M/s. Sampatmal Gadhaiya, Kolkata V. ITO, Ward - 29(4), Kolkata, Kolkata

ITA 2167/KOL/2009

• Counselvise Citation: 216723514 RSA 2009
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-12-2009
• Court: TRIBUNAL
• Department Lawyers: S M SURANA LD AR SHR
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report

Judgement Text

, C INCOME TAX APPELLATE TRIBUNAL, BENCH- C KOLKATA ( ) BEFORE . , ! SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER '#$ /AND 1 & ' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER $( / ITA NO.2167/KOL/2009 A.Y 2005-06 M/S. SAMPATMAL GADHAIYA PAN: AELPG 9449Q - #' - VERSUS - . I.T.O WARD 29(4), KOLKATA ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* .' / FOR THE APPELLANT +,&* .' / FOR THE RESPONDENT: . / SHRI S. M SURANA, ADVOCATE, LD.AR / SHRI RAJENDRA PRASAD, LD.JCIT/SR.DR /'#0 1 2 /DATE OF HEARING : 05-02-2014 34 1 2 /DATE OF PRONOUNCEMENT: 07/02/2014 5 / ORDER 1 &' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), XVI, KOLKATA IN APPEAL NO. 115/CIT(A)- XVI/IT/29(4)/07-08 DATED 13-11-2009 FOR THE ASSESSM ENT YEAR 2005-06. 2. SHRI S. M SURANA, ADVOCATE, LEARNED AR REPRESE NTED ON BEHALF OF THE ASSESSEE. AND SHRI RAJENDRA PRASAD, LEARNED JCIT/ SR.DR REPRE SENTED ON BEHALF OF THE REVENUE. 3. IN THE ASSESSEES APPEAL, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL:- 1. FOR THAT THE ORDER OF THE LD.CIT(A) IS ARBITRARY , ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD.CIT(A) ERRED IN CONFIRMING THE A CTION OF THE AO MAKING REFERENCE U/S. 142(A) TO THE VALUATION OFFIC ER AND THE VALUATION OFFICER WAS WRONG IN VALUING THE PROPERTY AS ON 1.4 .1981 UNDER REFERENCE MADE U/S. 142(A) THEREBY THE ENTIRE REFER ENCE TO THE VALUATION OFFICER AND ADAPTATION OF THE VALUE DETE RMINED BY THE VALUATION OFFICER IS CONTRARY TO THE LAW AND THEREF ORE, CANNOT BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DETERMINING THE COS T AS ON 1.4. 1981. ITA NO.2167/KOL/09-M/S. SAMPATMAL GADHAIYA 2 3. FOR THAT THE LD.CIT(A) ERRED IN TREATING THE REF ERENCE MADE AS A REFERENCE MADE U/S.55A BY HOLDING THAT IT WAS A SHE AR TYPOGRAPHICAL MISTAKE WHEN THERE WAS NOTHING ON RECORD THAT IT W AS A TYPOGRAPHICAL ERROR AND THE LD. VALUATION OFFICER ALSO PROCEEDED AND DETERMINED THE VALUATION AS IF THE REFERENCE WAS MADE U/S.142(A). 4. FOR THAT THE LD.CIT(A) ERRED IN CONFIRMING THE A CTIONS OF THE AO EVEN OTHERWISE WHEN NO PARTICULAR SECTION OR SUB- SECTION OF SECTION 55A WAS MENTIONED IN THE REFERENCE NOR THERE WAS AN Y SATISFACTION RECORDED BY THE AO BEFORE MAKING A REFERENCE UNDER ANY OF THE PROVISIONS OF THE I.T ACT OR SECTION 55A(B)(II) OF THE I.T ACT. 5. FOR THAT THE LD.CIT(A) ERRED IN CONFIRMING THE A CTION OF THE AO WITH REGARD TO THE REFERENCE MADE TO THE VALUATION OFFICER WHICH WAS BAD IN LAW OR WAS NOT ACCORDANCE WITH LAW AND THERE FORE THE MARKET VALUE AS ON 1.4.81 DETERMINED BY THE VALUATION OFFI CER AS ON 1.4.81 CANNOT BE TAKEN AND CONSIDERED FOR THE PURPOSE OF D ETERMINATION OF CAPITAL GAIN. 6. FOR THAT THE LD.CIT(A) ERRED IN CONFIRMING THE C OST OF THE PROPERTY AS ON 1.4.81 AT AN ARBITRARY FIGURE WHEN THE VALUAT ION OFFICER DID NOT ALLOW THE ASSESSEE ANY OPPORTUNITY OF BEING HEARD B EFORE DETERMINING THE VALUATION AS ON 1.4.81. 7. FOR THAT THE LD.CIT(A) ERRED IN NOT ADMITTING TH E EVIDENCES FILED BEFORE HIM WITH REGARD TO THE COMPARABLE CASES OF T HE MARKET VALUE OF LAND WHEN NO OPPORTUNITY WAS PROVIDED EARLIER FOR SUBMISSION OF SUCH COMPARABLE CASES AND THE ASSESSEE CAME TO KNOW OF T HE COMPARABLE CASES RELIED ON BY THE VALUATION OFFICER ONLY AFTER THE VALUATION REPORT WAS SENT ON THE BASIS OF WHICH THE AO COMPLETED THE ASSESSMENT. 8. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE MARKET VALUE AS ON 1.4.81 DETERMINED BY VALUATION OFFICER WHEN THE LD. VALUATION OFFICER ERRED IN COMPARING THE VALUATION OF THE PROPERTY LO CATED FAR AWAY AND IN A NARROW LAND IGNORING THE VALUATION OF SOME OTH ER PROPERTIES DONE BY THE DEPARTMENTAL VALUE FOR THE PURPOSE OF ACQUI SITION PROCEEDINGS WHICH WERE MORE NEARER AND COMPARABLE TO THE ASSE SSEES PROPERTY AND EVIDENCE WHERE OF MAY FILED. 9. FOR THAT THE LD.CIT(A) ERRED IN ACCEPTING THE V ALUATION AND THE VALUATION OFFICER ERRED IN NOT PROPERLY TAKING THE VALUE OF THE LAND AS WELL AS THE BUILDING THEREOF AND IGNORING THE ACTU AL CONSTRUCTED AREA VERIFIABLE FROM THE MUNICIPAL PLANS AND THE LD.CIT( A) COULD HAVE CONSIDERED THE SAME THE EVIDENCE WHEREOF WAS FILED BEFORE HIM AND SHOULD HAVE TAKEN PROPER MULTIPLIER FOR THE COST O F CONSTRUCTION OF THE BUILDING. 10. FOR THAT THE LD.CIT(A) ERRED IN IGNORING THE R EGISTERED VALUERS REPORT WITHOUT ANY BASIS AND ON MERE PRESUMPTIONS AND EVEN THE LD. VALUATION OFFICER DID NOT RECORD ANY REASON AS TO WHEY HE IGNORED THE REPORT OF THE REGISTERED VALUER. 11. FOR THAT THE LD.CIT(A) HAS NOT REJECTED THE CON TENTION OF THE ASSESSEE WITH REGARD TO THE TOTAL AREA CONSTRUCTE D, THEREFORE, SHOULD HAVE ACCEPTED THE SAID CONSTRUCTED AREA FOR THE PUR POSE OF DETERMINATION OF THE MARKET VALUE OF THE BUILDING AS ON 1.4.81. ITA NO.2167/KOL/09-M/S. SAMPATMAL GADHAIYA 3 12. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE DETERMINATION OF THE MARKET VALUE AS ON 1.4.81 WAS NOT LAWFUL AND PROPER. THEREFORE, THE ORDER OF THE CIT(A) BE MODI FIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. 4. IT WAS SUBMITTED BY THE LEARNED AR FOR THE AS SESSEE THAT THE ASSESSEE HAD SOLD ITS PROPERTY AND OFFERED FOR LONG TERM CAPITAL GAIN S. IT WAS SUBMITTED BY HIM THAT THE AO HAD REFERRED THE VALUATION OF THE PROPERTY AS ON 1 -4-1981 TO THE DVO BY INVOKING THE PROVISIONS OF SECTION 55A OF THE I.T ACT 1961. IT W AS THE SUBMISSION THAT THE PROVISIONS OF SECTION 55A OF THE I.T ACT 1961 COULD NOT BE INVOKE D FOR THE PURPOSE OF VALUATION OF THE PROPERTY AS ON 1.4.1981 FOR COMPUTING THE CAPITAL G AINS. HE HAD RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT I N THE CASE OF CIT VS. UMEDBHAI INTERNATIONAL P. LTD REPORTED IN (2011) 330 ITR 506 (CAL)., WHEREIN THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT HAS HELD AS FOL LOW:- 6. THE COMMISSIONER OF INCOME-TAX (APPEALS) AS WEL L AS THE LEARNED TRIBUNAL HAS COME TO FACT FINDINGS THAT TH E DEPARTMENT HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT THE ASSESSING O FFICER HAD FORMED AN OPINION HAVING REGARD TO THE NATURE OF THE ASS ESSMENT AND CONSIDERING THE OTHER RELEVANT CIRCUMSTANCES FOR MAKING REFERENCE TO THE DEPARTMENTAL VALUATION OFFICE UNDER SECTION 55A OF THE SAID ACT. THIS CONCURRENT FACT FINDINGS OF TWO AUTHORITIES A RE NOT QUESTIONED TO BE PERVERSE. 7. THIS COURT CANNOT MAKE ANY ENDEAVOUR TO MAKE ANY FACT FINDING NOR DOES IT WISH TO DO IN THE ABSENCE OF PLEA OF P ERVERSITY. IN THIS CASE THE ADMITTED POSITION IS THAT THE ASSESSEE SUBMITTE D VALUATION MADE BY THE REGISTERED VALUER. HENCE, CLAUSE(A) OF THE AF ORESAID SECTION IS APPLICABLE IN THIS CASE WHICH IS SET OUT HEREUNDER : 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSE OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUA TION OFFICER. (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAI MED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE B Y A REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE OF SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE. (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF THE OPINION. (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEED S THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET 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 AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. THUS, IT IS CLEAR BASED ON THE AFORESAID CONCURRE NT FACT FINDINGS THAT THE FORMATION OF OPINION OF THE ASSESSING OFFI CER THAT THE VALUE ITA NO.2167/KOL/09-M/S. SAMPATMAL GADHAIYA 4 CLAIMED BY THE ASSESSEE LESS THAN ITS FAIR MARKET VALUE IS SINE QUA NON. REASONS RECORDED AFTER ORDER OF REFERENCE FOR VALUATION OF THE REGISTERED VALUER IS NOT THE SUBSTITUTE OF PRE-DECI SIONAL FORMATION OF OPINION. THEREFORE, THE LEARNED TRIBUNAL HAS CORRECTLY HELD ACCEPTING THE DECISION OF THE FIRST APPELLATE AUTHORITY THAT ON T HE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS NO APPLICABILITY OF CLAUSE (B) OF SECTION 55A WHICH IS MEAN FOR OTHER PURPOSE. BOTH THE AUTHORITIES HAVE CONSIDERED THE WELL SETTLED PRINCIPLES OF LAW REGARDING THE APPLICABILITY OF SECTION 55A AND VARIOUS JUDGMENTS OF THE COURT ON THIS ISSUE HAVE BEEN CONSIDERED. WE HAVE NO DOUBT THOS E JUDGMENTS HAVE BEEN APPROPRIATELY APPLIED. WHEN THE LAW IS SETTLED AND ALSO THE PROVISIONS OF THE AFORESAID SECTION 55A ARE CLE AR WE DO NOT THINK THAT ANY POINT OF LAW NEEDS TO BE DECIDED IN THIS CASE. HENCE, WE ARE NOT INCLINED TO ADMIT THE APPEAL. ACC ORDINGLY, THE SAME IS DISMISSED. 4.1 HE ALSO RELIED UPON THE DECISION OF THE HONBLE GUJRAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH VS. ITO & ANR. REPORTED IN ( 2009) 310 ITR 31(GUJ), WHEREIN THE HONBLE GUJRAT HIGH COURT HAS HELD AS FOLLOW:- 13. THE RECORD OF THE PETITION DOES NOT INDICATE AS TO WHAT WAS THE OPINION FORMED BY THE ASSESSING OFFICER BEFORE MAKI NG REFERENCE TO THE DVO. IT IS ONLY FROM THE UNDATED COMMUNICATION OF THE DVO THAT ONE GATHERS THAT THE VALUER HAS UNDERTAKEN ESTIMAT ION OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON APRIL 1, 1981 AN D DECEMBER 28, 1995. HOWEVER, IN THE AFFIDAVIT-IN-REPLY THE ASSESS ING OFFICER HIMSELF STATES TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY, A REFERENCE WAS MADE BY THIS OFFICE TO THE VALUATION OFFICER O N APRIL 26, 1996, SINCE, ACCORDING TO THIS OFFICE, THE VALUE DECLARED BY THE ASSESSEE AS ON THE DATE OF EXECUTION AND REGISTRATION OF THE SA LE DEED WAS LOWER BY MORE THAN 25 PER CENT. THE PETITIONER FILED A RETU RN ON AUGUST 27, 1996, FOR THE ASSESSMENT YEAR 1996-97 AND THE FAIR MARKET VALUE AS ON APRIL 1, 1981, WAS SHOWN AT RS.6,25,000. THE CAP ITAL GAIN WAS WORKED OUT AT RS.17,43,750 TAKING THE SALE VALUE OF THE PROPERTY AT RS.17,50,000 AS PER THE BANAKHAT DATED NOVEMBER 29, 1994. IN THE ABOVE BACKGROUND OF FACTS IT IS HUMBLY SUBMITTED TH AT SINCE THE CAPITAL GAIN IS REQUIRED TO BE WORKED OUT ON THE FAIR MARKE T VALUE OF THE PROPERTY ON THE DATE OF THE SALE DEED, RESPONDENT N O.1 HAS ACTED WITHIN JURISDICTION FOR MAKING REFERENCE TO THE VAL UATION OFFICER UNDER THE PROVISIONS OF SECTION 55A OF THE ACT. 14. THEREFORE, IT IS APPARENT THAT THE ASSESSING O FFICER HAD, AT NO POINT OF TIME, FORMED AN OPINION THAT THE FAIR MAR KET VALUE, IN SUBSTITUTION OF THE COST OF ACQUISITION, AS CALLED BY THE ASSESSEE WAS REQUIRED TO BE DISTURBED BECAUSE PRESCRIBED PARAMET ERS WERE FULFILLED. IN FACT, AS CAN BE SEEN FROM THE AFFIDAVIT-IN-REPL Y THE ONLY GROUND ON WHICH REFERENCE WAS MADE TO THE VALUATION OFFICER WAS THAT THE VALUE ITA NO.2167/KOL/09-M/S. SAMPATMAL GADHAIYA 5 DECLARED BY THE ASSESSEE AS ON THE DATE OF THE EXEC UTION AND REGISTRATION OF THE SALE DEED WAS LOWER BY MORE TH AN 25 PER CENT. THERE IS NO PROVISION IN THE ACT WHICH PERMITS THE ASSESSING OFFICER TO DISTURB THE SALE CONSIDERATION, AT LEAST SECTION 55 A OF THE ACT CANNOT BE INVOKED FOR THE SAID PURPOSE. 4.2 IT WAS THE SUBMISSION THAT CONSEQUENTLY THE AO HAVING VIOLATED THE PROVISIONS OF SECTION 55A OF THE ACT, THE ADDITION SUSTAINED BY T HE LD.CIT(A) ON THE BASIS OF THE DVOS REPORT WAS LIABLE TO BE DELETED. 5. IN REPLY, THE LEARNED JCIT/SR.DR HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE AO AND THE LD. CIT(A)... 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE CONDITIONS MENTIONED IN SECT ION 55A OF THE ACT HAVE NOT BEEN SATISFIED BY THE AO. CONSEQUENTLY, IN VIEW OF THE D ECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF UMEDBHAI INTERNA TIONAL P. LTD (REFER TO SUPRA) AS ALSO THE DECISION OF THE HONBLE GUJRAT HIGH COURT IN TH E CASE OF HIABEN JAYANTILAL SHAH (REFER TO SUPRA), WE ARE OF THE VIEW THAT THE REFERENCE TO THE DVO BY THE AO IS NOT SUSTAINABLE IN LAW. CONSEQUENTLY, THE ADDITION MADE BY THE AO A ND CONFIRMED BY THE LD.CIT(A) ON THE BASIS OF THE DVOS REPORT STANDS DELETED. 7. NO OTHER ISSUES HAVE BEEN SPECIFICALLY ARGUED BY THE LD.AR FOR THE ASSESSEE BEFORE US. CONSEQUENTLY, THE SAME ARE DISMISSED. 8. IN THE RESULT, THE ASSESSEES APPEAL IN ITA N O. 2167/KOL/2009 FOR THE ASSESSMENT YEAR 2005-06 STANDS ALLOWED AS STATED ABOVE. 5 / 6 /' 7 8 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 07/0 2/2014 SD/- SD/- [ . , ! ] [ 1&' , ! ] [ ABRAHAM P.GEORGE, ACCOUNTANT MEMBER ] [GEORGE MATHAN, JUDICIAL MEMBER ] 2 / DATED 07/02/2014 ITA NO.2167/KOL/09-M/S. SAMPATMAL GADHAIYA 6 5 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : M/S. SAMPATMAL GADHAIYA C/O S.M SURANA, ADVOCATE, P-38, INDIA EXCHANGE PLACE, 3 RD FL., KOL-1. 2 +,&* / THE RESPONDENT- I.T.O W 29(4), KOLKATA. 3 4. . .5' / THE CIT, .5' ( )/ THE CIT(A) 5 . #<.7 +.' / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, 5'// BY ORDER, $ /ASSTT REGISTRAR