Shri Kartikeya S.Shodhan,HUF, Ahmedabad V. The Income tax Officer,Ward-7(2), Ahmedabad

CO 28/AHD/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7273 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: ANIL R SHAH; S N SOPARKARSR
• Keywords: Unexplained investment; Capital asset converted into stock in trade; Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Assessment record; Reason to believe
• Section: 45(2); 50C; 69; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 51 TO 55/AHD/2010 ASSESSMENT YEAR :2006-07 ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD V/S . SHRI KARTIKEYA S. SHODHAN, HUF D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AADHS1047Q KARTIKEY S. SHODHAN, INDL. D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. ACTPS7671J GAURANGINIBEN S. SHODHAN, INDL., D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AFUPS6318E SHRI SANATKUMAR J. SODHAN INDL. D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. ADFPS0312R SHRI SANAT KUMAR J. SHODHAN HUF, D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AADHS5399P (APPELLANT) .. (RESPONDENT) ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 2 C.O. NOS. 28 TO 32/AHD/2010 ASSESSMENT YEAR :2006-07 (ARISING OUT OF ITA NO. 51 TO 55/AHD/2010) ASSESSMENT YEAR :2006-07 SHRI KARTIKEYA S. SHODHAN, HUF D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AADHS1047Q KARTIKEY S. SHODHAN, INDL. D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. ACTPS7671J GAURANGINIBEN S. SHODHAN, INDL., D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AFUPS6318E SHRI SANATKUMAR J. SODHAN INDL. D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. ADFPS0312R SHRI SANAT KUMAR J. SHODHAN HUF, D-34, TIRTHDAM APPTS., NR. SUREL APPTS., OPP. SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD. PAN NO. AADHS5399P V/S . ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD ITO, WD.-7(2), AHMEDABAD (APPELLANT) .. (RESPONDENT) ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 3 BY REVENUE SHRI S.K.GUPTA, SR.D.R. /BY ASSESSEE SHRI S.N.SOPARKAR (SR.A.R.) & SHRI ANIL R. SHAH, A.R. /DATE OF HEARING 05.06.2012 /DATE OF PRONOUNCEMENT 13.07.2012 O R D E R PER BENCH THESE FIVE APPEALS ARE FILED BY THE REVENUE IN ITA NOS.51 TO 55/AHD/2010, WHICH HAVE EMANATED FROM THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDABAD, DATED 09-11-2009 FOR A.Y. 2006-07 AND BY WAY OF THIS, THE ASSESSEE FILED FIVE CROSS OBJECTIONS IN C.O. NOS. 2 8 TO 32/AHD/2010. 2. THE MAIN GROUND OF THE REVENUE IS DELETING THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN BY THE CIT(A) ON THE BASIS O F DVO VALUATION REPORT AS ON 1.4.81 AND AS WELL AS ON DATE OF SALE I.E. 14.07 .2005. THE ASSESSEE ALSO FILED C.O. IN ALL THE CASES WHICH ARE ALSO SURROUND ING AT LONG TERM CAPITAL GAIN ASSESSED BY THE A.O. 3. THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEES WERE CO-OWNERS OF THE HOUSE PROPERTY SITUATED AT FINAL PLOT NO.515, TPS-3 /5, SHREE SADAN, OPPOSITE SANYAS ASHRAM, ASHRAM ROAD, ELLIS BRIDGE, AHMEDABAD WHICH HAD BEEN SOLD TO JAI SHRI SWAMINARAYAN COM. CO-OPERATIVE SOCIETY LTD. TWO SALES DEED WERE EXECUTED FOR RS.4,25,50,000/- EACH ON 14.07.20 05. LD. A.O. OBSERVED THAT IT WAS A HIGH CLASS SOCIETY IN ONE OF THE POSH AREA OF AHMEDABAD. DURING THE YEAR 05-06, THE PROPERTY RATE WAS BOOMIN G. LOOKING TO THE STATUS ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 4 OF THE PROPERTY, THERE WAS STRONG REASONS TO BELIEV E THAT THE ASSESSEE HAD UNDERESTIMATED VALUE OF THE SALE CONSIDERATION BY A DOPTING LOWER RATE. SIMILARLY, THE FAIR MARKET VALUE AS ON 1.4.81 WAS N OT CORRECTLY TAKEN. HENCE, THE CASE WAS REFERRED TO THE DISTRICT VALUATION OFF ICER, VALUATION CELL, INCOME TAX DEPARTMENT. AS PER THE VALUATION REPORT FURNIS HED BY THE DVO, THE SALE VALUE AS ON 14.07.2005 WAS DETERMINED AT RS.13,73,9 0,000/- AS AGAINST THE DECLARED SALE VALUE OF RS.8,51,00,000/- BY THE ASSE SSEE. SIMILARLY, THE VALUATION AS ON 1.4.81 WAS DETERMINED AT RS.94 LACS AS AGAINST THAT SHOWN BY THE ASSESSEE AT RS.1,03,00,000/-. 4. THE REFERENCE WAS MADE U/S 142A OF THE IT ACT IN PRESCRIBED PERFORMA U/S 55A OF THE IT ACT READ WITH SECTION 16A OF THE WEALTH TAX ACT TO THE DVO ON 05.11.2008. THERE WAS A DIFFERENCE BETWEEN SALE PRICE DISCLOSED BY THE ASSESSEE AND FAIR MARKET VALUE DETERMINED BY THE DI STRICT VALUATION OFFICER AS ON 14.07.2005 AS WELL AS 1.4.81. THE A.O. HAD GIVE N REASONABLE OPPORTUNITY OF BEING HEARD DURING COURSE OF ASSESSMENT PROCEEDI NG. THE ASSESSEE FILED REPLY BEFORE THE A.O., THE SAME WAS NOT CONVINCING TO THE A.O. THEREFORE, HE MADE ADDITION UNDER THE HEAD OF LONG TERM CAPITAL G AIN AS UNDER:- (I) SHRI SANATKUMAR J. SODHAN HUF RS.3,18,49,604/ - (II) SHRI SANAT KUMAR J. SHODHAN INDIVIDUAL RS. 7 6,88,676/- (III) GAURANGINI BEHAN S.SHODHAN RS.81,57,643/- (IV) KARTIKEY S. SOHAN RS. 33,52,282/- (V) KARTIKEY S. SHODHAN HUF RS.40,70,528/- ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 5 5. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEES FILED APPEAL BEFORE LD. CIT (A), WHO HAS DELETED THE ADDITION IN ALL THE CASES AFTER GIVING DETAILED FINDINGS IN HIS APPEAL ORDER. THE RELEVAN T FINDINGS IN PARAGRAPH NOS. 5, 5.1, 5.1.2, 5.1.3. 5.1.4, 5.1.5. & 5.1.6 ARE REP RODUCED AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E B Y THE A.R. OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE DECISI ONS, REFERRED TO ABOVE, WHICH ARE RELIED UPON BY THE A.R. OF THE APP ELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. 5.1. A REFERENCE TO THE DVO CAN BE MADE BY THE A.O. UNDER THE PROVISIONS OF SECTION 142A OR SECTION 55A OR SECTIO N 50C OF THE INCOME- TAX ACT. REFERENCE U/S. 142A IS FOR THE PURPOSES O F ESTIMATING THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECT ION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE RE FERRED TO IN SECTION 69A OR SECTION 69B. IN OTHER WORDS, A REFERENCE UNDER THIS SECTION IS NOT FOR THE PURPOSE OF COMPUTING CAPITAL GAINS AND ACCORDIN GLY HAS NO RELEVANCE TO THE ISSUE UNDER CONSIDERATION. 5.1.2 ON PERUSAL OF THE ASSESSMENT RECORDS, IT IS S EEN THAT THE REFERENCE DATED 5-11-2008 BY THE A.O. TO THE DVO WA S STATED TO BE U/S. 142A AND VALUATION WAS REQUESTED FOR A.Y. 2006-07. AS SEEN FROM THE A.OS REFERENCE, THE GROUND IN WHICH THE OPINION OF THE A.O. IS BASED IS STATED TO BE THE PROPERTY WAS SITUATED AT ASHRAM ROAD, ELLIS BRIDGE WHICH IS VERY POSH AREA, THE RTE ADOPTED BY THE ASS ESSEE SEEMS TO BE AT A LOWER RATE, IT IS PERTINENT TO MENTION HERE TH AT THE REALTY PRICE WAS BOOMING DURING THE PERIOD, HENCE, THE SAME IS REQUI RED TO BE VERIFIED BEFORE FINALIZING THE ASSESSMENT. THEREFORE, I HO LD THAT THE REFERENCE ITSELF IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT. 5.1.3. SECTION 55A EMPOWERS THE A.O. TO MAKE REFER ENCE TO THE DVO WITH A VIEW TO ASCERTAIN THE FAIR MARKET VALUE FOR THE PURPOSES OF CHAPTER IV. THUS A REFERENCE CAN BE MADE WITH A VI EW TO ASCERTAIN THE FAIR MARKET VALUE TO ARRIVE AT THE COST OF ACQUISIT ION U/S.55(2)(B). IN THE ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 6 INSTANCE CASE, THE APPELLANT OPTED FOR THE F.M.V. A S ON 1-4-81 TO BE THE COST OF ACQUISITION. THE VALUE ADOPTED OF RS. 1,03, 00,000/- IS SUPPORTED BY THE REPORT OF A REGISTERED VALUER. THEREFORE, TH E CASE FALLS UNDER SECTION 55A(A) (AND SECTION 55A(B) HAS NO APPLICABI LITY). IN SUCH A SITUATION, THE A. O. CAN MAKE A REFERENCE IF HE IS OF THE OPINION THAT THE VALUE CLAIMED BY THE APPELLANT IS LESS THAN THE F.M .V. IN SUCH AN EVENT THE AO'S OPINION WOULD TANTAMOUNT TO SAYING THAT TH E COST OF ACQUISITION ADOPTED IS TO BE INCREASED AND THE CAPITAL GAIN ADM ITTED SHALL BE REDUCED. THIS IS A CONTRADICTION IN TERMS. PERUSAL OF THE ASSESSMENT RECORDS DOES NOT SHOW THAT A.O. FORMED ANY SUCH OPI NION. ANYWAY A. O. DID NOT CALL FOR A REPORT ON THE VALUE AS ON 1-4 -81, THOUGH DVO FURNISHED THE SAME. IN CASE THE A. O. WAS RESORTING TO THE PROVISIONS OF SEC. 133(6), THE REPORT OF THE DVO WILL LOSE ITS BI NDING NATURE. IN SUCH AN EVENTUALITY , THE A. O. IS DUTY-BOUND TO GIVE TH E APPELLANT AN OPPORTUNITY OF CONTESTING THE DVO'S VALUATION, CONS IDER THE OBJECTIONS AND COME TO A FINDING AFTER APPLICATION OF MIND. NO SUCH EXERCISE WAS DONE IN THE INSTANT CASE. A.O. ADOPTED THE VALUE AR RIVED AT BY THE DVO, STATING IT TO BE BINDING. THEREFORE, THE ACTION OF A. O. IN ADOPTING DVO'S VALUE AS ON 01-04-1981 IS NOT IN ACCORDANCE WITH TH E PROVISIONS OF THE ACT. 5.1.4. SIMILARLY SECTION 55A EMPOWERS THE A. O.; TO MAKE A REFERENCE TO THE DVO WITH A VIEW TO ASCERTAIN THE FAIR MARKET VA LUE AND TAKE IT AS THE FULL VALUE OF THE CONSIDERATION RECEIVED FOR THE PU RPOSES OF SECTION 48. HOWEVER, THIS CAN BE RESORTED TO ONLY IN THE INSTAN CES ENUMERATED U/S. 45(IA), 45(2) AND 45(4). GOING BY THE FACTS OF THE CASE, THE INSTANT CASE IS NOT COVERED UNDER ANY OF THREE SUB-SECTIONS OF S ECTION 45 MENTIONED ABOVE. 5.1.5. SECTION 55A EMPOWERS THE A.O. TO MAKE A REF ERENCE TO THE DVO FOR THE PURPOSES OF SECTION 50C ALSO. A PLAIN R EADING OF SUB- ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 7 SECTION 50C MAKES IT CLEAR THAT MAKING SUCH A REFER ENCE IS POSSIBLE ONLY WHEN THE SALE CONSIDERATION ADMITTED BY AN ASS ESSEE IS LESS THAN THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY . IN THE INSTANT CASE, THE SALE CONSIDERATION ADMITTED BY THE APPELL ANT IS MUCH HIGHER THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY AND THEREFORE, PROVISIONS OF SECTION 50C HAVE NO APPLICABILITY TO THE FACTS OF THE CASE. RELIANCE IS PLACED ON THE DECISIONS OF (I) JITENDRA MOHAN SAXENA V/S. ITO 305 ITR 62(AT) LUKNOW AND (II) PUNJAB POLY JUTE CORPORATION V/S. ACIT 313 ITR 178 (AT) AMRITSAR. WHEREIN IT WAS HELD AS UNDER:- (A) JITENDRA MOHAN SAXENA V/S ITO 305ITR 62(AT) LUC KNOW. EVEN IF THE DVO HAS VALUED AT A HIGHER RATE THEN AD OPTED BY THE STAMP VALUATION AUTHORITY THEN THE CONSIDERATION TO BE AD OPTED IS BY STAMP VALUATION AUTHORITY AND NOT BY DVO. (B) PUNJAB POLY JUTE CORPORATION VS. ACIT 313 ITR 1 78 (AT) AMRITSAR. CAPITAL GAINS - FULL VALUE OF CONSIDERATION - CONSI DERATION DECLARED BY ASSESSEE IN SALE DEED ACCEPTED BY STAMP VALUATION A UTHORITY - VALUE ADOPTED BY STAMP VALUATION AUTHORITY NEED NOT BE SU BSTITUTED WITH THE DETERMINED BY DEPARTMENTAL VALUATION OFFICER FOR CO MPUTATION OF CAPITAL GAIN- SEC. 5QC NOT ATTRACTED. ' 5.1.6. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THA T BOTH THE ACTIONS OF THE A. O. - (I) SUBSTITUTING THE ADMITTED SALE C ONSIDERATION BY THE FMV ARRIVED AT BY THE DVO AND (II) SUBSTITUTING THE ADM ITTED FMV AS ON 01- 04-1981 BY THE FMV ARRIVED AT BY THE DVO ARE NOT CO NFIRMITY WITH THE PROVISIONS OF THE ACT. THE CASE LAWS RELIED UPON BY THE APPELLANT CITED AT 310 ITR 31 (GUJ) AND 209 ITR 568 (GUJ) ARE SQUAR ELY APPLICABLE TO THE FACTS OF THE CASE. SINCE THE A O'S ACTION IS NO T UPHELD LEGALLY, I DO NOT CONSIDER IS NECESSARY TO GO INTO THE APPELLANT' S GRIEVANCES ON THE MERITS OF VALUATION ON BOTH THE ABOVE MENTIONED COU NTS. A. O. IS ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 8 DIRECTED TO DELETE THE ADDITION MADE TO THE CAPITAL GAIN RETURNED BY THE APPELLANT. 6. NOW, THE REVENUE IS BEFORE US AGAINST THE ORDER OF THE CIT(A). THE LD. CIT D.R. SHRI S.K. GUPTA VEHEMENTLY ARGUED THAT THE A.O. WAS JUSTIFYING IN REFERRING THE PROPERTY UNDER CONSIDERATION FOR FAIR MARKET VALUE TO THE DVO ON THE DATE OF SALE AS WELL AS ON 1.4.81. FROM THE SI DE OF THE ASSESSEE, LD. SR. COUNSEL SHRI S.N.SOPARKAR HAS ARGUED THAT THE ASSES SEE HAD SHOWN THE SALE PRICE IN THE SALE DEED @ RS.18,687 PER SQ. MTR. WHE REAS STAMP VALUATION AUTHORITY HAS CALCULATED THE STAMP VALUE @ 14,500 PER SQ. MTR. SALE PRICE IS MUCH MORE THAN VALUATION MADE BY THE STAMP AUTHORIT Y FORE STAMP DUTY. THEREFORE, SECTION 50C OF THE IT IS NOT APPLICABLE. SECTION 48 DOES NOT TALK ABOUT FAIR MARKET VALUE IN WHICH FULL VALUE CONSIDE RATION HAS TO BE PROVIDEDED FOR COMPUTING INCOME UNDER CHAPTER (VI) COMPUTATI ON OF INCOME FROM CAPITAL GAIN. THE A.O. REFERRED THESE CASES U/S 142A, PRES CRIBED PERFORMA IN 55A READ WITH U/S 16A OF THE WEALTH TAX ACT. UNDER S ECTION 142A, ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE A RTICLES REFERRED TO IN SECTION 69A OR SECTION 69B CAN BE MADE REFERENCE TO DVO. S ECTION 55A IS ALSO REPRODUCED AS UNDER:- 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE O F A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE [ASSESSING] O FFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 9 REGISTERED VALUER, IF THE [ASSESSING] OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET V ALUE; (B) IN ANY OTHER CASE, IF THE [ASSESSING] OFFICER I S OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEE DS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THA N SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSE T AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, 7. LD. COUNSEL SUBMITTED THE WRITTEN REPLY VIDE HIS LETTER DATED 19.06.2012, THE RELEVANT PORTIONS ARE REPRODUCED AS UNDER:- GROUND NO.2. 1. THE SECOND GROUND IS WITHOUT PREJUDICE TO GROUND NO.1 AND THE SAME IS AGAINST THE AO ESTIMATING FULL VALUE OF CON SIDERATION OF THE PROPERTY AT RS.13,73,90,000/- AS AGAINST THE AC TUAL AMOUNT RECEIVED RS. 8,51,00,000/- AS PER THE DULY STAMPED AND REGISTERED SALE DEED. 2. I MAY MENTION THAT THE VALUES STATED ABOVE ARE F OR THE WHOLE PROPERTY BEING RESIDENTIAL HOUSE AT SHRI SADAN, N EAR M.J. LIBRARY, ELLISBRIDGE, ABAD. MY SHARE IN THE PROPE RTY/SALE CONSIDERATION IS RS.60,42,569/- BEING THE FULL VALU E OF CONSIDERATION ACTUALLY RECEIVED AS PER THE REGISTER ED SALE DEED AS AGAINST THE SAME ESTIMATED BY THE DVO/AO AT RS.9 7,55,447/- IN MY CASE. ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 10 3. FOR THE SAKE OF CONVENIENCE AND SINCE ISSUES ARE IDENTICAL IN THE GROUP CASE OF MY FAMILY, I MAY KINDLY BE ALLOWED TO PROCEED WITH THE FIGURES OF THE PROPERTY AS A WHOLE SINCE THE RE FERENCE TO THE DVO AS WELL AS THE REPORT OF THE DVO IS MADE FOR TH E PROPERTY AS A WHOLE. BREAK UP OF THE AMOUNTS WITHIN MY FAMILY MEMBERS CAN BE ASCERTAINED FROM THE CHART ENCLOSED (PAGE-1). 4. WHILE PASSING ASSESSMENT ORDER, THE AO IN PARA-3 .1 HAS OBSERVED THAT DURING THE YEAR 2005-06, THE PROPERTY RATE WAS BOO MING. LOOKING TO THE STATUS OF THE PROPERTY, THERE WAS A STRONG REASON TO BELIEVE THAT THE ASSESSEE HAD UNDER ESTIM ATED THE VALUE OF SALE CONSIDERATION BY ADOPTING LOWER R ATE. SIMULTANEOUSLY, THE FAIR MARKET VALUE AS ON 1.4.81 WAS NOT CORRECTLY TAKEN. HENCE, THE WAS REFERRED TO THE DV O. 5. THE AO FURTHER STATES THAT AS PER THE VALUATION REPORT FURNISHED BY THE DVO, THE SALE VALUE AS ON 14.11.05 WAS DETERMINED AT RS.13,73,90, 000/- AS AGAINST THE DECLARED VALUE AT RS.8,51,00,000/- B Y THE ASSESSEE. 6. AS FAR AS THE QUESTION OF FULL VALUE OF CONSIDER ATION IS CONCERNED, THE PROVISIONS OF SECTION 48 ARE VERY CLEAR. AS PE R THE PROVISIONS OF SECTION 48, CAPITAL GAINS SHALL BE COMPUTED BY D EDUCTING FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 11 TRANSFER OF A CAPITAL ASSET THE FOLLOWING AMOUNT NA MELY EXPENDITURE INCURRED ON TRANSFER AND COST OF ACQUIS ITION OF THE PROPERTY. 7. THE EXPRESSION FULL VALUE OF CONSIDERATION CANNO T BE CONSTRUED AT THE MARKET VALUE. THE INTERPRETATION OF FULL VALU E OF CONSIDERATION IS VERY CLEARLY MADE BY HON. COURTS AND I RELY UPON THE FOLLOWING DECISIONS ON THIS ISSUE :- (A) IN THE CASE OF CIT VS. GEORGE HENDERSON & CO. L TD., 66 ITR PG.622, HON S.C. HAVE HELD THAT THE EXPRESSION FULL CONSIDERATION IN THE MAIN P ART OF SECTION 12B(2) CANNOT BE CONSTRUED AS HAVING A REFE RENCE TO THE MARKET VALUE OF THE ASSET TRANSFERRED BUT TH E EXPRESSION ONLY MENAS THE FULL VALUE OF THE THING R ECEIVED BY THE TRANSFEROR IN EXCHANGE FOR THE CAPITAL ASSET TRANSFERRED BY HIM. (B) THIS VIEW IS ENDORSED ONCE AGAIN BY HON. S.C. IN THE CASE OF CIT VS. GILLANDERS ARBUTHNOT & CO., 87ITR PAGE-407 IT IS HELD THAT - 'WHAT EXACTLY IS THE MEANING OF THE EXPRESSION 'FUL L VALUE OF THE CONSIDERATION FOR WHICH SALE IS MADE? IS IT THE CO NSIDERATION AGREED TO BE PAID OR IS IT THE MARKET VALUE OF THE CONSIDERATION? IN THE CASE OF SALE FOR A PRICE, THERE IS NO QUESTI ON OF ANY MARKET VALUE UNLIKE IN THE CASE OF AN EXCHANGE. THEREFORE, IN CASES OF SALES TO WHICH THE FIRST PROVISO TO SUBSECTION (2) OF SECTION 12B IS NOT ATTRACTED, ALL THAT WE HAVE TO SEE IS WHAT IS T HE CONSIDERATION BARGAINED FOR.' ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 12 (C) IN THE CASE OF CIT VS. NILOFER I SINGH 221 CTR PAGE 221 CTR PAGE- 277 -HON. DELHI HIGH COURT HAS HELD THAT - 'EXPRESSION FULL VALUE OF CONSIDERATION' USED IN SE C.48 DOES NOT HAVE ANY REFERENCE TO THE MARKET VALUE BUT ONLY TO THE CONSIDERATION REFERRED TO IN THE SALE DEEDS AS THE SALE PRICE OF THE ASSETS WHICH HAVE BEEN TRANSFERRED.' (D) IN THE CASE OF DEV KUMAR JAIN VS. ITO 309 ITR PGE-240 -DELHI HIGH COURT HAS HELD THAT - 'HELD, ALLOWING THE APPEAL, THAT THERE WAS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE RECEIVED CONSIDERATION FOR T HE SALE OF THE PROPERTY IN EXCESS OF THAT WHICH WAS SHOWN IN THE A GREEMENT TO SELL. THUS, THE ACTUAL SALE CONSIDERATION RECORDED IN THE AGREEMENT TO SELL AND RECEIVED BY THE ASSESSEE COUL D NOT BE SUBSTITUTED BY THE VALUE AS ADOPTED BY THE DISTRICT VALUATION OFFICER UNDER SECTION 55A FOR THE PURPOSE OF COM PU TTING THE CAPITAL GAINS CHARGEABLE TO TAX.' (E) HON. ITAT B-BENCH DELHI IN THE CASE OF TEJ PRATAP SINGH VS. ACIT - 116 ITD PAGE 388 HAVE HELD THAT - 'WHETHER CAPITAL GAIN IN RESPECT OF AN ASSET IS TO BE COMPUTED AND TAXED ON BASIS OF PROVISIONS CONTAINED UNDER SE CTION 48 AND IT CANNOT BE COMPUTED ON BASIS OF FAIR MARKET VALUE OF ASSET AS DETERMINED BY VALUATION OFFICER - HELD, YES' (F) THE JURISDICTIONAL HON. ITAT A- BENCH, AH MEDABAD IN THE CASE OF HARSHVADAN MANGALDAS (HUF) VS. ITO - IN ITA NO.3 757/AHD/2002 HAVE HELD THAT - 'WE SEE MERIT IN THE CONTENTION. THE COMPUTATION OF CAPITAL GAINS CAN BE MADE ONLY ON THE BASIS OF WHAT THE ASSESSEE RECEIVES AS CONSIDERATION FOR THE TRANSFER. THIS IS ONLY RS.3,9 2,156/-. SECTION45(3) INSERTED SUBSEQUENTLY ALSO SAYS SO, SU PPORTING THE ASSESSEE'S CONTENTION. WE ACCORDINGLY DIRECT THE AO TO COMPUTE THE CAPITAL GAINS TAKING THE SALE CONSIDERATION AT RS.3,92,156/-.' ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 13 SINCE THIS IS AN UNREPORTED DECISION, THE TEXT OF T HE WHOLE JUDGEMENT IS ENCLOSED. (PAGES 62 TO 64). 8. ON THE OTHER HAND, THE AO HAS NOT MADE A REFEREN CE TO THE DVO U/S. 55A (A)/(B) FOR ESTIMATION OF MARKET VALUE PRE VAILING ON THE DATE OF SALE OF THE PROPERTY I.E. THE FULL VALUE OF CONSIDE RATION. AS MAY BE OBSERVED FROM THE NOTICE U/S. 16A(4) (PAGES 41 AND 42) THE REFERENCE IS ONLY MADE FOR DETERMINING OF FMV AS ON 1.4.1981 AND NOT FOR DETERMINING FULL VALUE OF CONSIDERATION. EVEN IN TH E FINAL REPORT U/S. 16A(5),THE ESTIMATION IS FOR FMV AS ON 1.4.1981 AND NOT FOR VALUATION OF FULL VALUE OF CONSIDERATION. 9. THE REPORT OF THE DVO DETERMINING FMV OF THE PRO PERTY AS ON DATE OF SALE IS NEITHER A REPORT U/S. 16 A(5) NOR A N ORDER RECEIVED ON REFERENCE VALIDLY MADE BY THE AO. THE REPORT OF THE DVO DT.29.12.2008 (PAGES 54 TO57) IS BY WAY OF A LETTER ADDRESSED TO THE AO. THE LETTER IS IN THE FORMATE OF VALUATION/ESTIMATION OF COST OF I NVESTMENT DISCLOSED AT THE TIME OF SEARCH AND SURVEY WHERE ASSESSEE MAY HA VE MADE UNEXPLAINED INVESTMENTS. THIS HAS NO RELEVANCE TO T HE FACTS OF MY CASE. IN THE LETTER, IT IS FURTHER STATED THAT 'IF REVENUE INVESTIGATION OF PURCHASER AND SELLER S HOWS MORE MARKET RATE THEN SAME BE CONSIDERED AS HARD EVIDENC E AND UTILIZE THE SAME IN ASSESSMENT.' THIS IS MENTIONED IN BOLD FONTS. THE LETTER FURTHER STATES THAT - 'FMV OF THE PROPERTY IS WORKED OUT IN ADVISORY CAPA CITY AND ACTUAL ADDITION BE MADE AS PER EVIDENCES ALREADY GA THERED DURING SEARCH/SURVEY OR ARE GATHERED DURING REVENUE INVESTIGATION AS DEEMED NECESSARY.' THESE ASPECTS ARE NOT RELEVANT/APPLICABLE ON THE FA CTS OF MY CASE. 10. ON VALIDITY OF THIS LETTER OF THE DVO, 1 INVITE YOUR KIND ATTENTION TO MY LETTER DT.31.12.08 ADDRESSED TO THE AO IN THE CO URSE OF ASSESSMENT PROCEEDINGS (PAGES 58 AND 59 ) ON THE ISSUE OF ESTI MATION OF FULL VALUE ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 14 OF CONSIDERATION. THE CONTENTIONS RAISED ARE REPROD UCED FOR YOUR READY REFERENCE AS FOLLOWS:- RELEVANT EXTRACT OF LETTER DT.31.12.2008:- 1. AS PER LETTER DATED 29-12-08 AND VALUATION REPO RT ENCLOSED THEREWITH, FULL VALUE OF CONSIDERATION IS ESTIMATED AT RS. 13,73,90,000/- AS AGAINST THE SAME MENTIONED IN THE REGISTERED SALE DEED AND AS ACTUALLY RECEIVED AT RS . 8,51,00,000/-. 2. I HAVE RECEIVED THIS LETTER WITH VALUATION REPOR T NOT ONLY AS A SURPRISE BUT AS A SHOCK. THE LETTER OF THE DVO IS D ATED 29.12.2008. ORIGINAL LETTER WITH REPORT IS NOT SENT TO ME/SERVED UPON ME. IT IS ONLY A PHOTO COPY WHICH IS HANDED OVER TO ME BY YOUR GOODSELF AT THE TIME OF H EARING WHICH TOOK PLACE I.E. ON 31.12.08. EVEN THOUGH THE LETTER AND THE REPORT IS DATED 29.12.08, THERE WAS NO MENT ION ABOUT IT AT THE TIME OF HEARING WHICH TOOK PLACE BE FORE THE DVO ON 30.12.08 AND 31.12.08 IN THE COURSE OF ESTIM ATION OF FAIR MARKET VALUE AS ON 1.4.81. 3. I FURTHER STATE THAT THE LETTER AND THE REPOR T DT.29.12.08 IS NEITHER A PROPOSAL UNDER SECTION 16A(4) NOR IS IT A N ORDER U/S.16A(5). THE LETTER AND THE REPORT THEREFORE DO NOT HAVE ANY LEGAL EXISTENCE AND/OR ANY EVIDENCIARY VALUE. 4. I FURTHER STATE THAT THE SUBJECT OF THE LETTE R STATES THAT IT IS THE CASE FOR DETERMINING FAIR VALUE OF THE PROPERTY . HOWEVER, IT HAS TURNED OUT TO BE AN ESTIMATION OF F ULL VALUE OF CONSIDERATION. 5. THE LETTER DT.29.12.08 REFERS TO YOUR LETTER D T.5.11.08 BEING A REFERENCE MADE TO THE DVO. IT IS NOT ESTABLISHED AS TO WHETHER THE REFERENCE MADE IS FOR ESTIMATION OF FAI R MARKET VALUE AS ON 1.4.81 OR FOR ESTIMATION OF FULL VALUE OF CONSIDERATION OR BOTH AND WHETHER THE REFERENCE IS MADE ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 15 U/S.55A(A) OR U/S.55A(B). WHATEVER IT MAY BE, I STR ONGLY STATE THAT IN THE FIRST PLACE, THERE IS NO SECTION UNDER THE LAW WHICH ENABLES THE A.O. TO MAKE A REFERENCE FOR ESTIMATION OF FULL VALUE OF CONSIDERATION. SECONDLY , IF AT ALL A REFERENCE CAN BE MADE, IT HAS TO BE A VALID REFEREN CE FOR ESTIMATION OF FAIR MARKET VALUE EITHER U/S.55A(A) O R U/S.55A(B) AS MAY BE APPLICABLE. 6. EVEN OTHERWISE, FOR THE A.O. TO MAKE ADJUSTMENT IN THE FULL VALUE OF CONSIDERATION THERE EXISTED A PROVISION U/ S.52(2) AS PER WHICH THE A.O., SUBJECT TO THE CONDITIONS LAID DOWN THEREIN, HAD A DISCRETION TO ESTIMATE FULL VALUE OF CONSIDERATION. HOWEVER, SINCE SECTION 52(2) BEING D ELETED FROM THE STATUTE BOOK AND SINCE THE A.O. HAS NOT ESTABLISHED WITH EVIDENCE, ANY CONSIDERATION WHICH IS NOT REFLECTED IN THE FULL VALUE OF CONSIDERATION AS PER THE REGISTERED SALE DEED, THE SAME CAN NOT BE ESTIMATED BY THE DVO AND AS PROPOSED TO BE TAKEN BY YOUR GOODSEL F. THE AO HAS NOT TAKEN INTO CONSIDERATION ANY OF THE ABOVE SUBMISSIONS NOR HAS HE REBUTTED ANY OF THE SAME. 11. I MAY MENTION IN PASSING THAT THERE IS NO OTHER SECTION UNDER WHICH THE FULL VALUE OF CONSIDERATION CAN BE ADJUST ED/ESTIMATED. THE ONLY SECTION UNDER WHICH FULL VALUE OF CONSIDERATIO N CAB BE DEEMED TO BE AT A HIGHER FIGURE THAN THE FULL OF CONSIDERATIO N IS SECTION 50C. SECTION 50C APPLIES ONLY IN THE CASES WHERE THE VAL UE AS PER THE JANTRI IS MORE THAN THE FULL VALUE OF CONSIDERATION. AS A MATTER OF FACT, THE SALE CONSIDERATION PER SQ.MT. IS AT THE RATE WHICH IS MU CH HIGHER THAN THE RATE PREVAILING IN THE JANTRI. AS PER COPY OF JANTR I ENCLOSED. (PAGE 33) THE RATE PER SQ. MT. IS RS. 14,500 AS AGAINST WHICH , THE FULL VALUE OF CONSIDERATION RECEIVED BY ME PER SQ. MT. IS RS.18,6 86.86 AS PER THE REGISTERED SALE DEED (PAGES 6 TO 32). UNDER THE CIR CUMSTANCES, PROVISIONS OF SEC. 50C ARE ALSO, NOT APPLICABLE IN MY CASE. ON THIS ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 16 ISSUE, I RELY UPON THE DECISION OF HON. ITAT, AMRUT SAR BENCH IN THE CASE OF PUNJAB POLY JUTE CPORPORATION V/S CIT, 120 TTJ, PAGE 1113. IT IS HELD THAT- HELD, ALLOWING THE APPEAL, THAT THE PROPERTY WAS R EGISTERED AT A PARTICULAR RATE, WHICH WAS ADOPTED FOR REGISTRATION PURPOSE AND THERE WAS NO QUESTION OF REPLACING THE VALUATION AD OPTED BY THE STAMP VALUATION AUTHORITY WITH THE VALUE DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER FOR THE PURPOSE OF C OMPUTING THE CAPITAL GAIN. SINCE THE STAMP VALUATION AUTHORITY HAD ACCEPTED THE CONSIDERATION DECLARED BY THE ASSESSEE IN THE S ALE DEED, THERE WAS NO QUESTION OF ONCE AGAIN REFERRING THE M ATTER TO THE DEPARTMENTAL VALUATION OFFICER. 12. IN THE LIGHT OF ABOVE CIRCUMSTANCES, I RESPECTF ULLY BUT STRONGLY SUBMIT THAT THE LETTER OF THE DVO ON THE ISSUE OF M ARKET VALUE OF FULL VALUE OF CONSIDERATION HAS NO EVIDENTIARY VALUE AND THE SAME BE IGNORED AND THE ACTUAL AMOUNT RECEIVED BY WAY OF RE GISTERED SALE DEED AT RS.8,51,00,000/- WHICH IS MUCH MORE THAN TH E JANTRI PREVAILING ON THAT DATE FOR THE PURPOSE OF IMPOSING STAMP DUTY BE ACCEPTED AS THE CORRECT AMOUNT FOR WORKING OUT TAXABLE CAPITAL GAIN S AS ENVISAGED U/S.48. III. GROUND NO.3. 1. THE THIRD GROUND BEFORE YOUR HONOUR IS AGAINST T HE AO ESTIMATING FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.94,00,000/- AS AGAINST THE SAME ESTIMATED AS PER THE REPORT OF THE REGISTERED VALUER AT RS.1,03,00,000/-. 2. I MAY MENTION THAT THE VALUES STATED ABOVE ARE F OR THE WHOLE PROPERTY BEING RESIDENTIAL HOUSE AT SHRI SADAN, NEA R M.J. LIBRARY, ELLISBRIDGE, AHMEDABAD. MY SHARE IN THE MARKET VAL UE AS ON 1.4.81 IS RS.9,86,977/- AS AGAINST THE SAME ESTIMATED BY THE AO AT RS.9,00,736/-. ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 17 3. FOR THE SAKE OF CONVENIENCE AND SINCE ISSUES ARE IDENTICAL IN THE GROUP CASE OF MY FAMILY, I MAY KINDLY BE ALLOWED TO PROCEED WITH THE FIGURES OF THE PROPERTY AS A WHOLE SINCE REPORT OF THE REGISTERED VALUER, THE REFERENCE TO THE DVO AS WELL AS THE REPORT OF T HE DVO IS MADE FOR THE PROPERTY AS A WHOLE. 4. THE MARKET VALUE AS ON 1.4.81 AT RS.1,03,00,000/ - IS TAKEN ON THE BASIS OF REPORT OF APPROVED AND REGISTERED VALUER ( PAGES 34 TO 40). IN PARAGRAPH 3.1 PAGE-2 OF THE ASSESSMENT ORDER, THE AO HAS HELD THAT SIMULTANEOUSLY, THE FAIR MARKET VALUE AS ON 1.4.8 1 WAS NOT CORRECTLY TAKEN. HENCE THE CASE WAS REFERRED TO TH E DVO. AS PER THE VALUATION REPORT FURNISHED BY THE DVO, THE PURCHASE VALUE AS ON 1.4.81 WAS DETERMINED AT RS.94,00,000/- AS AGAINST THAT SHOWN BY THE ASSESSEE AT RS.1,03,00,000/-. 5. AT THE OUTSET, I STATE THAT PROVISIONS OF SECTI ON 55A(A)/(B) - AS THE CASE MAY BE, ARE WRONGLY RESORTED TO BY THE AO WHIL E MAKING REFERENCE TO THE DVO. PROVISIONS OF SECTION 55A(A) CAN BE RES ORTED TO ONLY WHERE THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER IS, IN THE OPI NION OF THE AO, LESS THAN THE FAIR MARKET VALUE. PUTTING IT DIFFERENTLY, THIS SECTION APPLIES ONLY WHERE THE AO IS OF THE OPINION THAT THE FAIR MARKET VALUE OF THE PROPERTY IS MORE THAN THE VALUE ESTIMATED BY THE REGISTERED VALUER. IN MY CASE, THE VALUE ESTIMATED BY THE REGISTERED VALUER IS RS. 1,03,00,000/- WHEREAS, THE VALUE ESTIMATED BY THE DVO/AO IS RS.94 ,00,000/- WHICH IS LESS (AND NOT MORE) THAN THE VALUE OF THE REGISTERE D VALUER, 6. SIMILARLY, PROVISIONS OF SECTION 55A(B) ARE ALSO NOT APPLICABLE IN MY CASE, AS THESE SECTIONS CAN BE APPLIED ONLY IF T HE AO IS OF THE OPINION THAT THE FAIR MARKET VALUE OF THE ASSET EXC EEDS THE VALUE CLAIMED BY THE ASSESSEE BY MORE THAN 15% OR HAVING REGARD TO THE NATURE OF THE ASSETS, IT IS NECESSARY TO DO SO. 7. IN MY CASE, ONCE AGAIN, THE VALUE ESTIMATED BY T HE AO/DVO IS LESS THAN THE VALUE DETERMINED BY THE REGISTERED VA LUER AND THEREFORE, ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 18 THE QUESTION OF FAIR MARKET VALUE BEING MORE BY 15% THAN THE VALUE CLAIMED BY THE ASSESSEE DOES NOT ARISE. SIMILARLY, THE PROPERTY IN QUESTION IS NOT ONE HAVING REGARD TO THE NATURE OF WHICH, IT IS NECESSARY TO MAKE A REFERENCE TO THE DVO. 8. UNDER THE CIRCUMSTANCES, I STRONGLY SUBMIT THAT NEITHER SECTION 55A(A) NOR 55A(B) ARE APPLICABLE IN MY CASE AND HEN CE, THE REFERENCE TO THE DVO IS WRONGLY MADE. 9. THIS VIEW IS STRONGLY SUPPORTED BY THE DIRECT DE CISION OF HON. GUJARAT HIGH COURT AS WELL AS OTHER HON. COURTS AS FOLLOWS :- (A) IN THE CASE OF HIRABEN JAYANTILAL SHAH VS. ITO REPORTED IN 310 ITR -31, HON. GUJARAT HIGH COURT HAS HELD THA T: 'THAT IN SO FAR AS THE MARKET VALUE OF THE PROPERTY AS ON APRIL 1, 1981, WAS CONCERNED, THE PETITIONER HAD CL AIMED IT AT A SUM OF RS.6,25,000/-AS PER THE REGISTERED VALU ER'S REPORT. THEREFORE, THE ASSESSING OFFICER WAS REQUIR ED TO FORM AN OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PROPOSED BY THE VALUATION OFFICER WAS SHOWN AT RS.3,97,000, WHICH W AS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESS EE AS ON APRIL 1, 1981. THEREFORE, CLAUSE (A) OF SECTION 55A OF THE ACT COULD NOT BE MADE APPLICABLE. CLAUSE (B) OF SEC TION 55A OF THE ACT CAN BE INVOKED ONLY IN ANY OTHER CAS E, NAMELY, WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE WAS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUER. IN THE FACTS OF THE PRESENT CASE , CLAUSE (B) OF SECTION55A OF THE ACT ALSO COULD NOT BE INVO KED.' (B) IN THE CASE OF M.V. SHAH, OFFICIAL LIQUIDA TOR, ANANT MILLS LTD., VS. U.J. MATIN & ANOTHER REPORTED IN 209 ITR PAGE 568 H ON. GUJARAT HIGH COURT HAS HELD THAT- 'HELD, THAT REFERENCE UNDER CLAUSE (B)(II) OF SECTI ON 55A COULD HAVE BEEN MADE IF THE I.T.O. WAS OF THE OPINION THA T HAVING ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 19 REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES, IT WAS NECESSARY SO TO DO. IN THIS C ASE THE ASSET WAS A PIECE OF LAND. THERE WAS NOTHING SPECIAL ABOU T THE NATURE OF THE ASSET WHICH WOULD HAVE JUSTIFIED THE ITO TO MAKE A REFERENCE TO THE VALUATION OFFICER. NO OTHER RELEVA NT CIRCUMSTANCES COULD BE POINTED OUT BY THE VALUATION OFFICER IN HIS AFFIDAVIT OR BY THE ITO UNDER ANY OTHER PROVISION O F SECTION 55A. THE REFERENCE TO THE DVO WAS NOT IN ACCORDANCE WITH LAW AND HAD TO BE QUASHED (SEE PP. 571G,H, 572C). (C) IN THE CASE OF SAJJANKUMAR M. HARLALKA VS. JT.C.I.T., REPORTED IN 284 ITR PAGE-156 (AT) MUMBAI BENCH HAS HELD THAT - 'HELD, ALLOWING THE APPEALS, THAT THE AO COULD NOT HAVE FORMED SUCH AN OPINION IN THIS CASE AS THE WHOLE BASIS OF THE REFERENCE WAS THAT THE FAIR MARKET VALUE ESTIMATED BY THE REG ISTERED VALUER AS ON APRIL 1, 1981,WAS HIGHER THAN ITS ACTUAL FAIR MARKET VALUE. THE REFERENCE COULD BE MADE UNDER SECTION 55A(B)(II ) BY THE AO IF HE WAS OF THE OPINION THAT IT WAS NECESSARY TO D O SO. NOTHING HAD BEEN SHOWN TO STATE THAT THE REFERENCE WAS MADE UNDER SECTION 55A(A) OR 55A(B)(II) AND IF IT WAS MADE UND ER SECTION 55A(B)(II) THEN WHAT CIRCUMSTANCES WERE IN EXISTENC E ON THE BASIS OF WHICH THE AO HAD FORMED HIS OPINION TO MAKE SUCH REFERENCE. THEREFORE, THE REFERENCE MADE TO THE VALUATION OFFI CER WAS INVALID.' (D) IN THE CASE OF MS. RUBAB M.KAZERANI VS. JT. CIT REPORTED IN 97 TTJ PAGE-698 (AT) (THIRD MEMBER) MUMBAI HAS HELD TH AT- 'POWER UNDER SECTION 55A FOR REFERENCE TO DVO COULD BE INVOKED ONLY WHEN IN THE OPINION OF AO, THE FAIR MARKET VAL UE DISCLOSED BY ASSESSEE LESS THAN FAIR MARKET VALUE WHEREAS THE VA LUE SHOWN BY ASSESSEE WAS ON HIGHER SIDE.' (E) IN THE CASE OF ITO VS. SMT. LALITABEN B. KA PADIA REPORTED IN 115 TTJ PAGE-938 (ITAT MUMBAI K-BENCH) HAS HELD THAT - ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 20 'REFERENCE TO VALUATION OFFICER UNDER S. 55A - VALI DITY - REFERENCE TO THE DVO CAN BE MADE UNDER S.55A ONLY WHEN THE AO IS OF THE OPINION THAT THE VALUE OF THE CAPITAL ASSET CLAIMED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE - I N THE INSTANT CASE, AO REFERRED THE VALUATION OF THE PROPERTY TO THE VALUATION OFFICER AS HE WAS OF THE OPINION THAT THE FAIR MARK ET VALUE OF THE PROPERTY ON 1 ST APRIL,1981, AS SHOWN BY THE ASSESSEE WAS MORE THAN ITS ACTUAL FAIR MARKET VALUE - HENCE, REFERENC E TO DVO WAS NOT VALID - AO IS THEREFORE DIRECTED TO ADOPT THE C OST OF ACQUISITION AS ON 1 ST APRIL, 1981 AS CLAIMED BY THE ASSESSEE.' (F) IN THE CASE OF NEVILLE DE NORANHA VS. ACI T REPORTED IN 26 SOT PAGE-35 HON. ITAT KOLKATTA BENCH-C HAS HELD THAT - 'ASSESSEE'S CASE WAS THAT SINCE AT ASSESSMENT STAGE , VALUATION REPORT PREPARED BY A REGISTERED VALUER WAS FURNISHE D IN SUPPORT OF CLAIM OF VALUE OF ASSET TRANSFERRED BY ASSESSEE AS ON 1.4.1981, ONLY CLAUSE (A) OF SECTION55A WAS APPLICABLE - HOWE VER, AO SUBMITTED THAT VALUATION OF ASSET AS ON 1.4.1981 IN STEAD OF BEING UNDERVALUED BY REGISTERED VALUER WAS RATHER OVERVAL UED BY HIM, THAT WAS WHY REFERENCE WAS MADE TO DVO -WHETHER .SI NCE DVO ACTUALLY VALUED PROPERTY AT LESSER FIGURE AND SAID VALUATION WAS FINALLY ACCEPTED BY AO, PROVISIONS OF SECTION 55A I N MATTER OF MAKING REFERENCE TO DVO WERE NOT SATISFIED - HELD, YES.' (G) IN THE CASE OF SMT. KRISHNABAI TINGRE VS. ITO REPORTED IN 101 ITD PAGE-317, HON. ITAT PUNE BENCH-A HAS HELD THAT - 'WHETHER AO CAN MAKE REFERENCE TO DVO UNDER SEC. 55 A(A) ONLY WHEN IN HIS OPINION FAIR MARKET VALUE DISCLOSED BY ASSESSEE IS LESS THAN FAIR MARKET VALUE AND UNDER SECTION 55A(B ) ONLY WHERE VALUE OF PROPERTY DISCLOSED BY ASSESSEE IS NOT BASE D UPON APPROVED VALUER'S REPORT - HELD, YES.' (H) IN THE CASE OF URMILA BAWA VS. ACIT., REPO RTED IN 11 SOT PAGE- 661 HON. ITAT DELHI BENCH HAS HELD THAT - ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 21 'WHETHER REFERENCE TO THE DVO UNDER SECTION 55A WAS INVALID, SINCE (A) FAIR MARKET VALUE DECLARED BY ASSESSEE WA S SUPPORTED BY AN ESTIMATE OF REGISTERED VALUER AND (B) VALUE S O CLAIMED BY ASSESSEE WAS MORE THAN ITS FAIR MARKET VALUE ACCORD ING TO ASSESSING OFFICER - HELD, YES.' (I) IN THE CASE OF RASHID S.MEDORA VS. ACIT., HON. ITAT AHMEDABAD BENCH-D HAS HELD THAT - 'WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. ACCORDING TO THE DECISIO NS CITED BY LD. AR THE REFERENCE UNDER SECTION 55A CAN BE MADE BY A SSESSING OFFICER ONLY IN THE CASE WHERE FAIR MARKET VALUE DI SCLOSED BY THE ASSESSEE IS LESS AND IN THE CASE WHERE FAIR MARKET VALUE DISCLOSED BY ASSESSEE IS MORE REFERENCE CANNOT BE M ADE VALIDLY.' SINCE THIS IS AN UNREPORTED DECISION, THE TEXT OF T HE WHOLE JUDGEMENT IS ENCLOSED (PAGES 65 TO 68). 10. I FURTHER STATE THAT EVEN ON MERITS, THE ORDER OF THE DVO IS NOT ACCEPTABLE AND DOES NOT HAVE ANY EVIDENTIARY VALUE. IN SUPPORT OF MY ABOVE CONTENTIONS I STATE THAT :- (A) THE ASSESSMENT PROCEEDINGS IN RESPECT OF RETURN OF INCOME FILED ON 12.10.2006 WAS TAKEN UP AT THE FAG END OF THE YEAR I.E. IN DECEMBER, 2008 WHEN THE ASSESSMENT WAS GETT ING TIME BARRED ON 31.12.2008. (B) THE ASSESSMENT ORDER IS PASSED IN HASTE AND HURRY WITHOUT APPLICATION OF MIND AND WITHOUT GIVING PROPER AND REASONABLE OPPORTUNITY TO THE APPELLANT. (C) THERE ARE SEVERAL MISTAKES COMMITTED IN THE ORDER AGAINST WHICH APPLICATION U/S. 154 OF THE ACT IS MADE ON 3. 1.2009 WHICH IS PENDING. ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 22 (D) WITH REGARD TO MARKET VALUE AS ON 1.4.1981, TH E VALUE DECLARED BY THE APPELLANT BASED ON REPORT OF AUTHOR IZED AND APPROVED VALUER WAS FAIR, REASONABLE AND AFTER CONSIDERING THE INSPECTION OF THE PROPERTY PRIOR TO ITS DEMOLITION AS IT STOOD AS ON 1.4.1981. (E) WHEREAS, THE REPORT OF THE DVO IS BASED ON SI TE INSPECTION AFTER THE PROPERTY WAS ALREADY DEMOLISHED AND A NEW COMMERCIAL BUILDING HAD COME UP IN ITS PLACE. THE R EPORT OF THE DVO CANNOT BE RELIED UPON AS FAR AS THE QUALITY OF CONSTRUCTION AND MATERIAL USED AS IT STOOD ON 1-4-81 IS CONCERNED. THEREFORE, DVO'S REPORT CANNOT BE RELIED UPON AS AN EVIDENCE. 11. IN THE COURSE OF ASSESSMENT PROCEEDINGS, I HAVE BROUGHT THESE ASPECTS TO THE NOTICE OF THE AO WHICH ARE NOT TAKEN INTO CONSIDERATION., I INVITE YOUR KIND ATTENTION TO THE PROPOSED VALUATIO N BY DVO U/S. 16A(4) (PAGES 41 AND 42), MY OBJECTIONS VIDE LETTER DT.30. 12.08 (PAGES 43 TO45), OBJECTIONS FILED BY THE REGISTERED VALUER VI DE LETTER DT.31.12.08 (PAGES 46 AND 47), MY LETTER DT.30.12.08 IN REPLY T O AO'S NOTICE DT.29.12.08 (PAGES 48 AND 49). REPORT OF THE DVO U/ S. 16A(5) (PAGES 50 TO 53) AND MY LETTER DT.31.12.2008 ADDRESSED TO THE AO (PAGES 58 AND 59), 12. I REQUEST YOUR HONOUR TO KINDLY TAKE INTO CONSI DERATION THE SUBMISSIONS, CIRCUMSTANCES AND EVIDENCES REFLECTED IN MY ABOVE LETTERS AND ACCEPT THE MARKET VALUE ESTIMATED BY TH E REGISTERED VALUER AT RS.1,03,00,000/- AS AGAINST THE SAME ESTIMATED B Y THE DVO AT RS.94,00,000/-. 8. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW, GONE THROUGH THE WRITTEN SUBMISSION OF THE ASSESSEE AND HEARD THE AR GUMENTS FROM BOTH THE SIDES. IN SECTION 48, THE A.O. CAN COMPUTE THE CAP ITAL GAIN ON THE BASIS OF FULL ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 23 VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS RESU LT OF THE TRANSFER OF CAPITAL ASSETS. THE HONBLE SUPREME COURT AS WELL AS OTHER HIGH COURTS AS HELD THAT EXPRESSION OF FULL VALUE CONSIDERATION CANNOT BE CO NSTRUED TO THE MARKET VALUE OF THE ASSETS TRANSFERRED BUT ONLY MEANS THE FULL V ALUE OF THE THINGS RECEIVED BY THE TRANSFEROR AS HELD IN THE CASE OF CIT VS.GEORGE HENDERSON & CO. LTD. (SUPRA). THE A.O. REFERRED THIS CASE U/S 55A OF THE IT ACT T O THE DVO FOR ESTIMATING THE FAIR MARKET VALUE ON DATE OF SALE AS ON 14-07-2005 AS WELL AS 1- 4-81. THE APPELLANT ARGUED THAT THE REFERENCE WAS MADE BY THE A.O. ONLY FOR ESTIMATING VALUE AS ON 1.4.81. THE A.O. REFERRED T HE CASE U/S 55A OF IT ACT FOR FAIR MARKET VALUE OF THE CAPITAL ASSETS TRANSFE R AND SUBSTITUTED THE VALUE OF THE DVO IN COMPUTING THE CAPITAL GAIN TAX BUT THE F ULL VALUE OF CONSIDERATION AS DISCUSSED ABOVE CANNOT BE CONSTRUED TO THE FAIR MAR KET VALUE. THE A.O. HAS ALSO TAKEN THE VALUE AS ON 1.4.81 AT RS.94 LACS IN PLACE OF RS.1.03 CRORE VALUE DECLARED BY THE ASSESSEE ON THE BASIS OF REGISTERED APPROVED VALUER REPORT. AS PER SECTION 55A, THE A.O. CAN MADE THE REFERENCE IF ESTIMATED VALUE MADE BY THE REGISTERED VALUER IS LESS THAN FAIR MARKET V ALUE. IN THIS CASE, THE VALUE ESTIMATED BY THE REGISTERED VALUER WAS RS.1.03 CROR E WHEREAS THE DVO HAD GIVEN FAIR MARKET VALUE AT RS.94 LACS. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF HIRABEN JAYANTILAL SHAH VS. ITO (SUPRA) AS HELD THAT ESTIMATED VALUE AS ON 1.4.81 AS PER REGISTERED VALUERS REPORT WAS RS.6,25,000/- WHEREAS THE VALUATION OFFICER HAD SHOWN VALUE AT RS.3,97,000/- WHICH WAS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON APRIA L1, 1981. THEREFORE, CLAUSE (A) OF SECTION 55A OF THE ACT COULD NOT BE M ADE APPLICABLE. CLAUSE (B) ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 24 OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY IN AN Y OTHER CASE WHEN VALUE OF THE ASSET CLAIMED BY THE ASSESSEE WAS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUER. THE FACTS OF APPELLANTS ARE S IMILAR AS DISCUSSED ABOVE, THE VALUE ESTIMATED BY THE DVO IS LESS THAN VALUED ESTIMATED BY THE GOVERNMENT APPROVED VALUER. FURTHER, THE DIFFERENC E BETWEEN VALUE ESTIMATED BY THE DVO AND ADOPTED ON THE BASIS OF RE GISTERED VALUERS REPORT, THE DIFFERENCE IS LESS THAN 15%. THE A.O. HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THE ASSESSEE HAD RECEIVED MU CH MORE WHATEVER DISCLOSED IN THE SALE DEED. THEREFORE, WE HAVE CON SIDERED VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND T HE ORDER OF THE CIT (A) IS PERVERSE. 6. IN ALL THESE CASES, THE REVENUES APPEALS ARE DI SMISSED AND ASSESSEES C.OS. ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , ITA NOS. 51-55/AHD/2010 & C.O. NOS.28-32/AHD/2010 A.Y. 06-07 PAGE 25 :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 11.07.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 12.07.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION ,, ,, 6) DATE OF INITIAL SIGN BY MEMBERS 13.07.2012 7) ORDER UPLOADED ON 13.07.2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 13.07.2012