Shri VASANT N MORE, Pune V. Addl. CIT, Pune

ITA 1503/PUN/2013

• Counselvise Citation: 150324514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Assessee Lawyers: S N DOSHI
• Keywords: Capital asset; Principle of natural justice; Retrospective amendment; Question of law; Cost of acquisition; Fair market value; Valuation report
• Section: 133(6)

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. 1503/PN/2013 (ASSESSMENT YEAR : 2008-09) SHRI VASANT N. MORE, PROP.VASANT ENTERPRISES, 391-C, SONYA MARUTI CHOWK, RAVIWAR PETH, PUNE 411002 PAN NO. ACDPM 3163D .. APPELLANT VS. ADDL.CIT, RANGE-5, PUNE .. RESPONDENT ITA NO. 1729/PN/2013 (ASSESSMENT YEAR : 2008-09) ADDL.CIT, RANGE-5, PUNE .. APPELLANT VS. SHRI VASANT N. MORE, PROP.VASANT ENTERPRISES, 391-C, SONYA MARUTI CHOWK, RAVIWAR PETH, PUNE 411002 PAN NO. ACDPM 3163D .. RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI P.S. NAIK DATE OF HEARING : 02-09-2014 DATE OF PRONOUNCEMENT : 10-09-2014 ORDER PER R.K. PANDA, AM : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIR ECTED AGAINST THE ORDER DATED 03-01-2012 OF THE CIT(A)-III, PUNE RELATING TO ASSESSMENT YEAR 2008-09. FOR THE SAKE OF CONVENIEN CE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER. 2 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A DEALER OF PAINT AND PAINTS MATERIAL. HE FILED HIS RETURN OF INCOME ON 31-07- 2008 DECLARING INCOME OF RS.2,82,98,616/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS SOLD VACANT LAND DURING THE YEAR AND DECLARED LONG TERM CAPITAL GAIN OF RS.2,61,82,796/- ON THE SAME, THE DETAILS OF WHICH ARE AS UNDER : SALE CONSIDERATION RS.4,00,00,000 LESS : 1. COST OF SELLING RS.8,26,854 2. CLAIM OF 54EC RS.4,00,000 3. COST OF ACQUISITION RS.1,25,90,350 RS.1,38,17,204 ------------------- RS.2,61,82,796 ------------------- 2.1 FROM THE DETAILS FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER NOTED THAT THE LAND WAS ACQUIRED PRIOR TO 1 981. THEREFORE, THE ASSESSEE HAS ADOPTED THE VALUE OF THE LAND AS O N 01-04-1981 AT RS.22,85,000/- AS THE COST OF ACQUISITION AND ACCOR DINGLY ARRIVED THE INDEXED COST OF ACQUISITION AT RS.1,25,90,350/-. O N BEING QUESTIONED BY THE ASSESSING OFFICER TO JUSTIFY THE CLAIM OF COST OF ACQUISITION, THE ASSESSEE SUBMITTED THE VALUATION R EPORT PREPARED BY ONE SHRI VISHWAS BHAT. HOWEVER, THE ASSESSING OFFI CER REFERRED THE MATTER TO THE DVO WHO SUBMITTED HIS REPORT VALU ING THE LAND AT RS.12,18,000/- AS ON 01-04-1981. THE ASSESSING OFF ICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY RS.12,18,00 0/- SHOULD NOT BE TREATED AS VALUE AS ON 01-04-1981 AS AGAINST RS. 22,85,000/- ADOPTED BY THE ASSESSEE. THE ASSESSEE GAVE REASONS AS TO WHY THE 3 SAME SHOULD NOT BE ADOPTED. HOWEVER, THE ASSESSING OFFICER REJECTED ALL THE OBJECTIONS RAISED BY THE ASSESSEE FOR THE FOLLOWING REASONS : (I) THE ASSESSEE WAS ASKED TO SUBSTANTIATE HIS CLAIM OF COST OF ACQUISITION BY WAY OF SALE INSTANCES DURING OR NEAR 1981, HOWEVER, THE ASSESSEE COULD NOT FURNISH THE NECESSARY DETAILS. IN ABSENCE OF ACTUAL SALE INSTANCES, READY RECKONER RATES CREATED BY TOWN P LANNING & VALUATION DEPARTMENT (TP&VD) DEFINITELY GIVE GUIDANCE FOR ASCERTAINING FAIR VALUE OF THE LAND. (II) IT IS PERTINENT TO NOTE THAT ASSESSEE SOLD T HE LAND FOR RS.4 CRORES WHEREAS THE GOVERNMENT VALUE WAS RS.96.29 LA KHS. THUS, THE FAIR MARKET VALUE WAS ACTUALLY AROUND 4 TIMES THE GO VERNMENT VALUE. THEREFORE, VALUATION OF LAND AS ON 1981 BY SRI HARSHAD RUPAREL, GOVERNMENT APPROVED VALUER, AT 4 TIMES MORE THAN READY RE CKONER VALUE IS QUITE LOGICAL. (III) MOREOVER, SRI HARSHAD RUPAREL, GOVERNMENT APPR OVED VALUER HAS SUPPORTED HIS VALUATION THROUGH SPECIFIC SALE INSTANCE IN PIMPRI CHINCHWAD AREA. BOTH KATRAJ (WHERE ASSESSEE'S LAN D IS LOCATED) AND PIMPRI CHINCHWAD ARE IN DIFFERENT DIRE CTIONS FROM PUNE. HOWEVER, PIMPRI CHINCHWAD AREA WAS COMMANDING MORE V ALUE THAN KATRAJ, IN VIEW OF INDUSTRIAL DEVELOPMENT. SHRI HARSH AD RUPAREL, GOVERNMENT APPROVED VALUER, HAS ADOPTED THE SAME VALU E PREVAILING AT PIMPRI CHINCHWAD AREA FOR ARRIVING AT FAIR MARKE T VALUE OF LAND AT KATRAJ, THEREFORE, THE VALUATION OF SRI HARSHAD RUPA REL, GOVERNMENT APPROVED VALUER IS FOUND TO BE REASONABLE. (IV) THE CONTENTION OF THE ASSESSEE THAT THE COST INFLAT ION INDEX FOR 1989 IS 172 AND FOR 1981 IT IS 100. THEREFORE, SAME SHO ULD BE ADOPTED FOR ARRIVING AT VALUE OF LAND AS ON 1981. ASSE SSEE'S ARGUMENT IS NOT CORRECT. INFLATION INDEX IS A GENERAL INDEX FO R ALL THE COMMODITIES AND FOR ENTIRE COUNTRY. HOWEVER, TP&VD G UIDELINES ARE SOLELY & SPECIFICALLY FOR PROPERTY VALUATION AND THAT TOO SPECIFICALLY FOR THE SPECIFIC AREA. THEREFORE, FOLLOWING TP&VD GU IDELINES FOR ARRIVING AT VALUE OF LAND AS ON 1981 IS THE MOST APPRO PRIATE METHOD. 2.2 THE ASSESSING OFFICER, THEREFORE, PROCEEDED TO ADOPT THE FAIR MARKET VALUE REPORTED BY THE GOVERNMENT APPROVED VA LUER AT RS.12,18,000/- AS ON 01-04-1981 FOR COMPUTING THE L ONG TERM CAPITAL GAINS WHICH HE WORKED OUT AS UNDER : 4 SALE CONSIDERATION RS.4,00,00,000 LESS : 1. COST OF SELLING RS.8,26,854 2. CLAIM OF 54EC RS.4,00,000 3. COST OF ACQUISITION A. FMV AS ON 01-04-1981 (RS. 12,18,000/-) B. INDEXED COST OF ACQUISITION 67,11,180 (551/100X12,18,000/-) RS.79,38,034/- --------------------- LONG TERM CAPITAL GAINS RS.3,20,61,966/- --------------------- 3. BEFORE THE CIT(A) THE ASSESSEE VEHEMENTLY CHALLE NGED THE LEGALITY OF THE ACTION OF THE ASSESSING OFFICER IN MAKING REFERENCE U/S.55A OF THE I.T. ACT. IT WAS SUBMITTED THAT THE ASSESSING OFFICER CAN MAKE THE REFERENCE U/S.55A ONLY IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IN THE OPINION OF TH E ASSESSING OFFICER, IS LESS THAN ITS FAIR MARKET VALUE. IT WA S ARGUED THAT THE ASSESSEE HAD ADOPTED THE FAIR MARKET VALUE OF THE L AND AS ON 01-04- 1981 AT RS.22,85,000/- WHICH IS SUPPORTED BY THE RE PORT OF THE APPROVED VALUER. IT WAS SUBMITTED THAT DVO HAS DET ERMINED THE FAIR MARKET VALUE AT RS.12,18,000/-. IT WAS ACCORD INGLY ARGUED THAT THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE IS NO T LESS THAN THE FAIR MARKET VALUE ADOPTED BY THE DVO. RELYING ON VARIOU S DECISIONS IT WAS ARGUED THAT THE ASSESSING OFFICER SHOULD BE DIR ECTED TO ADOPT THE FAIR MARKET VALUE AT RS.22,85,000/- AND ACCORDI NGLY ACCEPT THE CAPITAL GAINS DETERMINED BY THE ASSESSEE. 5 3.1 WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE ALS O QUESTIONED THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE VALUATION MADE BY THE DVO ON THE GROUND THAT THE ASSESSING OFFICER PROCEEDED TO DO SO INSPITE OF POINTING OUT SPECIFICALLY THE FACT UAL AND PATENT ERRORS COMMITTED BY THE DVO. IT WAS SUBMITTED THAT BOTH THE DVO AS WELL AS THE APPROVED VALUER EXPRESSED THEIR INAB ILITY TO OBTAIN ANY COMPARABLE SALE INSTANCE. THE RELIANCE PLACED BY THE DVO ON THE VALUATIONS PRESCRIBED FOR THE PURPOSE OF STAMP DUTY WAS ALSO CHALLENGED BY THE ASSESSEE SUBMITTING THAT SUCH VAL UATION ON THE BASIS OF THE READY RECKONER RATE HAS LIMITED PURPOS E OF LEVYING THE STAMP DUTY AND BY ANY STANDARD SUCH VALUATION CANNO T BE CONSIDERED CONCLUSIVELY AS REPRESENTING THE FAIR MA RKET VALUE. IT CAN ONLY BE CONSIDERED AS A GUIDELINE TO CALCULATE THE PAYMENT OF STAMP DUTY. IT WAS ARGUED THAT THE FAIR MARKET VAL UE OF THE PROPERTY DIFFERS FROM PROPERTY TO PROPERTY DUE TO VARIOUS PA RAMETERS SUCH AS ITS SIZE, LOCATION, PROXIMITY TO CIVIC AMENITIES, I NFRASTRUCTURAL FACILITIES, VEHICULAR TRANSPORT FACILITY ETC. HOWE VER, THE DVO HAS NOT CONSIDERED ALL THESE PARAMETERS. THE VARIOUS I NFIRMITIES IN THE REPORT OF THE DVO WAS ALSO POINTED OUT TO THE LD.CI T(A). THE ASSESSEE ALSO CHALLENGED THE DVOS RELIANCE ON THE GUIDELINES ISSUED BY THE TOWN PLANNING DEPARTMENT WHICH SUGGES T THAT THE RATE AS OF 1981 SHOULD BE REDUCED BY 40% OF THE RAT ES PRESCRIBED IN 1989. IT WAS ARGUED THAT SUCH A METHOD HAS ABSOLUT ELY NO BASIS AND IS DEVOID OF ANY MERITS ESPECIALLY WHEN THE DVO ACC EPTS THAT THE VALUE DIFFERS FROM PROPERTY TO PROPERTY DEPENDING U PON SEVERAL 6 OTHER PARAMETERS. RELYING ON VARIOUS DECISIONS THE ASSESSEE SUBMITTED THAT THE VALUE ADOPTED BY HIM IS FAIR AND REASONABLE AND THE SAME SHOULD BE ACCEPTED. 3.2 HOWEVER, THE LD.CIT(A) WAS ALSO NOT CONVINCED W ITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. AFTER ANALYSIN G THE PROVISIONS OF SECTION 55A AND REFERRING TO VARIOUS DECISIONS, THE LD.CIT(A) NOTED THAT THERE ARE CONFLICTING DECISIONS ON THE I SSUE AS TO WHETHER REFERENCE CAN BE MADE TO THE DVO IF THE VALUE ADOPT ED BY THE ASSESSEE IS SUPPORTED BY THE VALUATION REPORT OF A REGISTERED VALUER AND THE VALUE ESTIMATED BY THE REGISTERED VALUER IS NOT LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY. FOLLOWING THE D ECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. KRIS HNABAI TINGRE VS. ITO REPORTED IN 101 ITD 317, WHEREIN IT HAS BEE N HELD THAT REFERENCE MADE BY THE ASSESSING OFFICER U/S.55A FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04-1 981 IS NOT A VALID REFERENCE PARTICULARLY WHEN THE VALUE DETERMINED BY THE REGISTERED VALUER IS NOT LESS THAN THE VALUE AS ESTIMATED BY T HE GOVERNMENT APPROVED VALUER. HE ACCORDINGLY HELD THAT THE REFE RENCE MADE BY THE ASSESSING OFFICER U/S.55A TO THE DVO IS NOT A V ALID REFERENCE. HE, HOWEVER, HELD THAT THE VALUATION REPORT OF THE DVO WILL NOT LOSE ITS RELEVANCE BEING A GOOD PIECE OF EVIDENCE ON THE ISSUE OF FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04-1981. 3.3 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF POORAN MAL VS. DIRECTOR OF INSPECTION ( INVESTIGATION) REPORTED IN 93 ITR 505 WHEREIN THE APEX COURT HAS OBSERVED THAT 7 EVEN IF THE SEARCH IS HELD AS ILLEGAL SEARCH, NOTHI NG IN THE ARTICLE 19 OF THE CONSTITUTION BARS USE OF EVIDENCE OBTAINED AS A RESULT OF SUCH ILLEGAL SEARCH, THE LD.CIT(A) HELD THAT THE VALUATI ON REPORT OF THE DVO WILL NOT LOSE ITS RELEVANCE AND CONSEQUENTLY AS EVIDENCE. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN ABSENCE OF ANY COMPARABLE CASES, THE LD.CIT(A) HELD THAT TH ERE IS NO FLAW IN THE APPROACH OF THE GOVERNMENT APPROVED VALUER AND THE ASSESSING OFFICER IN TAKING INTO CONSIDERATION THE STAMP DUTY RECKONER RATES NOTIFIED FOR THE FIRST TIME IN THE YEAR 1989 FOR TH E PURPOSE OF ASCERTAINING THE FAIR MARKET VALUE OF THE LAND AS O N 01-04-1981. THE LD.CIT(A) NOTED THAT DVO IN PARA 3 OF THE VALUA TION REPORT HAS MENTIONED THAT THERE IS A DIFFERENCE IN VALUES GIVE N IN THE READY RECKONER AND IN THE ACTUAL MARKET RATES AND HAS FUR THER OBSERVED THAT THE ACTUAL MARKET RATES VARY BETWEEN 2 TO 6 TI MES FROM THE RATES MENTIONED IN THE READY RECKONER. HE NOTED THAT THE DVO WHILE ESTIMATING THE VALUE HAS ADOPTED THE VALUE OF THE P ROPERTY AT 4 TIMES OF THE RATE OF THE GOVERNMENT RATE OF RS.75,000/- P ER HECTARE OF LAND FOR THE YEAR 1989 AND THEREAFTER REDUCED THE V ALUE BY 60% FOR ARRIVING AT THE VALUE IN THE YEAR 1981. IN ABSENCE OF ANY ACTUAL READY RECKONER RATE FOR THE YEAR 1981 AND CONSIDERI NG THE DEVELOPMENT POTENTIAL OF THE LAND WHICH IS LOCATED IN THE PROXIMITY TO THE NATIONAL HIGHWAY, THE LD.CIT(A) HELD THAT VA RIOUS OTHER PARAMETERS WILL DETERMINE THE OVERALL VALUATION OF THE LAND. HE ACCORDINGLY ADOPTED RS.3,75,000/- PER HECTARE OF LA ND WHICH IS 5 TIMES THE GOVERNMENT RATE OF RS.75,000/- PER HECTAR E AS AGAINST 8 RS.3 LAKHS ADOPTED BY THE GOVERNMENT APPROVED VALUE R AND THE ASSESSING OFFICER. HE ACCORDINGLY DIRECTED THE ASS ESSING OFFICER TO DETERMINE THE FAIR MARKET VALUE AS ON 01-04-1981 WHICH IS AS UNDER : LAND AREA = 10.15 HA. RATE AS DISCUSSED FOR YEAR 1989 : RS.3,75,000/- PER HA TOTAL VALUE AS ON 1989 = 10.15 X3,75,000 : RS.38,06,250 VALUE OF LAND AS ON 1981 @40% : RS.15,22,500 INDEXED COA : 551/100 X15,22,500 : RS.83,88,975 THUS, HE DETERMINED THE LONG TERM CAPITAL GAIN AT RS.3,03,84,171/- WHICH IS AS UNDER : SALE CONSIDERATION RS.4,00,00,000 LESS : 1. COST OF SELLING RS. 8,26,854 2. CLAIM OF 54EC RS. 4,00,000 3. INDEXED COA RS.83,88,975 ------------------ RS.96,15,829 -------------------- LONG TERM CAPITAL GAINS : RS.3,03,84,171 -------------------- 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH TH E FOLLOWING GROUNDS : GROUNDS BY ASSESSEE : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAVING HELD THAT THE ASSESSING OFFICER HAS NO POWER TO M AKE REFERENCE TO THE DISTRICT VALUATION OFFICER U/S. 55A HAS ERRED IN DETERMINING THE FAIR MARKET VALUE AS OF 1/4/1981 OF THE IMMOVABLE PROPERTY SOLD BY THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO ABOVE GROUND NO. 1 CIT(A) HAS ERRED IN NOT ADOPTING THE VALUATION MADE BY THE REGISTERED VALUER WITHOUT POI NTING OUT ANY DEFECT THEREIN AS WELL AS WITHOUT TAKING NOTE OF THE PATENT ERRORS IN THE VALUATION MADE BY THE DISTRICT VALUATION OFFICE R WHOSE REPORT HAS BEEN CONSIDERED BY THE CIT(A) AS AN ADMISSIBLE PIECE OF EVIDENCE 9 DESPITE HOLDING THAT REFERENCE TO THE DISTRICT VALUA TION OFFICER WAS ILLEGAL. 3. THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWE D TO BE AMENDED, ALTERED, MODIFIED ETC., IN THE INTEREST OF NATURAL JUSTICE. GROUNDS BY REVENUE : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) IS CONTRARY TO THE LAW AND FACTS AND CIRCUMSTANCES OF T HE CASE. . 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED ON FACTS AND IN LAW IN ALLOWING 5 TIMES THE GOVT. RATE O F RS. 75,000/- FOR COST OF ACQUISITION INSTEAD OF 4 TIMES FIXED THE GO VT., RATE OF RS.75,000/- AS ON 01.04,1931, WHERE AS THE RATE OF CO ST OF ACQUISITION WAS FIXED BY GOVT. APPROVED VALUER RELYIN G ON READY RECKONER RATE AS PER THE TOWN PLANNING AND VALUATION DEPARTMENT, 1989. 3. FOR THESE AND SUCH ABOVE OTHER GROUNDS AS MAY BE UR GED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED C IT(APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED . 4. THE APPELLANT CRAVES, LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUND OF APPEAL DURING THE COURSE OF THE APPELLANT PROCEEDINGS BEFORE THE ITAT. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S TRONGLY CHALLENGED THE ORDER OF THE CIT(A). HE SUBMITTED T HAT THE LD.CIT(A) HAVING ACCEPTED THE SUBMISSION THAT THE A SSESSING OFFICER HAS NO POWER TO MAKE REFERENCE U/S.55A, NEV ERTHELESS, HELD THAT THE VALUATION MADE BY THE DVO CAN BE CONSIDERE D FOR THE PURPOSE OF DECIDING AS TO WHETHER VALUATION MADE BY THE APPROVED VALUER AND ADOPTED BY THE ASSESSEE IS FAIR AND REAS ONABLE. HE SUBMITTED THAT WHERE THE ASSESSEES VALUATION IS BA SED ON THE REPORT OF AN APPROVED VALUER AND WHERE SUCH VALUATION IS N OT FOUND TO BE LESS THAN ITS FAIR MARKET VALUE, THERE IS NO QUESTI ON OF REFERRING TO ANY OTHER EVIDENCES INCLUDING THE REPORT OF THE DVO . REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF CIT 10 VS. PUJA PRINTS REPORTED IN 360 ITR 687 HE SUBMITTE D THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD TH AT REFERENCE TO THE DVO CAN BE MADE ONLY IN CASES WHERE THE VALUE O F THE CAPITAL ASSET SHOWN BY THE ASSESSEE IS LESS THAN ITS FAIR M ARKET VALUE AS ON 01-04-1981. WHERE THE VALUE OF THE CAPITAL ASSET S HOWN BY THE ASSESSEE ON THE BASIS OF THE APPROVER VALUERS REPO RT WAS MORE THAN ITS FAIR MARKET VALUE REFERENCE U/S.55A OF THE I.T. ACT WAS NOT VALID. HE SUBMITTED THAT THE HONBLE HIGH COURT WHILE DECI DING THIS ISSUE HAS FOLLOWED THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. DAULAT MOHTA REPORTED IN 360 ITR 6 80. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. SMT. KRISHNABAI TINGRE VS. ITO ITA NO.572/PN/199 8 ORDER DATED 30-06-2005. 2. DY.CIT VS. CHATURBHUJ VALLABHDAS (HUF) ITA NO.3439/MUM/2007 ORDER DATED 2012-2010. 3. CIT VS. RAMANKUMAR SURI 255 CTR (BOM) 257 5.1 SO FAR AS THE DETERMINATION OF VALUE OF THE LAN D AT RS.15,22,500/- PER ACRE AS ON 01-04-1981 BY THE CIT (A) IS CONCERNED, HE SUBMITTED THAT SUCH VALUATION IS ALSO INCORRECT FOR THE FOLLOWING REASONS AS PER PAGE 2 OF THE SYNOPSIS AN D WHICH READS AS UNDER : I) ONCE REFERENCE TO DVO IS ADMITTED AS NOT PERMISSI BLE THE CIT(A) HAS ERRED IN RELYING ON THE SAME FOR THE PURPO SE OF REJECTING THE VALUATION MADE BY THE APPROVED VALUER. II) THE CIT(A) HAS NOT FOUND ANY VITAL DEFECT IN T HE VALUATION MADE BY THE APPROVED VALUER THE SAME SHOULD BE ADOPTED AS FAIR AND REASONABLE. III) THERE ARE SEVERAL METHODS OF VALUATION IN THE A BSENCE OF 11 COMPARABLE INSTANCES. IT IS POSSIBLE THAT BY ADOPTING TH OSE METHODS THERE IS BOUND TO BE DIFFERENCE IN THE VALUAT ION OF FMV FINALLY ARRIVED AT. THEREFORE RELYING ON SOME OTHER METHOD WHERE THE FMV AS OF 01-04-1981 IS FOUND TO BE LESSER THAN THE FMV ESTIMATED BY THE APPROVED VALUER THAT PER SE SHOULD N OT BE THE CRITERIA FOR OUTRIGHTLY REJECTING THE VALUATION MAD E BY THE APPROVED VALUER. THE CIT(A) HAS THEREFORE ERRONEOUSLY RELIED ON DIFFERENT METHODS PERHAPS ONLY BECAUSE IT IS BENEFICIA L TO THE REVENUE. IT IS SUBMITTED THAT IN THE CONVERSE SITUATION DEPARTMENT DOES NOT ADOPT SUCH AN APPROACH. IV) IN A CASE WHERE APPELLANT'S CLAIM IN RESPECT OF FMV IS SUPPORTED BY THE REGISTERED VALUER'S VALUATION THE ASSES SING OFFICER NEITHER COULD MAKE ANY REFERENCE TO THE DVO NOR THERE WOULD BE ANY ENQUIRY AND EXAMINATION EVEN IF THE VA LUATION REPORT OF THE REGISTERED VALUER WAS PRIMA FACIE NOT CORRECT. REFER- DCIT V/S CHATURBHUJ VALLABHDAS-130 ITD 230 - MUMBAI BENCH RELEVANT PARA 10. (REFER PAGE NO.28 TO 31) V) IT IS FURTHER PERTINENT TO BE NOTED THAT CIT(A) H AS NOT FOUND ANY VITAL DEFECT IN THE VALUATION MADE BY THE APPRO VED VALUER. COPY OF THE REPORT IS AT PAGE NO.21 TO 59. IT WILL BE APPRECIATED THAT APPROVED VALUER HAS TAKE N INTO CONSIDERATION MINUTE DETAILS RELATING TO THE PROPERTY UNDER CONSIDERATION AND HAS TAKEN SUPPORT OF SEVERAL FACTORS ATTACHED TO THE SAID PROPERTY. REFER PAGE NO.32 TO 70. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT( A) BET SET ASIDE AND THE VALUE ADOPTED BY THE ASSESSEE BE CONSIDERED AS CORRECT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICE R. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS ADOPTED T HE VALUE OF LAND AS ON 01-04-1981 AT RS.22,85,000/- BASED ON THE APPROV ED VALUERS REPORT WHEREAS THE DVO HAS VALUED THE COST OF LAND AT 12 RS.12,18,000/-. THE ASSESSING OFFICER IN THE INSTA NT CASE HAS REFERRED THE MATTER TO THE DVO U/S.55A OF THE I.T. ACT. THEREFORE, THE FIRST QUESTION TO BE DECIDED IN THE GROUND OF A PPEAL IS AS TO WHETHER THE ASSESSING OFFICER HAS POWER TO REFER TH E MATTER TO THE DVO FOR DETERMINATION OF THE FAIR MARKET VALUE WHEN THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE IS MORE THAN T HE FAIR MARKET VALUE DETERMINED BY THE DVO. 7.1 WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF PUJA PRINTS (SUPRA) HAS OBSERVED AS UNDER : WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE IMPUGNED ORDER DATED FEBRUARY 18, 2011, ALLOWING TH E RESPONDENT- ASSESSEES APPEAL HOLDING THAT NO REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER CAN BE MADE UNDER SECTION 55A OF THE ACT ONLY FOLLOWS THE DECISION OF THIS COURT IN THE MATTER OF DAULAL MOHTA (HUF) (SUPRA). THE REVENUE HAS NOT BEEN ABLE TO POINT OU T HOW THE AFORESAID DECISION IS INAPPLICABLE TO THE PRESENT FACTS NOR H AS THE REVENUE POINTED OUT THAT THE DECISION IN DAULAL MOHTA (HUF) (SUPRA) HAS NOT BEEN ACCEPTED BY THE REVENUE. ON THE AFORESAID GROUN D ALONE, THIS APPEAL NEED NOT BE ENTERTAINED. HOWEVER, AS THE SUB MISSIONS WERE MADE ON THE MERITS, WE HAVE INDEPENDENTLY EXAMINED THE SAME. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLEARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MADE TO THE DEPA RTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY TH E ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT IS AN UNDISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESP ONDENT- ASSESSEE OF THE PROPERTY AT RS. 35.99 LAKHS WAS MUCH MO RE THAN THE FAIR MARKET VALUE OF RS. 6.68 LAKHS EVEN AS DETERMI NED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE ASSESS ING OFFICER REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY A S ON 1981 AS MADE BY THE RESPONDENT-ASSESSEE WAS HIGHER THAN THE FAIR MA RKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECTION 55A(A) OF THE ACT IS NOT JUSTIFIED. THE CONTENTION OF THE REVENUE THAT IN VIEW OF THE A MENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORD S 'IS LESS THEN ITS FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GI VEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 201 2 AMENDMENT WAS MADE EFFECTIVE ONLY FROM JULY 1, 2012. PARLIAMENT H AS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, T HE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF TH E ACT AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2 006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL 13 VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSESSING OFFICER LESS THAN ITS FAIR MAR KET VALUE. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFF ICER IS SUSTAINABLE IN VIEW OF SECTION 55A(A)(II) OF THE ACT IS NOT ACC EPTABLE. THIS IS FOR THE REASON THAT SECTION 55A(B) OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE, I.E., A CASE NOT COVERED B Y SECTION 55A(A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITI ON THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RE SORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CENTRAL BOARD OF DIRECT TAXES CIR CULAR DATED NOVEMBER 25 1972, CAN HAVE NO APPLICATION IN THE FA CE OF THE CLEAR POSITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN CIRCULAR ISSU ED BY THE CENTRAL BOARD OF DIRECT TAXES IS NOT BINDING UPON THE ASSES SEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. THE CONTENTION OF THE REVENUE THAT THE ASSESSING OFFIC ER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PROPERTY TO TH E DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS POWER UNDER SECTI ONS 131, 133(6) AND 142(2) OF THE ACT IS ENTIRELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SU PRA). HOWEVER, THE APEX COURT IN SMT. AMIYA BALA PAUL (SU PRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AND HELD THAT IF THE POWER TO REFER ANY DISPUTE WITH REGARD TO THE VA LUATION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTIONS 131(1), 136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPECIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFI C PROVISION UNDER WHICH THE REFERENCE CAN BE MADE TO THE DEPARTMENTAL VALUATION OFFICER IS AVAILABLE, THERE IS NO OCCASION FOR THE ASSESSI NG OFFICER TO INVOKE THE GENERAL POWERS OF ENQUIRY. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CL EAR PROVISIONS OF LAW AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSM ENT YEAR 2006-07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B ) DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. REGARDING QUESTION (C) THE TRIBUNAL BY ITS IMPUGNED ORDER HAS MERELY REMAND ED THE ISSUE TO THE ASSESSING OFFICER TO DETERMINE THE DATE ON WHICH THE RESPONDENT-ASSESSEE ACQUIRED THE PROPERTY FOR THE PURPOS E OF WORKING OUT THE COST OF ACQUISITION. NO SPECIFIC SUBM ISSIONS IN REGARD TO THIS ISSUE WAS MADE BY THE REVENUE DURING THE ORAL SUBMISSIONS. IN ANY EVENT, AN ORDER OF REMAND IN THESE FACTS DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. ACCORDINGLY, WE SEE NO REASON TO ENTERTAIN QUESTIONS (A ), (B) AND (C) AS FORMULATED BY THE REVENUE AS THEY DO NOT RAISE ANY SUBSTANTIAL QUESTIONS OF LAW. ACCORDINGLY, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 7.2 SIMILAR VIEW HAS BEEN TAKEN IN VARIOUS OTHER DE CISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH ARE PL ACED IN THE PAPER 14 BOOK. RESPECTFULLY FOLLOWING THE DECISION OF THE J URISDICTIONAL HIGH COURT CITED (SUPRA), WE HOLD THAT THE ASSESSING OFF ICER HAS NO POWER TO REFER THE MATTER U/S.55A FOR DETERMINING T HE FAIR MARKET VALUE OF THE PROPERTY. ONCE THE REFERENCE U/S.55A IS HELD AS NOT IN ACCORDANCE WITH LAW, THE FURTHER EXERCISE AS DONE B Y THE LD.CIT(A) BECOMES ACADEMIC IN NATURE. WE ACCORDINGLY ALLOW T HE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL AND DISMISS TH E GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 10-09-2014. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 10 TH SEPTEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY// ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE