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Smt. Reshma R. Daryanani 209, Tulsiani Chambers 212, Nariman Point Mumbai 400021 Vs. Income Tax Officer, Ward 12(3) 1st Floor, Aayakar Bhavan M.K. Road, Mumbai 400020
September, 11th 2014
                          "SMC" Bench, Mumbai

                 Before Shri D. Manmohan, Vice President

                          ITA No. 4785/Mum/2014
                          (Assessment Year: 2006-07)

     Smt. Reshma R. Daryanani        Income Tax Officer, Ward 12(3)(3)
     209, Tulsiani Chambers          1st Floor, Aayakar Bhavan
     212, Nariman Point              M.K. Road, Mumbai 400020
     Mumbai 400021
                            PAN - ABAPD1067D
              Appellant                          Respondent

                    Appellant by:      Shri G.P. Mehta
                    Respondent by:     Shri Neil Philip

                    Date of Hearing:       10.09.2014
                    Date of Pronouncement: 10.09.2014


Per D. Manmohan, V.P.

      This appeal, by the assessee, is directed against the order passed by the
CIT(A)-23, Mumbai and it pertains to ay 2006-07.

2.     There is a delay of nine days in filing the appeal. Assessee filed an
explanation    seeking   condonation     of   delay.   Having   regard   to   the
circumstances of the case the delay in filing the appeal is condoned and the
appeal is taken for hearing on merits.

3.     Facts necessary for disposal of the appeal are stated in brief. During
the previous year relevant to the AY under consideration assessee sold a plot
at Palghar for a total consideration of `1,00,000/-. In the opinion of the AO
the consideration declared is low. He therefore adopted the value determined
by the Stamp Authorities in the place of the sale consideration declared by
the assessee and accordingly determined the long term capital gain of

4.     Aggrieved, assessee contended before the CIT(A) that though the
provisions of section 50C of the Act speaks of valuation determined by
                                     2                 ITA No. 4785/Mum/2014
                                                      Smt. Reshma R. Daryanani

Stamp Duty Authorities as market value, when the assessee objected to the
market value it is the duty of the AO to refer the matter to the Valuation
Officer whereas in the instant case the AO refused to refer to the Valuation
Officer and hence the value adopted by the AO is bad in law. The learned
CIT(A) rejected the contention of the assessee. However, the appellate
Tribunal, vide its order dated 07.10.2010 observed that when an assessee
objected to the value adopted by Stamp Duty Authorities as market value,
the AO has a discretion to refer the matter to the Valuation Officer for
valuation of the capital asset. In the instant case the AO did not apply his
mind on this aspect and hence the issue was set aside to the file of the AO
with a direction to pass a speaking order. It was also mentioned that the
assessee is free to produce any supporting material in respect of her claim
that the market value is much lower than the stamp duty value. It deserves
to be noticed that the Tribunal mentioned that the assessee is free to
produce supporting material which do not indicate that the assessee is
directed to produce supporting material; on the contrary it only shows that
the AO is duty bound to apply his mind in an objective manner and to
highlight that the value determined by the Stamp Duty Authorities is
applicable in the instant case. The AO, however, proceeded on the
assumption that the onus is upon the assessee to produce the material.

5.    In the instant case the assessee, in the set aside proceedings, placed
before the AO copy of the entire layout to show that the plot in question was
located in a very disadvantageous location and could not fetch more value
than what it was sold for. It was also contended that in the absence of any
positive evidence on record that the assessee in fact received sale
consideration more than what was recorded in the sale agreement, there is
no case for alteration of disclosed consideration/amount.

6.    Vide letter dated 27.02.2011 assessee submitted before the AO that
the piece of land bearing plot No. 109, Survey No. 826 at Mahim Village,
Taluka Palghar was purchased by the assessee on 13.01.1988 for a sum of
`21,500/- and the same was sold on 03.02.2006 for a consideration of
`1,00,000/-. It was also submitted that the plot in question forms part of a
                                       3                 ITA No. 4785/Mum/2014
                                                        Smt. Reshma R. Daryanani

large piece of land admeasuring 152145.56 metres from Survey No. 826 at
Village Mahim, Taluka Palghar. The entire property is a sanctioned layout
which has provisions of open space, school, dispensary, vegetable market
and internal roads. However, no such facilities existed at the material time,
i.e. at the time of sale of the property in question. It was also submitted that
this large piece of land is about 4 kms away from Palghar Railway Station.
The plot sold is about 1 km interior from the main Mahim road and at the
fag end of the layout. Services like water supply and sewage disposal are not
developed. Copy of the entire layout plan was also produced to show that
the plot in question was located in a very disadvantageous location and
could not fetch more value than what it was sold for.

7.    The AO, however, was of the opinion that in the absence of registered
government approved valuer's report the plea of the assessee cannot be
considered. He therefore proceeded to value the property as valued by the
Stamp Duty Authorities, and thus repeated the addition which was again
confirmed by the CIT(A) and thus the assessee is in appeal before the

8.    I have heard the learned counsel for the assessee as well as the
learned D.R. in this regard and carefully perused the record. The plea of the
assessee is that the expression `may' referred to in section 50C imposes an
obligation on the part of the AO to apply his mind objectively before applying
the value adopted by the Stamp Value Authorities. In the instant case the
assessee has given a detailed clarification as to why the land sold by the
assessee could not fetch higher value. The AO has not properly done his
homework in finding out as to what was the basis for the Stamp Duty
Authorities in adopting the value at `3,65,500/-. It is ordinarily based upon
sale of a particular plot at a particular location. It is the duty of the AO to
verify the proximity of that plot to the plot which was sold by the assessee so
as to objectively assess as to whether the assessee could have sold her plot
at a price which was stipulated by the Stamp Duty Authorities. No such
action was taken by the AO despite the specific direction by the Bench to
analyse the issue `objectively'. Under these circumstances I am of the firm
                                      4                 ITA No. 4785/Mum/2014
                                                       Smt. Reshma R. Daryanani

view that the action of the AO is not in accordance with law. The
Department, in such cases, should have been more benevolent rather than
being capricious in their approach particularly when there is specific
direction from the Bench to consider the issue objectively. With these
observations the addition made by the AO is deleted and the appeal filed by
the assessee is allowed.

Order pronounced in the open court on 10th September, 2014.

                                                   (D. Manmohan)
                                                    Vice President

Mumbai, Dated: 10th September, 2014

Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   CIT(A) ­ 23, Mumbai
   4.   The   CIT­ 12, Mumbai City
   5.   The   DR, "SMC" Bench, ITAT, Mumbai
                                                     By Order

//True Copy//
                                                  Assistant Registrar
                                          ITAT, Mumbai Benches, Mumbai
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