2016 (3) TMI 1322 - AT - Income Tax

Reopening of assessment u/s 147 - computation of capital gain by taking the sale consideration - Held that - Whatever proceedings are available on the record cannot be presumed directly that the basis of reasons to believe is that the proceedings without referring by the Assessing Officer is reason to believe. The reasons recorded by the Assessing Officer are self contained. AR claimed that the assessee enclosed the copy of sale deed where value by the stamp authority had been disclosed alongwith the return appears to be incorrect that the assessee had enclosed the copy of sale deed as evident from the remark photo copy of the sale deed of property sold (2) can be referred two pages of the copy of deed but on verification of the copy of the sale deed it is in nine page. Even the assessee enclosed the copy of sale deed alongwith the return it is not necessary to verify the each and every item by the Assessing Officer as the returns are processed on computer and whatever refund/demand is sent directly to the assessee. These returns are bunched and put in the record room. The department hardly takes 1% return under the scrutiny to promote the compliance of the tax payment for the public. It is also on the part of the assessee to disclose the true facts in the return. The assessee has calculated capital gain by taking the sale consideration of 60 lacs in computation of income. Therefore we uphold the order of the CIT(A) on this issue. Addition without considering Section 50C(2) - non reference to DVO - computation of capital gain the sale value on the basis of value adopted by the stamp authority - AR has submitted that the ld Assessing Officer was aware that sale value/fair market value of the property was less than the stamp duty value he should have referred the case to the valuation officer - Held that - As per Section 50C AO is duty bound to take value as taken by the Stamp Authorities. As per law the assessee can challenge the valuation made by the stamp authority by filing the appeal against the stamp duty paid before the appellate authority under the Registration of Stamp Act and another alternative is that he can object the valuation proposed by the Assessing Officer on the basis of Section 50C and on that basis the Assessing Officer can refer the issue to the DVO and get valuation as per law. The Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal 2014 (6) TMI 13 - CALCUTTA HIGH COURT cited by the assessee are squarely applicable. Therefore the ld Assessing Officer is directed to refer the matter to the DVO and take fair market value on the date of sale/transfer. On that basis he will compute the capital gain as per law. Therefore we set aside this issue to the Assessing Officer. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 without jurisdiction and reasonable cause.
2. Issuance of notice under Section 148 without recording satisfaction and based on audit objections.
3. Addition under Section 50C without considering Section 50C(2).

Issue-wise Detailed Analysis:

1. Validity of Notice Issued under Section 148 without Jurisdiction and Reasonable Cause:
The assessee challenged the reopening of the assessment on the grounds that the Assessing Officer (AO) lacked jurisdiction and that the notice under Section 148 was issued without reasonable cause. The assessee filed a return declaring an income of ?12,11,541/-. The AO noticed an escapement of income and issued a notice under Section 148 after recording reasons. The CIT(A) upheld the AO's decision, noting that the reasons were recorded before issuing the notice and communicated to the assessee. The case was transferred to another officer, who disposed of the objections raised by the assessee. The Tribunal found no procedural lacuna in the issuance of the notice, as it was issued by the jurisdictional ACIT and subsequently handled by the new incumbent. The Tribunal upheld the CIT(A)'s order, noting that the AO had valid reasons to believe income had escaped assessment, and there was no requirement for prior enquiry before recording reasons under Section 147.

2. Issuance of Notice under Section 148 without Recording Satisfaction and Based on Audit Objections:
The assessee argued that the reopening was based on audit objections and that the AO did not record his satisfaction independently. The Tribunal noted that the reasons for reopening were based on differences in the sale value disclosed, the deduction claimed under Section 54F, and excess interest deduction under Section 24. The Tribunal found no reference to audit objections in the AO's satisfaction and held that the reasons recorded were self-contained. The Tribunal also noted that the assessee's claim that the sale deed was enclosed with the return was incorrect, as the return processing is computerized and not all items are verified. The Tribunal upheld the CIT(A)'s order, finding that the AO had valid reasons to reopen the assessment.

3. Addition under Section 50C without Considering Section 50C(2):
The assessee contested the addition made under Section 50C, arguing that the AO should have referred the case to the valuation officer if the fair market value was less than the stamp duty value. The CIT(A) upheld the AO's decision, noting that the assessee did not challenge the valuation before the AO. The Tribunal referred to the Calcutta High Court's decision in Sunil Kumar Agarwal, which held that the AO should give the taxpayer an option to follow the course provided by law. The Tribunal directed the AO to refer the matter to the DVO to determine the fair market value on the date of sale/transfer and compute the capital gain accordingly. The Tribunal set aside this issue to the AO for further action.

Conclusion:
The Tribunal upheld the reopening of the assessment under Section 148, finding that the AO had valid reasons to believe income had escaped assessment and that there was no procedural error in issuing the notice. However, the Tribunal directed the AO to refer the valuation issue under Section 50C to the DVO to determine the fair market value and compute the capital gain accordingly. The assessee's appeal was partly allowed.