ACIT, Circle-5(1), Hyd, Hyderabad V. Lalitha Karan, Hyd, Hyderabad

ITA 1130/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6259 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Sale consideration of property below Jantri Value; Period of limitation; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1130/HYD/2015 ASSESSMENT YEAR: 2011-12 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. VS. LALITHA KARAN, HYDERABAD. PAN ACTPK 0799E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : NONE DATE OF HEARING : 07-12-2016 DATE OF PRONOUNCEMENT : 04-01-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-4, HYDERABAD, DATED 08/06/2015 FOR AY 201 1-12. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAS FILED HER RETURN OF INCOME FOR THE AY 2011-12 ON 18/10/2011 D ECLARING INCOME OF RS. 31,90,770/- INCLUDING LONG TERM CAPITAL GAIN S OF RS. 14,23,805/- ON SALE OF PROPERTY. THE RETURN OF INCOME WAS PROCE SSED U/S 143(1) OF THE INCOME-TAX ACT. THE CASE WAS SELECTED FOR SCRUT INY AND NOTICE U/S 143(2) WAS ISSUED, AGAINST WHICH, THE AR OF THE ASS ESSEE PRODUCED THE INFORMATION CALLED FOR. FROM THE INFORMATION SU BMITTED BY THE ASSESSEE, THE AO NOTICED THAT THE ASSESSEE HAD OFFE RED LONG TERM CAPITAL GAINS OF RS. 14,23,800/- ON SALE OF IMMOVAB LE PROPERTY AT COLABA, MUMBAI BEING 50% OF HER SHARE. HE OBSERVED THAT THE PROPERTY WAS SHOWN TO BE SOLD AT RS. 39 LAKHS AND T HE ASSESSEES SHARE BEING 50% COMES TO RS. 19,50,000/- AND AFTER DEDUCTING THE 2 ITA NO. 1130/H/15 SMT. LALITA KARAN INDEXED COST AND CONSIDERATION PAID TO ONE SRI P.C. SRIMAL, THE ASSESSEE HAD ARRIVED AT A NET LONG TERM CAPITAL GAI N OF RS. 14,23,800/-. ON PERUSAL OF THE SALE DEED AND OTHER DOCUMENTS SUBMITTED BY THE ASSESSEES COUNSEL, THE AO FOUND THAT THE STAMP VALUATION AUTHORITY HAS TAKEN THE MARKET VALUE OF T HE PROPERTY AT RS. 1,35,57,500/- FOR THE PURPOSE OF LEVYING OF STAMP D UTY. ACCORDINGLY, THE AO WAS OF THE VIEW THAT THE CASE OF THE ASSESSE E ATTRACTS PROVISIONS OF SECTION 50C OF THE ACT AS PER WHICH H E HAS TO ADOPT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. 2.1 THE AO, THEREFORE, ISSUED A SHOW CAUSE NOTICE D ATED 20/06/2013 TO THE ASSESSEE ASKING HER EXPLANATION A S TO WHY THE VALUE OF RS. 1,35,57,500/- ADOPTED BY THE STAMP VAL UATION AUTHORITY FOR THE PURPOSE OF LEVYING STAMP DUTY SHOULD NOT BE ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS AS PER SECT ION 50C OF THE ACT. THE AR OF THE ASSESSEE, INTER-ALIA, SUBMITTED THAT THE CONSIDERATION RECEIVED BY HER MAY BE ADOPTED AS FAIR VALUE OF THE PROPERTY AS THE ENTIRE PROPERTY WAS OCCUPIED BY THE TENANTS FOR OVE R 60 YEARS AND LITIGATION WAS PENDING OVER THE SAME. SHE, THEREFO RE, OBJECTED FOR ADOPTION OF STAMP DUTY VALUATION AND REQUESTED THAT THE SAME MAY BE REFERRED TO THE DEPARTMENTAL VALUATION OFFICER (DVO ) AS PER SECTION 50C OF THE ACT, FOR WHICH, SHE RELIED ON THE DECISI ON OF THE MUMBAI TRIBUNAL IN THE CASE OF MS. NANDITA KOSLA [2011] 11 344 (MUMBAI) AND HONBLE MUMBAI HIGH COURT IN THE CASE OF M/.S BHATI A NAGAR PREMISES COOPERATIVE SOCIETY LTD. VS. UNION OF INDI A AND OTHERS, [2010] 234 CTR (BOM) 175. 2.2 REFERRING TO THE PROVISIONS OF SECTION 50C(1), THE AO OBSERVED THAT HE IS BOUND TO ADOPT THE VALUE OF THE STAMP VA LUATION AUTHORITY U/S 50C OF THE ACT FOR THE PURPOSE OF COMPUTATION O F CAPITAL GAINS AND HAS NO DISCRETION OF WHATSOEVER IN THIS MATTER AND HENCE, THE CIRCUMSTANCES OF SALE OF PROPERTY EXPLAINED BY THE ASSESSEE HAVE NO RELEVANCE TO THE ADOPTION OF VALUATION WHILE APPLYI NG THE SAID SECTION. 3 ITA NO. 1130/H/15 SMT. LALITA KARAN HE, FURTHER OBSERVED THAT THE ASSESSEES REQUEST FO R REFERENCE OF THE CASE TO THE DVO FOR VALUATION ALSO CANNOT BE ACCEPT ED AS THE FACTS OF THE CASE LAWS CITED BY THE ASSESSEE ARE NOT SIMILAR TO THE FACTS OF THIS CASE AS WHAT IS CONTESTED BY THE ASSESSEE IN HER CA SE HAVE NO RELEVANCE TO THE FACTS STATED IN THE CASE LAWS. IN VIEW OF THE ABOVE OBSERVATIONS, THE AO COMPUTED THE LONG TERM CAPITAL GAINS IN RESPECT OF THE SALE OF PROPERTY AT MUMBAI AT RS. 62,52,550/ - AS AGAINST RS. 14,23,800/- RETURNED BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDER ING THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, OBSERVED THAT AO IS BOUND TO REFER TO THE VALUATION IF THE ASSESSEE CLAIMS THAT THE VA LUE ADOPTED BY THE REGISTRATION AUTHORITIES DOES NOT REPRESENT CORRECT MARKET VALUE. HE FURTHER OBSERVED THAT THE AO HAS BRUSHED ASIDE THE ASSESSEES OBJECTION HOLDING THAT THEY ARE EXTRANEOUS REASONS. HE OBSERVED THAT THE REASONS CITED BY THE ASSESSEE FOR CONSIDERATION BEING LESS THAN THE VALUE TAKEN FOR REGISTRATION PURPOSES ARE VALID AND RELEVANT AND THE ACTION OF THE AO IS NOT HAVING THE SAME INTO AC COUNT WHILE DECIDING THE ISSUE, DOES NOT APPEAR TO BE CORRECT. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) HELD THAT THE AO HAS NOT REFERRED THE MATTER TO VALUATION OFFICER AS MANDATED U/S 50C AND DID NOT CONSIDER VALID REASONS PUT FORWARD BY THE ASSESSEE FOR THE ACTUAL CONSIDERATION BEING LESS THAN THE VALUE ADOPTED FOR REGISTRATION PURPOSES. HE, THEREFORE, CONCLUDED THAT THE ADDITIO N MADE BY THE AO IS WITHOUT FOLLOWING THE DUE PROCESS OF LAW AND, HE NCE, THE SAME CANNOT BE SUSTAINED AND ACCORDINGLY THE ADDITION IS DELETED BY THE CIT(A). 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER THE LD. CIT(A) IS CORRECT ON FACTS AND CIRCUMSTANCES IN DELETING THE ADDITION MADE BY THE AO BY ADOPTING THE GUIDE LINE VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE I N PLACE OF STATED CONSIDERATION IN THE SALE DEED FOR THE PURPO SE OF 4 ITA NO. 1130/H/15 SMT. LALITA KARAN COMPUTING LONG TERM CAPITAL GAINS ON THE GROUND THA T THE ASSESSING OFFICER HAS NOT REFERRED THE MATTER TO DE PARTMENTAL VALUATION OFFICER. 2. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND C IRCUMSTANCES HOLDING THAT REFERENCE TO DEPARTMENTAL VALUATION OF FICER U/S 50C(2)(A) IS MANDATORY FOR ASSESSING OFFICER WHILE DETERMINING VALUE OF THE PROPERTY AS PER THE PROVISIONS OF SECT ION 50C IGNORING THAT THE EXPRESSION USED IS 'MAY' AND 'SHA LL'. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) O UGHT TO HAVE REMANDED THE ISSUE TO THE AO WITH A DIRECTION TO RE FER VALUATION OF THE PROPERTY TO DEPARTMENTAL VALUATION OFFICER A ND DECIDED THE MATTER ACCORDINGLY. 5. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE AT THE TIME OF HEARING OF THIS APPEAL. HOWEVER, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LD. DR AND ON MERITS OF TH E CASE. 6. LD. DR SUBMITTED THAT THE CIT(A) OUGHT TO HAVE R EMANDED THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO REF ER VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER AND DECIDE THE MATTER ACCORDINGLY. HE, THEREFORE, PLEADED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE AO. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE T HROUGH THE CASE LAW ON THIS ASPECT. BEFORE GOING INTO THE FACTS OF THE CASE, IT NEEDS TO BE STATED THAT THE POWERS OF CIT(A) ARE SUBJECT TO SECTION 250 OF THE ACT WHEREBY THE CIT(A) HAS NO POWER TO SET ASIDE AN Y ISSUE EVEN IN A GENUINE CASE AND, HENCE, THE ONLY OPTION LEFT TO TH E CIT(A) IS EITHER TO ALLOW THE APPEAL OF THE ASSESSEE AFTER OBTAINING TH E REMAND REPORT OR TO DISMISS THE APPEAL OF THE ASSESSEE. IN THE INSTA NT CASE, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE R EQUESTED THE AO TO REFER THE MATTER TO THE DVO AS PER SECTION 50C(2) OF THE IT ACT. THE ASSESSEE SOLD THE TENANTED PROPERTY WHEREIN SHE HAS 50% SHARE; AS PER THE ASSESSEE, NET LONG TERM CAPITAL GAIN WORKS OUT TO RS. 14,23,805/-; 50% OF THE PROPERTY WAS STATED TO HAVE BEEN SOLD FOR ONLY RS. 19,50,000/-. IT IS THE CASE OF THE ASSESSE E THAT IT IS TENANTED 5 ITA NO. 1130/H/15 SMT. LALITA KARAN PROPERTY, WHICH DOES NOT FETCH HIGHER VALUE AND, TH EREFORE, WHILE ARRIVING AT THE FAIR MARKET VALUE (FMV), THAT ASPEC T HAS TO BE TAKEN INTO CONSIDERATION. IT WAS BROUGHT TO THE NOTICE O F THE AO THAT THE PROPERTY IS UNDER TENANCY UNDER THE MAHARASHTRA REN T CONTROL ACT; THIS ISSUE IS LITIGATED UPON AND CONSEQUENTLY, THE PROPERTY CAN BE STATED TO HAVE BEEN SUBJECTED TO CERTAIN ENCUMBRANC ES. BUT THE AO HAS NOT ADDRESSED ON THIS ASPECT. THE ASSESSEE HAS ALSO REFERRED TO THE PROVISIONS OF SECTION 50C OF THE ACT, WHICH HAV E TO BE MANDATORILY FOLLOWED BY THE AO. HOWEVER, THE AO BRUSHED ASIDE T HE SUBMISSIONS OF THE ASSESSEE, WHILE ADOPTING THE VALUE, AS MENTI ONED BY THE STAMP VALUATION AUTHORITIES. IN OTHER WORDS, THE FMV OF T HE PROPERTY WAS NOT AT ALL TAKEN INTO CONSIDERATION THOUGH A STATUTORY DUTY IS IMPOSED UPON THE AO TO OBTAIN THE VALUE BY REFERRING THE MA TTER TO DVO. IN OTHER WORDS, HE CHOSE TO BRUSH ASIDE THE SUBMISSIO NS, BY NOT REFERRING THE MATTER TO THE DVO. 7.1 THE ISSUE THAT COMES UP FOR OUR CONSIDERATION I S AS TO WHETHER THE AO CAN BE GIVEN A SECOND OPPORTUNITY TO MAKE GO OD HIS DEFICIENCIES AT THE COST OF EXPENDITURE TO BE INCUR RED BY THE ASSESSEE BY CONTINUING THE LITIGATION FOR A FURTHER PERIOD, PARTICULARLY, IN VIEW OF THE PERIOD OF LIMITATION PRESCRIBED U/S 153 OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF PRASHURAM POTTERY WORK S CO. LTD. VS. ITO, 106 ITR 1, OBSERVED THAT NO LITIGATION SHOULD CONTINUE BEYOND A PERIOD OF TIME PRESCRIBED UNDER THE ACT. RELEVANT O BSERVATIONS OF THE HONBLE COURT ARE EXTRACTED BELOW, FOR IMMEDIATE RE FERENCE: IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALIZING THAT PRI CE SHOULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT. ANY REMISS NESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQ UER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THER E MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT ST ALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND TH AT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI- 6 ITA NO. 1130/H/15 SMT. LALITA KARAN JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. PRESUMABLY BEARING IN MIND THE SAID PRINCIPLE, APAR T FROM THE FACT THAT THE CIT(A) HAS NO POWER TO SET ASIDE THE MATTER, HE DELETED THE ADDITION MADE BY THE AO FOR NOT EXERCISING DUE DIL IGENCE ON HIS PART I.E.; NOT FOLLOWING THE MANDATORY PROVISIONS OF SEC TION 50C(2) OF THE ACT. THE LIMITED ISSUE THAT ARISES FOR OUR CONSIDER ATION IS AS TO WHETHER THE CIT(A) IS JUSTIFIED IN CANCELLING THE A DDITION MADE BY THE AO, IN THE PECULIAR CIRCUMSTANCES OF THE CASE. 7.2 THE HONBLE DELHI HIGH COURT IN THE CASE OF ACC LTD. VS. DVO AND OTHERS, [2013] 357 ITR 160 (DELHI) OBSERVED THA T IN THE EVENT OF NOT REFERRING THE MATTER TO THE DVO, THE AO CANNOT SAID TO BE JUSTIFIED IN PROCEEDING WITH THE VALUATION OF THE SUB-REGISTR AR. HOWEVER, IN THE SAID CASE, THE AO HAVING MADE GENUINE ATTEMPT OF RE FERRING THE MATTER TO THE DVO AND ON ACCOUNT OF THE FACT THAT T HE DVO HAD NOT COMPLETED HIS JOB OF FURNISHING REPORT WITHIN THE D UE TIME, THE AO WAS DIRECTED TO REFRAME THE ASSESSMENT AND IN THIS BAC KDROP THE COURT, UNDER EXTRAORDINARY POWERS VESTED IN THE COURT UNDE R ARTICLE 227 OF THE CONSTITUTION OF INDIA, SET ASIDE THE MATTER TO THE AO TO OBTAIN THE VALUATION REPORT AND TO COMPLETE THE ASSESSMENT ACC ORDINGLY. 7.3 REVERTING TO THE FACTS ON HAND, THE AO HAS NOT FOUND ANY MATERIAL TO INDICATE THAT THE ASSESSEE HAS RECEIVED ANY EXCESS MONEY OVER AND ABOVE WHAT WAS DECLARED BY HER. IT IS NOT KNOWN AS TO WHETHER ANY SIMILAR ADDITION WAS MADE IN THE HAN DS OF CO-OWNER. AT ANY RATE, NO MATERIAL WAS PLACED BEFORE US ON TH IS ASPECT. WHEN DEEMING PROVISION WAS TO BE INVOKED, THE SAME HAS T O BE CONSTRUED STRICTLY AND IT HAS TO BE TAKEN TO ITS LOGICAL CONC LUSION I.E. UPON NOT FOLLOWING THE PROPER PROCEDURE PRESCRIBED THEREIN, PARTICULARLY, IN THE BACKDROP OF THE FACT THAT THE ASSESSEE HAS PRIMA-F ACIE SHOWN THAT IT WAS A TENANTED PROPERTY AND, THEREFORE, SUBJECTED T O CERTAIN ENCUMBRANCES AND ALSO THE FACT THAT IN THE ABSENCE OF OBTAINING A DVOS REPORT, ASSESSEE CANNOT BE PUT TO THE TROUBLE OF FACING A VIRTUAL 7 ITA NO. 1130/H/15 SMT. LALITA KARAN TRIAL EVEN AFTER FIVE YEARS OF APPEARING BEFORE THE AO/DVO AT THIS STAGE TO PROVE THAT THE SALE PRICE DECLARED BY HER IS REASONABLE. 7.4 AS COULD BE NOTICED FROM THE ORDER PASSED BY TH E AO, ASSESSEE RAISED A SPECIFIC PLEA THAT THE TENANTS HAVE NOT VA CATED THE PROPERTY EVEN AS ON THE DATE OF SALE OF PROPERTY AND THEY HA D FILED CASES AGAINST THEIR VACATION. LITERALLY, THERE WERE NO PU RCHASERS FOR THIS LITIGATED PROPERTY AND, HENCE, THE PROPERTY WAS SOL D AT A RATE LESSER THAN THE MARKET VALUE WITH A CLAUSE IN THE SALE DEE D THAT THE PURCHASER WOULD DEAL WITH THE TENANTS REGARDING THE IR VACATION ETC. IT WAS ALSO STATED THAT THE PROPERTY WAS FULLY OCCUPIE D BY SEVEN TENANTS, WHO ARE IN POSSESSION OF THEIR RESPECTIVE PREMISES. THEIR NAMES AND THE FACT THAT THEY ARE PAYING A RENT OF ONLY RS. 45 0/- PER MONTH AS ON THE DATE OF SALE HAVE ALSO BEEN ANNEXED TO THE SALE DEED. THE SALE DEED ALSO CONTAINS A CLAUSE THAT THE PROPERTY WAS S OLD UNDER AS IS WHERE IS CONDITION AND THE PURCHASER HAS AGREED TO ACQUIRE THE SAME FROM THE VENDORS ON THE SAME BASIS FOR A CONSIDERA TION OF RS. 39 LAKHS. IT WAS ALSO EXPLAINED THAT HER FATHER AND GR AND FATHER IN THEIR LIFE TIME COULD NOT TAKE POSSESSION OF THE PROPERTY NOR COULD GET THE TENANTS VACATED. SHE BEING A LADY RESIDING AT HYDER ABAD WAS NEITHER ABLE TO LOOK AFTER THE PROPERTY OR ENJOY THE SAME W HICH FORCED HER TO SELL THE SAME IN AS IS WHERE IS CONDITION FOR A P RICE WHATEVER SHE COULD GET. IN SPITE OF ADVERTISEMENT IN THE NEWS PA PERS, NOBODY CAME FORWARD TO PURCHASE THE PROPERTY BECAUSE OF LITIGAT ION. AS THERE WAS A THREAT OF PROPERTY GOING AWAY FROM HER HANDS, SHE W AS FORCED TO SELL THE SAME FOR WHATEVER PRICE SHE COULD GET. BY EXPLA INING IN DETAIL, IT WAS STATED THAT THE PROPERTY WAS OCCUPIED BY TENANT S FOR OVER 60 YEARS THAT LITIGATION WAS PENDING AND, THUS, WHATEV ER SHE COULD OBTAIN ON SALE SHOULD BE TREATED AS FMV OF THE SAID PROPER TY, WHILE, SHE ALSO MADE A SPECIFIC REQUEST TO THE AO TO REFER THE MATT ER TO THE DVO. SHE ALSO OBJECTED FOR ADOPTION OF STAMP DUTY VALUATION DUE TO THE ABOVE REASONS. HOWEVER, THE AO WAS OF THE OPINION THAT T HE FACTUAL DIFFICULTIES OF THE ASSESSEE ARE OF NO RELEVANCE WH ICH IS WHY STAMP VALUATION AUTHORITY HAS ALSO ADOPTED THE MARKET VAL UE OF RS. 8 ITA NO. 1130/H/15 SMT. LALITA KARAN 1,35,57,500/-. THUS, HE WAS OF THE VIEW THAT SECTIO N 50C IS A MANDATORY PROVISION AND DOES NOT CONFER ANY DISCRET ION AND HE IS BOUND TO ADOPT THE VALUE ADOPTED BY THE STAMP VALUA TION AUTHORITY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. 7.5 THERE ARE CATENA OF DECISIONS ON THIS POINT AND , ON OTHER HAND, REFERRING TO THE SPEECH OF THE FINANCE MINISTER AS WELL AS CIRCULAR ISSUED BY THE CBDT BRINGING THE INTENTION OF THE LE GISLATURE WHEREBY IT WAS HELD THAT THE AO IS DUTY BOUND TO REFER THE MATTER TO THE VALUATION OFFICER WHEN THE REASONS WERE THOROUGHLY MENTIONED BY THE ASSESSEE FOR THE FMV THAT THE ASSESSEE COULD FETCH IN THESE CIRCUMSTANCES. DESPITE MAKING REQUEST TO REFER THE MATTER TO THE DVO, THE AO PURPOSELY DID NOT REFER THE MATTER TO T HE DVO ON THE GROUND THAT HE IS DUTY BOUND TO GO BY THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY. 7.6 LITIGATION IN THE BOMBAY, PARTICULARLY, UNDER T HE MAHARASHTRA RENT CONTROL ACT, IS WELL KNOWN AND NEEDS TO BE TAK EN JUDICIAL NOTICE. A PROPERTY WHICH IS IN THE OCCUPATION OF TENANTS FO R MORE THAN 60 YEARS ONE CANNOT FETCH FULL MARKET VALUE AND IN FAC T THE PARTY WHO PURCHASED THE PROPERTY HAD AGREED TO THE TERMS AND CONDITIONS I.E. THE PROPERTY WAS PURCHASED ON AS IS WHERE IS COND ITION WITH A SPECIFIC CLAUSE THAT ANY FURTHER LITIGATION WILL BE DEALT WITH BY THE PURCHASER AND UNDER THOSE CIRCUMSTANCES, GENERALLY, MARKET VALUE CANNOT BE ADOPTED. IN THESE CIRCUMSTANCES, THE COUR TS TIME AND GAIN HELD THAT REFERENCE U/S 50C(2) OF THE IT ACT IS MAN DATORY AND THE AO HAVING FAILED TO FOLLOW THE PROVISIONS OF THE ACT, HE SHOULD NOT BE GIVEN ONE MORE CHANCE TO REFER THE MATTER TO THE DV O. RECENTLY, THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHAES WARI VS. ACIT AND ANOTHER, AND INDORE CONSTRUCTION P. LTD. VS. C IT, [2007] 289 ITR 341 (SC) VIS--VIS THE PROVISIONS OF SECTION 153C O F THE ACT, OBSERVED THAT IF THE AO HAS NOT RECORDED HIS SATISFACTION FO R ISSUE OF NOTICE U/S 153C OF THE ACT, THE PROCEEDINGS DESERVE TO BE QUAS HED RATHER THAN GIVING THE AO ANOTHER CHANCE TO RECORD PROPER REASO NS. THE SAME 9 ITA NO. 1130/H/15 SMT. LALITA KARAN PRINCIPLE HOLDS GOOD EVEN IN THIS CASE; WHEN THE AO HAS NOT FOLLOWED THE PROCEDURE PRESCRIBED IN LAW, THE ADDITION MADE DESERVED TO BE DELETED. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDER ED VIEW, THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO, DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, WE UPHOLD THE OR DER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHM AN) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 4 TH JANUARY, 2017 KV COPY TO:- 1) ACIT, CIRCLE 5(1), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) SMT. LALITHA KARAN, H. NO. 4-5-313, SULTAN BAZAR , HYDERABAD. 3) CIT(A) 4, HYDERABAD 4 CIT - 4 HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE