Parvatabai Dada Kharate, Nashik V. Assistant Commissioner of Income-tax,

ITA 186/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1130 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUHAS S KULKARNI
• Keywords: Value adopted by valuation officer; Capital asset; Rectification of order; Retrospective amendment; Question of law; Fair market value
• Section: 2(14); 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.185/PN/2016 / ASSESSMENT YEAR : 2009-10 ARJUN DADA KHARATE, H.NO.894/3, GANDHARVAWADI, NEAR FOREST NURSERY CANAL, MAKHMALABAD, NASHIK 422 013 PAN : BCMPK8087Q . / APPELLANT V/S ACIT, CIRCLE - 1, NASHIK . / RESPONDENT . / ITA NO.186/PN/2016 / ASSESSMENT YEAR : 2009-10 PARVATABAI DADA KHARATE, H.NO.894/3, GANDHARVAWADI, NEAR FOREST NURSERY CANAL, MAKHMALABAD, NASHIK 422 013 PAN : DDZPK2026K . / APPELLANT V/S ACIT, CIRCLE - 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI SUHAS S. KULKARNI / ORDER PER R.K.PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 07-01-2016 OF THE CIT(A)-1, NASHIK RELATING TO THE ASSESSMENT YEAR 2009-10. 2. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE RESPE CTIVE ASSESSEE IN BOTH THE APPEALS, THEREFORE, THESE WERE HEAR D TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. / DATE OF HEARING :18.08.2016 / DATE OF PRONOUNCEMENT:19.08.2016 2 ITA NO.185 & 186/PN/2016 3. FIRST I TAKE UP ITA NO.185/PN/2016 AS THE LEAD CASE . FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DER I VES INCOME FROM CAPITAL GAIN & AGRICULTURAL INCOME. THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME UNDER SECTION 13 9(1) OR 139(4) OF THE INCOME-TAX ACT. THE AO RECEIVED INFORMATION FROM INVESTIGATION WING REGARDING SALE OF PROPERTY. ON THE BAS IS OF THE INFORMATION AT HIS DISPOSAL, THE AO ISSUED NOTICED U/S 148 OF THE ACT O N THE ASSESSEE ON 28-03-2013. THEREAFTER THE ASSESSEE FILED RETURN OF INCOME ON 07-08-2013 IN RESPONSE TO NOTICE ISSUED U/S. 148 OF THE ACT DECLARING TOTAL INCOME AT RS. 5,63,507/-. THE AO OBSERVED THAT DURING THE YEAR, THE ASSESSEE ALONG WITH OTHER 5 MEMBERS SOLD AGRICULTURAL LAND SITUATED IN S . NO. 150, MAKHMALABAD ADMEASUR I NG 9.83 ACRES FOR TOTAL CONSIDERATION OF RS. 1,80 , 00 , 000/- WHEREIN THE SHARE OF THE ASSESSEE WAS 28.61 % . AS THE SAID LAND I S SITUATED WITHIN 8 KILOMETERS OF THE MUNICIPAL LIMITS OF NASHIK MUNICIPAL CORPORATION, THE SAME IS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. HENCE THE G AIN OUT OF SALE OF SUCH AGRICULTURE LAND IS CHARGEABLE TO INCOME - TAX. AS THE SAID LAND WAS ANCESTRAL LAND THE DEEMED COST OF ACQ UISITION WAS TO BE TAKEN AS THE FAIR MARKE T VALUE OF THE SAID LAND AS ON 01- 04-1981 . THE ASSESSEE TOOK THE CO S T OF ACQUISITION AT RS. 8 , 96 , 782/- AS PER THE REPORT OF APPROVED VALUER . THE A.O. DID NOT ACCEPT THE VALUATION OF THE APPROVED VALUER AND MADE A REFERENCE TO DEPARTMENTAL VALUATION OFFICER TO DETERMINE THE FAIR MARKET VALUE OF THE SAID LAND AS ON 01/04/1981 . THE VALU A TION REPORT FROM DVO WAS NOT RECEIVED TILL FINALIZATION OF ASSESSMENT PROCEED I NGS. HENCE , THE A O PASSED THE ASSESSMENT ORDER CONSIDERING THE FAIR MARKET VALUE OF THE SAID LAND AS ON 01-04-1981 AT RS.1,99 ,000/- 3 ITA NO.185 & 186/PN/2016 AS INTIMATED BY THE JT. DISTRICT REGISTRAR OF STAMP. ACCORD INGLY, THE AO COMPLETED ASSESSMENT U/S.143(3) R.W.S. 147 OF THE I.T. ACT, 1961 AND ASSESSED INCOME AT RS.48,26,896/- AS AGAINST T HE RETURNED INCOME OF RS.5,63,507/- BY MAKING ADDITION AT RS.42,63,389/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. 4. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF THE HONB LE BOMBAY HIGH COURT IN THE CASE OF PUJA PRINTS DELETED THE ADDITION MADE BY THE AO WHO HAS MADE THE ADDITION ON ACCOUNT O F LONG TERM CAPITAL GAIN RELYING ON THE REPORT OF THE DVO. THE RELEVANT OBSERVATION OF THE CIT(A) READS AS UNDER : 4.4 I HAVE CONSIDERED THE FACTS OF THE CASE THE SUBMISSION OF THE APPELLANT, THE ORDER OF THE ASSESSING OFFICER, THE REMA ND REPORT AND THE REJOINDER TO THE REMAND REPORT. THE FAIR MARKET VALUE OF LAND ADOPTED BY APPELLANT AS ON 01 104/1981 AS PER THE RE PORT OF THE APPROVED VALUER IS RS.2,80,705/- PER ACRE. VALUATION MADE BY DVO DENOTES F.M.V. AT RS.1,94,852/- PER ACRE. THEREFORE, THAT THE F.M.V. ADOPTED BY APPELLANT ON 01/04/1981 IS HIGHER THAN TH E FMV ADOPTED BY THE DVO. 4.5 THE APPELLANT FIRST GROUND OF APPEAL WHEREIN IT HAS CHALLENGED THE VERY REFERENCE TO THE DVO BY THE AO UNDER SECTIO N 55A OF THE ACT. THE APPELLANT'S ARGUMENT REGARDING THE SAME IS THAT UN DER CLAUSE (A) OF SECTION 55A, THE AO IS ENTITLED TO MAKE THE REFERE NCE IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE APPELLA NT IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED V ALUER AND THE AO IS OF THE OPINION THAT THE VALUE OF SO CLAIMED IS L ESS THAN THE FAIR MARKET VALUE. WHILE IN CLAUSE (B), THE AO HAS TO RECO RD AN OPINION THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VA LUE OF THE ASSET BY MORE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED OR HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUC H A REFERENCE. 4.5.1 THE APPELLANT HAD CLAIMED THE VALUE OF THE P ROPERTY AS PER THE REGISTERED VALUER'S REPORT. THEREFORE, THE CASE FALLS U NDER CLAUSE (A) OF SECTION 55A AND THE AO WAS REQUIRED TO FORM AN OPI NION THAT THE VALUE CLAIMED BY THE APPELLANT AS PER THE REGISTERED VALUER'S REPORT WAS LESS THAN THE FAIR MARKET VALUE. HOWEVER, THE ESTIM ATED VALUE PROPOSED BY THE DVO WAS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE APPELLANT AS ON APRIL, 1981 AND HENCE CLAUSE (A) WAS NOT APPLICABLE. THE APPELLANT'S CASE ALSO DID NOT FALL IN CLAUSE (B) AND HENCE THE REFERENCE WAS BAD IN LAW. 4.5.2 TO BUTTRESS THE ABOVE PROPOSITIONS, THE APPELLAN T RELIED ON THE DECISION OF BOMBAY HIGH COURT IN PUJA PRINTS, WHEREIN , IT WAS HELD THAT AO ASSUMES POWER UNDER CLAUSE (A) OF SECTION 55A ON LY WHEN IN 4 ITA NO.185 & 186/PN/2016 HIS OPINION FAIR MARKET VALUE DISCLOSED BY THE APPELLA NT IS LESS AND HENCE THE REFERENCE WAS HELD TO BE INVALID. THE SPECI FIC PROVISIONS CONTAINED IN SECTION 55A OF THE ACT STATES THAT THE SAM E COULD BE INVOKED ONLY IF THE AO WAS OF THE OPINION THAT THE V ALUE DECLARED BY THE ASSESSEE IS LESS THAN ITS FMV. IT IS OBSERVED THAT THE RE FERENCE IN THE CASE OF THE ASSESSEE WAS HOWEVER MADE BY THE AO TO TH E DVO BECAUSE HE FELT THAT THE VALUE OF PROPERTY AS ON 1.4. 1981 DECLARED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUER'S REPORT IS A CTUALLY MORE THAN ITS FMV. HE HELD THAT THE CONDITION STIPUL ATED IN CLAUSE (A) OF SECTION 55A THUS WAS NOT SATISFIED. 4.5.3 THE ISSUE INVOLVED IN THE APPEAL IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS (2014) 265 CTR (BOM) 124, WHEREIN THE SIMILAR ISSUE WAS RAISED BY WAY OF THE FOLLOWING QUESTION OF LAW FOR THE CONSIDERATION OF THEIR LORDSHIPS: '(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ITAT WAS RIGHT IN HOLDING THAT THE REFERENCE MADE BY THE AO TO THE VALUATION OFFICER PER SE IS B AD IN LAW? FURTHER, WHETHER THE ITAT WAS JUSTIFIED IN OBSERVIN G THAT THE REFERENCE TO THE DVO U/S. 55A OF THE IT ACT 1961 IS TO BE MADE WHEN THE VALUE OF THE PROPERTY DISCLOSED BY THE ASS ESSEE IS LESS THAN THE FAIR VALUE AND NOT VICE VERSA THEREBY IGNO RING THE PROVISIONS OF SECTION 55A(B)(II) OF THE ACT 1961 AND PARAGRAPH 26 TO 28 OF CIRCULAR NO. 96 DATED 25.11.1972 OF THE CBDT? 4.5.4 THE HONBLE BOMBAY HIGH COURT DECIDED THE ISSU E INVOLVED IN THE ABOVE QUESTION IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE IMPUGNED ORDER DATED 18 FEBRUARY, 2011 ALLOWING THE RESPONDENT-ASSESSEE'S APPEAL HOLDING THAT NO REFERE NCE TO THE DEPARTMENTAL VALUATION OFFICER CAN BE MADE UNDER SE CTION 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 OUT HOW THE AFORESAID DECISION IS INAPPLICABL E TO THE PRESENT FACTS NOR HAS THE REVENUE POINTED OUT THAT THE DECISION IN DAULAL MOHTA HUF (SUPRA) HAS NOT BEEN ACCEPTED B Y THE REVENUE. ON THE AFORESAID GROUND ALONE, THIS APPEAL NEED NOT BE ENTERTAINED. HOWEVER, AS SUBMISSIONS WERE MADE ON M ERITS, WE HAVE INDEPENDENTLY EXAMINED THE SAME. 7. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLEA RLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MA DE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THEN THE FAIR MARKET VALUE. I N THE PRESENT CASE, IT IS AN UNDISPUTED POSITION THAT THE VALUE A DOPTED 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 DEPARTMENTAL VALUATION OFFICER. I N FACT, THE ASSESSING OFFICER REFERRED THE ISSUE OF VALUATION T O THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT-ASSESSEE WAS HIGHER THEN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECT ION 55A(A) OF THE ACT IS NOT JUSTIFIED. 5 ITA NO.185 & 186/PN/2016 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF T HE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE W ORDS 'IS LESS THEN THE FAIR MARKET VALUE' IS SUBSTITUTED BY THE W ORDS ' 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTOR Y AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS I N FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONL Y FROM 1 JULY 2012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTI VE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EXISTING DURIN G THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. AT THE REL EVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTA L VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSESSING OFFICER LESS THAN ITS FAIR MARKET VALU E. 9. 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 A CT IS NOT ACCEPTABLE. THIS IS FOR THE REASON THAT SECTION 55A(B)OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHE R CASE I.E. A CASE NOT COVERED BY SECTION 55A(A) OF THE ACT. IN T HIS CASE, IT IS AN UNDISPUTABLE 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 CBDT CIRCULAR DATED 25 NOVEMBER 1972 CAN HAVE NO APPLICATION IN THE FACE OF THE CLEAR PO SITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN CIRCULAR ISSUED BY THE CBDT IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSE SSEE TO CONTEND TO THE CONTRARY. ' 4.5.5 AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WELL A S ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT O F THE CASE OF CIT V/S PUJA PRINTS(SUPRA) DECIDED BY THE HON'BLE BOMBAY H IGH COURT. I, RESPECTFULLY FOLLOW THE DECISION OF JURISDICTIONAL HIG H COURT RENDERED IN THE SAID CASE AND UPHOLD THE SUBMISSION OF THE APPELL ANT DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF LTCG RELY ING ON THE REPORT OF DVO BY HOLDING THAT THE REFERENCE MADE BY AO TO THE DVO U/S 55A OF THE ACT ITSELF WAS BAD IN LAW. THE ADDITION OF RS.42,63,889/- STANDS DELETED. 5. SUBSEQUENTLY, A LETTER WAS RECEIVED FROM THE AO TO R ECTIFY THE ORDER U/S.154 OF THE I.T. ACT AS FACTUAL ERROR HAS OCCURRED WHILE PASSING THE APPELLATE ORDER. THE AO VIDE HIS LETTER D ATED 04-12-2015 REQUESTED THE CIT(A) FOR RECTIFICATION OF THE O RDER PASSED BY HER WHICH HAS BEEN REPRODUCED BY THE CIT(A ) IN PARA 2 OF HER ORDER AND WHICH READS AS UNDER : I WOULD LIKE TO BRING YOUR NOTICE THAT YOU HAVE RE LIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. P UJA PRINTS (2014) 265 CTR (BOMB.) 124. 6 ITA NO.185 & 186/PN/2016 IN THE REFERRED CASE, THE REFERENCE U/S.55A WAS MADE B EFORE IST JULY, 2012, I.E. BEFORE THE AMENDMENT BROUGHT OUT BY FINA NCE ACT, 2012 CAME INTO FORCE. HOWEVER, IN THE PRESENT CASE THE R EFERENCE WAS MADE BY THE AO ON 14 TH NOVEMBER, 2013. SECTION 55A BEING A MACHINERY PROVISION AND NOT A CHARGING SECTION, THE R EFERENCE U/S.55A IN THE PRESENT CASE, THEREFORE, NOT BAD IN LAW . THE RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS (2014) 265 CTR (BOMB.) 124, THEREFORE, APPEAR S TO BE INCORRECT. 6. AFTER THE RECEIPT OF THE SAID LETTER THE LD.CIT(A) ON VERIFICATION OF THE RECORD FOUND THAT THE SUBMISSION MADE B Y THE AO WAS CORRECT. SHE OBSERVED THAT THE VITAL FACT THAT REFERENCE TO THE DVO WAS MADE AFTER 01-07-2012, I.E. THE DATE FROM WHIC H THE AMENDMENT IN SECTION 55A CAME INTO OPERATION WAS NEVER POINTED OUT BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE. ACCORDING TO HER, THE SUPPRESSION OF VITAL FACT LED TO WRONG APPLICATIO N OF RATIO OF THE DECISION IN THE CASE OF PUJA PRINTS (SUPRA). S HE, THEREFORE, ISSUED A NOTICE U/S.154 OF THE ACT. SINCE NOBO DY APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE WAS ISS UED AND DULY SERVED ON THE ASSESSEE, THE LD.CIT(A), FOLLOWING VARIO US DECISIONS HELD THAT THE REFERENCE MADE BY THE AO TO THE DVO WAS JUSTIFIED. THEREFORE, THE ADDITION MADE BY THE AO ON ACCOU NT OF LONG TERM CAPITAL GAIN ON THE BASIS OF THE REPORT OF THE D VO WHICH IS BINDING ON THE AO IS ALSO JUSTIFIED. THUS SHE DISMISSED TH E APPEAL FILED BY THE ASSESSEE IN THE RECTIFIED ORDER. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I , IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO OF MAKI NG REFERENCE FOR VALUATION OF PROPERTY TO THE DVO U/S. 55A OF THE ACT. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW AND WITHOUT PREJUDICE TO ABOVE, THE COMMI SSIONER OF INCOME TAX, (APPEALS)-L, IS NOT JUSTIFIED IN CONFIRMIN G THE ACTION OF THE AO OF MAKING REFERENCE FOR VALUATION OF PROPERT Y TO THE DVO U/S. 7 ITA NO.185 & 186/PN/2016 55A OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT PARTICULARLY WHEN IN AN ORDER PASSED U/S. 250 OF THE ACT, IT WAS HELD BY THE COMMISSIONER OF INCOME TAX, (APPEALS)-I THAT TH E REFERENCE MADE BY THE AO TO THE DVO U/S. 55A OF THE ACT AS BAD IN LAW. THE COMMISSIONER OF INCOME TAX, (APPEALS)-I IS NOT JUSTIFIED IN PASSING THE ORDER U/S. 154 OF THE ACT PARTICULARLY WHEN THE ISSUE IS DEBATABLE. 3. THE APPELLANT CRAVES FOR THE ADDITION TO, DELETIO N, ALTERATION, MODIFICATION OF ANY OF THE ABOVE GROUNDS OF APPEALS. 8. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A) PASSED IN THE 154 PROCEEDINGS. THE L D. COUNSEL FOR THE ASSESSEE REFERRING TO PARA 4.1 OF THE ORIG INAL ORDER OF THE CIT(A) AT PAGE 4 DREW MY ATTENTION TO THE SUBMIS SIONS MADE BY THE ASSESSEE WHEREIN IT WAS INTER ALIA STATED AS UNDER : THE FOLLOWING DETAILS IS SUBMITTED REGARDING CAPIT AL GAIN COMPUTATION IN RETURN OF INCOME DATE OF SALE 06/08/2008 AREA IN ACRE 9.83 ACRE TOTAL VALUATION AS ON 01/04/1981 VALUE PER ACRE AS PER APPROVED VALUER AS ON 01/04/1 981 RS. 2,80,705/-. THE AO IS LEGALLY NOT EMPOWERED TO MAKE REFERENCE F OR VALUATION OF THE LAND AS ON 01/04/1981 BECAUSE THE REFERENCE TO VALUATION UNDER PROVISIONS OF SECTION 55A(A) COULD BE MADE ONLY IF THE VALUATION DISCLOSED BY THE APPELLANT WAS LESS THAN THE FAIR M ARKET VALUE. IN THE PRESENT CASE, IT APPEARS THAT THE A. O. HAS MADE REFERENCE TO VALUATION OFFICE WHEN THERE IS NOT SUCH FINDING RECORDED AND PARTICULARLY WHEN THE VALUATION AS ON 01/04/1981 IS REDUCED BY THE A. O. THEREFORE, IT IS UNDISPUTED FACT THAT THE FAIR MARKET VALUE ADOPTED BY A. O. IS LESS THAN THE FAIR MARKET VALUE DISCLOSED BY THE APPELLANT. A S SUCH THE A. O. IS LEGALLY NOT PERMITTED TO REFER THE CASE FOR DEPARTM ENTAL VALUATION. THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS M/ S PUJA PRINTS 360 ITR 697 SUPPORTS THIS VIEW I.E. ITO VS SMT. SUREKHA TAJAJI BHILARE ITA NO.1612/PN/2012 DATED 29/05/2014, SHRI VASANT N MORE VS. ADDL. CIT ITA NO. 1503/PN/2013 DATED 10/09/2014 & I.T.O. VS VIJAYA CHANDRAKANT TUPE & ORS ITA NO. 1129/PN/2013 DATED 27/08/2014. IT IS ALSO CLARIFIED BY HON.BLE BOMBAY HIGH COURT IN T HE CASE OF PUJA PRINTS (SUPRA) THAT THE AMENDMENT BROUGHT IN SECTIO N 55A W.E.F 01/06/2012 I.E. SUBSTITUTING THE WORDS 'IS LESS THAN THE FAIR MARKET VALUE' BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR M ARKET VALUE' IS NOT RETROSPECTIVE AND THE PROVISIONS OF SECTION 55A WIL L HAVE EFFECT AS PER THE PROVISIONS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR IN QUESTION. THEREFORE, THE PRESENT ASSESSMENT YEAR IS 2009-10, THEREFORE, THE PROVISIONS OF SECTION 55A AS EXISTED AS ON 01/04/2009 SHALL BE CONSIDERED IN THE PRESENT CASE AND AS SUCH THE A. O. WAS NOT HAVING POWERS TO REFER THE VALUATION TO DVO IN THE GIVEN SITUATION AS ON 01/04/2009. THEREFORE, THE IMPUGNED ADDITION MADE BY THE A. O. PLEASE BE DELETED. 8 ITA NO.185 & 186/PN/2016 8.1 REFERRING TO PARA 4.2 OF THE ORIGINAL ORDER OF THE CIT(A ) HE SUBMITTED THAT THE SUBMISSION OF THE ASSESSEE ALONG WITH REPORT OF THE DVO WAS FORWARDED TO THE AO FOR NECESSARY COMMENT S AND HIS REPORT. HOWEVER, THE AO IN HIS REMAND REPORT OFFERED NO COMMENTS ON THE OBJECTION RAISED BY THE ASSESSEE REGA RDING REFERENCE TO THE DVO U/S.55A. HOWEVER, HE FURNISHED THE REVISED WORKING OF LONG TERM CAPITAL GAIN. THEREFORE, UNDER THESE FA CTS AND CIRCUMSTANCES WHETHER THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PUJA PRINTS (SUPRA) IS APPLICABLE TO A CASE WHEN THE REFERENCE WAS MADE AFTER 01-07-2012 FOR AN AS SESSMENT YEAR PRIOR TO THAT IS A HIGHLY DEBATABLE ISSUE. REFERRIN G TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T.S. BALA RAM, ITO VS. VOLKART BROTHERS AND OTHERS REPORTED IN 82 IT R 50 HE SUBMITTED THAT RECTIFICATION PROCEEDINGS CANNOT BE INITIATED IN CASE OF DEBATABLE ISSUES. HE SUBMITTED THAT THE AO INITIALL Y HAD AN OPPORTUNITY TO COMMENT ON THIS ISSUE. HOWEVER, DESPIT E GIVEN AN OPPORTUNITY DURING THE REMAND PROCEEDINGS, HE HAS N OT PASSED ANY COMMENTS ON THIS ISSUE. THEREFORE, THE ORDER OF THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE CANNOT B E RECTIFIED IN A PROCEEDING U/.S.154. 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITT ED THAT THE ISSUE HAS NOT AT ALL DEBATABLE AND THE CIT(A) WAS FULLY JUS TIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IN PASSING AN ORDER U/S.154. 10. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SU BMITTED THAT THE DEPARTMENT IS CONFUSED BY MISUNDERSTANDING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F PUJA 9 ITA NO.185 & 186/PN/2016 PRINTS (SUPRA). IT HAS BEEN CLEARLY MENTIONED THAT THE A MENDMENT BROUGHT IN SECTION 55A W.E.F. 01-06-2012, I.E. SUBSTITUTING THE WORDS IS LESS THAN THE FAIR MARKET VALUE BY THE WORDS IS AT VARIANCE WITH ITS FAIR MARKET VALUE IS NOT RETROSPECTIVE A ND THE PROVISIONS OF SECTION 55A WILL HAVE EFFECT AS PER THE PROVIS IONS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YE AR IN QUESTION. SINCE THE ASSESSMENT YEAR INVOLVED IS 2009-10, THEREFORE, THE PROVISIONS OF SECTION 55A AS EXISTED AS ON 01-04-2009 SHALL BE CONSIDERED AND MERELY BECAUSE THE AO HAS REFERRED THE MATTER TO THE DVO AFTER THE AMENDMENT CA NNOT BE A GROUND TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY THE HONBLE BOMBAY HIGH COURT. HE ACCORDINGLY SUBMITTED THAT THE G ROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 11. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDE RED THE VARIOUS DECISIONS CITED BEFORE US. I FIND THE ASSESSEE IN THE INSTANT CASE HAS SOLD A PIECE OF LAND AND HAS ADOPTED T HE FAIR MARKET VALUE OF THE LAND AS ON 01-04-1981 ON THE BASIS OF THE REPORT OF THE APPROVED VALUER WHICH WAS RS.2,80,705/- PER ACRE. THE AO MADE REFERENCE TO THE DVO WHO VALUED THE FAIR MA RKET VALUE AS ON 01-04-1981 AT RS.1,94,852/- PER ACRE. SINCE THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE ON 01-04-1981 W AS HIGHER THAN THE FAIR MARKET VALUE ADOPTED BY THE DVO, THE AO C OMPUTED THE LONG TERM CAPITAL GAIN AT RS.48,18,644/- AS AGAINST RS.4,86,023/- DECLARED BY THE ASSESSEE AS LONG TERM CAPIT AL GAIN. I FIND THE LD.CIT(A) VIDE ORDER DATED 14-09-2015 FOLLOWING TH E DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PUJA PRINTS 10 ITA NO.185 & 186/PN/2016 (SUPRA) DELETED THE ADDITION MADE BY THE AO ON ACCOUNT O F LONG TERM CAPITAL GAIN BY HOLDING THAT THE AO SHOULD NOT HAVE REFERRED THE MATTER TO THE DVO U/S.55A OF THE I.T. ACT. I FIND SU BSEQUENTLY THE LD.CIT(A), BASED ON THE REQUEST OF THE AO TO RECTIFY THE ORDER U/S.154, ISSUED NOTICE U/S.154 TO THE ASSESSEE. SINCE NON E APPEARED ON BEHALF OF THE ASSESSEE AND OBSERVING THAT THE REFERENCE TO THE DVO IN THE INSTANT CASE WAS MADE BY T HE AO AFTER 01-07-2012, I.E. THE DATE FROM WHICH THE AMENDMENT IN SECT ION 55A CAME INTO OPERATION, UPHELD THE ACTION OF THE AO IN MAKING A REFERENCE TO THE DVO. 12. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT FULL FACTS WERE ALREADY BEFORE THE CIT(A) AS WELL AS BEFORE TH E AO DURING THE REMAND PROCEEDINGS. FURTHER, WHEN THE ASSES SMENT YEAR INVOLVED IS 2009-10 AND THE AMENDMENT WAS BROUGH T IN THE STATUTE BOOK W.E.F. 01-07-2012 AND WHEN THE HONBLE BOMB AY HIGH COURT IN THE CASE OF PUJA PRINTS (SUPRA) HAS ALREADY HELD THAT SUCH AMENDMENT BROUGHT TO THE STATUTE IS NOT RETROSP ECTIVE, THEREFORE, WHETHER A REFERENCE CAN BE MADE TO THE DVO AFTER 01-07-2012 FOR AN ASSESSMENT YEAR PRIOR TO A.Y. 2012-13 IS A HIGHLY DEBATABLE ISSUE. 13. I FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY, THE ASSESSEE HAS MADE ELABOR ATE SUBMISSION DURING THE APPELLATE PROCEEDINGS WHICH HAS ALRE ADY BEEN REPRODUCED AT PARA 8 OF THIS ORDER. THE LD.CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE AO BY FORWARDING THE SUBMI SSION AND THE AO HAS NOT COMMENTED UPON THIS ISSUE. 11 ITA NO.185 & 186/PN/2016 14. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT ONCE THE COMMISSIONER (APPEAL) HAS RECORDED HIS FINDINGS FOR OR AGAINST THE ASSESSEE THE COMMISSIONER (APPEAL) IS NOT COMPETENT T O REVIEW ITS OWN ORDER ON THE BASIS OF SAME FACTS IN GARB O F POWERS VESTED U/S.154 OF THE I.T. ACT. ALL ISSUES WHICH INVOLVE PRO LONGED ARGUMENTS AND ARE DEBATABLE AND WHERE TWO VIEWS ARE P OSSIBLE FALL OUTSIDE THE SCOPE OF THE POWERS U/S.154 OF THE I.T. ACT. 15. I FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PUJA PRINTS (SUPRA) AT PARA 8 OF THE ORDER HAS OBSERVED AS UNDER : 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF THE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE W ORDS 'IS LESS THAN THE FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS ' 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISS I ON IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM 1 JULY 2 012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EX I STING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07 . AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSESSING OFFICER LESS THAN ITS FAIR MARKET VALUE. 16. ONCE IT IS HELD BY THE JURISDICTIONAL HIGH COURT THAT SU CH AMENDMENT TO PROVISIONS OF SECTION 55A(A) IS NOT RETROSPECTIVE AND PROSPECTIVE, THEREFORE, MERELY BECAUSE THE AO HAS MADE A REFERENCE TO THE DVO AFTER THE DATE OF SUCH AMENDMENT FOR AN ASSESSMENT YEAR PRIOR TO THE AMENDMENT IS A HIGHLY DEB ATABLE ISSUE. THE HONBLE SUPREME COURT IN THE CASE OF T.S. BALAR AM, ITO VS. VOLKART BROTHERS AND OTHERS REPORTED IN 82 ITR 50 HAS HELD THAT A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHE D BY A LONG RUN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW 12 ITA NO.185 & 186/PN/2016 IS NOT A MISTAKE APPARENT FROM THE RECORD. SINCE IN THE INSTANT CASE THE ISSUE AS TO WHETHER THE AO CAN MAKE A REFERE NCE TO THE DVO U/S.55A(A) OF THE I.T. ACT AFTER THE AMENDMENT BROUGH T IN THE STATUTE BOOK W.E.F. 01-07-2012 BUT FOR AN ASSESSMEN T YEAR PRIOR TO THAT DATE WHERE THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE AS ON 01-04-1981 IS MORE THAN THE FAIR MARKET VALUE DETERMINED BY THE AO IS A HIGHLY DEBATABLE ISSUE, THEREFOR E, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T.S. BARALAM, ITO VS. VOLKART BROTHERS AND OTHERS (SUPRA) I HO LD THAT THE CIT(A) WAS NOT JUSTIFIED IN PASSING THE ORDER U/S.154 O F THE I.T. ACT IN THE INSTANT CASE WHICH IN MY OPINION IS A HIGHLY DEBATABLE ISSUE. ACCORDINGLY, I SET ASIDE THE ORDER OF TH E CIT(A) PASSED THE ORDER U/S.154 OF THE I.T. ACT. GROUNDS RAIS ED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. ITA NO.186/PN/2016 : 17. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I , IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO OF MAKI NG REFERENCE FOR VALUATION OF PROPERTY TO THE DVO U/S. 55A OF THE ACT. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW AND WITHOUT PREJUDICE TO ABOVE, THE COMMI SSIONER OF INCOME TAX, (APPEALS)-L, IS NOT JUSTIFIED IN CONFIRMIN G THE ACTION OF THE AO OF MAKING REFERENCE FOR VALUATION OF PROPERT Y TO THE DVO U/S. 55A OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT PARTICULARLY WHEN IN AN ORDER PASSED U/S. 250 OF THE ACT, IT WAS HELD BY THE COMMISSIONER OF INCOME TAX, (APPEALS)-I THAT TH E REFERENCE MADE BY THE AO TO THE DVO U/S. 55A OF THE ACT AS BAD IN LAW. THE COMMISSIONER OF INCOME TAX, (APPEALS)-I IS NOT JUSTIFIED IN PASSING THE ORDER U/S. 154 OF THE ACT PARTICULARLY WHEN THE ISSUE IS DEBATABLE. 3. THE APPELLANT CRAVES FOR THE ADDITION TO, DELETIO N, ALTERATION, MODIFICATION OF ANY OF THE ABOVE GROUNDS OF APPEALS. 13 ITA NO.185 & 186/PN/2016 18. AFTER HEARING BOTH THE SIDES, I FIND THE GROUNDS RAISE D BY THE ASSESSEE IN THE ABOVE APPEAL ARE IDENTICAL TO THE GR OUNDS RAISED IN ITA NO.185/PN/2016. I HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOW ED. FOLLOWING THE SAME REASONINGS ABOVE, THE GROUNDS RAISED B Y THE ASSESSEE ARE ALSO ALLOWED. 19. IN THE RESULT, BOTH THE APPEALS FILED BY THE RESPECT IVE ASSESSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19-08-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 19 TH AUGUST, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // TRUE COPY // // $ % //UE &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - I, NASHIK 4. THE CIT-I, NASHIK 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.