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2017 (6) TMI 121 - AT - Income TaxReopening of assessment - Held that - Assessee had not filed any return voluntarily. First return filed by the assessee was pursuant to a notice issued u/s.148 of the Act on 17.12.2013. The said notice was issued since assessee had alongwith three other co- owners sold land measuring 1 ground 1593 sq.ft, at New No.76, Old No.24, Mandaveli Street, Chennai-28 on 27.12.2006, but had not filed any return for the capital gains arising from such transaction. Thus assessee having not filed any return voluntarily, the proceedings resulted only in a first assessment. Therefore assessee s ground challenging the reopening has no merits Computation of long term capital gains - value determined by the DVO - application of Sec. 50C - Held that - It is true that there was a pending litigation on the property which was sold by the assessee. This was also brought to the notice of the ld. Assessing Officer/DVO. However, Jurisdictional High Court had not restrained assessee from alienating or dealing with the property. What it directed was only to indicate the pendency of litigation in any transactions relating to the property. Assessee had during the course of the valuation proceedings before ld. DVO, brought to his attention, the existence of the litigation in the objections filed by him. It was after considering such objections that DVO made the valuation. Thus, the value determined by the DVO was after considering the effect of the pending litigation. Assessee thus, was not been able to rebut the case of the Revenue that DVO had considered all the material filed by the assessee including the details of the suit pending on the subject property. Sub Section (3) to Sec. 50C of the Act clearly mandates adoption of the value fixed by the DVO when such value was less than what was adopted by the Revenue authorities for fixing the stamp value. Admittedly, DVO had taken FMV at I74,76,054/- which was less than the value of I78,70,203/- adopted by the Registration authorities. Coming to the decision of Lucknow Bench of the Tribunal in the case of Hari Om Gupta (2016 (1) TMI 486 - ITAT LUCKNOW ) relied on by the ld. Authorised Representative, the sale was considered as done under distress, since assessee concerned was not able to pay dues to the bank where the property was kept as collateral security. It does not lay down a law that in all cases where there is a litigation it would be a distress sale. Therefore, it is of the opinion that lower authorities were justified in applying Sec. 50C of the Act. Enhancement done by recomputing the cost of acquisition - Contention of the assessee is that Sec.55A of the Act had no application where the value claimed by the assessee was more than the FMV - Held that - As in the instant case there was no reference made to a Valuation Officer by the ld. Assessing Officer or ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) had taken note of the partition deed dated 28.07.1978 through which assessee become the owner of the property, and thereafter adopted the guideline value fixed by the Government for the property. In such circumstances, Commissioner of Income Tax (Appeals) was justified in holding that Sec. 55A of the Act had no application. Appeal of the assessee stands dismissed.
Issues Involved:
1. Validity of reopening the assessment under Section 148 of the Income Tax Act, 1961. 2. Computation of long-term capital gains. 3. Enhancement of long-term capital gains by recomputing the cost of acquisition. Issue-Wise Detailed Analysis: 1. Validity of Reopening the Assessment under Section 148: The assessee challenged the reopening of the assessment under Section 148, arguing it was done without valid reason. The Tribunal found that the assessee had not filed any return voluntarily and the first return was filed only after a notice under Section 148 was issued on 17.12.2013. The notice was prompted by the sale of land by the assessee and three co-owners, which had not been reported for capital gains. The Tribunal concluded that since the assessee had not filed any return voluntarily, the reopening constituted a first assessment and thus, the challenge to the reopening lacked merit. Grounds 2 and 3 were dismissed. 2. Computation of Long-Term Capital Gains: The assessee declared long-term capital gains of ?40,500 from the sale of property, while the Assessing Officer computed it at ?16,84,760, based on the DVO's report which estimated the fair market value at ?74,76,054. The assessee contended that the sale was a distress sale due to pending litigation and requested consideration of the sale price mentioned in the deed. The Tribunal noted that the DVO had considered the pending litigation in its valuation and upheld the application of Section 50C of the Act, which mandates adopting the DVO's value when it is less than the value adopted by the stamp valuation authority. The Tribunal found no merit in the assessee's argument and dismissed Grounds 4 to 7. 3. Enhancement of Long-Term Capital Gains by Recomputation of Cost of Acquisition: The assessee's cost of acquisition was based on an estimated value as of 01.04.1981, which was ?1,42,000 for 4000 sq.ft. The Commissioner of Income Tax (Appeals) recomputed this value based on the guideline value provided by the SRO, Mylapore, which was ?22,000 per ground as on 01.04.1981. The assessee argued that Section 55A of the Act, as it existed prior to its amendment in 2012, did not allow for a reference to a Valuation Officer when the value claimed by the assessee was higher than the fair market value. The Tribunal noted that the Commissioner of Income Tax (Appeals) had not made a reference to a Valuation Officer but had based the recomputation on the guideline value and the partition deed. The Tribunal upheld the recomputation and dismissed Grounds 8 to 11. Conclusion: The Tribunal dismissed the appeal of the assessee, upholding the validity of the reopening of the assessment, the computation of long-term capital gains based on the DVO's valuation, and the recomputation of the cost of acquisition by the Commissioner of Income Tax (Appeals). Order Pronounced: The appeal of the assessee stands dismissed, as pronounced on Friday, the 31st day of March, 2017, at Chennai.
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