAL ASSE T. THE DEPARTMENTAL VALUATION OFFICER HAS VALUED THE FAIR MARKET VALUE OF THE PRO PERTY AT RS. 8.07 LAKHS. THE ASSESSING OFFICER ADOPTED THE VALUE AS PER DVOS RE PORT TO WORK OUT THE CAPITAL GAIN OF THE ASSESSEE. BEING AGGRIEVED THE ASSESEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCESS AND NOW THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE FACTS REGARDING GIFT TAX APPEAL ARE THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 16 OF THE GT ACT ON 8.11.1999 AND IN RES PONSE TO THE SAID NOTICE THE ASSESSEE FILED RETURN OF GIFT DECLARING TAXABLE GIF T AT RS. NIL. IN ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESS EE FURNISH INFORMATION TO FACILITATE COMPUTATION OF TAXABLE GIFT. IN REPLY T HE AR OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED A LETTER DATED 26.3.2002. THEREAFTER IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE PR OPERTY HAS BEEN SOLD BY THE ASSESSEE DURING THE YEAR FOR A SALE CONSIDERATION O F RS.3.50 LAKHS. THE ASSESSING OFFICER SAYS THAT THE ASSESSEE WAS INFORM ED THAT THE SALE CONSIDERATION AS SHOWN BY HIM HAS BEEN CONSIDERED L OW IN COMPARISON TO THE FAIR MARKET VALUE THEREOF ON THE DATE OF TRANSFER. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE FAIR MARKET VALUE OF THE PRO PERTY MAY NOT BE TAKEN AT RS.8.07 LAKHS AS DETERMINED BY THE DVO. IN REPLY IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT CAPITAL GAIN HAS ALREADY BE EN TAXED IN INCOME TAX PROCEEDINGS FOR THE SAME ASSESSMENT YEAR ON THIS D IFFERENCE AMOUNT BETWEEN THE SALE CONSIDERATION AS DECLARED BY THE ASSESSEE AND FAIR MARKET VALUE AS PER . I.T.A. NO.1550/DEL/02 3/7 DVO. THE ASSESSING OFFICER SAYS THAT THIS CONTENTI ON OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE INCOME TAX AND GIFT TAX PROCEEDI NGS ARE SEPARATE PROCEEDINGS AND HENCE THE PROVISION REGARDING DEEME D GIFT U/S 4(1)(A) OF THE GT ACT IS ATTRACTED IN THIS CASE AND HE DETERMINED THE TAXABLE GIFT AT RS.4.57 LAKHS BETWEEN THE DIFFERENCE BETWEEN VALUE OF PROPERTY SO LD AS DETERMINED BY THE DVO AT RS.8.07 LAKHS AND SALE CONSIDERATION SHOWN B Y THE ASSESSEE AT RS.3.50 LAKHS. BEING AGGRIEVED THE ASSESSEE CARRIED THE M ATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AGAINST THIS ORDER OF LD CIT(A) ALSO IN GIFT TAX PR OCEEDINGS. 4. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE TH AT REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER IN TAXABLE INCOME OF THE ASSESSEE ON THE BASIS OF DIFFERENCE IN SALE VALUE AS PER SALE DEED I.E. RS.3 .50 LAKHS AND FAIR MARKET VALUE OF THE PROPERTY AS PER DVO OF THE SAME PROPERTY AT RS.8.07 LAKHS IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE D ELHI HIGH COURT RENDERED IN THE CASE OF CIT V. SMT. NILOFER I. SINGH AS REPORTE D IN 309 ITR 233 (DEL.). IT IS POINTED OUT THAT AS PER THIS JUDGMENT OF HON'BLE DE LHI HIGH COURT THE FULL VALUE OF THE CONSIDERATION WAS THE SALE PRICE OF THE PROPERT Y SOLD BY THE ASSESSEE AND IN SUCH A CASE THERE WAS NO NECESSITY FOR COMPUTING T HE FAIR MARKET VALUE AND THUS THE ASSESSING OFFICER COULD NOT HAVE REFERRED THE M ATTER TO THE VALUATION OFFICER. IT IS ALSO SUBMITTED THAT IN THE CASE OF SHRI NAVEE N BHATIA V. ACIT IN I.T.A. NO.519/DEL/2007 DATED 13 TH AUGUST 2009 SIMILAR ISSUE WAS THERE BEFORE THE TRIBUNAL AND BY FOLLOWING THIS VERY JUDGMENT OF HON 'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V. SMT. NILOFER I SINGH (SUPRA) SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. HE SUBMITTE D A COPY OF THIS TRIBUNAL DECISION AND OUR ATTENTION WAS DRAWN TO PARA NO.8 O F THIS TRIBUNAL DECISION. IT IS SUBMITTED THAT IN THIS CASE THE TRIBUNAL HAS DECID ED THIS ISSUE ON THE BASIS THAT THERE IS NO EVIDENCE ON RECORD PRODUCED ON BEHALF O F THE REVENUE TO SHOW THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION FOR TH E SHARES OVER AND ABOVE THE SALE CONSIDERATION SHOWN BY THE ASSESSEE AND HENCE THIS DECISION OF HON'BLE DELHI HIGH COURT IS FULLY APPLICABLE. IT IS SUBMIT TED THAT IN THE PRESENT CASE ALSO . I.T.A. NO.1550/DEL/02 4/7 THE REVENUE COULD NOT BRING ANY EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION FOR THE IMPUGNED PR OPERTY OVER AND ABOVE THE SALE CONSIDERATION SHOWN BY THE ASSESSEE AND HENCE THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE FACTS IN THAT CASE AND THER EFORE AS PER THIS DECISION OF THE TRIBUNAL ALSO THE ISSUE IN THE PRESENT CASE IS COVE RED IN FAVOUR OF THE ASSESSEE. 5. REGARDING GIFT TAX MATTER IT WAS SUBMITTED BY T HE LD COUNSEL OF THE ASSESSEE THAT THE SAME MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION TO VALUE THE PROPERTY IN ACCOR DANCE WITH SCHEDULE-II TO GIFT TAX READ WITH SCHEDULE III TO WEALTH TAX ACT. IN SUPPORT OF THIS CONTENTION RELIANCE WAS PLACED BY HIM ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF SMT. USHA JAIN V. GTO IN GIFT TAX APPEAL NO. 5/DEL/2002 DATED 26.2.2003. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION AND OUR ATTENTION WAS DRAWN TO PARA NO.4 OF THIS TRIBUNAL DECISION. 6. AS AGAINST THIS LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR BOTH THE APPEALS. IT WAS ALSO SUBMITTED A CLEAR FINDING IS GIVEN BY THE LD CIT(A) ON PAGE NO.11 OF HIS ORDER T HAT THERE WAS NO DISPUTE WITH REGARD TO THIS PROPERTY AS WAS CLAIMED BY THE ASSES SEE BEFORE THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND VARIOUS JUDGMENTS CITED BY THE LD AR OF THE ASSESSEE. WE FIND THAT THE FACTS IN THE CASE OF CIT V. NILOFE R I SINGH (SUPRA) ARE SIMILAR. IN THAT CASE ALSO THE ASSESSEE SOLD TWO PROPERTIES AN D DISCLOSED CAPITAL GAINS OF RS.21.17 LAKHS ONE OF THE PROPERTIES WAS AT BOMBAY AND THE OTHER PROPERTY WAS AT DELHI. THE BOMBAY PROPERTY WAS SOLD FOR A CONSID ERATION OF RS.10 LAKHS WHEREAS DELHI PROPERTY WAS SAOLD AT THE PRICE OF RS .23.50 LAKHS. IN THAT CASE ALSO AND IN THE COURSE OF ASSESSMENT PROCEEDINGS U/ S 143(3) OF THE INCOME TAX ACT 1961 THE ASSESSING OFFICER WAS OF THE VIEW THA T THE SALE CONSIDERATION OF THE TWO PROPERTIES DID NOT REFLECT THE FAIR MARKET VALU E AND THEREFORE HE REFERRED THE . I.T.A. NO.1550/DEL/02 5/7 MATTER TO THE VALUATION OFFICER. THE DVO INDICATED THE FAIR MARKET VALUE OF THE PROPERTY AT BOMBAY TO RS.14.55 LAKHS AND THE PROPER TY AT DELHI TO RS.53.73 LALKHS. UNDER THESE FACTS IT WAS HELD BY HON'BLE D ELHI HIGH COURT AND IN THAT CASE THAT THE EXPRESSION FULL VALUE OF CONSIDERATI ON USED IN SECTION 48 OF THE INCOME TAX ACT 1961 DOES NOT HAVE ANY REFERENCE TO MARKET VALUE BUT ONLY TO THE CONSIDERATION REFERS TO IN THE SALE DEED AS THE SALE PRICE OF THE ASSETS WHICH HAVE BEEN TRANSFERRED. UNDER THESE FACTS IT WAS HE LD BY HON'BLE DELHI HIGH COURT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAI NS IN A CASE OF SALE SIMIPLICITOR THERE IS NO NECESSITY FOR COMPUTING THE FAIR MARKET VALUE AND THEREFORE THE ASSESSING OFFICER COULD NOT HAVE REFERRED THE MATTE R TO THE VALUATION OFFICER. ON THIS BASIS THE HON'BLE DELHI HIGH COURT HAS CONFIR MED THE TRIBUNAL ORDER IN THAT CASE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. IN THE PRESENT CASE ALSO THERE IS SALE SIMPLICITOR AND NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS RECEIVED SALE CONSIDERATION FOR THE PROPERTIES OVER AND ABOVE THE SALE CONSIDERATION AS SHOWN BY THE ASSESSEE. WE THEREFORE ARE OF THE CONSIDERED OPINION THAT THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS FULLY APPLICABLE TO THE FACTS AND ISSUE UN DER CONSIDERATION BEFORE US. THIS JUDGMENT OF HON'BLE DELHI HIGH COURT WHICH IS JURISDICTIONAL HIGH COURT IN THE PRESENT CASE IS BINDING ON THIS TRIBUNAL AND HE NCE RESPECTFULLY FOLLOWING THIS DECISION THIS ISSUE IS DECIDED IN FAVOUR OF THE AS SESSEE AND WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER IN THE CAPIT AL GAIN CANNOT BE SUSTAINED. WE THEREFORE DELETE THE SAME. 8. IN THE RESULT THE INCOME TAX APPEAL OF THE ASSE SSEE IS ALLOWED. 9. REGARDING GIFT TAX APPEALS OF THE ASSESSEE WE F IND THAT THE TRIBUNAL DECISION RENDERED IN THE CASE OF SMT. USHA JAIN (S UPRA) IS SQUARELY APPLICABLE IN THE PRESENT CASE AND IN THAT CASE ALSO THE PROPERT Y WAS SOLD BY THE ASSESSEE FOR RS.4.50 LAKHS. IN THAT CASE ALSO THE ASSESSING OFF ICER WAS NOT SATISFIED ABOUT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE. TH E ASSESSING OFFICER REFERRED THE MATTER TONTHE DVO AND THE DVO ESTIMATED THE SAL E CONSIDERATION AT . I.T.A. NO.1550/DEL/02 6/7 RS.30.13 LAKHS INSTEAD OF 4.50 LAKHS DECLARED BY TH E ASSESSEE. IN THAT CASE ALSO IT WAS HELD BY THE ASSESSING OFFICER THAT THE DIFFE RENCE BETWEEN THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AND THE SALE CONSIDERATION ESTIMATED BY THE DVO WAS DEEMED GIFT. THERE IS ONE DIFFERENCE I N FACT AS WE ARE NOTING THAT IN THE CASE IT IS NOTED BY THE TRIBUNAL IN PARA NO .3 OF THE DECISION THAT FOR THE PURPOSE OF COMPUTATION OF CAPITAL THE MODE OF VALU ATION HAS BEEN PROVIDED IN GIFT TAX RULES ANDN IN THAT CASE THE PROPERTY IN Q UESTION WAS GIVEN ON RENT AND THEREFORE RENT CAPITALIZATION METHOD SHOULD HAVE BE EN ADOPTED FOR VALUATION. IN THE PRESENT CASE WE FIND THAT THE PROPERTY IN QUES TION WAS GIVEN ON RENT OR NOT IS NOT CLEAR ALTHOUGH FOR THE PRESENT YEAR THE ASSESS EE HAS DECLARED RENTAL INCOME OF RS.64 618/- AS ASSESSED BY THE ASSESSING OFFICER BUT WE DO NOT KNOW WHETHER THE SAME IS IN RESPECT OF THIS VERY PROPERTY OR FOR SOME OTHER PROPERTY. THIS ASPECT HAS TO BE EXAMINED BY THE ASSESSING OFFICER. IN THE CASE OF SMT. USHA JAIN 9SUPRA) IT WAS HELD BY THE TRIBUNAL THAT THE A SSESSING OFFICER SHOULD VALUE THE PROPERTY IN ACCORDANCE WITH SCHEDULE II OF GIFT TAX ACT READ WITH SCHEDULE III OF W.T. ACT. SINCE THE GIFT TAX ACT AS PROVIDED TH E METHOD OF VALUATION OF PROPERTY WE ARE IN AGREEMENT WITH LD COUNSEL OF TH E ASSESSEE THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AS PER THE METHOD OF VALUATION PROVIDED IN THE GIFT TAX ACT. WE THEREFORE SET ASIDE THE ORDER OF THE LD CIT(A) O9N THIS ISSUE AND RESTORE T HE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO VALUE THE PROPERTY IN ACCORDAN CE WITH GIFT TAX ACT AFTER DETERMINING THIS ASPECT AS TO WHETHER THE PROPERTY IN QUESTION WAS GIVEN ON RENT IN THE PRESENT YEAR OR NOT. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER ABOVE DISCUSSION AND AFTER PROVIDING ADEQUAT E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT THE GIFT TAX APPEAL OF THE ASSES SEE IS ALLOWED 11. IN THE COMBINED RESULT THE IT APPEAL OF THE AS SESSEE IS ALLOWED AND GT APPEAL; IS ALLOWED FOR STATISTICAL PURPOSES. . I.T.A. NO.1550/DEL/02 7/7 12. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH FE BRUARY 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.2.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).