SUNETA S CHADDA, MUMBAI V. ITO WD 19(3(4), MUMBAI

ITA 1878/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71258 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 25-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Assessee Lawyers: MOHAN V TANDON
• Keywords: Capital asset; Question of law; Fair market value; Valuation report
• Section: 6; 2; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMB ER . / ITA NO. 1878 /MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 7 08 ) MRS. SUNETA S. CHADDA 404, SWEET HOME CHS SHERLEY RAJAN ROAD BANDRA (W), MUMBAI 400 050 .. / APP ELLANT V/S INCOME TAX OFFICER WARD - 19 ( 3 ) - 4 , PIRAMAL CHAMBERS LOWER PAREL, MUMBAI 400 013 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AGXPC2669Q / ASSESSEE BY : MR. MOHAN V. TANDON / REVENUE BY : MR. S.K. MADHUK / DATE OF HEARING 25 .0 9 .2013 / DATE OF ORDE R 30.09.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL IS PREFERRED BY THE A SSESSEE , CHALLENGING THE IMPUGNED ORDER DATED 14 TH DECEMBER 2011 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) X X X, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE MRS. SUNETA S. CHADDA 2 ACT') FOR THE ASSESSMENT YEAR 200 7 08 , VIDE WHICH, FOLLOWING GROUND S HAVE BEEN RAISED : I) THE FAIR MARKET VALUE OF THE PROPERTY SOLD BY THE APPELLANT AS ADOPTED BY THE ASSESSING OFFICER BE SUBSTITUTED WITH THE VALUE SUPPORTED BY VALUATION REPORT SUBMITTED BY THE APPELLANT FOR THE PUR POSE OF CALCULATION OF CAPITAL GAINS AS PROVIDED IN SECTION 48 OF THE ACT. II) THE VALUATION REPORT OF THE DVO SHOULD BE TREATED AS INVALID AS THE REFERENCE MADE BY THE ASSESSING OFFICER TO DVO UNDER SECTION 55A OF THE ACT IS INVALID IN LAW AND THE VIEW I S SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE JURISDICTIONAL HIGH COURT OF BOMBAY. III) THE COST OF FILING THIS APPEAL BE REFUNDED BACK TO THE APPELLANT BECAUSE THE ASSESSING OFFICER AS WELL AS THE 1 ST APPELLATE AUTHORITY HAVE NOT FOLLOWED THE LAW OF JUDICIAL PROPRIETARY AND PUT THE APPELLANT INTO HARDSHIP OF FILING A SECOND APPEAL BEFORE THE ITAT. 2. AT THE OUTSET, IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT S A ME ISSUES HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES HUSBAND S CASE, WHO WAS 50% CO OWNER OF THE PROPERTY REFERRED TO IN THE IMPUGNED ORDER AND SIMILAR NATURE OF ADDITION HAS BEEN DELETED ON ACCOUNT OF REFERENCE MADE TO THE DVO UNDER SECTION 55A. 3. LEARNED DEPARTMENTAL REPRESENTATIVE ALSO FAIRLY ADMITTED THAT THIS IS SUE STANDS COVERED BY THE DECISION RENDERED IN ASSESSEES HUSBANDS CASE. 4. AFTER CAREFULLY CONSIDERING THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS OF THE LEARNED COMMISSIONER (APPEALS) AND ALSO THE ORDER PASSED IN LATE SHRI SARVAMITRA RAM CHA DDA, ITA NO.2279/MUM./2012, ORDER DATED 30 TH APRIL 2013, THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE ARISING OUT OF THE SAME SET OF FACTS IN ASSESSEES HUSBANDS CASE WHO WAS 50% SHAREHOLDER IN THE IMMOVABLE PROPERTY SITUATED AT 11, NIBBANA CHS, PALI HILL R IOAD, BANDRA, MUMBAI. THE FACTS WHICH HAS BEEN INCORPORATED IN THE APPELLATE ORDER ARE IDENTICAL WHICH HAS BEEN DEALT WITH BY THE TRIBUNAL IN PARA 2 TO 4 OF ITS MRS. SUNETA S. CHADDA 3 ORDER. THE TRIBUNAL, AFTER RELYING UPON THE VARIOUS CO ORDINATE BENCH DECISIONS, OBSERVED AND H ELD AS UNDER: 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AS WELL AS THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL. THIS ISSUE OF REFERENCE UNDER SECTION 55A ON THESE CIRCUMST ANCES HAVE COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN LARGE NUMBER OF CASES. IN ITO V/S PRATAP M. INDULKAR, ITA NO.1142/MUM./2010, THE TRIBUNAL HAS RELIED UPON THE DECISION OF SARALA N. SAKARANEY V/S ITO, [2010] 46 DTR (MUM.) (TRIB.) 208 (MUM.) AND A LSO THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN DAULAL MOHTA (SUPRA). THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: 4. BEFORE US IT IS NOT IN DISPUTE THAT IDENTICAL ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CASE O F SMT. SARALA N. SAKARANEY VS. ITO (2010) 46 DTR (MUM) (TRIB) 208 AND THIS TRIBUNAL HAS HELD AS FOLLOWS. 11. AGGRIEVED BY THE ORDERS OF LEARNED CIT(A), ASSESSEES HAVE PREFERRED GROUND NO. 1 TO 3 BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIO NS. AS FAR AS GROUND NO. 1 IS CONCERNED, WE ARE OF THE VIEW THAT THE REFERENCE TO THE DVO WAS INVLAID. ON THIS ISSUE, LEARNED DR RELIED ON THE ORDER OF LEARNED CIT(A). WHILE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISIONS WHICH WERE CITED BEFORE L EARNED CIT(A) AND FURTHER DREW OUR ATTENTION TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF DAULAL MOHTA HUF, ITA NO. 1031 OF 2008 DATED 22.9.2008; WHEREIN, HON'BLE BOMBAY HIGH COURT HAS APPROVED THE DECISION OF HON'BLE ITAT MUMBAI, THIRD MEMB ER DECISION IN THE CASE OF MS. RUBAB M. KAZERANI, 91 ITD 429 (MUM)(TM)AND THE HONBLE ITAT PUNE DECISION IN THE CASE OF SMT. KRISHNABAI TINGRE VS. ITO, 101 ITD 317 (PUNE)(TM). FURTHER REFERENCE WAS ALSO MADE TO THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH VS. ITO, 310 ITO 31 (GUJ). IT HAS TO BE MENTIONED HERE THAT THERE IS A DECISION OF ITAT MUMBAI BENCH IN THE CASE OF VIJAYKUMAR M. SHAH VS. DCIT (2009), 29 SOT 338 (MUM); WHEREIN A CONTRARY VIEW WAS TAKEN. IN THE SAID DEC ISION, MUMBAI BENCH OF THE TRIBUNAL HAD TAKEN A VIEW THAT THE ASSESSING OFFICER IS EMPOWERED TO MAKE REFERENCE UNDER SUB - CLAUSE (II) OF SECTION 55A(B), EVEN IN CASES WHERE FMV CLAIMED BY THE ASSESSEE IS HIGHER THAN ACTUAL FAIR MARKET VALUE AND THAT A REFER ENCE CAN BE MADE EVEN WHERE CONDITIONS SPECIFIED IN SUB - CLAUSE (II) RELATING TO HAVING REGARD TO ASSET AND OTHER RELEVANT CIRCUMSTANCES IS MET. IT MAY MENTIONED HERE THAT THE AFORESAID DECISION DOES NOT CONSIDER DECISION OF HON'BLE BOMBAY HIGH COURT AS W ELL AS DECISION OF HON'BLE GUJARAT HIGH COURT AND TO THAT EXTENT, WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT BINDING. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DAULAL MOHATA HUF (SUPRA) DEALT WITH FOLLOWING SUBSTANTIAL QUESTION OF LAW : - B) WHET HER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HON'BLE TRIBUNAL WAS RIGHT IN LAW TO OBSERVE THAT THE MRS. SUNETA S. CHADDA 4 ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING A REFERENCE UNDER SECTION 55A OF THE ACT TO THE DVO FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPERTY? IN PARA NO. 4&5 OF ITS JUDGEMENT OF HON'BLE HIGH COURT HELD AS FOLLOWS: - 4. THE TRIBUNAL IN ITS ORDER DATED 23 RD JULY, 2004 HAS CATEGORICALLY OBSERVED THUS : - THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE REFE RENCE MADE BY THE ASSESSING OFFICER TO THE DVO U/S. 55A IS BAD IN LAW UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS ISSUE, IN OUR CONSIDERED OPINION IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGEMENT IN THE CASE OF RUBAB M. KAZERANI REPORTED IN 91 ITD 429 (MUM)(TM). FURTHER THE ASSESSEE ALSO COVERED BY THE THIRD MEMBER DECISION OF THE PUNE BENCH OF THE TRIBUNAL, THE CASE OF THE KRISHNABAI TINGORE VS. ITO REPORTED IN 101 ITD 317 (PUNE)(TM) WHEREIN IT HAS BEEN HELD THAT REFERE NCE TO DVO CAN ONLY BE MADE IN CASES WHERE THE VALUE OF CAPITAL ASSET SHOWN BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE OF LAND AS ON 1 ST APRIL, 1981 SHOWN BY THE ASSESSEE ON THE BASIS OF APPROVED VALUERS REPORT BEING MORE THAN ITS FAIR MARKET VALU E, REFERENCE UNDER SECTION 55A WAS NOT VALID. RESPECTFULLY FOLLOWING THE PROPOSITIONS LAID DOWN THESE TWO CASES BY THE COORDINATE BENCHES WE UPHOLD THE CONTENTION OF THE ASSESSEE AND HOLD THAT THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO U/S. 55A IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IS BAD IN LAW. THUS, ON THE SOLE GROUNDS OF APPEAL, OF THE ASSESSEE HAS TO BE ALLOWED. BEFORE PASSING, WE HAVE TO MENTION THAT THE ASSESSEE HAS SUBMITTED THE ARGUMENTS. AS ON THE BASIS OF THE LEGA L ASPECTS ITSELF WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WE REFRAIN FROM UNDERTAKING THIS ACADEMIC EXERCISE OF DISPOSING THIS CASE ON MERITS. 5. IN VIEW THEREFORE IS NO MERIT IN THE APPEAL. APPEAL STANDS DISMISSED. 13. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH(SUPRA) HAS HELD ON THIS ISSUE AS FOLLOWS : - UNDER CL. (A) OF S. 55A THE AO IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE AO IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVIDED UNDER CL. (B) OF S. 55A, THE AO HAS TO RECORD AN OPINION THAT (I) THE FA IR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT I S NECESSARY TO MAKE SUCH A REFERENCE. AS CAN BE SEEN FROM THE COMMUNICATION DATED NIL FROM DVO TO THE PETITIONER INSOFAR AS THE FAIR MARKET MRS. SUNETA S. CHADDA 5 VALUE OF THE PROPERTY AS ON 1ST APRIL, 1981 IS CONCERNED, THE PETITIONER HAD CLAIMED THE SAME AT A SUM OF RS. 6,25,0 00 AS PER REGISTERED VALUERS REPORT. THEREFORE, THE AO WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PROPOSED BY THE DVO IS SHOWN AT RS. 3,97,000, WHICH IS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON 1ST APRIL, 1981. THEREFORE, CL. (A) OF S. 55A CANNOT BE MADE APPLICABLE. CLAUSE (B) OF S. 55A CAN BE INVOKED ONLY IN ANY OTHER CASE, NAMELY WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY AN ESTIMATE MAD E BY A REGISTERED VALUER . IN THE FACTS OF THE PRESENT CASE, CL. (B) OF S. 55A ALSO CANNOT BE INVOKED. THEREFORE THERE IS NO QUESTION OF HAVING RECOURSE TO SUB - CL. (II) OF CL. (B) OF S. 55A OF THE ACT. 14. IN VIEW OF THE AFORESAID DECISIONS, WE ARE OF T HE VIEW THAT REFERENCE BY THE ASSESSING OFFICER TO THE DVO U/S. 55A FOR VALUATION OF FMV OF THE PROPERTY AS ON 1.4.1981 IS NOT VALID FOR THE REASONS THAT FMV DECLARED BY THE ASSESSEE AS PER GOVERNMENT REGISTERED VALUERS REPORT WAS MORE THAN THE FMV AS EST IMATED BY THE DVO. SINCE DETERMINATION OF THE FMV AS ON 1.4.1981 WAS BASED ON THE REPORT OF THE DVO, THE SAME IS HELD TO BE INVALID. CONSEQUENTLY, ESTIMATION OF THE FMV OF THE PROPERTY AS ON 1.4.1981 AS MADE BY THE ASSESSEE IS DIRECTED TO BE ACCEPTED. GROU ND NO. 1 OF THE ASSESSEES IS ALLOWED. 5. IT IS THUS CLEAR FROM THE AFORESAID DECISION THAT SECTION 55A COULD BE INVOKED ONLY IF THE LD. ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE DECLARED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VALUE OF THE ASSET. IN THE ASSESSS CASE, THE LD. ASSESSING OFFICER HAS MADE THIS REFERENCE BECAUSE HE FELT THAT THE VALUE OF THE PROPERTY AS ON 1/4/1981 DECLARED BY THE ASSESSEEE IS MORE THAN THE FAIR MARKET VALUE. THUS, THE CONDITION OF CLAUSE (A) OF SECTION 55A I S NOT SATISFIED. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL REFERRED TO ABOVE WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL BY THE REVENUE. 8. THUS, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL AND ALSO ON THE FACTS OF THE ASSESSEES CASE, WE FIND THAT THE CONDITIONS AS ENUMERATED IN CLAUSE (A) OF SECTION 55A ARE ALSO NOT SATISFIED BECAUSE THE ASSESSING OFFICER HAS NOT FORMED ANY OPINION THAT VALUE DECLARED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUERS REPORT IS NOT CORRECT OR LESS THAN FMV. THUS, THE REFERENCE TO THE DVO ITSELF WAS UNWARRANTED IN TERMS OF SECTION 55A. CONSEQUENTLY, THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) IS SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALL OWED. 5. IN VIEW OF THE AFORESAID RATIO LAID DOWN BY THE TRIBUNAL, THE ADDITION MADE ON ACCOUNT OF REFERENCE MADE TO THE DVO UNDER SECTION 55A IS UNCALLED FOR AND, CONSEQUENTLY, THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) IS SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. MRS. SUNETA S. CHADDA 6 6. 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED. 30 TH SEPTEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2013 SD/ - SANJAY AROR A ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 30 TH SEPTEMBER 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / T HE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI