ITO, Ward - 35(1), Kolkata, Kolkata V. M/s. Onkarmal Kajaria Family Trust, Kolkata

ITA 1065/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83163 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 04-08-2011
• Court: TRIBUNAL
• Department Lawyers: DILIP KR MITRA
• Assessee Lawyers: S M SURANA
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 50C; 147; 148; 263

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1065/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-35(1), KOLKATA VS. M/S. ONK ARMAL KAJARIA FAMILY TRUST (PAN: AAATO1474C) (() /APPELLANT ) (*+()/ RESPONDENT ) & C.O. NO. 35/KOL/2013 IN ' / I.T.A NO.1065/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2006-07 M/S. ONKARMAL KAJARIA FAMILY TRUST VS. INCOME-TAX OFFICER, WD-35(1), KOLKATA (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 25.09.2014 DATE OF PRONOUNCEMENT: 27.10.2014 FOR THE APPELLANT: SHRI DILIP KR. MITRA, JCIT, SR . DR FOR THE RESPONDENT: SHRI S. M. SURANA, ADVOCATE / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE IS ARISING OUT OF ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 143/CIT(A)-XX/W ARD-35(1)/2010-11/KOL DATED 23.05.2011. ASSESSMENT WAS FRAMED BY ITO, WARD-35( 1), KOLKATA U/S. 147/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR ASSESSMENT YEARS 2006-07 VIDE HIS ORDER DATED 26.11.2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN HOLDING THAT THE TRANSACTION OF AN IMMOVABLE PROPERTY (IN D ISPUTE) TOOK PLACE IN FY 2004-05 RELEVANT TO AY 2005-06 AS AGAINST THE ACTUAL DEED O F CONVEYANCE REGISTERED ON 22.07.2005 I.E. IN FY 2005-06 RELEVANT TO AY 2006-0 7. THE SECOND INTER-CONNECTED ISSUE IS AS REGARDS TO THE ORDER OF CIT(A) IN ADOPT ING THE VALUE FOR THE PURPOSE OF 2 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 COMPUTATION OF LONG TERM CAPITAL GAIN I.E. FAIR MAR KET VALUE AS ON 01.04.1981 FOR THE PURPOSE OF INDEXATION AT RS.24,03,838/- FOR ITS 1/6 TH SHARE I.E. THE TOTAL VALUE OF THE PROPERTY AT RS.1,44,23,028/-. THE ASSESSEE HAS ALS O MOVED CROSS OBJECTION AND THE INTER- CONNECTED ISSUE RAISED BY ASSESSEE TRUST IS AS REGA RDS TO THE ORDER OF CIT(A) IN NOT ADJUDICATING THE DEEMED SALE CONSIDERATION TO BE TA KEN FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS AS ON THE DATE OF SALE O F THE PROPERTY I.E. THE VALUE AS ADOPTED BY STAMP VALUATION AUTHORITY ON THE BASIS O F CIRCLE RATES OR THE PROPERTY SHOULD BE REFERRED TO DVO IN TERM OF SECTION 50C(2) OF THE ACT. 3. AT THE OUTSET, THE CROSS OBJECTION FILED BY ASSE SSEE IS TIME BARRED BY 564 DAYS AND ASSESSEE HAS FILED CONDONATION PETITION STATING THE REASON THAT THE CROSS OBJECTION WAS FILED AS PER THE DIRECTION OF THE BENCH IN THE COURSE OF HEARING ON 19.03.2013 AS THE BENCH WAS OF THE OPINION THAT THE ISSUE RAISED HERE IN HAS TO BE ADDRESSED TO THE BENCH BY FILING A CROSS OBJECTION. BUT, ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, THIS ISSUE CAN BE RAISED EVEN UNDER RULE 27 OF INCOME TAX (APP ELLATE TRIBUNAL) RULES, 1963. ON QUERY FROM THE BENCH, THE LD. SR. DR HAS NOT OBJECT ED FOR CONDONATION OF DELAY. SINCE THE ISSUE BEING LEGAL AND AFTER GOING THROUGH THE R ECORDS IT IS SEEN THAT THE SAME WAS RAISED BEFORE CIT(A), WHO HAS ADJUDICATED THE ISSUE AGAINST THE ASSESSEE, WHICH REQUIRES NOW ADJUDICATION AS THE MAIN ISSUE IS UNDER CHALLEN GE. IN TERM OF THE ABOVE, THE DELAY IS CONDONED. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE TRUST HAS UNDIVIDED 1/6 TH SHARE IN THE PROPERTY NO. 6, RUSSEL STREET, KOLKATA. THIS PROPE RTY IS OCCUPIED BY TENANTS AND ALSO A PARTITION SUIT IS PENDING IN THE HIGH COURT IN RESP ECT TO THIS PROPERTY. THE ASSESSEE TRUST IS ENTERED INTO AGREEMENT FOR SALE OF ITS UNDIVIDED 1/6 TH SHARE FOR A SUM OF RS. 25 LAKHS VIDE DATED 24.03.2005. THE ASSESSEE RECEIVED PART CONSIDERATIONS VIDE CHEQUES OF RS.15 LAKHS AND RS.5 LAKHS AGAINST AGREEMENT FOR SALE OF THIS PROPERTY ON 24.03.2005. ACTUALLY AND FACTUALLY THE PROPERTY WAS SOLD BY A R EGISTERED CONVEYANCE DEED DATED 22.07.2005 AND AS PER CIRCLE RATES THE VALUE FOR TH E PURPOSE OF STAMP DUTY FOR ASSESSEES 1/6 TH SHARE OF THIS PROPERTY WAS DETERMINED AT RS.1,16,5 8,995/-. THE ASSESSMENT YEAR INVOLVED IN THIS APPEAL IS AY 2006-07 BUT THE ORIGI N OF DISPUTE LIES IN AY 2005-06 ALSO. THE ASSESSEE FILED ITS RETURN FOR AY 2005-06 ON 31. 03.2007 DECLARING LONG TERM 3 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 CAPITAL GAINS OF RS.90,38,422/- ON THE SALE OF ITS ABOVEMENTIONED PROPERTY. THE RELEVANT COMPUTATION FILED ALONG WITH RETURN WAS AS UNDER: TOTAL CONSIDERATION RECEIVED RS. 25,00,000 LESS: INDEXED COST OF ACQUISITION AS PER APPROVED VALUERS REPORT DT. 18.10.06 THE VALUE OF THE PROPERTY AS ON 1.4.1981 WAS RS.24 ,03,838 APPLYING INDEXED COST ON THIS VALUE @ 480/100, THE COST OF ACQUISITION RS.1,15,38,422 LONG TERM CAPITAL LOSS (-) RS. 90,38,422 5. THE ASSESSEE HAS WRONGLY DECLARED LONG TERM CAPI TAL GAINS AT RS.9,03,842/- IN ITS RETURN OF INCOME ACTUALLY IT WAS RS.90,38,622/- . THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING ACCEPTED LONG TERM C APITAL LOSS OF RS.9,03,842/- WHILE COMPLETING ASSESSMENT U/S 143(3) OF THE ACT, IGNORING LONG TERM CAPITAL LOSS DECLARED BY ASSESSEE IN THE COMPUTATION OF INCOME A T RS.90,38,422/-. SUBSEQUENTLY, THE ASSESSMENT WAS REVISED BY CIT, KOLKATA-XII U/S. 263 OF THE ACT FOR THE REASON THAT THE ASSESSMENT COMPLETED IS WITHOUT APPLICATION OF MIND AS REGARDS TO GENUINENESS OF SALE VALUE OF RS.25 LAKHS SHOWN BY THE ASSESSEE, AS HE F AILED TO TAKE INTO ACCOUNT THE VALUE DETERMINED BY STAMP VALUATION AUTHORITY BASED ON CI RCLE RATES IN VIEW OF THE PROVISIONS OF SECTION 50C OF THE ACT AT RS.1,16,58,995/- FOR T HE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS. ACCORDINGLY, CIT DIRECTED THE AO TO COMPLETE FRESH ASSESSMENT AFTER OBTAINING VALUATION REPORT FROM THE DVO. IN PURSUANCE TO REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT, THE AO COMPLETED ASSESS MENT U/S. 143(3) READ WITH SECTION 263 OF THE ACT DATED 24.12.2009 COMPUTING THE TOTAL INCOME AT NIL IGNORING LONG TERM CAPITAL LOSS DECLARED IN THE RETURN OF INCOME FOR A Y 2005-06 WITH THE FOLLOWING OBSERVATIONS: THE LD. CIT-XII, KOLKATA VIDE HIS ORDER DATED 12. 09.08 SET ASIDE THE SAID ORDER WITH A DIRECTION TO THE PRESENT AO TO COMPLETE THE SAID ASSESSMENT AFTER OBTAINING THE VALUATION REPORT FROM THE DVO. ACCORDINGLY, TH E CASE WAS FIXED FOR HEARING BY ME. SCRUTINY OF THE RECORD REVEALS THAT THE PRO PERTY IN QUESTION HAD BEEN TRANSFERRED ON 22.07.05 RELEVANT TO THE ASSESSMENT YEAR 2006-07. HENCE THE IMPLICATIONS OF THE VALUATION REPORT AS ALSO THE OB SERVATION MADE BY THE LD. CIT IN HIS ORDER U/S. 263 WILL BE APPLICABLE IN THE ASS ESSMENT YEAR 2006-07 ONLY. IN VIEW OF THIS THE ASSESSMENT PROCEEDING INITIATED F OR THIS YEAR IS COMPLETED AT RS. NIL INCOME IGNORING THE LONG TERM CAPITAL LOSS CL AIMED BY THE ASSESSEE IN HIS RETURN OF INCOME. 4 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 6. SIMULTANEOUSLY, IN VIEW OF THE ABOVE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER FOR AY 2005-06, HE ISSUED NOTICE U/S. 148 OF THE ACT DATED 24.12.2009 FOR THE REASON THAT THE PROPERTY IN QUESTION WAS ACTUALLY T RANSFERRED ON 22.07.2005 RELEVANT TO AY 2006-07 AND, AS SUCH THE TAXABLE GAIN ON SALE OF SUCH PROPERTY HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THE AO IN THE MEANTIME REFERRED THE MATTER TO DVO FOR VALUATION OF THE PRO PERTY AS ON 01.04.1981, WHO VIDE LETTER DATED 16.12.2009 ESTIMATED THE FAIR MARKET V ALUE OF THE PROPERTY AS ON 01.04.1981 AT RS.11,92,295 QUA 1/6 TH SHARE OF ASSESSEE. ACCORDING TO AO, THE DEEMED SA LE CONSIDERATION AS PER CIRCLE RATES OF STAMP VALUATIO N AUTHORITY, THE PROPERTY WAS VALUED AT RS.1,16,58,995/- AS AGAINST THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AT RS.25 LACS. THE AO COMPUTED THE LONG TERM CAPITAL GAINS AFTER T AKING THE FAIR MARKET VALUE ASSESSED BY DVO AS ON 01.04.1981 AT RS.11,19,295/- AND DEEMED SALE CONSIDERATION ASSESSED BY STAMP VALUATION AUTHORITY BASED ON CIRC LE RATES AT RS.1,16,58,995/- AS UNDER: AS ON 01.4.1981 COST OF ACQUISITION OF THE PROPE RTY: RS. 1119295X497 = RS.5562896 9AFTER INDEXATION) 100 STAMP DUTY VALUATION = RS.11658995/- THEREFORE, LONG TERM CAPITAL GAIN IS (RS.11658995 RS.5562896) = RS.6096099/- AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO UPHELD THE ACTION OF AO FOR REOPENING OF ASSESSMENT U/S. 147 READ WITH SECTION 148 OF THE ACT AND ASSESSING THE LONG TERM CAPITAL GAINS IN AY 2006-07. TO THIS, NOW THE ASSESSEE HAS NOT CHALLENGED THE ISSUE OF ASSESSMENT OF LONG TERM CAPITAL GAIN IN AY 2006-07 FOR THE REASON THAT THE PROPERTY WAS ACTUALLY TRANSFERRED BY CONVEYANCE DEE D DATED 22.07.2005 FALLING IN THIS AY 2006-07 AND EVEN FULL AND FINAL PAYMENT FOR CONS IDERATION WAS MADE IN THIS YEAR. ACCORDING TO ASSESSEE, THE POSSESSION WAS ALSO HAND ED OVER IN THIS YEAR. THE REVENUES MAIN CONTENTION WAS THAT THE LONG TERM CAPITAL GAIN IS TO BE ASSESSED IN AY 2006-07. HENCE, WE ADJUDICATE THIS ISSUE IN FAVOUR OF REVENU E THAT THE LONG TERM CAPITAL GAINS ARISING OUT OF TRANSACTION OF THIS PROPERTY WILL BE ASSESSED IN AY 2006-07 AND NOT IN AY 2005-06. 7. NOW QUESTION ARISES WHAT WILL BE THE BASE VALUE FOR ADOPTING THE FAIR MARKET VALUE AS ON 01.04.1981 FOR DETERMINING THE INDEXED COST FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. ADMITTEDLY, THIS PROPER TY WAS ACQUIRED BY ASSESSEE TRUST 5 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 MUCH BEFORE 01.04.1981 AND ASSESSEE HAS FILED APPRO VED VALUERS REPORT DATED 18.10.2006, WHO VALUED THE ASSESSEES 1/6 TH SHARE AS ON 01.04.1981 AT RS.1,15,38,423/- BY APPLYING COST INFLATION INDEX, THE VALUE ESTIMAT ED BY REGISTERED VALUER WAS AT RS.24,03,838/- AS ON 01.04.1981. THE ASSESSEE HAS FILED THIS VALUATION REPORT BY REGISTERED VALUER AT PAGES 31 TO 36 OF ASSESSEES P APER BOOK. THE DVO HAS ALSO VALUED THIS PROPERTY AS ON 01.04.1981 AT RS.11,19,295/-. THE FIRST QUESTION ARISES WHETHER THE PROPERTY AS ON 01.04.1981 CAN BE REFERRED TO DVO FO R DETERMINING FAIR MARKET VALUE FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAI NS U/S. 55A OF THE ACT OR NOT. THIS ISSUE HAS BEEN ANSWERED BY HONBLE CALCUTTA HIGH CO URT IN THE CASE OF CIT VS. UMEDBHAI INTERNATIONAL (P) LTD. (2011) 338 ITR 506, WHEREIN IN SIMILAR SITUATION, THERE WAS A SUBSTITUTION OF THE COST AS ON 1.4.1981, VALU E BASED ON DVOS REPORT ON A REFERENCE UNDER SECTION 55A OF THE ACT, HELD THAT S UCH A REFERENCE COULD NOT BE MADE UNLESS AND UNTIL THE ASSESSING OFFICER FORMED AN OP INION THAT VALUE SHOWN BY THE ASSESSEE WAS LESS THAN FAIR MARKET VALUE. PARAS 4 T O 8 OF THE JUDGMENT IS REPRODUCED HEREUNDER:- 4. THE ASSESSEE ON THE BASIS OF REGISTERED VALUER S REPORT WORKED OUT INDEXED COST AS ON 1S T APRIL, 2002 AT RS.3,06,37,281/-. IT WAS TAKEN OPENING STOCK OF LAND IN THE ASSESSMENT YEAR UNDER CONSIDERATION. WITH TH E RETURNS THE AFORESAID VALUATION REPORT WAS SUBMITTED. HOWEVER, THE AO DID NOT ACCEPT VALUATION AND REFERRED THE MATTER TO THE DEPARTMENTAL VALUER UNDE R SECTION 55A OF THE SAID ACT TO DETERMINE THE FAIR MARKET VALUE AS ON 1S T APRIL , 1981 AND IT WAS DONE BY THE DEPARTMENTAL VALUER AT RS.18,73,800. THE AO DID NOT ACCEPT VALUATION REPORT SUBMITTED BY THE ASSESSEE ON THE GROUND THAT THE SA ME WAS NOT PREPARED ON THE BASIS OF ANY SALE INSTANCE. NATURALLY THE AO PROCEE DED ON THE BASIS OF THE VALUATION OF THE DEPARTMENTAL VALUER WHICH MADE A L OT OF DIFFERENCE IN ASSESSING TAX LIABILITY. BASING DEPARTMENTAL VALUATION REPORT THE AO CAME TO CONCLUSION THAT THE ASSESSEE HAD OVERSTATED THE VALUE OF THE O PENING STOCK AT RS.2,26,54,893/- AND INSTEAD OF ACCEPTING THE LOSS, AS SHOWN IN THE RETURN THE AO HAS DETERMINED THE NET PROFIT OF RS.6,09,025/-. THU S THE CONCLUSION ARRIVED AT BY THE AO BASED ON VALUATION. THEREFORE, THE POINT RAI SED BEFORE THE C!T(A) THAT THE VALUATION WAS GOT TO BE DONE BY THE AO WITHOUT COMP LIANCE OF S. 55A OF THE !T ACT, 1961. ACCORDING TO THE ASSESSEE REFERENCE TO T HE VALUATION OFFICER IS WITHOUT JURISDICTION AS PER- CONDITION FOR REFERENCE WAS NO T SATISFIED. ACCORDING TO THE ASSESSEE BEFORE MAKING ANY REFERENCE THE AO HAS TO FORM OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE WITHO UT DOING SO REFERENCE IS WITHOUT JURISDICTION. ON THIS LIMITED POINT THE C!T (A) ALLOWED THE APPEAL AND HELD THAT THE REFERENCE WAS NOT DONE BY THE AO IN C OMPLIANCE OF PROVISIONS OF SEC. 55A OF THE SAID ACT. THE TRIBUNAL ALSO UPHELD THIS FINDING. 5. READING THE AFORESAID QUESTION WE ARE NOT CONCER NED WITH ANY OTHER PORTION OF THE JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL. 6 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 6. THE CIT(A) AS WELL AS THE LEARNED TRIBUNAL HAS C AME TO FACT FINDING THAT THE DEPARTMENT HAS NOT BROUGHT ANY MATERIAL ON RECORD T HAT AO HAD FORMED AN OPINION HAVING REGARD TO THE NATURE OF THE ASSESSME NT AND CONSIDERING THE OTHER RELEVANT CIRCUMSTANCES FOR MAKING REFERENCE TO DEPA RTMENTAL VALUATION OFFICER UNDER S. 55A OF THE SAID ACT. THIS CONCURRENT FACT FINDING OF TWO AUTHORITIES ARE NOT QUESTIONED TO BE PERVERSE. 7. THIS COURT CANNOT MAKE ANY ENDEAVOUR TO MAKE ANY FACT FINDING NOR DOES IT WISH TO DO IN ABSENCE OF PLEA OF PERVERSITY . IN THIS CASE THE ADMITTED POSITION IS THAT THE ASSESSEE SUBMITTED VALUATION M ADE BY THE REGISTERED VALUER. HENCE CI. (A) OF THE AFORESAID SECTION IS APPLICABL E IN THIS CASE WHICH IS SET OUT HEREUNDER- '55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET V ALUE OF 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 REGISTERED V ALUER, IF THE (ASSESSING) OFFICER IS OF THE OPINION THAT THE VAL UE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE. (B) IN ANY OTHER CASE, IF THE (ASSESSING) OFFICER I S OF THE OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE 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, SO TO DO'. 8. THUS IT IS CLEAR BASED ON THE AFORESAID CONCURRE NT FACT FINDINGS THAT THE FORMATION OF OPINION OF THE AO THAT THE VALUE CLAIM ED BY THE ASSESSEE LESS THAN ITS FAIR MARKET VALUE IS SINE QUA NON REASONS RECOR DED AFTER ORDER OF REFERENCE FOR VALUATION OF THE REGISTERED VALUER IS NOT THE S UBSTITUTE OF PRE-DECISIONAL FORMATION OF OPINION. 8. AS THE ISSUE IS COVERED BY HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF UMEDBHAI INTERNATIONAL (P) LTD., SUPRA AND ONCE THE ASSESSEE HAS FILED APPROVED VALUERS REPORT, WHICH IS IN THE CASE OF THE ASSESS EE IS DATED 18.10.2006 VALUING THE PROPERTY AS ON 01.04.1981 AT RS.24,03,838/-, IS FIN AL. NO FURTHER REFERENCE U/S. 55A CAN BE MADE FOR ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY FOR DETERMINING THE VALUE AS ON 01.04.1981 UNLESS AND UNTIL THE AO FORMS AN OPIN ION THAT VALUE SHOWN BY THE ASSESSEE WAS LESS THAN FAIR MARKET VALUE. 9. THE SECOND ISSUE RAISED BY ASSESSEE IS AS REGARD S TO THE VALUE ADOPTED BY THE AO BASED ON DEEMED VALUE DETERMINED ON THE BASIS OF CI RCLE RATES BY STAMP VALUATION 7 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 AUTHORITY AT RS.1,16,58,995/- IS TO BE TAKEN FOR TH E PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN OR THE PROPERTY IS TO BE REFERRED TO D VO FOR DETERMINING THE FAIR MARKET VALUE IN TERM OF SECTION 50C OF THE ACT. NOW, THE A SSESSEE HAS REFERRED TO THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF SUNIL K UMAR AGARWAL VS. CIT IN GA NO. 3686 OF 2013 ITAT NO. 221 OF 2013 ORDER DATED 13.03 .2014, WHEREIN HONBLE CALCUTTA HIGH COURT HAS LAID DOWN CERTAIN PRINCIPLES IN REGA RD TO VALUATION TO BE MADE BY DVO IN TERM OF SECTION 50C OF THE ACT, WHICH ARE AS UND ER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ADVANCED BY THE LEARNED ADVOCATES APPEARING FOR THE PARTIES. THE SUBMISSION OF MS. GHUTGHUTIA THAT THE REQUIREMENT OF CLAUSES A) AND (B) OF SUB-SECTION 2 OF SECTION 50C HAS NOT BEEN MET BY THE ASSESSEE, CAN HARDLY BE ACCEPTED. THE REQUIR EMENT OF CLAUSE (B) OF SUB- SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONL Y QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (B) OF SUB-SECTION 2 OF SECTI ON 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (A) OF SUB-SECTION 2 OF SECTION 50C WAS MET BY THE ASSESSEE. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APP EARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRE SUMABLY, THE CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS TH E HIGHEST PREVAILING PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE D ISTRICT SUB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENC E CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER . STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER A CCEPT IT OR DISPUTE IT. THE ASSESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB-REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LAKHS WHICH, ACCORDING TO THE ASSESSEE, WAS THE HIGHEST P REVAILING MARKET PRICE. IT WOULD FOLLOW AUTOMATICALLY THAT HIS CASE WAS THAT THE FAI R MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS ASSESSED BY THE DISTRIC T SUB REGISTRAR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, IN FAIRNESS, H AVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPARTME NTAL VALUATION OFFICER CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COUR SE, IN ALL SUCH CASES THE ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSE SSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION TH AT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID N OT INTEND THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATIO N TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISL ATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATUR E SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE W HERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSESSEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSESSING OFFICER, DISCHARGI NG A QUASI JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR T REATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. 8 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 FROM THE ABOVE FACTS AND LEGAL PROPOSITION LAID DOW N BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL, SUPRA, WE ARE OF THE VIEW THAT THE VALUE OF THE PROPERTY ESTIMATED BY DVO AS ON THE DATE OF SAL E IS TO BE TAKEN AS THE FINAL CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LON G TERM CAPITAL GAINS U/S. 50C OF THE ACT. THE ASSESSEE SOLD THE PROPERTY FOR A TOTA L CONSIDERATION OF RS.25 LACS DURING THE RELEVANT FINANCIAL YEAR RELEVANT TO THIS ASSESSMENT YEAR. THE AO HAS TAKEN THE FAIR MARKET VALUE AT RS.1,16,58,995/- AS PER THE CIRCLE RATE FIXED BY SUB-REGISTRAR. THE AO AS WELL AS CIT(A) HAS TAKEN THE VALUE AS ADOPTED BY SUB-REGISTRAR BASED ON CIRCLE RATE FOR ASSESSING THE LONG TERM CAPITAL GAIN ARISING OU T OF SALE OF THE ABOVE PROPERTY. BEFORE US, NOW THE LD. COUNSEL FOR THE ASSESSEE STATED THA T IN VIEW OF THE PROPOSITION LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL, SUPRA, THE PROPERTY IS TO BE REFERRED TO DVO IN TERM OF THE PR OVISIONS OF SECTION 50C(2) OF THE ACT FOR ESTIMATING THE FAIR MARKET VALUE OF THE PROPERT Y AS ON THE DATE OF SALE. WE ARE OF THE VIEW THAT THE VALUE OF THE PROPERTY ESTIMATED BY DV O AS ON THE DATE OF SALE IS TO BE TAKEN AS THE FINAL CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS U/S. 50C(2) OF THE ACT. ACCORDINGLY, AO IS DI RECTED TO REFER THE MATTER TO DVO U/S. 50C(2) OF THE ACT AND ALSO ALLOW OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. THE ASSESSEE WILL BE ALLOWED OPPORTUNITY TO REPRESENT B EFORE DVO, IF HE DESIRES SO. THIS ISSUE OF ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF AO FOR FRESH ADJUDICATION IN TERM OF THE ABOVE. 10. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED A ND THE ISSUE OF THE CROSS OBJECTION OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.10. 2014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27TH OCTOBER, 2014 ,- #./ 0 JD.(SR.P.S.) 9 ITA NO.1065/K/2011 & CO NO. 35 OF 2013 M/S. ONKARMAL KAJARIA FAMILY TRUST AY 2006-07 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT ITO, WARD-35(1), KOLKATA. 2 *+() / RESPONDENT M/S. ONKARMAL KAJARIA FAMILY TRUST, 18, AMRATOLLA STREET, KOLKATA-700 001. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / ACIT KOLKATA 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #