GOPI S SHIVNANI, MUMBAI V. ITO WD 21(1)(2), MUMBAI

ITA 1220/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6177 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JEEVRAJ JAIN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Source of fund; Cost of acquisition; Fair market value; Valuation report; Revised return; Reassessment proceedings
• Section: 50C; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1220/MUM/2010 (ASSESSMENT YEAR: 2005-06) MRS. GOPI S. SHIVNANI INCOME TAX OFFICER - 21(1)(2 ) 18/11 KEWAL KUNJ PRAYTAKSHAKAR BHAVAN 12, GULMOHAR CROSS ROAD VS. BANDRA KURLA COMPLEX JUHU, MUMBAI 400049 MUMBAI PAN - AAMPS 3565 J APPELLANT RESPONDENT APPELLANT BY: SHRI JEEVRAJ JAIN RESPONDENT BY: SHRI VIJAY SHANKAR O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XXXII, MUMBAI DATED 19.11.2009. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERR ED IN CONFIRMING ORDER OF THE A.O. FOR NOT TAKING VALUE AS ON 1.4.19 81 AS PER VALUATION REPORT SUBMITTED DURING ASSESSMENT PROCEE DINGS. APPELLANT PRAY TO TAKE VALUE AS ON .4.1981 AS PER V ALUATION REPORT. 2. LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRE D IN REJECTING THE CLAIM TO TAKE VALUE AS ON 1.4.1981 AS PER VALUA TION REPORT ON THE GROUND THAT ANY CLAIM HAS TO BE MADE BY FOLLOWI NG DUE PROCEDURE OF LAW. APPELLANT PRAYS THAT CLAIM IS AS PER LAW ONLY AND HENCE VALUE BE TAKEN AS PER VALUATION REPORT AS ON 1.4.1981. 3. LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRE D IN IGNORING THE FACT THAT AS PER PROVISIONS OF SECTION 48, TAKI NG VALUE AS ON 1.4.1981 IS FUNDAMENTAL RIGHT, APPELLANT PRAYS TO T AKE VALUE AS PER VALUATION REPORT AS ON 1.4.1981. 4. LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRE D IN DIRECTING TO TAKE VALUE OF ` 3008000 AS PER D.V.OS REPORT DT. 28.08.08. APPELLANT PRAY THAT D.V.OS REPORT DT. 28.08.08 IS WITHOUT CONSIDERING OBJECTIONS OF APPELLANT AS PER LETTER D T 10.06.08. SUBMITTED TO D.V.O. APPELLANT PRAYS TO TAKE VALUE A FTER CONSIDERING OBJECTIONS RAISED VIDE LETTER DT. 10.06 .08. ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 2 3. BRIEFLY STATED, DURING THE RELEVANT ASSESSMENT PERI OD THE ASSESSEE HAS SOLD OFFICE PREMISES IN EVEREST BUILDING AT TARDEO ROAD FOR A CONSIDERATION OF RS.21,00,000/-. COMPUTATION OF LONG TERM CAPITAL GAIN AS SHOWN WITH RETURN OF INCOME IS AS UNDER: - SALE CONSIDERATION OF OFFICE AT TARDEO ` 21,00,000 ON 02.02.2005 LESS: TRANSFER COST ` 90,000 NET CONSIDERATION RECEIVED ` 20,10,000 LESS: COST OF ACQUISITION (61,200X480/100) ACQUIRED ON 01.09.1978 ` 2,93,760 LONG TERM CAPITAL GAIN ON SALE OF OFFICE PREMISES ` 17,16,240 CONSIDERATION ON SALE OF SHARES ` 75,419 LESS: INDEXED COST ` 69,053 ` 6,366 LONG TERM CAPITAL GAINS ` 17,22,606 LESS: INVESTMENT IN NABARD BONDS ` 21,00,000 RESTRI CTED TO ` 17,22,606 INCOME FROM LONG TERM CAPITAL GAIN ` NIL ========= THE ASSESSEE, WHILE FILING THE RETURN OF INCOME HAS TAKEN ITS COST OF ACQUISITION AS ON 01.09.1978 AS VALUATION AS ON 01. 04.981 AND ARRIVED ON THE INDEXED COST OF ACQUISITION AT ` 2,93,760/-. DURING THE ASSESSMENT PROCEEDINGS ASSESSEE FILED A VALUATION REPORT STATI NG THE VALUE AS ON 01.04.1981 AT ` 3,80,000/- AND THE INDEXED COST OF ACQUISITION HAS BEEN ARRIVED AT ` 18,24,000/-. A.O. DID NOT ACCEPT THIS CLAIM AS THE ASSESSEE HAS NOT FILED ANY REVISED RETURN. THE A.O. ALSO DID NOT ACCEPT THE SALE CONSIDERATION AT ` 21,00,000/- AND ON NOTICING THAT THE STAMP VALUE FO R THE PURPOSE OF REGISTRATION WAS AT ` 42,27,104/- HAS ADOPTED THE STAMP VALUE PENDING VALUATION BY THE DVO UNDER THE PROVISIONS O F SECTION 50C WITH A REMARK VIDE PARA 16.4 THAT THE ASSESSMENT WOULD BE RECTIFIED AFTER THE RECEIPT OF VALUATION REPORT. AS ASSESSING OFFICER S TATED IN PARA 5 OF THE ASSESSMENT ORDER TWO ISSUES IN THIS CASE CALLS FOR CONSIDERATION. ONE IS THE VALUATION ADOPTED FOR THE PURPOSE OF COST OF ACQUIS ITION AS PER THE VALUERS REPORT AS AGAINST ACTUAL COST OF THE SAID PROPERTY SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. THE OTHER ISSUE IS REGARDING THE APPARENT CONSIDERATION RECEIVED BY THE ASSESSEE AS AGAINST T HE STAMP AUTHORITY ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 3 VALUATION AND THE DVOS VALUATION. BEFORE THE CIT(A ) IT WAS CONTESTED THAT THE ASSESSEE WAS ENTITLED TO ADOPT THE MARKET VALUE AS ON 01.04.1981 AND FURTHER THE ASSESSEE WAS ENTITLED FOR OBJECTION ON DVOS REPORT AS PER PROVISIONS OF SECTION 50C. THE CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF SUBSTITUTING THE COST OF ACQUISITION WITH VALUAT ION AS ON 01.04.2981 AS THE ASSESSEE ITSELF HAS OFFERED THE PURCHASE COST A T ` 61,200. WITH REFERENCE TO THE ISSUE OF ADOPTION OF SALE CONSIDERATION UNDE R SECTION 50C, WITHOUT CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE, THE CIT(A) DIRECTED THE A.O. TO ADOPT THE AMOUNT OF ` 30,08.000/- ADOPTED BY THE DVO, HENCE THE ASSESSEE IS AGGRIEVED ON BOTH THE ISSUES. 4. ON THE ISSUE OF ADOPTION OF FAIR MARKET VALUE AS ON 01-04-81, THE LEARNED COUNSEL REFERRING TO THE PAPER BOOK FILED I N THIS REGARD HAS SUBMITTED THAT THE ASSESSEE WAS WELL WITHIN HER RIG HTS TO ADOPT THE COST OF ACQUISITION AS ON 01.04.1981 BUT MISTAKENLY HAS TAK EN THE PURCHASE COST AS ON 01.09.1978 AND THE A.O. WAS NOT CORRECT IN REFUS ING TO ENTERTAINING THE CLAIM OF ADOPTING THE VALUE AS ON 01.04.1981. IT WA S HIS SUBMISSION THAT THE CIT(A) AS WELL AS THE ITAT HAS POWER TO ENTERTAIN T HE ISSUE. 5. THE LEARNED D.R., HOWEVER, OBJECTED TO ON THE BASIS OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323. 6. WE HAVE CONSIDERED THE ISSUE AND ARGUMENTS OF THE L EARNED COUNSEL AND THE LEARNED D.R. AS SEEN FROM THE FACTS OF THE CASE THE ASSESSEE HAS PURCHASED THE PROPERTY WHICH WAS SOLD DURING THE YE AR, ON 01.09.1978. THE ACT PERMITS THE ASSESSEE TO ADOPT THE FAIR MARKET V ALUE AS ON 01.04.1981 OR THE ACTUAL COST IF IT IS ACQUIRED PRIOR TO 01.04.19 81. PROVISIONS OF SECTION 55(2)(B) IS AS UNDER: - WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE 1 ST DAY OF APRIL, 1981, MEANS THE COST OF ACQUISITION OF THE ASSET TO THE ASSESSEE OR FAIR MARKET VALUE OF THE ASSET ON THE 1 ST DAY OF APRIL, 1981, AT THE OPTION OF THE ASSESSEE THIS PROVISION PERMITS THE ASSESSEE TO ADOPT EITHER THE ACTUAL COST OF ACQUISITION OR THE FAIR MARKET VALUE OF THE ASSET A S ON 1 ST APRIL 1981 AND THE ASSESSEE CHOOSE TO FILE THE VALUATION REPORT TAKING THE VALUE AS ON 01-04-81 IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE A. O. CHOOSE TO MODIFY THE ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 4 SALE VALUE AS PER SECTION 50C. ASSESSEE IS WELL WIT HIN HER RIGHTS TO CHOOSE THE VALUE AS PER THE PROVISIONS OF THE ACT. THE A.O . SHOULD HAVE ENTERTAINED ASSESSEES CLAIM WHEN HE CHOOSE TO MODIFY THE CAPIT AL GAINS WORKING BY ADOPTING DIFFERENT SALE VALUE AS PER SECTION 50C. T HE CIT(A)S OBJECTION ALSO IN REJECTING THE CLAIM IN STATING THAT ANY CLAIM H AS TO BE MADE BY FOLLOWING TRUE PROCEDURE OF LAW AND ONE VALUE CANNOT BE SUBST ITUTED BY ANY OTHER DURING THE ASSESSMENT PROCEEDINGS EXCEPT UNDER THE PROCEDURE GIVEN UNDER THE ACT CAN NOT BE ACCEPTED. HE REJECTED ASSESSEE S CLAIM IGNORING THE FACT THAT IT IS THE A.O. WHOSE CHOOSE TO CHANGE THE WORK ING OF CAPITAL GAINS. SINCE THE ASSESSEE HAS INVESTED THE CAPITAL GAINS S O WORKED OUT BY HER IN THE NABARD BOUNDS AND CLAIMED TOTAL EXEMPTION, THER E WAS NO NECESSITY TO ADOPT FAIR MARKET VALUE WHEN THE RETURN WAS FILED. SHE EVEN INVESTED MORE THAN THE CAPITAL GAIN SO ARRIVED AT ADOPTING THE AC TUAL COST. SINCE THE VALUE UNDER SECTION 50C WAS BEING INCREASED AND THE CAPIT AL GAINS SOUGHT TO BE REWORKED OUT, THE ASSESSEE CHOOSE TO EXERCISE THE O PTION GIVEN BY THE IT ACT TO ADOPT THE FAIR MARKET VALUE, WHILE WORKING OUT T HE CAPITAL GAINS BY THE A.O. THE A.O. SHOULD HAVE ENTERTAINED THIS CLAIM EV EN WITHOUT A REVISED RETURN. THE CIT(A) ALSO ERRED IN NOT CONSIDERING TH E CLAIM, WHICH IS A LEGALLY PERMISSIBLE CLAIM AS PER THE PROVISIONS OF THE ACT ITSELF. NOW THAT THE ASSESSEE HAS RAISED THIS GROUND, WE ARE OF THE VIEW THAT THIS CLAIM IS AN ALLOWABLE CLAIM BOTH ON FACTS AND ON LAW. 7. THE COORDINATE BENCH IN CASE OF M/S. ASIAN PAINTS L TD. IN ITA NO. 1686/MUM/2010 FOR A.Y. 2006-07 HAS CONSIDERED A SIM ILAR SITUATION OF REJECTION OF CLAIM MADE BEFORE THE A.O. IN THE COUR SE OF ASSESSMENT PROCEEDINGS AND BY THE CIT(A) AND HELD AS UNDER: 21. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. ........................... ..... IN THIS APPEAL, THE PRELIMINARY QUESTION THAT FALLS FOR CONSIDERATI ON RELATES TO SCOPE OF POWERS OF CIT(A) WHETHER THE CIT(A) WAS HA VING POWER TO ADMIT ASSESSEES CLAIM WITHOUT FILING REVISED RE TURN OF INCOME. TO PROPERLY APPRECIATE THE ISSUE, WE WOULD LIKE TO REPRODUCE THE FINDING GIVEN BY HONBLE SUPREME COUR T IN CASE OF GOETZ INDIA LTD. CITED SUPRA, READS AS UNDER:- THE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS TO ENTERTAIN FOR THE F IRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE O F LAW CAN BE RAISED BEFORE ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 5 THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELA TE TO THE POWER OF THE AO TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY F ILING A REVISED RETURN. IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APP EAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1 961. THERE SHALL BE NO ORDER AS TO COSTS. 21.1 FROM THE ABOVE FINDING OF THE APEX COURT, WE F IND THAT THE APEX COURT HAS DECIDED THE ISSUE FOR A LIMITED PURP OSE IN RESPECT OF POWER OF THE ASSESSING AUTHORITY. THE APEX COURT CLARIFIED IN ITS JUDGMENT ITSELF THAT THEIR FINDING DOES NOT IMP INGE ON THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL UNDER SE CTION 254 OF THE ACT. WE FIND THAT THE CIT(A) HAS ALSO SIMILAR P OWER U/S 251(1)(C). THE SAID SECTION READS AS UNDER:- SECTION 251(1): IN DISPOSING OF AN APPEAL, THE COM MISSIONER (A) SHALL HAVE THE FOLLOWING POWERS- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABA TES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONSIDERAT ION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSE SSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDE D BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. B) IN ANY APPEAL AGAINST AN ORDER IMPOSING A PENALT Y, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHER TO ENH ANCE OR TO REDUCE THE PENALTY; C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN TH E APPEAL AS HE THINKS FIT.: 21.2 THE ISSUE RELATED POWER OF FIRST APPELLATE AUT HORITY HAS BEEN EXAMINED BY THE HONBLE SUPREME COURT IN THE C ASE OF COMMISSIONER OF INCOME-TAX V. NIRBHERAM DELURAM 224 ITR 610(SC). THE BRIEF FACTS OF THAT CASE WERE THAT D URING REASSESSMENT PROCEEDINGS THE ITO MADE ADDITION TO T HE ASSESSEE'S INCOME TO THE EXTENT OF RS. 2,45,000 ON ACCOUNT OF OSTENSIBLE TRANSACTIONS IN HUNDI LOANS SHOWN BY THE ASSESSEE. ON APPEAL, THE AAC, WHILE SUSTAINING THE AFORESAID ADDITION ALSO TOOK NOTICE OF 10 OTHER ITEMS OF OSTENSIBLE HU NDI LOANS AMOUNTING TO RS. 2,30,000 AND DIRECTED THAT THE TOT AL INCOME BE ENHANCED BY THE SUM OF RS. 2,30,000. THE TRIBUNAL, HOWEVER, DELETED THE SAID ADDITION HOLDING THAT THE AAO HAD EXCEEDED HIS JURISDICTION. THE HIGH COURT PLACING RELIANCE ON TH E DECISION OF THE SUPREME COURT IN ADDL. CIT V. GURJARGRAVURES (P .) LTD. [1978] 111 ITR 1 HELD THAT THE AAC HAD NO JURISDICTION TO CONSIDER THE NEW ENTRIES WHICH WERE NOT CONSIDERED AT ALL BY THE ITO AND TO ADD THE AMOUNT OF RS. 2,30,000 TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDING TO THE HIGH COURT, THE ITEMS RE PRESENTING ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 6 THE SAID AMOUNT CONSTITUTED NEW SOURCES OF INCOME W HICH WERE NOT THE SUBJECT-MATTER OF ASSESSMENT BEFORE THE ASS ESSING OFFICER AND, THEREFORE, IT WAS NOT OPEN TO THE AAC IN APPEAL TO CONSIDER THE NEW SOURCES AND TO ASSESS THEM. 21.3 ON APPEAL TO THE SUPREME COURT, THE SUPREME CO URT HAS HELD AS UNDER:- (PAGES 612 TO 614) IN JUTE CORPN. OF INDIA LTD.'S CASE (SUPRA) THIS COURT HAS REFERRED TO THE EARLIER DECISION OF THIS COURT IN CIT V. KANPUR COAL SYNDICATE [1964] 53 ITR 225, WHICH WAS ALSO A DECISION OF A THREE JUDGE BENCH WHEREIN THE SCOPE OF SECTION 31(3)(A) OF THE INDIAN INCOME-TAX ACT, 1922 [WHICH WAS ALMOST IDENT ICAL TO SECTION 251(1)(A) OF THE 1961 ACT] WAS CONSIDERED AND IT WA S HELD: ' 'IF AN APPEAL LIES, SECTION 31 OF THE ACT DESCRIB ES THE POWERS OF THE APPELLATE ASSISTANT COMMISSIONER IN SUCH AN APPEAL. UNDER SECTION 31(3)(A), IN DISPOSING OF SUCH AN APPEAL, THE APPEL LATE ASSISTANT COMMISSIONER MAY, IN THE CASE OF AN ORDER OF ASSESS MENT, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; UNDER CLAU SE (B) THEREOF HE MAY SET ASIDE THE ASSESSMENT AND DIRECT THE INCOME- TAX OFFICER TO MAKE A FRESH ASSESSMENT. THE APPELLATE ASSISTANT CO MMISSIONER HAS, THEREFORE, PLENARY POWERS IN DISPOSING OF AN APPEAL . THE SCOPE OF HIS POWER IS COTERMINOUS WITH THAT OF THE INCOME-TAX OF FICER. HE CAN DO WHAT THE INCOME-TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO'.' (P. 693) AFTER REFERRING TO THESE OBSERVATIONS, THIS COURT I N JUTE CORPN. OF INDIA LTD.'S CASE (SUPRA) HAS STATED : 'THE ABOVE OBSERVATIONS ARE SQUARELY APPLICABLE IN THE INTERPRETATION OF SECTION 251(1)(A) OF THE ACT. THE DECLARATION OF LAW IS CLE AR THAT THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IS CO-TERMINOUS WI TH THAT OF THE INCOME-TAX OFFICER, AND IF THAT IS SO, THERE APPEARS TO BE NO REASON AS TO WHY THE APPELLATE AUTHORITY CANNOT MODIFY THE ASSESSMENT ORDER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE INCOME-TAX OFFICER. NO EXCEPT ION COULD BE TAKEN TO THIS VIEW AS THE ACT DOES NOT PLACE ANY RESTRICTION OR LIMITA TION ON THE EXERCISE OF APPELLATE POWER. EVEN OTHERWISE, AN APPELLATE AUTHORITY WHILE HEARING THE APPEAL AGAINST THE ORDER OF A SUBORDINATE AUTHORITY, HAS ALL THE P OWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATION, IF ANY, PRESCRIBED BY THE STATUTORY PRO VISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VES TED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MAT TER. THERE APPEARS TO BE NO GOOD REASON AND NONE WAS PLACED BEFORE US TO JUSTIF Y CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAININ G AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF T HE ORDER OF ASSESSMENT PASSED BY THE INCOME-TAX OFFICER.' (P. 693) TAKING NOTE OF THE DECISION IN GURJARGRAVURES (P.) LTD.S CASE (SUPRA), THE COURT HAS SAID : '... APPARENTLY, THIS VIEW TAKEN BY THE TWO JUDGE B ENCH OF THIS COURT APPEARS TO BE IN CONFLICT WITH THE VIEW TAKEN BY TH E THREE JUDGE BENCH OF THIS COURT IN KANPUR COAL SYNDICATE CASE [ 1964] 53 ITR 225. IT APPEARS FROM THE REPORT OF THE DECISION IN THE G UJARAT CASE THAT THE THREE JUDGE BENCH DECISION IN KANPUR COAL SYNDICATE CASE [1964] 53 ITR 225 (SC) WAS NOT BROUGHT TO THE NOTICE OF THE B ENCH IN GURJARGRAVURES (P.) LTD. [1978] 111 ITR 1 (SC). IN THE CIRCUMSTANCES, ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 7 THE VIEW OF THE LARGER BENCH IN KANPUR COAL SYNDICA TE CASE [1964] 53 ITR 225 (SC) HOLDS THE FIELD....' (P. 694) HAVING REGARD TO THE DECISION IN JUTE CORPN. OF IND IA LTD.'S CASE (SUPRA), IT MUST BE HELD THAT THE HIGH COURT WAS IN ERROR IN HOLDING THAT THE APPELLATE POWER CONFERRED ON THE AAC UNDER SECTION 251 WAS CONFINED TO THE MATTER WHICH HAD BEEN CONSIDERED BY THE ITO AND THE AAC EXCEEDED HIS JURISDICTION IN MAKING AN ADDITION OF RS. 2,30,000 ON THE BASIS OF THE OTHER 10 ITEMS OF HUNDIS WHICH HAD NOT BEEN EXPLAINED BY THE ASSESSEE. 21.4 IN THE LIGHT OF THE ABOVE DISCUSSION, WE F IND THAT THE AO HAS NO POWER TO ADMIT FRESH CLAIM OTHERWISE THAN RE VISED RETURN BUT APPELLATE AUTHORITIES INCLUDING CIT(A) & ITAT H AVE POWER TO ADMIT SUCH CLAIM. WITHOUT PREJUDICE TO THE ABOVE F INDING, WE ADMIT THE ASSESSEES CLAIM WHICH IS IN ACCORDANCE W ITH THE JUDGMENT OF THE APEX COURT IN THE CASE OF GOETZ IND IA LTD. (SUPRA).IN THE INTEREST OF NATURAL JUSTICE AND KEEP ING IN VIEW THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF GO ETZE (INDIA) LTD., 284 ITR 323, WE REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE ON MERI T IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPO RTUNITY OF HEARING TO BOTH THE SIDES. 8. IN VIEW OF THE ABOVE PRINCIPLES LAID DOWN WITH WHIC H WE AGREE, WE DIRECT THE A.O. TO ADOPT THE FAIR MARKET VALUE OF T HE ASSET ON 1 ST OF APRIL 1981. SINCE THE REGISTERED VALUERS REPORT WAS FILE D IN THE COURSE OF ASSESSMENT ITSELF BUT A.O. HAS NOT REJECTED THE SAM E ON MERITS, WE DIRECT THE A.O. TO ACCEPT THE VALUE AT ` 3,80,000/- AS ON 01.04.1981 FOR THE PURPOSE OF WORKING OUT THE CAPITAL GAINS AFTER DUE EXAMINATION . IN FACT THE ASSESSEE, WITHOUT PREJUDICE TO THE CLAIM UNDER SECTION 50C, H AS FURNISHED A REVISED CAPITAL GAINS WORKING TO THE A.O. VIDE LETTER DATED 17.12.2007, WHICH IS RECEIVED BY THE A.O. BUT THE A.O. DID NOT CHOOSE TO ACCEPT THE SAME. THE WORKING WAS AS UNDER: - MARKET VALUE AS PER SECTION 50C SUBJECT TO OUR OBJE CTION TO THIS VALUE AS PER OUR LETTER DATED 3.11.07. IN VIEW OF V ALUATION REPORT DT. JAN 2005 AT ` 2040000/- LESS: TRANSFER COST 4227104 90000 4137104 LESS: (1) INDEXED COST OF PROPERTY BASED ON VALUE AS ON 1.4.81 380000 X480 1824000 2) AMOUNT INVESTED 2100000 3924000 LONG TERM CAPITAL GAIN SUBJECT TO OUR OBJECTION 213104 ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 8 9. IN THE COURSE OF ARGUMENT THE LEARNED D.R., HOWEVER , REQUESTED TO RESTORE THE MATTER TO THE FILE OF THE A.O. TO CONSI DER THE FAIR MARKET VALUE AS ON 01.04.1981. WE CONSIDER IT NOT NECESSARY AS THE A.O. CHOOSE NOT TO FOLLOW THE PROVISIONS OF THE ACT AT THE TIME OF COMPLETING THE ASSESSMENT EVEN THOUGH THE ACT ITSELF GIVES THE OPTION TO THE ASSES SEE TO SUBSTITUTE THE FAIR MARKET VALUE, ON TECHNICAL GROUNDS. AS SEEN FROM TH E ABOVE LETTER THE ASSESSEE, SUBJECTION TO THE OBJECTION FOR VALUATION UNDER SECTION 50C, GAVE A REVISED LONG TERM CAPITAL GAINS WORKING WHICH THE A .O. SHOULD HAVE CONSIDERED. IT IS TO BE NOTED THAT THE A.O. HAS NO POWER TO REFER TO VALUATION TO FIX THE FAIR MARKET VALUE ON THE FIRST DAY OF AP RIL 1981 ON THE INTERPRETATION GIVEN TO SECTION 55A TO A VALUE LES S THAN THE VALUE OFFERED BY THE ASSESSEE FOLLOWING THE PRINCIPLES ESTABLISHE D BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DAULAL MOHTA HUF, ITA NO. 1031 OF 2 008 DATED 22.9.2008 WHEREIN, HON'BLE BOMBAY HIGH COURT HAS APPROVED THE DECISION OF HON'BLE ITAT MUMBAI, THIRD MEMBER DECISION IN THE C ASE OF MS. RUBAB M. KAZERANI, 91 ITD 429 (MUM)(TM)AND THE HONBLE ITAT PUNE DECISION IN THE CASE OF SMT. KRISHNABAI TINGRE VS. ITO, 101 ITD 317 (PUNE)(TM). FURTHER THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE C ASE OF HIABEN JAYANTILAL SHAH VS. ITO, 310 ITO 31 (GUJ) IS ALSO ON THE SAME ISSUE. IN VIEW OF THIS THE A.O. HAS NO OPTION THAN TO ACCEPT THE FAIR MARKET V ALUE OF ` 3,80,000/- AS ON 01.04.1981 AND THE INDEXED COST OF ACQUISITION AT ` 18,24,000/-.HOWEVER THE ISSUE IS RESTORED TO THE FILE OF AO TO EXAMINE THE REGISTERED VALUERS REPORT AND ALLOW THE AMOUNT AS SUCH. GROUND NOS. 1,2 & 3 A RE CONSIDERED ALLOWED. 10. GROUND NO. 4 PERTAINS TO THE ISSUE OF ADOPTION OF S UBSTITUTED VALUE ON THE BASIS OF DVOS REPORT. AS STATED EARLIER THE A. O. ADOPTED THE MARKET VALUE AS PER SECTION 50C ON THE BASIS OF STAMP VALU E AT ` 42,27,104/- SUBJECT TO MODIFICATION THEREAFTER ONCE THE DVOS R EPORT WAS RECEIVED. CONSEQUENT TO THE RECEIPT OF THE REPORT, THE CIT(A) WITHOUT CONSIDERING THE OBJECTIONS OF THE ASSESSEE, DIRECTED THE A.O. TO AD OPT THE VALUATION OF ` 30,08,000/- AS SALE CONSIDERATION IN PLACE OF ` 42,27,104/- ADOPTED BY THE A.O. IT IS THE OBJECTION OF THE ASSESSEE THAT THE C IT(A) HAD NOT CONSIDERED THE OBJECTIONS AS PER THE LETTER DATED 01.06.2008 SUBMI TTED TO THE DVO. IT WAS THE PRAYER TO TAKE THE VALUE AFTER CONSIDERING THE OBJECTION RAISED VIDE LETTER ITA NO.1220/MUM/2010 MRS. GOPI S. SHIVNANI 9 DATED 10.06.2008. AS SEEN FROM THE RECORD THE OBJEC TIONS OF THE ASSESSEE HAVE NOT BEEN CONSIDERED AND THEREFORE THE VALUATIO N REPORT IS TO BE CONSIDERED BY THE A.O. AFRESH TAKING INTO CONSIDERA TION THE OBJECTIONS OF THE ASSESSEE. SINCE THIS ASPECT WAS NOT EXAMINED EITHER BY THE A.O., THE REPORT BEING NOT WITH HIM BY THE TIME ASSESSMENT WAS COMPL ETED, OR BY THE CIT(A), IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION T HAT THIS ASPECT REQUIRE EXAMINATION BY THE A.O. AFRESH AS PER THE PROVISION S OF SECTION 50C(2). THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY BEFORE ADOP TING THE VALUE. IT IS NOT OUT OF PLACE TO MENTION THAT THIS EXERCISE MAY BECO ME ACADEMIC AS THE COST OF INDEXATION ALLOWED UNDER GROUND NOS. 1 TO 3 MAY REDUCE THE CAPITAL GAINS AND THE ASSESSEE HAVING INVESTED THE MONEY IN THE B ONDS MAY NOT BE HAVING ANY CAPITAL GAINS TO BE TAXED EVEN TO THE VALUE AS CONFIRMED BY THE CIT(A). HOWEVER, FOR THE SAKE OF COMPLETENESS OF THE COMPUT ATION, WE RESTORE THE MATTER TO THE FILE OF THE A.O. TO EXAMINE THE VALUA TION AS PER PROVISIONS OF SECTION 50C AFTER GIVING DUE OPPORTUNITY TO THE ASS ESSEE AND TO ADOPT THE VALUE, WHICH IN ANY CASE SHOULD NOT EXCEED THE VALU E AS DETERMINED BY THE CIT(A). WITH THIS DIRECTION, THE GROUND IS CONSIDER ED ALLOWED. 11. IN THE RESULT, APPEAL IS CONSIDERED ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH NOVEMBER 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXII, MUMBAI 4. THE CIT XX1, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.