ITO, Ward 2(2), Pune V. Mrs. Sangeeta Jeevan Bhonsale, Pune

ITA 1125/PUN/2013

• Counselvise Citation: 112524514 RSA 2013
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Retrospective amendment; Fair market value; Valuation report
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO. 1 125 /PN/20 1 3 ASSESSMENT YEAR : 200 7 - 08 INCOME TAX OFFICER, WARD 2(2), PUNE VS. MRS. SANGEETA JEEVAN BHONSALE, B - 301, AMAR AMBIENCE, NO. 61, BEHIND EMPRESS GARDEN, GHORPADI, PUNE (APPELLANT) (RESPONDENT) PAN NO. ABQPB9928N APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI SUHAS BORA DATE OF HEARING : 30 - 05 - 2014 DATE OF PRONOUNCEMENT : 30 - 05 - 2014 ORDER PER R.S . PADVEKAR , JM : - THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - II, PUNE DATED 2 9 - 01 - 2013 FOR THE A.Y. 200 7 - 08. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN TH E APPEAL : 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY ACCEPTING THE ASSESSEE'S CONTENTION THAT NO REFERENCE CAN BE MADE BY THE ASSESSING OFFICER IF THE VALUE DECLARED BY THE ASSESSEE IS MORE THAN THE FAIR MARKET VALUE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THAT NO REFERENCE WAS MADE TO THE DVO U/S 55A OF THE I.T ACT, 1961. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THAT THE VALUE ADOPTED BY THE A.O. WAS REASONABLE AND SCIENTIFIC AND WAS BASED ON REAL TIME SALE INSTANCES . 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THAT THE REPORT OF THE DVO RELIED UPON BY THE A.O WHILE ARRIVING AT THE FMV AS ON 1.4.1981 IS A RELEVANT AND ADMISSIBLE PIECE OF EVIDENCE. 2 ITA NO. 1 125/PN/2013, MRS. SANGEETA JEEVAN BHONSALE, PUNE 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND SHE WAS ISSUED NOTICE U/S. 148 OF THE INCOME - TAX ACT ON THE REASON THAT THE ASSESSEE HAS NOT PAI D THE CAPITAL GAIN TAX ON THE SALE OF HER PROPERTY IN PUNE. THE ASSESSEE HAS SOLD THE PROPERTY BEARING S. NO. 200/1A/1B & S. NO. 200/1B/2 SADESATRA NALI, HADAPSAR, PUNE FOR THE TOTAL CONSIDERATION OF RS.3,49,12,500/ - . AS OBSERVED BY THE ASSESSING OFFICER THE REFERENCE U/S. 55A OF THE ACT WAS MADE TO THE VALUATION OFFICER, SOLAPUR AND THE VALUATION OFFICER VIDE ORDER U/S. 55 A AND 50C(2) OF THE ACT DATED 20 - 09 - 2010 HAS ADOPTED THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 01 - 04 - 1981 @ RS.110 / - PER SQ. MT R. AS AGAINST @ RS.560 / - PER SQ. MTR. ADOPTED BY THE ASSESSEE. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFICER. ACCORDING TO THE ASSESSEE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01 - 04 - 1981 WAS ADOPTED AS PER THE REPORT OF THE GOVT. APPROVED VALUER MR. AVINASH R. PUNDLIK , WHO HAS CERTIFIED THE VALUE OF THE SAID PROPERTY AT RS.31,92,000/ - AS ON 01 - 04 - 1981 AS DETERMINED BY THE VALUATION OFFICER AS PER HIS REPORT DATED 28 - 09 - 2011 WHICH WAS AT RS.110 / - PER SQ. MTR . THE ASSESSEE CHALLENGED THE AS SESSMENT ORDER BEFORE THE LD. CIT(A) AS THE ONLY ISSUE WAS DETERMINATION OF CAPITAL GAIN. 3. THE ASSESSEE TOOK THE CONTENTION BEFORE THE LD. CIT(A) THAT THE PROVISIONS OF SEC. 55A ARE NOT APPLICABLE IF THE VALUE ADOPTED BY THE ASSESSEE AS ON 01 - 04 - 1981 IS MORE THAN THE FMV DECLARED BY THE ASSESSEE. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS: I. M.V. SHAH, OFFICIAL LIQUIDATOR, ANANT MILLS LTD. VS. U.J. MATAIN AND ANOTHER 209 ITR 568. II. SMT. KRISHNABAI TINGRE VS. INCOME TAX OFFICER 101 ITD 317 (PUNE). III. MS. RUBAB M. KAZERANI VS. JOINT CIT 91 ITD 429. IV. ITO VS. SMT. LALITABEN B. KAPADIA 115 TTJ 935. 3 ITA NO. 1 125/PN/2013, MRS. SANGEETA JEEVAN BHONSALE, PUNE 4 . THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE REFERENCE AS THE ASSESSING OFFICER ASSUMED THE POWER U/S. 5 5A(A) OF THE ACT IF THE FAIR MARKET VALUE IS MORE THAN DECLARED BY THE ASSESSEE . THE OPERATIVE PART OF THE FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 4.4 THUS, FROM THE FOREGOING DISCUSSION IT IS SEEN THAT THE COURTS HAVE HELD THAT THE SCOPE OF SECTION 55A AS IS EVIDENT FROM ITS TERMS, IS CONFINED TO THE ASCERTAINMENT OF THE FAIR MARKET VALUE OF A CAPITAL ASSET WHICH HAS BEEN THE SUBJECT MATTER OF TRANSFER. UNDER THIS SECTION WHERE THE A.O. IS OF THE OPINION THAT THE VALUE OF THE ASSET AS CLAIMED BY THE ASSE SSEE THOUGH IN ACCORDANCE WITH THE; ESTIMATE MADE BY A REGISTERED VALUER IS LESS THAN THE FAIR MARKET VALUE, HE MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER. HE CAN ALSO DO SO WHERE IN OTHER CASES HE IS OF THE OPINION THAT THE FAIR M ARKET VALUE OF THE ASSET EXCEEDS THE 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 PRESCRIBED AS PER RULE 111A OF WEALTH TAX RULES IN THIS BEHALF, OR , THAT HAVING REGARD TO THE NATURE OF THE ASPECT AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. HOWEVER, IN THE PRESENT CASE THE ASSESSING OFFICER HAS NOT REFERRED THE MATTER FOR VALUATION BUT HAS MERELY RELIED UPON THE RESULT OF THE REFERRAL MADE IN A DIFFERENT CASE AND HAS COMPLETELY DISREGARDED THE VALUATION REPORT AS ON 01.04.1981 ADOPTED BY THE APPELLANT AND COMPUTED THE CAPITAL GAIN ON THE BASIS OF THE REPORT OF THE GOVT. APPROVED VALUER, AS THE A.O. HELD THAT THE APPELLANT HAD TAKEN A HI GHER FAIR MARKET VALUE AS ON 01.04.1981 FOR THE PURPOSE OF INDEXATION. THE ASSESSING OFFICER, HOWEVER, HAS NOT DOUBT OR CHALLENGED THE VALUATION REPORT OF THE APPROVED VALUER AS PROVIDED BY THE APPELLANT. IT HAS ALREADY BEEN SEEN THAT THE ASSESSING OFFICER ASSUMES POWERS U/S 55A(A) ONLY WHEN IN HIS/HER OPINION THE FAIR MARKET VALUE DISCLOSED BY THE ASSESSEE IS LESS AND IN THE CASE OF THE APPELLANT THE ASSESSING OFFICER HAS HIMSELF HELD THE FAIR MARKET VALUE ADOPTED BY THE APPELLANT TO BE MORE WHICH IS ALREA DY AGAINST THE PROVISIONS OF SECTION 55A(A) OF THE ACT. NOW THE REVENUE IS IN APPEALS BEFORE US. 4 ITA NO. 1 125/PN/2013, MRS. SANGEETA JEEVAN BHONSALE, PUNE 5 . WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL ARGUES THAT THE ISSUE ARISING IN THE REVENUE APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS (2014) 98 DTR (BOM) 177. THE LD. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF HIABEN JAYANTILAL SHAH VS. ITO & ANR. 6 DTR 203 (GUJ). 6 . IN THE CASE OF PUJA PRINTS (SUPRA) THE HON'BLE HIGH COURT HAS EXAMINED THE POWERS OF THE ASSESSING OFFICER FOR MAKING THE REFERENCE U/S. 55A OF THE ACT AS WELL AS THE AMENDMENT MA D E TO SEC. 55A (A) AND HELD AS UNDER: 7. WE FIND THAT S. 55A(A) OF THE ACT VERY CLEARLY AT THE RELEVANT TIE PROVIDED THAT A REFERENCE COULD BE MADE TO THE DVO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT IS AN UNDISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESPONDENT - ASSESSEE OF THE PROPERTY AT RS.35.99 LAKHS WAS MUCH MORE THAN THE FAIR MARKET VALUE OF RS.6.68 LAKHS EVEN AS DETERMINED BY THE DVO. IN FACT, THE AO REFERRED THE ISSUE OF VALUATION TO THE DVO ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT - ASSESSEE WAS HIGHER THAN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF S. 55A(A) OF THE ACT IS NOT JUSTIFIED. 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF THE AMENDMENT TO S. 55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS I S LESS THAN THE FAIR MARKET VALUE ARE SUBSTITUTED BY THE WORDS IS AT VARIANCE WITH ITS FAIR MARKET VALUE IS CLARIFIACTORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM 1 ST JULY, 2012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS S. 55A(A) OF THE ACT AS EXISTING DURING THE PERIOD RELEVANT TO THE ASST. YR. 2006 - 07. AT THE RELEVANT TIME, V ERY CLEARLY REFERENCE COULD BE MADE TO DVO ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF AO LESS THAN ITS FAIR MARKET VALUE. 9. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DVO BY THE AO IS SUSTAINABLE IN VIEW OF S. 55A(A)(II) [55A(B)(II)] OF THE ACT IS NOT ACCEPTABLE. THIS IS FOR THE REASON THAT S. 55A(B) OF THE ACT VERY 5 ITA NO. 1 125/PN/2013, MRS. SANGEETA JEEVAN BHONSALE, PUNE CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVERED BY S. 55A(A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITION THAT THE IS SUE IS COVERED BY S. 55A(A) OF THE ACT. THEREFORE, RESORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN S. 55A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CBDT CIRCULAR DT. 25TH NOV., 1972 CAN HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITION IN L AW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN CIRCULAR ISSUED BY THE CBDT IS RIOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. 7 . IN THE CASE OF HIABEN JAYANTILAL SHA H (SUPRA) THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER: 10. UNDER CL. (A) OF S. 55A OF THE ACT THE AO IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE AO IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVIDED UNDER CL. (B) OF S. 55A OF THE ACT, THE AO HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET V ALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUCH A R EFERENCE. 11. A S CAN BE SEEN FROM THE COMMUNICATION DATED NIL (ANNEX. D) FROM RESPONDENT NO. 2 DVO TO THE PETITIONER INSOFAR AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1ST APRIL, 1981 IS CONCERNED, THE PETITIONER HAD C LAIMED THE SAME AT A SUM OF RS. 6,25,000 AS PER REGISTERED VALUER'S REPORT. THEREFORE, THE AO WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PROPOSED BY THE DVO IS SHOWN AT RS.3,97,000, WHICH IS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON 1ST APRIL, 1981. THEREFORE, CL. (A) OF S. 55A OF THE ACT CANNOT BE MADE APPLICABLE. CLAUSE (B) OF S. 55A OF THE ACT CAN BE INVOKED ONLY IN ANY OTHER CASE, NAMELY WHEN THE VALUE OF THE ASSET CLAIMED BY THE A SSESSEE IS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUER. IN THE FACTS OF THE PRESENT CASE, CL. (B) OF S. 55A OF THE ACT ALSO CANNOT BE INVOKED. THEREFORE, THERE IS NO QUESTION OF HAVING RECOURSE TO SUB - CL. (II) OF CL. (B) OF S. 55A OF THE (ACT. 12. T HERE IS ONE MORE ASPECT OF THE MATTER. FOR INVOKING S. 55A OF THE ACT, THERE HAS TO BE A CLAIM MADE BY THE ASSESSEE, BEFORE THE 6 ITA NO. 1 125/PN/2013, MRS. SANGEETA JEEVAN BHONSALE, PUNE AO CAN RECORD OPINION EITHER UNDER CL. (A) OR CL. (B) OF S. 55A OF THE ACT TO MAKE A REFERENCE TO THE VALUATION OFFICER. T HE FACTS OF THE PRESENT CASE GO TO SHOW THAT THE REFERENCE WAS MADE ON 26TH APRIL, 1996, WHEREAS, THE RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE ONLY ON 27TH AUG., 1996. HENCE, ON THE DATE OF MAKING THE REFERENCE BY THE AO, NO CLAIM WAS MADE BY THE AS SESSEE AND THE AO COULD NOT HAVE FORMED ANY OPINION AS TO EXISTENCE OF PRESCRIBED DIFFERENCE BETWEEN THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE AND THE FAIR MARKET VALUE. THEREFORE ALSO, PROVISIONS OF S. 55A OF THE ACT COULD NOT HAVE BEEN RESORTED T O BY THE AO. 8 . IN OUR OPINION, THE ASSESSING OFFICER HAS NO POWER TO MAKE THE REFERENCE TO THE DVO FOR THE A.Y. 200 7 - 08 BY INVOKING U/S. 55A OF THE INCOME - TAX ACT FOR DETERMINING FAIR MARKET VALUE AS ON 01 - 04 - 1981 ON THE OPINION THAT FMV MUST BE LESS TH AN AS DECLARED BY THE ASSESSEE . MOREOVER, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JURISDICTIONAL HIGH COURT. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, CONFIRM THE SAME AND GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 9 . IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 - 05 - 201 4 SD/ - SD/ - ( R.K . PAN DA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 30 TH MAY, 20 1 4 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, PUNE 4 THE CIT - II, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE