Kolkata ITAT Deletes Addition Made By AO Upon Capital Gains By Adopting Value Of Property As Per DVO's Report

The Bench of the ITAT comprising of Sanjay Garg (Judicial Member) and Girish Agrawal (Accountant Member) observed that, “The problems of the assessee continued over the years and the assessee during the period has made sincere efforts by approaching to the different authorities and requested them to stop the agitators from preventing the assessee from peaceful enjoyment of his property and running the cinema hall. After making entire efforts, when the administration failed to help the assessee, the assessee, under the circumstances, to get rid of the problem, sold the property at a lower rate.” (Para 3)

As per the brief facts of the case, the assessee had sold his property whose sell value and market value evaluated by the Departmental Valuation Officer at the time of sale, is different. On being asked to explain in this respect, the assessee had submitted that the property, in question, was a cinema hall and certain members of political party were preventing the assessee from peaceful use and enjoyment of the said property. The assessee, therefore, to get rid of the continuous harassment and day to day problems, had made distressed sale of the property at such cost. However, the said contention of the assessee did not find favour with the Income Tax authorities and even before this Tribunal.

The assessee thereafter filed an appeal before the High Court. The High Court remanded back the matter to the Tribunal with a direction that to examine this issue in the light of the evidences, if any, furnished by the assessee as to whether a prudent seller dealing at arms' length with a prudent buyer in ordinary market conditions, in relation to a property similarly situated in the same area, would have got the same cost only by its sale or a much higher price determined by the valuation officer. The High Court observed that in this respect more evidence was required to be furnished by the assessee for coming to the conclusion on this point and hence, set aside the matter back to this Tribunal to consider the valuation aspect in accordance with law by a reasoned order within one year from the date of communication of the order.

The Bench noted that the assessee has produced on record a paper-book containing several documents which show that the assessee was prevented from peaceful use and enjoyment of his property by certain persons/members of political party.

The Bench further noted that the assessee has placed many copies of complaints made to various authorities including Police Authorities and District Administration.

The Bench found that the assessee has placed on file the copies of the newspaper clippings, whereby, it is demonstrated that the assessee was prevented from peaceful use and enjoyment of his cinema hall. Even the employees of the cinema hall were in hand in glove with the agitators and the assessee faced several problems.

The Bench observed that the assessee as a prudent seller to get rid of the long time and continuous harassment due to interruption and obstacles of miscreants in peaceful use and enjoyment of the property, has made a distress sale of the property.

Therefore, on not finding justification on the part of the Income Tax Authorities, the ITAT allowed the assessee's appeal.

Counsel for Appellant/Taxpayer: Souvik Guha

Counsel for Respondent/Department: B. K. Singh

Case Title: Sri Arijit Chakraborty verses ITO

Case Number: I.T.A. No.287/Kol/2013

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