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TMI Blog2016 (9) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the property mentioned in the sale deed is lower than the value adopted by the stamp valuation authority. The petitioner was therefore, asked to explain whether capital gain was computed on the basis of section 50C of the Act. If yes, the petitioner would submit evidence, if no, the petitioner to show cause why adverse inference should not be drawn. This letter was received by the petitioner on 4.12.2007. On 6.12.2007, it appears that the purchaser of the land had in respect to a similar letter from investigation wing contended that the Government approved valuer had assessed rate of land at ₹ 275/per square meter at which the land was sold. It was further pointed out that stamp valuation authority had earlier adopted market value of ₹ 1.42 crores but after objection reduced it to ₹ 71.07 lacs which would show that no proper parameters had been adopted. As noted, the petitioner had also replied separately to the said authority under letter dated 2.1.2008. The stand of the petitioner in such reply was rather vague and general. The petitioner did not deny the higher valuation adopted by the stamp duty authority or application of section 50C of the Act bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,42,14,000/- ) Thus the assessee was found to have suppressed its long term capital gain as per the provisions of section 50C of the IT Act at ₹ 29,07,000/- for AY 200506. Thus there was an escapement of income as per the provisions of section 50C of the IT Act. 2. It is also found during the assessment for AY 200607, 200708 and 200809 that the assessee has been claiming deduction u/s.80P of the IT Act without first deducing its interest expenses in contravention to section 80AB. It was held by the Assessing Officer in their assessment orders u/s.143(3) for the above three assessment years that the assessee did not adjust the interest expenses with the income deductible u/s.80P of the IT Act. The Assessing Officer had invoked section 80AB to net the income deductible u/s.80P with the amount of interest expenses of the assessee. In this regard the provision of section 80AB of the Act is reproduced hereunder: 80AB Deduction to be made with reference to the income included in the gross total income. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading (C) Deductions in respect of certain incomes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the long term capital gain, counsel drew our attention to a letter dated 28.11.2007 written by the Assistant Director of Incometax, Surat, in which he pointed out to the assessee that the valuation of the property mentioned in the sale deed was lower than the value adopted by the stamp valuation authority. The assessee was called upon to explain whether the capital gain was paid on such higher value and if not why. Counsel submitted that this letter dated 28.11.2007 was received by the petitioner on 4.12.2007 and the petitioner replied to the same under letter dated 2.1.2008. It appears that the purchaser was also asked by the department to clarify this aspect which was done under letter dated 4.12.2007. On 4.12.2007 itself, the Assessing Officer passed the order of assessment. Thus the fact that sale consideration was lower than the stamp valuation assessment was known to the income tax authorities even during the original assessment. Notice for reopening therefore, beyond a period of four years, could not have been issued. Regarding the netting of interest also, counsel submitted that full facts were on record. The petitioner had not withheld any relevant facts. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst refer to the materials on record. In the returns filed on 15.10.2005, the petitioner declared the sale consideration of land at ₹ 42 lacs. However, it appears that when the document was presented for registration, the stamp duty authorities had dispute about such valuation. On 9.4.2007, Deputy Collector, Stamp Duty, passed an order assessing the value of land for the purpose of registration at ₹ 71.07 lacs and demanded the deficient stamp duty of ₹ 2.44 lacs. This was conveyed to the purchaser of the land by the said order. It appears that upon the purchaser paying the deficient stamp duty as per such order, the document was registered on or around 12.4.2007. 9. Long after this, during the assessment proceedings, the Assessing Officer had under a letter dated 23.11.2007 raised multiple queries, one of them being Details of long term capital gain to be provided by the petitioner. In response to this, the petitioner under letter dated 28.11.2007 conveyed as under : (13) The ledger account of longterm capital gain arised on transfer of land situated at Survey No.185 at Katargam, Surat is also attached herewith. 10. Along with this letter, the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details/ documents/information/ materials if any, gathered and intended by you to take action u/s 50C of the Act in pursuance to the principles of natural justice and oblige. 13. On 6.12.2007, the purchaser had stated as under : With reference to above under the instruction from the above referred assessee we beg to submit as under : 2. Regarding your point for showing the value of property less in sale deed than the value adopted by the stamp valuation authority we would like to clarify as under. a. Assessee has purchased the property jointly with other five persons directly from Surat District Co. Operative Milk Producer's Union Ltd. (SUMUL). b. Property purchased was of agriculture land Copy of Zoning Certificate is enclosed. c. The SUMUL the seller party has carried out valuation of the said property from H.T. Shah, Govt. Approved Valuer dated 29/08/2005 he had adopted the rate of ₹ 275 per sq. mtr where as we had adopted the rate of ₹ 297/sq. Mtr (Rs.4200000/14113 sq. mtr.) while executing the sale deed hence there is no question of adopting lower amount for the purpose of executing sale deed. Copy of valuation report is enclosed. d. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of subsection (1), where- ( a ) the assessee claims before any Assessing Officer that the value adopted or assessed [or assessable] by the stamp valuation authority under subsection (1) exceeds the fair market value of the property as on the date of transfer; ( b ) the value so adopted or assessed [or assessable] by the stamp valuation authority under subsection (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of subsections (2), (3), (4), (5) and (6) of section 16A, clause ( i ) of subsection (1) and subsections (6) and (7) of section 23A, subsection (5) of section 24, section 34A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esorted to subsection( 2) of section 50C and disputed such valuation before the Assessing Officer. The sole question is, was he guilty of non declaration of true and full facts since we are examining the reopening of assessment beyond a period of four years? 19. In this context, the documents on record assume significance. As noted, the stamp duty authority assessed the value of land on 9.4.2007 and registered the document on purchaser paying the deficient stamp duty on 12.4.2007. It was only after that, that during assessment, the Assessing Officer had asked the petitioner to supply the details of long term capital gain under a letter dated 23.11.2007. In reply to such letter, the petitioner provided no further information, except for pointing out that the land was sold for ₹ 42 lacs, by which time, we may recall the revised valuation by the stamp duty authority was already available. 20. It is by now well settled that the duty to disclose true and full facts not only is at the stage of filing returns, but continues through out the assessment. Reference in this respect can be made to decision of Delhi High Court in case of Honda Siel Power Products Limited v. Deputy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 6.12.2007, it appears that the purchaser of the land had in respect to a similar letter from investigation wing contended that the Government approved valuer had assessed rate of land at ₹ 275/per square meter at which the land was sold. It was further pointed out that stamp valuation authority had earlier adopted market value of ₹ 1.42 crores but after objection reduced it to ₹ 71.07 lacs which would show that no proper parameters had been adopted. As noted, the petitioner had also replied separately to the said authority under letter dated 2.1.2008. 22. The stand of the petitioner in such reply was rather vague and general. The petitioner did not deny the higher valuation adopted by the stamp duty authority or application of section 50C of the Act but merely generally and vaguely opposed any proposal for action. 23. Even thereafter, on 28.2.2008, the incometax authorities wrote to the petitioner and conveyed as under : 2. It is gathered from the information received from the office of the Sub Registrar Surat in regards to the property sold by you, situated at Survey No.185 that full value of the said consideration as per value adopted by them is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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