2021 (2) TMI 1060 - HC - Income Tax

LTCG on sale of property - reference was made under Section 55A read with Section 50C of the Income Tax Act, 1961 for valuation by the second respondent District Valuation Officer, Valuation Cell, Income Tax Department - petitioner along with her sister sold a property which sale was apparently negotiated by their father during his lifetime but before the sale could be completed, their father passed away on 15.01.2012 and therefore the buyers negotiated the sale price with the petitioner and concluded the sale in respect of two parcels of land to two different buyers - it is the contention of the petitioner that the respondents ought not to have adopted the higher value as the price of the land in 2012 had increased manifold time and that the sale price was negotiated by the petitioner s father during his lifetime in 2010 - HELD THAT - All the agreements are unregistered agreements. Though it is the case of the petitioner that the sales of the properties were negotiated by her father during his lifetime and had received an advance of ₹ 50 lakhs in respect of the first property in Varadharajapuram Village, Sriperumbadur Taluk, Kancheepuram District, Tamil Nadu from M/s.Tatia Development Private Limited on various dates and manifold increase in the guideline value by the Registration Department in 2012 cannot be the basis to countermand the value adopted in the sale agreement. It is therefore submitted that the higher value adopted was liable to be quashed. Such submission cannot be entertained in absence of any document particularly in absence of documents to substantiate that there was a concluded sale agreement in respect of these properties by the petitioner s father during his lifetime. The petitioner s father may also have had independent transactions and merely by looking at banking transactions in the Bank Passbook, one cannot determine existence of any concluded sale agreement. Therefore, it cannot be construed that the banking transactions of the petitioner s father pertain to the properties which were subject matter of the sale agreements. Further, under Section 17(1)(g) of the Registration Act, 1908, an agreement for sale of immovable property has to be mandatorily registered. There are several disputed questions of fact which in my considered view are best left open to be decided by the authorities under the hierarchy of the Income Tax Act, 1961. Since none of the agreements which have been produced by the petitioner are registered documents, this Court cannot conclude that the value adopted by the petitioner reflected the correct value for the purpose of payment of stamp duty. Therefore, even otherwise, based on the sale agreements enclosed by the petitioner, no relief can be granted to the petitioner in these writ petitions. The petitioner has an alternate and efficacious remedy by way of an appeal against the respective assessment orders before the Commissioner of Income Tax (Appeals). Therefore, I do not find any reasons to interfere with the impugned orders. Under these circumstances, there is no merit in these writ petitions. The petitioner is however given a liberty to file a statutory appeal against respective assessment orders before the Commissioner of Income Tax (Appeals), within a period of thirty days from date of receipt of a copy of this order. Pending disposal of the writ petitions, no such recovery proceedings have been initiated.

Summary

Issues:
Challenging assessment orders for Assessment Years 2013-2014 and 2014-2015 regarding income from long-term capital gains, Dispute over valuation of property for computation of long-term capital gains, Unregistered sale agreements, Allegations of higher valuation without proper documentation, Availability of alternate remedy through appeal before Commissioner of Income Tax (Appeals).

Analysis:
The petitioner challenged assessment orders for the Assessment Years 2013-2014 and 2014-2015, disputing the re-computation of income from long-term capital gains based on the sale of property. The sale of property was negotiated by the petitioner's father before his passing, leading to disputes over valuation. A reference was made for valuation by the District Valuation Officer, resulting in preliminary reports and subsequent assessment orders by the first respondent.

In the case of unregistered sale agreements, the petitioner argued that the sale price was negotiated by her father before his demise, and subsequent formal agreements were entered into by the petitioner and her sister. However, the respondents defended the assessment orders, highlighting the lack of documented evidence supporting the petitioner's claims and suggesting an appeal as an alternate remedy.

The court considered the arguments presented, emphasizing the necessity of registered agreements for property transactions. It noted the absence of conclusive evidence supporting the petitioner's contentions and the need for proper documentation to establish the correctness of the valuation. The court concluded that disputed factual issues should be addressed through the hierarchy of the Income Tax Act, and without registered documents, relief could not be granted in the writ petitions.

Ultimately, the court found no grounds to interfere with the impugned orders, granting the petitioner the liberty to appeal before the Commissioner of Income Tax (Appeals) within a specified timeframe. The court directed the continuation of protection against recovery proceedings until the appeal's disposal, emphasizing that the appeal should be decided on its merits without influence from the court's observations.

In conclusion, the writ petitions were disposed of with the above observations, allowing the petitioner to pursue an appeal while maintaining protection from recovery proceedings until the appeal's resolution.