Shri Mathurbhai Nathalal Patel, Ahmedabad V. The Income Tax Officer, Ward-7(4), Now Ward-2(2)(3), Ahmedabad

ITA 1087/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0510 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Value adopted by valuation officer; Capital asset; Fair market value; Valuation report
• Section: 143(3); 37; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, & SHRI MANISH BORA D, AM. ITA NO.3034/AHD/2011 & ITA NO.1087/AHD/2015 ASST. YEAR: 2007-08 SHRI MATHURBHAI NATHALAL PATEL, C/O SAHKAR STEEL TRADERS, 12, BHARAT MILAP SOCIETY, NARANPURA, AHMEDABAD. VS. ITO, WD-2(2)(3), AHMEDABAD. APPELLANT RESPONDENT PAN ABJPP8174A APPELLANT BY SHRI RAJESH C. SHAH, AR RESPONDENT BY SHRI SANJAY AGRAWAL, CIT, DR DATE OF HEARING: 11/8/2016 DATE OF PRONOUNCEMENT: 23/9/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS (I) OF CIT-III, AHMEDABAD, DATED 10 /10/2011, U/S 263 OF THE IT ACT, 1961 (IN SHORT THE ACT) AND (II) CIT (A)-10, AHMEDABAD, DATED 24.2.2015, PASSED AGAINST ORDER U/S 143(3) R. W.S. 263 OF THE ACT ON 22/03/2013 BY ITO WARD-7(4), AHMEDABAD. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 2 GROUNDS RAISED IN ITA NO.3034/AHD/2011 ARE AS UNDER :- 1. THAT THE ORDER PASSED BY THE LEARNED C.I.T. U/S 263 OF THE I.T. ACT IS ABSOLUTELY BAD-IN-LAW AND ON THE FACTS OF THE CASE AND WITHOUT JURISDICTION AND, HENCE, THE SAME BE CANCELLED. 2. THAT THE LEARNED C.I.T. FURTHER ERRED IN HOLDING THAT THE ASSESSMENT ORDER U/S 143(3) WAS PASSED BY THE ASSESSING OFFICER WITHOUT APPLYING HIS MIND AND IN A STEREOTYPED MANNER ACCEPTING THE CLAIM OF THE APP ELLANT WITHOUT MAKING ANY INQUIRY AND, THEREFORE, THE SAID ORDER WAS ERRONEOU S. IT IS SUBMITTED THAT THE C.I.T. HAS NOT SHOWN AS TO HOW THE ORDER OF THE A.O . IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH FINDING IS ALSO MUST TO INVOKE THE JURISDICTION U/S 263 OF THE ACT. 3. THAT THE C.I.T. FURTHER ERRED IN CANCELLING THE A.O. WITH A DIRECTION TO EXAMINE THE CLAIM OF LTCG AFRESH IN SPITE OF THE FACT THAT ALL THE RELEVANT DETAILS INCLUDING THE COPY OF THE VALUATION REPORT AS ON 1- 4-1981 FROM AN APPROVED VALUER WAS FILED BEFORE THE A.O. AND THE A.O. WAS O F THE OPINION THAT THE FAIR MARKET VALUE CANNOT EXCEED THE VALUE AS ON -4-1981 AS PER THE VALUER'S REPORT AND, THEREFORE, HE HAD NO POWERS TO REFER TO THE VA LUATION U/S 55A AS HELD BY THE HONOURABLE GUJARAT HIGH COURT. IT IS, THEREFORE, SUBMITTED THAT THE ORDER PASSED B Y THE A.O. CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND, THEREFORE, ACTION OF THE C.I.T. IS BEYOND THE POWERS U/S 263 OF THE ACT AND, HENCE, THE ORDER U/S 263 BE CANCELLED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL HAVING SOURCE OF INCOME FROM SHARE OF PR OFITS, INCOME FROM SHARE CAPITAL, SALE OF IMMOVABLE PROPERTY. RETURN O F INCOME WAS FILED ON 30.03.2008 SHOWING TOTAL INCOME AT RS.4,36,100/- . ASSESSMENT WAS COMPLETED ON 29.09.2009 ASSESSING THE INCOME AT RS.6,96,694/- AFTER MAKING ADDITION OF RS.2,60,594/-. PURSUANT TH ERETO LD. CIT-III, AHMEDABAD INVOKED HIS POWERS UNDER SECTION 263 OF T HE ACT. LD. CIT OBSERVED THAT IN THE COMPUTATION OF INCOME FOR ASST . YEAR 2007-08 ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.65, 53,712/- AND ITA NO. 3034 & 1087 ASST. YEAR 2007-08 3 WHILE CALCULATING LONG TERM CAPITAL GAINS (LTCG) A DOPTED THE COST OF THE SAID LAND AS ON 1/4/1981 AT RS.7,29,300/- ON TH E BASIS OF VALUATION REPORT BY REGISTERED VALUER DATED 25.5.20 06 WHERE THE RATE OF DEVELOPED LAND WAS ADOPTED @ RS.50/- PER SQ. YD. LD. CIT OBSERVED THAT ASSESSING OFFICER FAILED TO EXAMINE T HE ARBITRARY ADOPTING THE RATE OF DEVELOPED LAND, AS ALSO ENHANC ED RATE OF DEVELOPED LAND HAS BEEN ACCEPTED WITHOUT ANY ENQUIR Y BY WAY OF REFERRING TO THE DVO. IN THE COURSE OF PROCEEDINGS U/S 263 ASSESSEE DULY SUBMITTED THAT PROPER ENQUIRY WAS MADE BY THE ASSESSING OFFICER. HOWEVER, LD. CIT WAS NOT CONVINCED WITH TH E REPLY OF ASSESSEE AND ACCORDINGLY CANCELLED THE ASSESSMENT O RDER PASSED U/143(3) OF THE ACT DATED 29.9.2009 AND DIRECTED TH E ASSESSING OFFICER TO EXAMINE THE COMPUTATION OF LONG TERM CAP ITAL GAIN AND PASS FRESH ASSESSMENT ORDER. 3. THEREAFTER ASSESSMENT U/S 143(3) R.W.S. 263 OF T HE ACT COMPLETED ON 22.3.2013 ASSESSING THE INCOME AT RS.3 2,37,047/- AFTER MAKING VARIOUS ADDITIONS ON ACCOUNT OF LONG TERM CA PITAL GAINS AND OTHER HEADS. APPEAL AGAINST THIS ORDER BEFORE LD. C IT(A) WAS DISMISSED. AGGRIEVED, ASSESSEE IS NOW IN APPEAL AGA INST THE ORDER U/S 263 OF LD. CIT AS WELL AS AGAINST THE ORDER OF LD.CIT(A) PASSED AGAINST THE ORDER U/S 143(3) R.W.S. 263 OF THE ACT. 4. WE WILL FIRST TAKE UP ITA NO.3034/AHD/2011 FOR A SST. YEAR 2007- 08 WHEREIN THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT U/S 263 OF THE ACT. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 4 5. LD. AR SUBMITTED THAT ALL NECESSARY DETAILS RELA TING TO CALCULATION OF LONG TERM CAPITAL GAINS ON SALE OF L AND WERE PLACED BEFORE THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. VALUATION REPORT BY REGISTERED VALUER DATED 25.5.2006 WAS ALSO SUBMITTED TO THE LD . ASSESSING OFFICER FOR EXAMINING THE ADOPTION OF COST OF LAND AS ON 1.4.1981 @ % RS.50/- PER SQ.YD. WHICH COMES IN TOTAL TO RS.7,0 1,800/- AS THE COST OF LAND AS ON 1.4.1981. LD. AR FURTHER SUBMITTED TH AT PROVISIONS OF FOR REFERENCE TO VALUATION OFFICER ARE PROVIDED IN SEC. 55A OF THE ACT WHICH GIVES DISCRETIONARY POWER TO THE ASSESSING AU THORITY WHEREIN HE MAY REFER IT TO THE VALUATION OFFICER IF HE TENT AMOUNTS TO BELIEVE THAT THE FAIR MARKET VALUE OF THE PROPERTY SOLD OR THE COST OF THE LAND OR PROPERTY SHOWN IS EITHER LESS OR COST OF THE PRO PERTY SOLD IS MORE THAN THE FAIR MARKET VALUE THEN HE MAY REFER THE MA TTER TO THE VALUATION OFFICER. IN THE CASE OF ASSESSEE VALUATIO N REPORT BY REGISTERED VALUER WAS ON RECORD WHICH WAS DULY ACCE PTED BY THE ASSESSING OFFICER. IT IS THEREFORE, NOT PROPER TO S AY THAT ASSESSING OFFICER HAS NOT CONDUCTED PROPER ENQUIRY. LD. AR FU RTHER SUBMITTED THAT IN CASE THE ASSESSING AUTHORITY HAS TWO POSSIB LE VIEWS TO BE TAKEN AND HE CHOOSES ONE THEN IT CANNOT BE SAID THA T THE ENQUIRY CONDUCTED BY HIM WAS NOT PROPER AS HE HAS NOT TAKEN UP THE SECOND VIEW ALSO. LD. AR PLACED RELIANCE ON THE JUDGMENT O F HON. SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT 243 ITR 83 (SC) AND THE DECISION OF THE CO-ORDINATE BENCH KOLK ATA IN THE CASE OF MUGNEERAM BENGUR & CO. VS.CIT, KOLKATA IN ITA NO.12 34//KOL/2009. 6. ON THE OTHER HAND, LD. DR SUBMITTED AS BELOW :- ITA NO. 3034 & 1087 ASST. YEAR 2007-08 5 THE ISSUE RELATED TO NON-INQUIRY INTO FAIR MARKET V ALUE AS ON 01/04/81. LACK OF ENQUIRY ON ANY MATTER MAKES THE ORDER ERRON EOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AS HELD IN T HE FOLLOWING JUDGEMENTS: LD. DR FURTHER SUBMITTED THAT ASSESSMENT WITHOUT PR OPER ENQUIRY, UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A D ECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, AN ASSESSING OFFICE R IS NOT ONLY AN ADJUDICATOR BUT IS ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE ON THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER B UT CALLS FOR FURTHER ENQUIRY - IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE INQUIRY - IF THERE IS FAILURE TO MAKE SUCH ENQUIRY, ORDER IS ERRONEOUS AND PREJUDICIAL TO REVENUE - CIT NEED NOT PROVE THA T IT IS ERRONEOUS AND HE CAN REVISE IT U/S 263. RELIANCE WAS PLACED O N FOLLOWING JUDGMENTS :- RAMPYARI DEVI SARAOGI VS CIT (SC) 67 ITR 84 MALABAR INDUSTRIAL CO. LTD. VS CIT (SC) 243 ITR 83 (3 RD LAST PARA) SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD VS CIT (AL L) 187 ITR 412 GEE VEE ENTERPRISES VS ADDL. CIT & ORS. (DEL) 99 IT R 375 LD. DR FURTHER SUBMITTED THAT IT WILL NOT BE PROPER FOR THE HON'BLE MEMBERS OF THE TRIBUNAL TO LOOK INTO THE MERITS OF ISSUE AS THE COURT OF FIRST INSTANCE. RELIANCE IS PLACED ON: CIT PASSED ORDER U/S 263 SINCE ASSESSING OFFICER D ID NOT MAKE ANY ENQUIRY ON THE ISSUE - ONCE IT IS FOUND THAT INVOCATION OF THE PROVISIONS OF SEC. 263 WAS PROPER AND VALID, SUCH AN ORDER PASSED BY CIT COULD NOT HAVE BEEN TINKERED BY THE TRIBUNAL BY GOING TO THE MERITS OF THE ISSUE - ONCE CIT HAS REMANDED THE ISSUE TO ASSESSING OFFICER IT WAS NOT PROPER FOR TR IBUNAL TO DECIDE ON MERITS CONVERTING ITSELF INTO A COURT OF FIRST INSTANCE AN D DECIDING ON SOME ISSUES ON ITA NO. 3034 & 1087 ASST. YEAR 2007-08 6 WHICH BOTH ASSESSING OFFICER AND CIT HAVE NOT RECOR DED ANY FINDING CIT VS EASTERN MEDIKIT LTD. (DEL) 58 DTR 265 ; 337 ITR 56. RELIANCE IS ALSO PLACED ON DECISION OF GUJARAT HIGH COURT IN CASE OF ADDL. CIT VS. MUKUR CORPORATION (1978) 111 ITR 0312 (GUJ): REVISIONSCOPE AND VALIDITYERRONEOUS AND PREJUDICI AL ORDER IT IS NOT NECESSARY THAT IN HIS ORDER UNDER S. 263, THE CIT S HOULD COME TO A FIRM CONCLUSION THAT THE ORDER OF THE ITO WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE WHERE THE ITO ALLOWED DEDUCTION TO ASSESSEE-FIRM ON CAPITAL GAINS WITHOUT PROPERLY PROBING INTO THE MAT TER, THE INITIATION OF PROCEEDINGS UNDER S. 263 BY THE CIT WAS PROPER FURTHER, WHERE THE CIT HAD AN AFFIDAVIT OF ONE V STATING THAT HE WAS BENAMI FOR THE ASSESSEE-F IRM AND THE ASSESSEE DESIRED TO CROSS-EXAMINE SAID V, CIT WAS JUSTIFIED IN CANCELLING THE ASSESSMENT MADE BY ITO WITHOUT GIVING ANY FINAL DECISION IN TH E MATTER AND REMANDING THE CASE TO MAKE FRESH ASSESSMENT AFTER GIVING THE ASSE SSEE AN OPPORTUNITY TO CROSS-EXAMINE RELIANCE IS ALSO PLACED ON DECISION OF ITAT, MUMBAI IN THE CASE OF CROMPTON GREEVES LTD. ITA NO. 1994/MUM/2013 DATED 0 1/02/2016 HOLDING THAT EXPLANATION 2 TO S. 263 (WHICH SUPERSE DES THE LAW THAT THERE IS A DIFFERENCE BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY') IS 'DECLARATORY- & CLARIFICATORY' IN NATU RE AND IS INSERTED TO PROVIDE CLARITY ON THE ISSUE AS TO WHICH ORDERS PAS SED BY THE AO SHALL CONSTITUTE ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF REVENUE. LD. DR ALSO SUBMITTED THAT WHERE THE AO FAILS TO CO NDUCT AN ENQUIRY OR PROPER ENQUIRY, WHICH IS CALLED FOR IN THE GIVEN CIRCUMSTANCES, THE CIT IS EMPOWERED TO SET ASIDE THE ASSESSMENT ORDER BY TREATING IT AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IN SUCH CIRCUMSTANCES, IT IS NOT FURTHER REQUIRED ON THE PA RT OF THE CIT TO EXPRESSLY SHOW WHERE THE ASSESSMENT ORDER WENT WRON G. THE VERY FACT THAT NO ENQUIRY WAS CONDUCTED OR NO PROPER ENQ UIRY WAS ITA NO. 3034 & 1087 ASST. YEAR 2007-08 7 CONDUCTED IN THE REQUIRED CIRCUMSTANCES, IS SUFFICI ENT IN ITSELF TO INVOKE THE PROVISIONS OF SECTION 263. (PARA21.G) SUBHLAKSHMI VANIJYA (P) LTD. & ORS. VS.COMMISSIONER OF INCOME TAX KOLKATA TRIBUNAL (2015) 172 TTJ 0721 (KOLKATA) ARVIND LAXMIDAS KABARWALA(HUF) VS CIT [2011] 12 TAXMANN.COM 73(AHD TRIBUNAL) FURTHER AMENDMENT TO SEC 55A(A) ALSO FALLS IN CATEG ORY OF CLARIFICATORY AND DECLARATORY IN NATURE AS DISCUSSED ON PAGE 17 O F ORDER DATED 01/02/2016 IN ITA NO. 1994/MUM/2013 AND IN ANY CASE THE REPORT OF DVO IS DATED FEB 2013, SO FAULT CAN BE FOUND IN ORD ER PASSED U/S 143(3)/263. \ 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US AND GONE THROUGH THE JUDGMENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. THROUGH THIS APPEAL ASSESSEE HAS CHALLENGED THE ORDER U/S 263 OF CIT HOLDING THE ASS ESSMENT ORDER U/S 143(3) WAS PASSED BY ASSESSING OFFICER WITHOUT DILI GENCE AND APPLICATION OF MIND AND CONSEQUENTLY, THIS WAS ERRO NEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. WE OB SERVE THAT GENESIS OF INVOCATION OF POWER U/S 263 OF THE ACT IN THE CASE OF ASSESSEE AROSE FROM THE ISSUE OF CALCULATION OF LONG TERM CAPITAL GAIN FROM SALE OF LAND. IN ORDER TO CALCULATE LONG TERM CAPITAL GAIN FROM THE COST OF LAND AS ON 1.4.1981 WAS ADOPTED AT RS.7,29,300/- AS THE LAND WAS ACQUIRED BY ASSESSEE BEFORE 1.4.1981. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, ASSESSEE IN SUPPORT OF THE COST OF LAND OF RS.7,29,300/- FURNISHED THE VALUATION REPORT BY REG ISTERED VALUER DATED 25.5.2006 WHICH HAS ADOPTED THE RATE OF DEVEL OPMENT BY RS.50/- PER SQ.YD. FURTHER THE REGISTERED VALUER TO OK SUFFICIENT ITA NO. 3034 & 1087 ASST. YEAR 2007-08 8 INSTANCES OF SALE IN THE SAME VICINITY IN THE YEAR 1980-81 SO AS TO CALCULATE THE COST OF THE LAND WHICH WHEN APPLIED T O THE TOTAL LAND SOLD WAS CALCULATED AT RS.7,29,300/-. WE FURTHER FI ND THAT COMPUTATION OF LONG TERM CAPITAL GAIN WAS PLACED BEFORE THE ASS ESSING AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON THE BASIS OF THE SAME THE COST OF THE LAND ADOPTED BY THE ASSESSEE F OR CALCULATING LONG TERM CAPITAL GAIN WAS ACCEPTED BY THE ASSESSIN G OFFICER. IT IS PERTINENT TO NOTE THAT THE VALUATION REPORT IS DATE D 25.5.2006 WHICH WAS VERY MUCH FALLING IN THE RELEVANT PERIOD FOR AS ST. YEAR 2007-08 AND ORDER U/S 143(3) OF THE ACT WAS FRAMED ON 29.9. 2009 WHICH SHOWS THAT ASSESSEE HAS TAKEN THE VERY BASIS OF REG ISTERED VALUERS REPORT DATED 25.5.2006 AT THE TIME OF FILING OF RET URN OF INCOME AND CALCULATED THE CAPITAL GAIN. FURTHER IT WOULD BE RE LEVANT TO GO THROUGH THE PROVISIONS OF SECTION 55A OF THE ACT WHICH READ S AS UNDER :- [REFERENCE TO VALUATION OFFICER. 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE [ASSESSING] OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER ( A ) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF T HE [ASSESSING] OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED [IS AT VARIANCE WITH 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 EXCEEDS T HE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESC RIBED 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 SECTION 24, SECTI ON 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL WITH T HE NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATIO N TO A REFERENCE MADE BY THE [ASSESSING] OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 9 EXPLANATION. IN THIS SECTION, VALUATION OFFICER HAS THE SAME MEANING, AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 195 7).] 8. FROM GOING THROUGH THE ABOVE PROVISIONS OF THE A CT, WE FIND THAT THERE IS DISCRETIONARY POWER OF THE ASSESSING OFFICER AS PER WHICH HE MAY REFER THE VALUATION OF CAPITAL ASSET TO VALU ATION OFFICER WHICH MEANS THAT IT IS NOT MANDATORY ON THE PART OF ASSESSING OFFICER TO REFER THE VALUATION OF CAPITAL ASSET TO VALUATIO N OFFICER EACH TIME WHEN HE ASSESSES THE LONG TERM CAPITAL GAIN. CERTAI NLY IN THE CASE OF ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S WHEN THE COPY OF VALUATION REPORT BY REGISTERED VALUER WAS P LACED BEFORE THE ASSESSING AUTHORITY, LD. ASSESSING OFFICER SEEMS TO BE CONVINCED WITH THE SAME AND DID NOT CONSIDER IT NECESSARY TO REFER IT TO THE VALUATION OFFICER. SUCH INCIDENT WHERE THE ASSESSING AUTHORIT Y HAS TWO LEGALLY POSSIBLE VIEWS AND HE ADOPTS ONE, THEN INVOKING OF POWER U/S 263 BY CIT AS HAS BEEN HELD ERRONEOUS BY THE CO-ORDINATE B ENCH IN THE CASE OF MUGNEERAM BANGUR & CO. VS. CIT (SUPRA) WHI CH HAS RELIED ON THE JUDGMENT OF HON. SUPREME COURT IN THE CASE O F MALABAR INDUSTRIAL CO. LTD. (SUPRA) - 9; ANOTHER ASPECT FOR REVISION OF ASSESSMENT WAS TH AT THE AO HAS TO COMPUTE INCOME FROM HOUSE PROPERTY, IN RESPECT OF THE PROPERTIES F ROM THE ASSESSEE HAS NOT RECEIVED ANY RENT AND KEPT VACANT. LD. COUNSEL FOR THE ASSESSEE STATED THAT COMPLETE INFORMATION BEFORE THE AO WAS AVAILABLE AT THE TIME OF FRAMING OF ASSE SSMENT IN RESPECT TO 11 UNITS OF HOUSE PROPERTY AT 65, HARI RAM GOENKA ST., AND ASSESSEE H AS DISCLOSED NOTIONAL VALUE U/S. 23(2) OF THE ACT AT NIL IN ITS COMPUTATION OF INCOME AND AO WHILE ADJUDICATING THIS ISSUE HAS ACCEPTED THE NOTIONAL VALUE AT NIL FROM THESE UNITS . ONCE THE ENTIRE INFORMATION IS BEFORE THE AO, AND AO HAS FORMED OPINION, NO REVISION IS P OSSIBLE IN RESPECT TO ASSESSMENT FRAMED U/S. 143(3) OF THE ACT. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 10 10. IN VIEW OF THE ABOVE FACTS AND CASE LAW REFERRE D BY LD. COUNSEL OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT (2000) 243 TTR 83 (SC), WHICH IS APPLICABLE TO THE FACTS OF THIS CASE. HON'BLE SU PREME COURT HAS CONSIDERED [HE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REVENUE', AND I NTERPRETED THAT IT HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A O AND EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO, IT CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. HON'BLE SUPREME COURT DISCUSSED EXAMPLE, W HERE THE AO ADOPTED ONCE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND HE HAS TAKEN ONE VIEW WITH WHICH THE C OMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED THAT THE ASSESSMENT ORDER IS ERRO NEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY AO IS UNSUSTAIN ABLE IN LAW. WE HAVE GONE THROUGH THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUS TRIAL CO. LTD. (SUPRA) AND FIND THAT THIS PHRASE 'PREJUDICIAL TO T HE INTEREST OF REVENUE', WHERE ONE OF THE POSSIBLE VIEWS IS TAKEN BY THE AO, HAS BEEN INTERPRETED AS UNDER; 'THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE RE VENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCO ME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AN D THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-LAX OFFICER IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD B Y THIS COURT [HAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS I NCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDER PASSED BY THE A SSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGANVAL V. CIT [1973 ] 88 ITR 323 (SC).' 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, D ISCUSSION CARRIED OUT, WE ARE OF THE CONSIDERED VIEW THAT THE CIT HAS ERRED IN EXERCISIN G JURISDICTION U/S. 263 OF THE ACT FOR REVISING THE ASSESSMENT FRAMED BY AO U/S. 143(3) OF THE ACT AS THE ASSESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. HENCE, WE QUASH THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT AND APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 11 9. WE FURTHER FIND THAT THE FACTS DEALT IN THE JUDG MENTS & DECISIONS CASES RELIED ON BY THE LD. DR ARE NOT THE SAME AS T HAT OF THE ASSESSEE SO THE SAME WILL NOT BE OF ANY HELP TO THE REVENUE. FURTHER APPLYING THE FACTS OF THE CASE TO THE DECISION OF C O-ORDINATE BENCH IN THE CASE OF MUGNEERAM BANGUR & CO. VS. CIT (SUPRA) WE FIND THAT IN THE CASE OF ASSESSEE TWO POSSIBLE VIEWS WERE THERE ON MERIT AND LD. ASSESSING OFFICER HAS ADOPTED ONE VIEW AFTER APPREC IATING THE FACTS AND THEREFORE, HIS ORDER U/S 143(3) OF THE ACT CANN OT BE PREJUDICIAL TO THE INTEREST OF REVENUE SO AS TO INVOKE SECTION 263 OF THE ACT. CERTAINLY THERE IS NO DISPUTE TO THE PROPOSITION TH AT ASSESSING OFFICERS ORDER CAN BE REVISED IN CASE NO ENQUIRY I S MADE BUT THAT IS NOT THE CASE BEFORE US AS THE ENQUIRY WAS DONE WHIC H FORMS THE VERY BASIS OF THE ASSESSMENT ORDER ITSELF. SO IT CANNOT BE SAID THAT ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER WITHO UT APPLICATION OF MIND. WE THEREFORE, HOLD THAT LD. CIT WAS NOT JU STIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT BECAUSE AS SESSING OFFICER HAS DECIDED THE ISSUE AS PER HIS VIEW LEGALLY POSSI BLE IN THE FRAME WORK OF LAW AND HAS ACCEPTED THE COST OF LAND ON TH E BASIS OF THE REPORT OF REGISTERED VALUER AND NO NEED WAS FELT ON HIS PART TO REFER THE CASE TO THE VALUATION OFFICER. WE, THEREFORE, Q UASH THE ORDER OF LD. CIT PASSED U/S 263 OF THE ACT AND RESTORE THE ORDER U/S 143(3) OF THE ACT PASSED BY THE ASSESSING OFFICER. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO. 3034 & 1087 ASST. YEAR 2007-08 12 11. NOW WE TAKE UP THE APPEAL OF ASSESSEE IN ITA NO.1087/AHD/2015 WHEREIN FOLLOWING GROUNDS ARE RAIS ED:- 1. THAT THE ORDER PASSED BY THE A.O. U/S. 143(3) R.W.S . 263 OF THE I. T. ACT IS ABSOLUTELY BAD-IN-LAW AND WITHOUT JURISDICTION AND, HENCE THE SAME BE DELETED. 2. THAT THE C.I.T.(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REFERRING THE DETERMINATION OF FAIR MARK ET VALUE OF THE PROPERTY IN QUESTION AS ON 1-4-1981 TO THE D.V.O. UNDER THE PRO VISIONS OF SECTION 55A OF THE I. T. ACT AS AMENDED W.E.F. 1-7-2012 PURSUANT T O THE ORDER U/S 263 DT. 10- 10-2011 THOUGH THE ORIGINAL ASSESSMENT WAS COMPLETE D ON 29-9-2009 AND THE NOTICE U/S 263 OF THE ACT WAS ISSUED BY THE CIT ON 11-8-2011 AND THUS ADOPTED F.M.V. AS ON 1-4-1981 AT RS. 246000 ONLY SU BJECT TO INDEXATION . IT IS SUBMITTED THAT THE ORDER PASSED U/S 263 OF THE ACT ON 10-10-2011 HAS BEEN CHALLENGED BEFORE THE HONOURABLE TRIBUNAL AND IN VI EW OF THE DECISIONS OF THE HONOURABLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH V. I.T.O. AND ANOTHER REPORTED IN 310 1TR 31 AND M. V. SHAH, OFFICIAL LIQUIDATOR, ANANT MILLS LTD.V. U. J. MATAIN AND ANOTHER REPORTE D IN 209 ITR 568, THE ORIGINAL ASSESSMENT ORDER U/S 143(3) CANNOT BE CONS IDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND, THEREFO RE, THE ACTION OF THE A.O. IN REFERRING THE MATTER OF VALUATION BE HELD TO BE BEY OND JURISDICTION AND BAD-IN- LAW AND , ACCORDINGLY, THE VALUE OF RS. 729300 AS O N 1-4-1981 AS DETERMINED BY THE APPROVED VALUER OF THE APPELLANT AND ACCEPTE D BY THE A.O. IN THE ORIGINAL ASSESSMENT BE DIRECTED TO BE ADOPTED SUBJE CT TO INDEXATION AS PER THE LAW AND THAT THE L.T.C.G. BE REWORKED OUT ACCORDING LY. 3. THAT THE CIT(APPEALS) FURTHER ERRED IN CONFIRMIN G THE ADOPTION OF THE SALE VALUE OF THE PROPERTY OF RS.37653000 DERIVED BY THE A.O. AS THE JANTRI VALUE BASED ON THE CAPITALIZATION OF THE STAMP DUTY OF RS . 1845000 PAID BY APPLYING THE STAMP DUTY RATE OF 4.90% ON THE DATE OF SALE I. E.22.2.2007, THOUGH THE CORRECT RATE OF STAMP DUTY APPLICABLE WAS 5.95% UPT O 31-3-2007 AND THE SAME WAS REDUCED TO 4.90% W.E.F. 1-4-2007 . IT IS SUBMIT TED THAT THE APPELLANT HAD CORRECTLY SHOWN THE TOTAL SALE CONSIDERATION AT RS. 3,10,00,000 IN THE DOCUMENT AND THE SAME WAS DULY ACCEPTED BY THE STAMP AUTHORI TIES AND, THEREFORE, NO DISTURBANCE IS CALLED FOR IN THE SHARE OF RS. 75000 00 OF THE APPELLANT THEREIN . IT IS THEREFORE, SUBMITTED THAT THE FURTHER ADDITIO N OF RS. 1913250 MADE BY THE A.O. IN THE SHARE OF THE APPELLANT IN THE SALE CONS IDERATION BE DELETED. 12. AS THE APPEAL OF ASSESSEE CHALLENGING THE ORDER OF LD. CIT PASSED U/S 263 OF THE ACT HAS BEEN ALLOWED BY US AN D THE ORDER U/S ITA NO. 3034 & 1087 ASST. YEAR 2007-08 13 263 OF THE ACT HAS BEEN QUASHED AND THE ORDER U/S 1 43(3) OF THE ACT HAS BEEN RESTORED, IT WILL BE JUST ACADEMIC TO DEAL WITH THE APPEAL AGAINST THE ORDER OF CIT PASSED AGAINST THE ORDER U /S 143(3) R.W.S. 263 OF THE ACT. ACCORDINGLY, WE DISMISS THE SAME. 13. IN THE RESULT ITA NO.3034/AHD/2011 IS ALLOWED A ND ITA NO.1087/AHD/2015 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 23/9/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 3034 & 1087 ASST. YEAR 2007-08 14 1. DATE OF DICTATION: 21/09/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 22/09/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 23/9/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: