2021 (8) TMI 564 - AT - Income Tax

Reopening of assessment u/s 147 - Addition on account of Capital Gains - procedure contemplated u/s. 50C - case was reopened on receipt of information of Central Information Bureau (CIB) regarding non disclosure of Capital Gains by issuing notice u/s.148 of the Act which was served on the assessee - HELD THAT - Assessee having failed in establishing the sale effected through sauda chitti (agreement), we find no infirmity in the reasons given by the CIT(A) in this regard. We note that the AVO, Nagpur submitted its valuation of the subject land at ₹ 77,94,000/-. The assessee also submitted another valuation report dated 05-06-2015 issued by M/s. Vastukala Consultants (I) Pvt. Ltd. wherein we note that the valuation of the subject land was determined at ₹ 37,24,000/- in 2008. As it appears from the record that the assessee reported no objection to the value determined by the AVO at ₹ 77,94,000/- and it is also apparent from the record the AVO considered the valuation report of M/s. Vastukala Consultants (I) Pvt. Ltd. Since, the assessee put up no objection before the AVO regarding the determination of value of the subject land and since AVO considered the valuation report submitted by the assessee through its M/s. Vastukala Consultants (I) Pvt. Ltd. We find no infirmity in the order of CIT(A) in determining the valuation of the subject land by holding the valuation adopted by the AVO is correct and proper. We are of the view that the CIT(A) considered all the submissions and contentions of the assessee and also the mandate contemplated under the provisions of section 50C of the Act in determining the valuation of the subject land for computation of Capital Gains. Thus, we agree with the reasons recorded by the CIT(A). Therefore, the grounds raised by the assessee are fails and are dismissed.

Issues Involved:
1. Delay in filing the appeal.
2. Non-appearance of the assessee.
3. Challenge to the addition on account of Capital Gains.
4. Validity of the sale agreement (sauda chitti).
5. Valuation of the subject land for Capital Gains computation.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 4 days. Upon hearing the Revenue's representative (ld. DR), the Tribunal condoned the delay.

2. Non-appearance of the Assessee:
The appeal was instituted on 22-03-2016, and the hearing was scheduled multiple times until the current date. Despite notifications, there was no representation from the assessee or her Authorized Representative. The Tribunal proceeded ex-parte to hear the Revenue's representative and pass the order based on the available material.

3. Challenge to the Addition on Account of Capital Gains:
The core issue raised by the assessee was the restriction of addition on account of Capital Gains by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee did not file an Income Tax Return for the concerned year and did not possess a Permanent Account Number (PAN). The case was reopened based on information from the Central Information Bureau (CIB) regarding non-disclosure of Capital Gains. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1) of the Income Tax Act, seeking an explanation for invoking section 50C of the Act. Despite 12 opportunities, the assessee did not comply, leading the AO to assess the income based on best judgment, determining the total income at ?88,36,320 by adopting the sale consideration as per section 50C.

4. Validity of the Sale Agreement (Sauda Chitti):
Before the CIT(A), the assessee argued that the land sold was agricultural and not subject to Capital Gains. It was claimed that the land was sold on 09-05-1997 through a first agreement to sale (sauda chitti) but registered on 13-08-2008. The CIT(A) rejected this contention, noting that the sauda chitti was not signed by the five purchasers and witnesses, making it invalid. The CIT(A) found no evidence supporting the sale in 1997 and upheld the AO's assessment.

5. Valuation of the Subject Land for Capital Gains Computation:
The AO initially adopted the stamp duty valuation of ?1,03,20,000, but the CIT(A) directed a reference to the District Valuation Officer (DVO), who determined the value at ?77,94,000. The assessee submitted a valuation report by M/s Vastukala Consultants (I) Pvt. Ltd., valuing the land at ?37,24,000. The CIT(A) and the Tribunal found no objections raised by the assessee against the DVO's valuation and considered the DVO's report proper and correct. The Tribunal agreed with the CIT(A) that the land, situated within the Nanded Waghala Municipal Corporation, was a capital asset as per section 2(14)(iii) of the Income Tax Act, and Capital Gains were exigible on its sale. The Tribunal upheld the CIT(A)'s decision to adopt the DVO's valuation of ?77,94,000 for computing Capital Gains.

Conclusion:
The appeal of the assessee was dismissed as the Tribunal found no infirmity in the CIT(A)'s order. The CIT(A) had correctly applied the provisions of section 50C and considered all relevant submissions and evidence. The Tribunal agreed with the CIT(A)'s findings and reasoning, leading to the dismissal of the grounds raised by the assessee. The order was pronounced in the open court on 12th August 2021.

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