Assistant Commissioner of Income-Tax, Central Circle-1,(1), BILASPUR(CG) V. Shri KABIR CHADHHA, BILASPUR(CG)

ITA 180/BIL/2011

• Counselvise Citation: 18024714 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R RAO
• Assessee Lawyers: D LAHRI
• Keywords: Value adopted by valuation officer; Capital asset; Opportunity of being heard; Retrospective amendment; Question of law; Cost of acquisition; Fair market value; Valuation report
• Section: 6; 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,BENCH -RAIPUR . .. . . .. . , ,, , ! ! ! !, ,, , . .. . . .. . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ./ ITA NO.180/BLPR/2011- # # # # / // / ASSESSMENT YEAR -2008-09 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), BILASPUR. V/S. SHRI KABIR CHADHHA, CHADHHABADI, OPP. SWIMMING POOL, MUNGELI NAKA, BILASPUR. PAN:AFLPC 0986K C.O NO.09/RPR/2013 IN ITA NO.180/BLPR/2011- # # # # / // / ASSESSMENT YEAR -2008-09 SHRI KABIR CHADHHA, CHADHHABADI, OPP. SWIMMING POOL, MUNGELI NAKA, BILASPUR. V/S. ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), BILASPUR. ( ) / // / APPELLANT ) ( *+) / RESPONDENT ) ASSESSEE BY : SH. D. LAHRI, SR. DR REVENUE BY : SH. S.R. RAO, A.R. - /DATE OF HEARING : 18-12-2014 - /DATE OF PRONOUNCEMENT : 19 -12-2014 # # # # , 1961 1961 1961 1961- - - - 254 254254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM < << < = = = =, ,, , ! ! ! ! : CHALLENGING THE ORDER DT.30.05.2011OF THE CIT(A),BI LASPUR-THE ASSESSING OFFICER (AO) IN ITS APPEAL AND THE ASSESSEE IN ITS CROSS OBJECTION HAVE RAISED FOLLOWING GROUNDS OF APPEAL: GROUNDS OF APPEAL : 1(A). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF OF RS.43,19,326/- WHICH HAS BEEN ADDED BY THE AO BY ESTIMATING THE FMV AS ON 01.04.1981 AT RS.0.30 PER SQUARE FEET I.E . RS.13,200/- PER ACRE. (B). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING THE ABOVE RELIEF IN SPITE OF THE FACTS ON RECORDS THAT THE ADDITION MADE BY THE A.O. WAS BASED ON THE GOVERNMENT DOCUMENTS I.E. LETTER N O. 132 DATED 01.04.1985 (GUIDE LINE) ISSUED BY THE DY. COLLECTOR, BILASPUR AND THE SALE DEEDS O F THE LANDS OF THE SAME LOCALITY MADE AVAILABLE BY THE REGISTRAR OF THE PROPERTY BILASPUR. 2. THAT THE LD. CIT(A)S ORDER BEING ERRONEOUS, PER VERSE AND CONTRARY TO THE FACTS ON RECORD, THE SAME MAY BE REVERSED WHILE THAT OF THE A.O. BE REST ORED. GROUNDS OF CROSS-OBJECTION: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. A.O., BEING A NON-TECHNICAL PERSON, IS NOT JUSTIFIED IN REJECTING THE VALUATION REPORT OF THE REGD. VALUER AND HAS ERRED IN ESTIMATING THE FMV AS ON 01.04.1981 AT RS.0.30 PER SQUARE FEET I.E . RS.13,200/- PER ACRE ON THE BASIS OF INFORMATION OBTAINED FROM SUB-REGISTRAR/DY. COLLECT OR, BILASPUR, WHICH RELATE TO NON-COMPARABLE SALE INSTANCES, ETC. AND FOR WHICH THERE IS NO PROI SI9ON IN THE INCOME-TAX ACT, 1961 AND ACCORDINGLY, THE RELIEF GIVEN BY THE LD. CIT(APPEAL S) IS CORRECT AND JUSTIFIED. DURING THE COURSE OF HEARING BEFORE US,THE AUTHRORI SED REPRESENTATIVE(AR)OF THE ASSESSEE DID NOT PRESS GROUND OF APPEALS RAISED BY WAY OF CROSS OBJE CTION.HENCE THE CO STANDS DISMISSED AS NOT PRESSED. 2. ASSESSEE,AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF C IVIL CONSTRUCTION WORK,FILED HIS RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF RS.1 0,22,126/-.AO FINALISED THE ASSESSMENT ON 31.12.2010 DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS. 54,41,452/-. 2 ITA NO. 180/BLPR/2011 KABIR CHADHHA DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD SOLD A JOINTLY OWNED LAND ADMEASURING 90971 SQUARE FOOT FOR A CONSIDERATION O F RS. 90,97,800/-; THAT HE HAD CLAIMED DEDUCTION IN RESPECT OF INDEXED COST OF ACQUISITION AT RS.43,85,939/- BY TAKING RS.17.51 PE R SQUARE FEET AS THE FAIR MARKET VALUE OF THE LAND AS ON 1 ST APRIL, 1981 AS THE LAND WAS HELD BY THE APPELLANT PRIOR TO THE SAID DATE.THE AO DIRECTED TH E ASSESSEE TO SUBSTANTIATE HIS CLAIM WITH SUPPORTING PROOF.IN RESPONSE TO THAT THE ASSESSEE R ELIED UPON THE VALUATION REPORT DATED 29.09.2008.THE VALUER HAD EVALUATED THE LAND AT RS .7,63,000/- PER ACRE I.E. RS.17.51 PER SQUARE FEET.THE VALUER, VIDE HIS LETTER DATED 28.12.2010 E XPLAINED THAT HE VALUED THE FAIR MARKET VALUE (FMV) AS ON 01.04.1981 BY REVERSELY APPLYING THE RA TIO OF COST INFLATION INDEX FOR THE FY 2009- 10 AND 1981-82 AND FOR THAT PURPOSE, HE TOOK THE VA LUE OF LAND AT RS.1,41,45,244/- AS THE BASE. THE AO CONDUCTED ENQUIRY FOR ARRIVING AT THE FMV AS ON 01.04.1981 FROM THE REGISTRAR, BILASPUR WHO INFORMED THAT THE GUIDELINE RATES ARE NOT AVAI LABLE.HOWEVER, THE AO BASED ON THE COPY OF SALE DEEDS PROVIDED BY THE REGISTRAR, BILASPUR, AND AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD IN THE MATTER, ESTIMATED THE FMV AS ON 01.04.1981 AT RS.0.30 PER SQUARE FEET I.E RS.13,200/- PER ACRE. ACCORDINGLY,THE AO COMPUTED I NDEXED COST OF ACQUISITION AT RS.75,186/- IN THE HANDS OF THE APPELLANT AGAINST RS.43,85,939/- C LAIMED BY THE APPELLANT WHICH RESULTED IN ADDITION OF RS. 43,10, 753/- TO THE RETURNED INCOME. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).THE ASSESSEE ARGUED THAT THE CASES RELIED UPON BY THE AO WER OF DISTRESSED SALE; THAT THE GOVERNMENT LETTERS WERE MERELY INDICATIVE AND WERE NOT CONCLUSIVE; THAT FMV WAS BASED UPON SUBJECTIVE INTERPRETATION OF AVAILABLE INFORMA TION AT THE TIME OF ASSESSMENT; THAT EVERY ASSET HAD ITS OWN PECULIAR FEATURES; THAT THE VALUATION A DOPTED BY THE AO WAS NOT REALISTIC AS IT WAS SHOWING 333.33 TIMES INCREASE IN THE VALUE OF LAND AFTER GOING THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE ASSESSEE,HE HELD THAT THE ASSESS EE HAD CLAIMED DEDUCTION BASED ON THE REPORT OF THE REGISTERED VALUER,THAT THE VALUER HAD VALUED TH E LAND ON 0L.04.198L. HE REFERRED TO THE PROVISIONS OF SECTION 55A OF THE ACT AND HELD THAT THE DETERMINATION OF THE FAIR MARKET VALUE U/S 55A WAS REQUIRED FOR THE PURPOSE OF CHAPTER IV, WHI CH DEALT WITH COMPUTATION OF TOTAL INCOME UNDER VARIOUS HEADS COMPRISING OF S ECTIONS 14 TO 59 OF THE ACT,THAT CONCEPT OF FAIR MARKET VALUE OF CAPITAL ASSET UNDER CHAPTER IV OF T HE INCOME-TAX ACT 1961 CAN BE BROADLY CLASSIFIED INTO TWO CATEGORIES-FOR THE PURPOSE OF D ETERMINING THE COST OF ACQUISITION, AND FOR THE PURPOSE OF ASCERTAINING THE FULL VALUE OF CONSIDERA TION RECEIVED,THAT THE AO HAD REJECTED THE VALUATION GIVEN BY THE REGISTERED VALUER AND GATHER ED INFORMATION FROM THE REGISTRAR OFFICE AND MADE VALUATION ON HIS OWN,THAT THE AO ENTERED INTO THE SHOES OF VALUATION OFFICER AND MADE FRESH VALUATION ON THE BASIS OF FINDINGS AND INFORMATION GATHERED FROM REGISTRAR OFFICE AND WHEREAS IN SUCH A SITUATION,THE AO SHOULD HAVE REFERRED FOR FR ESH VALUATION OR ACCEPTED THE VALUATION SUBMITTED BY THE REGISTERED VALUER.FINALLY,THE FAA DELETED THE ADDITION MADE BY THE AO. 4.BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)STAT ED THAT THE AO HAD GOT THE COMPARABLE CASES FROM THE OFFICE OF THE REVENUE AUTHORITIES,THAT THE VALUE SHOWN BY THE ASSESSEE AND THE VALUER WAS ON HIGHER SIDE,THAT THERE WAS NO VALID BASIS FOR AD OPTING RATE OF RS7.63 LAKHS PER ACER.AUTHORISED REPRESENTATIVE ARGUED THAT THE ASSESSEE HAD ADOPTED THE VALUE ESTIMATED BY THE VALUER,THAT THE AO COULD NOT MAKE ANY REFERENCE TO THE DVO ONCE THE VA LUE ADOPTED WAS NOT LESS THAN THE VALUE SUGGESTED BY THE VALUER,THAT PROVISIONS OF SECTION 55 WERE VERY CLEAR IN THAT REGARD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD SOLD A PART OF L AND,THAT HE GOT IT VALUED BY A REGISTERED VALUER,THAT HE ADOPTED THE VALUE GIVEN IN THE VALUA TION REPORT OF THE PLOT AS ON 01.04.1981,THAT THE AO WAS OF THE OPINION THAT VALUE SHOWN BY THE ASSES SEE WAS VERY HIGH AND THUS HE HAD TRIED TO AVOID PAY TAXES ON LONG TERM CAPITAL GAINS,THAT THE AO COLLECTED INFORMATION FROM THE OFFICE OF THE REGISTRAR,THAT CONSIDERING THE MATERIAL RECEIVE D FROM THE STATE REVENUE AUTHORITIES HE REDUCED 3 ITA NO. 180/BLPR/2011 KABIR CHADHHA THE VALUE OF THE PLOT AS ON 01.04.1981,THAT HE COMP UTED INDEXED COST OF ACQUISITION AT RS.75,186/- IN THE HANDS OF THE ASSESSEE AGAINST RS.43,85,939/- CLAIMED BY HIM,THAT IT RESULTED IN ADDITION OF RS.43,10,753/- TO THE RETURNED INCOME OF THE ASSESS EE.THE ISSUE IN SHORT,BEFORE US,IS TO DECIDE WHAT WAS THE FMV OF THE PLOT OF LAND IN QUESTION AS ON 01.04.1981. HERE,WE WOULD LIKE TO REFER TO THE PROVISIONS OF SE CTION U/S.55A OF THE ACT.THE PROVISIONS OF THE SECTION WERE INTRODUCED ,W.E.F. 01.01.1973,BY THE T AXATION LAWS(AMENDMENT) ACT 1972.SECTION READS AS UNDER '55A. REFERENCE TO VALUATION OFFICER.- WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE O F A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE AO MAY REFER THE VALUATION OF THE CAPI TAL ASSET TO A VALUATION OFFICER- (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAI MED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER,IF THE AO IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE ; (B) IN ANY OTHER CASE, IF THE AO IS OF OPINION- (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE AS SET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF ; OR (II)THAT HAVING REGARD TO THE NATURE OF THE ASSET A ND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO.' BY AN AMENDMENT,W.E.F. 01.07.2012 ,WORDS 'IS LESS T HAN ITS FAIR MARKET VALUE' WERE SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR MARKET VALU E'.FOR BETTER UNDERSTANDING OF THE PURPOSE OF INTRODUCING IT IN THE ACT,ONE HAS TO TAKE NOTE OF THE EXPLANATORY NOTES TO THE SECTION.CIRCULAR NO.96 OF 25.11.1972 IS RELEVANT IN THIS REGARD AS I T READS AS UNDER: 'UNDER THE NEW PROVISIONS,AN INCOME TAX OFFICER MA Y REFER THE VALUATION OF ANY CAPITAL ASSET TO A VO IN A CASE WHERE THE ASSESSEE HAS GOT THE ASSETS VALUED BY A REGISTERED VALUER AND THE INCOME TAX OFFICER IS OF THE OPINION THAT THE VALUE AS ES TIMATED BY THE REGISTERED VALUER (I.E.,A PERSON REGISTERED AS A VALUER UNDER SECTION 34AB OF THE WE ALTH-TAX ACT)IS LESS THAN THE FAIR MARKET VALUE OF THE ASSET.OTHER CASES IN WHICH A REFERENCE MAY B E MADE TO THE VO WOULD BE WHERE THE INCOME TAX OFFICER IS OF THE OPINION THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSETS AS CLAIMED BY MORE THAN 15 PERCENT OF THE VALUE CLA IMED OR BY MORE THAN RS. 25,000, WHICHEVER IS LESS OR WHERE, HAVING REGARD TO THE NATURE OF THE A SSET AND THE RELEVANT CIRCUMSTANCES, THE INCOME- TAX OFFICER CONSIDERS IT NECESSARY TO DO SO. IT WIL L BE SEEN THAT IN A CASE WHERE THE ASSESSEE HAS OPTED FOR SUBSTITUTION OF THE COST OF ACQUISITION O F AN ASSET BY ITS FAIR MARKET VALUE AS ON JANUARY 1,1954,THE FAIR MARKET VALUE AS CLAIMED BY HIM MAY BE HIGHER THAN ITS ACTUAL FAIR MARKET VALUE.THE PROVISIONS OF SECTION 55A(A) AND (B)(I) WILL THEREF ORE, NOT APPLY IN SUCH A CASE. IT WILL, HOWEVER, BE OPEN TO THE INCOME-TAX OFFICER TO MAKE A REFERENCE TO THE VO UNDER SECTION 55A(B)(II).' A PERUSAL OF THE MEMORANDUM EXPLAINING THE REASONS BEHIND THE INTRODUCTION OF THE SECTION AND THE EXPLANATORY NOTES FOR INTRODUCTION OF AMENDMENT TO SECTION W.E.F.01.07.2012 PROVES THAT THE SECTION WAS INSERTED IN THE ACT WITH THE DELIBERATE OBJECT OF EMPOWERING THE AO TO FIND OUT THE MARKET VALUE OF CAPITAL ASSETS FOR THE PURPOSE OF C HAPTER IV.IN OUR OPINION, INTENTION OF THE LEGISLATURE IS OBVIOUS THAT THE AO CAN MAKE A REFER ENCE TO THE DVO FOR DETERMINING THE VALUE OF A CAPITAL ASSET.WE ARE OF THE OPINION THAT FOR THE PURPOSE OF ASCERTAINING THE FMV OF A CAPITAL ASSET,THE STATUTE HAS PROVIDED TWO GROUP OF CASES N AMELY : (I) THE CASE MENTIONED AT CLAUSE (A) ABOVE,WHERE TH E VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE BY THE REGISTERE D VALUER ; AND (II) OTHER CASES MENTIONED AT CLAUSE (B) ABOVE. IN THE CASES MENTIONED AS (I) ABOVE,THE AO ASSUMES JURISDICTION,WHEN THERE IS A VALUATION REPORT IN RESPECT OF THE ASSET AND THE ASSESSEE ADOPTS THE VALUE OF THE ASSET IN ACCORDANCE WITH SUCH ESTIMATION AND ALSO IF THE AO IS OF THE OPINION TH AT THE VALUE CLAIMED BY THE ASSESSEE IS LESS THAN THE FMV. IN OTHER CASES MENTIONED AS (II) ABOVE AND WHICH AR E COVERED BY THE PROVISIONS OF CLAUSE (B) OF SECTION 55A,THE AO IS EMPOWERED TO MAKE A REFERENC E TO THE VALUATION OFFICER, WHERE THE AO IS OF THE OPINION THAT THE FMV OF THE ASSET EXCEEDS TH E VALUE OF THE ASSETS AS CLAIMED BY MORE THAN 15 % OF THE VALUE CLAIMED OR BY MORE THAN RS. 25,00 0, WHEREVER IS LESS OR WHERE, HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMST ANCE,THE AO CONSIDERS IT NECESSARY TO DO SO.IN 4 ITA NO. 180/BLPR/2011 KABIR CHADHHA OTHER WORDS,SECTION DEALS WITH CASES WHERE THE BASI S FOR FMV OF THE ASSET IS THE VALUATION REPORT ITSELF AND THE ASSESSEE FAILS TO ADOPT THE VALUE OF THE ASSET IN ACCORDANCE WITH THE ESTIMATE OF SUCH VALUATION REPORT AND CASES WHERE THE BASIS FOR SUC H FMV OF THE ASSET IS OTHER THAN THE VALUATION REPORT.THE OTHER SITUATION ENVISAGES THE EXISTENCE OF SUCH CIRCUMSTANCES,THAT TO MAKE REFERENCE IS JUSTIFIABLE.IN SUCH A CASE,NATURE OF THE ASSETS AND OTHER RELEVANT FACTORS ALSO PLAY A DECISIVE ROLE. A REFERENCE CAN BE MADE TO VO,UNDER SECTION 55A,CLAUS E (B) SUB-CLAUSE (II),ONLY IF AO RECORDS EXISTENCE OF SUCH OTHER RELEVANT CIRCUMSTANCES ON THE BASIS OF WHICH HE FORMS SUCH OPINION.IN OTHER WORDS,A REFERENCE CAN BE MADE IF CERTAIN PRE- CONDITIONS EXIT.FOR INVOKING THE PROVISIONS OF SECTION 55A OF THE ACT FORMATION OF OPINION OF THE AO THAT THE VALUE CLAIMED BY THE ASSESSEE IS LESS THAN ITS FMV IS A SINE QUA NON.RECORDING REASO NS AFTER THE ORDER OF REFERENCE,FOR VALUATION OF THE REGISTERED VALUER,IS NOT A SUBSTITUTE FOR PRE D ECISIONAL FORMATION OF OPINION.(330 ITR506).IN THE MATTER OF HOTEL JOSHI,HONBLE RAJASTHAN HIGH CO URT HAS HELD THAT FOR INVOKING SUB-CLAUSE (II)OF CLAUSE (B) OF SECTION 55A OF THE ACT,THE AO IS REQUIRED TO FORM AN OPINION ON THE BASIS OF THE MATERIAL ON RECORD THAT REFERENCE TO THE DVO FO R ASCERTAINING THE FMV OF AN ASSET AND HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES(242 ITR 478). IT WILL BE USEFUL TO DISCUSS A FEW CASES,DEALING W ITH SECTION 55A OF THE ACT.IN THE CASE OF ANANT MILLS LTD.A REFERENCE UNDER CLAUSE (B)(II) OF SECTI ON 55A OF THE ACT WAS MADE BY THE AO AND THE ASSET IN QUESTION WAS A PIECE OF LAND.DECIDING THE WRIT PETITION FILED BY THE ASSESSEE, HONBLE GUJARAT HIGH COURT HELD THAT REFERENCE COULD HAVE B EEN MADE,IF THE AO WAS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT WAS NECESSARY SO TO DO,THAT THERE WAS NOTHING SPECIAL ABOUT THE NATURE OF THE ASSET WHICH WOULD HAVE JUSTIFIED THE AO TO MAKE A REFERENCE TO THE VO.NO OTHER RELEVANT CIR CUMSTANCES COULD BE POINTED OUT,THAT NO ATTEMPT WAS MADE TO JUSTIFY THE ACTION OF THE AO U NDER ANY OTHER PROVISION OF SEC.55A.FINALLY, IT WAS HELD BY THE HONBLE COURT THAT THE REFERENCE TO THE DVO WAS NOT IN ACCORDANCE WITH LAW AND IT HAD TO BE QUASHED.(209 ITR 568). HONBLE GUJARAT HIGH COURT IN THE CASE OF HINABEN J AYANTILAL SHAH(310ITR31)HAS HELD THAT AS PER THE CLAUSE(B) OF SECTION 55A OF THE ACT,THE AO HAS TO RECORD AN OPINION THAT (I) THE FMV 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 CIRCUMSTANCES,IT IS NECESSARY TO MAKE SUCH A REFERENCE.CLAUSE (B) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY THE VALUATION REPORT OF A REGISTERED V ALUER. WE WOULD ALSO LIKE TO DISCUSS THE DECISION OF THE H ONBLE BOMBAY HIGH COURT,DELIVERED IN THE CASE OF PUJA PRINTS(360ITR697).IN THAT CASE,ASSESSE E HAD CLAIMED VALUE OF THE PROPERTY AS ON 01. 04.1981 AT RS.35.99 LAKHS ON THE BASIS OF THE REPOR T OF A GOVERNMENT VALUER.THE AO REFERRED THE ISSUE OF VALUATION TO THE DVO,WHO VALUED THE PROPER TY AT RS. 6.68 LAKHS AS ON FIRST APRIL, 1981.CONSEQUENTLY,THE AO ENHANCED THE TAXABLE CAPIT AL GAINS OF THE ASSESSEE.IN THE APPELLATE PROCEEDINGS,THE FAA DECIDED THE ISSUE AGAINST THE I T. ORDER OF THE FAA WAS CHALLENGED BEFORE THE TRIBUNAL.DECIDING THE ISSUE OF FMV,THE TRIBUNAL HE LD THAT IN VIEW OF SECTION 55A IT WAS NOT PERMISSIBLE FOR THE AO TO MAKE A REFERENCE TO THE D VO FOR THE PURPOSE OF VALUATION,AS THE VALUE OF THE PROPERTY DECLARED BY THE ASSESSEE WAS NOT LE SS THAN ITS FMV.DEPARTMENT AGITATED THE ISSUE BEFORE THE HONBLE HIGH COURT.UPHOLDING THE ORDER O F THE TRIBUNAL AND FOLLOWING THE JUDGMENT OF DAULAL MOHTA (HUF)(360ITR680) HONBLE COURT HELD AS UNDER: THERE WAS NO DISPUTE THAT THE VALUE ADOPTED BY THE 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 DEPARTMENTAL VALUATION OFFICER.IN FACT, THE AO REF ERRED THE ISSUE OF VALUATION TO THE DEPARTMENT - AL VO ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE ASSESSEE WAS HIGHER THAN THE FAIR MARKET VALUE. THEREFORE, T HE INVOCATION OF SECTION 55A(A) WAS NOT JUSTIFIED. (II) THAT THE AMENDMENT TO SECTION 55A(A) OF THE AC T IN 2012 BY WHICH THE WORDS 'IS LESS THAN ITS 5 ITA NO. 180/BLPR/2011 KABIR CHADHHA FAIR MARKET VALUE' WERE SUBSTITUTED BY THE WORDS 'I S AT VARIANCE WITH ITS FAIR MARKET VALUE' WAS MADE EFFECTIVE ONLY FROM JULY 1,2012.PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT.THEREFORE, THE LAW TO BE APPLIED IN THE A SSESSEE'S CASE WAS SECTION 55A(A) AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2 006-07.AT THE RELEVANT TIME,VERY CLEARLY REFERENCE COULD BE MADE TO THE DEPARTMENTAL VO ONLY IF THE VALUE DECLARED BY THE ASSESSEE WAS IN THE OPINION OF AO LESS THAN ITS FAIR MARKET VALUE. (III)THAT SECTION 55A(B) STATES THAT IT WOULD APPLY IN ANY OTHER CASE, I.E., A CASE NOT COVERED BY SECTION 55A(A). THERE WAS NO DISPUTE THAT THE ISSUE WAS COVERED BY SECTION 55 A(A).THEREFORE, RECOURSE COULD NOT BE HAD TO THE RESIDUARY CLAUSE P ROVIDED IN SECTION 55 A(B)(II).THEREFORE, THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR DATED NOVEMB ER 25 1972 (SEE [1973] 91 ITR (ST.) 1), COULD HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITION IN LAW. HENCE, THE REFERENCE TO THE DEPARTMENTAL VO BY THE AO ,WAS NOT SUSTAINABLE IN V IEW OF SECTION 55A(A)(II). THE FOLLOWING QUESTIONS OF LAW HAVE BEEN FORMULATED BY THE REVENUE FOR CONSIDERATION BY THIS COURT : (A)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE REFERENCE MA DE BY THE AO TO THE VO PER SE IS BAD IN LAW ? FURTHER, WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN OBSERVING THAT THE REFERENCE TO THE DVO UNDER SECTION 55A OF THE ACT IS TO BE MADE WHEN THE VALUE OF THE PROPERTY DISCLOSED BY THE ASSESSEE IS LESS THAN THE FAIR VALUE AND NOT VI CE VERSA THEREBY IGNORING THE PROVISIONS OF SECTION 55A(B)(II) OF THE ACT, AND PARAGRAPHS 26 TO 28 OF CIRCULAR NO.96, DATED NOVEMBER 25, 1972, OF THE CENTRAL BOARD OF DIRECT TAXES (SEE [1973] 91 IT R (ST.) 1) ? (B) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN DIRECTING THE AO TO ACCEPT TH E VALUATION GIVEN BY THE RESPONDENT AS THE FAIR MARKET VALUE ON THE BASIS OF THE REGISTERED VALUER' S REPORT AND WORKOUT CAPITAL GAINS ? (C)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE OWNERSHIP OF THE PROPERTY IS REQUIRED TO BE EXAMINED VIS-A- VIS THE VARIOUS PARTNERSHIP DEEDS ENTERED INTO BY T HE FIRM AND TO THAT LIMITED EXTENT RESTORING THE ISSUE TO THE FILE OF THE AO FOR DETER-MINING THE D ATE OF ACQUISITION BY THE FIRM FOR THE PURPOSE OF INDEXATION, PARTICULARLY WHEN THIS ISSUE WAS NOT RA ISED EITHER BEFORE THE AO OR THE COMMISSIONER OF INCOME-TAX (APPEALS) AND, HENCE, DID NOT ARISE F ROM THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS) ? WE HAVE CONSIDERED THE RIVAL SUBMISSIONS.WE FIND TH AT THE IMPUGNED ORDER DATED 18.02.2011, ALLOWING THE RESPONDENT-ASSESSEE'S APPEAL HOLDING T HAT NO REFERENCE TO THE DEPARTMENTAL VO CAN BE MADE UNDER SECTION 55A OF THE ACT ONLY FOLLOWS T HE DECISION OF THIS COURT IN THE MATTER OF DAULAL MOHTA (HUF) (SUPRA).THE REVENUE HAS NOT BEEN ABLE T O POINT OUT HOW THE AFORESAID DECISION IS INAPPLICABLE TO THE PRESENT FACTS NOR HAS THE REVEN UE POINTED OUT THAT THE DECISION IN DAULAL MOHTA (HUF) (SUPRA) HAS NOT BEEN ACCEPTED BY THE RE VENUE. ON THE AFORESAID GROUND 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 DEPARTMENTAL VO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT IS A N UNDISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESPONDENT-ASSESSEE OF THE PROPERTY AT RS. 35.99 LA KHS WAS MUCH MORE THAN THE FAIR MARKET VALUE OF RS. 6.68 LAKHS EVEN AS DETERMINED BY THE DEPARTM ENTAL VALUATION OFFICER. IN FACT, THE AO REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VO ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT-A SSESSEE WAS HIGHER THAN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATI ON 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 WORDS 'IS LESS THAN ITS FAIR MARKET VA LUE' IS SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHO ULD BE GIVEN RETROSPECTIVE EFFECT.THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM JULY 1, 2012. PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO TH E AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EX ISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VO ONLY IF THE VALUE DECLARED BY THE A SSESSEE IS IN THE OPINION OF AO LESS THAN ITS FAIR MARKET VALUE. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DEPARTMENTAL VO BY THE AO 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) 6 ITA NO. 180/BLPR/2011 KABIR CHADHHA OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE, I.E., A CASE NOT COVERED BY SECTION 55A(A) OF THE ACT. IN THIS CASE, IT IS AN U NDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RESORT 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 CIRCULAR DATED NOVEMBER 25, 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 CENTRAL OF DIRECT TAXES IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. THE CONTENTION OF THE REVENUE THAT THE AO IS ENTITL ED TO REFER THE ISSUE OF VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VO IN EXERCISE OF ITS POWER UND ER SECTIONS 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 (SUPRA).HOWEVER, THE APEX COURT IN SMT. AMIYA BALA PAUL(SUPRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AND HELD THAT IF THE POWER TO R EFER ANY DISPUTE WITH REGARD TO THE VALUATION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTION S 131(1), 136(6) AND 142(2) OF THE ACT,THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE AO TO DO S O 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 VO IS AVAILABLE, THERE IS NO OCCASION FOR THE AO 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 ASSESSMENT YEAR 2006-07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. IN OUR OPINION AFTER THE ABOVE ORDER OF THE HONBLE BOMBAY HIGH COURT,THERE IS NO CONFUSION WITH REGARD TO THE MATTERS WHERE THE ASSESSEE ADOPTS THE VALUE SUGGESTED BY A REGISTERED VALUER.IF THE FMV ADOPTED BY HIM IS IN ACCORDANCE WITH THE VALUAT ION REPORT I.E.NOT LESS THAN THE VALUATION REPORT TILL 01.07.2012,THAN THE PROPERTY IN QUESTIO N CANNOT BE REFERRED FOR VALUATION BY THE AO.THE RECORD AVAILABLE WITH US,DOES NOT INDICATE AS TO WH AT WAS THE OPINION FORMED BY THE AO BEFORE MAKING REFERENCE TO THE DVO.THEREFORE, IT IS APPARE NT THAT HE HAD, AT NO POINT OF TIME,FORMED AN OPINION THAT THE FMV DETERMINED BY THE VALUER.IN OT HER WORDS,IT IS NOT CLEAR AS TO WHETHER THE REFERENCE WAS MADE UNDER CLAUSE 55A(A) OR 55A(B)(II ) OF THE ACT AND IF IT WAS MADE UNDER SECTION 55A(B)(II) THEN WHAT WERE THE RELEVANT CIRCUMSTANCE S FOR MAKING SUCH A REFERENCE.RECORDING OF REASONS FOR INVOKING A PARTICULAR SECTION OF THE AC T AND JUSTIFICATION FOR INVOKING THE SPECIFIC CLAUSE ARE NOT AVAILABLE AND NOR WERE THEY BROUGHT TO OUR NOTICE.AS THE VALUE SHOWN BY THE ASSESSEE WAS NOT LESS THAN THE FVM,SO,IN OUR OPINIO N,THERE WAS NO JUSTIFICATION FOR MAKING ANY REFERENCE TO THE REVENUE AUTHORITIES OF STATE GOVER NMENT,BY THE AO IN THE YEAR UNDER CONSIDERATION.AMENDMENT TO THE SECTION 55A OF THE A CT IS EFFECTIVE FROM 01.07. 2012 AND AS PER THAT NOW REFERENCE CAN BE MADE IF THERE IS VARIANCE IN THE FMV.THE ISSUE BEFORE US PERTAIN TO AY.2007-08. RESPECTFULLY,FOLLOWING THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE A O STANDS DISMISSED. > > > > #> #> #> #> @ @@ @ A A A A - -- - . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH ,DECEMBER,2014. - E 19 F ,2014 - . SD/- SD/- (H.L.KARWA/ . .. . . .. . ) ( ! ! ! ! / RAJENDRA) PRESIDENT/ = = = = /ACCOUNTANT MEMBER /RAIPUR. F DATE: 19.12.2014 - -- - *#GH *#GH *#GH *#GH IH IH IH IH / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / ) 2. RESPONDENT / *+) 3. THE CONCERNED CIT(A)/ J K , 4. THE CONCERNED CIT / J K 5. DR ITAT,RAIPUR BENCH/ H *## , . . . , 7 ITA NO. 180/BLPR/2011 KABIR CHADHHA 6. GUARD FILE/ . +H *# //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, RAIPUR