Sh. Manjit Singh, Ludhiana V. DCIT, Ludhiana

ITA 1037/CHANDI/2011

• Counselvise Citation: 103721514 RSA 2011
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 31-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Document seized; Rule of consistency; Cost of acquisition; Fair market value; Documents seized
• Section: 37; 11; 143(3); 50C; 54F; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1037/CHD/2011 ASSESSMENT YEAR: 2008-09 SHRI MANJIT SINGH, V DCIT, CIRCLE III, VILLAGE MEHARBAN, LUDHIANA. LUDHIANA. PAN: AFIPS-8573B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT : SHRI MANJEET SINGH DATE OF HEARING : 28.08.2012 DATE OF PRONOUNCEMENT : 28.09.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 07.09.2011 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE AC T'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A)-I, LUDHIANA HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER THE HEAD LONG TERM CAPI TAL GAIN BY ADOPTING THE FAIR MARKET VALUE OF LAND AS ON 1.4.1981 AT RS. 27,030/- PER ACRE AGAINST RS. 5 LACS PER ACRE ADOPTED BY THE ASSESSEE. 2. THAT THE LD. CIT(A)-I, LUDHINA HAS FAILED TO IGNORE THE DOCUMENTARY EVIDENCE IN THE SHAPE OF CERTIFICATE FROM THE PATWARI AS WEL L AS TEHSILDER WHICH WAS BASED ON FIELD ENQUIRES BY THE PARTWARI AND REJECTI ON OF THAT REPORT OF THE TEHSILDAR/ PATWARI BY THE CIT(A) WAS NOT PROPER. 3. THAT THE CIT(A) HAS ERRED IN NOT CONSIDERING THE RE PLY FILED BY THE TEHSILDAR WHO HAD RESPONDED TO ENQUIRIES MADE BY THE ASSESSIN G OFFICER U/S 133(6) AND GAVE THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.19 81 AFTER MAKING DETAILED ENQUIRIES FROM THE VARIOUS PROMINENT PERSONS VIZ NA MBARDARS/SARPANCHS WHO 2 CONFIRMED THE MARKET RATE OF RS.5 LACS PER ACRE. 4. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT FAIR MARKET VALUE OF LAND AND REGISTRY VALUE ARE DIFFERENT AS IN THE CASE OF ASSE SSEE HIMSELF THE SALE WAS MADE FOR RS.43,25,000/- PER ACRE AND CIRCLE RATE WAS RS. 5 LACS PER ACRE AND, THUS, IF FAIR MARKET VALUE HAS BEEN DECLARED AT RS.43,25,000 /- PER ACRE THEN THE SAME BASIS SHOULD HAVE BEEN ADOPTED AS COST OF ACQUISITI ON AS ON 1.4.1981, BASED ON FAIR MARKET VALUE. THUS, THE CONTRADICTORY STAND HAVE BEEN CONFIRMED BY THE CIT(A) AGAINST THE FACTS AND CIRCUMSTANCES OF THE C ASE. 5. NOTWITHSTANDING THE ABOVE GROUND OF APPEAL THE ASSE SSING OFFICER HAVING ALREADY ACCEPTED FAIR MARKET VALUE OF THE LAND IN THE SAME AREA @ RS. 1,80,000/- PER ACRE, WHICH WAS LOCATED DEEP INS IDE THE VILLAGE HAVING ODD SHAPE AND OTHER DEFECTS, AND THE LAND SOLD UNDER CO NSIDERATION BEING SITUATED ON THE MAIN ROAD HAVING BETTER LOCATION, SIZE AND S HAPE, THE RATE SHOULD HAVE ADOPTED FOR HIGHER THAN THE RS. 1,80, 000/- PER ACRE AS ACCEPTED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT FOR THE ASS ESSMENT YEAR 2005-2006. 6. THE CIT(A) HAS NOT BEEN ABLE TO REBUT THE IDENTICAL CASE OF SHRI ABDUL RASHID RATHER OF AMRITSAR BENCH AS CITED BEFORE HIM AND OT HER DETAILED SUBMISSIONS AS MADE BEFORE HIM. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND HE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, BEFORE THE BENCH, LD. 'AR' CONTENDED THAT THE GROUNDS OF APPEA L REVOLVE AROUND NON-ADOPTION OF CIRCLE RATE OF RS.5 LACS PER ACRE AS FAIR MARKET VALUE AS ON 01.04.1981, FOR THE PURPOSE OF C OMPUTATION OF CAPITAL GAINS BY THE AO AND UPHOLDING THE FINDIN GS OF THE AO BY CIT(A). LD. 'AR' REFERRED TO VARIOUS PAGES OF T HE PAPER BOOK, SUCH AS PAGES FROM 50 TO 62, 39. LD. 'AR' ALSO PLA CED RELIANCE ON THE DECISION OF THE AMRITSAR BENCH IN THE CASE O F ABDUL RASHID V ITO IN ITA NO. 104/ASR/2009, A.Y. 2004-05 DATED 23.7.2009. LD. 'AR' ALSO PLACED RELIANCE ON THE DE CISION OF THE CHANDIGARH BENCH IN DCIT V SMT.BALJINDER KAUR 115 T TJ (CHD- TRIB) 982. LD. 'AR' ALSO FILED WRITTEN SUBMISSIONS IN THE FORM OF SYNOPSIS. A BARE PERUSAL OF THE SYNOPSIS REVEALS TH AT ASSESSEE APPELLANT IS AGGRIEVED BY THE ORDER PASSED BY THE A O AND UPHELD BY THE CIT(A) IN ADOPTING FAIR MARKET VALUE OF THE ASSET AS ON 1.4.1981 AT RS.27,030/- PER ACRE. LD. 'AR' C ONTENDED THAT CIT(A) ACCEPTED THE RATE OF RS.43.25 LACS PER ACRE AS SALE 3 RATE, AS DISCLOSED ON THE BASIS OF ONE AGREEMENT IN RESPECT OF LAND, SEIZED FROM THE PREMISES OF SHRI G.K.COLONIZE R AGAINST CIRCLE RATE OF RS.5 LACS, BUT IGNORED THE ADOPTION OF RS.5 LACS AS FAIR MARKET VALUE OF THE SAME LAND AS ON 1.4.1981. THE APPELLANT HAS ADOPTED FAIR MARKET VALUE OF THE LAND AS ON 1.4.1981 ON THE BASIS OF CERTIFICATE OF HALKA PATWA RI, AS ENDORSED BY THE TEHSILDAR, ISSUED ON THE BASIS OF E NQUIRIES CONDUCTED FROM THE FIELD STAFF, VARIOUS SARPANCHES AND PANCHAYAT MEMBERS, WITH THEIR SIGNATURE APPENDED TH EREON. LD. 'AR' FURTHER POINTED OUT THAT THE FAIR MARKET V ALUE OF THE LAND VIS--VIS SALE CONSIDERATION AS RECORDED IN RE GISTERED SALE DEED CANNOT BE THE SAME. RELEVANT PART OF THE BRIEF SYNOPSIS IS REPRODUCED HEREUNDER : 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN AGRICULTURIST AND HAD SOLD SOME LAND TO G.K. COLONIZERS AND DURING THE COURSE OF SEARCH ON G.K. GROUP OF CASES, ONE AGREEMENT WAS SEIZED FROM WHERE, IT CAME TO THE NOT ICE OF THE DEPARTMENT THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND AT THE RATE OF RS. 43.25 LACS PER ACRE, AGAINST THE CIRCLE RATE OF RS. 5 LACS PER ACRE AND THE ASSESSEE ACCEPTED THAT RATE OF SALE AS PER AGREEMENT AND FILED THE RETURN OF INCOM E AND ADOPTED THE SALE RATE AS PER AGREEMENT . 3. FOR THE JUSTIFICATION OF LAND RATE AS ON 1.4.1981, THE ASSESSEE FILED THE CERTIFI CATE FROM THE REVENUE OFFICER, WHEREIN HE HAD CERTIFIED THE 'FAIR MARKET VALUE OF THE LAND AT RS. 5 LACS PER ACRE AS ON 1.4.1981 AND THE EVIDENCE OF THE SAME HAD BEEN ENCLOSED IN THE PAPER BOOK AT PAGE 11. 4. NOT SATISFIED WITH THAT CERTIFICATE, THE AO MADE ENQUIRIES FROM THE TEHSILDAR FOR 'FAIR MARKET VALUE' OF LAND AS ON 1.4.1981 AND THAT LETTER HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE TEH SILDAR MADE DETAILED ENQUIRIES FROM THE NAMBARDAR, PATWARI, SARPANCHES OF VIL LAGES AND GAVE A EXHAUSTIVE REPORT AS PER COPY PLACED AT PAGES 12 TO 17 OF THE PAPER B OOK. THE REPORT IS VERY EXHAUSTIVE. 4. LD. 'AR' POINTED OUT THAT THE CIT(A), CANNOT ADO PT CONTRADICTORY APPROACH, IN THE ADOPTION OF THE FAIR MARKET VALUE OF THE LAND, AS ON 1.4.1981, IGNORING THE SAL E 4 CONSIDERATION OF RS.43.25 LACS PER ACRE, OF THE SAI D LAND, DISCLOSED BY THE ASSESSEE, AS RECORDED IN THE AGREE MENT, SEIZED IN THE COURSE OF SEARCH OPERATION, AS FULL VALUE OF CONSIDERATION U/S 48 OF THE ACT. IT WAS, FURTHER, POINTED OUT BY THE LD. 'AR' THAT THE DEPARTMENT HAS ALREADY ACCEPTED RS.1,80,00 0/- PER ACRE AS FAIR MARKET VALUE OF THE LAND AS ON 1.4.198 1 LOCATED IN THE SAME VILLAGE AND AT AN ADVERSE LOCATION FOR THE ASSESSMENT YEAR 2005-06. LD. 'AR' ALSO ANALYZED THE FINDING OF THE CIT(A) IN THE WRITTEN SYNOPSIS AND THE SAME ARE REPRODUCED AS UNDER: ASSESSEE'S REPLY THE REVENUE OFFICER IS ENTRUSTED WITH THE TASK OF D ETERMINING THE VALUE OF LAND AND THE FACT IHAT ON THE BASIS OF ENQUIRIES MA DE U/S 133 (6), THE FIELD ENQUIRIES WERE MADE, WHICH ARE PART OF THE RE PORT OF THE TEHSILDAR, CERTIFIES -BEYOND, ANY DOUBT, ABOUT 'FAIR MARKET VA LUE' AT RS. 5 LACS PER ACRE AS ON 1.4.1981AND, THEREFORE, THE FINDINGS OF THE CIT ARE NOT CORRECT. THE REVENUE OFFICER AS PER THE JUDGMENT OF THE AMRITSAR BENCH OF THE ITAT IS THE FINAL AUTHORITY IN DETERMINING T HE VALUE OF THE PROPERTY AND NOT THE AO. THE ENQUIRIES ARE DETAILED AND EVEN THE CIT (A) HAS MENTIONED THAT REASON, GIVEN BY ASSESSEE, ARE L OGICAL. AS PER CIT(A), THE REGISTERED DOCUMENTS WE HAVE DEM ONSTRATED, FIRSTLY, THAT ON THE BASIS OF COMPENSATI ON HAS TO BE CONSIDERED. BEING PAID TO FARMERS, WHICH IS MUCH HIGHER THAN THE REGISTERED RATE, NO RELIANCE COULD BE PLACED ON SUCH FINDING OF THE C1T (A). THEN, THERE IS A DIFFERENCE IN WORDING IN SECTION 55 (2)(B)(II) AND ON OTHER SECTIONS, CIT (A) HAS NOT BEEN ABLE TO FIND ANY FAULT IN EXPLANATION OF ASSESSEE, COUPLED WITH THE DOCUMENTARY EVIDENCES. THE CIT(A) HAS STATED THAT THE THE CIT(A) HAS FAIL ED TO CONSIDER THAT IF THE SALE SALE VALUE WAS ON THE BASIS OF VALUE IS BEING TAKE N INTO CONSIDERATION, MUCH MORE AGREEMENT TO SELL AND AS SUCH THAN THE CIRCLE RATE AND, ACCORDINGLY, FOR DETER- THE SAME BASIS HAD TO BE ADOPTED MINING THE FAIR M ARKET VALUE AS ON 1.4.1981, THE FOR DETERMINING THE COST. SAME KIND OF CONSIDERATIO N HAD TO BE ADOPTED AS IN THE CASE OF SHRI ABDUL RASHID BY THE AMRITSAR BENCH OF THE ITAT. THE CIT(A) HAS FAILED TO CONSID ER THAT SALE CONSIDERATION ADOPTED MUCH MORE THAN THE CIRCL E RATE. THE CLT HAS STATED THAT LANGUAGE OF SECTION THE CI T HAS FAILED TO CONSIDER THAT THE ENQUIRIES MADE F ROM THE 55 (2)(B) (II) WAS NOT INTENDED TO HAVE REVENUE DEPARTMENT U/S 133 (6) HAS CLEARLY BROUG HT OUT THE RATE DIFFERENT MEANING FOR THE PURPOSES OF WHICH IS MOR E THAN THE REGISTERED SALE CONSIDERATION. FURTHER CALCULATION OF CAPITAL GAIN AND, AS SUCH, THE LAN GUAGE IN SECTION 55(2)(B)(II) HAS TO BE GIVEN MEANI NG AS THAT DOCUMENTARY EVIDENCE HAS TO BE TAKEN PER SEC TION ONLY.. INTO CONSIDERATION IN DETERMINING THE FAIR MARKET (II) HAS TO BE GIVEN MEANING AS PER SECTION ONLY. THE CIT HAS NOT DISPUTED THAT THE RATE OF RS. THE C IT(A) HAS FAILED TO CONSIDER THE FACT THAT THE FACT S AND CIR- 1,80,000/- HAD BEEN ADOPTED FOR A.Y. 2005-06 CIRCUM STANCES WERE SAME AND THE RATE OF RS.1,80,000/- WAS OF THE AND ACCORDING TOCIT, THE SAME IS NOT BINDING LAND I N THE SAME VILLAGE BUT WAS IN REMOTE LOCATION AND T HE LAND OF FINDING OF THE CIT (A) THE CIT (A) HAS STATED THAT THE REASON GIVEN BY THE ASSESSEE APPEARS TO BE LOGICAL BUT THEN, HE HAS STATED THAT THE ENQUIRIES MADE BY TEHSILDAR IS ON THE BASIS OF REPORT OF HALKA PATWAR BASED UPON SOME VERBAL ENQUIRIES F ROM RESIDENT OF THE AREA, WHICH ACCORDING TO THE CIT(A) IS NOT CORRECT 5 UPON THE AO FOR A.Y. 2008-09. THE ASSESSEE IS ALSO IN THE SAME AREA BUT MUCH BETTER LOCATED. THE CIT(A) HAS ONLY SIDE TRACKED THE ISSUE. THERE ALSO THE DEPARTMENT WANTED TO APPLY THE RATE OF RS.43,25 LACS PER ACRE AND THEN ON THE BASIS OF CONSISTENCY, AS PER THE JUDGEMENT OF JURIS DICTIONAL HIGH COURT, WHICH WE HAVE CITED IN THE JUDGMENT SET, THE FINDING OF THE CIT(A) IS ERRONEOUS. 5. LD. 'DR' ON THE OTHER HAND, SUPPORTED THE FINDIN GS OF THE LOWER AUTHORITIES AND PLACED RELIANCE THEREON. 6. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE JUDICIAL PRECEDENTS, RELIED UPON B Y THE PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FOU ND THAT ASSESSEE HAD SOLD LAND AND COMPUTED LONG TERM CAPIT AL GAIN THEREON, BY ADOPTING THE FAIR MARKET VALUE OF THE LAND, AS ON 1.4.1981, AT RS.5 LACS PER ACRE, ON THE BASIS OF CE RTIFICATE ISSUED BY THE PATWARI ON THE BASIS OF LOCAL ENQUIRI ES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, PATWARI SHRI GURV INDER SINGH S/O SHRI BANTA SINGH, APPEARED BEFORE THE AO, ON 9. 11.2010, AND EXPLAINED THAT HE HAD ENQUIRED FROM PROMINENT P ERSONS OF THE AREA ABOUT FAIR MARKET VALUE OF THE LAND, SITUA TED ON THE MAIN RAHON ROAD, AS PREVAILING DURING THE YEAR 1981 -81 AND ACCORDINGLY, ON THE BASIS OF SUCH ENQUIRIES, ISSUED THE CERTIFICATE SPECIFYING THE MARKET VALUE OF THE LAND AS RS.5 LACS PER ACRE. THE AO, WITH A VIEW TO VERIFYING THE VER ACITY OF THE SAID CERTIFICATE, REQUISITIONED CERTAIN DETAILS AND MADE ENQUIRY U/S 133(6) OF THE ACT, IN ASSESSEE'S CASE, FROM THE TEHSILDAR (EAST) LUDHIANA, VIDE LETTER DATED 13.12.2010. TEH SILDAR, VIDE LETTER DATED 20.12.2010, INTIMATED THAT AVERAGE VALUE OF THE LAND OF SHRI MANJIT SINGH S/O TIRATH SINGH, RESIDENT OF VILLAGE MEHARBAN IS RS.27,030/- PER ACRE. HE, FURTHER, INF ORMED THAT SHRI MOHAN SINGH S/O SHRI BUDH SINGH, S/O SHRI ATTA R SINGH HAD SOLD 16 KANAL 2 MARLA OF HIS LAND TO M/S AMAR INDUSTRIES 6 LTD. @ RS.54,300/- PER ACRE. TEHSILDAR, FURTHER, S TATED THAT AS PER REPORT OF THE FIELD STAFF, ENQUIRY FROM THE SAR PANCH AND THE EMINENT PERSONNELS OF THE VILLAGE, REVEALED THAT IN THE YEAR 1980-81, RATE OF AGRICULTURAL LAND ON THE MAIN RAHO N ROAD WAS APPROXIMATELY RS.5 LACS PER ACRE. 7. THE ASSESSEE AND HIS BROTHER, SOLD LAND MEASURIN G 58 KANAL 5 MARLA, SITUATED AT MAIN RAHON ROAD, LUDHI ANA, FOR NET CONSIDERATION OF RS.3,11,88,214/-. AS THE LAND WAS OWNED JOINTLY BY THE ASSESSEE AND HIS BROTHER, SALE CONSI DERATION TO THE SHARE OF THE ASSESSEE IS WORKED OUT AT RS.1,55, 94,107/-. AS THE LAND WAS ACQUIRED PRIOR TO 1.4.1981, THE LONG T ERM CAPITAL GAIN WAS COMPUTED BY CONSIDERING FAIR MARKET VALUE OF THE LAND IN TERMS OF PROVISIONS OF SECTION 55(2)(B)(I) OF TH E ACT. THE LD. 'AR', PLACED RELIANCE, ON THE DECISION IN CIT V AJA Y PRODUCTS LTD. (1965) 55 ITR 741 (S.C); SMT. TARULATA SHYAM V CIT (1971) 108 ITR 345 (S.C) AND KESHAVJI RAVJI & CO. V CIT (1 990) 183 ITR 1 (S.C) AND CONTENDED THAT PLAIN LANGUAGE USED IN A STATUTE, SHOULD BE INTERPRETED AS IT IS, WITHOUT IMPORTING A NYTHING EXTRANEOUS, WITH A VIEW TO GIVING FULL EFFECT, TO T HE LEGISLATIVE INTENT. SUCH JUDGEMENTS WERE CITED BY THE ASSESSEE , BEFORE AO, TO SUPPORT HIS CONTENTIONS, IN RESPECT OF THE INTER PRETATION OF THE PROVISIONS OF SECTION 45 READ WITH 48, 55 AND 5 5A OF THE ACT. THE ASSESSEE, FURTHER, PLACED STRONG RELIANCE ON THE PRINCIPLE OF CONSISTENCY BY CITING THE DECISION BEF ORE AO IN THE CASE OF CIT V LEADER VALVES LTD.(2007) 295 ITR 273 (P&H); CIT V DALMIA DADRI CEMENT LTD. (1970) 77 ITR 410 (P&H) ; RADHASOAMI SATSANG V CIT (1992) 193 ITR 321 (S.C), BERGER PAINTS V CIT (2004) 266 ITR 99 (S.C); DCIT V UNITED VANASPATI 7 LTD. (2005) 275 ITR 124 (AT) (TM) AND CIT V ARTHUR ANDERSON & CO. (2009) 318 ITR 229 (BOM). THE ASSESSEE CONTEND ED BEFORE AO THAT HAVING REGARD TO THE PRINCIPLE OF CONSISTEN CY, AS ENUNCIATED IN THE ABOVESAID DECISIONS, EQUITY DEMAN DS THAT FAIR MARKET VALUE OF THE LAND, AS ON 1.4.1981 BE DETERMINED HAVING REGARD TO THE FULL VALUE OF CONSIDERATION AS ADOPTED AT RS.43,25,000/- PER ACRE VIS--VIS THE CIRCLE RATE O F THE SAME LAND, IN THAT YEAR AT RS.5 LACS PER ACRE, FOR COMPU TING STAMP DUTY, AS THE APPELLANT HAD DISCLOSED AND AO ADOPTED FULL VALUE OF SALE CONSIDERATION OF THE LAND IN QUESTION, FOR THE PURPOSE OF SECTION 48 OF THE ACT AT RS.43,25,000/- PER ACRE. 7(I) IT IS, FURTHER, ARGUED THAT CIRCLE RATE IS THE GUIDING FACTOR FOR COMPUTING STAMP DUTY, FOR THE PURPOSE OF REGIST RY. SUCH FACTUM VALIDLY CONFIRMS THAT REGISTRY RATE HAS NO R ELEVANCE WITH THE MARKET RATE OR FAIR MARKET VALUE OF ASSET/LAN D. BY FOLLOWING THE SAME PROPOSITION, IT CAN BE REASONABL Y CONCLUDED THAT REGISTRIES, DURING THE PERIOD 1.4.1980 TO 31.1 .1981, WERE MADE AT QUITE LOWER RATES, AS COMPARED TO THE MARKE T RATES, AS POINTED OUT BY THE ASSESSEE, BEFORE AO. THE EXPLANA TION FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE ADOPTED AVERAGE RATE OF LAND AT RS.27,030/-, AS THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.1981, FOR THE PURPOSE OF COMP UTING THE CAPITAL GAIN, IN THIS CASE. THE AO, OBSERVED THAT ASSESSEE HAS NOT BROUGHT ON RECORD ANY COMPARABLE INSTANCE, FOR THE PURPOSE OF ADOPTION OF FAIR MARKET VALUE AT RS.5 LACS PER ACRE OF THE LAND IN QUESTION, AS ON 1.4.1981. THE AO, ADOPTED AVERAGE RATE OF LAND, AS REPORTED BY THE TEHSILDAR. HOWEVER, IN THE SAME SOME COMMUNICATION, THE TEHSILDAR HAS REPORTED THE RATE OF 8 AGRICULTURAL LAND, ON THE MAIN RAHON ROAD, APPROXIM ATELY AT RS.5 LACS PER ACRE. THUS, AO, HAS ADOPTED CONTENTS OF THE COMMUNICATION OF THE TEHSILDAR ONLY IN PART AND, TH US, IGNORED THE REMAINING CONTENTS OF THE SAME. IT IS, THUS, EVIDEN T THAT THE AO, ADOPTED THE AVERAGE SALE RATE OF THE LAND IN THAT A REA, ON THE BASIS OF REGISTERED SALE DEEDS AS FAIR MARKET VALU E OF THE LAND IN QUESTION, FOR THE PURPOSE OF COMPUTATION OF CAPI TAL GAINS. 8. THE CIT(A), UPHELD THE FINDING OF THE AO, AS IS EVIDENT FROM PARA 15 & 16 OF THE ORDER, AS REPRODUCED HEREU NDER : 15. I HAVE CONSIDERED THE AO'S BASIS FOR ADOPTI NG FAIR MARKET VALUE AT RS. 27,030/- AS AGAINST RS. 5,00,000/- CLAIMED BY T HE ASSESSEE AND THE AR'S ARGUMENTS ON THE ISSUE. THE APPELLANTS CLAIM RESTS ON THE CERTIFICATE ISSUED BY THE PATWARI, WHICH IN TURN IS BASED UPON VERBAL ENQ UIRIES CONDUCTED BY HIM TO ARRIVE AT THE FAIR MARKET VALUE AS ON 1.4.1981. SEC ONDLY THE APPELLANT RELIES HEAVILY ON THE ACCEPTANCE OF THE FAIR MARKET VALUE BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE FOR A.Y. 2005-06 AT RS. 1,80,OO0/- PER, ACRE. THE AR'S CONTENTION IS THAT ONCE THE VALUE CLAIMED ON T HE BASIS OF PATWARI'S CERTIFICATE HAS BEEN ACCEPTED, FAIR MARKET VALUE CL AIMED ON THE BASIS OF SAME PRINCIPLE SHOULD LOGICALLY BE ACCEPTED FOR THE YEAR UNDER CONSIDERATION. THE REASONING GIVEN BY THE AR, ON THE FACE OF IT, APPEA RS LOGICAL BUT IF ONE DIGS LITTLE DEEPER IT BECOMES APPARENT THAT EVEN FOR A.Y . 2005-06 THE AO DID NOT EXAMINE THIS ISSUE IN IT ENTIRETY AS THE CERTIFICAT E OF THE PATWARI IS BASED UPON SOME VERBAL ENQUIRIES CONDUCTED BY HIM FROM THE RES IDENTS OF THE AREA WHEREIN THEY SPECULATED AS TO WHAT COULD HAVE BEEN THE FAIR MARKET VALUE OF THE LAND 25 YEARS AGO. THIS KIND OF EXERCISE IS NOT HING BUT A FARCE AS THE REVENUE OFFICIALS ARE IN POSSESSION OF DOCUMENTS WH ICH CLEARLY EVIDENCE THE FAIR MARKET VALUE AS ON THE SAID DATE. THE TEHS ILDAR IN HIS REPORT GIVEN TO THE AO HAS CLEARLY BROUGHT ON RECORD FEW SALES INST ANCES TO ARRIVE AT THE AVERAGE RATE OF RS. 27,030/-. I DO NOT UNDERSTAND A S TO WHERE WAS THE NEED TO GO AROUND AND MAKE VERBAL ENQUIRIES ABOUT THE VALUE OF LAND 25 YEAR AGO WHEN CLEAR DOCUMENTARY EVIDENCE WAS AVAILABLE WITH THE S AID AUTHORITY. THE AR'S CLAIM THAT REGISTERED VALUE OR THE VALUE FOR THE PU RPOSE OF STAMP DUTY DOES NOT REPRESENT THE FAIR MARKET VALUE IS NOT ACCEPTABLE B ECAUSE IT LEADS YOU FROM POSITION OF CERTAINTY AS CONTAINED IN THE REGISTERE D DOCUMENT TO COMPLETE 9 UNCERTAINTY AND UNVERIFIABILITY AS EXPRESSED IN THE REPORT BASED UPON VERBAL OPINIONS. THE AR HAS CLAIMED THAT THE ASSESSEE ADOP TED SALE CONSIDERATION AT RS. 43,25,OOO/- PER ACRE AS AGAINST CIRCLE RATE OF RS. 5,00,OOO/- PER ACRE WHICH MEANS THAT THE FAIR MARKET VALUE WAS DIFFERENT FROM THE C IRCLE RATE. HERE IT NEEDS TO BE KEPT IN MIND THAT THE SALE VALUE ADOPTED BY THE ASS ESSEE IS ON ACCOUNT OF DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERAT ION AND THERE WAS NO OPTION BUT TO ADOPT THIS VALUE AS IT HAPPEN TO BE THE ACTUAL S ALE CONSIDERATION AND WAS BASED UPON A DOCUMENTARY EVIDENCE. THE LANGUAGE IN SECTION 55 (2)(B)(II) WAS NOT INTENDED TO HAVE DIFFERENT VALUES FOR THE PURPO SE OF CALCULATION OF THE CAPITAL GAIN AND THE INTENSION WAS NOT TO PLACE RELIANCE ON ANY EVIDENCE OTHER THAN DOCUMENTARY EVIDENCE IN DETERMINING THE FAIR MARKET VALUE. IT NEEDS TO BE APPRECIATED THAT THE ASSESSEE WOULD HAVE PROCEEDED TO ADOPT ' THE REGISTERED SALE PRICE AS SALE CONSIDERATION HAD THERE BEEN NO SEARCH ACTION IN HIS CASE LEADING TO DISCOVERY OF ACTUAL SALE CONSIDERATION. IN THE CIRCUMSTANCES THE ASSESSEE CAN NOT TURN BACK I AND RELY ON GENERALLY PREVALENT PRACTICE IN REAL ESTATE TRANSACTIONS TO J SUPPRESS THE ACTUAL SALE C ONSIDERATION AND RUBBISH THE EVIDENTIARY VALUE OF REGISTERED SALE PRICE AS REPOR TED BY REVENUE AUTHORITIES. THEREFORE I DO NOT FIND ANY MERIT IN AR'S ARGUMENT ON THE ISSUE. 16. THE AR HAS ALSO RAISED THE ISSUE OF CONSISTENCY ON THE GROUND THAT FOR A.Y. 2005-06 THE AO HAD ACCEPTED THE CER TIFICATE OF THE PATWARI IN DETERMINING THE FAIR MARKET VALUE OF ASS ET SOLD. THE ACTION OF THE AO IN ACCEPTING PATWARI'S REPORT ON THE BASI S OF VERBAL ENQUIRIES ALLEGEDLY CONDUCTED BY HIM FOR A.Y. 2005 -06 IS ERRONEOUS AND THEREFORE CAN NOT BE ACCEPTED TO BE BINDING UPON TH E AO FOR A.Y. 2008-09. THE DETAILED REASONS FOR HOLDING THE SAID CERTIFICATE AS ERRONEOUS HAVE BEEN DETAILED IN PARA 5 OF THIS ORDE R. AS SUCH THE ADDITION MADE BY THE AO BY ADOPTING THE FAIR MARKET VALUE OF LAND SOLD AT RS. 27,030/- IS CONFIRMED. 9. WE FEEL IT ESSENTIAL, TO REFER TO THE RELEVANT P ROVISIONS OF THE ACT, ON THE ISSUE IN QUESTION. THE RELEVANT PR OVISIONS IN THE MATTER ARE REPRODUCED HEREUNDER : 45. (1) ] ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS [54, 54B, 54D, [54E, [54EA, 54EB,] 54F [, 54G AND 54H, BE CHARGEAB LE TO INCOME-TAX UNDER THE HEAD CAPITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE.. 10 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOL LOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSE T AND THE COST OF ANY IMPROVEMENT THERETO: 55(2)(B(I)) IN RELATION TO ANY OTHER CAPITAL ASSET,] (I) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE [1ST DAY OF APRIL, [1981]], MEANS THE COST OF ACQUISITIO N OF THE ASSET TO THE ASSESSEE OR THE FAIR MARKET VALUE OF THE ASSET ON THE [1ST DAY OF APRIL, [1981]], AT THE OPTION OF THE ASSESSEE ; 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE [ASSESSING] OFFICER M AY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAI MED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED V ALUER, IF THE [ASSESSING] OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE ; (B) IN ANY OTHER CASE, IF THE [ASSESSING] OFFICER IS OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEED S THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAG E 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 ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSES (HA) AND (I) OF SUB-SECTION (1) AND SUB-SECTIONS (3A) AND (4) OF SECTION 23, SUB-SECTION (5) OF SECT ION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1 957), SHALL WITH THE NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE [ASSESSING] OFFICER UNDER SUB -SECTION (1) OF SECTION 16A OF THAT ACT. 10. LD. CIT(A), IN HIS APPELLATE ORDER OBSERVED THA T HE HAD CONSIDERED THE BASIS FOR ADOPTION OF FAIR MARKET V ALUE AT RS.27,030/-, AS AGAINST RS. 5 LACS CLAIMED BY THE A PPELLANT HAVING REGARD TO SUBMISSION MADE BY THE LD. 'AR', O N THE ISSUE. THE CLAIM OF THE APPELLANT, FOR ADOPTION OF RS.5 LA CS AS FAIR MARKET VALUE PER ACRE, AS ON 1.4.1981, IS BASED ON THE CERTIFICATE ISSUED BY THE PATWARI, IN THE LIGHT OF ENQUIRIES CONDUCTED BY HIM. THE APPELLANT ALSO PLACED RELIANC E ON FAIR MARKET VALUE AS ACCEPTED BY THE AO, IN ASSESSEE'S CASE FOR THE ASSESSMENT YEAR 2005-06, AT RS.1,80,000/- WHILE COM PLETING 11 ASSESSMENT U/S 143(3) OF THE ACT. THE CONTENTION O F THE APPELLANT WAS REJECTED BY THE CIT(A), ON THE GROUND THAT THE AO, WHILE COMPLETING THE ASSESSMENT U/S 143(3), FOR THE ASSESSMENT YEAR 2005-06, FAILED TO EXAMINE THE ISSU E, IN ITS ENTIRETY, AS THE CERTIFICATE OF THE PATWARI IS BASE D UPON SOME VERBAL ENQUIRIES, CONDUCTED FROM THE RESIDENTS OF T HE AREA, WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF T HE ASSET, AS ON 14.1981. LD. CIT(A), DUBBED SUCH MODE OF ENQUIR Y CONDUCTED BY THE PATWARI, AS A FARCE, AS THE REVENU E OFFICIALS ARE NOT IN POSSESSION OF DOCUMENTS, WHICH CLEARLY E VIDENCE THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.1981. TH E TEHSILDAR, IN HIS REPORT, SUBMITTED TO THE AO, POINTED OUT FEW SALES INSTANCES TO ARRIVE AT THE AVERAGE RATE OF RS.27,03 0/-. LD. CIT(A) HAS EQUATED THE AVERAGE RATE OF RS.27,030/- AS FAIR MARKET VALUE AS ON 1.1.1981 OF THE SAID LAND. IT IS POINTED OUT THAT SALE INSTANCES, ON THE BASIS OF THE REGIST ERED SALE DEEDS CANNOT BE CONSTRUED AS THE FAIR MARKET VALUE AS DEFINED U/S 2(22B) OF THE ACT. THIS FACTUM IS PROV ED IN THE ASSESSEE'S OWN CASE BY THE REGISTERED SALE DEED, DA TED 14.3.2005, SPECIFYING THE SALE CONSIDERATION AT RS. 4,50,000/- OF THE LAND MEASURING 4 KANAL 10 MARLA, SOLD BY THE AP PELLANT, WHEREAS IN THE CURSE OF SEARCH OPERATIONS, APPELLAN T AGREEMENT TO SELL OF THE SAME LAND, RECORDS SALE CONSIDERATIO N AT RS.43,25,000/- PER ACRE I.E. RS.5,40,000/- PER KANA L. HOWEVER, AS PER REGISTERED SALE DEED, THE SALE RATE IS WORKE D OUT AT RS. 1 LAKH PER KANAL. THEREFORE, THERE IS INVARIABLY A WIDE GAP BETWEEN THE SALE CONSIDERATION, AS SHOWN IN THE REG ISTERED SALE DEED VIS--VIS SALE CONSIDERATION AS RECORDED IN TH E AGREEMENT 12 TO SELL. IT IS, IN VIEW OF THIS HARD FACT, THE LE GISLATURE INTRODUCED THE PROVISIONS OF SECTION 50C OF THE ACT , AS SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION, IN CERTA IN CASES, WHEREBY, FOR THE PURPOSE OF SECTION 48 OF THE ACT, FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF THE ASSET, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE O F PAYMENT OF STAMP DUTY, IN RESPECT OF TRANSFER, IS DEEMED, A S THE FULL VALUE OF CONSIDERATION, FOR THE PURPOSE OF SECTION 48 OF THE ACT. THE AVERAGE RATE AT RS.27,030/-, AS ON 1.4.1981, AD OPTED BY THE AO AND UPHELD BY THE CIT(A),IS THE AVERAGE RATE OF THE REGISTERED SALE DEEDS, WHICH CANNOT BE CONSTRUED AS FAIR MARKET VALUE, WITHIN THE MEANING OF PROVISIONS OF SECTION 2(22B) OF THE ACT. THE CONTENTION BEFORE CIT(A) THA T THE SALE CONSIDERATION, AS SPECIFIED IN THE AGREEMENT TO SEL L AT RS.43.25 LACS PER ACRE, AS AGAINST CIRCLE RATE OF RS.5 LACS PER ACRE, ESTABLISHES THAT FAIR MARKET VALUE OF THE LAND IS DIFFERENT FROM ITS CIRCLE RATE. HOWEVER, THIS CONTENTION OF THE AS SESSEE DID NOT FIND FAVOUR WITH THE CIT(A), ON THE GROUND THAT THE ASSESSEE HAD NO OPTION BUT TO DECLARE THE SAID SALE CONSIDER ATION OF RS.43.25 LACS AS MENTIONED IN THE SALE AGREEMENT, I N VIEW OF THE SEIZURE OF THE SAID DOCUMENT. FURTHER, THE CIT(A), IS OF THE OPINION THAT CONTENTS OF THE SEIZED DOCUMENT S CANNOT BE TAKEN AS EVIDENCE FOR THE PURPOSE OF DETERMINATION OF FAIR MARKET VALUE, FOR THE PURPOSE OF CHARGING CAPITAL GAINS TAX. SUCH REJECTION OF THE CONTENTIONS RAISED BY THE APP ELLANT IS NOT LEGALLY AND FACTUALLY TENABLE, AS THE REVENUE CAN N OT RESORT TO PRINCIPLE OF APPROBATION AND REPROBATION, IN RESPEC T OF THE 13 SAME TRANSACTION PERTAINING TO THE LAND IN QUESTION . THE INTERPRETATION OF THE CIT(A) OF THE PROVISIONS OF S ECTION 55(2)(B)(I), THAT IN TERMS OF SUCH PROVISIONS, IT I S NEVER INTENDED TO HAVE DIFFERENT VALUES, FOR THE PURPOSE OF CALCUL ATION OF CAPITAL GAINS AND THE INTENTION WAS NOT TO PLACE RE LIANCE ON ANY EVIDENCES, OTHER THAN THE DOCUMENTARY EVIDENCE IN D ETERMINING THE FAIR MARKET VALUE, IS NOT IN CONSONANCE WITH THE LEGISLATIVE INTENT CONTAINED IN SUCH PROVISIONS. T HE FAIR MARKET VALUE, AS CONTEMPLATED U/S 2(22B) R.W.S. 55( 2)(B)(I), MAY BE DIFFERENT THAN THE SALE CONSIDERATION, AS RE CORDED IN THE REGISTERED SALE DEED. THE DEFINITION OF FAIR MA RKET VALUE, AS PROVIDED U/S 2(22B) OF THE ACT IS REPRODUCED HER EUNDER: 2(22B) FAIR MARKET VALUE, IN RELATION TO A CAPITAL ASSE T, MEANS (I) THE PRICE THAT THE CAPITAL ASSET WOULD ORDINAR ILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE ; AND (II) WHERE THE PRICE REFERRED TO IN SUB-CLAUSE (I) IS NOT ASCERTAINABLE, SUCH PRICE AS MAY BE DETERMINED IN ACCORDANCE WITH THE RULES M ADE UNDER THIS ACT ;] 11. THE CIT(A), FURTHER, OBSERVED THAT ASSESSEE WO ULD HAVE PROCEEDED TO ADOPT THE PRICE AS RECORDED IN THE REG ISTERED SALE DEED, AS FULL VALUE OF CONSIDERATION OF THE LAND, H AD THERE BEEN NO SEARCH ACTION IN HIS CASE, LEADING TO DISCOVERY OF ACTUAL SALE CONSIDERATION, AS SPECIFIED IN THE AGREEMENT TO SE LL. THE LD. CIT(A), FURTHER, OBSERVED THAT IN THE CIRCUMSTANCE S, THE ASSESSEE CANNOT TURN BACK AND RELY ON GENERALLY PREVALENT PR ACTICE, IN REAL ESTATE TRANSACTIONS, TO SUPPORT THE ACTUAL SALE CON SIDERATION AND RUBBISH THE EVIDENTIARY VALUE OF REGISTERED SALE PR ICE, REPORTED BY THE REVENUE AUTHORITIES. THE LINE OF ARGUMENT AND LOGIC, ADOPTED BY THE CIT(A), DOES NOT STAND THE TEST OF RATIONALI TY AND, HENCE, NOT TENABLE IN THE LIGHT OF THE SALE CONSIDERATION OF RS.43.25 LACS PER ACRE, AS ADOPTED BY THE AO, AS FULL VALUE OF 14 CONSIDERATION OF THE LAND SOLD BY THE APPELLANT, WH ILE COMPUTING CAPITAL GAINS. THE APPELLANT IS NOT RELY ING ON PREVALENT PRACTICE IN REAL ESTATE TRANSACTIONS, AS CONSTRUED BY THE LD. CIT(A), BUT HIS CONTENTION IS FOUNDED ON TH E SALE CONSIDERATION, AS RECORDED IN THE SALE AGREEMENT AT RS.43.25 LACS PER ACRE, WHICH CANNOT BE CONSTRUED, AS SALE C ONSIDERATION FOUNDED ON PRACTICE IN REAL ESTATE TRANSACTIONS. I N A NUT-SHELL, CIT(A), CONCLUDED THAT FAIR MARKET VALUE IS SYNONYMOUS AND EQUAL TO THE AVERAGE RATE OF THE SALE CONSIDERA TION, AS SPECIFIED IN THE REGISTERED SALE DEEDS, IGNORING TH E DEFINITION OF FAIR MARKET VALUE AS PROVIDED U/S 2 (22B) OF THE ACT, AS REPRODUCED ABOVE AND THE IMPACT OF ACTUAL SALE CONSIDERATION RECORDED AT RS.43.25 LACS IN THE SEIZ ED AGREEMENT TO SELL. THE LD. CIT(A), ALSO DISREGAR DED THE PRINCIPLE OF CONSISTENCY AS ESPOUSED BY THE APPELLA NT BEFORE HIM, IN THE CONTEXT OF ASSESSMENT YEAR 2005-06. 12. WE HAVE PERUSED THE IMPUGNED ASSESSMENT ORDER, FOR THE ASSESSMENT YEAR 2005-06 PASSED U/S 143(3) OF TH E ACT,, WHEREIN, AFTER DETAILED DISCUSSIONS AND APPLICATION OF MIND, THE AO HAS ADOPTED FAIR MARKET VALUE OF THE LAND, AS ON 1.4.1981, AT RS.1,80,000/- PER ACRE. THEREFORE, THE LOGIC AN D RATIONALE, AS ADOPTED BY THE CIT(A),IN REJECTING THE CONTENTIO NS AND EXPLANATION OF THE APPELLANT, DOES NOT STAND TO LEG AL AND FACTUAL POSITION AND THE RULE OF CONSISTENCY. 13. IN THIS CONTEXT, IT IS PERTINENT TO REPRODUCE T HE CERTIFICATE ISSUED BY THE TEHSILDAR, LUDHIANA (EAST) AS ANNEXED AT PAGE 12 15 OF THE PAPER BOOK (ENGLISH TRANSLATION): ( TRUE TRANSLATION FOR PUNJAB TO ENGLISH) FROM: THE TEHSILDAR, LUDHIANA (EAST) TO DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, OLD RED CROSS BUILDING, UDHAM SINGH NAGAR, LUDHIANA NO.L SPL/READER DATED 20.12.10. SUB : CALLING THE INFORMATION U/S 133(6) OF THE INC OME TAX ACT, 1963 IN THE CASE OF SH MANJIT SINGH FOR AY 2008-09 (RELEVANT TO FINANCIAL YEAR 2007-08) REFERENCE: WITH REFERENCE TO YOUR OFFICE LET TER NO.DCIT/CIR-III/LDH/2010-11/2728 DATED 13.12.2010 WITH REFERENCE TO THE INFORMATION DEMANDED VIDE YOU R ABOVE REFERRED LETTER REGARDING THE AGRI. LAND OF SH. MANJIT SINGH S/O TIRATH SINGH RESIDENT OF VILLAGE MEHERBAN, REPORT FROM THE FIEL D STAFF HAS BEEN OBTAINED, VIDE WHICH THE AVERAGE PRI CE OF THE AGRICULTURAL LAND IN THE AREA WORKS OUT TO BE RS. 27030/-AND 18/- PAISE PER ACRE FOR THE YEAR 1980-81 BASED ON THE REPORT OF MUTATIONS. THE REPORT OF THE FIELD STAFF FOR THE YEAR 1980-81 CONT AINS DATA RELATED TO THE AGRICULTURAL LAND FOR WHICH MUTATIONS WERE MADE . FURTHER, AS PER WASIKA NO. 4312 DATED 14.11.80 SH. MOHAN SINGH S/O BUDH SINGH S/O ATTAR SINGH SOLD AGRICULTURAL LAND A REA MEASURING 16 KANAL 2MARLA AT THE RATE OF RS. 54300/- PER ACRE TO M/S AMAR INDUSTRY, LUDHIANA. AS PER THE REPORT OF THE FIELDS-STAFF, THE MARKET PRICE OF AGRICULTURAL LAND SITUATED ON THE MAIN RAH ON ROAD IS VERIFIED AS ABOUT RS. 500,000/-PER ACRE DURING THE YEAR 1980-81 AS PER THE INQUIRIES M ADE FROM THE VILLAGE SARPANCH. AND PROMINENT CITIZENS. THE INFORMATION IS SUBMITTED FOR FURTHER NECESSARY ACTION. SD/- TEHSILDAR LUDHIANA (EAST) 14. A BARE PERUSAL OF THE CERTIFICATE ISSUED BY THE TEHSILDAR, AS REPRODUCED ABOVE CLEARLY REVEALS THAT AVERAGE PR ICE OF AGRICULTURE LAND IN THE AREA, HAS BEEN WORKED OUT A T RS.27,030/- PER ACRE DURING THE YEAR 1980-81, BASED ON THE REPORT OF MUTATIONS. THUS, THE AVERAGE PRICE OF AGR ICULTURAL LAND IN THE AREA HAS BEEN WORKED OUT BY THE TEHSILD AR, ON THE 16 BASIS OF SALE CONSIDERATION AS RECORDED IN THE MUTA TIONS. HOWEVER, TEHSILDR HAS MENTIONED IN THE SAME LETTER, THE MARKET PRICE OF THE AGRICULTURAL LAND, SITUATED ON THE MAIN RAHON ROAD AT RS.5 LACS PER ACRE, DURING THE YEAR 1 980-81, AS PER ENQUIRIES MADE FROM VILLAGE SARPANCH AND PRO MINENT CITIZENS. IT NEEDS TO BE MENTIONED HERE THAT THE SALE INSTANCES, AS RECORDED IN THE RESPECTIVE SALE DEEDS , ON THE BASIS OF WHICH TEHSILDAR WORKED OUT THE AVERAGE PRI CE OF AGRICULTURAL LAND AT RS.27,030/-, PERTAINS TO THE AGRICULTURAL LAND SITUATED IN THE AREA. HOWEVER, TEHSILDAR HAS SPECIFICALLY MENTIONED LOCATION OF THE LAND AS SITUATED AT THE M AIN RAHON ROAD, WHEREBY MARKET PRICE OF AGRICULTURAL LAND HAS BEEN VERIFIED AT RS.5 LACS PER ACRE. THEREFORE, THERE I S A MARKED DIFFERENCE IN THE LOCATION OF AGRICULTURAL LAND SIT UATED IN THE AREA AND THE IMPUGNED LAND SITUATED AT MAIN RAHON R OAD, CONSEQUENTLY LEADING TO DIFFERENT MARKET RATE OF LA ND AT DIFFERENT LOCATIONS. 15. THE DOCUMENT SEIZED IN THE COURSE OF SEARCH OPE RATION U/S 132(1) OF THE ACT, CAN BE USED AS AN EVIDENCE, EVEN IN A SITUATION WHERE THE SEARCH HAS BEEN HELD AS ILLEGAL BY THE COMPETENT COURT. IN VIEW OF THIS, THE REVENUE IS C OMPETENT TO USE THAT CONTENTS OF THE SEIZED DOCUMENTS IN ITS FA VOUR, ON THE BASIS OF SUCH DOCUMENTS SEIZED IN THE COURSE OF ILL EGAL SEARCH. SIMILARLY, ASSESSEE IS ALSO COMPETENT TO USE THE SA ME, TO SUPPORT HIS CONTENTIONS, WHEREVER NEED IT. 16. THE ASSESSEE APPELLANT PLACED RELIANCE ON THE INTERPRETATION OF THE STATUTORY PROVISIONS AND THE PRINCIPLE OF 17 CONSISTENCY. IN THIS CONTEXT, IT IS PERTINENT TO M ENTION HERE THAT PRINCIPLE OF CONSISTENCY CAN BE INVOKED IF THE FACTS AND CIRCUMSTANCES, AS PREVAILING IN VARIOUS ASSESSMENT YEARS, ARE IDENTICAL. HOWEVER, GENERALLY THE PRINCIPLE OF RES -JUDICATA IS NOT APPLICABLE, TO THE INCOME TAX PROCEEDINGS. IN THE PRESENT CASE, SALE CONSIDERATION, AS ADOPTED BY THE ASSESSE E, ON THE BASIS OF SEIZED AGREEMENT TO SELL AT RS.43.25 LAC S PER ACRE, AS THE FULL VALUE OF SALE CONSIDERATION, CANNOT BE IGN ORED, IN THE CONTEXT OF DETERMINATION OF THE FAIR MARKET VALUE OF THE SAME LAND, AS ON 1.4.1981. 17. LD. 'AR' PLACED RELIANCE ON THE DECISION OF THE ITAT, AMRITSAR BENCH IN THE CASE OF ABDUL RASHID (SUPRA) AND DECISION OF THE CHANDIGARH BENCH IN THE CASE OF CIT V SNMT. BALJINDER KAUR (2008) 115 TTJ (CHD) 982. A BARE PER USAL OF THE SAME REVEALS THAT ASSESSEE GETS SUPPORT FROM SUCH D ECISIONS, IN RESPECT OF CONTENTION RAISED BY THE APPELLANT, IN T HE MATTER OF ADOPTION FAIR MARKET VALUE OF THE LAND IN QUESTIO N AS ON 1.4.1981. THE RELEVANT PART OF THE DECISION OF THE CHANDIGARH BENCH IS REPRODUCED HEREUNDER : CAPITAL GAINSCOST OF ACQUISITIONFAIR MARKET VALU E AS ON 1ST APRIL, 1981IN TERMS OF AN AGREEMENT TO SELL DT. 6TH FEB., 1981, WITH ONE Z, ASSESSEE HAD AGREED TO SELL A PORTION OF THE IMPUGN ED LAND AT THE RATE OF RS. 11.50 LACS PER ACRETHOUGH THAT AGREEMENT DID N OT MATERIALIZE, IT SUPPORTS THE FAIR MARKET VALUE ADOPTED BY THE ASSES SEESECOND PRIMARY EVIDENCE IS THE REPORT OF THE REGISTERED VA LUER WHEREIN ALSO THE VALUE OF THE LAND HAS BEEN ESTIMATED @ RS. 11.50 LA CS PER ACRETHIS RATE IS ADOPTED ON THE BASIS OF A SALE DEED OF A COMPARA BLE PROPERTY LOCATED IN THE VICINITY OF ASSESSEE'S LANDCOMPARABLE INSTANCE CONSIDERED BY THE REGISTERED VALUER WAS ALSO CONSIDERED BY THE DVO TO EVALUATE A PROPERTY IN THE SAME VILLAGE IN THE CASE OF ONE K, AND THE V ALUATION REPORT OF THE DVO VALUING THAT PROPERTY AS ON 1ST JAN., 1981 HAS BEEN ACCEPTED BY THE 18 AO IN THE CASE OF K THAT APART, ASSESSEE'S LAND EN JOYED AN ADVANTAGEOUS POSITION BECAUSE OF ITS LOCATION-AFORE SAID EVIDENCE IED BY THE ASSESSEE HAS NOT BEEN SHOWN TO BE LACKING IN BO NA FIDES AO HAS NOT MADE OUT A CASE AS TO WHY HE HAS PREFERRED THE RATE COLLECTED FROM THE REVENUE DEPARTMENTTHUS, THERE WAS NO JUST IFICATION FOR THE AO TO REJECT THE FAIR MARKET VALUE OF LAND DETERMIN ED @ RS. 11.50 LACS PER ACRETHEREFORE, CAPITAL GAIN IS TO BE COMPUTED BY TAKING THE FAIR MARKET VALUE OF LAND @ RS. 11.50 LACS PER ACRE AS T HE COST OF ACQUISITION 18. IT IS PERTINENT TO HIGHLIGHT HERE THAT THE APPE LLANT OFFERED THE SALE CONSIDERATION, AS RECORDED IN THE SEIZED AGREEMENT TO SELL, FOR THE PURPOSE OF SECTION 45 R.W. SECTION 4 8 OF THE ACT, WHICH WAS ACCEPTED BY THE AO AND THE CIT(A), FOR TH E PURPOSE OF COMPUTATION OF CAPITAL GAINS. HOWEVER, AO AS WEL L AS CIT(A) TURNED A VOLTE-FACE, IN CONSIDERING SUCH SALE CONSI DERATION RECORDED IN SEIZED AGREEMENT TO SELL FOR THE PURP OSE OF DETERMINING FAIR MARKET VALUE OF THE SAID LAND AS ON 1.4.1981. THIS APPROACH OF THE AUTHORITY IS CONTRAD ICTORY IN NATURE, AS THE LAND AND TRANSACTION RELATED THERETO , ARE FACTUAL IN NATURE. THE REVENUE IS NOT PERMITTED TO ADOPT D IFFERENT YARD STICKS, IN RESPECT OF A SINGLE TRANSACTION, UNDER R EFERENCE, AS PER ITS SUITABILITY. THE REVENUE HAS ADOPTED SALE CONSIDERATION OF THE SAID LAND, FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS AT RS.43.25 LACS PER ACRE, BUT REJECTED THE SAME WH ILE DETERMINING THE FAIR MARKET VALUE OF THE SAID LAN D, AS ON 1.4.1981. SUCH APPROACH CANNOT BE JUSTIFIED UNDER ANY CIVILIZED JURISPRUDENCE AND ON THE TOUCH STONE OF P RAGMATIC AND FACTUAL RATIONALITY. FURTHER, THE CONTENTION OF TH E APPELLANT IS SUPPORTED BY THE CERTIFICATE ISSUED BY THE PATWARI AND DULY ENDORSED BY THE TEHSILDAR, IN HIS COMMUNICATION IN QUESTION, AS REPRODUCED ABOVE, WHEREBY THE MARKET PRICE OF TH E 19 AGRICULTURAL LAND SITUATED, ON MAIN RAHON ROAD IS V ERIFIED AT ABOUT RS.5 LACS PER ACRE, DURING THE YEAR 1980-81, AS PER ENQUIRIES MADE. IN THIS CONTEXT, IT IS PERTINENT T O MENTION HERE THAT AO HAS FAILED TO INVOKE THE PROVISIONS OF SECT ION 55A OF THE ACT, FOR THE PURPOSE OF ASCERTAINING THE FAIR MARK ET VALUE OF THE LAND, AS ON 1.4.1981, AS THE PROVISIONS OF SECT ION 55A OF THE ACT CONTAIN A LEGISLATIVE INTENT AND MANDATE, F OR SUCH SPECIFIC PURPOSE OF ASCERTAINING FAIR MARKET VALUE OF THE ASSET, AS ON 1.1.1981, BY THE EXPERT VALUER. FURTH ER, IT IS PERTINENT TO MENTION THAT FAIR MARKET VALUE IN R ELATION TO A CAPITAL ASSET HAS BEEN DEFINED U/S 2(22B) OF THE AC T. FAIR MARKET VALUE IN RELATION TO CAPITAL ASSET, MEANS TH E PRICE THAT THE CAPITAL ASSET WOULD ORDINARILY FETCH ON THE SAL E IN THE OPEN MARKET ON THE RELEVANT DATE. SALE CONSIDERATION, A S FOUND RECORDED IN THE SALE AGREEMENT IN QUESTION, WHICH W AS SEIZED IN THE COURSE OF SEARCH OPERATION, IS NOTHING BUT FAIR MARKET VALUE, AS NEGOTIATED AND ARRIVED AT BY THE PURCHAS ER AND THE SELLER, IN RESPECT OF SAID LAND, HAVING REGARD TO T HE MARKET CONDITIONS, LOCATION OF THE LAND AND OTHER RELEVANT FACTORS. SUCH SALE CONSIDERATION, AS RECORDED IN AGREEMENT TO SELL IS NOT SAME AS RECORDED IN THE REGISTERED SALE DEED OF THE SAID LAND. THEREFORE, ADOPTION OF AVERAGE VALUE OF LAND BY THE REVENUE, AT RS.27,030/- PER ACRE, ON THE BASIS OF R EGISTERED SALE DEEDS, CANNOT BE CONSIDERED AS FAIR MARKET VA LUE WITHIN THE DEFINITION OF FAIR MARKET VALUE IN RELATION TO A CAPITAL ASSET, AS CONTAINED U/S 2(22B) OF THE ACT. THE RATI ONALE AND PHILOSOPHY BEHIND INSERTION OF SECTION 50C OF THE A CT IS THAT THERE IS A WIDE GAP BETWEEN THE SALE CONSIDERATION SHOWN IN THE 20 REGISTERED SALE DEED AND THE FAIR MARKET VALUE OF THE ASSET SOLD. THEREFORE, LEGISLATURE DEEMED IT FIT, TO INT RODUCE THE DEEMING PROVISIONS OF SECTION 50C, WHICH CONTEMPLAT E A DEEMING SITUATION IN RESPECT OF FULL VALUE OF CONSI DERATION, FOR THE PURPOSE OF LEVY OF CAPITAL GAINS. THUS, CONCEP TUALLY AND FACTUALLY, THERE IS WIDE DIFFERENCE BETWEEN THE SAL E CONSIDERATION, AS RECORDED IN THE REGISTERED SALE D EED AND THE FAIR MARKET VALUE OF THE ASSET. 19. IN VIEW OF THIS, CONSIDERATION AS SHOWN IN THE REGISTERED SALE DEED CANNOT BE EQUATED WITH FAIR M ARKET VALUE, AS DEFINED IN THE ACT U/S 2(22B) OF THE ACT . THEREFORE, ADOPTION OF AVERAGE VALUE OF LAND AT RS.27,030/- PE R ACRE AS ON 1.4.1981, AS FAIR MARKET VALUE OF THE LAND IN QUE STION, FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, IS NOT LEG ALLY AND FACTUALLY TENABLE. FAIR MARKET VALUE REPRESENTS T HE PRICE THAT A SELLER IS WILLING TO ACCEPT AND A BUYER IS WILLIN G TO PAY IN THE OPEN MARKET. THE PRICE OR SALE CONSIDERATION AS SP ECIFIED IN THE REGISTERED SALE DEED OF AN ASSET IN INDIA REPRE SENTS THE PRICE OR SALE CONSIDERATION NEGOTIATED OR DETERMINE D NOT IN THE OPEN MARKET BUT IN THE PARALLEL OPERATING MARKET WH ERE SUCH TRANSACTIONS CRYSTALLIZED IN A CLANDESTINE MANNER. IN VIEW OF THIS, SALE CONSIDERATION OF AN ASSET, AS RECORDED I N THE REGISTERED SALE DEED IS GENERALLY UNDERSTATED AND, HENCE, CANNOT BE TAKEN AS FAIR MARKET VALUE AS ON 1.4.19 81 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. 20. THE ITAT, CHANDIGARH B BENCH IN THE CASE OF DY.CIT V SMT. BALJINDER KAUR & ORS. (SUPRA) HELD THAT IT IS WELL SETTLED 21 THAT THE CONCEPT OF FAIR MARKET VALUE ENVISAGES E XISTENCE OF A HYPOTHETICAL SELLER AND A HYPOTHETICAL BUYER IN A H YPOTHETICAL MARKET. THEREFORE, INTRINSICALLY SPEAKING, THE DET ERMINATION OF FAIR MARKET VALUE OF A CAPITAL ASSET AS ON IST AP RIL, 1981 WOULD INVOLVE AN ELEMENT OF ESTIMATION BASED ON REL EVANT FACTORS. AN AGREEMENT TO SELL IS A RELEVANT FACT OR IN DETERMINATION OF FAIR MARKET VALUE, AS ON 1.4.198 1, IN THE PRESENT APPEAL. 21. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSI ONS, AND HAVING REGARD TO THE FAIRNESS, THE FAIR MARKET VALU E OF THE LAND IN QUESTION, DESERVES TO BE TAKEN AT RS.3.50 LACS P ER ACRE, AS ON 1.4.1981, FOR THE PURPOSE OF COMPUTATION OF CAPI TAL GAINS. CONSEQUENTLY, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPT.,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH SEPT.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH