D.R. Singh, J.M. -
(1.) THE revenue has filed this appeal against the order of Commissioner (Appeals), Dehradun, passed in Appeal No. 357/DDN/05-06dated 22-2-2007 on the following effective ground:
THE ld. Commissioner (Appeals) has erred in law and on facts in directing the assessing officer to adopt the value estimated by the V.O. and work out the capital gain accordingly.
(2.) The relevant and material facts for the disposal of this ground of appeal are that the assessee is earning income from business and agriculture. Shefiled her return declaring income of Rs. 2,75,810. The assessment has been completed on returned income of Rs. 2,75,810 but income under the head 'capital gains' has been computed at Rs. 58,20,917because the Assessing Officer noticed that the assessee had sold her half share in the property, in Agra, and the full value of the sale consideration declared by the assessee for entire 4 properties was Rs. 40,48,000 while the market value adopted, for stamp duty purpose was Rs. 1,64,16,000 so the assessing officer adopted the market value of the property for the stamp duty purposes taking recourse to Section 50C of the Income Tax Act, 1961 (in short 'the Act') and worked out the capital gain in the case of the assessee at Rs. 58,20,917.
Aggrieved with the order of assessing officer the assessee filed an appeal before the Commissioner (Appeals) and submitted that the stamp duty is purely paid at the circle rates which are fixed by the state authorities. The circle rates do not mention the details and descriptions of the properties. It is flatly applied to all die properties which are covered in the vicinity of circle rates.
In fact, old tenants covered under UP Rent Control Act could not be evicted or dispossessed from the properties. Also these properties have no proper location and no proper approach roads. The properties under consideration were considered at the same circle rates which are also applicable to those properties which are newly built, and having good location and approach roads. The property No. 31/20 and 31/20, 1-16 Rawat Para, Kotwali Ward Agra was actually sold for the consideration of Rs. 32,00,000. But for the purposes of value of stamp duty, the rates were fixed at Rs. 1,31,40,000. Similarly the property No. 31/62 Lohargali, Kotwali Ward Agra and 31/60 Lohargali Kotwali Ward Agra were actually for Rs. 6,00,000 and Rs. 2,00,000 respectively. But for the purposes of stamp duty, the rate were fixed at Rs. 24,00,000 and Rs. 8,00,000 respectively. The assessee has also furnished the valuation reports for the above properties as on 1-11-2002 from the registered Government approved valuer. The valuer had valued the fair market value of the property of 31 / 20 and 31/ 20,1 -16 Rawat Para Agra at Rs. 31,16,000 after considering all the material facts regarding it. Similarly, the valuation of other properties, ie., 31/62 and 31/60 Lohargali has been valued by the valuer at Rs. 7,90,000. The above properties were approximately one hundred years old and the roof and walls were in dilapidated condition, which require a lot of renovation and repair works. Also the title of the above properties was in litigation at the time of sale. One trespasser Jugal Kishore s/o Ram A'vtar had filed civil suits for claiming his poor title against these properties. The civil suit No. 289/98 Jugal Kishore v. Manju Rani Etc. (for properties 31 /62 and 31 /62) in the court of Civil Judge Senior Division Agra and civil suit No. 60/1999 Jugal Kishore v. Manju Rani etc. (for properties 31/20 and 31/20,1-16, Rawat Para Agra) in the court of District Judge Agra, were pending at the time of sale of the above properties. Similarly property No. 4/81 Seherawla Pech Near Motia Gali Chattan ward Agra was actually sold for Rs. 48,000. But for the purposes of stamp duty it was considered at Rs. 76,000. The property was a very old property about 75 years old with an es tim ated total life of 60 years. The roof and walls of the property was in dilapidated and bad condition, which required lot of renovation and repairs. Also, the property was occupied by various tenants covered by the UP Rent Control Act and as such could not be evicted or dispossessed from the property. Considering this fact the property had to be sold to Shri Ram Das Agarwal s /o Late Shri Babu Lai Ji who was one of the tenants in this property. If the above facts are considered the valuation of the above properties in question would not exceed the actual sale consideration. Further, it is Esubmitted that the request was also made before the assessing officer to refer for valuation under Section 50C(2) of the Act to Valuation Cell in case the assessing officer was not satisfied with the valuation of the above properties in question. The assessing officer turned down the request of the assessee and ignoring all the submissions made before him, he passed the impugned order.
(3.) IN support of his contentions he placed reliance on various case laws as detailed in the order of Commissioner (Appeals) to contend that from his submissions and the case laws cited, the market value of the properties sold should be adopted at the actual consideration for which they were sold (actual realized value) by the assessee and not the notional and hypothetical gain as assessed by the assessing officer and so the impugned addition made by the assessing officer is liable to be deleted. During assessment proceedings before the Commissioner (Appeals) the Id. AR for the assessee further brought to his notice that vide letter dated 12-12-2005 the assessee has requested the assessing officer to refer the case to the Valuation Cell in case the value declared by the assessee was not acceptable to the assessing officer but the assessing officer without referring the case to the Valuation Cell adopted the value taken for stamp duty purposes and completed the assessment ignoring the provisions of Section 50C(1) and 50C(2) of the Act which provides that in case the assessee adopted the market value assessed by the State Government for stamp duty purposes, the assessing officer should have referred the case to the IT. department Valuation Cell. The Commissioner (Appeals), after considering the provisions of Section 50C(1) and (2) of the Act, observed that as the assessing officer adopted the market value assessed by the State Government for stamp duty purposes, the assessing officer should have referred the case to the IT. department Valuation Cell since this was not done, he directed the assessing officer vide his office letter dated 27-2-2006 to refer the case to the Valuation Cell. The assessing officer vide his letter dated 12-2-2007 submitted his report along with the report of Valuation Cell and the value estimated by the Valuation. Cell as on 1 -4-1981 and on the date of sale and the same is mentioned in the order of Commissioner (Appeals).;