Shri Harshvadan Mangaldas(HUF), Ahmedabad V. The Dy.CIT.,Cenet.Circle-1(1), Ahmedabad

ITA 2724/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72864 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Assessee Lawyers: ANIL R SHAH
• Keywords: Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.2724/AHD/2010 A.Y. 2004-05 SHRI HARSHAVADAN MANGALDAS (HUF), MANGALBAUG, SHETH MANGALDAS ROAD, ELLISBRIDGE, AHMEDABAD. PAN: AACHH 5242M V/S. DCIT, CENTRAL CIRCLE- 1(1), AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.P. KRISHNAKUMAR, CIT-D.R. ASSESSEE(S) BY : SHRI ANIL R. SHAH, A.R. / DATE OF HEARING : 22/01/2014 / DATE OF PRONOUNCEMENT: 23/01/2014 O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LEARNED CIT(A)-I AHMEDABAD, DATED 18.08.2010. GROUN DS RAISED ARE REPRODUCED BELOW: 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN HOLDING THAT THE ASSESSING OFFICER HAD CORRECTLY INVOKED SEC.L53-C A ND WAS SATISFIED WITH REGARD TO ITS APPLICABILITY. YOUR APPELLANT SUBMITS THAT THE ASSESSING OFFICER H AS NOT SUPPLIED COPY OF SATISFACTION RECORDED BY HIM TO THE EFFECT THAT SEC .L53C APPLIES TO THE FACTS OF THE CASE THOUGH APPLICATION WAS MADE. IT IS THER EFORE SUBMITTED THAT IN ABSENCE OF HIS RECORDING SATISFACTION OF APPLICABIL ITY U/S.1530 THE CIT(A) HAVE HELD THAT THE ASSESSMENT IS BAD IN LAW AND VOI D. 2. (A) YOUR APPELLANT FURTHER SUBMITS THAT MARKET V ALUE OF LAND SOLD WAS RS.2000/-PER SQ. MTR. SINCE YOUR APPELLANT HAD OBTA INED AND FILED VALUATION REPORT OF AUTHORIZED AND APPROVED VALUER AS ON 1-4-81. THE ASSESSING OFFICER WAS DUTY BOUND TO FOLLOW PROVISIO NS OF SEC.55A AND SINCE ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 2 - HE HAS NOT OBTAINED VALUATION REPORT OF DEPT. VALUA TION OFFICER HE OUGHT TO HAVE ACCEPTED THE VALUE AS SHOWN BY YOUR APPELLA NT. (B) THE ASSESSING OFFICER HAVE NOT FOLLOWED SEC.55 A AND HAVE ESTIMATED THE VALUE OF 1-4-1981 AT RS. 1,623 PER SQ. MTR. AS AGAINST RS.2000 PER SQ. MTR. VALUED BY THE APPROVED VALUER WHICH IS CONTRAR Y TO PROVISIONS OF THE ACT AND NOT BCKED BY COMPARABLE CASES BOTH IN SIZE AND SITUATION. (C). ON ABOVE FACTS OF THE CASE TO CIT(A) OUGHT TO HAVE HELD THAT THE VALUE OF LAND AS ON 1-4-81 WAS RS.2000/- PER SQ .MTR. AND HE SHOULD HAVE DIRECTED THE ASSESSING. OFFICER TO ACCEPT THE SAME AND WORK OUT CAPITAL GAIN ACCORDINGLY. IT IS THEREFORE SUBMITTED THAT RELIEF CLAIMED ABOVE BE ALLOWED AND ME ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCORDINGLY. Y OUR RESPONDENT RESERVES RIGHT TO ADD, ALTER, AMEND TO WITHDRAW ANY OR ALL GROUND OF APPEAL. 2. AT THE OUTSET, LEARNED AR MR. ANIL R. SHAH HAS S TATED IN THE COURT THAT THE APPELLANT IS NOT WILLING TO CONTEST GROUND NO.1. THE SAME IS HEREBY DISMISSED BEING NOT PRESSED. 3. IN RESPECT OF GROUND NO.2, FACTS IN BRIEF AS EME RGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.153A(B) O F IT ACT, DATED 22 ND OF JANUARY, 2006 WERE THAT CONSEQUENT UPON A SEARC H U/S.132 OF IT ACT CONDUCTED UPON DHARMADEV BUILDERS GROUP ON 9 TH FEBRUARY, 2005; PROCEEDINGS WERE INITIATED AGAINST THIS ASSES SEE. A RETURN WAS FILED IN COMPLIANCE OF NOTICE U/S.153C OF IT ACT AS MENTIONED IN THE IMPUGNED ASSESSMENT ORDER. ON PERUSAL OF THE RETURN , IT WAS NOTICED THAT THE ASSESSEE HAD ANCESTRAL BUNGALOW KNOWN AS MANGALBAUG WITH APPURTENANT LAND. IT WAS NOTED BY THE AO THAT ONE SIDE OF THE BUNGALOW WAS OPPOSITE TO PARIMAL GARDEN. HOWEVER IT WAS ALSO NOTED IN THE ASSESSMENT ORDER THAT A PART OF THE LAND AD MEASURING 145.45 SQ. MTRS WAS ACQUIRED BY THE MUNICIPAL CORPORATION IN ASSESSMENT YEAR 1999-00. FURTHER, IT WAS NOTED THAT THE ASSESS EE HAD SOLD THE ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 3 - REMAINING PORTION OF THE LAND (ADMEASURING 306 SQ. MTRS) IN THE ASSESSMENT YEAR 2004-05 TO SRI SANJAY THAKKAR FOR A SUM OF RS.66,20,940/-. THEN THE AO HAD NOTED THAT THE ASSE SSEE HAD TAKEN FAIR MARKET VALUE OF THE LAND AT RS.2,000/- PER SQ MTR. AS ON 01.04.1981. THE OBJECTION OF THE AO WAS THAT THE FA IR MARKET VALUE AS ON 01.04.1981 AS ADOPTED BY THE ASSESSEE WAS HIGHER THAN THE PREVAILING RATE. A SHOW CAUSE NOTICE WAS ISSUED TO EXPLAIN AS TO WHY RS.1,623/- PER SQ. MTR. BE NOT SUBSTITUTED FOR THE PURPOSE OF COMPUTATION OF THE CAPITAL GAIN. THE ASSESSEES REP LY WAS THAT THE PROPERTY OF THE ASSESSEE IS SITUATED AT PARIMAL GAR DEN HAVING HIGHER MARKET VALUE AS COMPARED TO THE PROPERTIES SITUATED AT CG ROAD AHMEDABAD AS ON 1.4.1981. THE AO HAS REJECTED THE E XPLANATION OF THE ASSESSEE AND HELD AS UNDER: SINCE THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE AS ON 1.4.1981 WAS HIGHER THAN THE PREVAILING RATE, A SHOW CAUSE NOTIC E WAS ISSUED TO THE ASSESSEE ON 19.12.2006 AND THE ASSESSEE WAS REQUEST ED TO EXPLAIN AS TO WHY THE PREVAILING RATE OF RS.1,357/- PER SQUARE YA RD, I.E., RS.1,623/- PER SQUARE METRE, AS FOUND IN THE CASE OF THE PLOT OF L AND ON WHICH THE SCHEME ISCON ARCADE HAS BEEN CONSTRUCTED AT CG ROAD, AHMED ABAD, SHOULD NOT BE ADOPTED FOR WORKING OUT THE CAPITAL GAINS. IN RE SPONSE THERETO THE ASSESSEES REPRESENTATIVE SHRI CHANDRAKANT MEHTA AT TENDED ON 22.11.2006 AND CONTENDED THAT THE ASSESSEES PROPER TY AT PARIMAL GARDEN HAD MORE MARKET VALUE AS COMPARED TO OTHER PROPERTI ES AT CG ROAD, AHMEDABAD AS ON 1.4.1981 ON ACCOUNT OF ITS LOCATION AND HE, THEREFORE, OBJECTED TO THE ADOPTION OF FAIR MARKET VALUE AT RS .1,623/- PER SQUARE METRE AS ON 1.4.1981 AS AGAINST RS.2,000/- PER SQUA RE METRE ADOPTED BY THE ASSESSEE. THE ASSESSEES ARGUMENTS HAVE BEEN CA REFULLY CONSIDERED BUT IT IS FOUND THAT THE ASSESSEE COULD NOT GIVE AN Y SPECIFIC REASON FOR THE VARIATION IN THE FAIR MARKET VALUE OF THE PROPERTY AS COMPARED TO THE FAIR MARKET VALUE OF THE PLOT OF LAND ON WHICH THE SCHEM E ISCON ARCADE HAS BEEN CONDUCTED AT CG ROAD, AHMEDABAD. THIS PLOT OF LAND IS NEAR TO MUNICIPAL MARKET, THE ONLY PART OF CG ROAD WHICH WA S COMMERCIALIZED EVEN IN 1981. THEREFORE, THIS PLOT WAS HAVING MORE MARKET VALUE AS ON 1.4.1981 AS COMPARED TO THE ASSESSEES LAND AT PARI MAL GARDEN. THUS IN ANY CASE THE FAIR MARKET VALUE OF THE ASSESSEES LA ND COULD NOT EXCEED THE FAIR MARKET VALUE OF THE ABOVE REFERRED LAND AT CG ROAD, AHMEDABAD. IN THE CIRCUMSTANCES, FAIR MARKET VALUE OF THE LAND OF THE ASSESSEE IS ADOPTED AT RS.1,623/- PER SQUARE METRE AS ON 01.04.1981. PE NALTY PROCEEDINGS ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 4 - U/S.271(1)(C) ARE INITIATED IN THIS CASE FOR FURNIS HING INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALING THE IN COME. 4. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A ), IT WAS CONTESTED THAT THE AO HAD NOT FOLLOWED THE PROVISIO NS OF SECTION 55A(A) OF IT ACT. IT WAS INFORMED THAT THE VALUE AS ON 1.4.1981 AT RS.2,000/- SQ. PER METER WAS BASED ON A VALUATION R EPORT OF THE APPROVED VALUER OF THE APPELLANT. IT WAS ARGUED THA T AS PER THE SAID PROVISIONS OF LAW, ONCE THE ASSESSEE HAS OPTED TO A DOPTED MARKET VALUE AS ON 1.4.1981 AND SUBMIT IN SUPPORT AN AUTHO RIZED APPROVED VALUERS REPORT; THEN THE AO HAD ONLY TWO OPTIONS, FIRST, THAT TO ACCEPT THE VALUE AS DECLARED BY THE ASSESSEE BEING BASED U PON A REPORT OF THE APPROVED VALUER AND, SECOND, REFER THE MATTER TO TH E DEPARTMENTAL VALUATION OFFICER. RELIANCE WAS PLACED ON HIRABEN JAYANTILAL SHAH, 310 ITR 31 (GUJ.) . HOWEVER, LEARNED CIT(A) WAS NOT CONVINCED AND HELD THAT THE HONBLE HIGH COURT IN THE CITED DECIS ION HAS EXPRESSED THAT ONLY IN A SITUATION WHEN THE AO IS OF THE OPIN ION THAT THE VALUE WAS UNDER ESTIMATED THEN A REFERENCE TO BE MADE TO THE VALUATION CELL, HOWEVER, A REPORT OF THE APPROVED VALUER COUL D NOT BE CONSIDERED AS A SACROSANCT REPORT. FURTHER, LEARNED CIT(A) HAS MENTIONED THAT THE REGISTERED VALUER HAD COLLECTED CERTAIN COMPARABLE SALES INSTANCES, ALSO REPRODUCED BY LEARNED CIT(A); HENCE, THE RATE OF THE LAND WAS OVER ESTIMATED BY THE VALUER HIMSELF. LEARNED CIT(A) HAS AFFIRMED THE VALUE AS ADOPTED BY THE AO AS ON 1 .4.1981. 5. BEING AGGRIEVED NOW THE ASSESSEE IS FURTHER IN A PPEAL. FROM THE SIDE OF THE ASSESSEE, LEARNED AR MR. ANIL R. SHAH A ND FROM THE SIDE OF THE REVENUE, LEARNED CIT-DR MR. T.P. KRISHNAKUMA R APPEARED. LEARNED AR HAS INFORMED THAT A VALUATION REPORT DAT ED 10 TH OF JUNE, ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 5 - 1999 WAS OBTAINED FROM A REGISTERED VALUER WHO HAS GIVEN HIS VALUATION AS FOLLOWS: PART-II VALUATION ( HERE THE REGISTERED VALUER SHOULD DISCUSS IN DETAIL HIS APPROACH TO VALUATION OF THE PROPERTY & INDICATE HOW THE VALUE HAS BEEN ARRI VED AT SUPPORTED BY NECESSARY CALCULATIONS). DESCRIPTION:- I HAVE SEEN THE SITE AND TAKEN THE ME ASUREMENTS OF THE AREA UNDER ROAD LINE WHICH COMES TO 145.46M. THE ABOVE V ALUATION IS MADE FOR CAPITAL GAIN PURPOSE HENCE SEARCH OF SALES INSTANCE S ARE MADE FROM SUB- REGISTRAR OFFICE AND ON THE BASE OF THAT SEARCH THE LAND VALUE IS TAKEN AS RS.2,000-00/SQ. MT. ON DT 1.4.1981. VALUATION: LAND AREA X LAND VALUE. = 145.45 SQ. M. X RS.2,000-00 = RS.2,90,900-00 HENCE VALUATION OF THE PROPERTY OF OPEN LAND ADMEAS URING ABOUT 145.46 SQ. MT. GOING IN R.L. BELONGING TO HARSHVADAN MANGA LDAS COMES TO RS.2,90,900-00 TWO LACS NINETY THOUSAND NINE HUNDRE D ONLY DT. 1.4.1981 TO MY EXPERIENCE AND KNOWLEDGE. 6. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. T.P. KRISHNAKUMAR HAS CONTESTED THAT THE SAID V ALUER HAS ANNEXED CERTAIN SALE INSTANCES WHICH WERE CLOSE TO THE VALU ATION AS ADOPTED BY THE AO. 7. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN AN ASSE SSEE HAS ADOPTED A VALUE AS ON 1.4.1981 ON THE BASIS OF A REPORT OF AN APPROVED VALUER AND THAT VALUATION REPORT WAS VERY MUCH BEFORE THE AO, THAN IF THE AO WAS NOT IN AGREEMENT WITH THAT VALUATION THEN WI TH A VIEW TO ASCERTAIN THE FAIR MARKET VALUE AS ON 1.4.1981 HE C OULD HAVE REFERRED THE MATTER TO VALUATION OFFICER OF THE REVENUE DEPA RTMENT IN THE LIGHT OF THE PROVISIONS OF SECTION 55A OF IT ACT. I N THIS CASE, THE AO HAD ADOPTED A VERY SIMPLISTIC APPROACH BY REFERRING CERTAIN SALE ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 6 - INSTANCES AS NOTED BY THE REGISTERED VALUER OF THE ASSESSEE. HOWEVER ON THE BASIS OF THOSE SALE INSTANCES, THE REGISTERE D VALUER HAS GIVEN HIS EXPERT OPINION THAT THE VALUE AS ON 1.4.1981 OF THE PROPERTY IN QUESTION WAS FAIR AND REASONABLE AT RS.2,000/- PER SQ. MTR. AFTER EXAMINING THOSE SALES INSTANCES, THE APPROVED VALUE R HAS COMMENTED AS FOLLOWS: HENCE LOOKING TO THE ABOVE SALE INSTANCES AND LAND UNDER VALUATION IS 3.00 METER WIDE AND 48.5 METER LONG ROAD FRONT STRI P ON MAIN ROAD WHICH IS THE MOST VALUABLE AND IMPORTANT PART OF THE LAND OF PART LAND VALUE AT RS.2000/- PER SQ. MT. TO MY EXPERIENCE AND KNOWLEDG E LOOKING TO SIZE, SHAPE AND SITUATION ABUTTING ON MAIN ROAD ON DT. 1. 4.1981. 7.1 WE, THEREFORE, HOLD THAT IN THE LIGHT OF THE VA LUATION REPORT OF THE APPROVED VALUER, RELEVANT PORTION REPRODUCED SU PRA, THE AO SHOULD HAVE BROUGHT ON RECORD SOME COGENT MATERIAL BEFORE DISTURBING THE SAID VALUE DECLARED BY THE ASSESSEE. IN THE ABS ENCE OF ANY CONTRARY EVIDENCE OR MATERIAL GATHERED BY THE AO AS WELL AS IN THE ABSENCE OF ANY ACTION U/S. 55A OF IT ACT, WE HEREBY HOLD THAT THE APPROACH OF THE AO WAS NOT JUSTIFIED; HENCE, THE CHANGE IN THE VALU ATION AS ON 1.4.1981 IS HEREBY NEGATED. RESULTANTLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IS HEREBY ALLOWED. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. SD/- SD/- (ANIL CHATURVEDI) (MUKU L KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 23/01/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT ITA NO.2724/AHD/2010 SHRI HARSHAVADAN MANGALDAS (HUF), VS. DCIT, AHMEDAB AD A.Y. 2004-05 - 7 - 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD