2019 (8) TMI 846 - AT - Income Tax

Condonation of delay of 46 days - no proper advice by tax consultant within the reasonable period of time to file the appeal - HELD THAT - Taking into account the principles laid down by the Hon ble Apex Court in the case of MST Katiji and Others 1987 (2) TMI 61 - SUPREME COURT wherein laid down the principles for dealing with matters relating to condonation of delay; the decision of the Hon ble Karnataka High Court in the case of ISRO Satellite Centre 2011 (10) TMI 737 - KARNATAKA HIGH COURT and the reasons the assessee has laid out in his Affidavit seeking condonation of delay (supra), we are of the view that the assessee was prevented by reasonable and sufficient cause from filing the appeal for AY 2014-15 on time before the Tribunal. In this view of the matter and respectfully following the principles laid down by the Hon ble Apex Court in the case of MST Katiji and Others (supra), we condone the delay of 46 days by the assessee in filing the appeal before the Tribunal and accordingly admit the assessee s appeal for consideration and adjudication. LTCG computation - applicability of provisions of section 50C - HELD THAT - In the case on hand, the circumstances are even more acute as the AO who had admittedly made a reference to the DVO vide letter No.ACIT C-3(2)(1)/16-17/105 dated 13.12.2016, strangely did not wait for the DVO s valuation report and hurriedly proceeded to pass the impugned order of assessment on 27.12.2016; just 14 days later; when the DVO had already initiated valuation proceedings by calling for details to be filed by the assessee on 02.01.2017 and had time to submit his Valuation Report upto 30.06.2017. Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT 2014 (6) TMI 13 - CALCUTTA HIGH COURT has held that there is no reason why the machinery provided by Legislature should not be used and the benefit thereof refused, even in a case where no prayer has been made by the assessee, who may not have been properly instructed. Since the AO, discharging a quasi-judicial function, has the bounden duty to act fairly; he should in all fairness make a reference to the DVO to have the valuation of the said property contemplated under section 50C. The orders passed by the authorities below i.e., CIT(A) and AO are set aside and we restore the matter of computation of LTCG on sale of the said property by the assessee to the file of the AO. AO shall obtain the DVO s Valuation Report, as called for by him in his reference dated 13.12.2016 , and after such valuation is made by the DVO, the computation of LTCG shall be made on this issue, de novo in accordance with law and after affording the assessee adequate opportunity of being heard in the matter by both the DVO for valuation proceedings and the AO and to file details required which shall be duly considered by the DVO / AO before deciding the issue. Grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of assessment order under section 143(3) without waiting for the Departmental Valuation Officer (DVO) report.
3. Application of section 50C of the Income Tax Act for computation of Long Term Capital Gains (LTCG).

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed an appeal with a delay of 46 days. The delay was attributed to improper advice from the tax consultant and subsequent referral to another Chartered Accountant. The Tribunal considered the principles laid down by the Hon’ble Apex Court in MST Katiji and Others (1987) and the Karnataka High Court in CIT Vs. ISRO Satellite Centre (2013), concluding that the delay was due to reasonable and sufficient cause. Thus, the delay was condoned, and the appeal was admitted for consideration.

2. Validity of Assessment Order under Section 143(3) Without Waiting for the DVO Report:
The assessee objected to the adoption of stamp duty valuation under section 50C for computing LTCG on the sale of property. The Assessing Officer (AO) referred the matter to the DVO but concluded the assessment hurriedly without waiting for the DVO’s report. The Tribunal noted that the AO should have waited for the DVO’s report, as per the provisions of section 50C(2). The CIT(A) dismissed the appeal on the grounds that the reference to the DVO was made suo-moto by the AO and not at the request of the assessee. However, the Tribunal found merit in the assessee’s contention that the AO’s reference to the DVO was based on the assessee’s oral objections, and the AO should have completed the assessment in accordance with the DVO’s valuation.

3. Application of Section 50C of the Income Tax Act for Computation of LTCG:
The Tribunal examined the conflicting judicial pronouncements on the issue, specifically the decisions of the Hon’ble Madras High Court in Ambattur Clothing Co. Ltd. Vs. ACIT (2010) and the Hon’ble Calcutta High Court in Sunil Kumar Agarwal Vs. CIT (2015). The Tribunal decided to follow the principle laid down by the Hon’ble Apex Court in CIT Vs. Vegetable Products Ltd. (1973), which states that in cases of conflicting judgments, the view favorable to the assessee should be adopted. Thus, the Tribunal followed the decision of the Calcutta High Court, which emphasized the necessity of obtaining a DVO’s report to ensure fair treatment to the taxpayer.

Conclusion:
The Tribunal set aside the orders of the AO and CIT(A) and remanded the matter back to the AO. The AO was directed to obtain the DVO’s valuation report and recompute the LTCG in accordance with the law, ensuring the assessee is given adequate opportunity to be heard. The assessee’s appeal was allowed for statistical purposes.