IN THE INCOME TAX APPELLATE TRIBUNAL

“A” BENCH : BANGALORE

BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND

SHRI JASON P BOAZ, ACCOUNTANT MEMBER

ITA No.1086/Bang/2019
Assessment years : 2014-15

Shri Somashekar Venkataswamappa, Vs. Assistant Commissioner of

Arehalli Village, Uttarahalli Post, Income Tax,

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Subramanyapura Post, Circle – 3(2)(1),
Bangalore-560 061. Bangalore.

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PAN : ACVPV 7051 K
APPELLANT .O RESPONDENT
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Assessee by : Shri Rajeev C. Nulvi, Advocate
Revenue by : Shri. Vikas Suryavamshi, Addl. CIT
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Date of hearing : 03.07.2019

Date of Pronouncement : 14.08.2019
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ORDER

Per Shri Jason P Boaz, A.M. :

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This appeal by the assessee is directed against the ex-parte order of

CIT(A)-3, Bangalore, dated 30.01.2019 for Assessment Year 2014-15.

Order on Petition for condonation of delay of 46 days in filing appeal before

ITAT

2.1 At the outset, the learned AR for the assessee submitted that there was a delay
of 46 days in filing the appeal before the ITAT. It is submitted that an Affidavit
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dated 16.05.2019 seeking condonation of delay was filed by the assessee along with
the appeal, praying that the delay be condoned. The reasons for delay in filing this
appeal have been explained in the Affidavit at paras 1 to 4 thereof, which are
extracted hereunder:-

1. In my case the ACIT circle 3(2)(1) passed the order u/s 143(3) on
27/12/2016 by determining the taxable income of Rs.81,29,280/-
and tax liability of Rs. 15,52,840/-.
2. Against the said order of the AO, I preferred an appeal before the
CIT (A)-3, Bangalore. The Hon'ble CIT(A) 3, Bangalore had
dismissed my appeal vide is order u/s 250 dated 30/01/2019, the

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said order of the CIT(A) received by me on 30/01/2019.

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3. The last date for preferring the appeal for against the order of the
CIT(A) expires on 01/04/2019, now I am preferring the appeal on
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17/05/2019. Hence, there was delay of 46days in filing the appeal.
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4. The delay was due to the reason that, there was no proper advice
by my tax consultant within the reasonable period of time to file
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the appeal. On repeated request made by me to my tax consultant

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to file the appeal, he finally referred to the Channappa R Nulvi,

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Chartered Accountants for filing an app. In the process of

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approaching to Channappa R Nulvi there was a delay of 46days

and on 15/05/2019, I approached him and he is preferring an
appeal filing on 17/05/2019, before the ITAT. The said delay was
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beyond my control and not intentional on my part.

2.2 Before us, it was prayed that the delay of 46 days in filing the appeal be
condoned in keeping with the principles laid down by the Hon’ble Apex Court in
MST Katiji and Others (1987) 167 ITR 471 (SC) and the decision of the Hon’ble
Karnataka High Court in the case of CIT Vs. ISRO Satellite Centre (2013) 263 ITR
549 (Kar).
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2.3 The learned DR for Revenue opposed the assessee’s plea for condonation of
delay.

2.4 We have heard and considered the rival contentions and the material on
record in respect of the matter of non-condonation of delay of 42 days in filing the
appeal before the Tribunal. The ultimate object of assessment proceedings is that
the true and correct income of the assessee be brought to tax. Taking into account
the principles laid down by the Hon’ble Apex Court in the case of MST Katiji and
Others (supra), wherein the Hon’ble Apex Court laid down the principles for dealing
with matters relating to condonation of delay; the decision of the Hon’ble Karnataka

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High Court in the case of ISRO Satellite Centre (supra) and the reasons the assessee

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has laid out in his Affidavit seeking condonation of delay (supra), we are of the view
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that the assessee was prevented by reasonable and sufficient cause from filing the
appeal for Assessment Year 2014-15 on time before the Tribunal. In this view of
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the matter and respectfully following the principles laid down by the Hon’ble Apex
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Court in the case of MST Katiji and Others (supra), we condone the delay of 46 days
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by the assessee in filing the appeal before the Tribunal and accordingly admit the
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assessee’s appeal for consideration and adjudication.

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ORDER
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3. Briefly stated, the facts of the case are as under:

3.1 The assessee, an individual in business as a contractor, filed his return for
Assessment Year 2014-15 on 31.03.2015 declaring total income of Rs.30,61,280/-.
The return was processed under section 143(1) of the Income Tax Act, 1961 (in
short ‘the Act’) and the case was subsequently taken up for scrutiny for this
Assessment Year. The assessment was concluded under section 143(3) of the Act
vide order dated 27.12.2016 wherein the assessee’s income was determined at
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Rs.81,29,280/-. This was in view of the Assessing Officer (AO) making an addition
of Rs.50,68,00/- on re-computation on long term capital gains (LTCG) on sale of
property by invoking of the provisions of section 50C of the Act and thereby raising
demand of Rs.15,52,840/-.

2.2 Aggrieved by the order of assessment dated 27.12.2016 for Assessment Year
2014-15, the assessee preferred an appeal before the CIT(A)-3, Bangalore, who
dismissed the assessee’s ex-parte; on the basis of material on record; without hearing
the assessee in the matter.

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3.1 The assessee, being aggrieved by the ex-parte order of the IT(A)-3,

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Bangalore, dated 30.01.2019 for Assessment Year 2014-15, has filed this appeal
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before the Tribunal wherein he has raised the following grounds:-
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1. The order of the Assessing Officer as well as the Commissioner of Income Tax
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(Appeals) is against the fact and circumstances of the case and against equity
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and justice.
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2. On the fact and circumstances of the case, the Assessing Officer erred in
passing the order u/s 143(3) of the Income Tax Act, 1961 hurriedly which is
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one month earlier to the last date of the passing the order without waiting
for the valuation report from the DVO and adopting the stamp duty valuation
as the sale consideration received by the Appellant on the sale of the
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property.

3. On the fact and circumstances of the case, the Commissioner of Income Tax
(Appeals) erred in dismissing the appeal on the ground that the valuation
of the property referred to the DVO by the Assessing Officer on his own
initiation and not at the request of the Appellant. Hence, the Assessing
Officer is right in passing the order without waiting for the DVO report.
Such action of the Commissioner of Income Tax (Appeals) is against the
principal of administration of law.

4. For these and other reasons which may be adduced at the time of the hearing,
the Appellant prays before this Honourable Bench to set aside the order of the
Assessing Officer for making fresh assessment after providing due opportunity
to the Appellant and also considering the valuation report of the DVO.
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5. The appellant craves leaves, to add, to alter, to amend and to delete any other
grounds at the time of hearing.

3.2 In support of these grounds (supra), the learned AR of the assessee contends
that all the facts relevant to the issues of LTCG on sale of property agitated both
before the CIT(A) and before us is evident from a perusal of the “statement of facts”
filed before the CIT(A), which he selectively and erroneously quoted while
dismissing the assessee’s appeal ex-parte. In sum and substance, it is contended by
the learned AR that since in view of the assessee’s oral objection to the adoption of
stamp duty valuation under section 50C of the Act for computation of LTCG on sale

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of property, the AO, after having made the reference to he Departmental Valuation

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Cell under section 50C(2) of the Act for valuation of the said property vide letter
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No.ACIT C03(2)(1)/16-17/105 dated 13.12.2016, ought to have waited for the
DVO’s Report; but did not do so. It is submitted that the AO proceeded to conclude
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the order of assessment hurriedly, two weeks later, on 27.12.2016; without waiting
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for the DVO’s report in the matter which is in violation of the provisions of section
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50C(2) of the Act. It is prayed that in these circumstances, as narrated above, the
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erroneous orders of the CIT(A) and AO which are unsustainable both on facts and
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in law be set aside and the matter be restored to the file of the AO for denovo
examination and computation of the LTCG in accordance with law after taking into
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account the DVO’s report in the matter. In support of assessee’s contentions,

reliance was placed on the decision of the Calcutta High Court in the case of Sunil
Kumar Agarwal Vs. CIT (2015) 372 ITR 83 (Cal).

3.3 Per contra, the learned DR for Revenue supported the orders of the
authorities below.

3.4.1 We have considered the rival submissions; perused the orders of the
authorities below and the material on record. From an appraisal of the records
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before us, it is seen that the assessee sold a property at Site No.11/15-490 vide Khata
No.504 situated at Jattipalya Village, Kengeri Hobli, Bangalore South Taluk vide
sale deed dated 26.06.2013 for sale consideration of Rs.80 lakhs and computed
LTCG thereon at Rs.2,94,164/-. In the course of assessment proceedings, the AO
noticed that stamp duty was paid by the purchaser as per stamp authorities’ valuation
of the property at Rs.1,30,68,000/-; while the assessee had only offered Rs.80 lakhs
as sale consideration in the sale agreement. The AO states that in view of the above,
the provisions of section 50C of the Act were invoked taking Rs.1,30,68,000/- as
the sale consideration and the LTCG was re-computed at Rs.50,68,000/-.

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3.4.2 In the ‘statement of facts’ filed by the assessee, in its appeal before

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the CIT(A) and which the CIT(A) purportedly utilized to dispose of the assessee’s
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appeal ex-parte for non-prosecution, the assessee has submitted as under:-
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“Since the market value mentioned in the sale deed was not the
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actual consideration, the appellant objected to the adoption of

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market value for capital gains purposes during the scrutiny

proceedings before the Assessing Officer, and insisted upon not
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taking the deemed sale consideration as per Section 50C.

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By virtue of the power vested in him under section . 1.42A of the

Income tax Act, the Assessing Officer referred the matter to the
Departmental Valuation Cell vide his letter • No. ACIT C-
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3(2)(1)/16-17/105 dated: 13.12.2016. Pursuant to such a

reference, the Valuation Officer vide his letter No. VO
(B)/CG/680/2016-17/346 dated: 16.12.2016 called for various
particulars for the purpose of making the valuation. He had
fixed the date as 2.1.2017 as the date for compliance. Numbers
of details were called for. The appellant was in the process of
gathering particulars for compliance. However, to his utter
shock and surprise, he received the order of assessment itself
dated: 27,12.2016, much before the date fixed by the Valuation
Officer.

The reason for completion of assessment in such haste is not

discernible from the assessment order. According to
Explanation 1 to Section 153, in computing the period of
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limitation, the period commencing from the date on which the

Assessing Officer makes a reference to the Valuation Officer
under sub-section (1) of section 142A and ending with the date
on which the report of the Valuation Officer is received by the
Assessing Officer shall be excluded.

According to sub-section (6) of section 142A, the Valuation

Officer shall send a copy of the report of the estimate made
under sub-section (4) or sub-section (5), as the case may be of
Section 142A, to the Assessing Officer and the assessee, within
a period of six months from the end of the month in Which a
reference is made under sub-section (1) of section 142A. The
Valuation Officer having got a letter 13.12.2016 from the
Assessing Officer had time up to 30.6.2017 to send the report.
The period of six months odd taken by the Valuation Officer

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could have been excluded for the purpose of completion of

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assessment. The Assessing Officer, on the contrary, rushed
through the assessment on 27.12.2016 without waiting for the
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valuation report itself. He has fixed the value of the property
at Rs. 1,30,68,000/- for the purpose of computation of capital
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gains. After deducting the cost of acquisition etc., he has
arrived at a difference of Rs. 50,68,000/-and added the same
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to the. income returned.

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The order of assessment is bad in law, in as much as, the

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Assessing Officer has not adopted the value as per Valuation

Officer, after having made a reference to him. The appellant
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did not have fair opportunity to furnish the particulars to the

Valuation Officer, study his proposal and obtain a final
Valuation Report. The order of the Assessing Officer is,
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therefore, opposed to principles of natural justice.

3.4.3 In the impugned order the CIT(A) has dismissed the assessee’s
appeal holding as under at para 4.7 of the impugned order:-

“4.7 The claim of the appellant during appellate proceedings (as in

the statement afflicts) that he had made a request to the AO to refer
the matter to Valuation Officer is without any basis as neither any such
documents have been produced by the appellant during appellate
proceedings nor there are any such documents on the assessment
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records which support the claim of the appellant. el The order sheet
notings available on the assessment records also do not show that any
such claim was ever made by the appellant before the AO. So the
contention of the appellant that the AO should have waited for the
valuation report is without any merit. In the case of Amhattur Clothing
Company Limited vs ACIT, 2010 326 IT1? 245 (Madras), the High
Court held that the AO is bound to follow the mandate of law and if the
assessee has not availed the opportunity as provided under Section
50C of the Act, there was no option available with the AO.
Considering above the grounds of appeal 5 to 7 of the appellant are
dismissed.”

3.4.4 We are inclined to accept that there appears to be merit in the

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averments of the learned AR that; it is because the assessee had orally objected to

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the AO’s proposal to invoke the provisions of section 50C of the Act; to substitute
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the sale consideration of Rs. 80 lakhs mentioned in the sale deed with the value as
per stamp valuation authorities of Rs.1,30,68,000/- for computing the LTCG on sale
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of the aforesaid property; that the AO referred the matter to the DVO for valuation
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of the property vide letter dated 13.02.2016. Nowhere in the relevant provisions of
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the Act has it been laid down that the assessee has to put forth a request in writing
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to the AO for making a reference to the DVO. In our view, the AO, after having
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made the reference to the DVO; ostensibly on the assessee’s objections to the AO’s
proposal invoking the provisions of section 50C of the Act; the AO ought to have
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completed the assessment in accordance with the valuation report rendered by the
DVO.

3.4.5 The CIT(A)’s view is that since the assessee did not make a written
request to the AO for reference for valuation of the said property and therefore has
not availed the opportunity under section 50C of the Act, the AO had no option but
to proceed to apply provision of section 50C of the Act and in this regard placed
reliance on the decision of the Hon’ble Madras High Court in the case of Ambattur
Clothing Co. Ltd., Vs. ACIT (2010) 326 ITR 245 (Madras). The CIT(A)’s attempt
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to buttress this claim was in his observation that the AO’s reference to the DVO was
made suo-moto and invalid as the AO exceeded his jurisdiction.

3.4.6 Per contra, the learned AR has placed reliance on the decision of the
Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT reported
in (2015) 372 ITR 83 (Cal). On a perusal thereof, we find that the Hon’ble Court;
after detailed consideration of the provisions of section 50C of the Act; has held that
the valuation by the DVO, contemplated under section 50C of the Act, is required
to give fair treatment to the tax-payer and avoid the miscarriage of justice as the
Legislature did not intend that the capital gains should be fixed merely on the basis

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of the valuation to be made by the District Sub-Registrar for the purpose of stamp

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duty. There is no reason why the machinery provided by Legislature should not be
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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,
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discharging a quasi-judicial function, has the bounden duty to act fairly; he should
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in all fairness make a reference to the DVO to have the valuation of the said property
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contemplated under section 50C of the Act. In this regard, the Hon’ble Calcutta
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High Court finally at paras 9 to 11 thereof has held as under:-

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………………….We are of the opinion that the valuation by the

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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 by the Legislature should not be used and the
benefit thereof should be refused. Even in a case where no such prayer is made by
the learned advocate representing the assessee, who may not have been properly
instructed in law, the Assessing Officer, discharging a quasi-judicial function, has
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the bounden duty to act fairly and to give a fair treatment by giving him an option
to follow the course provided by law.

10 For the aforesaid reasons, the order under challenge is set aside.

11. The impugned order including orders passed by the Commissioner of

Income-tax (Appeals) and the Assessing Officer are all set aside. The matter is
remanded to the Assessing Officer. He shall refer the matter to the Departmental
Valuation Officer in accordance with law. After such valuation is made, the
assessment shall be made de novo in accordance with law.”

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We must observe that in the case on hand, the circumstances are even more
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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
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DVO’s valuation report and hurriedly proceeded to pass the impugned order of
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assessment on 27.12.2016; just 14 days later; when the DVO had already initiated
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valuation proceedings by calling for details to be filed by the assessee on 02.01.2017

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and had time to submit his Valuation Report upto 30.06.2017.

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3.4.7 We now have slightly contrasting judicial pronouncements on the

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issue before us; wherein Revenue has relied on the Hon’ble Madras High Court in
the case of Ambattaur Clothing Co. Ltd., (2010) 326 ITR 235 (Mad) and the learned
AR of the assessee has placed reliance on the decision of the Hon’ble Calcutta High
Court in the case of Sunil Kumar Agarwal Vs. CIT (2015) 372 ITR 83 (Cal). In our
view, in the circumstances that prevail on the issue before us, the Hon’ble Apex
Court in the case of CIT Vs. Vegetable Products Ltd., 88 ITR 192 (SC) has laid
down the principle that the Rule of judicial precedence demands that if there are
judgments in favour of the assessee and against the assessee, then the view
favourable to the assessee should be adopted. Respectfully, following the ratio of
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the aforesaid decision of the Hon’ble Apex Court in Vegetable Products Ltd.,
(supra) and from we drew support, we hold that the decision of the Hon’ble Calcutta
High Court in the case of Sunil Kumar Agarwal Vs. CIT (2015) 372 ITR 83 (Cal)
is to be followed and applied and do so. In this view of the matter, 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. The 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

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by both the DVO for valuation proceedings and the AO and to file details required

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which shall be duly considered by the DVO / AO before deciding the issue. We
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hold and direct accordingly. Consequently, the grounds raised by the assessee are
allowed for statistical purposes.
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4. In the result, the assessee’s appeal for Assessment Year 2014-15 is allowed
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for statistical purposes.

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Order pronounced in the open court on this 14th day of August, 2019.
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Sd/-
Sd/- Sd/-
(N. V. VASUDEVAN) (JASON P BOAZ)
Vice President Accountant Member

Bangalore.
Dated: 14th August, 2019.
/NS/*
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Copy to:

1. Appellants 2. Respondent
3. CIT 4. CIT(A)
5. DR 6. Guard file

By order

Assistant Registrar,
ITAT, Bangalore.

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