ITO, Pune V. Smt Surekha Tanaji Bhilare, Pune

ITA 1612/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79871 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: V L JAIN
• Keywords: Value adopted by valuation officer; Retrospective amendment; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1612 /PN/20 12 ASSESSMENT YEAR : 2008 - 09 INCOME TAX OFFICER, WARD 4(5), P .M.T. BUILDING, SWARGATE, PUNE VS. SMT. SUREKHA TANAJI BHILARE, SR. NO. 33/5/A - 1, SHRIHARI APT., SHANIMARUTI MANDIR CHOWK, DHANKAWADI, PUNE (APPELLANT) (RESPONDENT) PAN NO. AOCPB8234K APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI V.L. JAIN DATE OF HEARING : 07 - 05 - 2014 DATE OF PRONOUNCEMENT : 29 - 05 - 2014 ORDER PER R.S . PADVEKAR , JM : - IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) - II, PUNE DATED 27 - 03 - 2012 FOR THE A.Y. 2008 - 09. THE REVENUE HAS TAKEN T HE MULTIPLE GROUNDS BUT THE FOLLOWING ARE THE EFFECTIVE GROUNDS: 1. (3). THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THAT THE VALUATION OF THE REGISTERED VALUER OF THE ASSESSEE SHOULD BE ACCEPTED AND NOT THE VALUATION GIVEN BY THE DVO WHEREIN REFERENCE IN AN IDENTICAL CASE, ONE AMONG THE 63 VENDORS, WAS MADE TO THE DVO BY THE ASSESSING OFFICER U/S. 55A OF THE INCOME TAX ACT, 1961 TO DETERMINE THE COST OF ACQUISITION. 2. (4). THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GRO SSLY ERRED IN TREATING THE REFERENCE TO VALUATION OFFICER U/S. 55A AS INVALID. ON THE CONTRARY IT SHOULD HAVE UPHELD THE REFERENCE TO THE DVO IN VIEW OF THE PROVISIONS LAID DOWN IN SECTION 55A(B)(II) OF THE ACT, WHICH CLEARLY STATES THE FOLLOWING THAT IN ANY OTHER CASE IF A.O. IS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES IT IS NECESSARY TO DO SO. 2 ITA NO. 1612/PN/2012, SMT. SUREKHA TANAJI BHILARE, PUNE 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE RETURN FILED BY THE ASSESSEE FOR THE A.Y. 20 08 - 09 WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT. THE ASSESSEE WAS THE CO - SHARER OF A PROPERTY ALONG WITH 63 OTHER PERSONS. THE SAID PROPERTY / LAND WAS SOLD OUT AND THE ASSESSEE RECEIVED RS.51,24,604/ - TO WARDS HER SHARE IN THE SAID LAND/PROPERTY. THE ASSESSEE WORKED OUT THE LONG TERM CAPITAL GAIN AT RS.2,20,704/ - AND ADOPTED INDEXED COST OF ACQUISITION AT RS.49,03,900/ - . THE FAIR MARKET VALUE AS ON 01 - 04 - 1981 IS BASED ON THE VALUATION REPORT OF SHRI VIDY ASAGAR JADHAV, GOVT. APPROVED VALUER AT RS.20.60/ - PER SQ. FT. AND THIS IS THE PRECISE CONTROVERSY IN THE PRESENT APPEAL. THE ASSESSING OFFICER MADE THE REFERENCE TO THE DVO U/S. 55A OF THE INCOME - TAX ACT FOR DETERMINING THE FAIR MARKET VALUE OF THE LAND AS ON 01 - 04 - 1981. 3. THE ASSISTANT VALUATION OFFICER COMMUNICATED THE RATE OF THE LAND UNDER CONSIDERATION IN 1989 OF RS.20,000/ - TO RS.30,000/ - PER HECT ARE . THE ASSESSING OFFICER HAS ADOPTED THE RATE OF 40% LE SS THAN THE VALUE OF LAND AS IN THE YEAR 1 989 BASED ON ADVICE OF THE ASSISTANT VALUATION OFFICER. THE ASSESSING OFFICER WORKED OUT THE FAIR MARKET VALUE OF THE LAND MORE PARTICULARLY THE ASSESSEES SHARE AT RS.4,963/ - AND ADOPTING THE SAID FIGURE , WORKED OUT THE INDEXED COST OF ACQUISITION AT RS. 27,350/ - AS AGAINST RS.49,03,900/ - ADOPTED BY THE ASSESSEE. THE ASSESSING OFFICER, ACCORDINGLY, WORKED OUT THE LONG TERM CAPITAL GAIN AT RS.50,97,250/ - AS AGAINST RS. 2,20,704/ - DECLARED BY THE ASSESSEE. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A ) AND LD. CIT(A) FOLLOWING THE DECISION OF THE ITAT, PUNE IN THE CASE OF SMT. KRISHNABAI TINGARE VS. ITO, PUNE (2006) 103 ITD 317 HELD THAT THE REFERENCE TO THE DVO U/S. 55A FOR DETERMINING THE FAIR MARKET VALUE OF SHARE IN THE LAND AS ON 01 - 04 - 1981 WAS AG AINST THE PROVISIONS OF LAW. HE, ACCORDINGLY, ALLOWED THE CLAIM OF THE ASSESSEE. NOW THE REVENUE IS IN APPEALS BEFORE US. 3 ITA NO. 1612/PN/2012, SMT. SUREKHA TANAJI BHILARE, PUNE 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL ARGUES THAT THE ISSUE ARISING IN THE REVENUE APPEAL IS COVERE D 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). 5. 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 MAKE TO SEC. 55A (A) AND HELD AS UNDER: 7. WE FIND THAT S. 55A(A) OF THE ACT V ERY 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 198 1 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 IS 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 AMENDME NT 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, VERY 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 SUSTAINAB LE IN VIEW OF S. 55A(A)(II) [55A(B)(II)] OF THE ACT 4 ITA NO. 1612/PN/2012, SMT. SUREKHA TANAJI BHILARE, PUNE IS NOT ACCEPTABLE. THIS IS FOR THE REASON THAT S. 55A(B) OF THE ACT VERY 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 UNDISP UTABLE POSITION THAT THE ISSUE 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 LAW. 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. 6. IN THE CA SE OF HIABEN JAYANTILAL SHAH (SUPRA) THE HON'BLE 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 VALUE 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 CIRCUMSTANC ES, 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 AS SET CLAIMED BY THE ASSESSEE 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. 5 ITA NO. 1612/PN/2012, SMT. SUREKHA TANAJI BHILARE, PUNE 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 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. THE 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 CLAI M WAS MADE BY THE ASSESSEE 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 TO BY THE AO. 7. IN OUR OPINION, THE ASSESSING OFFICER HAS NO POWER TO MAKE THE REFERENCE TO THE DVO FOR THE A.Y. 2008 - 09 BY INVOKING U/S. 55A OF THE INCOME - TAX ACT FOR DETERMINING FAIR MARKET VALUE AS ON 01 - 04 - 1981 . MOREOVER, THE ISS UE 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, THE SAME IS CONFIRM AND GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 8. IN THE RESUL T, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 - 05 - 201 4 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 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