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TMI Blog2018 (10) TMI 1849X X X X Extracts X X X X X X X X Extracts X X X X ..... ond inning, by sending the matter back to AO, enabling it to fill in the lacunae and shortcomings of the assessment order, and putting the assessee virtually to face a re-trial for no fault of hisandto again put him to prove before the AO that the sale consideration was the fair market value of the property sold by him. This would amount to giving life to an order which on the basis of facts on records is unsustainable in law. In view of our findings in the cases of Tarun Agarwal [ 2018 (8) TMI 1989 - ITAT AGRA] and Dr. Sanjay Chaubey (HUF) [ 2018 (7) TMI 133 - ITAT AGRA] and ANIMA INVESTMENT LTD. [ 2000 (1) TMI 150 - ITAT DELHI-D] with LALITHA KARAN, HYDERABAD [ 2017 (1) TMI 505 - ITAT HYDERABAD] we hold that at this stage, the AO cannot be allowed a second inning, by sending the matter back enabling him to make good his own shortcomings and putting the assessee virtually to face a re-trial for no fault on his part and to again prove before the AO that the sale consideration was the fair market value of the property sold by him. This would amount to giving a lease of life to an order which on the basis of facts on records is unsustainable in law. Failure of the AO to follow the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relied upon by CIT(A) in assessee's case under question), Hon'ble Court, like Hon'ble Allahabad High Court, remanded the matter to the AO to make assessment de novo in accordance with law after valuation by DVO. (e) Findings of Hon'ble High Court as pointed out above in (d) have been misread by the CIT(A), and consequently instead of exercising his conferred upon him by provisions of section 250(4) of I.T. Act 1961 has granted relief allowed the appeal of the assessee out-rightly. 2. In view of above, the order of the learned CIT(Appeals) being erroneous in law and on facts deserved to be quashed and that the order of the AO to be restored. 3. Notwithstanding grounds above, alternatively, it is prayed that respectfully following the decisions of Hon'ble High Courts in theabove mentioned cases of CIT Vs Chandra NarainChaudhary (Allahabad High Court) Sunil Kumar Agarwal Vs CIT 372 ITR 83 (Calcutta High Court), the matter be remanded to the AO to make assessment de novo in accordance with law after valuation by DVO. 4. The appellant craves leave to add or alter any or more ground or grounds of Appeal as may be deemed fit at the time of hearing of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation of capital gains arising out of its property were provided by it to the A.O. during the assessment proceedings. Also, it is an undisputed fact that the A.O. has chosen not to refer the matter to the Valuation Officer and proceeded to rebut some of those grounds on his own, and thereafter determined the capital gains on the stamp value in accordance with the provisions of section 50C of the Act. A perusal of the judicial precedents cited by the appellant indicates that in this case, the A.O. was not legally justified not to refer the matter to the Valuation Officer, Hon'ble Calcutta High Court's has held in the case of Sunil Kumar Agarwal V. CIT (372 ITR 83) that the AO, discharging a quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving the assessee an option to follow the course provided by law, which in that case, was the reference to the valuation officer, Hence, in light of the above facts and judicial precedents, the appellant's grounds no. 2 and 3 are allowed and it is held that the actual value as per sale deed should be adopted by the A.O. for the purpose of computing the appellant's long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DVO for valuation.It was also submitted by the Ld. Sr. D.R that the Ld. CIT(A) has allowed relief to the assessee placing reliance upon the Judgment of CIT Vs Chandra Narain Chaudhary ignoring to take note that the case was decided in favour of the revenue where instead of giving outright relief to the assessee, the Hon'ble Court remanded the matter to the AO to decide the valuation of the capital asset. In the case of Sunil Kumar Agarwal Vs CIT 372 ITR 83 the Hon'ble Calcutta High Court like the Hon'ble Allahabad High Court, remanded the matter to the AO to make assessment de-novo after valuation by DVO. Thus, it was prayed that the case be set-aside for reference to the DVO. 8. The Ld. A.R of the assessee placed strong reliance on the order passed by the Ld CIT(A), and also placed reliance on certain case laws which shall be discussed in the following paras at appropriate place.He vehemently opposed to the prayer made for setting aside the case of the assessee for the purpose of obtaining valuation report from DVO. 9. Heard both the parties, perused the records and considered the provision of law in the light of cases cited before the Bench by both the parties. 10. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led a Writ in Allahabad High Court (Writ No 18814 of 1988) and the Petition was dismissed by the High Court vide order dated 02.04.2003. 7. Thereafter for the execution of High Court order Suit was filed in the Court of Civil S.C.C.,Etah vide case No. S.C.C. Ex. 3/03 which remained pending for long, since we had no family member living in Etah and the Tenants were local and were getting the judgment onthe case postponed on one or the other pretext, we remained unsuccessful for a long time. 8. Due to long litigation over the property nobody had the courage to buy the property belonging to Dr. Ramesh Chand Kulshreshtha& Brothers HUF. 9. Under the aforementioned, very briefly stated circumstances it can be appreciated that virtually we had no option in hands to be able to command for the sale price of the said property and it was apparent that in the near future the property would slip out from our hands. Being unable to find anyone and in our pity circumstances we could find Mr. Avinash Sharma a local resident of Etah of equally matching character with the tenants in occupation of the property showed courage and stated his own rates for the property. However before being able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WILL. Case is still pending. In the meantime a local man approached us to buy the property under dispute and agreed to make registry after settlement of dispute by our Karta [Dr. R.C. Kulshrestha]. Unfortunately one Karta expired on 31/08/2012, In the meantime some of tenants tempered the records In municipal records at Etah. So due to the unavoidable conditions and in the meantime circle rates increased very high and the stamp duty had to be paid at the current circle rate prevailing although the price paid on distress sale was a very small. But keeping in view the above circumstances, we have sold our property hurriedly and received ₹ 36,00,000/- from sale of property, besides this amount we have not received any amount. So, it is therefore kindly requested to accept my above submission and the assessment be made on returned income." 13. The AO while framing the assessment,observed in the assessment order that no evidence was filed to show that property was illegally occupied by other persons; The AO rejected the claim of the assessee placing reliance to the decision of Bangalore Bench of the Hon'ble ITAT in the case of 'ShriGouliMahadevappaVs.ITO', in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t according to the assessee, the purchaser of the property Shri. Avinash Sharma has still been able to get physical possession of the property till today as the Karta of HUF was expired before the transfer of property. Since, it was under the aforementioned circumstances the Seller had virtually no option to be able to command for the sale price and had to satisfy himself with whatever was coming to hand. Thus, according to the submission of the assessee the property has no market price much less the price notified by the Government for payment of Stamp duty. Evidences in respect of the litigation mentioned above was also brought on records of the AO, which all were summarily ignored for no good reason assigned in the body of assessment order. Even the Ld. Sr. D.R before us has not disputed that such evidences despite being available on records of assessment were not at all addressed much less disputed by the Ld. AO. No reply was furnished as to what prevented the Ld. AO to refer the matter to the Valuation Cell for determination of fair market value on the face of specific request being made by the assessee at the stage of assessment before him. 16. Thus, the action of the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nden duty of the AO to have referredthe matter to the Valuation Officer which, for the reasons not borne out from the records, was not done. 19. Now, being aggrieved the revenue contends that, as the legislaturevide section 50C(2) has used the term 'may' and, therefore, the intent of legislature is that reference to valuation cell is dependent upon the sweet will of the AO and it is not necessary for the AO to refer to valuation cell in all cases. This stand of the revenue is in direct conflict with the view propounded by the Hon'ble Calcutta High Court in the case of 'Sunil Kumar Agarwal Vs CIT', (2015) 372 ITR 83 (Calcutta) wherein examining the similar issue the Hon'ble High Court observedthat: "forthe aforesaid reasons, the valuation by the departmental valuation officer contemplated under section 50C is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub-Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO intended to go ahead with the proposed action of substitutingthe value as provided under section 50C of the Act he was duty bound to have demonstrated with reasons,evidences and legal position as to how the facts as stated by the assessee are unbelievable or calls forrejection. In the matter of valuation, law is fairly well settled that value mentioned in the registered documentcan be substituted by following the process prescribed under the law. The assessment order is silent on thismaterial aspect. 9. Appellant has a statutory right and is fully entitled to know the reason for disagreement on the detailedsubmissions filed during the course of assessment proceedings before the AO. Judicial consideration of theissue by the AO in the light of the submission made by assessee is necessary. Passing of a reasoned order isall the more necessary where there is provision for contesting it in appeal. In a case like the one on handwhere the AO has virtually given no reasons, the right of appeal will be devoid of any substance. Needless toadd, it is neither possible nor appropriate for an appellate court to attempt to probe the probable mentalprocess by which the authority below had r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, recording of reasons ensures that the authority has applied its mind to the case and the reasons that compelledthe authority to take a decision in question are germane to the contents and scope of power vested in theauthority. Therefore, giving of reasons by an adjudicating authority goes to the very root of the process ofdecision-making or adjudication and, therefore, it is not just a formal requirement, but indicates that theadjudicating authority has applied its mind to the merits of the case and also to avoid any doubt as to anyperfunctory approach. The Assessing Officer being a quasi-judicial authority, the assessment order passed byhim must be a speaking order, giving full reasons for the conclusions arrived at. This requirement derives itsauthority from the maxim that justice should not only be done but also be seen to be done. Thus, theimpugned order passed by the AO does not meet the requirement of law and cannot be allowed to stand. Theaction of the AO making the addition thus cannot be appreciated and such an order is no order in the eyes oflaw. 12. Now, coming the merits of the addition been made taking aid of deeming provisions of section 50C of theAct, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary modifications, apply in relation to such reference as theyapply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16Aof that Act. Explanation 1.-For the purposes of this section, "Valuation Officer" shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.-For the purposes of this section, the expression "assessable" means the price which thestamp valuation authority would have, notwithstanding anything to the contrary contained in any otherlaw for the time being in force, adopted or assessed, if it were referred to such authority for the purposesof the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section(2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to insub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the fullvalue of the consideration received or accruing as a result of the transfer. 13. Thus, Sub-section (2) clearly mandates that where the assessee claims that the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or referring the case to valuation officer as required under s. 50C (2)(a) of the I. T. Act, 1961." 14.1 The ITAT, Delhi rejected all the grounds raised by the revenue and approved the order passed by the Ld.CIT (Appeals) holding as under: "On the very perusal of the provisions laid down under s. 50C of the Act reproduced herein above, wefully concur with the finding of the learned CIT(A) that when the assessee in the present case hadclaimed before AO that the value adopted or assessed by the stamp valuation authority under sub-s. (1)exceeds the fair market value of the property as on the date of transfer, the AO should have referred thevaluation of the capital asset to a Valuation Officer instead of adopting the value taken by the Stateauthority for the purpose of stamp duty. The very purpose of the legislature behind the provisions laiddown under sub-section (2) of section 50C of the Act is that a Valuation Officer is an expert of thesubject for such valuation and is certainly in a better position than the AO to determine the valuation.Thus, non-compliance of the provisions laid down under sub s.(2) by the AO cannot be held valid andjustified. The Hon'ble jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue the property in accordance with the circle rates fixed by theCollector. The object of the valuation by the Stamp Valuation Authority is to secure revenue on such sale andnot to determine the true, correct and fair market value on which it may be purchased by a willing purchasersubject to and taking into consideration its situation, condition and other attributes such as it occupation bytenant, any charge or legal encumbrances. 16. Hon'ble Jurisdictional High Court of Allahabad in the case of Dr. Shashi Kant Garg v. CIT [2006] 152Taxman 308/285 ITR 158 has also observed "that if under the provisions of the Act an authority is required toexercise power or do an act in a particular manner, then that power has to be exercised and the act has to beperformed in that manner alone and not in any other manner." 17. In the present case, as discussed above the AO not only passed a cryptic order without disputing any ofthe grounds of dispute raised by the assessee but also failed to follow the procedure prescribed in law i.e.making of a reference to the DVO as mandated by section 50C (2) of the Act. Therefore, the addition madeby the AO cannot be approved. 18. Now, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th law. TheBench, rejecting the assessee's request has held that the remand order should be made in very rare andexceptional case, for example, if at original stage, patently grave error was committed by the originalauthority or that the order was made in haste owning to the limitation or that the first appellate authorityhad violated the rules of natural justice. Nothing like this has happened on the present case. The Benchhas further observed that the Courts have also cautioned the Appellate Authorities by holding thatremand should be made only in those cases where the original authorities have not passed orders inaccordance with law but in no case, remand should be made only in those cases where the originalauthorities have not passed orders in accordance with law but in no case, remand should be made toenable an assessee to fill in the blanks or lacuna in the case which remains present. What applies to theassessee, would equally apply to the AO. Likewise, in the case of Smt. NeenaSyalv. Asstt. CIT (1999)70 ITD 62 (Chd.), the Chandigarh Bench of the Tribunal has observed that it is not the function of theTribunal to allow further opportunity to the AO to cover up legal lapse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quer and must necessarily result in loss of revenue. At the same time, we have tobear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that staleissues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (emphasissupplied) 24. Recently, this Bench in the case of Dr. Sanjay Chobey (HUF) v. ACIT [IT Appeal No. 140 (Agr.) of 2018,dated 2-7-2018], in the pariMateriaof facts allowed the assessee's appeal by observing, vide para 14, as under: "The lower authorities passed the order in summery manner without going into the merits of the case andanalyzing the legal issue involved, the applicability of Section 50C(2)(a) of the Act, in a particular. Wefurther find that the AO has not found any adverse material evidence to indicate that the assessee hasreceived any excess money over and above the sale consideration, in the return of income. In light of thepeculiar facts of this case and in the absence of the DVO report, we are of the considered opinion that theassessee cannot put to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 taxmann.com 158 (Calcutta). Thesaid case is distinguishable on facts for the very reason that in the case referred no such request was made by the assessee before the AO. Requirement of clauses (a) and (b) of sub-Section (2) of Section 50C are also not met by the assessee. In the case under consideration assessee vide Reply dated 05.02.2016 made a specific request before the AO to refer the matter to the DVO, which request was not acceded to. Assessee thus has complied with the condition laid down in clause (a) of sub-section (2) to Section 50C of the Act. Further, in the referred case the relief sought by the assessee was that the order under challenge should be set aside and the matter should be referred to the valuation officer. In the case on hand the challenge made by the assessee is that in the peculiar facts and circumstances of the case,no set-aside is called for to make the deficiency good. Thus, the case relied upon is distinguishable on facts. 25. The next case relied on by the revenue, is of 'CIT Vs Chandra NarainChaudhary', by the Hon'ble Allahabad High Court and on the strength on such reliance it is pleaded that the Hon'ble Allahabad High Court remanded the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount over the sale consideration mentioned in the deeds. In the light of these facts and particularly on the failure of the AO to follow the course as prescribed under section 50C(2) and respectfully following various decisions discussed above, we do not find any infirmity in the order of the CIT(A) in quashing the addition made by the AO. We are also of the considered opinion that the department cannot be allowed a second inning, by sending the matter back to AO, enabling it to fill in the lacunae and shortcomings of the assessment order, and putting the assessee virtually to face a re-trial for no fault of hisandto again put him to prove before the AO that the sale consideration was the "fair market value" of the property sold by him. This would amount to giving life to an order which on the basis of facts on records is unsustainable in law. 29. In view of above discussion and in view of our findings in the cases of 'Tarun Agarwal Vs ACIT', Agra (supra) and 'Dr. Sanjay Chaubey (HUF) Vs ACIT', Jhansi, and also placing reliance upon the decisions of co-ordinate Benches in the cases of 'ITO v. Aditya Narain Verma (HUF)',;'ACIT Vs Lalitha Karan', and 'ACIT Vs Anima Investment Ltd,', ..... X X X X Extracts X X X X X X X X Extracts X X X X
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