Shri Gunvantlal Ratanchand (HUF), Ahmedabad V. The Dy.CIT.,Circle-10(1)., Ahmedabad

ITA 2205/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0461 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 14-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 143(1); 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND M.V. NAYAR, ACCOUNTANT MEMBER) ITA NO.87/AHD/2005 WITH CO NO.53/AHD/2005 [ASSTT.YEAR : 1996-1997] ITO, WARD-11(4) AHMEDABAD. VS. SHRI SANDIP RATACHAND, HUF 32, NEW CLOTH MARKET O/S.RAIPUR GATE, AHMEDABAD. ITA NO.2205/AHD/2009 [ASSTT.YEAR : 1996-1997] SHRI GUNVANTLAL RATANCHAND (HUF), NEW CLOTH MARKET AHMEDABAD. VS. DCIT, CIR.10(1) AHMEDABAD. REVENUE BY : SHRI GOVIND SINGHAL ASSESSEE BY : SHRI S.N.SOPARKAR O R D E R PER R.V.EASWAR, VICE-PRESIDENT : ALL THESE THREE APPEALS RELATE TO THE ASSESSMENT YEAR 1996-97. SINCE THEY INVOLVE CE RTAIN COMMON ISSUES THEY ARE DISPOSED OF BY A SINGLE ORDER FOR THE SAKE OF C ONVENIENCE. 2. THE ASSESSEES ARE GUNVANTLAL RATANCHAND (HUF) AN D SANDIP RATANCHAND (HUF). THE KARTAS OF THESE FAMILIES VIZ . GUNVANTLAL RATANCHAND AND SANDIP RATANCHAND ARE BROTHERS. THE FAMILIES H AD 52.5% AND 47.5% IN A PROPERTY KNOWN AS KAMAL, MAITRI PATH SOCIETY, MIT HAKALI, AHMEDABAD. DURING THE PREVIOUS YEAR ENDED ON 31-3-1996, WHICH IS THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE PROPERTY WAS SOLD UNDER A REGISTERED SALE DEED DATED 23-11-1995. WHILE WORKING OUT THE CAPIT AL GAINS, THE ASSESSEES OPTED FOR SUBSTITUTING THE COST OF ACQUISITION OF T HE PROPERTY BY THE FAIR MARKET VALUE AS ON 1-4-1981 UNDER SECTION 55(2)(B) OF THE INCOME TAX ACT. WE ARE NOT REFERRING TO THE SALE PRICE OR THE OTHER EXPENS ES CLAIMED WHILE COMPUTING THE CAPITAL GAINS BECAUSE THEY ARE NOT SUBJECT MATT ER OF DISPUTE. IN SO FAR AS THE FAIR MARKET VALUE AS ON 1-4-1981 IS CONCERNED, THE CLAIM OF THE ASSESSEES WAS THAT THE LAND SHOULD BE VALUED AT THE RATE OF RS.12 00/- PER SQUARE METER AND THE PAGE - 2 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -2- BUILDING THEREON SHOULD BE VALUED AT THE RATE OF RS .3000/- PER SQUARE METER. THE ASSESSEES CLAIM WAS SUPPORTED BY THE REPORT OF THE REGISTERED VALUER DATED 8-11-1995. 3. THE ASSESSING OFFICER REFERRED THE VALUATION OF THE PROPERTY TO THE DISTRICT VALUATION OFFICER, HEREINAFTER REFERRED TO AS DVO UNDER SECTION 55A(B)(II) OF THE ACT. THE REFERENCE WAS MADE BY O RDER DATED 18-3-1999. THE REFERENCE WAS MADE IN THE NAMES OF GUNVANTLAL RATAN CHAND (HUF) AND SANDIP RATANCHAND (HUF), THOUGH IT WOULD APPEAR THAT NO SE PARATE REFERENCE WAS SPECIFICALLY MADE BY THE AO IN THE COURSE OF THE AS SESSMENT PROCEEDINGS OF SANDIP RATANCHAND (HUF) AND THAT THE REFERENCE WOUL D APPEAR TO HAVE BEEN MADE SPECIFICALLY IN THE ASSESSMENT PROCEEDINGS OF GUNVANTLAL RATANCHAND (HUF). BE THAT AS IT MAY, THE DVO VALUED THE FAIR MARKET VALUE OF THE LAND AS ON 1-4-1981 AT RS.1,100/- PER SQUARE METER AND RS.6 94.36 PER SQUARE METER IN RESPECT OF THE BUILDING. THE RESULT WAS THAT THE C APITAL GAINS WERE HIGHER THAN WHAT WAS DECLARED BY THE ASSESSEES. 4. THE ASSESSEE GUNVANTLAL RATANCHAND (HUF) CARRIED THE MATTER IN APPEAL UPTO THE TRIBUNAL AND BY ORDER DATED 3-2-2006 IN IT A NO.675/AHD/2001, THE TRIBUNAL SET ASIDE THE QUESTION OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1- 4-1981 TO THE CIT(A) WITH THE DIRECTION THAT HE SHO ULD DISPOSE OF THE SAME AFTER GIVING DUE OPPORTUNITY TO THE DVO OF BEING HEARD. THE CIT(A) AFTER HEARING THE DVO IN ACCORDANCE WITH THE DIRECTIONS OF THE TR IBUNAL, IN HIS IMPUGNED ORDER DATED 29-6-2009 ESTIMATED THE FAIR MARKET VAL UE OF THE BUILDING AT RS.2000/- PER SQUARE METER AND DIRECTED THE AO TO C OMPUTE THE CAPITAL GAINS ACCORDINGLY. IT APPEARS THAT DUE TO OVERSIGHT THE CIT(A) DID NOT SPECIFICALLY DECIDE THE FAIR MARKET VALUE OF THE LAND AS ON 1-4- 1981. 5. THE ASSESSEE GUNVANTLAL RATANCHAND (HUF) IS IN A PPEAL AGAINST THE AFORESAID ORDERS OF THE CIT(A) IN ITA NO.2205/AHD/2 009 AND HAS FIRSTLY PAGE - 3 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -3- CONTENDED THAT THE CIT(A) OUGHT TO HAVE ACCEPTED TH E VALUATION REPORT OF THE REGISTERED VALUER ON THE BASIS OF WHICH THE ASSESSE E CLAIMED THE FAIR MARKET VALUE OF THE LAND AND BUILDING AS ON 1-4-1981. IT IS ALTERNATIVELY CONTENDED THAT THE REFERENCE MADE TO THE DVO IS INVALID IN VIEW OF THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN HIRABEN JAYANTILAL VS . ITO, 310 ITR 31. THERE IS HOWEVER NO APPEAL BY THE DEPARTMENT. 6. IN THE CASE OF SANDIP RATANCHAND (HUF), THE FACT S ARE SLIGHTLY DIFFERENT BUT THAT DOES NOT AFFECT THE ULTIMATE CONTROVERSY. IN THIS CASE, THE ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 143(1) ON 4- 11-1996 ACCEPTING THE INCOME DECLARED BY THE ASSESSEE, INCLUDING THE CAPI TAL GAINS, ARISING ON SALE OF THE PROPERTY IN WHICH THE ASSESSEE HAD 47.5%. THE ASSESSEE HAD CLAIMED THE FAIR MARKET VALUE OF THE LAND AS ON 1-4-1981 AT RS. 1,200/- PER SQUARE METER AND THAT OF THE BUILDING AT RS.3,000/- PER SQUARE METER ON THE BASIS OF THE SAME REPORT OF THE REGISTERED VALUER ON THE BASIS OF WHI CH GUNVANTLAL RATANCHAND (HUF) HAD COMPUTED THE CAPITAL GAINS. SUBSEQUENTL Y, ON THE BASIS OF THE VALUATION REPORT OF THE DVO FURNISHED IN THE CASE O F GUNVANTLAL RATANCHAND (HUF), THE ASSESSMENT CAME TO BE REOPENED UNDER SEC TION 147 AND IN THE REOPENED ASSESSMENT THE CAPITAL GAINS WERE COMPUTED ON THE SAME BASIS AS IN THE CASE OF GUNVANTLAL RATANCHAND (HUF), BY ADOPTIN G RS.694.36 PER SQUARE METER IN RESPECT OF THE BUILDING AND RS.1,100/- PER SQUARE METER IN RESPECT OF THE LAND, BOTH BEING THE FAIR MARKET VALUE AS ON 1- 4-1981. AN APPEAL WAS FILED BEFORE THE CIT(A) QUESTIONING THE JURISDICTION OF T HE AO TO REOPEN THE ASSESSMENT UNDER SECTION 147, QUESTIONING THE VALID ITY OF THE REASSESSMENT ON THE GROUND THAT NO NOTICE UNDER SECTION 143(2) HAD BEEN ISSUED BY THE AO WITHIN ONE YEAR FROM THE DATE OF FILING THE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 AND ALSO CHALLENGING THE COMPUTATION OF THE FAIR MARKET VALUE OF THE LAND AND THE BUILDING AS ON 1-4-1981. BY ORDE R DATED 8-10-2004, WHICH IS THE IMPUGNED ORDER, THE CIT(A) DISMISSED THE CHALLE NGE TO THE REOPENING OF THE ASSESSMENT. AS REGARDS THE VALIDITY OF THE REASSES SMENT ORDER WHICH WAS PAGE - 4 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -4- CHALLENGED ON THE GROUND THAT THE NOTICE UNDER SECT ION 143(2) HAD NOT BEEN ISSUED WITHIN THE PRESCRIBED TIME, HE REFUSED TO EN TERTAIN THE GROUND AS IT WAS TAKEN NOT IN THE ORIGINAL GROUNDS OF APPEAL BUT BY WAY OF ADDITIONAL GROUND. AS REGARDS THE MERITS, HE HELD THAT THE AO WAS NOT BOU ND BY THE REPORT OF THE DVO FURNISHED IN THE CASE OF GUNVANTLAL RATANCHAND (HUF ), THAT IN THE CASE OF THE ASSESSEE, THE AO HAD NOT MADE A SPECIFIC REFERENCE TO THE DVO EITHER AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS OR IN T HE REOPENED PROCEEDINGS AND THEREFORE THE REPORT OF THE DVO DID NOT HAVE ANY EV IDENTIARY VALUE. HAVING THUS ELIMINATED THE DVOS REPORT, THE CIT(A) HELD T HAT WHAT REMAINED WAS ONLY THE REGISTERED VALUERS REPORT WHICH REQUIRED TO BE ACCEPTED. ACCORDINGLY, HE DIRECTED THE AO TO COMPUTE THE CAPITAL GAINS BY ADOPTING THE FAIR MARKET VALUE OF THE LAND AS ON 1-4-1981 AT RS.1,200/- PER SQUARE METER AND THAT OF THE BUILDING AT RS.3000/- PER SQUARE METER. 7. BOTH THE ASSESSEE [SANDIP RATANCHAND (HUF)] AND THE REVENUE ARE IN APPEAL AGAINST THE AFORESAID ORDER OF THE CIT(A). IN ITA NO.87/AHD/2005 THE REVENUE HAS TAKEN GROUNDS QUESTIONING THE DIRECTION OF THE CIT(A) TO THE AO TO ADOPT THE FAIR MARKET VALUE OF THE LAND AS ON 1-4-1 981 AT RS.1,200/- PER SQUARE METER AS AGAINST AND RS.3000/- PER SQUARE METER EST IMATED BY THE DVO. IT HAS ALSO BEEN CONTENDED THAT THE CIT(A) ERRED IN NOT CO NSIDERING THE CASE OF THE CO- OWNER WHERE SIMILAR ISSUE WAS INVOLVED. THE ASSESS EE IN ITS CO NO.53/AHD/2005 HAS TAKEN GROUNDS CHALLENGING THE VA LIDITY OF THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND THE VALIDITY OF THE REASSESSMENT ORDER DATED 20-3-2002 ON THE GROUND TH AT THERE WAS NO SERVICE OF A NOTICE UNDER SECTION 143(2) WITHIN THE PRESCRIBED PERIOD AND ALSO SUPPORTING THE DECISION OF THE CIT(A) ON MERITS, VIZ. ON THE Q UESTION OF ESTIMATING THE FAIR MARKET VALUE OF THE LAND AND THE BUILDING AS ON 1-4 -1981. 8. WE MAY STRAIGHT AWAY SAY THAT THE LEARNED COUNSE L FOR THE ASSESSEE STATED BEFORE US THAT HE WOULD NOT PRESS THE FIRST TWO GROUNDS IN THE CROSS PAGE - 5 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -5- OBJECTION FILED BY THE SANDIP RATANCHAND (HUF) IN C O NO.53/AHD/2005 WHICH QUESTION THE VALIDITY OF THE REOPENING OF THE ASSES SMENT AND THE VALIDITY OF THE REASSESSMENT ORDER DATED 20-3-2002. THESE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND NO.3 AND 4 MERELY SUPPORT, WITHOUT ASKING ANY FURTHER RELIEF, THE DECISION OF THE CIT(A) ON THE QUESTION OF FAIR MARKET VALUE OF THE LAND AND THE BUILDING AS ON 1-4-1981. THEY ARE DISMISSED AS INFRUCTUOUS OR ACADEMIC. THE RESULT WOULD BE THAT CO NO.53/AHD/2005 IS DISMI SSED. 9. THAT LEAVES US WITH THE COMMON QUESTION INVOLVED IN BOTH THE APPEALS VIZ. THE ESTIMATE OF THE FAIR MARKET VALUE OF THE L AND AND BUILDING AS ON 1-4- 1981. 10. THE CONTENTION OF THE LEARNED COUNSEL FOR THE A SSESSEE GUNVANTLAL RATANCHAND (HUF) FIRSTLY WAS THAT THE REFERENCE MAD E TO THE DVO WAS INVALID IT IS POINTED OUT THAT THE REFERENCE HAS BEEN MADE UNDER SECTION 55A(B)(II) OF THE INCOME TAX ACT WHICH GIVES POWER TO THE AO TO R EFER THE QUESTION OF FAIR MARKET VALUE OF A CAPITAL ASSET TO THE DVO IF HE IS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES, IT IS NECESSARY TO DO SO. THE CONTENTION IS THAT CLAUSE (B) WOULD COME INTO PLAY ONLY IF CLAUSE (A) IS NOT APPLICABLE AS IS CLEAR FR OM THE WORDS IN ANY OTHER CASE APPEARING IN THE BEGINNING OF CLAUSE (B) AND THAT A PERUSAL OF CLAUSE (A) WOULD SHOW THAT IT IS APPLICABLE WHEN THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER AND THE AO IS OF THE OPINION THAT THE VALUE SO CLAIMED IS L ESS THAN ITS FAIR MARKET VALUE. THE SUBMISSION IS THAT SINCE THE FAIR MARKET VALUE OF THE ASSET AS ON 1-4-1981 AS CLAIMED BY THE ASSESSEE WAS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, NO REFERENCE CAN BE MADE BY THE AO TO THE DVO UNDER CLAUSE (B). IT IS FURTHER CONTENDED THAT EVEN ON M ERITS CLAUSE (A) CANNOT APPLY BECAUSE THE AO IS OF THE OPINION THAT THE FAIR MARK ET VALUE OF THE LAND AND BUILDING AS ON 1-4-1981 AS CLAIMED BY THE ASSESSEE IS MORE THAN ITS FAIR MARKET PAGE - 6 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -6- VALUE, WHEREAS THE CONDITION FOR REFERENCE TO THE D VO UNDER THIS CLAUSE IS THAT THE AO SHOULD HOLD THE OPINION THAT THE FAIR MARKET VALUE CLAIMED BY THE ASSESSEE IS LESS THAN ITS REAL FAIR MARKET VALUE. IN OUR OPINION CLAUSE (A) OF THE SECTION CANNOT APPLY BECAUSE THE FAIR MARKET VALUE OF THE LAND AND BUILDING AS ON 1-4-1981 AS CLAIMED BY THE ASSESSEE IN ACCORDANC E WITH THE REPORT OF THE REGISTERED VALUER IS RS.1200/- PER SQUARE METER AND RS.3000/- PER SQUARE METER RESPECTIVELY, WHEREAS IN THE OPINION OF THE AO IT S HOULD BE MUCH LESS THAN THAT. IN OTHER WORDS THE AO DOES NOT HOLD THE OPINION THA T THE FAIR MARKET VALUE CLAIMED BY THE ASSESSEE IS LESS THAN THE REAL OR AC TUAL FAIR MARKET VALUE, WHICH IS THE REQUIREMENT OF THE SECTION. ON THE CONTRARY , HE IS OF THE OPINION THAT THE REAL OR ACTUAL FAIR MARKET VALUE AS ON 1-4-1981 IS LESS THAN THE VALUE CLAIMED BY THE ASSESSEE. THE AO CANNOT REFER THE MATTER TO TH E DVO UNDER CLAUSE (A) ON THE BASIS OF THIS OPINION HELD BY HIM. THIS CONTEN TION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS FULLY SUPPORTED BY THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH VS. ITO , (2009) 310 ITR 31. THE FOLLOWING PASSAGES FROM PAGE 35 OF THE REPORT ARE R ELEVANT: UNDER CLAUSE (A)OF SECTION 55A OF THE ACT, THE ASS ESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFF ICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE I S IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER IS THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVIDED UNDER CLAUSE (B) OF SEC TION 55A OF THE ACT, THE ASSESSING OFFICER HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET A S CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OR BY MORE TH AN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY T O MAKE SUCH A REFERENCE. AS CAN BE SEEN FROM THE COMMUNICATION DATED NIL (AN NEXURE D) FROM RESPONDENT NO.2-DVO TO THE PETITIONER IN SO FAR AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON APRIL 1, 1981 IS CONCERNED, T HE PETITIONER HAD CLAIMED THE SAME AT A SUM OF RS.6,25,000 AS PER THE REGISTERED VALUERS REPORT. THEREFORE THE AO WAS REQUIRED TO FORM AN O PINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PAGE - 7 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -7- PROPOSED BY THE DVO IS SHOWN AT RS.3,97,000 WHICH I S LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON APRIL 1, 1 981. THEREFORE, CLAUSE (A) OF SECTION 55A OF THE ACT CANNOT BE MADE APPLICABLE. CLAUSE (B) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY I N ANY OTHER CASE, NAMELY, WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUE R. IN THE FACTS OF THE PRESENT CASE, CLAUSE (B) OF SECTION 55A OF THE ACT ALSO CANNOT BE INVOKED. THEREFORE, THERE IS NO QUESTION OF HAVING RECOURSE TO SUB- CLAUSE (II) OF CLAUSE (B) OF SECTION 55A OF THE ACT . THE AFORESAID JUDGMENT DIRECTLY AND FULLY APPLIES T O THE FACTS OF THE PRESENT CASE. HERE ALSO THE CLAIM OF THE ASSESSEES REGARDI NG THE FAIR MARKET VALUE OF THE ASSET AS ON 1-4-81 IS SUPPORTED BY THE REPORT OF RE GISTERED VALUER. THE AO FORMED THE OPINION THAT THE FAIR MARKET VALUE OF TH E ASSET AS ON 1-4-1981 WAS MORE THAN THE ACTUAL FAIR MARKET VALUE OF THE ASSET . UNLESS HE HOLDS THE OPINION THAT THE FAIR MARKET VALUE CLAIMED BY THE ASSESSEE IS LESS THAN THE REAL OR ACTUAL FAIR MARKET VALUE OF THE ASSET AS ON 1-4-1981, HE C ANNOT MAKE A REFERENCE TO THE DVO UNDER CLAUSE (A) OF SECTION 55A. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT, WE HOLD THAT THE RE FERENCE MADE BY THE AO TO THE DVO IN THE CASE GUNVANTLAL RATANCHAND (HUF) IS NOT VALID. THE SAME VIEW HAS TAKEN BY THE AHMEDABAD BENCH OF THE TRIBUN AL IN THE CASE OF SHRI RASHID S. MEDORA VS. ACIT IN ITA NO.662/AHD/2001 DA TED 9-11-2006 (ASSESSMENT YEAR 1994-1995) FOLLOWING THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SAJJANKUMAR M. HARLALKA VS. JCIT (100 ITD 148). 11. THE LEARNED SR-DR, HOWEVER, SUBMITTED THAT THE REFERENCE WAS NOT UNDER CLAUSE (A) OF SECTION 55A BUT WAS UNDER CLAUS E (B) AND PARTICULARLY UNDER SUB-CLAUSE (II). IT WAS SUBMITTED THAT A REFERENCE UNDER CLAUSE (B) OF THE SECTION CAN BE MADE TO THE DVO EVEN WHERE THE AO IS OF THE OPINION THAT THE FAIR MARKET VALUE OF AN ASSET AS ON 1-4-1981 AS CLAIMED BY THE ASSESSEE ON THE BASIS OF A REGISTERED VALUERS REPORT WAS MORE THAN ITS A CTUAL OR REAL FAIR MARKET VALUE ON THAT DAY. EVEN THIS ARGUMENT CANNOT BE ACCEPTED IN THE LIGHT OF THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN M.V.S HAH, OFFICIAL LIQUIDATOR, PAGE - 8 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -8- ANAND MILLS LTD. VS. U.J.MATAIN AND ANR., (1994) 20 9 ITR 568. IN THIS JUDGMENT THE HONBLE HIGH COURT EXAMINED THE SCOPE AND AMBIT OF CLAUSE (B) OF SECTION 55A. THEIR LORDSHIPS STARTED BY ASSUMIN G THAT CLAUSE (B)(II) APPLIES ALSO TO A CASE WHERE THE VALUE OF THE ASSET AS CLAI MED BY THE ASSESSEE WAS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED V ALUER. THEIR LORDSHIPS HOWEVER OBSERVED THAT A REFERENCE UNDER THE ABOVE C LAUSE COULD HAVE BEEN MADE ONLY IF THE AO WAS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT WAS NECE SSARY TO REFER THE VALUATION TO THE DVO. IN THE PRESENT CASE, THE ASSET CONCERN ED IS A SIMPLE ASSET, SUCH AS LAND AND BUILDING. THERE IS NO COMPLEXITY OR PECUL IARITY ATTACHED TO THE ASSET SO AS TO JUSTIFY VALUATION THEREOF BY A DVO, EVEN I F THE VALUATION OF THE ASSET AS ON 1-4-1981 IS CONSIDERED BY THE AO TO BE MUCH LESS THAN WHAT HAS BEEN CLAIMED BY THE ASSESSEE ON THE BASIS OF A REPORT OF THE REGISTERED VALUER. THUS, EVEN ASSUMING THAT THE LEARNED SR-DR IS RIGHT IN HI S SUBMISSION THAT A REFERENCE CAN BE MADE TO THE DVO UNDER CLAUSE (B)(I I) EVEN IN CASES WHERE THE ASSESSEES VALUATION IS SUPPORTED BY A REGISTERED V ALUERS REPORT AND EVEN WHERE THE FAIR MARKET VALUE AS ON 1-4-1981, AS PER THE RE GISTERED VALUERS REPORT, IS CONSIDERED TO BE MORE THAN THE ACTUAL FAIR MARKET V ALUE OF THE ASSET AS ON THAT DATE, SINCE THE CONDITIONS OF CLAUSE (B)(II) HAVE N OT BEEN SATISFIED, THE REFERENCE WAS NOT VALID. 12. THE LEARNED SR-DR WOULD HOWEVER CONTEND THAT TH E AO HAS MERELY QUOTED A WRONG SECTION FOR OBTAINING THE VALUATION REPORT OF THE DVO AND THAT THE REFERENCE WAS IN FACT UNDER SECTION 133(6). WE HAVE EXAMINED THE CONTENTION BUT FIND, AS POINTED OUT THE LEARNED COU NSEL FOR THE ASSESSEE THAT UNDER THIS PROVISION THE AO HAS THE POWER TO ONLY T O CALL FOR ANY INFORMATION FROM ANY PERSON, INCLUDING A BANKING COMPANY OR ANY OFFICER THEREOF, IN RELATION TO SUCH POINTS OR MATTERS AS IN THE OPINIO N OF THE AO WOULD BE USEFUL OR RELEVANT TO ANY INQUIRY OR PROCEEDINGS UNDER THE INCOME TAX ACT. AS NOTED, THE AO HAS ONLY TO ASK FOR INFORMATION FROM THE DVO BUT NOT AN OPINION AS TO PAGE - 9 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/200 5 AND ITA NO.2205/AHD/2009 -9- THE VALUATION OF THE PROPERTY. VALUATION IS AN OPI NION EXPRESSED BY AN EXPERT AND IT CANNOT BE EQUATED WITH INFORMATION. THEREF ORE, THE POWER TO ASK FOR THE OPINION OF AN EXPERT IS NOT REFERABLE TO SECTION 13 3(6) OF THE ACT. THIS CONTENTION OF THE LEARNED SR-DR ALSO FAILS. 13. IT WAS ALSO CONTENDED ON BEHALF OF THE DEPARTME NT THAT EVEN IF THE REFERENCE TO THE DVO WAS INVALID FOR ANY REASON, TH E REPORT OF THE DVO CAN BE LOOKED INTO BY THE AO FOR THE PURPOSE OF MAKING AN ASSESSMENT. IT WAS CONTENDED THAT ANY EVIDENCE, THOUGH UNLAWFULLY OBTA INED, CAN BE RELIED UPON FOR THE PURPOSE OF MAKING THE ASSESSMENT. EVEN IF THIS ARGUMENT IS UPHELD, THE DEPARTMENT NOT HAVING APPEALED AGAINST THE ORDER OF THE CIT(A) IN THE CASE OF GUNVANTLAL RATANCHAND (HUF) WHERE HE HAS NOT ACCEPT ED THE VALUATION OF THE DVO AND HAS DISTURBED THE SAME, THE DEPARTMENT CANN OT ASK FOR RESTORATION OF THE ASSESSMENT ORDER BASED ON THE DVOS REPORT. IT MAY BE RECALLED THAT IN THAT CASE THE CIT(A) HAD DIRECTED THE AO TO ADOPT THE FA IR MARKET VALUE OF THE BUILDING AT RS.2,000/- PER SQUARE METER AS ON 1-4-1 981 AND SO FAR AS THE LAND IS CONCERNED, HE DID NOT EXPRESS ANY OPINION EVEN THOU GH THE POINT WAS RAISED BEFORE HIM BY THE ASSESSEE. MOREOVER, IN THE APPE AL OF THE DEPARTMENT IN THE CASE OF SANDIP RATANCHAND (HUF), THE DEPARTMENT HAS QUESTIONED ONLY THE LAND VALUE ADOPTED BY THE CIT(A) AT RS.1,200/- PER SQUAR E METER AS ON 1-4-1981 AND HAS NOT SPECIFICALLY QUESTIONED THE BUILDING VALUE ADOPTED BY THE CIT(A) AT RS.3,000/- PER SQUARE METER AS DETERMINED BY THE RE GISTERED VALUER. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE TO PERMIT THE DEP ARTMENT TO RELY ON THE REPORT OF THE DVO IN TOTO . 14. HOWEVER, WITHOUT BEING TECHNICAL ON THIS QUESTI ON, WE PROCEED TO EXAMINE THE QUESTION OF VALUATION OF THE LAND AND B UILDING AS ON 1-4-1981. SO FAR AS THE LAND IS CONCERNED, THE RATE OF RS.1,200/ - PER SQUARE METER ADOPTED BY THE REGISTERED VALUER IS BASED ON SALE INSTANCES, W HICH ARE ANNEXED TO HIS REPORT, COPY OF WHICH IS PLACED AT PAGES 2 TO 7 OF THE PAPE R BOOK. AS AGAINST THIS, THE PAGE - 10 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/20 05 AND ITA NO.2205/AHD/2009 -10- DVO HAS ADOPTED THE LAND RATE OF RS.1,100/- PER SQU ARE METER AS ON 1-4-1981 AND HE HAS STATED THAT IT HAS BEEN DETERMINED ON TH E BASIS OF COMPARABLE SALES INSTANCES AFTER GIVING DUE CONSIDERATION TO THE VAR IOUS FACTORS, SUCH AS SIZE, SHAPE, SITUATION, LOCATION, UTILITY ETC. SINCE THE DIFFERENCE IS MARGINAL, WE HOLD THAT THE LAND VALUE AS ON 1-4-1981 CAN BE TAKEN AT RS.1,200/- PER SQUARE METER AS PER THE REGISTERED VALUERS REPORT. 15. AS REGARDS THE BUILDING VALUE AS ON 1-4-1981, T HE RATE OF RS.3,000/- PER SQUARE METER ADOPTED BY THE REGISTERED VALUER, IS A FTER PERSONAL INSPECTION OF THE PROPERTY ON 4-11-1995, WHEREAS AT THE TIME WHEN THE DVO INSPECTED THE PROPERTY ON 18-1-1999, THE BUILDING HAS BEEN DEMOLI SHED AND AN OFFICE BUILDING HAD BEEN CONSTRUCTED BY THE PURCHASER OF T HE PROPERTY. IN THE ORDER PASSED BY THE CIT(A) IN THE CASE OF GUNVANTLAL RATA NCHAND (HUF), HE HAS TAKEN THE FAIR MARKET VALUE OF THE BUILDING AT RS.2 ,000/- PER SQUARE METER AS ON 1-4-1981 AND IN THE CASE OF SANDIP RATANCHAND (HUF) , THE CIT(A) HAS TAKEN THE VALUE AT RS.3,000/- PER SQUARE METER AS ADOPTED BY THE REGISTERED VALUER. WHILE ADOPTING THE VALUE AT RS.2,000/- PER SQUARE M ETER IN THE CASE OF GUNVANTLAL RATANCHAND (HUF), THE CIT(A) HAS REFERRE D TO THE COST OF CONSTRUCTION OF THE PROPERTY RIGHT FROM THE INCEPTI ON AND AS ACCEPTED IN THE INCOME-TAX ASSESSMENTS. FROM PARA-4.4 OF HIS ORDER , THE FOLLOWING POSITIONS EMERGE: ASSTT.YEAR CONSTRUCTED AREA (SQ.MT) RATE PER SQUARE METER (RS.) 1957-58 TO 325 337/- 1960-61 1965-66 TO 41 1,419/- 1970-71 1986-87 AND 138.33 2,877/- 1987-88 -DO-* 117 3,073/- PAGE - 11 ITA NO.87/AHD/2005 WITH CO NO.53/AHD/20 05 AND ITA NO.2205/AHD/2009 -11- *CONSTRUCTION BY SANDIP RATANCHAND (HUF). IT MAY BE SEEN FROM THE ABOVE THAT IN THE YEAR 1970 -71 THE CONSTRUCTION COST WAS RS.1,419/- PER SQUARE METER AND IN 1986-87 IT H AD GONE UP TO ONLY RS.2,877/- PER SQUARE METER. THE FAIR MARKET VALUE AS ON 1-4-1981 COULD NOT HAVE BEEN RS.3000/- PER SQUARE METER IN ANY CASE, E VEN GIVING ALLOWANCE FOR THE FACT THAT THE COST OF CONSTRUCTION AND THE FAIR MARKET VALUE MAY SHOW SOME DIFFERENCE EVEN ON THE SAME DAY. AT THE SAME TIME, IT COULD NOT HAVE BEEN ONLY RS.2,000/- PER SQUARE METER AS ON 1-4-1981, AFTER A BOUT TEN YEARS FROM THE TIME AT WHICH THE COST OF CONSTRUCTION WAS RS.1,419/- PE R SQUARE METER. TAKING ALL THESE INTO CONSIDERATION, WE ESTIMATE THE FAIR MARK ET VALUE OF THE BUILDING AS ON 1-4-1981 AT RS.2,500/- PER SQUARE METER AS AGAINST RS.2,000/- PER SQUARE METER ESTIMATED BY THE CIT(A) IN THE CASE OF GUNVANTLAL R ATANCHAND (HUF) AND RS.3,000/- PER SQUARE METER ESTIMATED BY THE CIT(A) IN THE CASE SANDIP RATANCHAND (HUF) ON THE BASIS OF THE REPORT OF THE REGISTERED VALUER. THE AO IS DIRECTED TO RE-COMPUTE THE CAPITAL GAINS ON THE BASIS OF OUR DECISION. 16. IN THE RESULT, ITA NO.2205/AHD/2009 IS PARTLY ALLOWED, ITA NO.87/AHD/2005 IS DISMISSED AND CO NO.53/AHD/2005 I S ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 13 TH NOVEMBER, 2009. SD/- SD/- (M.V. NAYAR) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 13-11-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER/DR, ITAT, AHMEDABAD