S. Muthuraja vs Commissioner of Income Tax

Chitra Venkataraman, J.—The following substantial questions of law are raised by the assessee in seeking admission of the Tax Case

Appeal No. 449 of 2013 relating to the assessment year 2009-10, preferred as against the orders of the Income Tax Appellate Tribunal, Chennai

''C'' Bench dated 31.01.2013 passed in I.T.A. No. 1587/Mds/2012.

Whether the Tribunal was right in law in confirming the order of the lower authorities in adopting the value as per Section 50C(1) without

making any reference to the DVO as provided u/s 50C(2), inspite of objection raised by the assessee for adoption of the guideline value by the

officer?

Whether the Tribunal was correct in law in adopting the value as per Section 50C(1), in spite of the jurisdictional High Court decision holding

that once objection is raised the matter shall be referred to the District Valuation Officer?

Whether the finding of the Tribunal is perverse as no finding was given in respect of the contentions raised by the assessee?

Whether the Tribunal is right in assessing the capital gains in the hands of assessee when the sale consideration was received by assessee and his

brother as co-owners of the property?

Whether on the facts and in the circumstances of the case, Section 50C itself can be applied in respect of the property under consideration as

part performance was made in 2000?

It is seen from the records filed before this Court that the assessee objected to the Assessing Officer adopting the guide-line value relating to the

property sold for the sale consideration of Rs. 25,60,000/- as against the guide-line value adopted by the Assessing Officer at Rs. 39,63,900/-. In

the objection letter filed by the assessee on 15.12.2011, the assessee specifically pointed out that the sale was more in the nature of distress sale

and requested to confirm the actual sale consideration for the purpose of working out capital gains. The Assessing Officer rejected 50C of the

Income Tax Act, 1961 (hereinafter called as the ""Act"") for the purpose of working out long term capital gains.

Aggrieved by the same, the assessee went before the Commissioner of Income Tax (Appeals) and thereafter, before the Income Tax Appellate

Tribunal.

A reading of the order of the Income Tax Appellate Tribunal shows that it rejected the assessee''s appeal holding that there is nothing on record

to show that the assessee had disputed the sale consideration of Rs. 39,63,900/- adopted for the purposes of stamp duty taken as basis under the

Income Tax Act, thus the Assessing Officer rightly invoked Section 50C of the Act. Thus, the assessee''s appeal was rejected by the Income Tax

Appellate Tribunal.

As rightly contended by the learned counsel for the assessee, when specific objection was made by the assessee as to the Assessing Officer

adopting the market value, u/s 50C(2) of the Act, the Assessing Officer ought to have referred the valuation of the capital asset to the Valuation

Officer, whereas, the authorities below referred to Section 50C(1) of the Act alone without adverting to Section 50C(2) of the Act.

A reading of the order of the Assessing Officer shows that having found such an objection, the Assessing Officer committed serious error in not

adverting to Section 50C(2) of the Act, the error proceeded throughout before every Appellate Forum, we do not find any justification in the order

of the Income Tax Appellate Tribunal taking the view that there is nothing on record to show that the assessee had disputed the sale consideration

of Rs. 39,63,900/- adopted for the purpose of stamp duty for the purposes of working out capital gains. In such view of the matter, the matter is

restored to the files of the Assessing Officer to work out capital gains by invoking Section 50C(2) of the Act.

In the result, Tax Case (Appeal) No. 449 of 2013 stands disposed of. No costs.

Tax Case (Appeal) No. 354 of 2013 is filed by the same assessee raising the following substantial questions of law in seeking admission relating

to the assessment year 2009-10 as against the orders of the Income Tax Appellate Tribunal, Chennai ''C'' Bench dated 20.05.2013 passed in

M.A. No. 22/Mds/2013 arising out of I.T.A. No. 1587/Mds/2012.

Whether the Tribunal was right in saying, though objection was raised in respect of the valuation of the property u/s 50C, the assessee had not

asked it to be referred to the DVO?

Whether the finding of the Tribunal is perverse as no finding was given in respect of the contentions raised by the assessee?

Whether the Tribunal is right in assessing the capital gains in the hands of assessee when the sale consideration was received by assessee and his

brother as co-owners of the property?

Whether the Tribunal was right in law in not considering the Board Circular No. 14 (XL035) dated 11th April 1955 saying that it is the duty of

the officer to appraise the assessee of his rights provided under the Act and not to take advantage of the ignorance of assessee?

In view of the order passed in Tax Case (Appeal) No. 449 of 2013 setting aside the order of the Income Tax Appellate Tribunal and restoring

the matter to the files of the Assessing Officer for working out the capital gains, nothing survives in the Tax Case (Appeal) No. 354 of 2013. In the

result, Tax Case (Appeal) No. 354 of 2013 is also disposed of on the above terms. No costs.