Shri Vipul T. Joshi, Baroda V. The Dy.CIT, Circle-2(2), Baroda

ITA 1710/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5906 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: SURESH MODIANI
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Audit objection; Principle of natural justice; Cost of acquisition; Fair market value; Valuation report; Assessment record; Prejudicial to interest; Revenue expenditure
• Section: 143(3); 50C; 234B; 54; 263; 63

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITA NO. 1 710 / AHD/201 4 / ASSTT. YEAR: 2009 - 2010 SHRI VIPUL T. JOSHI, A 28 SARAN AGAR SOCIETY OPP. YASH COMPLEX, GOTRI ROAD, BARODA 390021. PAN :ABMPJ2795E VS DY. COMMISS IONER OF INCOME CIRLE2(2) , BAROAD (APPLICANT) (RESPONENT) ASSESSEE BY : MR. SURESH MODIANI , AR REVENUE BY : MS. VIBHA BHALLA , CIT .DR / DATE OF HEARING : 29 / 03 /201 7 / DATE OF PRONOUNCEMENT: 15 / 05 /201 7 / O R D E R PER MANISH BORAD , ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE FOR ASST. YEAR 2009 - 10 IS DIRECTED AGAINST THE ORDER U/S.263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) OF THE LEARNED COMMIS SIONER OF INCOME TAX - I, BARODA (IN SHORT LD.CIT ) , FRAMED ON 25 / 03 / 2014 BY COMMISSIONER OF INCOME - TAX - I, BARODA . 2. THROUGH THE SOLE GROUND , ASSESSE HAS CHALLENGED THE VALIDITY OF THE ORDER OF LD.CIT(A) U/S.263 OF THE ACT AND HAS CONTENDED THAT THE ORDER ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 2 OF LEARNED ASSESSING OFFICER (IN SHORT LD.AO) U/S.143(3) OF THE ACT DATED 29/ 09/2011 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST TO REVENUE. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE AVAILABLE RECORDS ARE THAT ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM TRADING IN SHARE , INCOME FROM OTHER SOURCES AND SHARE OF PROFIT FROM PARTNERSHIP FIRM. RETURN OF INCOME WAS FILED ON 10/03/2010 DECLARING TOTAL INCOME OF RS.18,54,660/ - CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT FOLLOWED BY U/S.142(1) OF THE ACT WAS DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD.AO EXAMINED THE TRANSACTION OF SALE OF AGRICULTURE LAND JOINTLY OWNED BY THE ASSESSEE WITH HIS BROTHER SHRI YOGESHCHANDRA T JOSHI HELD SINCE PRIOR TO 01/04/1981 . THI S AGRICULTURE LAND BEARING NO.165 SITUATED AT GOTRI WAS SOLD AT NET SALE CONSIDERATION VALUE OF RS.1,89,60,000/ - . ASSESSEE BEING 5 0% OWNER HAS SHOWN THE SALE CONSIDERATION AT RS.93,80,000/ - . IN ORDER TO CALCULATE LONG TERM CAPITAL GAIN ASSESSEE ADOPTED THE FAIR MARKET VALUE AS ON 01/04/1981 AT RS.25,37,260/ - CALCULATED BY APPLYING RATE OF RS.380 PER SQ.MT. DURING THE COURS E OF ASSESSMENT PROCEEDINGS ASS ESSEE WAS ASKED ABOUT THE QUALITY OF LAND AND BASIS OF REASONABILITY OF ADOPTING THE RATE OF RS.380 PER S Q.MT. SUBSEQUENTLY ASSESSEE FILED ANOTHER VALUATION REPORT ON 10/08/2011 WHICH HAS SHOWN THE FAIR MARKET VALUE CALCULATED ON THE BASIS OF RS.290 PER SQ.MT. ASSESSEE ACCORDINGLY OFFERED THE ADDITIONAL LONG TERM CAPITAL GAIN FOR TAX AND SUBMITTED REVISED COM PUTATION OF TOTAL INCOME ALONG WITH THE DIFFERENTIAL TAX PAYMENT. LD.AO AFTER EXAMINING THE REVISED COMPUTATION OF INCOME AND COPY OF VALUATION REPORT DATED 10/0 8/2011, ACCORDINGLY TAXED LONG TERM CAPITAL GAIN OF RS.25,46,017/ - AS AGAINST RS.12,57,226/ - SH OWN BY THE ASSESSEE IN HIS ORIGINAL RETURN OF INCOME. INCOME WAS ASSESSED AT RS.30,33,450/ - ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 3 3.1 SUBSEQUENTLY LD.CIT HAVING JURISDICTION OVER THE ASSESSEE CALLED FOR THE ASSESSMENT RECORDS OF THE ASSESSEE FOR A.Y. 2009 - 10. AFTER EXAMINING THE RECORDS LD.C IT WAS OF THE VIEW THAT JANTRI RATE WAS AVAILABLE AS ON 01/04/1999 OF THE IMPUGNED AGRICULTURE LAND. LD.AO SHOULD HAVE TAKEN THE BASIS OF JANTRI RATE OF RS.220 PER SQ.MT. AS ON 01/04/1999 AND THE COST INDEXATION BENEFIT SHOULD HAVE BEEN ALLOWED AC CORDINGLY . ACCORDINGLY LD.CIT ISSUED NOTICE U/S.263 OF THE ACT ON 18/12/2013 ARE READ AS FOLLOWS: I T WAS FOUND THAT THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATED 29.09.2011 BY THE ASSESSING OFFICER, ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(2), BARODA FOR A.Y. 2009 - 10 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENU E ON ACCOUNT OF THE FOLLOWING: '1. WHEREAS IT IS NOTICED THAT YOU HAD COMPUTED LTCG ON SALE OF LA ND AT REVENUE SURVEY NO 165 OF GOTRI, VADOD ARA. THE LAND HO LD (ADMEASURING 6,677 SQ MTS) JOINTLY WITH YOUR BROTHER AND SOLD IT FOR CO NSIDERATION OF RS.1,97,60,000/ - ON 22.09.20 08. YOU HAD SHOWN FAIR MARKET VALUE OF THE SAID LAND AT RS. L9,36,300/ - AS ON 01 .04,. 1981 ON THE BASIS OF VALUATION REPORT OF A PRIVATE V ALUER WHO HAD TAKEN RATE OF THEN UN - IRRIGATED AGRICULTURAL LAND AT 290 PER SQ MT. THE SAME WAS ACCEPTED BY ASSESSING OFFICER AND LTCG WAS WORKED OUT AT R S.25,46,017/ - AFTER ALLOWING DEDUCTION OF RS.11,99,359/ - U/S. 54F. IT WAS HOWEVER NO TICED THAT IN HIS VALUATION REPORT, THE PRIVATE VALUER HAD STATED THAT AS JANTRI RATE WAS PRESCRIBED ONLY FROM 01..04.2006 FOR THE LAND WHICH WAS 1200 PER SQ MT. THERE WAS NO COMPARABLE SALE IN THE VICINITY , HE TOOK COMPARABLE PRICE OF GOLD IN 2008 AN D THAT OF IN 1981 AND AFTER TAKING REFERENC E OF JANTRI RATE OF 2006, HE FMV OF LAND AS ON 01.04.1981 AT RS.19,36,300/ - @ 290 PER SQ MT. IT WAS HOWEVER NOTICED THAT JANTRI RATE OF LAND WAS AVAILABLE FROM 1 ST APRIL 1999 WHICH WAS 220 PER SQ MT. ADOPTING THE SA ME METHOD OF PRIVATE VALUER (I.E. COMPARABLE PRICE OF GOLD IN 1999 (167 PER GRAM) AND THAT OF IN 1981 (423.50 PER GRAM) AND AFTER TAKING REFERENCE OF JANTRI RATE OF 1999), THE FMV OF LAND AS ON 01.04.1981 COMES TO 579250.[FMV = {COST OF GOLD AS ON 01.04.19 81/COST OF GOLD AS ON 01.04.1999} X (RATE OF LAND AS PER JANTRI AS ON 1.4.1999 X AREA OF LAND SOLD)]. AS SUCH LTCG ON SALE OF THIS LAND COMES TO 48,09,415 AS UNDER: SALE CONSIDERATION = 1/2 OF 1, 87,60,000 - 10,00,000 PAID TO CONFIRMING PARTY = 93,80,000/ - LESS : INDEXED COST = 5,79,250 X 5.82 = 33,71,235 LESS : CLAIM U/S.54F = 11,99,350 ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 4 LTCG = 48,09,415/ - THUS THERE WAS SHORT LTCG OF 22,63,398 (48,09,415 25,46,017 BEING COMPUTED LTCG BY ASSESSING OFFICER 4. ASSESSEE REPLIED TO THE SHOWCAUSE NOTICE U/S.261 OF THE ACT ON 18/12/2013 BY SUBMITTING AS FOLLOWS : - LTCG ON SALE OF THIS LAND COMES TO 48,09,415. THUS THERE WAS SHORT LTCG OF 22.63.3.08 (48,09,415 25,46, 017 BEING COMPUTED LTCG BY ASSESSING OFFICER).' 2. IN VIEW OF THE ABOVE, A NOTICE U/S. 263(1) DATED 18.12.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE, REQUIRING HIM TO ATTEND ON 03.01.2014. BUT NO ONE ATTENDED ON 31.01.2014, ACCORDINGLY ONE MORE OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO ATTEND ON 04.02.2014. AFTER FU RTHER NON - COMPLIANCE OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO ATTEND ON 20.02.2014. THEREAFTER ON 25.02.2014 THE A.R. OF THE ASSESSEE ATTENDED AND FURNISHED WRITTEN SUBMISSION FOR THE CASE. THE CONTENTS OF THE WRITTEN SUBMISSION ARE AS UNDER: 'IT APPEARS FROM NOTICE BEARING NO. BRD/CIT - I/HQ/263/VTJ/2OIS - I4, DATED 18,12.2013 THAT THE PRESENT PROCEEDINGS HAVE BEEN INITIATED FOR THE FOLLOWING ITEM CONSIDERED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. FOR COMPUTATION OF CAPITAL GAINS ON SALE OF LAN D, FAIR MARKET VALUE OF LAND (FMV) AS ON 01/04/1981 DETERMINED BY REGISTERED VALUER AT RS. L9,36,300/ - WHILE ACCORDING TO THE CALCULATION IN THE NOTICE IT IS RS. 5,79,250/ - IT ALSO APPEARS THAT THE ABOVE ISSUE IS BASED ON AUDIT OBJECTION RAISED BY THE REVENUE AUDIT PARTY. WE MAY BE PERMITTED TO SUBMIT ON FACTS OF THE CASE AND IN VIEW OF DIRECT DECISIONS AVAILABLE ON THE SUBJECT, THAT THE ABOVE MATTER DOES NOT WARRANT ANY ACTION U/S 263. IT SEEMS FULL FACTS HAVE NOT BEEN PLACED BEFORE YOUR HONOUR. KINDL Y PERMIT US TO ELABORATE ON THE ABOVE POINT AS BELOW: (I) THE ASSESSEE HAD SOLD AN AGRICULTURAL LAND BEARING RS NO. 165 SITUATED AT GOTRI, VADODARA. SINCE THE LAND WAS ACQUIRED PRIOR TO 01.04.1981 , THE FAIR MARKET VALUE AS ON 01.04.1981 WAS ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL A DIN TAX. II) FOR FILING THE RETURN OF INCOME, ASSESSEE OBTAINED A VALUATION REPORT ACCORDING TO WHICH SUCH VALUE AS ON 01,04.1981 MAS RS. 3 80/ - PER SQUARE ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 5 METER. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER STATED THAT IN CASE OF ANOTHER ASSESSEE ASSESSED BY HIM EARLIER, THE FMV AS ON 01.04.1981 ADOPTED WAS LESS THAN THE VALUE ADOPTED BY THE VALUER OF THE ASSESSEE. HENCE, AT THE INSTANCE OF THE ASSESSING OFFICER, THE ASSESSE E APPROACHED ANOTHER VALUER AND OBTAINED ANOTHER VALUATION REPORT. (II) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSES HAD FILED VALUATION REPORT DATED 10.08.2011 FROM THE SAID REGISTERED VALUER COMPETENT TO VALUE AGRICULTURAL LANDS. THE SAID REPORT VA LUED THE LAND AT RS. 290 / - PER SQUARE METRE. (III) IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAD DETAILED VALUATION REPORTS FROM DIFFERENT SOURCES. ALSO AT THE SAME TIME HE COULD NOT MAKE R EFERENCE T O THE VALUATION OFFICER IN VIEW OF PROVISIONS OF SECTION 55 A AS APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR. IT WAS AFTER THOROUGH EXAMINATION OF ALL THESE VALUATION REPORTS AND AFTER DUE DELIBERATIONS AND THINKING THAT THE ASSESSMENT WAS MADE. SUCH AN ASSESSMENT CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT AN AUDIT OFFICER, WHO HAS NO MANDATE TO DO AM/ VALUATION, SPECULATES A DIFFERENT VALUE AS MARKET VALUE AS ON 01/04/1981. (IV) THE ASSESSES RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS, WHERE IT WAS HELD THAT AS PER SECTION 554 ( A) THE VALUATION DONE BY THE REGISTERED VALUER CAN BE DISREGARDED AND REFERRED TO THE DVO ONLY WHEN THE AO IS OF OPINION THAT THE VALUE CLAIM ED AS PER THE REPORT OF REGISTERED VALUER IS LESS THAN ITS FMV AND NOT WHEN VALUE CLAIMED BY THE ASSESSEE IS MORE THAN ITS FMV. (A) INCOME TAX OFFICER, WD. 7(1) AHMEDABAD V. NI TIN JAYANTILAL SHAH ITA NO.1988/AHD/2009. (B) MS. RUBAB M. KAZERANI U. JT. COMMISSIONER OF INCOME TAX [2004] 91 ITD 429 (MUM.)(TM ). (C) INCOME TAX OFFICER V. SMT. LALITABEN V. KAPADIA [2008] 115 TTJ 938 (MUM ) COPIES OF ORDERS IN THE ABOVE REFERRED CASES ARE ENCLOSED, MARKED AS ANNEXURE - L. 2. THE ASSESSEE RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS BY THE JURISDICTIONAL HIGH COURT AND MOST HUMBLY STATES THAT NO ACTION U/S 263 IS WARRANTED IN HIS CASE. (A) COMMISSIONER OF INCOME TAX U. AMIT CORPORATION [2012] 21 TAXMAN.COM 64 (GUJ.) IT WAS HELD THAT WHEN, DURING COURSE OF FRAMING OF ASSESSMENT, ASSESSING OFFICER HAD ACCESS TO ALL RECORDS OF ASSESSEE, AND AFTER PERUSING SAID RECORDS, ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 6 HE FRAMED ASSESSMENT, SAID ASSESSMENT COULD NOT BE RE - OPENED IN EXERCISE OF REVISION POWER UNDER SECTIO N 263 FOR MAKING FURTHER INQUIRIES. (B) COMMISSIONER OF INCOME T AX V. ARVINDJEWELLERS [2002] 124 TAXMAN 615 (GUJ.) IT WAS HELD THAT SINCE MATERIAL WAS THERE ON RECORD AND SAID MATERIAL WAS CONSIDERED BY ITO AND A PARTICULAR VIEW WAS TAKEN MERE FACT THAT DIFFERENT VIEW COULD BE TAKEN, SHOULD NOT HAVE BEEN BASIS FOR AN ACTION UNDER SECTION 263 .THE COMMISSIONER WAS UNJUSTIFIED IN ARRIVING AT A CONCLUSION THAT ORDER PASSED BY I TO WAS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE. COPIES OF ORDER S IN THE ABOVE REFERRED CASES ARE ENCLOSED, MARKED - AS:. ANNEXURE - 2 5. AFTER GOING THROUGH THE SUBMISSION OF ASSESSEE LD.CIT INCLINED TO HELD THAT ORDER PASSED BY THE LD.AO DATED 29/09/2011 SUFFERS FROM SERIOUS INFIRMITIES AND ERROR AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD.CIT ACCORDINGLY SET AS IDE THE ORDER OF LD.AO FOR FRAMING AFRESH AFTER WORKING OUT CAPITAL GAIN BY OBSERVING AS FOLLOWS: 3.1. I HAVE EXAMINED THIS CONTENTION AND AS NOTED ABOVE, I FIND THAT THE LONG TERM CAPITAL GAINS WORKED OUT BY THE ASSESSING OFFICER ON THE BASIS OF REGISTERED VALUER'S REPORT CONTAINS BASIC INFIRMITIES. SINCE THERE IS GLARING ERROR IN THE REGISTERED VALUER'S REPORT MAKING THAT REPORT THE BASIS OF WORKING OF CAPITAL GAINS HAS RESULTED INTO AN ERRONEOUS ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE. MERELY BECAUSE AN ERRONEOUS ORDER HAS BEEN PASSED AFTER DUE DELIBERATIONS, IT WILL NOT TAKE THE SAID ORDER OUT OF THE PURVIEW OF SECTION 263. 3.2. COMING TO THE VALUATION REPORT, IT IS SEEN THAT THE REGISTER ED VALUER HAD STATED THAT SALE INSTANCES OF SIMILAR PROPERTIES ARE AVAILABLE BUT THEY ARE FEW IN NUMBERS AND THESE INSTANCES ARE UNRELIABLE BECAUSE OF INVOLVEMENT OF UNACCOUNTED MONEY IN ALL THOSE LAND DEALINGS AND BECAUSE OF RESTRICTION OF ULC(C&R) ACT, 1976. ACCORDING TO REGISTERED VALUER OPEN AND FREE TRANSACTIONS WERE NOT AVAILABLE, HENCE COMPARABLE SALE INSTANCES WERE NOT USED. IT WAS FURTHER - STATED BY THE REGISTERED VALUER THAT SALE INSTANCES WERE ALSO NOT COMPARABLE BECAUSE OF OT HER THINGS LIKE, LOCATIONS, SITUATION, FERTILITY, YIELD, CROPS AND TYPE OFF SOIL ETC. THE REGISTERED VALUER THEN PROCEEDED TO ASSERT THAT GOLD PRICE INDEX PROVIDE THE BASIS FOR FIXING L AND VALUE RATE AS ON APRIL, 1981 WHEN THE INSTANCES OF THE SALES ARE NO T AVAILABLE OR AVAILABLE IN FEW NUMBERS AND THEREAFTER HE MADE THAT OBSERVATION BASIS FOR HIS VALUATION FOR FIXING THE LAND VALUE AS ON APRIL, 1981 ON THE BASIS OF GOLD PRICE. ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 7 3.3. THERE IS BASIC FALLACY IN THE OBSERVATION OF THE REGISTERED VALUER. THE SWE EPING GENERALIZATION THAT COMPARABLE SALE INSTANCES ARE NET RELIABLE BECAUSE O - F UNDER VALUATION IS NOT SUSTAINABLE IN LAW. HE HAS NO EVIDENCE THAT THE SALE INSTANCES WERE UNDERVALUED. THE SAME ALLEGATION CAN BE MADE AGAINST EVERY SALE/PURCHASE INSTANCE BU T THEY WILL NOT BE WORTH THE PAPER THEY ARE WRITTEN, IF THEY ARE NOT SUPPORTED BY EVIDENCE. THEREFORE, THE BASIS FOR REJECTION OF COMPARABLE SALE INSTANCES ARE NOT SUSTAINABLE AND, THEREFORE, THE WHOLE REPORT BASED ON SUCH FLAWED PREMISES AND OBSERVATION S UFFERS FROM SERIOUS ERROR. FURTHER, REGISTERED VALUER HAS NO DATA IN HIS POSSESSION TO COMMENT ABOUT COMPARABLE FERTILITY, YIELD ETC. 3.4. SECONDLY APPLYING THE REGISTERED VALUER'S OWN METHODOLOGY OF - WORKING OF LAND VALUE WITH REFERENCE TO GOLD PRICE IS ALSO FLAWED IN SO FAR AS THAT HE HAS TAKEN REFERENCE POINT FOR THE GOLD VALUE AS ON 01 - 04 - 2006 ON THE GROUND THAT THE JANTRI RATE WAS PRESCRIBED ONLY FROM 01 - 04 - 2006. THIS IS FACTUALLY INCORRECT IN SO FAR AS JANTRI RATE OF LAND WAS AVAILABLE FROM 01 - 04 - 199 9. SO EVEN IF THE METHODOLOGY OF REGISTERED VALUER IS ACCEPTED THE WORKING OF THE LONG TERM CAPITAL GAINS ON THE SAME REASONING AS GIVEN BY THE REGISTERED VALUER IS RS. 48.09 LACS AND NOT RS. 25.46 LACS AS WORKED OUT BY THE ASSESSEE. KEEPING IN VIEW THE AB OVE FACTS, IT IS HEREBY HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM SERIOUS INFIRMITIES AND ERROR WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY THE ORDER IS SET ASIDE TO BE FRAMED AFRESH AFTER WORKING OUT CAPITAL GA INS IN VIEW OF THE ABOVE DISCUSSION AND AFTER BRINGING EVIDENCE ON RECORD AS ALSO GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD. 6 . AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 7 . LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPELLANT SOLD 50% S HARE OF AGRICULTURE LAND JOINTLY HELD WITH HIS BROTHER AND 50% SHARE OF THE SALE CONSIDERATION IS RS.93,80,000/ - WHICH IS NOT DISPUTED AT ANY STAGE. AGRICULTURE LAND IN QUESTION WHICH WAS ACQUIRED PRIOR TO 01/04/1981. ASSESSEE IN ORDER TO CALCULATE T HE INDEX COST OF ACQUISITION APPLYING THE RATE OF RS.380 PER SQ.MT. AS ON 01/04/1981 ON THE BASIS OF VALUATION REPORT OF THE VALUER M/S. SPACE AGE CONSULTING . D URING THE ASSESSMENT PROCEEDINGS AFTER DISCUSSION WITH THE LD.AO A FRESH VALUATION REPO R T WAS O B TAINED FROM MR.P.K. DESAI WHO VALUE D THE LAND AT RS.290 PER SQ.MT. AS ON 01/04/1981 IN PLACE OF RS.380 PER SQ.MT MENTIONED IN THE EARLIER VALUATION REPORT. ASSESSEE ACCORDINGLY PREPARED REVISED ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 8 COMPUTATION OF INCOME AND OFFERED FOR TAX THE ADDITIONAL LONG TERM CAPITAL GAIN ARISED DUE TO CHANGE OF ACQUISITION COST. LD.COUNSEL FURTHER SUBMITTED THAT THE ORDER OF LD.CIT U/S.263 IS CONTRARY TO LAW IN THE GIVEN FACTS BECAUSE THE ASSESSMENT PROCEEDINGS CARRIED OUT BY THE LD.AO WAS COMPLETE IN ALL RESPECT. INFORM ATION CALLED DURING THE PROCEEDINGS WERE DULY SUBMITTED AND APPRAISED BY THE LD.AO. REVISED VALUATION REPORT WAS ALSO PREPARED ON THE INITIATION OF THE LD.AO AND ASSESSE AGREED TO PAY ADDITIONAL INCOME TAX ON THE INCREASED LONG TERM CAPITAL GAIN DUE TO LOW ERING DOWN OF INDEX COST. 7 .1 LD.COUNSEL FURTHER SUBMITTED THAT THE ORDER UNDER SECTION 263 IS CONTRARY TO LAW IN VIEW OF THE FOLLOWING: I) THE COMMISSIONER WAS NOT JUSTIFIED IN OBSERVING THAT THE ASSESSING OFFICER HAD MADE THE ASSESSMENT WITHOUT INVESTIGATION. IT IS SUBMITTED THAT THE ASSESSING OFFICER WAS VERY MUCH SEIZED OF THE MATTER AS SEEN FROM THE ASSESSMENT ORDER AND IT WAS IN PURSUANCE OF DISCUSSIONS WITH HIM THAT A FRESH VALUATION WAS OBTAINED DURING ASSESSMENT. II) IT IS FURTHER SUBMITTED TH AT THE COMMISSIONER FAILED TO APPRECIATE THAT VALUATION IS BY VERY NATURE A SUBJECTIVE MATTER AND A MATTER OF OPINION. LARGE NUMBER OF FACTORS MAY OR MAY NOT BE CONSIDERED BY A VALUER AND DIFFERENT VALUERS MAY CONSIDER DIFFERENT FACTORS AND ASSIGN DIFFEREN T WEIGHTAGE TO EACH FACTOR. IT WAS NOT FOR THE COMMISSIONER TO SUBSTITUTE HIS OPINION FOR THE OPINION OF THE VALUER. III) IT IS FURTHER SUBMITTED THAT THE COMMISSIONER WAS NOT JUSTIFIED IN IGNORING TWO DECISIONS OF HON'BLE GUJARAT HIGH COURT REPRODUCED IN THE ORDER UNDER SECTION 263 ACCORDING TO WHICH THE ACTION UNDER SECTION 263 WAS NOT JUSTIFIED AS THIS IS A MATTER WHICH WAS EXAMINED DURING THE ASSESSMENT AND POSSIBILITY OF A DIFFERENT VIEWPOINT DOES NOT JUSTIFY ACTION UNDER SECTION 263. IV) IT IS FINALLY SUBMITT ED THAT THERE IS ALSO NO MERIT IN THE ORDER UNDER SECTION 263 WHICH REQUIRES VALUATION BASED ON JANTRI VALUE AS ON, A DATE WHICH IS 20 YEARS AFTER THE RELEVANT DATE AND THEN ADJUSTING IT BACKWARDS TO THE EXTENT OF INCREASE IN VALUE OF GOLD. IT IS FURTHER S UBMITTED THAT THE JANTRI VALUE IS REQUIRED TO BE CONSIDERED ONLY FOR SECTION 50C AND CANNOT BE ADOPTED FOR OTHER PROVISIONS OF LAW. FOR THIS PROPOSITION, WE RELY ON VARIOUS JUDICIAL DECISIONS TO THE EFFECT THAT THE JANTRI VALUE ADOPTED IN CASE OF SELLER CA NNOT BE USED FOR ASSESSMENT OF PURCHASER TO PRESUME THAT HE PAID EXTRA CONSIDERATION. THESE DECISIONS INCLUDE THE FOLLOWING: ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 9 - ITO V. OPTEC DISC MANUFACTURING - 11 DTR 2640 - ITAT CHANDIGARH BENCH - CIT V. FITWELL LOGIC SYSTEM P. LTD. 1 ITR 286 - ITAT DELHI BE NCH - CIT V. SMT. ANSHU JAIN - 36 SOT 263 - ITAT JAIPUR BENCH - CIT V. SMT. SHWETA BHUCHAR - 192 TAXMAN 67 - PUNJAB AND HARYANA HIGH COURT. - CIT V. CHANDNI BHUCHAR - 323 ITR 510 - PUNJAB AND HARYANA HIGH COURT - CIT V. RAJ KUMAR BIMLA DEVI - 279 ITR 360 - ALLAHABAD H IGH COURT - ITO V. HARLEY STREET PHARMACEUTICAL LTD. - 38 SOT 486 - ITAT AHMEDABAD BENCH - ITO V. VENU PROTEIN INDUSTRIES (195 TAXMAN 14(MAGAZINE) - ITAT AHMEDABAD BENCH. - REKHABEN RAJENDRA SHAH V ACIT IT APPEAL NO.3069 (AHD) OF 2008 DATED 9 - 4 - 2010 - ITAT AHMEDABAD BENCH - INDERLOK HOTELS P. LTD. V. ITO - 32 SOT 419 - ITAT MUMBAI BENCH 7 .2 LD.COUNSEL FURTHER REFERRED AND RELIED ON THE JUDGMENT OF HON BLE HIGH COURT IN CASE OF CIT V/S AMIT CORPORATION(2012) 21 TAXMAN.COM 64 (GUJ.), CIT V/S ARVIND JEWELLERS(2 002) 124 TAXMAN 615(GUJ.) AND CIT V/S SARVANA DEVELOPERS DATED 21/01/2016 - HONBLE KARNATAKA HIGH COURT 2016 . 8 . ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE SUPPORTING THE ORDER LD.CIT U/S.263 OF THE ACT. 9 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. AFTER GOING THROUGH THE JUDGMENTS AND DECISION S RELIED ON BY THE LD.COUNSEL AND ALSO PERUSING THE ORDER OF LD.CIT QUA THE ASSESSMENT ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 10 ORDER DATED 29/09/2011 QUA THE QUERY RAISED D URING THE ASSESSMENT PROCEEDINGS. SOLITARY GRIEVANCE OF THE ASSESSEE IS CHALLENGING THE ORDER OF LD.CIT U/S.263 OF THE ACT BEING NOT JUSTIFIED IN CONTRARY TO LAW. WE NOTICE THAT ASSESSEE WAS JOINTLY HOLDING AGRICULTURE LAND BEARING NO.165 AT GOTRI WITH HI S BROTHER SHRI YOGESHCHANDRA T. JOSHI , ACQUIRED PRIOR TO 1981. THIS LAND WAS SOLD ON 22/09/2008 AT RS.1,97,60,000/ - . TRANSFER EXPENSES WERE INCURRED AT RS.10,00,000/ - AND OUT OF REMAINING CONSIDERATION AT RS.1,87,60,00 0/ - ASSESSEE S 50% SHARE WORKS OUT TO RS.93,80,000/ - WHICH IS NOT UNDER DISPUTE BY THE R EVENUE. IT IS ONLY THE COST OF ACQUISITION WHICH IS IN DISPUTE. IN THE COMPUTATION OF INCOME FILED WITH THE INCOME TAX RETURN ASSEESSEE ON THE BASIS OF VALUATION REPORT OF THE VALUER MR. SPACE AGE CONSU LTING TOOK THE RATE AT RS.380 PER SQ.MT. AS ON 01/04/1981 AND AFTER GOING THROUGH THE COST INDEX CALCULATED THE COST OF ACQUISITION AND OFFERED LONG TERM CAPITAL GAIN FOR TAX. ASSESSEE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND IMPUGNED TRANSACTION WAS INQUIRED BY THE LD.AO AND HE WAS NOT SATISFIED WITH THE RATE APPLIED AT RS.380 PER SQ.MT. ASSESSEE IN ORDER TO SATISFIED THE LD.AO AGAIN FURNISHED VALUATION REPORT ON 10/08/2011 FROM MR.P.K. DESAI WHO IN ABSENCE OF NECESSARY SALE INSTANCE AN D GOVERNMEN T RECORDS SHOWN THE J ANTRI RATE , TOOK THE BASIS OF GOLD PRICE INDEX FIXED BY THE RESERVE BANK OF INDIA TO VALUE THE AGRICULTURE LAND AND CALCULATED IT AT RS.290 PER SQ.MT. ASSESSEE SUBMITTED THE COPY OF VALUATION REPORT TO THE LD.AO ALONG WITH THE REVISED COMPUTATION OF INCOME AND TAX PAYMENT CHALLANS OF THE ADDITIONAL INCOME TAX PAYABLE ON INCREASED AMO UN T OF LONG TERM CAPITAL GAIN. LD.AO ACCEPTED THE SUBMISSION OF THE ASSESSEE AND FRAME D THE ASSESSMENT ORDER ACCORDINGLY. THEREAFTER, LD.CIT CALLED FOR THE ASSESSMENT RECORDS WITHIN HIS POWER U/S.263 OF THE ACT AND AFTER EXAMINING THEM TOOK A STAND THAT THE LD.AO SHOULD HAVE TAKEN THE BASIS OF JANTRI RATE OF LAND IN QUESTION AS ON 01/04/1999 WHEREIN PER SQ.MT. OF LAND STOOD AT RS.220 PER SQ.MT. LD.CIT WAS OF THE VIEW THAT ASSESSEE SHOULD HAVE CALCULATED THE INDEX COST BY TAKING THE BASIS OF RATE AS ON ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 11 01/04/1999 AND THEREFORE LD.AO ORDER U/S.143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE. 9 .1 NOW BEFORE MOVING FURTHER TO EXAMINE AS TO WHETHER LD.CIT H AS CORRECTLY ASSUMED POWER U/S.2 63 OF THE ACT, W E FIND IT NECESSARY TO FIRST GO THROUGH THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY 243 ITR 83 RELATING TO JUSTIFICATION/VALIDITY OF POWER EXERCISED BY LD.CIT U/S.26 3 OF THE ACT WHEREIN HONBLE APEX COURT AS OBSERVE AS FOLLOWS: A BARE READING OF PROVISIONS OF SECTION 263 OF THE INCOME - TAX ACT, 1961 MAKES IT CLEAR THAT THE P REREQUISITE TO EXERCISE OF JURISDICTION BY THE CIT SUO MOTU UNDER IT, IS THAT THE ORDER OF THE (TO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CIT HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE. ORDER OF THE AO S OUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RE COURSE CANNOT BE HAD TO S. 263(1). THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASS UMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIA L TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH TH E PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. I DUE TO AN ERRONEOUS ORDER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL T O THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE AO. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADO PTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 12 9 .2 LET US EXAMINE FACTS OF THE CASE IN LIGHT OF ABOVE RATIO WHETHER THE ASSESSMENT U/S.143(3) OF THE ACT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. FROM GOING THROUGH THE PARA 4 OF THE ASSESSMENT ORDER U/S.143(3) OF THE ACT WE OBSERVE THAT LD.AO HAS SPECIFICALLY DEALT WITH THIS TRANSACTION IN DETAILED BY MENTIONING THE DE TAILS OF AGRICULTURE LAND IN JOINT OWNERSHIP, SALES CONSIDERATION, FAIR MARKET VALUE AS ON 01/04/1981 VALUATION REPORT ATTACHED . THEREAFTER VIDE ORDER SHEET DATED 02/08/2011 THE AUTHORIZED REPRESENTATIVE OF ASSESSEE WAS ASKED TO FURNISH THE BASIS OF VALUATION OF LAND AS ON 01/04/1981 BY THE VALUER, THE QUALITY OF LAND AND BASIS OF REASONABILITY OF THE ADOPTING THE RATE FOR VALUATION PURPOSE. IN REPLY TO THIS SPECIFIC QUERY ASSESSEE SUBMITTED LETTER DATED 22/09/2011. THE CONTENT OF THIS LETTER ARE REPRODUCE BELOW: APROPOS TO THE SUBJECT MATTER AND REFERENCE AND AS PER INSTRUCTIONS AND AUTHORITY FROM OUR ABOVE REFERRED VALUED CLIENT, MOST RESPECTFULLY WE SUBMIT AS UNDER: 1. PLEASE FIND ENCLOSED A VALUATION REPORT DATED 10.08.2011 IN RESPECT PF AGRICULTURAL LAND BEARING RS NO. 165 SITUATED, AT GOTRI, VADODARA, THE SA ME IS MARKED AS ANNEXURE 1. 2. AT THE TIME OF FILING THE RETURN OF INCOME, YOUR ASSESSEE HAD OFFERED TAX ON LONG TERM CAPITAL GAIN (LTCG) ON SALE OF THE SAID AGRICULTURAL LAND ON THE BASIS OF VALUATION REPORT DATED 08.03.2008. AS PER THIS VALUATION REPORT THE FAIR MARKET VALUE (FMV) ASSESSED AS ON 01.04.1981 FOR THE PURPOSE OF LTCG WAS RS. 380 PER SQ. MTS. A COPY OF THIS REPORT WAS FURNISHED VIDE OUR SUBMISSION DATED 28.01.2011. 3.AS PER T HE VALU ATION REPORT DATED 10.08.2011 THE FMV ASSESSED AS ON 11.04.19 81 IS RS. 290 PER SQ. MTS WITHOUT PREJUDICE TO THE VALUATION REPORT DATED 08.03.2008, THE ASSESSEE OFFERS TO PAY THE DIFFERENTIAL LTCG ON SALE OF AGRICULTURAL LAND ON THE BASIS OF VALUATION REPORT DATED 10.08.2011. ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 13 ACCORDINGLY THE ASSESSEE HAS PAID THE DIFFERENTIAL LTCG ALONG WITH DIFFERENTIAL INTEREST U/S 234B AND 234C TILL SEPTEMBER' 2011. A REVISED COMPUTATION OF TOTAL INCOME AND TAX IS ENCLOSED FOR YOUR KIND PERUSAL, MARKED AS ANNEXURE - 2. ALSO ENCLOSED IS A COPY OF CHALLAN, DATED 21.09.2011, MARKED AS ANNEXURE - 3. 4. THE ASSESSEE HAD OFFERED TAX ON LTCG ON THE BASIS OF VALUATION REPORT ISSUED BY A REGISTERED VALUER AT THE TIME OF FILING THE RETURN OF INCOME. VALUATION IS A SUBJECTIVE MATTER . THE PRESENT VALUATION REPORT HAS ASSESSED THE FMV AT A RATE LOWER THAN AS COMPARED TO THE EARLIER VALUATION REPORT. HOWEVER TO AVOID ANY LITIGATION AND BUY PEACE OF MIND THE ASSESSEE HAS VOLUNTARILY PAID THE DIFFERENTIAL TAX ALONG WITH INTEREST AS PER FM V OF THE LATEST VALUATION REPORT. WE TRUST THE SAME TO MEET YOUR VALUED SATISFACTION. HOWEVER, NEED BE OF ANY FURTHER INFORMATION, EXPLANATIONS AND/OR EVIDENCE IN THE MATTER, PLEASE APPRISE US WITH THE SAME FOR OUR COMPLIANCE AND PROVIDE US AN OPPORTUNITY OF PERSONAL HEARING. 10 . LD.AO AFTER GIVING DUE COGNIZANCE OF THE ASSESSEES SUBMISSION MADE A SPECIFIC FINDINGS IN THE BODY OF ASSESSMENT ORDER AND CALCULATED THE REVISED LONG TERM CAPITAL GAIN. THE RELEVANT EXTRACT OF THE ASSESSMENT ORDER IS AS UNDER: THE SUBMISSION OF THE ASSESSEE IS CAREFULLY EXAMINED. THE COPY OF VALUATION REPORT DATED 10.8.2011 IS ALSO EXAMINED. TAKING INTO CONSIDERATION OF THE SUBMISSION, THE FAIR MARKET VALUE AS ON 1.4.1981 IS TAKEN AT RS. 290 PER SQ.MT THE FMV WORKED AT RS. 19,36,300/ - . THE LONG TERM CAPITAL GAIN IS WORKED AS UNDER: - SALE CONSIDERATION. RS.93,80,000/ - (1/2 OF RS. 1,87,60,000) (I.E RS.1,97,60,000 - RS. 10;00,000 PAYMENT MADE TO CONFIRMING PARTY) LESS: INDEXED COST: - F.MV AS ON 1.4.1981 RS.9,68,150/ - * 582/100 RS.56,34,633/ - RS.37,45,367/ - LESS: DEDUCTION U/S 54 F RS.11,99,350/ - ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 14 LONG TERM CAPITA! GAIN. RS.25,46,017/ - IN VIEW OF THE ABOVE, LONG TERM CAPITAL GAIN IS TAXED AT RS. 25,46 , 017/ - AS AGAINST RS. 13,57,2267 - SHOWN BY THE AS SESSEE. THE ASSESSEE HAS VOLUNTARILY PAID TAXES ALSO ON THE INCREASED CAPITAL GAIN. 11 . FROM GOING THROUGH THE ABOVE SERIES OF EVENTS OCCURRED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WE OBSERVE THAT TO A SPECIFIC QUERY RAISED DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS GIVEN A SPECIFIC REPLY WHICH WAS ACCEPTED BY THE LD.AO WHICH RESULTED IN FETCHING MORE REVENUE TO THE INCOME TAX DEPARTMENT BECAUSE OF APPLYING THE RATE OF LAND AS ON 01/04/1981 AT RS.290 PER SQ.MT. AS AGAINST RS.380 PER SQ.MT. ORIGINALLY SHOWN BY THE ASSESSEE IN THE INCOME TAX RETURN . W E FURTHER OBSERVE THAT THE JURISDICTIONAL HIGH COURT IN CASE OF CIT V/S AMIT CORPORATION (SUPRA) HAS HELD THAT DURING COURSE OF FRAMING OF ASSESSMENT, ASSESSING OFFICER HAD ACCESS TO ALL RECO RDS OF ASSESSEE, AND AFTER PERUSING SAID RECORDS, HE FRAMED ASSESSMENT, SAID ASSESSMENT COULD NOT BE RE - OPENED IN EXERCISE OF REVISION POWER UNDER SECTION 263 FOR MAKING FURTHER INQUIRIES . 11 .1 WE FURTHER OBSERVE IN JURISDICTIONAL HIGH COURT IN CASE OF CIT V/S. ARVIND JEWELLERS (SUPRA) WHEREIN IT WAS HELD THAT IT WAS HELD THAT SINCE MATERIAL WAS THERE ON RECORD AND SAID MATERIAL WAS CONSIDERED BY ITO AND A PARTICULAR VIEW WAS TAKEN MERE FACT THAT DIFFERENT VIEW COULD BE TAKEN, SHOULD NOT HAVE BEEN BASIS FOR AN ACTION UNDER SECTION 263.THE COMMISSIONER WAS UNJUSTIFIED IN ARRIVING AT A CONCLUSION THAT ORDER PASSED BY ITO WAS ERRONEOUS AND PRE JUDICIAL TO INTER EST OF REVENUE 12 . FROM GOING THROUGH THE ABOVE JUDGMENTS AND EXAMINING THE FACTS IN THE LIGHT OF ABOVE WE FIND THAT THERE WAS A SUFFICIENT ENQUIRY ABOUT THE IMPUGNED TRANSACTION TO WHICH COMPLETE DETAILS WERE FILED BY THE ASSESSEE TO THE SATISFACTION OF LD.AO WHICH RESULTED IN ENHANCING THE LONG TERM CAPITAL GAIN ORIGINALLY SHOWN BY THE ASSESSEE. LD.CIT S ORDER U/S.263 OF THE ACT IS FOCUSING ON CONDUCTING ADDITIONAL ENQUIRY O N DIFFERENT PATTERN AND ALSO TO APPLY FAIR MARKET VALUE OF THE LAND AS ON 01/0 4/1999 AND ALTERNATIVELY HE HAS MENTIONED ABOUT THE COMPARABLE PRICE OF GOLD IN ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 15 1999 WHICH WAS QUITE SIMILAR TO THE BASIS TAKEN BY THE VALU ER IN TH E REVISED VALUATION REPORT OF MR .P.K.DESAI DATED 10/08/2011 SUBMITTED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. IN SUCH CASE , WHERE THERE IS ADEQUATE ENQUIRY AND OBSERVATIONS OF THE LD.AO ARE CLEARLY MENTIONED IN THE BODY OF ASSESSMENT ORDER AND VIEW TAKEN BY HIM IS PERMISSIBLE IN LAW SUCH ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTER EST OF REVENUE. 12 .1 WE FURTHER OBSERVE THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V/S SARVANA DEVELOPERS (SUPRA) ADJUDICATED SIMILAR TYPE OF ISSUE RELATING TO THE DEVELOPMENT EXPENSES ALLOWED BY THE LD.AO BUT WERE FOUND TO BE NOT JUST AND REAS ONABLE BY LD.CIT , RESULTING IN INVOKING POWER U/S.263 OF THE ACT , SETTING ASIDE THE ORDER OF LD.AO. HONBLE HIGH COURT UPHELD THE ORDER OF TRIBUNAL , SETTING ASIDE THE ORDER PASSED U/S.263 OF THE ACT AND ALLOWED THE ASSESSEES APPEAL BY OBSERVING AS FOLLOWS : 15. THE METHOD OF COMPUTATION ADOPTED BY THE ASSESSEE IS AS FOLLOWS : NET DEVELOPMENT EXPENSES IN RESPECT OF SITES SOLD RS. 3,52,56,499/ - (RS. 4,12,60,000 - RS. 60,03,501 CLOSING WORK - IN - PROGRESS) VIS - A - VIS, THE SITES SOLD OF 1,40,400 SQ. FT. WHICH WORKS OUT TO RS. 251.11/ - PER SQ. FT. 16. FOR THE ASSESSMENT YEAR 2007 - 08, THE DEVELOPMENT EXPENSES ALLOWED BY THE ASSESSING OFFICER ARE RS. 3,40,01,131 RELATING TO THE SITES SOLD OF 1,13,557 SQ. FT. THE EXPENSES WORKS OUT TO RS. 299.41/ - PER SQ. FT. AN E XAMINATION OF THESE FIGURES AS REFLECTED IN THE COMPUTATION MADE ABOVE ESTABLISHES THAT THE DEVELOPMENT CHARGES CLAIMED BY THE ASSESSEE PER SQ. FT. IS RS. 251.11/ - WHICH IS LOWER THAN RS. 299.41/ - ACCEPTED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2007 - 08 W HILE CONCLUDING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. ONE MODE OF COMPUTATION WHICH WE HAVE EXAMINED, STATED ABOVE AT PARA. 14, WORKS OUT TO RS. 296.68/ - PER SQ. FT. THE DEVELOPMENT CHARGES OF RS. 251.11/ - PER SQ. FT. CLAIMED BY THE ASSESSEE IS J UST AND REASONABLE ATE DOES NOT RESULT IN ANY LOSS TO THE REVENUE. THUS, THE CIT INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, IS UNCALLED FOR AS THE ORDER PASSED BY THE ASSESSING OFFICER IS NO WAY PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE REVEN UE HAS MISERABLY FAILED TO SATISFY US THAT THE VALUATION OF THE WORK - IN - PROGRESS ACCEPTED BY THE ASSESSING OFFICER, IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. YET ANOTHER IMPORTANT ASPECT WHICH IS SIGNIFICANT TO NOTICE IS THAT THE ASSESSI NG OFFICER, ACCEPTING THE VALUATION OF THE WORK - IN - PROGRESS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08, WHILE CONCLUDING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. CIT, COMMITTED AN ERROR IN TAKING THE AMOUNT INCURRED IN THE CURRENT YEAR ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 16 OF RS. 4 ,12,60,000/ - AND DIVIDING IT BY ENTIRE AREA OF THE PROJECT OF 3,84,000 SQ. FT. WHILE COMPUTING THE WORK - IN - PROGRESS VALUE. 17. IN SUNBEAM'S CASE (SUPRA), DELHI HIGH COURT PLACING RELIANCE ON THE JUDGMENTS OF THE APEX COURT IN THE CASE OF PARASHURAM POTTER Y WORKS CO. LTD. VS ITO ((1977) 106 ITR 1) AND MALABAR INDUSTRIAL CO. LTD. (SUPRA) HAS HELD THAT THE COMMISSIONER HAVING CONCEDED THE POSITION THAT THE ASSESSING OFFICER MADE ENQUIRIES, ELICITED REPLIES AND THEREAFTER PASSED THE ASSESSMENT ORDER, THE GRIEV ANCE OF THE COMMISSIONER THAT THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER ENQUIRES RATHER THAN ACCEPTING THE EXPLANATION AND IN SUCH SITUATION, IT CANNOT BE SAID THAT IT IS A CASE OF 'LACK OF INQUIRY'. IN THIS CONTEXT, IT IS HELD THAT THE OPINION OF THE ASSESSING OFFICER IN TREATING THE EXPENDIT URE AS REVENUE EXPENDITURE WAS PLAUSIBLE AND THUS, THERE WAS NO MATERIAL BEFORE THE CIT TO VARY THA T OPINION AND ASK FOR FRESH INQUIRY BY TANKING SECTION 263 OF THE ACT. THE DIVISION BENCH OF THIS COURT IN THE CASE OF D. G. GOPALA GOWDA (SUPRA) WHILE CONSIDERING THE POWER OF REVISION CONFERRE D UNDER SECTION 263 OF THE ACT H AS HELD THAT THE CONDITION PRECEDE NT FOR EXERCISING THE REVISIONA L POWER UNDER SECTION 263 OF THE ACT IS THAT THE ORDER UNDER REVISION SHOULD NOT ONLY BE ERRONEOUS, BUT SUCH ERRONEOUS ORDER SHOULD RESULT IN PREJUDICE TO THE INTEREST OF THE REVENUE. MERE ERROR WOULD NOT CONFER THE JURISDICTION TO EXERCISE THE REVISIONAL POWER UNDER SECTION 263 OF THE ACT. IN THE JUDGMENT OF THIS COURT IN THE CASE OF DIGITAL GLOBAL SOFT LTD. (SUPRA), CONSIDERING THE JUDGMENT OF THIS COURT IN 'MALABAR INDUSTRIAL CO. LTD.' (SUPRA) IT IS CATEGORICALLY HELD THAT EVEN IF AN ORDER OF THE ASSESS : NG OFFICER IS ERRONEOUS, UNLESS THE SAID ERRONEOUS ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE COMMISSIONER COULD NOT HAVE EXERCISED THE SUO MOTO REVISIONAL POWER UNDER SECTOR 263 OF THE ACT. 18. THE APEX COURT IN THE CASE OF 'MALABAR INDUSTR IAL CO. LTD.' (SUPRA) HAS LAID DOWN THE PRINCIPLES IN THE CONTEXT OF SECTION 263 OF THE ACT. THE RELEVANT PORTION OF PARA 5 OF THE SAID JUDGMENT IS REPRODUCED BELOW : A BARE READING OF THIS PROVISION MAKES IT CLEAR T HAT THE PREREQUISITE TO EXERCISE OF JUR ISDICTION BY THE CIT SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR AS IT IS PR EJUDICIAL TO THE INTERESTS OF TH E REVENUE. THE CIT HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOU S; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IS ONE OF THEM IS ABSENT - IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO S. 263(1) OF THE ACT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN I NCORRECT ASSUMPTION OF FACT S OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTER ESTS OF THE REVENUE'S IS NOT AN EXPR ESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT (CONFERRED) TO LOSS OF TAX. ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 17 19. IN THE LIGHT OF THE JUDGMENTS DISCUSSED ABOVE, WE ARE OF THE FIRM VIEW THAT THE TWIN TEST PROPOUNDED BY THE HON 'BLE COURTS FOR INVOKING THE PROVISION OF SECTION 263 OF THE ACT, ARE NOT SATISFIED IN THE PRESENT CASE. AS DISCUSSED ABOVE, THE CIT PROCEEDED TO INITIATE PROCEEDINGS UNDER SECTION 263 OF THE ACT ONLY ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT ASSIGNED ANY REASONS FOR A CCEPTING THE VALUATION OF THE WORK - IN - PROGRESS DECLARED BY THE ASSESSEE. AS PER THE MATERIALS PLACED BEFORE THE TRIBUNAL IN THE RECORDS PERTAI NING TO THE ASSESSMENT YEAR IN QU ESTION, A DETAILED EXAMIN ATION IS MADE BY THE TRIBUNAL, TRIBUNAL IS OF THE VIEW THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND BEFORE ACCEPTING THE FIGURE DECLARED BY THE ASSESSEE IN THE WORK - IN - PROGRESS REPORT. SUCH AN ORDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS NOT A CASE OF 'LACK OF INQUIRY'. FURTHER INQUIRY ORDERED BY THE CIT WOULD AMOUNT TO FISHING/ ROWING INQUIRY IN THE MATTER ALREADY CONCLUDED. 20. LEARNED COUNSEL PLACED RELIANCE ON THE JUDGMENT OF THIS COURT IN THE CASE OF DR . L. NARENDRA PRASAD (SUPRA) TO CONTEND THAT GENERALLY IN THE BUSINESS OF REAL ESTATE, THE NET PROFIT WOULD BE 8% AS ACCEPTED BY THE DEPARTMENT. IN THE PRESENT CASE, THE PROFIT DECLARED BY THE ASSESSEE WORKS OUT TO MORE THAN 8% THAT IS NORMALLY ADOPTED AND ACCEPTED BY THE DEPARTMENT. HOWEVER, IN THE COMPUTATION OF WORK - IN - PROGRESS MADE BY THE, APPELLATE COMMISSIONER, THE PROFIT MARGIN WORKS OUT TO MORE THAN 31.8% WHICH IS PRACTICABLY NOT ACCEPTABLE. ACCORDINGLY, ON THIS COUNT ALSO, WE ARE NOT INCLINED TO AC CEPT THE ORDER PASSED BY THE CIT COMPUTING THE MARGIN AT MORE THAN 31% WHICH IS NOT NORMALLY WORKABLE IN THE BUSINESS OF REAL ESTATE AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE AND THIS VIEW IS ALSO SUPPORTED BY THE DIVISION BENCH JUDGMENT OF TH IS COURT IN DR. L. NARENDRA PRASAD'S CASE (SUPRA). 21. THE ITAT HAVING CONSIDERED THE MATERIAL PLACED BEFORE IT, RIGHTLY SET - ASIDE THE ORDER PASSED UNDER SECTION 263 OF THE ACT, AS NOT SUSTAINABLE. ACCORDINGLY, THE ASSESSEE'S APPEAL IS ALLOWED AS THE CONSEQUENTIAL ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT DOES NOT SURVIVE FOR CONSIDERATION AS HAVING BECOME INFRUCTUOUS. NO EXCEPTION CAN BE FOUND WITH THE WELL REASONED ORDER PASSED BY THE ITAT. 22. WE HAVE ALSO NOTICED THE AMEND MENT BROUGHT TO SECTION 263 OF THE ACT BY FINANCE ACT, 2015 WITH EFFECT FROM 01.06.2015 BY INTRODUCING AN EXPLANATION WHICH PROVIDES FOR INVOKING SECTION 263 EVEN IN CASES WHERE THE ORDER IS PASSED BY THE ASSESSING OFFICER IS WITHOUT MAKING INQUIRIES OR VE RIFICATIONS BUT THE SAME IS NOT APPLICABLE TO THE CASE ON HAND. 23. FOR THE FOREGOING REASONS, THE SUBSTANTIAL QUESTIONS OF LAW RAISED IN BOTH THE APPEALS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE APPEALS STAND DISMISSED. 13 . RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY HONBLE APEX COURT IN MALABAR INDUSTRIAL COMPANY (SUPRA) JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT AND HONBLE KARNATAKA HIGH COURT AS DISCUSSED ITA NO S.1710 /AHD/2014 ASSESSMENT YEAR : 2009 - 10 18 ABOVE AND CONSIDERING THE TOTALITY OF T HE FACTS AS DISCUSSED ABOVE WE ARE OF THE CONSIDERED OPINION THAT LD.CIT HAS WRONGLY ASSUMED THE JURISDICTION U/S.263 OF THE ACT AND IMPUGNED ORDER U/S.263 OF THE ACT DESERVES TO BE QUASHED . BECAUSE, ASSESSMENT ORDER WAS PASSED BY THE LD.AO AFTER TAKING INTO CONSIDERATION ALL THE DETAILS AND CONDUCTING A PROPER INQUIRY. WE ARE THEREFORE O F THE VIEW THAT ASSESSMENT ORDER U/S.143(3) OF T HE ACT DATED 29/09/2 011 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND THUS NEEDS TO BE RESTORE D BACK . ACCORDINGLY \ THE ORDER OF LD.CIT U/S.263 OF THE ACT DATED 25/03/2014 IS QUASHED. 14 . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 15 / 05 / 201 7 AT AHMEDABAD. SD/ - ( RAJPAL YADAV ) JUDICIAL MEMBER SD/ - ( MANISH BOARD ) ACCOUNTANT MEMBER AHMEDABAD; DATED 15 / 05 / 201 7 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE .