2016 (5) TMI 348 - AT - Income Tax

Adoption of land rate for the purpose of valuation u/s.50C - Held that - To consider valuation cell letter dt. 10.03.2005 and letter of Registration Department, Sub-Registrar, Adayar dt 24.02.2011 referring guideline value adopted in respect of Vikram Sarabai Instronics Estate, Thirumanmiyur alongwith CD. The guideline value adopted by SRO for the period from 01.04.2003 to 31.07.2007 being ₹ 516/- per sq.ft and present assessment year falls within the above period and there is an increase in guideline from 01.08.2007 being ₹ 2,400/- per sq.ft. The ld. Counsel substantiated the arguments with the letters addressed to the valuation cell, Sub- Registrar, and objections filed with the valuation officer. The ld. Commissioner of Income Tax has not provided opportunity to the assessee inspite of written request furnished in the appellate proceedings. So, considering the apparent facts circumstances and valuation rates adopted by Sub-Registrar and the assessee, we are of the opinion that assessee should be provided with one more opportunity based on the guideline value, valuation report and valuation under Wealth Tax Act and to consider the contents of CD as requested by the assessee in adjudicating the appeal. Therefore, we set aside the order of Commissioner of Income Tax (Appeals) and remit the entire disputed issue to the Commissioner of Income Tax (Appeals) to pass the order afresh based on the above findings and provide adequate opportunity of being heard to the assessee.

Issues Involved:
1. Fixation of property value by the Commissioner (Appeals).
2. Binding nature of the Valuation Officer's estimated value under section 50C(2) of the Income Tax Act.
3. Relevance of judgments cited by the Commissioner (Appeals).
4. Objections to the land rate estimated by the Valuation Officer.
5. Guideline value of the land as per Sub-Registrar's office records.
6. Non-forwarding of the CD by the Valuation Officer to the Commissioner (Appeals) and compliance with section 23A(6) of the Wealth Tax Act.

Issue-wise Detailed Analysis:

1. Fixation of Property Value by the Commissioner (Appeals):
The Commissioner (Appeals) fixed the value of the property at ?1,21,75,111/- against the actual sale consideration of ?80,00,000/-. The assessee contended that the Commissioner erred in approving the value estimated by the Valuation Officer, which was binding once a reference was made under section 50C(2) of the Income Tax Act.

2. Binding Nature of the Valuation Officer's Estimated Value:
The Commissioner (Appeals) held that the value estimated by the Valuation Officer is binding on the assessing authorities once a reference is made under section 50C of the Income Tax Act. The assessee argued that the scheme of the Act, read with the Wealth Tax Act, allows for objections in an appeal to the Commissioner (Appeals) regarding the Valuation Officer's assessment.

3. Relevance of Judgments Cited by the Commissioner (Appeals):
The appellant argued that the judgments of the Allahabad High Court in Dr. Indra Swarup Bhatnagar and Ambattur Clothing Co. Ltd cited by the Commissioner (Appeals) were not relevant to the current case and were distinguishable. The Commissioner (Appeals) dismissed this argument, stating that the facts and circumstances of the case were similar to those in Ambattur Clothing Co. Ltd.

4. Objections to the Land Rate Estimated by the Valuation Officer:
The appellant raised detailed objections to the land rate estimated by the Valuation Officer, arguing that it was contrary to the sale instances as per the Sub-Registrar's office records. The Commissioner (Appeals) did not accept these objections and increased the land rate arbitrarily.

5. Guideline Value of the Land as per Sub-Registrar's Office Records:
The appellant highlighted a letter from the Sub-Registrar, Adayar, Chennai, which stated that the guideline value for the land in Vikram Sarabhai Instronics Estate was ?516 per sq.ft between 01.04.2003 to 31.07.2007, while the rate at which the appellant sold the land was ?879 per sq.ft. The Commissioner (Appeals) did not consider this information adequately.

6. Non-forwarding of the CD by the Valuation Officer:
The appellant requested the Valuation Officer to forward the CD furnished by the Sub-Registrar to the Commissioner (Appeals), but this was not done. The Commissioner (Appeals) did not direct the Valuation Officer to submit the CD, thereby violating the principles of natural justice and the requirements of section 23A(6) of the Wealth Tax Act.

Judgment Summary:
The Tribunal heard the rival submissions and perused the material on record. The primary issue was the adoption of the land rate for valuation under section 50C of the Income Tax Act. The Tribunal noted that the assessee sold the property and offered long-term capital gains based on a sale consideration of ?879 per sq.ft. However, the registration charges and the valuation by the Valuation Officer indicated a higher value. The Tribunal found that the Commissioner of Income Tax (Appeals) did not provide an adequate opportunity to the assessee and did not consider the guideline value and other relevant documents.

The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remitted the entire disputed issue back for fresh adjudication. The Commissioner (Appeals) was directed to pass a new order considering the guideline value, the valuation report, and the contents of the CD, and to provide the assessee with an adequate opportunity to be heard.

Conclusion:
The appeal of the assessee was partly allowed for statistical purposes, and the case was remanded to the Commissioner of Income Tax (Appeals) for a fresh decision based on the Tribunal's findings.

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