ITO, Jaipur V. BAJAJ UDYOG, Jaipur

ITA 273/JPR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4813 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Rectification of order; Search and seizure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Question of law; Cost of acquisition; Tangible material; Fair market value; Valuation report; Assessment record; Reason to believe; Set aside
• Section: 143(3); 50C; 133(6); 250; 147; 246; 54; 132; 144

Judgement Text

1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 273/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2011-12 INCOME TAX OFFICER WARD 6(3), JAIPUR CUKE VS. M/S BAJAJ UDYOG 53, DHULESHWAR GARDEN C-SCHEME, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFB0546K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 10/JP/2017 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 273/JP/2017) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR 2011-12 M/S BAJAJ UDYOG 53, DHULESHWAR GARDEN C-SCHEME, JAIPUR CUKE VS. INCOME TAX OFFICER WARD 6(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFB0546K IZR;K{KSID@ OBJECTOR IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDAR MEHTA (CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VINOD GUPTA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 09/08/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE LD. CIT(A), AJMER DATED 17/01/2017 FOR A.Y 2014 -15 AND THE CROSS ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 2 OBJECTION FILED BY THE ASSESSEE WHEREIN RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- GROUNDS OF REVENUES APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N OF RS. 16,53,86,672/- MADE BY THE AO ON ACCOUNT OF LONG TE RM CAPITAL GAIN WITHOUT CONSIDERING THE FACTS OF THE CASE IN R IGHT PERSPECTIVE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLO WANCE OF RS. 1,00,00,000/- MADE BY THE AO ON ACCOUNT OF DEDUCTIO N CLAIMED BY THE ASSESSEE U/S 48 AS PAYMENT MADE BY IT AS CONTRA CTUAL OBLIGATION WHILE COMPUTING LTCG WHICH IS NOT MAINTAINABLE AS P ER INCOME TAX ACT, 1961. GROUNDS OF ASSESSEES CROSS-OBJECTIONS: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BY CONFIRMING THE ACTION OF LD. AO OF ADO PTING THE VALUE SO ADOPTED BY THE STAMP AUTHORITY I.E. 18,99,76,208 IN STEAD OF TRANSACTION VALUE OF RS. 18,63,71,000 AS FULL VALUE OF THE CONSIDERATION AND CONFIRMING THE ADDITION OF RS. 35 ,99,208. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LD. CIT(A) HAS ERRED IN NOT DECIDING GROUND OF APPEAL N O. 2 BEFORE HIM WHILE LD. AO HAS ERRED IN:- (I) NOT CONSIDERING THE VALUATION REPORT OF A REGI STERED VALUER, SUBMITTED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS IN RIGHT PROSPECTIVE. (II) REFERRING THE CASE TO DVO U/S 55A FOR DETERMIN ING THE FAIR MARKET VALUE OF PROPERTY. (III) DRAWING INFERENCES FOR REFERRING THE CASE TO DVO WHICH WERE BASED ON INCORRECT ASSUMPTION OF FACTS AND WIT HOUT ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 3 PROVIDING OPPORTUNITY OF BEING HEARD, HENCE, AGAINS T THE PRINCIPLE OF NATURAL JUSTICE. (IV) NOT CONSIDERING THE SUBMISSION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RIGHT PROSPECTIVE. (V) NOT CONSIDERING IN LOGICAL MANNER, THE LEGAL AN D FACTUAL OBJECTIONS RAISED DURING THE ASSESSMENT PROCEEDINGS ON THE DVO REPORT. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LD. CIT(A) HAS ERRED IN NOT DECIDING GROUND OF APPEAL N O. 3 BEFORE HIM WHILE LD. DVO HAS ERRED IN:- (I) DETERMINING FAIR MARKET VALUE OF THE PROPERTY A S ON 01.04.1981. (II) DRAWING INFERENCES BASED ON INCORRECT ASSUMPTI ON OF FACTS (III) DRAWING INFERENCES BASED ON UN-AUTHENTICATED MATERIAL (IV) DRAWING INFERENCES BASED ON COMPARISON, SAME I S GUIDED BY ASSUMPTION OF INCORRECT FACTS AND AGAINST THE ES TABLISHED NORMS OF THE VALUATION. (V) NOT APPRECIATING THE PRINCIPLE OF THE DETERMINI NG THE FAIR MARKET VALUE, WHICH AMONGST OTHERS ENVISAGES THAT I T SHOULD BE DETERMINED HAVING DUE REGARD TO ITS EXISTING CON DITION, WITH ALL ITS EXISTING ADVANTAGES AND ITS POTENTIAL POSSI BILITIES WHEN LAID OUT IN ITS MOST ADVANTAGEOUS MANNER. (VI) NOT APPRECIATING THE FACTORS OF ADJUSTMENT SUC H AS SITUATION OF PROPERTY IN COMMERCIAL ZONE, ON ROAD L OCATION, ROADS SIZE, SIGNIFICANCE OF THE ROAD, SHAPES, SIZE, FAR ETC. (VII) NOT FOLLOWING THE STANDARD PRACTICE AND PROCE DURES OF THE DEPARTMENT ITSELF FOR DETERMINING THE FAIR MARK ET VALUE. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 4 (VIII) NOT ALLOWING OPPORTUNITY OF BEING HEARD WHIL E DETERMINING THE FAIR MARKET VALUE AND THUS, VIOLATI NG THE PRINCIPAL OF NATURAL JUSTICE. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, L D. CIT(A) HAS ERRED IN NOT DECIDING GROUND OF APPEAL NO. 4 BEFORE HIM WHILE THE LD. AO HAS ERRED BY APPLYING THE FAIR MARKET VALUE DETE RMINED BY DVO NOT CALCULATING THE LONG TERM CAPITAL GAIN BASED ON SAID REPORT. 5. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, L D. CIT(A) HAS ERRED IN NOT DECIDING GROUND OF APPEAL NO. 9 BEFORE HIM WHILE THE LD. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE -6, JA IPUR HAS ERRED IN FACTS AND IN LAW, BY DIRECTING LD. AO TO COMPLET E ASSESSMENT ON THE BASIS OF REPORT SUBMITTED BY DVO VIDE HIS ORDER PASSED U/S 144A DATED 24.03.2014. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH WAS CARRYING ON THE BUSINESS OF MANUFACTURING OF COPPER WIRE. HOWEVER, FOR THE LAST FEW YEARS, THE FACTORY WAS CL OSED, AND DURING THE YEAR UNDER CONSIDERATION, NO BUSINESS ACTIVITY WAS BEING CARRIED ON BY THE ASSESSEE FIRM. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FIRM SOLD A PROPERTY MEASURING 3290 SQ.YDS SITUATED AT OLD KH ASRA NO. 286/1 & 282/2 (NEW KHASRA NO. 463), RAMPURA ROOPA (PRESENTLY MAIN TONK ROAD, NEAR GLASS FACTORY, JAIPUR) FOR A CONSIDERATION OF RS. 1 8,63,71,000/- TO M/S TRIVENI KRIPA ENTERPRISES. IN ITS RETURN OF INCOME , THE ASSESSEE FIRM HAS SHOWN THE CAPITAL GAINS ON SALE OF THE PROPERTY AS UNDER:- DATE OF SALE 06/12/2010 SALE CONSIDERATION RS. 17,61,42,188/- PURCHASE DATE 1/4/1981 PURCHASE COST RS. 2,72,94,000/- ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 5 INDEXED COST OF ACQUISITION RS 19,40,60,340/- LOSS RS. 1,79,18,152/- 3. AS PER SALE DEED, THE LAND WAS INITIALLY ALLOTTE D TO VASUDEV NAGARMAL ON 02.12.1943 BY THE THEN MAHARAJA OF THE JAIPUR ST ATE. SUBSEQUENTLY, THE LAND WAS SOLD TO M/S JAIPUR GLASS AND POTTERIES AND THEREAFTER, TO SH. SRI NARAYAN BAJAJ ON 13.11.1964. IN THE YEAR 1980, THE ASSESSEE FIRM M/S BAJAJ BROS CAME INTO EXISTENCE WITH SHRI SRI NARAYAN BAJA J AS ONE OF ITS PARTNERS AND THE SAID LAND BECAME THE ASSET OF THE ASSESSEE FIRM. FURTHER, IT IS ALSO APPARENT FROM RECORDS THAT THE SUB-REGISTRAR HAS DE TERMINED THE VALUE OF THIS PROPERTY AT RS. 18,99,70,208/- FOR THE PURPOSE OF LEVYING THE STAMP DUTY AS AGAINST STATED SALE CONSIDERATION OF RS. 18 ,63,71,000/-. 4. IN THE AFORESAID FACTUAL BACKGROUND, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E VALUE DETERMINED BY THE STAMP DUTY AUTHORITY HAS TO BE ADOPTED AS FULL VALUE OF CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. HE AC CORDINGLY ADOPTED THE FULL VALUE OF CONSIDERATION OF RS. 18,99,70,208/- AS AGA INST STATED SALE CONSIDERATION OF RS. 18,63,71,000/- FOR THE PURPOSE OF DETERMINING THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. FURTHER , REGARDING THE INDEXED COST OF ACQUISITION, AS AGAINST THE FMV AS ON 01.04 .1981 DETERMINED AT RS. 2,72,94,000/-BY THE ASSESSEE BASED ON THE REGISTERE D VALUERS REPORT, THE ASSESSING OFFICER REFERRED THE MATTER TO DVO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 55A OF THE ACT AND BASIS THE DVOS REPORT HAS ADOPTED THE FMV AS ON 01.04.1981 AT RS. 34,57,600/- . ACCORDINGLY, THE AO DETERMINED THE LONG TERM CAPITAL GAINS OF RS. 16,53 ,86,672/- WHEREIN THE SALE CONSIDERATION HAS BEEN TAKEN AT RS. 18,99,70,2 08/- AND INDEXED COST OF ACQUISITION AT RS. 2,45,83,536/- AS AGAINST LONG TE RM CAPITAL LOSS OF RS 1,79,18,152 CLAIMED BY THE ASSESSEE IN ITS RETURN O F INCOME. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 6 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE AC TION OF THE ASSESSING OFFICER WHERE HE HAS TAKEN THE FULL VALUE OF CONSID ERATION AT RS. 18,99,70,208/-. HOWEVER, AS FAR AS THE INDEXED COST OF ACQUISITION WAS CONCERNED, THE LD. CIT(A) HELD THAT THE REFERENCE M ADE BY THE AO U/S 55A TO THE DVO FOR ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 WAS NOT VALID. HENCE, THE ADDITION MADE BY THE AO BY ADOPTING INDEXED COST OF ACQUISITION ON THE BASIS OF DVOS R EPORT WAS DELETED. FURTHER, THE LD. CIT(A) ALLOWED IN EXPENDITURE AMOU NTING TO RS. 1 CR AS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER U/S 48 OF THE ACT. 6. AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A) , BOTH THE REVENUE AND THE ASSESSEE FIRM ARE IN APPEAL BEFORE US. IN I TS APPEAL, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS. 16,5 3,86,672/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL G AINS. GIVEN THAT THE LD. CIT(A) HAS SUSTAINED THE ADOPTION OF FULL VALUE OF CONSIDERATION AS PER THE VALUATION DONE BY THE STAMP DUTY AUTHORITY, THE GRO UND SO RAISED BY THE REVENUE EFFECTIVELY RELATES TO DETERMINATION OF IND EXED COST OF ACQUISITION WHERE THE ADOPTION OF THE FMV AS ON 1.4.1981 BASIS THE DVOS REPORT WAS DELETED BY THE LD CIT(A) HOLDING THAT THE REFERENCE TO DVO ITSELF IS NOT VALID AND HENCE, THE VALUATION SO DETERMINED BY THE DVO C ANNOT BE ADOPTED. FURTHER, THE REVENUE HAS CHALLENGED THE ACTION OF T HE LD. CIT(A) IN ALLOWING AT RS. 1 CR U/S 48 WHILE COMPUTING THE LONG TERM CA PITAL GAINS. IN ITS CROSS APPEAL, THE ASSESSEE FIRM HAS CHALLENGED THE ADOPTI ON OF THE FULL VALUE OF CONSIDERATION AS PER THE VALUATION DONE BY THE STAM P DUTY AUTHORITY AS AGAINST THE TRANSACTION VALUE RECORDED IN THE SALE DEED. FURTHER, THE ASSESSEE FIRM HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN NON ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 7 ADJUDICATION OF GROUNDS OF APPEAL ON MERITS RELATIN G TO DETERMINATION OF FMV AS ON 01.04.1981 BY THE ASSESSING OFFICER. 7. FIRSTLY, WE TAKE UP THE MATTER RELATING TO ADOPT ION OF THE STAMP DUTY VALUATION FOR THE PURPOSE OF DETERMINING THE FULL V ALUE OF CONSIDERATION U/S 50C OF THE ACT. IN THIS REGARD, THE LD. AR SUBMITT ED THAT THE VALUE DETERMINED BY STAMP VALUATION AUTHORITY IS RS. 18,9 9,70,208/- AS AGAINST TRANSACTION VALUE OF RS. 18,63,71,000/-, THERE IS T HUS A DIFFERENCE OF RS. 35,99,208/-, WHICH IS 1.49% OF THE VALUE DETERM INED BY THE STAMP VALUATION AUTHORITY. IT WAS SUBMITTED THAT DLC RATE S ARE INDICATIVE RATES OF A PARTICULAR LOCALITY, NOT OF A PARTICULAR PROPERTY , THEREFORE, SUCH INSIGNIFICANT DIFFERENCE CAN BE THERE WITH ANY PROP ERTY. IT IS A FACT THAT DLC IS NOT A RATE ON WITH EVERY PROPERTY HAVE TO BE SOL D. THE SALE VALUE OF THE PROPERTY DEPENDS UPON VARIOUS FACTORS, HENCE, SUCH INSIGNIFICANT DIFFERENCE CANNOT BE ADDED. IN SUPPORT, RELIANCE WAS PLACED ON THE CO-ORDINATE BENCH DECISION IN CASE OF SMT. SITA BEN KHETAN VS. ITO 6( 3), JAIPUR (ITA NO. 826/JP/2013 DATED 27.07.2016 ) AND IN CASE OF JOHN FOWLER (INDIA) PRIVATE LTD VS DCIT, MUMBAI (ITA NO. 7545/MUM/2014 DATED 25.01.2017). 8. REGARDING THE ALLEGATION OF THE ASSESSING OFFIC ER THAT THE ASSESSEE HAS NOT DISPUTED THE VALUE SO ADOPTED BY THE STAMP DUTY AUTHORITY, IT WAS SUBMITTED THAT STAMP DUTY WAS BORNE BY THE PURCHASE R AND IT IS FOR THE PURCHASER TO EITHER ACCEPT OR DISPUTE THE VALUATION SO ADOPTED BY THE STAMP DUTY AUTHORITY. IT WAS ACCORDINGLY SUBMITTED THAT N O ADVERSE INFERENCE MAY BE DRAWN AGAINST THE ASSESSEE SO FAR AS THE SAID AL LEGATION MADE BY THE ASSESSING OFFICER IS CONCERNED. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 8 9. PER CONTRA, THE LD. CIT DR RELIED ON THE FINDING OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND OUR REFERENCE WAS DRAWN THE FINDINGS OF THE LD. CIT(A) AT PARA 6.3 WHICH READS AS UNDER: - 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND THE SUBMISSION OF THE APPELLA NT CAREFULLY. APPELLANT CHALLENGED THE ADOPTION OF VALUATION DONE BY STAMP VALUATION AUTHORITY. IN SUPPORT OF THE CONTENTION A PPELLANT PLACED RELIANCE ON JUDGMENT OF JURISDICTIONAL ITAT. THE RE LEVANT PORTION OF THE ORDER DATED 27.7.2016(ITA NO. 826/JP/2013) IN T HE CASE OF SMT. SITA BEN KHETAN VS. ITO 6(3), JAIPUR, ON WHICH THE APPELLANT HAS RELIED UPON IS REPRODUCED HERE UNDER:- 4.2 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE HONBLE COORD INATE BENCH IN ITA NO. 1543/PN/2007 IN THE CASE OF RAHUL CONSTRUCTION VS. DCIT (SUPRA) HAS HELD AS UNDER:- WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT VS. HARPREET HOTELS (P) LTD. VIDE ITA NOS. 1156-116 0/PN/2000 AND RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE H AD DISMISSED THE APPEAL FILED BY THE REVENUE WHERE THE CIT(A) HAD DE LETED THE UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTION ON THE GROUND THAT THE DIFFERENCE BETWEEN THE FIGURE SHOWN BY THE ASSESSEE AND THE FIGURE OF THE DVO IS HARDLY 10 PER CENT. SIMILARLY, WE FIN D THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. KAADDU JAYGHOSH APPASAHEB, VIDE ITA NO. 441/PN/2004 FOR THE ASST. Y R. 1992-93 AND RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE F OLLOWING THE DECISION OF THE J&K HIGH COURT IN THE CASE OF HONES T GROUP OF HOTELS (P) LTD. VS. CIT (2002) 177 CTR (J&K) 232 HAD HELD THAT WHEN THE MARGIN BETWEEN THE VALUE AS GIVEN BY THE ASSESSEE A ND THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 9 DEPARTMENTAL VALUER WAS LESS THAN 10 PER CENT, THE DIFFERENCE IS LIABLE TO BE IGNORED AND THE ADDITION MADE BY THE A O CAN NOT BE SUSTAINED. SINCE IN THE INSTANT CASE SUCH DIFFERENCE IS LESS T HAN 10 PER CENT AND CONSIDERING THE FACT THAT VALUATION IS ALWAYS A MAT TER OF ESTIMATION WHERE SOME DEGREE OF DIFFERENCE IS BOUND TO OCCUR, WE ARE OF THE CONSIDERED OPINION THAT THE AO IN THE INSTANT CASE IS NOT JUSTIFIED IN SUBSTITUTING THE SALE CONSIDERATION AT RS. 20,55,00 0/- AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS. 19,00,000 DISCLOSE D BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE AO TO TAKE RS. 19,00,000/- ONLY AS THE SALE CONSIDERATION OF THE PROPERTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. IN THE INSTANT CASE, THE DIFFERENCE BETWEEN THE VAL UATION ADOPTED BY THE STAMP VALUATION AUTHORITY AND DECLARED BY THE A SSESSEE IS LESS THAN 10%. THEREFORE, RESPECTFULLY FOLLOWING THE DEC ISION OF THE HONBLE COORDINATE BENCH, WE HEREBY DIRECT THE AO T O ADOPT THE VALUE AS DECLARED BY THE ASSESSEE. THIS GROUND OF T HE ASSESSEE IS ALLOWED. IT IS SEEN THAT HONBLE ITAT WHILE PASSING THE ORDE R HAS RELIED UPON THE DECISION OF PUNE BENCH OF ITAT IN THE CASE OF A CIT VS. HARPREET HOTELS (P) LTD. (ITA NOS. 1156-1160/PN/ 2000) AND I TO VS. KAADDU JAYGHOSH APPASAHED (ITA NO. 441/PN/2004). I HAVE GO NE THROUGH BOTH THE ABOVE MENTIONED ORDER OF ITAT PUNE. THE IS SUE BEFORE THE ITAT IN BOTH THE CASES WAS DIFFERENCE BETWEEN THE V ALUE GIVEN BY THE APPELLANT AND VALUE ESTIMATED BY THE DVO. THE D IFFERENCE BETWEEN THE VALUATION MADE BY THE STATE STAMP VALUA TION AUTHORITY AND THE VALUATION SHOWN BY THE APPELLANT WAS NOT TH E ISSUE BEFORE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 10 THE ITAT. SUB-SECTION 1 OF SECTION 50C PROVIDES THA T WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (STAMP VALUATION AUTHORITY) FOR THE PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALU E SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SECTION 48 BE DE EMED TO BE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. SUB-SECTION 3 FURTHER PROVIDES THAT WHERE THE VALUE ASCERTAINED BY THE DVO ON REFERENCE BEING MADE UNDE R SUB-SECTION 2, EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STA MP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION 1, THE VALUE S O ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THUS, THE ONLY CIRCUMSTANCE UNDER WHICH T HE VALUE, LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY CAN BE ADOPTED IS, IF THE VALUATION HAS BEEN REFERRED BY T HE AO UNDER SUB- SECTION 2 AND THE DVO HAS VALUED THE PROPERTY AT TH E VALUE WHICH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE STAM P VALUATION AUTHORITY. THE CASE OF THE APPELLANT IS NOT COVERED UNDER SUB-SECTION 3 OF SECTION 50C. THEREFORE, IT IS HELD THAT THE AO HAS RIGHTLY ADOPTED U/S 50C, THE FULL VALUE OF CONSIDERATION ACCRUING T O THE APPELLANT, AS A RESULT OF THE TRANSFER OF THE ASSET AT RS. 18,99,70 ,208/- AS AGAINST THE SALE CONSIDERATION OF RS. 18,63,71,000/- DECLARED B Y THE APPELLANT. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E VALUE DETERMINED BY ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 11 THE STAMP DUTY AUTHORITY IS HIGHER THAN WHAT HAS BE EN STATED IN THE SALE DEED AND THE ASSESSEE HAS NOT DISPUTED THE VALUE SO ADOPTED BY THE STAMP DUTY AUTHORITY AND ACCORDINGLY, HE HAS ADOPTED THE FULL VALUE OF CONSIDERATION OF RS. 18,99,70,208/- AS AGAINST STAT ED SALE CONSIDERATION OF RS. 18,63,71,000/- FOR THE PURPOSE OF DETERMINING T HE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE AS PER THE PROVISIONS OF SECT ION 50C OF THE ACT. IN TERMS OF SECTION 50C(2), WHERE THE ASSESSEE OBJECTS TO SUCH VALUATION AND STATES THAT THE SAME EXCEEDS THE FMV OF THE PROPERT Y, THE AO IS REQUIRED TO REFER THE MATTER TO THE VALUATION OFFICER AS IS APP ARENT FROM THE PLAIN LANGUAGE OF SECTION 50C(2) WHICH READS AS UNDER: (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER TH AT THE VALUE ADOPTED OR ASSESSED 37[OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED 37 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB- SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MAD E BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER 11. THEREFORE, WHERE THE ASSESSING OFFICER GIVES A FINDING THAT THE ASSESSEE HAS NOT OBJECTED TO THE ADOPTION OF STAMP DUTY VALUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO IS NOT REQ UIRED TO REFER THE MATTER TO THE VALUATION OFFICER AND HE IS REQUIRED TO ADOPT THE VALUE SO ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 12 DETERMINED BY STAMP DUTY AUTHORITY AS SPECIFIED IN SECTION 50C(1) OF THE ACT WHICH READS AS UNDER: 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRU ING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 34[OR ASSES SABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION RE FERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED 35[OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. 12. AT THE SAME TIME, BEFORE ADOPTING THE VALUE SO DETERMINED BY THE STAMP DUTY AUTHORITY, THE ASSESSING OFFICER SHOULD CONSIDER THE VARIANCE BETWEEN THE TWO VALUES THE VALUE DETERMINED BY TH E STAMP DUTY AUTHORITY AND THE VALUE AS PER THE SALE DEED AS HEL D BY THE COORDINATE BENCH IN CASE OF SITA BEN KHETAN (SUPRA) WHERE IT W AS HELD THAT WHERE THE VARINACE IS 2.11% I.E, LESS THAN 10%, SUCH DIFFEREN CE SHOULD BE IGNORED AND THE VALUE SO DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED. WE FIND THAT THE REASONING BEHIND ACCEPTANCE OF VARIATION WITHIN THE TOLERABLE LIMITS IS THAT DLC RATES ARE INDICATIVE RATES OF A PARTICULAR LOCALITY AND NOT OF A PARTICULAR PROPERTY AND DEPENDING UPON VARIOUS FACT ORS, THE VALUE OF TWO PROPERTIES IN THE SAME LOCALITY MAY VARY. THEREFOR E, WE FIND THAT THE CONCEPT OF DETERMINING A TOLERABLE RANGE HAS TO BE APPRECIATED MORE SO IN THE CONTEXT OF DEEMING FICTION WHERE THE LIABILITY IS FASTENED ON THE ASSESSEE BASED ON SUCH STAMP DUTY VALUATION AND A F ACT WHICH HAS LATELY BEEN RECOGNIZED BY THE LEGISLATURE WHEREBY TOLERANC E RANGE OF 5% HAS BEEN SPECIFIED BY WAY OF THIRD PROVISO TO SECTION 5 0C(1) HAS BEEN INSERTED BY THE FINANCE ACT, 2018, W.E.F. 1-4-2019 WHICH REA DS AS UNDER: ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 13 PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSE SSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY DOES NO T EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECE IVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO R ECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. 13. IN THE INSTANT CASE, THE VARIATION IS ONLY RS. 35,99,208/-, WHICH IS 1.49% OF THE VALUE DETERMINED BY THE STAMP VALUATIO N AUTHORITY WHICH SHOULD THUS BE IGNORED AND THE VALUE SO DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED. IN THE RESULT, THE VALUE SO DECLARED BY THE ASSESSEE SHOULD BE ADOPTED AS FULL VALUE OF CONSIDERATION AND THE ADDI TION OF RS. 35,99,208 IS HEREBY DIRECTED TO BE DELETED. THE GROUND OF APPEA L TAKEN BY THE ASSESSEE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE. 14. NOW, COMING TO THE MATTER RELATING TO DEDUCTION OF RS. 1 CR WHICH HAS BEEN CLAIMED BY THE ASSESSEE FIRM AND ALLOWED B Y THE LD CIT(A) AND IS UNDER CHALLENGE BY THE REVENUE BEFORE US. 15. IN THIS REGARD, THE LD. DR SUBMITTED THAT THIS ISSUE WAS NOT EXAMINED BY THE ASSESSING OFFICER AT FIRST PLACE AND THEREFO RE, WHERE THE LD. CIT(A) DECIDED TO EXAMINE THE ISSUE, HE SHOULD HAVE ALLOWE D AN OPPORTUNITY TO THE ASSESSING OFFICER AND SHOULD HAVE CALLED FOR HIS RE MAND REPORT WHICH HAS NOT HAPPENED IN THE INSTANT CASE. FURTHER, ON MERIT S, HE SUBMITTED THAT THE SAID EXPENDITURE CANNOT BE HELD AS EXPENDITURE INCU RRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER. 16. IN HIS SUBMISSIONS, THE LD. AR SUBMITTED THAT T HE PROPERTY WAS SOLD FOR A CONSIDERATION OF RS. 18,63,71,000/- AND THE S AME WAS ASSESSED BY THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 14 SUB-REGISTRAR FOR LEVYING STAMP DUTY AT RS. 18,99,7 0,208/-. WHILE FILING THE RETURN OF INCOME, THE APPELLANT TOOK THE SALE CONSI DERATION AT RS. 17,61,42,188/-(RS. 18,63,71,000/- ACTUAL SALE CONSI DERATION AND REDUCED THEREFROM EXPENDITURE INCURRED IN CONNECTION WITH S UCH TRANSFER AMOUNTING TO RS. 1,02,28,812/-). OUT OF SAID RS. 1,02,28,812/ -, RS. 1,00,00,000/- WAS PAID TO SHRI RAMCHANDRA AGARWAL TOWARDS WITHDRAWING HIS RIGHTS AND ALLOWING THE TRANSFER TO THE OTHER PARTY OF THE SAM E PROPERTY FOR A HIGHER CONSIDERATION. 17. IT WAS SUBMITTED THAT THE APPELLANT PRIOR TO EN TERING INTO THE IMPUGNED SALE DEED DATED 6.12.2010 HAD ALREADY ENTE RED INTO ANOTHER AGREEMENT TO SELL WITH SHRI RAM CHANDRA AGARWAL TO SELL THE PROPERTY FOR A CONSIDERATION OF RS. 17,27,25,000/-. SUBSEQUENTLY, THE PROPERTY WAS SOLD TO TRIVENI KRIPA ENTERPRISES PRIVATE LIMITED VIDE THE ABOVE REFERRED SALE DEED DATED 6.12.2010 FOR A CONSIDERATION OF RS. 18,63,71 ,000/-. THUS BEFORE ENTERING THE FRESH SALE DEED, A RELINQUISHMENT FROM THE EARLIER PURCHASER I.E. SHRI RAM CHANDRA AGARWAL OF HIS RIGHT WITH RES PECT TO THE SAID PROPERTY WAS NECESSARY. THE APPELLANT AND SHRI RAM CHANDRA A GARWAL AGREED VIDE A MOU DATED 18.11.2010 THAT SINCE THE APPELLANT WOULD BE GETTING HIGHER SALES CONSIDERATION, IN LIEU OF ASSIGNMENT OF HIS R IGHTS, THE APPELLANT WOULD GIVE A SUM OF RS. 1,00,00,000/- TO SHRI RAM CHANDRA AGARWAL AND WHICH WAS PAID THROUGH ACCOUNT PAYEE CHEQUE. 18. IT WAS SUBMITTED THAT SECTION 48 OF THE ACT DE ALS WITH THE MODE OF COMPUTATION OF CAPITAL GAIN AND CONTAINS THAT FROM THE VALUE OF SALE CONSIDERATION, UNDER CLAUSE (I) OF SECTION 48, EXPE NDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER SH ALL BE REDUCED. IT IS ALSO IMPORTANT TO NOTE THAT CLAUSE (I) OF SECTION 48 ALL OWS DEDUCTION OF THE EXPENDITURE INCURRED IN CONNECTION WITH TRANSFER AN D IT IS NOT RESTRICTING THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 15 EXPENDITURE FOR TRANSFER ONLY. HENCE, THE SAID EXPE NDITURE OUGHT TO BE REDUCED WHILE MAKING THE FINAL COMPUTATION OF LONG TERM CAPITAL GAIN, SINCE WITHOUT PAYING SAID AMOUNT, THE SALE UNDER CO NSIDERATION COULD NOT BE AFFECTED. THEREFORE, THE SAID EXPENDITURE IS VER Y WELL INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AN D RIGHTLY CLAIMED AND DEDUCTABLE. 19. IT WAS SUBMITTED THAT THE LD. A.O. DID NOT DECL INE THE SAID CLAIM BUT SIMULTANEOUSLY, DID NOT REDUCE THE SAME ALSO WHILE MAKING THE FINAL COMPUTATION OF THE LONG TERM CAPITAL GAIN AND IT MA Y BE AN INADVERTENT MISTAKE ON HIS PART AND WHICH IN ANY CASE, HAS BEEN DULY EXAMINED BY THE LD CIT(A). HE ACCORDINGLY SUPPORTED THE FINDINGS O F THE LD. CIT(A) WHICH ARE CONTAINED AT PARA NO. 7.3 OF HIS ORDER WHICH RE ADS AS UNDER:- 7.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STAT EMENT OF FACTS, GROUNDS OF APPEAL AND THE SUBMISSION OF THE APPELLA NT CAREFULLY. IT IS SEEN THAT APPELLANT PAID RS. 1,00,00,000/- TO SHRI RAMCHANDRA AGARWAL TOWARDS WITHDRAWING HIS RIGHTS AND ALLOWING THE SALE PROPERTY, UNDER CONSIDERATION, TO OTHER PARTY FOR H IGHER CONSIDERATION, AS EVIDENT FROM PARA 4 ON PAGE 7, TH E MOU DATED 18.11.2010, WHICH READS AS UNDER:- 4- ;G FD F)RH; I{K IZFKE I{K DKS BL CKR DS FY;S VK OLR DJRS GQ;S VAMJVSFDAX NSRK GS FD IZFKE I{K )KJK MDR LEIFRR DS FO; I= DK FU'IKNU ,OA IATH;U MDR F=O S.KH D`IK ,AVJIZKBZTST IZK- FY- TFJ;S FUNSKD JH JKEPUNZ VXZOKY IQ= JH CZNHUKJK;.K VXZOKY] FUOKLH 9& 10] XKSIKY UXJ&,] XKSIKYIQJK CKBZIKL JKSM] T;IQJ DS GD ESA FU'IKFNR DJOK;S TKUS ESA F)RH; I{K DKS FDLH HKH IZDKJ DH DKSBZ VKIFRR] MTZ] NKOK VKFN UGHA GS V KSJ UK GH F)RH; I{K ;K VKSJ MLDK DKSBZ HKH MRRJKF/KDKJH ] OKFJL] FOF/KD IZFRFUF/K] LFKKUKIUU VKFN BL LECU/K ESA HKFO'; ESA IZFKE I{K DS FO:) FDLH HKH IZDKJ DH DKSB Z DK;ZOKGH GH VEY ESA YK LDSAXSASS ALSO FROM PARA 2 ON PAGE 6 OF THE MOU, IT IS NOTICE D PAYMENT IS MADE THROUGH PROPER BANKING CHANNEL, WHICH READS AS UNDER:- 2- ;G FD MIJKSDR OF.KZR R;KQNK 'KRKSZA DS EQRKFCD IZFKE I+{K US TKS DQY FO; JKFK 18]63]71]000@& :I K;S IZKIR GQBZ GS MLESA LS ,D DJKSM :I;S F)RH; I{K DKS FUEU IZDKJ VNK DJ FN;S FKSA ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 16 ,- PSD LA[;K 081207 CSAD ,PMH,QLH CSAD FY- :IK;S 5 0]00]000@& V{KJS IPKL YK[K :IK;S EK= FNUKAD 26-10-2010- CH- PSD LA[;K 081208 CSAD ,PMH,QLH CSAD FY- :IK;S 50]00]000@& V{KJS IPKL YK[K :IK;S EK= FNUKAD 27-10-2010 FTLDH IZKFIR DH RLNHD ,OA VFHKLOHD`FR F) RH; I+{K BL ESEKSJSUME VKWQ VAMJLVSFMAX ESA DJRS GQ;S JLHN TKJH DJRK GSASS IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED VIEW T HAT WITHOUT PAYING AFORESAID AMOUNT, THE SALE COULD NOT BE AFFE CTED, THEREFORE, IT IS HELD THAT SAID EXPENDITURE IS INCURRED WHOLLY AN D EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. ACCORDINGLY, RS. 1,0 0,00,000/- IS ALLOWED AS DEDUCTION U/S 48. THIS GROUND IS ALLOWED . 20. FURTHER, RELIANCE WAS PLACED ON THE FOLLOWING C ASE LAWS, WHEREIN, IT WAS HELD THAT THE WORD IN CONNECTION WITH TRANSFER IS MUCH WIDER THAN FOR THE TRANSFER. THEREFORE, ANY EXPENDITURE WITH OUT INCURRING WHICH THE TRANSFER COULD NOT BE AFFECTED AS ENVISAGED IN THE TRANSFER DEED SHALL BE TERMED AS INCURRED WHOLLY AND EXCLUSIVELY IN CONNEC TION WITH TRANSFER:- GOPINATH PAUL V/S. CIT 278 ITR 240 (2005) (CAL) WAHI V/S. DIT 325 ITR 269 CIT V/S. SHAKUNTALA KANTILAL 190 ITR 50 (1981) (BOM ) CIT V/S. BRADFORD TRADING CO. P. LTD. 261 ITR 222 ( 2003) (MAD.) SHRI VIVEK BOSS V/S. ITO, ITAT KOLKATA C BENCH KO LKATA, ITA NO. 1236/ KOL/2013 21. IT WAS ACCORDINGLY SUBMITTED THAT IN VIEW OF T HE ABOVE, LD. CIT(A) HAS RIGHTLY ALLOWED DEDUCTION OF RS. 1,00,00,000/- UNDER CLAUSE (I) TO SECTION 48 OF THE ACT IN THE COMPUTATION OF THE LON G TERM CAPITAL GAIN AND THE ORDER OF THE LD CIT(A) SHOULD BE CONFIRMED AND THE GROUND SO TAKEN BY THE REVENUE SHOULD BE DISMISSED. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 17 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN TERMS OF MOU DATED 18.11. 2010 SIGNED BETWEEN THE ASSESSEE FIRM AND MR RAM CHANDRA AGARWAL, IT HA S BEEN STATED THAT THE ASSESSEE HAS AGREED TO SELL THE PROPERTY TO MR. RAM CHANDRA AGARWAL IN TERMS OF AGREEMENT TO SELL DATED 27.09.2009 WHICH W AS SUBSEQUENTLY AMENDED VIDE AGREEMENT DATED 27.12.2009 AND THEREAF TER ON 13.09.2010 AND AS ON THE DATE OF SIGNING OF MOU, MR RAM CHANDR A AGARWAL HAS ALREADY PAID A SUM OF RS. 4,11,01,111/- TO THE ASS ESSEE FIRM. IT HAS BEEN FURTHER STATED IN THE MOU THAT MR. RAM CHANDRA AGAR WAL HAS AGREED TO ASSIGN HIS RIGHTS IN THE PROPERTY IN FAVOUR OF M/S TRIVENI KRIPA ENTERPRISES PVT. LTD AND HAS ALSO AGREED WITH M/S TRIVENI KRIPA ENTERPRISES PVT. LTD FOR HIGHER SALE CONSIDERATION OF RS. 18,63,71,000/- TO BE PAID TO THE ASSESSEE FIRM AS AGAINST THE EARLIER SALE CONSIDERATION OF R S. 17,27,25,000/- AGREED UPON BETWEEN THE ASSESSEE FIRM AND MR. RAM CHANDRA AGARWAL. AND IN CONSIDERATION THEREOF, THE ASSESSEE FIRM SHALL PAY A SUM OF RS. 1 CR TO SHRI RAM CHANDRA AGARWAL AND THE AMOUNT OF RS. 4,11,01,1 11/- ALREADY PAID BY SHRI RAM CHANDRA AGARWAL SHALL BE CONSIDERED TOWARD S PAYMENT OF PART CONSIDERATION BY M/S TRIVENI KRIPA ENTERPRISES PVT. LTD. BASIS THE SAID UNDERSTANDING BETWEEN THE PARTIES, THE ASSESSEE FIR M HAS PAID A SUM OF RS. 50,000,00/- ON 26.10.2010 AND ANOTHER RS. 50,000,00 /- ON 27.10.2010 THROUGH TWO SEPARATE CHEQUES ISSUED FROM ITS BANK A CCOUNT MAINTAINED WITH HDFC BANK. SUBSEQUENTLY, THE SALE DEED WAS EXE CUTED BETWEEN M/S BAJAJ UDYOG AND M/S TRIVENI KRIPA ENTERPRISES PVT. LTD ON 06.12.2010 WHEREIN THE PAYMENT OF RS. 4,11,01,111/- HAS BEEN D ULY DISCLOSED AS PART OF THE TOTAL PAYMENT RECEIVED BY THE ASSESSEE FIRM FROM M/S TRIVENI KRIPA ENTERPRISES PVT. LTD. WE THEREFORE FIND THAT THERE IS A DIRECT AND CLOSE LINKAGE BETWEEN THE SIGNING OF THE MOU DATED 18.11. 2010 AND THE SALE DEED EXECUTED ON 06.12.2010 AND THE PAYMENT OF RS. 1 CR IS CONNECTED WITH THE TRANSFER OF THE IMPUGNED PROPERTY IN FAVOU R OF M/S TRIVENI KRIPA ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 18 ENTERPRISES PVT. LTD AND THE ASSESSEE SHOULD THEREF ORE BE ELIGIBLE TO CLAIM THE SAME WHILE COMPUTING THE CAPITAL GAINS. WE THER EFORE, AFFIRM THE FINDINGS OF THE LD. CIT(A). THE MATTER IS THUS DEC IDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 23. NOW, COMING TO THE MAIN GROUND RAISED BY THE RE VENUE WHEREIN THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) WHEREIN HE HAS HELD THAT REFERENCE TO THE DVO BY THE ASSESSING OFFICER WAS INVALID AND HENCE, THE VALUATION SO DETERMINED BY THE DVO CANNOT BE AD OPTED FOR DETERMINING THE FMV AS ON 1.04.1981 AND THE ADDITION MADE BY TH E AO BY ADOPTING INDEXED COST OF ACQUISITION ON THE BASIS OF DVOS R EPORT WAS DELETED. 24. IN THIS REGARD, THE LD. CIT DR TOOK US THROUGH THE FINDINGS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE H AS ADOPTED THE FAIR MARKET VALUE LAND AS ON 01.04.1981 ON THE BASIS OF REPORT OF A REGISTERED VALUER AND AFTER GOING THROUGH THE REPORT OF THE RE GISTERED VALUER, THE ASSESSING OFFICER WAS OF THE OPINION THAT IT IS NEC ESSARY TO HAVE THE REPORT OF ANOTHER TECHNICAL EXPERT, I.E. DVO TO WHOM A REF ERENCE IS THEREAFTER MADE U/S 55A OF THE ACT ON 08.01.2014. IT WAS SUBM ITTED THAT PURSUANT TO THE DVOS REPORT DATED 07.03.2014, THE ASSESSING OF FICER HAS ADOPTED FMV OF THE PROPERTY AS ON 01.04.1981 AT RS. 34,57,660/ -. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS PROVIDED A COPY OF THE REPORT OF THE DVO ON 13.03.2013 AND SUBSEQUENTLY, THE ASSESSEE VIDE L ETTER DATED 07.03.2014 HAS RAISED THE CERTAIN OBJECTIONS WITH REGARD TO TH E REFERENCE MADE U/S 55A TO THE DVO ON THE PLEA THAT THE REFERENCE MADE WAS INVALID AS AMENDMENT IN SECTION 55A IS EFFECTIVE FROM 01.07.2012. FURTHE R, IT WAS SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 18.03.2014 ALSO FILE D AN APPLICATION U/S 144A TO THE ADDL. CIT, RANGE-6, JAIPUR FOR SEEKING NECES SARY DIRECTION TO THE ASSESSING OFFICER. IN THIS REGARD, OUR REFERENCE WA S DRAWN TO THE DIRECTION ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 19 ISSUED BY THE ADDL. CIT, RANGE-6, JAIPUR U/S 144A W HEREIN THE RELEVANT FINDINGS ARE AS UNDER:- 4. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A SSESSEE IN ITS APPLICATION U/S 144A DATED 18/3/2014, REPORT OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE ASSESSEE DU RING THE COURSE OF HEARING ON 21/3/2014. AFTER DUE CONSIDERA TION, THE POSITION EMERGED IS DISCUSSED AS UNDER:- (A) ON PERUSAL OF THE CASE RECORDS, I FIND THAT THE ASSESSEE FILED THE COPY OF THE VALUATION REPORT OF THE REGISTERED VALUER, SHRI G.S. BAPNA IN SUPPORT OF THE FAIR MARKET VALUE OF THE AS SET AS ON 1/4/1981. IT IS ON THE BASIS OF THE VALUE OF RS.2,7 2,94,000/- THAT THE ASSESSEE HAS CLAIMED THE BENEFIT OF INDEXED COS T OF ACQUISITION. THE ASSESSING OFFICER REFERRED THE MATTER TO THE DV O U/S 55 A OF THE IT ACT, 1961 ON 8/1/2014 AFTER CONSIDERING THE FOLLOWING FACTORS FOR FORMING AN OPINION IN THE MATTER :- 'THE ASSESSEE HAS FILED COPY OF VALUATION REPORT OF SHRI G.S. BAPNA, REGISTERED VALUER IN SUPPORT OF THE FAI R MARKET VALUE OF THE LAND AS ON 1/4/1981. IT IS ON THE BASI S OF THIS VALUE THAT THE ASSESSEE HAS CLAIMED INDEXED COST OF ACQUISITION. ON PERUSAL OF THE REGISTERED VALUER'S REPORT, THE FOLLOWING FACTS HAVE BEEN NOTICED :- (5) THE REGISTERED VALUER HAD ESTIMATED THE VALUE OF THE PROPERTY AT RS. 90,98,000/- BY TAKING THE RATE OF R S.1093/- AS ON 1/4/1981 AND MAKING ADJUSTMENTS ON ACCOUNT OF CORNER PLOT, LOCATION ETC. AND ARRIVED AT THE VALUE BY TAKING RATE OF RS.3306/- . IN THE SAME VALUATION REPORT, H E HAS ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 20 TAKEN THE VALUE AT RS.2,72,94,000/- TAKING THE RATE AT RS. 9918/- IF THE PARTY USES IT AS COMMERCIAL. THERE IS HUGE VARIATION IN THE VALUE ESTIMATED BY THE REGISTERED VALUER AT RS. 9098000/- AND RS. 27294000/-. (6) IN S. NO. 6, THE REGISTERED VALUER HAS HIMSELF GIVEN THE NATURE OF THE PROPERTY AS 'RESIDENTIAL LAND'. THEREFORE, THE NATURE OF THE ASSET AND ITS USE THE AT RELEVANT TIME IS NOT CLEAR FROM THE REGISTERED VALU ER'S REPORT; (7) FURTHER, THERE WAS NO BASIS OR EVIDENCE FOR TH E ADJUSTMENTS MADE BY THE REGISTERED VALUER; (8) HAVING REGARD TO THE NATURE OF THE ASSET AND I TS USE AT THE RELEVANT TIME, I AM OF THE OPINION THAT FOR COM PUTATION OF THE LONG TERM CAPITAL GAIN, IT IS NECESSARY TO H AVE THE REPORT OF ANOTHER TECHNICAL EXPERT, I.E. DVO TO WHO M A REFERENCE IS MADE U/S 55A OF THE IT ACT, 1961' IT IS, THUS, SEEN THAT THE REFERENCE WAS NOT MADE I N A ROUTINE MANNER, BUT AFTER CONSIDERING THE RELEVANT FACTORS AND AFTE R FORMING AN OPINION ON THE ISSUE. THEREFORE, THERE IS APPEARS TO BE NO INFIRMITY IN THE ACTION OF THE AO IN REFERRING THE MATTER TO THE DVO . (B) NOW REGARDING THE APPLICABILITY OF AMENDMENT MA DE IN SEC. 55A BY THE FINANCE ACT, 2012, THROUGH WHICH THE WOR DS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' HAS BEEN SUBSTITUTED IN PLACE OF ' IS LESS THAN ITS FAIR MARKET VALUE' W.E.F. 01/07/2012, IT IS NOTICED IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL, 2012, TH E LEGISLATURE HAS CLEARLY SPECIFIED THE ASSESSMENT YEAR FROM WHICH THE AMENDM ENTS MADE IN SECTION 47 AND SEC. 2 (19AA)(IV), SECTION 49(1), SE CTION 50 D, SECTION 54 B, SECTION 54 GB AND SECTION 112(1) WILL BE EFFECTI VE WHEREAS IN RESPECT OF ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 21 AMENDMENT MADE TO SECTION 55A, THE DATE FROM WHICH THE AMENDMENT WILL BE APPLICABLE HAS BEEN CLEARLY SPECIFIED AS ' W.E.F. 01/07/2012'. THIS SHOWS THAT THE AMENDMENT IN SEC. 55 A IS NOT APPLIC ABLE FROM A PARTICULAR ASSESSMENT YEAR, BUT IT IS EFFECTIVE FROM THE DATE 01/07/2012 ON ALL PENDING PROCEEDINGS. PRIOR TO 1/7/2012, ASSESSING O FFICER WAS NOT EMPOWERED TO MAKE A REFERENCE IN A CASE IN WHICH TH E FAIR MARKET VALUE AS ON 1/4/1981 WAS SHOWN AT A HIGHER VALUE AS THE W ORD USED IN THE SECTION WAS 'WHERE IN THE OPINION OF THE ASSESSING OFFICER VALUE OF ASSET AS CLAIMED BY THE ASSESSEE IS LESS THAN ITS MARKE T VALUE'. IF THE FAIR MARKET VALUE OF THE ASSET IS TAKEN AT A HIGHER FIGU RE, THEN THE CAPITAL GAIN BEING OFFERED FOR TAX WOULD BE LOWER. IT IS WITH AN INTENTION TO CURE THIS LACUNA OR MISCHIEF THAT THE AMENDMENT HAS BEEN BROU GHT IN WITH EFFECT FROM 01/07/2012, ENABLING THE AO TO REFER THE CASE W.E.F. 1/7/2012 IF HE IS OF THE OPINION THAT THE VALUE OF THE PROPERTY AS ON 01/04/1981 ESTIMATED BY THE REGISTERED VALUER IS AT VARIANCE WITH THE FA IR MARKET VALUE OF THE ASSET AS ON 01/04/1981. THIS IS A CURATIVE AND PROC EDURAL AMENDMENT MADE EFFECTIVE FROM THE DATE 01/07/2012 AS SPECIFIC ALLY MENTIONED IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BIL L. IF THE INTENTION OF THE LEGISLATURE WAS TO MAKE THE AMENDMENT WITH EFFE CT FROM A PARTICULAR ASSESSMENT YEAR, THEN THE ASSESSMENT YEAR FROM WHIC H AMENDMENT IS EFFECTIVE SHOULD HAVE BEEN MENTIONED BY IT. AS MENT IONED ABOVE, THE LEGISLATURE HAS CLEARLY SPECIFIED THAT THE AMENDMEN T WILL BE EFFECTIVE FROM THE DATE 01/07/2012, FROM WHICH DATE THE ASSESSING OFFICER HAS BEEN ENABLED TO MAKE THE REFERENCE TO DVO WHERE HE IS OF THE OPINION THAT THE VALUE OF ASSET CLAIMED BY THE ASSESSEE ON THE BASIS OF REPORT OF THE REGISTERED VALUER IS AT VARIANCE WITH THE FAIR MARK ET VALUE OF THE ASSET. IN THIS CASE, THE REFERENCE HAS BEEN MADE BY THE AO ON 08/01/2014 AFTER FORMING AN OPINION BEFORE MAKING THE REFERENCE. TAK ING INTO ACCOUNT THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 22 FACTS OF THE CASE IN ITS ENTIRETY, THE SUBMISSION M ADE BY THE ASSESSEE IS NOT FOUND TO BE ACCEPTABLE. (C) THE DECISIONS IN THE CASE OF MRS. RUBAB M KA ZERANI V. JCIT (2004) 91 ITD 429 (MUMBAI TRIBUNAL) MRS ROSY DIMELLO VS. A CIT, CIRCLE-2. THANE 2014 (2) TMI 424 ITAT MUMBAI CITED BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN THOSE CASES THE ISSUE OF AMENDMENT BROUGHT IN BY FINANCE ACT, 2012 WAS NOT INVOLVED. (D) THE MATTER OF VALUATION WAS REFERRED U/S 55A OF THE IT ACT, 1961 AND THE REPORT OF THE DVO WAS ALSO RECEIVED U/ S 55A OF THE IT ACT, 1961. IN COL. NO. 1.7 OF THE REFERENCE, THE SE CTION WAS MENTIONED AS 55A(A). IN THIS REGARD, IT MAY BE STAT ED THAT WITH THE AMENDMENT OF SEC. 55 A W.E.F. 01-072012, THE AO IS EMPOWERED TO INVOKE CLAUSE (A) AS HE WAS OF THE OPINION, AFTER C ONSIDERING THE RELEVANT FACTORS, THAT THE VALUE SHOWN BY THE ASSES SEE ON THE BASIS OF REPORT OF THE REGISTERED VALUER WAS AT VARIANCE WITH THE FAIR MARKET VALUE AS ON 1/4/1981. BOTH THE CLAUSES (B) O F SEC. 55A IS GOVERNED BY THE OVERRIDING EXPRESSION ' IN ANY OTHE R CASE', WHICH EXPRESSION, AS HELD BY THE HON'BLE GUJARAT HIGH COU RT IN THE CASE OF HIRA BEN JAYANTILAL SHAH VS. CIT, REFERS TO A CASE WHERE THE VALUE DECLARED BY THE ASSESSEE IS NOT IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER. ALSO THERE ARE JUDIC IAL DECISIONS TO THE EFFECT THAT EVEN IN A CASE THERE IS REGISTERED VALUER'S REPORT, THERE IS NO BAR FOR MAKING REFERENCE UNDER CLAUSE ( B) (II) OF SEC. 55A. HOWEVER, THE ENABLING SECTION FOR REFERRING TH E MATTER OF VALUATION FOR COMPUTATION OF CAPITAL GAIN IS SECTIO N 55A OF THE IT ACT, 1961. IN THE INSTANT CASE THE AO HAS CLEARLY MENTIO NED IN THE REFERENCE ITSELF THAT 'DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE HAS FILED A COPY OF THE VALUATION REPO RT OF THE REGISTER ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 23 VALUER, SHRI G.S. BAPNA (COPY ENCLOSED FOR READY RE FERENCE), IN WHICH THE VALUE OF THE LAND AS ON 1/4/81 HAS BEEN TAKEN A T RS. 90,98,000/- IF IT IS CONSIDERED AS RESIDENTIAL AND RS.27294000/ - IF IT IS TAKEN AS COMMERCIAL. FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN, IT IS NECESSARY TO ARRIVE AT THE VALUE OF THE LAND AS ON 1/4/1981. I AM OF THE OPINION THAT THE VALUE ESTIMA TED BY THE REGISTER VALUER IS AT VARIANCE WITH THE FAIR MARKET VALUE OF THE ASSET HAVING REGARD TO THE NATURE OF THE ASSET AND ITS US E AT THE RELEVANT TIME. THEREFORE, I CONSIDER IT NECESSARY TO REFER T HE BELOW- MENTIONED CASE FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE CASE ON THE RELEVANT DATE AS INDICATED BELOW.' THIS IS ALSO IN CONSONANCE WITH SEC. 55A(B)(II) AS THE AO FOUND THA T IT WAS NECESSARY TO REFER THE MATTER HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT FACTORS. 25. IT WAS ACCORDINGLY SUBMITTED BY THE LD. CIT DR THAT THE REFERENCE TO THE DVO WAS MADE BY THE ASSESSING OFFICER AFTER THE AMENDMENT WITH EFFECT FROM 01.07.2012 AND THE SAME BEING CURATIVE AND PROCEDURAL AMENDMENT, THE AMENDMENT APPLIES TO ALL PENDING PRO CEEDINGS ON OR AFTER DATED 01.07.2012. IT WAS FURTHER SUBMITTED THAT THE FIRST NOTICE U/S 143(2) WAS ISSUED BY THE AO ON 03.08.2012 AND THEREAFTER T HE REFERENCE WAS MADE TO THE DVO ON 08.01.2014 AFTER THE AMENDMENT H AS BEEN BROUGHT ON THE STATUE W.E.F 1.07.2012. THEREFORE, THE ASSESSIN G OFFICER WAS DULY EMPOWERED TO MAKE THE REFERENCE U/S 55A TO DVO IN R ESPECT OF DETERMINATION OF THE FMV OF THE PROPERTY AS ON 01.0 4.1981. HE ACCORDINGLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER. 26. PER CONTRA, THE LD. AR SUBMITTED THAT AT THE OU TSET, PERUSAL OF THE DEPARTMENTAL GROUND SHOWS THAT CIT(A) HAS ERRED BY NOT CONSIDERING THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 24 FACTS OF THE CASE IN RIGHT PERSPECTIVE. THE GRIEVAN CE IS LIMITED TO THE FACTS AND ITS CONSIDERATION, WHEREAS, PERUSAL OF THE ORDE R OF THE CIT(A) SHOWS THAT RELIEF HAS BEEN GRANTED ON THE BASIS OF INTERP RETATION OF LAW AND WHETHER AN AMENDMENT UNDER CONSIDERATION IS APPLICA BLE TO PARTICULAR YEAR OR NOT. UNDER THE FACTS AND CIRCUMSTANCES, THE ORDE R OF THE CIT(A) IS BASED UPON THE LAW, NOT ON FACTS, THEREFORE, GROUND UNDER CONSIDERATION IS NOT MAINTAINABLE. 27. IT WAS SUBMITTED THAT DURING THE YEAR UNDER CON SIDERATION, THE PROPERTY WAS SOLD AND THE RESULTANT LONG TERM CAPIT AL GAIN/LOSS WAS CALCULATED BY SUBSTITUTING THE FMV WORKED OUT BY TH E REGISTERED VALUER AS COST OF ACQUISITION, AS PROVIDED IN SECTION 55(2) O F THE ACT. THE LD. A.O. FORMED AN OPINION THAT THE VALUE ASCERTAINED BY THE REGISTERED VALUER IS HIGHER; HENCE, HE MADE A REFERENCE TO THE DVO. IT I S PERTINENT TO NOTE THAT THE ACTION OF THE LD. A.O. TO MAKE REFERENCE WAS CH ALLENGED DURING THE ASSESSMENT PROCEEDINGS ITSELF ON THE GROUND THAT HE COULD ONLY MAKE THE REFERENCE IF HE WAS OF THE OPINION THAT THE FMV ASC ERTAINED BY THE REGISTERED VALUER WAS LESS. 28. IT WAS SUBMITTED THAT TO APPRECIATE UNDER WHAT CIRCUMSTANCES, THE A.O. CAN MAKE A REFERENCE, THE RELEVANT SECTION I.E . 55A OF THE ACT AS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION MAY BE CONSIDERED AND WHICH READS AS UNDER: REFERENCE TO VALUATION OFFICER:- WITH A VIEW TO AS CERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITA L ASSET TO A VALUATION OFFICER:- ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 25 (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE. (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF O PINION:- (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THA N SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHAL F; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND O THER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, 29. IT WAS SUBMITTED THAT A PERUSAL OF THE ABOVE REFERRED LEGAL PROVISION MAKES IT ABUNDANTLY CLEAR THAT A REFERENCE TO THE D VO FOR THE RELEVANT PERIOD CAN BE MADE, WHERE THE A.O. IS OF THE OPINIO N THAT THE VALUE SO CLAIMED IS LESS THAN THE FMV WHEREAS, IN THE INSTAN T CASE, THE A.O. IS OF THE OPINION THAT THE VALUE SO CLAIMED WAS MORE THAN THE FMV. THUS, IT IS VERY MUCH CLEAR THAT THE REFERENCE WAS MADE WITHOUT HAVI NG ANY JURISDICTION TO MAKE SUCH REFERENCE. HENCE, THE SAME IS ILLEGAL AND , THEREFORE, CONSEQUENTLY THE SUBSEQUENT DVO REPORT IS ALSO ILLE GAL. 30. IT WAS SUBMITTED THAT DURING THE ASSESSMENT P ROCEEDINGS, THE AFORESAID OBJECTION WAS RAISED BEFORE THE AO AND SU BSTANTIATED WITH PLETHORA OF JUDGMENTS ON THE ISSUE WHETHER IN SUCH A CIRCUMSTANCE, THE REFERENCE CAN BE MADE OR NOT. THE SAME HAS BEEN DEA LT BY THE LD. A.O. IN HIS ASSESSMENT ORDER AT PAGE NOS. 9 TO 12. ON PERUS AL OF THE ASSESSMENT ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 26 ORDER, IT IS CLEAR THAT THE SOLE BASIS OF JUSTIFYIN G HIS ACTION BY THE AO IS THE AMENDMENT MADE BY THE FINANCE BILL, 2012 IN THE SEC TION 55A(A) W.E.F. 01.07.2012 ACCORDING TO WHICH THE WORDS AT VARIANC E WITH ITS FAIR MARKET VALUE HAVE BEEN SUBSTITUTED IN PLACE OF LESS THAN ITS FAIR MARKET VALUE. IT WAS SUBMITTED THAT PERUSAL OF THE THE ASSESSMENT OR DER, SHOWS THAT THE LD. A.O. DISTINGUISHED ALL THE RELIED UPON JUDGMENTS RE FERRED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS BY HOLDING THAT T HE REFERENCE HAS BEEN MADE ONLY BY APPLYING THE AMENDED PROVISION OF SECT ION 55A OF THE ACT. THE RELEVANT PART OF THE ORDER (PAGE 12 OF THE ASSE SSMENT ORDER) CLARIFYING THE SAID POSITION ADOPTED BY THE AO IS REPRODUCED A S FOLLOWS:- THE DECISIONS CITED BY THE ASSESSEE ARE NOT APPLIC ABLE TO THE FACTS OF THE PRESENT CASE AS THE REFERENCE MADE IN ASSESSEE S CASE IS ACCORDING TO THE AMENDED PROVISIONS OF SEC. 55A WHE REAS THE DECISIONS REFERRED TO ABOVE (MRS. RUBAB M KAZERANI V. JCIT (2004) 91 ITD 429 (MUMBAI TRIBUNAL) AND MRS. ROSY DIMELLO VS. ACIT CIRCLE- 2. THANE 2014(2) TMI 424 ITAT MUMBAI) RELATE TO THE OLD PROVISIONS WHICH STOOD BEFORE THE AMENDMENT MADE BY THE FINANC E ACT, 2012. 31. IT FURTHER EMERGES FROM THE ASSESSMENT ORDER TH AT ACCORDING TO THE LD. A.O., PRIOR TO 1.7.2012, NO SUCH REFERENCE COUL D BE MADE AS PER THE RELEVANT PART OF THE ORDER (PAGE 10 OF THE ASSESSME NT ORDER) WHICH IS REPRODUCED BELOW:- FROM THE ABOVE, IT IS NOTED THAT PRIOR TO 1.7.2012 , THE ASSESSING OFFICER HAD NO OPTION TO REFER A CASE TO THE VALUAT ION OFFICER IN WHICH THE FAIR MARKET VALUE AS ON 1 ST APRIL, 1981 WAS SHOWN AT A HIGHER VALUE AS THE WORD USED IN THE SECTION WAS WHERE IN THE OPINION OF ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 27 THE ASSESSING OFFICER VALUE OF ASSET AS CLAIMED BY THE ASSESSEE IS LESS THAN ITS MARKET VALUE. 32. WHILE THROWING LIGHT ON THE SAID AMENDMENT, THE LD. A.O. HAS ALSO REPRODUCED THE MEMORANDUM EXPLAINING THE PROVISION OF THE FINANCE BILL, 2012 RELATED TO THE SAID AMENDMENT AT PAGE 10 OF HI S ORDER. ACCORDING TO WHICH ALSO, REFERENCE CANNOT BE MADE BEFORE THE AME NDMENT WHERE THE FMV IS HIGHER IN THE OPINION OF THE ASSESSING OFFIC ER. FROM THE FORGOING DISCUSSIONS, IT IS CLEAR THAT LD. A.O. AGREES THAT BEFORE THE AMENDMENT, NO SUCH REFERENCE COULD BE MADE UNDER SUCH CIRCUMSTANC E BUT DUE TO AN AMENDMENT WITH EFFECT FROM 1.7.2012, SUCH REFERENCE CAN BE MADE. UNDER THE CIRCUMSTANCES, WITHOUT REPEATING THE JUDGMENTS RELIED UPON DURING THE ASSESSMENT PROCEEDINGS, THE SURVIVING ISSUE EMERGES AS UNDER:- WHETHER THE SAID AMENDMENT TO SECTION 55A(A) MADE BY THE FINANCE ACT, 2012, WHEREIN, IT IS SPECIFICALLY MENT IONED THAT IT IS APPLICABLE W.E.F. 1.7.2012 CAN APPLY TO THE PROCEED INGS RELEVANT TO THE ASSESSMENT YEAR 2011-12 ? 33. IT WAS SUBMITTED THAT THE LD. A.O. AT PAGE 10-1 1 OF HIS ASSESSMENT ORDER HAS HELD THAT THE INTENTION TO BRING THE AMEN DMENT IS TO REMOVE LACUNAE AND IT IS A CURATIVE AMENDMENT. ON PERUSAL OF THE MEMORANDUM EXPLAINING THE PROVISION OF THE FINANCE BILL, 2012, NOWHERE, IT IS WRITTEN THAT THE AMENDMENT IS TO REMOVE ANY LACUNAE. IT IS ONLY WRITTEN THAT IN A PARTICULAR SITUATION, REFERENCE CANNOT BE MADE AND THAT CAN LEAD TO LOWER AMOUNT OF CAPITAL GAIN WHICH DOES NOT MEAN THAT IT IS TO REMOVE LACUNAE. IT WAS SUBMITTED THAT IT IS ONLY EXPANDING THE CIRCUMS TANCES, WHEREIN POWER OF REFERENCE BY THE A.O. CAN BE EXERCISED. SUCH EXP ANSION OF POWER IS WITH RESPECT TO A NEW PARTICULAR CIRCUMSTANCE; HENCE, IT IS VERY MUCH CLEAR THAT THE AMENDMENT UNDER CONSIDERATION CANNOT BE SAID TO BE CURATIVE IN ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 28 NATURE, SINCE IT EXPANDS THE SCOPE TO COVER NEW CIR CUMSTANCES, FOR WHICH THERE IS NO EXISTING PROVISION FOR REFERENCE AND CU RATIVE ACTION IS ONLY POSSIBLE TO AN EXISTING PROVISION. FURTHER, IF IT I S FOR A CIRCUMSTANCE FOR WHICH POWER HAS ALREADY BEEN GIVEN THEN ANY SUCH AM ENDMENT CAN BE MADE BY WAY OF CLARIFICATION, SINCE IT IS NOT BY WA Y OF CLARIFICATION WHICH MEANS THAT IT IS TO COVER A NEW CIRCUMSTANCE, FOR W HICH, NO SUCH POWER EXISTS. 34. IT WAS FURTHER SUBMITTED THAT THE HONBLE SUPRE ME COURT IN THE CASE OF CIT VS. VATIKA TOWNSHIP PRIVATE LIMITED, CIVIL A PPEAL NO. 8750 OF 2014, VIDE ORDER DATED 15.9.2014 IN PARA 32 HELD THAT LE GISLATIONS WHICH MODIFY ACCRUED RIGHTS OR WHICH IMPOSE OBLIGATIONS OR IMPOS E NEW DUTIES OR ATTACH A NEW DISABILITY HAVE TO BE TREATED AS PROSPECTIVE UNLESS THE LEGISLATIVE INTENT IS CLEARLY TO GIVE THE ENACTMENT A RETROSPEC TIVE EFFECT. IT FURTHER HELD IN PARA 39(C) THAT IF THE CONCERNED PROVISION OF T HE TAXING STATUTE IS AMBIGUOUS AND VAGUE AND IS SUSCEPTIBLE TO TWO INTER PRETATIONS, THE INTERPRETATION WHICH FAVOURS THE SUBJECTS, AS AGAIN ST THERE THE REVENUE, HAS TO BE PREFERRED. IN THE INSTANT CASE, THE AMENDMEN T MODIFY A RIGHT OF THE ASSESSEE ACCORDING TO WHICH ESTIMATE MADE BY THE RE GISTERED VALUER HAVE TO ACCEPTED UNDER CERTAIN CIRCUMSTANCES. BY EXPANDI NG SUCH CIRCUMSTANCES, SUCH RIGHT HAS BEEN DILUTED. 35. IT WAS FURTHER SUBMITTED THAT IT IS AN ADMITTED FACT THAT THE AMENDMENT IS W.E.F. 1.7.2012, MEANS IT HAS COME INT O FORCE FROM 1.7.2012. IT IS PERTINENT TO NOTE THAT INCOME TAX PROCEEDING OF EACH ASSESSMENT YEAR IS SEPARATE FROM THE OTHER ASSESSMENT YEAR. IT HAS TO BE ASSESSED ACCORDING TO THE PROVISIONS APPLICABLE TO THAT PART ICULAR ASSESSMENT YEAR. EVEN ON VARIOUS OCCASIONS IN THE PAST AS WELL, WHEN EVER THE LEGISLATURE INTENDED TO APPLY A PROVISION RETROSPECTIVELY, IT W AS SPECIFICALLY MENTIONED ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 29 THAT IT WOULD BE APPLICABLE RETROSPECTIVELY WHICH H AS NOT BEEN DONE FOR THE AMENDMENT UNDER CONSIDERATION. THE LD. A.O. HAS GRO SSLY ERRED BY ASSUMING THE POWER WHICH IS IN FORCE FROM 1.7.2012, FOR THE PERIOD FROM 1.4.2010 TO 31.3.2011. ERROR OF ASSUMING SUCH POWER LEAD TO RETROSPECTIVE EFFECT WHICH IS NOT THE INTENT OF THE LEGISLATURE. IT IS FURTHER SUBMITTED THAT SUCH ERROR OF ASSUMING POWER IS A RESULT OF NOT REC OGNIZING THE PRINCIPLE OF INDEPENDENCE OF EACH ASSESSMENT YEAR FOR APPLICABIL ITY OF PROVISIONS OF THE ACT. 36. IT WAS ACCORDINGLY SUBMITTED THAT BASIS THE FOR GOING DISCUSSIONS, IT CLEARLY SHOWS THAT THE AMENDMENT IS APPLICABLE ONLY FOR THE TRANSACTIONS WHICH ARE ENTERED ON OR AFTER 1.7.2012. THE VIEW IS FURTHER SUPPORTED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN THIS REGAR D: (A) HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PU JA PRINTS [2014] 360 ITR 697 (BOM) WHILE DECIDING THE CASE ON THE ISSUE OF REFERENCE UNDER SECTION 55A(A) OF THE ACT, OBSERVED THAT:- 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF T HE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY W HICH THE WORDS IS LESS THAN THE FAIR MARKET VALUE IS SUBST ITUTED BY THE WORDS IS AT VARIANCE WITH ITS FAIR MARKET VALUE I S CLARIFICATORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBM ISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE E FFECTIVE ONLY FROM 1 JULY, 2012. THE PARLIAMENT HAS NOT GIVE N RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, T HE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSME NT YEAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY REFEREN CE COULD BE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 30 MADE TO DEPARTMENTAL VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSES SING OFFICER LESS THAN ITS FAIR MARKET VALUE. THE ABOVE REFERRED CASE IS FOR THE A.Y. 2006-07. TH E HONBLE HIGH COURT WHILE MAKING THE OBSERVATIONS OVER THE AMENDM ENT MADE WITH EFFECT FROM 1.7.2012, HAS CATEGORICALLY CLARIFIED T HAT THE LAW EXISTING DURING THE PERIOD RELEVANT TO THE A.Y. 2006-07 WOUL D BE APPLICABLE WHICH MEANS NEITHER THE AMENDMENT UNDER CONSIDERATI ON NOR OF THE PERIOD WHEN THE ASSESSMENT WAS COMPLETED BY THE ASS ESSING OFFICER WOULD BE APPLICABLE. IN THE INSTANT CASE, THE LAW E XISTING DURING THE PERIOD RELEVANT TO THE A.Y. 2011-12 SHOULD HAVE BEE N APPLIED ACCORDING TO THE SAID JUDGMENT AND NOT OF THE PERIO D WHEN THE ASSESSMENT ORDER IS MADE AND ACCORDINGLY, IT IS VER Y MUCH CLEAR THAT ASSESSING OFFICER MADE THE REFERENCE WITHOUT HAVING POWER TO DO SO. THUS SUCH REFERENCE IS ILLEGAL AND CONSEQUENT REPOR T OF THE DVO IS ALSO NOT RELEVANT FOR THE ASSESSMENT PURPOSE. (B) IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GAURA NGINIBEN S SHODHAN INDL HONBLE GUJARAT HIGH COURT VIDE ITS ORDER DATED 21.1.2014 HAS OBSERVED:- 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 A LSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT, WE HAVE NOTI CED THAT PRIOR TO THE AMENDMENT IN SECTION 55A WITH EFFECT F ROM 1.7.2012 IN A CASE, THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER WAS OF THE OPINION ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 31 THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MA RKET VALUE AS ON 1.4.1981. IT WOULD NOT BE THE CASE OF THE ASSESS ING OFFICER THAT THE VALUE OF THE ASSET SHOWN AS ON 1.4.1981 WA S LESS THAN THE FAIR MARKET VALUE. SUCH CLAUSE, THEREFORE, AS I T STOOD AT THE RELEVANT TIME, HAD NO APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS THAT WITH EFFECT FROM 1. 7.2012, THE EXPRESSION NOW USED IN CLAUSE (A) OF SECTION 55A IS IS AT VARIANCE WITH ITS FAIR MARKET VALUE. THE SITUATION MAY, THEREFORE, BE DIFFERENT AFTER 1.7.2012. WE ARE, HOW EVER, CONCERNED WITH THE PERIOD PRIOR THERETO. CLAUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FA IR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAI MED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGA RD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCE S, IT IS NECESSARY SO TO DO. SUB-CLAUSE (I) OF CLAUSE (B) AL SO FOR THE SAME REASONS RECORDED ABOVE; WOULD HAVE NO BEARING ON THE FAIR MARKET VALUE AS ON 1.4.1981. THE ASSESSING OFF ICER HAD NOT RESORTED TO SUB-CLAUSE (II) OF CLAUSE (B). IN A NY CASE, CLAUSE (B) WOULD APPLY WHERE CLAUSE (A) DOES NOT APPLY SIN CE IT STARTS WITH THE EXPRESSION IN ANY OTHER CASE. IN OTHER W ORDS IF THE ASSESSEE HAS RELIED UPON A REGISTERED VALUERS REPO RT, THE ASSESSING OFFICER CAN PROCEED ONLY UNDER CLAUSE (A) AND CLAUSE (B) WOULD NOT BE APPLICABLE. ON PERUSAL OF THE ORDER, IT IS CLEAR THAT THE CLAUS E AS IT STOOD AT THE RELEVANT TIME SHALL BE APPLICABLE. THE RELEVANT TIM E HERE MEANS THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 32 ASSESSMENT YEAR UNDER CONSIDERATION AND IT IS FURTH ER STATED THAT THE AMENDMENT SHALL BE APPLIED ONLY AFTER 1.7.2012. THE DATE 1.7.2012 DOES NOT FALL UNDER THE RELEVANT TIME IN THE INSTAN T CASE AS WELL. HENCE, IT IS CLEAR THAT ACCORDING TO THIS JUDGMENT ALSO, THE SAID AMENDMENT IS NOT OPERATIVE FOR THE PERIOD UNDER CON SIDERATION. (C) HONBLE GUJARAT HIGH COURT IN ITA NO. 1204 OF 2018 IN THE CASE OF DCIT V/S. LATE SHANTABEN P PATEL L/H GOVIND BH AI P. PATEL VIDE ORDER DATED 8.10.2018 DECIDED THE QUESTION UNDER CO NSIDERATION BY FOLLOWING THE JUDGMENT GIVEN IN THE CASE OF CIT V/S . GAURANGINIBEN S SHODHAN. 37. FURTHER, LD. AR SUBMITTED THAT THE CO-ORDINATE BENCHES HAVE BEEN CONSISTENTLY TAKING THE SAME VIEW AS PER THE AFORES AID LEGAL PROPOSITION LAID DOWN BY THE HONBLE HIGH COURTS IN THE FOLLOWING CA SES: ITO VS SHRI RABINDER H. CHHABRA, HUF ( ITA NO. 5511/MUM/2012 DATED 23.5.2014 ). SEEMA CHHADHA VS. ACIT ( ITA NO. 66/RPR/2013 DATED 21.9.2016 ). SUNITA JAIN V/S. ITO (ITA NO. 847/JP/2012 DATED 30.5.2016) DEEPALI BHARGAVA, JAIPUR V/S. ITO (ITA NO. 158/JP/2016 DATED 30.5.2017) KUNAL KISHORE BORAWKE V/S. ITO (ITA NO. 723/PN/2016 DATED 14.10.2016) SHRI RAJARAM S. WAYALE VS. ITO (ITA NO. 4233-4244/MUM/2015 DATED 09.01.2017) SHRI UJJAVAL MAHESHBHAI PANDAYA VS. ITO, WARD 3(1), AHMADABAD (ITA NO. 113/AHD/2016 DATED 23.01.2017) ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 33 LATE SHRI GORDHANDAS S. GARODIA & ANR. VS. DCIT, MU MBAI (ITA NO. 5097 & 5113/MUM/2015 DATED 01.11.2017) SHRI BHIMA DADA KHARATE VS ASSISTANT COMMISSIONER O F INCOME TAX, NASHIK (ITA NO. 1582/PUN/ 2015 DATED 31.10.2017) LATE KUM. ALLOBAI BEZONJI VS INCOME TAX OFFICER, JA LNA (ITA NO. 895/PUN/2015 DATED 23.11.2017) MARUTI G.THOPTE, PUNE VS INCOME-TAX OFFICER, PUNE O N 5 JANUARY, 2018 ITO V/S. M/S. BHATIA INDUSTRIAL COMPANY (ITA NO. 5385 /MUM./2016 DATED 25.04.2018) SMT. DHIRAJ BEN PRAVIN BHAI PATEL VS. ITO (ITA NO. 902/AHD./2017) BHUDEVI KISHAN RAO GURANTYAL V/S. ITO (ITA NO. 1036 /PUN/2015) 38. IT WAS ACCORDINGLY SUBMITTED THAT IN LIGHT OF A BOVE JUDICIAL PRONOUNCEMENT DIRECTLY DEALING WITH THE ISSUE UNDER CONSIDERATION, IT IS VERY MUCH CLEAR THAT THE AMENDMENT IS NOT APPLICABL E TO THE YEAR UNDER CONSIDERATION AND LD. CIT(A) HAS RIGHTLY REVERSED T HE ACTION OF THE ASSESSING OFFICER AND OUR REFERENCE WAS DRAWN TO THE FINDINGS OF THE LD. CIT(A) AT PARA NO. 4.3 OF HIS ORDER WHICH READS AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER, DIRECTIO N GIVEN BY ADDL. CIT U/S 144A, STATEMENT OF FACTS, GROUNDS OF APPEAL AND THE SUBMISSION OF THE APPELLANT CAREFULLY. APPELLANT CH ALLENGED THE REFERENCE MADE U/S 55A TO DVO BY THE AO FOR DETERMI NATION FOR FAIR MARKET VALUE. IN SUPPORT OF THE CONTENTION APPELLAN T PLACED RELIANCE ON VARIOUS CASE LAWS. I HAVE ALSO GONE THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 34 THE ABSTRACT FROM JUDGMENT OF HONBLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. PUJA PRINTS 360 ITR 697, IS THIS S UBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECT IVE ONLY 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 DURING THE PE RIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VALUATION OFFICER ONL Y IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF ASSES SING OFFICER LESS THAN ITS FAIR MARKET VALUE. COMMISSIONER OF INCOME TAX VS. GAURANGINIBEN S SHOB HAN INDL., HONBLE GUJARAT HIGH COURT HELD THAT COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET V ALUE AS ON 1.4.1981 ALSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT, WE HAVE NOTICED THAT PRIOR TO THE AMENDMENT IN SECTION 55A WITH EFFECT FROM 1.7.2012 IN A CASE, THE VALUE OF THE ASSET CLA IMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MARKET VALUE AS ON 1 .4.1981. IT WOULD NOT BE THE CASE OF THE ASSESSING OFFICER THAT THE V ALUE OF THE ASSET SHOWN AS ON 1.4.1981 WAS LESS THAN THE FAIR MARKET VALUE. SUCH CLAUSE, THEREFORE, AS IT STOOD AT THE RELEVANT TIME , HAD NO APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS T HAT WITH EFFECT FROM 1.7.2012, THE EXPRESSION NOW USED IN CLAUSE (A ) OF SECTION 55A IS IS AT VARIANCE WITH ITS FAIR MARKET VALUE. THE SITUATION MAY, THEREFORE, BE DIFFERENT AFTER 1.7.2012. APPELLANT ALSO PLACED RELIANCE ON VARIOUS JUDGMENTS OF ITAT. COPY OF THE RECENTLY PASSED ORDER DATED 9.1.2017 OF ITAT, M UMBAI IN THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 35 CASE OF SHRI RAJARAM S. WAYALE VS. ITO (ITA NO. 423 3- 4244/MUM/2015) HAS ALSO BEEN FILED BY THE APPELLANT . THE ITAT, RELYING ON THE ORDER OF HONBLE BOMBAY HIGH COURT I N THE CASE OF PUJA PRINTS (SUPRA) HAS HELD AS UNDER:- 7. WE HAD ALSO CAREFULLY GONE THROUGH THE ORDER OF THE BOMBAY HIGH COURT IN CASE OF PUJA PRINTS (SUPRA), WHEREIN THE F ACTS ARE EXACTLY SIMILAR AND REFERENCE SO MADE BY THE AO WAS HELD TO BE INVALID FOR ASSESSMENT YEAR FALLING PRIOR TO THE AMENDMENT SO B ROUGHT IN BY FINANCE ACT,2012. UNDISPUTEDLY, RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2004-05, WHICH IS PRIOR TO THE AMENDMENT BROUGHT IN SECTION 55A(A) BY FINANCE ACT, 2012 W.E.F. 1.7.2012. 8. FACTS AND CIRCUMSTANCES IN ALL THE APPEALS BEFOR E US ARE SAME, RESPECTFULLY FOLLOWING THE DECISION OF BOMBAY HIGH COURT, WE DO NOT FIND ANY MERIT FOR THE REFERENCE SO MADE BY THE AO TO THE DVO, WHEN THE VALUE OFFERED BY ASSESSEE WAS MORE THAN THE VAL UE DETERMINED BY THE AO IN RESPECT OF ASSESSMENT YEAR FALLING PRI OR TO INTRODUCTION OF AMENDMENT BROUGHT IN SECTION 55A(A) BY FINANCE A CT,2012 W.E.F. 1.7.2012. 9. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED IN TERMS INDICATED HEREINABOVE. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS, I AM OF THE CONSIDERED VIEW THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONL Y FROM 1 JULY,2012. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EXISTING DURING THE PE RIOD RELEVANT TO THE ASSESSMENT YEAR 2011-12. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VALUATION O FFICER ONLY IF THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 36 VALUE DECLARED BY THE APPELLANT IS IN THE OPINION O F AO LESS THAN ITS FAIR MARKET VALUE. (II) AO OBSERVED THAT APPELLANT IS OTHERWISE COVERE D BY THE PROVISION OF SECTION 55A(B). HOWEVER, APPELLANT SUBMITTED THA T EVEN U/S 55A(B) REFERENCE CAN NOT BE MADE. IN SUPPORT OF THE CONTENTION APPELLANT PLACED RELIANCE ON VARIOUS CASE LAWS. I H AVE GONE THROUGH THE JUDICIAL PRONOUNCEMENT RELIED UPON BY THE APPEL LANT CAREFULLY. THE ABSTRACT FROM JUDGMENT OF HONBLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. PUJA PRINTS 360 ITR 697, IS IN THI S CASE, IT IS AN UNDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RESORT CAN NOT BE HELD TO THE R ESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. GAURANGINIBEN S SHODHAN INDL. HELD THAT CL AUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FA IR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET 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 O THER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. SUB-CLAUSE (I) OF CLAUSE (B) ALSO FOR THE SAME REASONS RECORDED ABOVE; WOULD HAV E NO BEARING ON THE FAIR MARKET VALUE AS ON 1.4.1981. THE ASSESSING OFFICER HAD NOT RESORTED TO SUB-CLAUSE (II) OF CLAUSE (B). IN ANY C ASE, CLAUSE (B) WOULD APPLY WHERE CLAUSE (A) DOES NOT APPLY SINCE IT STAR TS WITH THE EXPRESSION IN ANY OTHER CASE. IN OTHER WORDS IF T HE ASSESSEE HAS RELIED UPON A REGISTERED VALUERS REPORT, THE ASSES SING OFFICER CAN ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 37 PROCEED ONLY UNDER CLAUSE (A) AND CLAUSE (B) WOULD NOT BE APPLICABLE. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS, I AM OF THE CONSIDERED VIEW THAT IF THE APPELLANT HAS RELIED UPON A REGIST ERED VALUERS REPORT, THE AO CAN PROCEED ONLY UNDER CLAUSE (A) OF SECTION 55A AND CLAUSE (B) WOULD NOT BE APPLICABLE. (III) IN VIEW OF THE ABOVE DISCUSSED JUDGMENTS OF T HE HIGH COURT & ITAT, THE REFERENCE MADE BY THE AO U/S 55A(A) OF TH E DVO FOR ESTIMATING THE FAIR MARKET VALUE AS ON 1.4.1981 OF THE PROPERTY SHOULD BY THE APPELLANT IS HELD TO BE INVALID. HENC E, THE ADDITION MADE BY THE AO BY ADOPTING INDEXED COST OF ACQUISIT ION AT RS. 2,45,83,536/- ON THE BASIS OF DVOS REPORT, AS AGAI NST THE INDEXED COST OF ACQUISITION OF RS. 19,40,60,340/- ADOPTED B Y THE APPELLANT, IS HEREBY DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF APPELLANT. THIS GROUND IS ALLOWED. 39. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION IS WHETHER THE AMENDMENT TO SECTION 55A(A) MADE BY THE FINANCE ACT , 2012 W.E.F. 1.7.2012 CAN APPLY TO THE PROCEEDINGS RELEVANT TO T HE IMPUGNED ASSESSMENT YEAR 2011-12 AND WHETHER REFERENCE SO MA DE BY THE ASSESSING OFFICER TO DVO AS PER THE AMENDED PROVISIONS IS SUS TAINABLE OR NOT. 40. THE RELEVANT PROVISIONS CONTAINED IN SECTION 55 A OF THE ACT READS AS UNDER: ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 38 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET V ALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED V ALUER, IF THE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO C LAIMED IS AT VARI ANCE WITH ITS FAIR MARKET VALUE; (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PER CENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SU CH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF ; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND O THER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSES (HA) AND (I) OF SUB-SECTION (1) AND SUB-SECTIONS (3A) AND (4) OF SECTION 23, SUB-SE CTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEAL TH-TAX ACT, 1957 (27 OF 1957), SHALL WITH THE NECESSARY MODIFICATIONS, APPL Y IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. EXPLANATION.IN THIS SECTION, 'VALUATION OFFICER' H AS THE SAME MEANING, AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1 957 (27 OF 1957). 41. THE AFORESAID PROVISIONS ARE AS AMENDED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1.07.2012 WHEREIN IN CLAUSE (A), F OR 'IS LESS THAN ITS FAIR MARKET VALUE' WAS SUBSTITUTED FOR AT VARIANCE WITH ITS FAIR VALUE. AS PER THE REVENUE, THE AMENDED PROVISIONS OF SECTION 55A( A) ARE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR 2011-12 AND THE ASSESS ING OFFICER WAS WELL ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 39 WITHIN HIS JURISDICTION TO REFER THE MATTER TO THE VALUATION OFFICER. THE ASSESSEES CONTENTION IS THAT UNAMENDED PROVISIONS OF SECTION 55A(A) ARE RELEVANT FOR THE IMPUGNED ASSESSMENT YEAR 2011-12 A ND THE ASSESSING OFFICER WAS NOT HAVING THE JURISDICTION TO REFER TH E MATTER TO THE VALUATION OFFICER. 42. IN ORDER TO RESOLVE THE CONTROVERSY, LETS EXAM INE THE PROVISIONS OF SECTION 55A(A). FIRST AND FOREMOST, IT PROVIDES TH AT WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASS ET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUAT ION OF CAPITAL ASSET TO A VALUATION OFFICER. IN THE INSTANT CASE, FOR THE PU RPOSES OF THIS CHAPTER MEANS FOR THE PURPOSES OF DETERMINING THE LIABILITY TOWARDS THE CAPITAL GAINS TAX ON THE SALE OF THE LAND. THERE IS NO DISPUTE T HAT THE LIABILITY TOWARDS THE CAPITAL GAINS HAS ARISEN DURING THE YEAR AS THE TRANSFER OF THE PROPERTY HAS HAPPENED DURING THE YEAR. THE SECOND CONDITION IS THAT WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER. IN THE INSTA NT CASE, THERE IS NO DISPUTE THAT COST OF ACQUISITION AS SUBSTITUTED BY THE ASSESSEE WITH THE FAIR MARKET VALUE AS ON 1.4.1981 IS BASED ON AND IN ACCO RDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER. THE THIRD CONDITION IS THAT THE ASSESSING OFFICER SHOULD FORM AN OPINION THAT THE V ALUE SO CLAIMED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE (AS PER UNAMENDED PROVISIONS) OR IS AT VARIANCE WITH ITS FAIR MARKET VALUE (AS PER T HE AMENDED PROVISIONS). THE FORMATION OF THE OPINION BY THE ASSESSING OFFIC ER THEREFORE HAS TO BE SEEN AND EXAMINED IN THE CONTEXT OF DETERMINING THE LIABILITY TOWARDS THE CAPITAL GAINS AND THE LIABILITY TOWARDS THE CAPITAL GAINS CAN BE EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREF ORE, THE FORMATION OF THE OPINION BY THE ASSESSING OFFICER HAS TO BE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT PRIOR OR SUBSEQUENT TO THE COMPLETION OF ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 40 THE ASSESSMENT PROCEEDINGS. AS PER THE UNAMENDED PR OVISIONS, THE ASSESSING OFFICER HAS TO FORM AN OPINION THAT THE V ALUE SO CLAIMED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE. THERE FORE, ONLY IN A SCENARIO, THE VALUE SO CLAIMED BY THE ASSESSEE OF THE CAPITAL ASSET IS LESS THAN ITS FAIR MARKET VALUE IN THE OPINION OF THE ASSESSING OFFICE R, THE MATTER CAN BE REFERRED TO THE VALUATION OFFICER. IN A SCENARIO, W HERE THE VALUE SO CLAIMED BY THE ASSESSEE IS MORE THAN ITS FAIR MARKET VALUE, THE MATTER COULDNT BE REFERRED TO THE VALUATION OFFICER. HOWEVER, THE AM ENDED PROVISIONS TAKES CARE OF BOTH THE SCENARIOS AND HAS PROVIDED THAT WH ERE THE VALUE SO CLAIMED BY THE ASSESSEE IS AT VARIANCE WITH ITS FAI R MARKET VALUE, THE MATTER CAN BE REFERRED TO THE VALUATION OFFICER. IN THE IN STANT CASE, THE ASSESSING OFFICER HAS INVOKED THE AMENDED PROVISIONS AND HAS HELD THAT THE VALUE SO CLAIMED BY THE ASSESSEE IS AT VARIANCE WITH ITS FAI R MARKET VALUE. THE CONTENTION OF THE ASSESSEE IS THAT THE AMENDED PROV ISIONS HAVE ONLY BEEN BROUGHT ON THE STATUE BOOKS W.E.F 1.07.2012 AND THE SAME CANNOT BE INVOKED IN THE INSTANT CASE AND THEREFORE, THE AO L ACKS THE NECESSARY JURISDICTION TO REFER THE MATTER TO THE VALUATION O FFICER. 43. THE QUESTION IS HOW ONE SHOULD READ THE AMENDME NT IN SECTION 55A(A) WHICH HAS BEEN BROUGHT ON THE STATUE BOOKS W .E.F 1.07.2012. WHETHER WE SHOULD READ THE AMENDMENT IN THE CONTEXT OF TRANSACTIONS WHICH HAVE HAPPENED ON OR AFTER 1.07.2012 AND WHICH ARE LIABLE FOR CAPITAL GAINS TAX AND THEREFORE, SATISFYING THE INITIAL CON DITION OF REFERENCE FOR THE PURPOSES OF THIS CHAPTER TO THE VALUATION OFFICER. ALTERNATIVELY, IRRESPECTIVE OF PERIOD TO WHICH THE TRANSACTION PERTAINS, WHERE THE ASSESSMENT PROCEEDINGS ARE INITIATED BY THE ASSESSING OFFICER OR PENDING BEFORE THE ASSESSING OFFICER ON OR AFTER 1.07.2012, GIVEN THAT THE ASSESSING OFFICER HAS TO FORM AN OPINION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 41 AMENDED PROVISIONS WILL APPLY. IN THIS REGARD, IT WOULD BE USEFUL TO REFER TO THE MEMORANDUM EXPLAINING THE FINANCE BILL, 2012 WH ICH READS AS UNDER: UNDER THE PROVISIONS OF SECTION 55A, WHERE IN THE OPINION OF THE ASSESSING OFFICER VALUE OF ASSET AS CLAIMED BY THE ASSESSEE IS LESS THAN ITS MARKET VALUE, HE MAY REFER THE VALUATION O F A CAPITAL ASSET TO A VALUATION OFFICER. UNDER SECTION 55 IN A CASE WHE RE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE 1S T APRIL, 1981, THE ASSESSEE HAS THE OPTION OF SUBSTITUTING THE FAIR MA RKET VALUE OF THE ASSET AS ON 1ST APRIL, 1981 AS THE COST OF THE ASSE T. IN SUCH A CASE THE ADOPTION OF A HIGHER VALUE FOR THE COST OF THE ASSET AS THE FAIR MARKET VALUE AS ON 1ST APRIL, 1981, WOULD LEAD TO A LOWER AMOUNT OF CAPITAL GAINS BEING OFFERED FOR TAX. ACCORDINGLY, IT IS PROPOSED TO AMEND THE PROVISIONS OF SECTION 55A OF THE INCOME-TAX ACT TO ENABLE THE ASSESSING OFFICER TO MAKE A REFERENCE TO THE VALUATION OFFICER WHERE IN HIS OPI NION THE VALUE DECLARED BY THE ASSESSEE IS AT VARIANCE FROM THE FA IR MARKET VALUE. THEREFORE, IN CASE WHERE THE ASSESSING OFFICER IS O F THE OPINION THAT THE VALUE TAKEN BY THE ASSESSEE AS ON 1-4-1981 IS H IGHER THAN THE FAIR MARKET VALUE OF THE ASSET AS ON THAT DATE, THE ASSESSING OFFICER WOULD BE ENABLED TO MAKE A REFERENCE TO THE VALUATI ON OFFICER FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF JUL Y, 2012. 44. THEREFORE, THE INTENT AND PURPOSE BEHIND THE AM ENDMENT IS TO ENABLE THE ASSESSING OFFICER TO MAKE A REFERENCE TO THE VALUATION OFFICER WHERE HE IS OF THE OPINION THAT THE VALUE ADOPTED B Y THE ASSESSEE AS ON 1- 4-1981 IS HIGHER THAN THE FAIR MARKET VALUE OF THE ASSET AS ON THAT DATE AND IN ORDER TO CHECK WHETHER THE ADOPTION OF A HIGHER VALUE FOR THE COST OF THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 42 ASSET AS THE FAIR MARKET VALUE AS ON 1ST APRIL, 198 1, HAS LEAD TO A LOWER AMOUNT OF CAPITAL GAINS BEING OFFERED FOR TAX. IT I S THEREFORE AN EMPOWERING PROVISION WHEREIN THE ASSESSING OFFICER HAS BEEN GI VEN REQUISITE POWER AND AUTHORITY W.E.F 1.07.2012 TO REFER THE MATTER RELAT ING TO VALUATION OF A CAPITAL ASSET TO THE VALUATION OFFICER. THE QUESTI ON HOWEVER REMAINS IN RESPECT OF WHICH ALL TRANSANCTIONS, THE ASSESSING O FFICER IS EMPOWERED TO MAKE A REFERENCE TO THE VALUATION OFFICER WITH EFFE CT FROM 1.07.2012. 45. IN THIS REGARD, WE REFER TO THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. PUJA PRINTS (SUPRA) WHEREIN IT WAS HELD THAT T HE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT AND THE LAW TO BE APPLIED IS AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. THE FINDINGS OF THE HONBL E HIGH COURT ARE 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 REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER CAN BE MADE UNDER SECTION 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 INAPPLICABLE TO THE PRESENT F ACTS NOR HAS THE REVENUE POINTED OUT THAT THE DECISION IN DAULAL MOH TA HUF (SUPRA) HAS NOT BEEN ACCEPTED BY THE REVENUE. ON THE AFORES AID GROUND ALONE, THIS APPEAL NEED NOT BE ENTERTAINED. HOWEVER , AS SUBMISSIONS WERE MADE ON MERITS, WE HAVE INDEPENDENTLY EXAMINED THE SAME. 7. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLE ARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MA DE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 43 ASSESSEE WAS LESS THEN THE FAIR MARKET VALUE. IN TH E PRESENT CASE, IT IS AN UNDISPUTED POSITION THAT THE VALUE ADOPTED 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 DETERMIN ED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE ASSESS ING OFFICER REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VALUATIO N OFFICER ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY A S 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. 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 WORDS ' 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHO ULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM 1 JULY 2012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO TH E AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CAS E IS SECTION 55A(A) OF THE ACT AS EXISTING DURING THE PERIOD RELEVANT T O THE ASSESSMENT YEAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY RE FERENCE 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. 9. THE CONTENTION OF THE REVENUE THAT THE REFERENC E TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFF ICER IS SUSTAINABLE IN VIEW OF SECTION 55A(A) (II) OF THE ACT IS NOT AC CEPTABLE. THIS IS FOR THE REASON THAT SECTION 55A(B)OF THE ACT VERY CLEAR LY STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVER ED BY SECTION ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 44 55A(A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTA BLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THER EFORE, RESORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN S ECTION 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 O F THE CLEAR POSITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN CIRCULAR ISSU ED BY THE CBDT IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. 10. THE CONTENTION OF THE REVENUE THAT THE ASSESSI NG OFFICER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PRO PERTY TO THE DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS P OWER UNDER SECTIONS 131, 133(6) AND 142(2) OF THE ACT IS ENTIR ELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA B ALA PAUL (SUPRA). HOWEVER, THE APEX COURT IN SMT. AMIYA BALA PAUL (SU PRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AN D HELD THAT IF THE POWER TO REFER ANY DISPUTE WITH REGARD TO THE VALUA TION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTIONS 131(1 ), 136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALL Y EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPECIFI ED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFI C PROVISION UNDER WHICH THE REFERENCE CAN BE MADE TO THE DEPARTMENTAL VALUATION OFFICER IS AVAILABLE, THERE IS NO OCCASION FOR THE ASSESSING OFFICER TO INVOKE THE GENERAL POWERS OF ENQUIRY. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CL EAR PROVISIONS OF LAW AS EXISTING DURING THE PERIOD RELEVANT TO ASSES SMENT YEAR 2006- 07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) D O NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 45 46. WE NOW REFER TO THE HONBLE GUJARAT HIGH COURT DECISION IN CASE OF CIT VS. GAURANGINIBEN S. SHODHAN INDL. (SUPRA) WHEREIN IT WAS HELD SECTION 55A AS IT STOOD AT THE RELEVANT TIME, HAS TO BE SEEN AN D EMPHASIS WAS LAID ON THE PERIOD OF THE TRANSACTION AND WHERE THE TRANSACTION WAS FOR THE PERIOD PRIOR TO 1.7.2012, AMENDED PROVISIONS WE RE HELD NOT APPLICABLE. THE FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER : 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 ALSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT. WE HAVE NOTICED THAT PRIOR TO TH E AMENDMENT IN SECTION 55A WITH EFFECT FROM 1.7.2012 IN A CASE, TH E VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFF ICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MARKET VALUE AS ON 1.4.1981. IT WOULD NOT BE THE CASE OF THE ASS ESSING OFFICER THAT THE VALUE OF THE ASSET SHOWN AS ON 1.4.1981 WAS LES S THAN THE FAIR MARKET VALUE. SUCH CLAUSE, THEREFORE, AS IT STOOD A T THE RELEVANT TIME, HAD NO APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS THAT WITH EFFECT FROM 1.7.2012, THE EXPRESSION NOW USED IN CLAUSE (A) OF SECTION 55A IS 'IS AT VARIANCE WITH ITS FAIR MAR KET VALUE'. THE SITUATION MAY, THEREFORE, BE DIFFERENT AFTER 1.7.20 12. WE ARE, HOWEVER, CONCERNED WITH THE PERIOD PRIOR THERETO. C LAUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FA IR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET 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 O THER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. SUB-CLAUSE (I) OF CLAUSE (B) ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 46 ALSO FOR THE SAME REASONS RECORDED ABOVE, WOULD HAV E NO BEARING ON THE FAIR MARKET VALUE AS ON 1.4.1981. THE ASSESSING OFFICER HAD NOT RESORTED TO SUB-CLAUSE(II) OF CLAUSE (B). IN ANY CA SE, CLAUSE (B) WOULD APPLY WHERE CLAUSE(A) DOES NOT APPLY SINCE IT START S WITH THE EXPRESSION 'IN ANY OTHER CASE'. IN OTHER WORDS IF A SSESSEE HAS RELIED UPON A REGISTERED VALUER'S REPORT, ASSESSING OFFICE R CAN PROCEED ONLY UNDER CLAUSE (A) AND CLAUSE (B) WOULD NOT BE A PPLICABLE. 16. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE HA D RELIED ON THE ESTIMATE MADE BY THE REGISTERED VALUER FOR THE PURP OSE OF SUPPORTING ITS VALUE OF THE ASSET. ANY SUCH SITUATION WOULD BE GOVERNED BY CLAUSE (A) OF SECTION 55A OF THE ACT AND THE ASSESSING OFF ICER COULD NOT HAVE RESORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVIS ION BENCH OF THIS COURT IN THE CASE OF HIABEN JAYANTILAL SHAH V. ITO [2009] 310 ITR 31/181 TAXMAN 191 (GUJ.) . IN THE SAID DECISION, IT WAS HELD AND OBSERVED AS UNDER: '10. UNDER CLAUSE(A) OF SEC. 55A OF THE ACT UNDER T HE ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSE SSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVID ED UNDER CLAUSE(B) OF SEC. 55A OF THE ACT, THE ASSESSING OFFICER HAS TO R ECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAG E OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCE S, IT IS NECESSARY TO MAKE SUCH A REFERENCE.' ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 47 47. WE NOW REFER TO THE CO-ORDINATE BENCH DECISION IN CASE OF LATE SHANTABEN P PATEL, AHMEDABAD VS. ITO, WARD-6(5), AH MEDABAD IN (ITA NO. 781, 784 & 785/AHD/2011 DATED 2.04.2018) WHEREIN, FOLLOWING THE AFORESAID DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF GAURANGINIBEN S. SHODHAN (SUPRA), IT WAS HELD AS UNDER:- 8. IN LIGHT OF THE ABOVE, IF FACTS OF THE PRESENT APPEALS ARE EXAMINED THEN IT WOULD REVEAL VALUE SHOWN BY THE AP PELLANTS OF THE PROPERTY AS ON 01.04.1981 IS CONSIDERED THEN IT WAS NOT LESS THAN FAIR MARKET VALUE AND REFERENCE CANNOT BE MADE. AS FAR A S THE AMENDMENT CARRIED OUT IN SECTION 55A IS CONCERNED, IT IS WITH EFFECT FROM 01.07.2012 I.E. BY FINANCE ACT 2012 THE TRANSA CTION TAKEN PLACE IN FY 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12 A ND THE AMENDED PROVISION WOULD NOT BE APPLICABLE ON THIS TRANSACTI ON. 48. IT IS NOTED THAT THE AFORESAID DECISION OF THE COORDINATE BENCH RENDERED IN THE CONTEXT OF TRANSACTION TAKEN PLACE IN FY 201 0-11 RELEVANT TO ASSESSMENT YEAR 2011-12 HAS SINCE BEEN AFFIRMED BY THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 1204 OF 2018 DATED 8.1 0.2018. 49. OUR REFERENCE WAS ALSO DRAWN TO THE CO-ORDINATE BENCH DECISION IN CASE OF ACIT, NASHIK VS. SHRI BHIMA DADA KHARATE, NASHIK (IN ITA NO. 1582/PUN/2015 DATED 31.10.2017) WHEREIN, FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CASE OF PUJA PRINT S (SUPRA), IT WAS HELD AS UNDER:- 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGA INST THE DETERMINATION OF COST OF ACQUISITION OF PLOT OF LAN D AS ON 01.04.1981. THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION HAD SOLD PIECE OF LAND AND THE ISSUE WHICH AROSE IN THE PRESENT APPEAL ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 48 WAS THE COST OF ACQUISITION TO BE ADOPTED AS ON 01. 04.1981 IN ORDER TO COMPUTE THE INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF SAID LAND, IN THE HANDS OF ASSESSEE. THE ASSESSE E IN THIS REGARD FURNISHED THE VALUATION REPORT AS ON 01.04.1981 AND CLAIMED THE COST OF PLOT AS ON 01.04.1981 AT RS.68,71,658/- AND DECLARED THE INDEXED COST OF ACQUISITION AT RS.1,60,59,301/-. TH E ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE COST OF ACQUISITION DECLARED BY THE ASSESSEE AS ON 01.04.19 81 WAS HIGHER AND ASSESSING OFFICER MADE REFERENCE TO THE STAMP V ALUATION AUTHORITY IN THIS REGARD AND RELYING ON THE REPORT OF THE STAMP VALUATION AUTHORITY, ADOPTED THE COST OF ACQUISITIO N AS ON 01.04.1981 AT RS.64,675/- AND WORKED OUT THE INDEXE D COST OF ACQUISITION AT RS.3,76,409/-. THE CIT(A) ON THE OTH ER HAND, HAS RELIED ON THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN CIT VS. PUJA PRINTS (SUPRA). THE DICTATE OF THE HON 'BLE BOMBAY HIGH COURT IS THAT REFERENCE COULD BE MADE TO THE D EPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY TH E ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN CASE THE VA LUE ADOPTED BY THE ASSESSEE OF ANY PROPERTY WAS MORE THAN THE FAIR MARKET VALUE AS DETERMINED BY THE DVO, THEN SUCH INVOCATION OF P ROVISIONS OF SECTION 55A(A) OF THE ACT WAS HELD TO BE NOT JUSTIF IED. REFERENCE WAS ALSO MADE TO THE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012, WHEREIN FOR THE WORDS 'IS LESS THAN THE FAIR MARKET VALUE' WAS SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH I TS FAIR MARKET VALUE', WAS HELD TO BE CLARIFICATORY AND IT WAS CAT EGORICALLY HELD THAT WHERE THE AMENDMENT WAS MADE EFFECTIVE ONLY FR OM 01.07.2012; THE PARLIAMENT HAS NOT GIVEN RETROSPECT IVE EFFECT TO THE AMENDMENT. THE HON'BLE HIGH COURT THUS, HELD TH AT THE LAW TO ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 49 BE APPLIED IN THE FACTS OF THE PRESENT CASE WAS THE SECTION AS EXISTING DURING THE PERIOD' RELEVANT TO ASSESSMENT YEAR 2006-07. 10. NOW, COMING TO THE FACTS OF THE PRESENT CASE, T HE YEAR UNDER REFERENCE IS ASSESSMENT YEAR 2009-10 AND SINCE THE AMENDMENT WAS MADE EFFECTIVE FROM 01.07.2012 AND THE HON'BLE HIGH COURT HAS HELD THAT LAW WHICH IS TO BE APPLIED IN SUCH CASES IS AS EXISTING DURING ASSESSMENT YEAR 2009-10, THEN THE PRE-AMENDED PROVI SIONS OF SECTION 55A(A) OF THE ACT ARE TO BE APPLIED. IN SUC H SCENARIO, THERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN ADOPT ING THE COST OF ACQUISITION AS ON 01.04.1981 AT THE VALUE LESS THAN THE VALUE SHOWN BY THE ASSESSEE, WHICH IN TURN, IS BASED ON THE REP ORT OF THE APPROVED VALUER. ACCORDINGLY, WE UPHOLD THE ORDER O F CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE . 50. WE ALSO REFER TO THE DECISION OF THE CO-ORDINAT E BENCH IN CASE OF SHRI MAHDEVBHAI MOHANBHAI NAIK, SURAT VS. ITO, WARD-3(1) (1), SURAT (IN ITA NO. 820/AHD/2016 DATED 11.07.2018) WHEREIN IT WAS HELD THAT THE AMENDMENT IS SUBSTANTIVE IN NATURE WHICH IS RELEVAN T TO ASSESSMENT YEAR COMMENCING AFTER THE DATE OF AMENDMENT I.E. FY 2012 -13 RELEVANT TO AY 2013-14 AND THE RELEVANT FINDINGS ARE AS UNDER:- 12. THUS, THE CONTENTION OF THE LEARNED DEPARTMENT AL REPRESENTATIVE THAT REFERENCE WAS MADE AFTER 01.07. 2012 IS NOT TENABLE IN LAW AS THE AMENDMENT MADE IN SECTION IS SUBSTANTIVE IN NATURE WHICH IS RELEVANT TO ASSESSMENT YEAR COMMENC ING AFTER THE DATE OF AMENDMENT I.E. FY 2012-13 RELEVANT TO AY 20 13-14, HENCE, IT IS NOT APPLICABLE FOR THE ASSESSMENT YEAR 2010-11, AS THE ASSESSMENT INVOLVED IS PRIOR TO PERIOD OF 01.07.2012. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T THE LAW HAS ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 50 BEEN SETTLED BY THE DECISION OF HON' BLE BOMBAY HIG H COURT, HON'BLE GUJARAT HIGH COURT, MUMBAI TRIBUNAL AND PUNE TRIBUN AL. THEREFORE, THE AO WAS NOT JUSTIFIED IN REFERRING TO DVO OR ADO PTING VALUATION BASED ON VALUATION REPORT. THE AMENDMENT IN SECTION 55A WAS QUA PRIOR PERIOD TO 01.07.2012 AND NOT QUA PROCEEDING P RIOR TO 01.07.2012. HENCE, RESPECTFULLY THE FOLLOWING THE R ATIO LAID DOWN IN ABOVE JUDGEMENTS OF HON'BLE HIGH COURTS AND TRIBUNA L AS REFERRED ABOVE, HENCE, GROUND NO. 1(1) TO (5) OF THE APPEAL ARE ALLOWED. 51. WE ALSO REFER TO DECISION OF THE CO-ORDINATE BE NCH IN CASE OF SONALI ROY VS. PR. CIT, KOLKATA (IN ITA NO. 1329/KOL/2017 DATED 28.02.2018) WHEREIN IT WAS HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND ALSO GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AND THE CASE LAWS RELIED UPON BY THE ASSESSEE. IN THE INSTANT CASE, ASSESSEE HAS DECLARED THE VALUE FOR THE COST OF ACQUISITION FOR THE PROPERTY AT A HIGHER VALUE THAN THE VALUE D ETERMINED BY THE DVO. THE FIRST TECHNICAL ISSUE AROSE BEFORE US IS WHETHE R THE REFERENCE MADE BY THE AO TO THE DVO FOR THE VALUATI ON OF THE PROPERTY IS VALID FOR THE YEAR UNDER CONSIDERATION. IN THIS REGARD WE NOTE THERE WAS AN AMENDMENT U/S 55A OF TH E ACT WHICH WAS EFFECTIVE FROM 01.07.2012. PRIOR TO THE A MENDMENT U/S 55A OF THE ACT, THE PROVISION OF SAID SECTION R EADS AS UNDER:- '[REFERENCE TO VALUATION OFFICER. 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE O F A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 51 60 [ASSESSING] OFFICER MAY REFER THE VALUATION OF CAPI TAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE 60 [ASSESSING] OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MAR KET VALUE' FROM THE ABOVE PROVISION WE NOTE THAT THE ASSESSING OFFICER CAN REFER THE VALUATION OF CAPITAL ASSET TO A VALUA TION OFFICER IN A CASE WHERE THE VALUE CLAIMED BY THE ASSESSEE B ASED ON THE REGISTERED VALUATION REPORT IS LESS THAN ITS FA IR MARKET VALUE. HOWEVER IN THE CASE BEFORE US THERE IS NO AM BIGUITY THAT THE FAIR MARKET VALUE AS DECLARED BY ASSESSEE IS NOT LESS THAN THE VALUE DETERMINED BY THE DVO. THUS, THE VAL UATION DETERMINED BY THE DVO CANNOT BE ACCEPTED AS IT IS A GAINST THE PROVISION OF SECTION 55A OF THE ACT AS APPLICAB LE PRIOR TO THE AMENDMENT. HOWEVER, THERE WAS AMENDMENT U/S 55A OF THE ACT WITH EFFECT FROM 01.07.2012 WHICH READS AS UNDER:- [REFERENCE TO VALUATION OFFICER. 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE O F A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER 12 , THE 8 [ASSESSING] OFFICER MAY REFER THE VALUATION OF CAPI TAL ASSET TO A VALUATION OFFICER ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 52 (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE 80 [ASSESSING] OFFICER IS OF OPINION THAT THE VALUE SO CLAIMEDAT V ARIANCE WITH ITS FAIR MARKET VALUE]; THERE IS NO DOUBT THAT THE AMENDMENT IN SECTION 55A OF THE ACT WAS EFFECTIVE FROM 01.07.2012. NOW, THE ISSUE A RISES WHETHER AMENDMENT U/S 55A OF THE ACT IS APPLICABLE FROM THE ASSESSMENT YEAR 2012-13 I.E. THE YEAR UNDER CONSIDE RATION. IT IS WELL SETTLED LAW THAT IF THE AMENDMENTS ARE APPL ICABLE FROM THE FIRST DAY OF ASSESSMENT YEAR THEN IT WOULD BE A PPLICABLE FROM THE RELEVANT ASSESSMENT YEAR. FOR EXAMPLE IF THE AMENDMENT UNDER THE STATUTE IS B ROUGHT 1.4.2009 THEN IT WOULD BE APPLICABLE FROM THE AY 20 09-10. SIMILARLY IF THE AMENDMENTS ARE BROUGHT ON ANY DATE OTHER THAN THE 1 ST DAY OF APRIL THEN IT WOULD BE APPLICABLE TO THE SU BSEQUENT ASSESSMENT YEAR. FOR EXAMPLE IF THE AMENDMENT UNDER THE STATUTE IS B ROUGHT 30.9.2009 THEN IT WOULD BE APPLICABLE FROM THE AY 2 010-11. IN HOLDING SO, WE FIND SUPPORT & GUIDANCE FROM THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF KARIMTHARUVI T EA ESTATE LTD. VS. STATE OF KERELA REPORTED IN 60 ITR 262 WHE RE IT WAS HELD AS UNDER: '10. NOW, IT IS WELL-SETTLED THAT THE INCOME-TAX AC T, AS IT STANDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FIN ANCIAL YEAR ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 53 MUST APPLY TO THE ASSESSMENTS OF THAT YEAR. ANY AMENDMENTS IN THE ACT WHICH COME INTO, FORCE AFTER THE FIRST DAY OF APRIL OF A FINANCIAL YEAR, WOULD NOT APPLY T O THE ASSESSMENT FOR THAT YEAR, EVEN IF THE ASSESSMENT IS ACTUALLY MADE AFTER THE AMENDMENTS COME INTO FORCE.' FROM THE ABOVE PROPOSITION OF LAW, IT IS CLEAR THAT THE AMENDMENTS WHICH ARE BEING APPLICABLE FROM ANY DATE OTHER THAN FIRST APRIL OF ASSESSMENT YEAR WOULD BE APPLIE D FROM THE NEXT ASSESSMENT YEAR. FOR EXAMPLE, IN THE INSTANT C ASE, THE AMENDMENT WAS BROUGHT WITH EFFECT FROM 01.07.2012. THUS, THE AMENDMENT WOULD BE APPLICABLE FROM THE ASSESSME NT YEAR BEGINNING FROM FIRST APRIL, 2013 I.E. ASSESSMENT YE AR 2013-14. THUS, IT IS CLEAR THAT THE AMENDMENT BROUGHT UNDER THE STATUTORY PROVISIONS OF SECTION 55A OF THE ACT IS N OT APPLICABLE IN THE YEAR UNDER CONSIDERATION. AS THE VALUE ADOPT ED BY ASSESSEE IS MORE THAN THE FAIR MARKET VALUE THEN NO REFERENCE TO VALUATION OFFICER WOULD HAVE BEEN MADE AS PER TH E PROVISION OF SECTION 55A(A) OF THE ACT AS IT IS ADM INISTERED AT THE RELEVANT TIME. ONCE, WE HAVE REACHED TO THE CON CLUSION NO REFERENCE CAN BE MADE TO THE DVO FOR THE YEAR UNDER CONSIDERATION IN THE GIVEN FACTS AND CIRCUMSTANCES. THUS ON THE SAME BASIS, THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. KEEPING IN VIEW ALL THESE DISCUSSION, AS ALSO BEARI NG IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO UPHOLD THE GRIEVANCE OF THE ASSESSEE AND QUASH THE IMPUGNED RE VISION ORDER AS DEVOID OF JURISDICTION. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 54 52. AS WE HAVE NOTED ABOVE, THE HONBLE BOMBAY HIG H COURT IN CASE OF CIT VS. PUJA PRINTS (SUPRA) HAS HELD THAT T HE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT AND THE LAW TO BE APPLIED I S AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. SI MILARLY, THE HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS. GAURANGINIBEN S. SHOD HAN INDL. (SUPRA) HAS HELD THAT SECTION 55A AS IT STOOD AT THE RELEVANT TIME, HAS TO BE SEEN AN D EMPHASIS WAS LAID ON THE PERIOD OF THE TRANSACTION AND WHERE THE TRANSACTION WAS FOR THE PERIOD PRIOR TO 1.7.2012, AMENDED PROVISIONS WERE H ELD NOT APPLICABLE. SIMILARLY, IN CASE OF LATE SHANTABEN P PATEL, AHMEDABAD (SUPRA), THE HON BLE GUJARAT HIGH COURT HAS REITERATED THE LEGAL POSITIO N THAT FOR THE TRANSACTION FALLING IN FINANCIAL YEAR 2010-11 RELEVANT TO AY 20 11-12, THE MATTER IS COVERED BY THE EARLIER DECISION IN CASE OF GAURANGINIBEN S. SHODHAN INDL. (SUPRA). WE THEREFORE FIND THAT THERE IS CONVERGENCE OF VIEWS A S EVIDENT FROM THESE DECISIONS OF HONBLE BOMBAY AND HONBLE GUJARAT HIG H COURT THAT THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2012 IN SE CTION 55A(A) HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. SECONDL Y, SUCH AMENDMENT SHALL APPLY TO TRANSACTIONS (SUBJECT MATTER OF DETERMINAT ION OF CAPITAL GAINS) WHICH ARE EFFECTED DURING THE PERIOD STARTING ON OR AFTER 1.07.2012. NO CONTRARY JURISDICTIONAL OR ANY OTHER HIGH COURT DECISION HAS BEEN CITED BEFORE US AND THEREFORE, IN ABSENCE OF ANY JURISDICTIONAL HIGH CO URT DECISION, THESE DECISIONS OF HONBLE BOMBAY AND GUJARAT HIGH COURTS ARE BINDI NG ON US. 53. FURTHER, WE FIND THAT THE COORDINATE BENCHES AR E ALSO OF THE CONSISTENT VIEW AND HAVING BEEN FOLLOWING THE LEGAL PROPOSITIO N SO LAID DOWN BY THE HONBLE BOMBAY AND GUJARAT HIGH COURT. THE COORDI NATE BENCH IN CASE OF SONALI ROY (SUPRA) DRAWING SUPPORT FROM THE DECISIO N OF THE HONBLE SUPREME COURT IN CASE OF KARIMTHARUVI TEA ESTATE (SUPRA) HA S FURTHER CLARIFIED THAT THE AMENDMENTS WHICH ARE BEING APPLICABLE FROM ANY DATE OTHER THAN FIRST APRIL OF ASSESSMENT YEAR WOULD BE APPLIED FROM THE NEXT ASSESSMENT YEAR. THE AMENDMENT BROUGHT WITH EFFECT FROM 01.07. 2012 IN SECTION 55A ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 55 WOULD BE APPLICABLE FROM THE ASSESSMENT YEAR BEGINN ING FROM FIRST APRIL, 2013 I.E. ASSESSMENT YEAR 2013-14 AND NOT APPLICABL E TO ASSESSMENT YEAR 2012-13. 54. IN LIGHT OF ABOVE DISCUSSIONS, IN THE FACTS OF THE PRESENT CASE, THE TRANSACTION OF SALE OF PROPERTY HAS TAKEN PLACE DUR ING THE FINANCIAL YEAR 2010- 11 RELEVANT TO ASSESSMENT YEAR 2011-12, THEREFORE, THE AMENDED PROVISIONS OF SECTION 55A(A) WOULD NOT BE APPLICABLE AND ONE SHAL L BE GUIDED BY THE ERSTWHILE PROVISIONS OF SECTION 55A(A) OF THE ACT A ND THEREFORE, THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDING THAT THE AMENDED PROVISIONS ARE APPLICABLE IN THE INSTANT CASE AND THEREFORE, REFERENCE TO THE VA LUATION OFFICER UNDER THE AMENDED PROVISIONS OF SECTION 55A(A) CANNOT BE SUST AINED IN THE EYES OF LAW. 55. A RELATED QUESTION THAT ARISES FOR CONSIDERATIO N IS GIVEN THAT THE REFERENCE HAS BEEN MADE UNDER SECTION 55A OF THE AC T, CAN THE SAME BE SUSTAINED IN TERMS OF UN-AMENDED PROVISIONS OF SECT ION 55A OF THE ACT AS THERE IS NO DISPUTE THAT THE UN-AMENDED PROVISIONS ARE AP PLICABLE IN THE INSTANT CASE. 56. IN ORDER TO REFER THE MATTER TO THE VALUATION O FFICER AS PER ERSTWHILE PROVISIONS OF SECTION 55A(A), IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE LIABILITY TOWARDS THE CAPITAL GAINS HAS ARISEN DURI NG THE YEAR AS THE TRANSFER OF THE PROPERTY HAS HAPPENED DURING THE YEAR. THERE IS ALSO NO DISPUTE THAT COST OF ACQUISITION AS SUBSTITUTED BY THE ASSESSEE WITH FAIR MARKET VALUE AS ON 1.4.1981 IS BASED ON AND IN ACCORDANCE WITH THE EST IMATE MADE BY A REGISTERED VALUER. THE THIRD CONDITION WHICH IS REQUIRED TO B E FULFILLED IS THAT THE ASSESSING OFFICER SHOULD FORM AN OPINION THAT THE VALUE SO CL AIMED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE. THEREFORE, ONLY IN A SC ENARIO, THE VALUE SO CLAIMED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE IN THE OPINION OF THE ASSESSING OFFICER, THE MATTER CAN BE REFERRED TO THE VALUATIO N OFFICER. IN A SCENARIO, WHERE THE VALUE SO CLAIMED BY THE ASSESSEE IS MORE THAN I TS FAIR MARKET VALUE, THE MATTER COULDNT BE REFERRED TO THE VALUATION OFFICE R. IN THE INSTANT CASE, THE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 56 VALUE OF THE PROPERTY SHOWN BY THE ASSESSEE AS ON 1 .4.1981 BASED ON THE REGISTERED VALUER REPORT IS CONSIDERED, IT WOULD RE VEAL THAT THE SAME WAS IN FACT EVEN HIGHER THAN THE VALUE SUBSEQUENTLY DETERMINED BY THE VALUATION OFFICER AND THEREFORE, THE ASSESSING OFFICER WAS NOT EMPOWE RED TO REFER THE MATTER TO THE VALUATION OFFICER EVEN AS PER ERSTWHILE PROVISI ONS OF SECTION 55A(A) PRIOR TO AMENDMENT BY THE FINANCE ACT, 2012. 57. NOW COMING TO ANOTHER RELATED ISSUE WHICH IS CO NTENDED BY THE LD. CIT DR THAT EVEN WHERE THERE IS REGISTERED VALUER REPOR T, THERE IS NO BAR IN MAKING REFERENCE UNDER CLAUSE (B)(II) OF SECTION 55A OF TH E ACT AND IN THAT SENSE, THE ARGUMENT OF THE LD AR REGARDING AMENDMENT IN CLAUSE (A) TO SECTION 55A BECOMES IRRELEVANT AND THE REPORT OF THE DVO CAN TH US BE RELIED UPON BY THE AO. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE FINDINGS AND DIRECTIONS OF THE ADDL. CIT U/S 144A WHICH READS AS UNDER: (D) THE MATTER OF VALUATION WAS REFERRED U/S 55A O F THE IT ACT, 1961 AND THE REPORT OF THE DVO WAS ALSO RECEIVED U/S 55A OF THE IT ACT, 1961. IN COL. NO. 1.7 OF THE REFERENCE, THE SECTION WAS MENTIONED AS 55A(A). IN THIS REGARD, IT MAY BE STATED THAT WITH THE AMENDMENT OF SEC. 55 A W.E.F. 01-072012, THE AO IS EMPOWERED TO INVOKE CLAUSE (A) AS HE WAS OF THE OPINION, AFTER CONSIDERING THE REL EVANT FACTORS, THAT THE VALUE SHOWN BY THE ASSESSEE ON THE BASIS OF REPORT OF THE REGISTERED VALUER WAS AT VARIANCE WITH THE FAIR MARKET VALUE A S ON 1/4/1981. BOTH THE CLAUSES (B) OF SEC. 55A IS GOVERNED BY THE OVER RIDING EXPRESSION ' IN ANY OTHER CASE', WHICH EXPRESSION, AS HELD BY THE H ON'BLE GUJARAT HIGH COURT IN THE CASE OF HIRA BEN JAYANTILAL SHAH VS. C IT, REFERS TO A CASE WHERE THE VALUE DECLARED BY THE ASSESSEE IS NOT IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER. ALSO THERE ARE JUDICIAL DECISIONS TO THE EFFECT THAT EVEN IN A CASE THERE IS REGISTER ED VALUER'S REPORT, THERE IS NO BAR FOR MAKING REFERENCE UNDER CLAUSE (B) (II ) OF SEC. 55A. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 57 HOWEVER, THE ENABLING SECTION FOR REFERRING THE MAT TER OF VALUATION FOR COMPUTATION OF CAPITAL GAIN IS SECTION 55A OF THE I T ACT, 1961. IN THE INSTANT CASE THE AO HAS CLEARLY MENTIONED IN THE RE FERENCE ITSELF THAT 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE HAS FILED A COPY OF THE VALUATION REPORT OF THE REGISTER VALUER , SHRI G.S. BAPNA (COPY ENCLOSED FOR READY REFERENCE), IN WHICH THE VALUE O F THE LAND AS ON 1/4/81 HAS BEEN TAKEN AT RS. 90,98,000/- IF IT IS C ONSIDERED AS RESIDENTIAL AND RS.27294000/- IF IT IS TAKEN AS COM MERCIAL. FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN, I T IS NECESSARY TO ARRIVE AT THE VALUE OF THE LAND AS ON 1/4/1981. I A M OF THE OPINION THAT THE VALUE ESTIMATED BY THE REGISTER VALUER IS AT VA RIANCE WITH THE FAIR MARKET VALUE OF THE ASSET HAVING REGARD TO THE NATU RE OF THE ASSET AND ITS USE AT THE RELEVANT TIME. THEREFORE, I CONSIDER IT NECESSARY TO REFER THE BELOW-MENTIONED CASE FOR DETERMINATION OF THE F AIR MARKET VALUE OF THE CASE ON THE RELEVANT DATE AS INDICATED BELOW.' THIS IS ALSO IN CONSONANCE WITH SEC. 55A(B)(II) AS THE AO FOUND THA T IT WAS NECESSARY TO REFER THE MATTER HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT FACTORS. 58. IN THIS REGARD, LD. AR SUBMITTED THAT EVEN UNDE R CLAUSE (B) OF SECTION 55A, THE REFERENCE TO DVO CANNOT BE MADE SINCE IT I S AN ADMITTED FACT THAT IN THE INSTANT CASE, THE FMV HAS BEEN ADOPTED BASED ON THE REGISTERED VALUER REPORT AND ALL THE CASE LAWS, EVEN RELIED UPON BY T HE A.O. AND BY THE LD. ADDITIONAL CIT, SUPPORT THE CONTENTION THAT WHEN TH E FMV HAS BEEN ADOPTED BASED ON REGISTERED VALUER REPORT, NO REFERENCE CAN BE MADE UNDER CLAUSE (B). IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DE CISIONS FOR THE PROPOSITION THAT ONLY WHEN FMV HAS BEEN ADOPTED WITHOUT THE REG ISTERED VALUER REPORT, A REFERENCE CAN BE MADE UNDER CLAUSE (B) WHICH IS NOT THE CASE OF THE APPELLANT:- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 58 (A) HONBLE BOMBAY HIGH COURT IN CASE OF PUJA PRINTS (S UPRA) WHERE IN PARA 9 OF THE ORDER, IT WAS HELD AS UNDER: 9. THE CONTENTION OF THE REVENUE THAT THE REFERENC E TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFFICER IS SUSTA INABLE IN VIEW OF SECTION 55A(B) OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVERED BY SECTION 55A(A ) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RESORT CANNOT BE HELD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. I N VIEW OF THE ABOVE, THE CBDT CIRCULAR DATED 25 NOVEMBER,1972 CAN HAVE NO AP PLICATION IN THE FACE OF THE CLEAR POSITION IN LAW. THIS IS SO AS TH E UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN CIR CULAR ISSUED BY THE CBDT IS NOT BINDING UPON THE ASSESSEE AND IT IS OPE N TO AN ASSESSEE TO CONTEND TO THE CONTRARY. (B) IN THE CASE OF CIT VS. GAURANGINIBEN (SUPRA), THE H ONBLE GUJARAT HIGH COURT HAS OBSERVED:- 16. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE H AD RELIED ON THE ESTIMATE MADE BY THE REGISTERED VALUER FOR THE PURP OSE OF SUPPORTING ITS VALUE OF THE ASSET. ANY SUCH SITUATION WOULD BE GOV ERNED BY CLAUSE (A) OF SECTION 55A OF THE ACT AND THE ASSESSING OFFICER CO ULD NOT HAVE RESORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVISION BENCH OF THIS COURT IN THE CASE OF HIRABEN JAYANTILAL SHAH VS. INCOME-TAX OFFI CER AND ANOTHER REPORTED IN [2009] 310 ITR 31 (GUJ). IN THE SAID DE CISION, IT WAS HELD AND OBSERVED AS UNDER:- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 59 10. UNDER CLAUSE (A) OF SEC. 55A OF THE ACT UNDER THE ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER 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 OF 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. 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 NECES SARY TO MAKE SUCH A REFERENCE. (C) IN THE CASE OF SMT. KRISHNABAI TINGRE 101 IT D 317 (PUNE), IT WAS HELD AS UNDER: THE APPLICABILITY OF SECTION 55A IN SUCH CASES WHE RE THE VALUE CLAIMED BY THE ASSESSEE IS HIGHER THAN THE FAIR MARKET VALU E HAD BEEN DEALT WITH IN DETAIL BY THE THIRD MEMBER DECISION IN THE CASE OF MS. RUBAB M. KAZERANI V. JOINT CIT [2004] 91 ITD 429 (MUM.) (TM) WHEREIN IT WAS HELD THAT THE COMMISSIONER OR THE ASSESSING OFFICER ASSUMES POWER UNDER SECTION 55A(A) ONLY WHEN IN HIS OPINION THE F AIR MARKET VALUE DISCLOSED BY THE ASSESSEE IS LESS. THERE WAS ONE MO RE ARGUMENT OF REVENUE THAT THE REFERENCE TO THE DVO CAN BE MADE B Y THE ASSESSING OFFICER IN ANY OTHER CASE AS PRESCRIBED UNDER SECTI ON 55A(B). ON CAREFUL PERUSAL OF THE AFORESAID THIRD MEMBER DECISION, NEI THER THE ASSESSING OFFICER NOR THE COMMISSIONER (APPEALS) CAN ASSUME P OWER TO GIVE SUCH A DIRECTION WHERE THE VALUE OF THE PROPERTY DISCLOSED BY THE ASSESSEE IS BASED UPON THE APPROVED VALUERS REPORT. THE WORDIN GS OF CLAUSE (B) ARE SUCH THAT IN ANY OTHER CASE IF THE ASSESSING OFFI CER IS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET, IT IS NEC ESSARY SO TO DO. SO, IN ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 60 THE CASES OTHER THAN THE CASE WHERE THERE IS NO VAL UERS REPORT GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER IS EMPOWERED TO MAKE REFERENCE UNDER SECTION 55A(B) AND NOT OTHERWISE. THUS, THE I SSUE WAS DIRECTLY COVERED BY THE DECISION OF MS. RUBAB M. KAZERANIS CASE (SUPRA). [PARA 6]. 59. IT WAS FURTHER SUBMITTED THAT THE AO HIMSELF WA S WELL AWARE OF THIS LEGAL POSITION AND IN HIS REPORT TO THE ADDL. CIT U/S 144 A, REPRODUCED AT PAGE 12 OF ASSESSMENT ORDER, HE HAS ADMITTED THAT S. 55A(B) IS NOT APPLICABLE. QUITE STRANGELY, THE ADDL. CIT IN PARA (D) OF HIS ORDER ( PAGE 17 OF THE ASSESSMENT ORDER) HELD THAT S. 55A(B)(II) IS ALSO APPLICABLE. HOWEVER, ALL THE ABOVE CITED DECISIONS CLEARLY RULE OUT APPLICABILITY OF 55A(B). IN THE PRESENT, CASE ONLY AND ONLY SUB-SECTION 55A(A) WAS APPLICABLE. THUS, IT I S CLEAR THAT WHEN THE ASSESSEE ADOPTED THE FMV BASED ON A REPORT OF THE R EGISTERED VALUER, REFERENCE CANNOT BE MADE UNDER CLAUSE (B) OF SECTIO N 55A OF THE ACT ALTHOUGH, IN THE INSTANT CASE, THE REFERENCE HAS BEEN MADE EX PRESSLY UNDER SECTION 55A(A). 60. IN THE INSTANT CASE, WE FIND THAT IT IS AN UNDI SPUTED FACT THAT THE ASSESSEE FIRM HAS DETERMINED THE FMV BASIS THE VALU ATION REPORT ISSUED BY A REGISTERED VALUER. FURTHER, FROM PERUSAL OF THE LE TTER DATED 8.01.2014 ISSUED BY THE ASSESSING OFFICER ADDRESSED TO THE DISTRICT VALUATION OFFICER WHICH IS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFF ICER HAS REFERRED THE MATTER TO THE DVO U/S 55A(A) OF THE ACT. THEREFORE, WHERE THE VALUATION SO ADOPTED BY THE ASSESSEE FIRM IS BASED ON A REGISTERED VALUE R REPORT AND THE ASSESSING OFFICER HAS FORMED AN OPINION THAT THE VALUE ESTIMA TED BY THE REGISTERED VALUER IS AT VARIANCE WITH THE FAIR MARKET VALUE OF THE AS SET HAVING REGARD TO THE NATURE OF THE ASSET AND ITS USE AT RELEVANT TIME, T HE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 55A(A) OF THE ACT . IN FACT, AS WE HAVE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 61 DISCUSSED ABOVE, THE MAIN ARGUMENT OF THE REVENUE I S REGARDING THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2012 IN SEC TION 55A(A) AND WHICH HAS BEEN CLAIMED AS APPLICABLE FOR THE IMPUGNED ASS ESSMENT YEAR. FURTHER, THE HONBLE HIGH COURTS REFERRED SUPRA HAVE ALSO HE LD THAT WHERE THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT, RESORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. T HEREFORE, THE CONTENTION SO ADVANCED BY THE LD CIT DR CANNOT BE ACCEPTED. 61. THE NEXT QUESTION THAT ARISES FOR CONSIDERATION IS WHERE THE REFERENCE MADE TO DVO IS HELD AS INVALID, CAN THE ASSESSING O FFICER STILL RELY ON THE VALUATION REPORT ISSUED BY THE DVO AS A RELIABLE AN D ADMISSIBLE PIECE OF EVIDENCE. 62. IN THIS REGARD, LD. CIT DR REFERRED TO THE FIND INGS OF THE ASSESSING OFFICER AND WHICH HAVE BEEN CONFIRMED BY THE LD. ADDL. CIT WHILE PASSING DIRECTIONS U/S 144A WHEREIN HE HAS HELD THAT: THE VALUATION REPORT OF THE DVO IS A RELEVANT AND ADMISSIBLE EVIDENCE IRRESPECTIVE OF THE LEGALITY OR OTHERWISE OF THE RE FERENCE AS HELD IN THE CASE OF CHATURBHUJ VALLABH DAS HUF VS. DCIT (130 IT D 230) MUMBAI WHEREIN THE DECISION OF HONBLE SUPREME COURT IN CA SE OF POORAN MAL VS. DIRECTOR OF INCOME TAX (INV.) HAS BEEN RELIED UPON. 63. PER CONTRA, THE LD. AR SUBMITTED THAT THE AMEN DMENT WHICH HAS BEEN BROUGHT IN SECTION 55A(A) OF THE ACT IS TO UNABLE T HE ASSESSING OFFICER TO MAKE REFERENCE TO THE DVO AND IF THE VIEW OF THE ASSESSI NG OFFICER IS ACCEPTED, THEN THERE WAS NO NEED FOR SUCH AMENDMENT WHEREIN LEGISL ATURE RECOGNIZED THE LEGAL POSITION THAT SUCH REFERENCE WAS NOT POSSIBLE IN THE EARLIER REGIME AND ACCORDINGLY, THE AMENDMENT HAS BEEN MADE. IT WAS FU RTHER SUBMITTED THAT THERE ARE NUMBER OF SUBSEQUENT JUDGMENTS AND MORE P ARTICULARLY JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. PU JA PRINTS [2014] 360 ITR ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 62 697 (BOM) ON THE SIMILAR ISSUE AND THEREFORE, IN VI EW OF THE SUBSEQUENT HIGH COURT DECISION, THE DECISION OF THE MUMBAI TRIBUNAL SHOULD NOT BE RELIED UPON. IT WAS FURTHER SUBMITTED THAT THE SAID DECISION OF THE MUMBAI TRIBUNAL HAS BEEN RENDERED WITHOUT CONSIDERING THE HONBLE SUPRE ME COURT DECISION IN CASE OF AMIYA BALA PAUL (CIVIL APPEAL NO. 4657 OF 2000 D ATED 7.07.2003) WHEREIN IT WAS HELD THAT THE REPORT OF THE VALUATION OFFICER O BTAINED WITHOUT PROPER REFERENCE CANNOT BE USED BY THE AO UNDER ANY SECTIO N FOR COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITT ED THAT SUBSEQUENT TO THE DECISION OF THE HONBLE SUPREME COURT, SECTION 142( A) WAS INSERTED AND SIMILAR AMENDMENTS WERE MADE IN SECTION 55A. IT WAS ACCORDI NGLY SUBMITTED THAT NEITHER POWER OF THE REFERENCE TO DVO EXIST IN ANY FORM WITH THE AO NOR SUCH VALUATION REPORT CAN BE USED WHEN SPECIFIC PROVISIO NS FOR REFERENCE ARE NOT AVAILABLE AT FIRST PLACE. IT WAS ACCORDINGLY SUBMIT TED THAT THE ORDER OF THE MUMBAI TRIBUNAL RELIED UPON BY THE ASSESSING OFFICE R IS PER INQUIRUM AS THE DECISION OF THE SUPREME COURT HAS NOT BEEN CONSIDER ED THEREIN. 64. REGARDING THE DECISION OF THE HONBLE SUPREME C OURT IN CASE OF POORAN MAL VS. DIRECTOR OF INCOME TAX (INV.) RELIED UPON B Y THE ASSESSING OFFICER, IT WAS SUBMITTED THAT IN THAT CASE, THE ISSUE WAS WHET HER EVIDENCES SEIZED DURING THE ILLEGAL SEARCH CAN BE USED, WHEREAS, THE ISSUE UNDER CONSIDERATION IN THE INSTANT CASE, IS RELATED TO THE REFERENCE TO THE DV O AND USE OF THE REPORT GIVEN, IN RESPONSE TO SUCH REFERENCE. THE DVO IS A TECHNIC AL EXPERT AND THERE IS ANOTHER REPORT OF THE REGISTERED VALUER WHO IS ALSO A TECHNICAL EXPERT. IT IS PERTINENT TO NOTE THAT A REPORT OF TECHNICAL EXPERT , THE DVO, HAS LEGAL VALUE ONLY BECAUSE OF THE PROVISION CONTAINED IN SECTION 55A OF THE ACT FOR THE PROCEEDINGS UNDER CONSIDERATION. WITHOUT SUCH PROVI SION, THE REPORT OF THE DVO DOES NOT HAVE ANY LEGAL RELEVANCE. WHEREAS, THE EVI DENCE SEIZED DURING THE SEARCH DOES NOT REQUIRE OR HAS NO SUCH PROVISION TO CREATE THEIR LEGAL RELEVANCE, MEANING THEREBY, THE REPORT OF THE DVO HAS EVIDENTI ARY VALUE ONLY BECAUSE OF THE SPECIFIC LEGAL PROVISION, WHEREAS, THE EVIDENCE SEIZED DURING THE SEARCH ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 63 HAVE THEIR OWN EVIDENTIARY VALUE INDEPENDENTLY. THE REFORE, UNDER THESE CIRCUMSTANCES WHEN ADMITTEDLY THE REFERENCE IS ILLE GAL AND WHEREAS, THE LEGALITY OF THE REFERENCE IS BACK BONE OF THE REPOR T OF THE DVO TO MAKE IT LEGALLY RELEVANT AND IN ABSENCE OF SUCH LEGAL RELEV ANCE, THE REPORT OF THE DVO CANNOT FIND ANY PLACE UNDER THE SCHEME OF SECTION 5 5A OF THE ACT AS IN THE CASE OF EVIDENCE SEIZED DURING A SEARCH. 65. IT WAS FURTHER SUBMITTED THAT ON PERUSAL OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN PAGE 18 OF SAID JUDGMENT, IT IS SP ECIFICALLY OBSERVED THAT DOCUMENT ILLEGALLY SEIZED CAN BE USED AND THAT JUDG MENT IS LIMITED TO SAID QUESTION. HOWEVER, IN THE INSTANT CASE, THERE WAS N O SUCH SEIZURE RATHER A REPORT WAS ISSUED BY THE DVO WHICH IS ILLEGAL. FURT HER, WHILE PRONOUNCING THE SAID JUDGMENT, HONBLE SUPREME COURT OBSERVED THAT PROVISION OF SEARCH AND SEIZURE IS OVERRIDING THE FUNDAMENTAL RIGHT GIVEN B Y THE CONSTITUTION TO ENSURE THE SOCIAL JUSTICE. THE INSTANT CASE IS NOT RELATED TO THE SEARCH AND SEIZURE AND PROVISION RELATED IS NOT HAVING OVERRIDING EFFECT T O THE CONSTITUTION AND, THEREFORE, HAVE TO OPERATE WITHIN THE ESTABLISHED J UDICIAL AND ADMINISTRATIVE PROCEDURE. HENCE, THE JUDGMENT IN THE CASE OF POORA N MAL IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. 66. IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CA SE, IMMEDIATELY AFTER REFERENCE WAS MADE TO THE DVO, IT WAS BROUGHT TO TH E NOTICE OF THE A.O. THAT SUCH REFERENCE COULD NOT BE MADE. IF THE A.O. IS PE RMITTED TO ACT ON THE BELIEF THAT EVEN IF ANY REPORT IS OBTAINED ILLEGALLY, IT C AN HOLD GOOD, SUCH KIND OF SITUATION CAN ONLY LEAD TO AN ABSURD LEGAL AND ADMI NISTRATIVE MECHANISM WHERE THE PROVISIONS AND PROCEDURES CONTAINED IN THE ACT WOULD BECOME IRRELEVANT. IT IS NOT THE DESIRED SITUATION AND APPARENTLY INDICAT ES THAT THE AFORESAID DECISIONS RELIED UPON ARE NOT RELEVANT TO THE MATTER UNDER CO NSIDERATION. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 64 67. WE HAVE HEARD RIVAL CONTENTIONS AND ALSO CAREF ULLY GONE THROUGH THE DECISIONS RELIED UPON BY BOTH THE PARTIES. WE FIND THAT IT IS A CONSISTENT VIEW OF THE COORDINATE BENCHES RIGHT FROM CHATURBHUJ VALLAB HDAS (HUF) (SUPRA) TO SUBSEQUENT DECISIONS IN CASE OF VIJAY P. KARNIK VS. INCOME-TAX OFFICER AND THEREAFTER, IN CASE OF PRADEEP G. VORA V. INCOME TA X OFFICER THAT THE REPORT OF A VALUATION OFFICER UNDER SECTION 55A MAY BE CONSID ERED AS A PIECE OF EVIDENCE WHERE THE SAME IS FOUND RELEVANT BY THE ASSESSING O FFICER EVEN WHERE THE REFERENCE MADE BY THE AO IS NOT AS PER THE PROVISIO NS OF SECTION 55A OF THE ACT. IN THIS REGARD, WE REFER TO THE RELEVANT FIND INGS OF THE COORDINATE BENCHES AS UNDER: 68. IN CASE OF DEPUTY COMMISSIONER OF INCOME-TAX VS CHATURBHUJ VALLABHDAS (HUF) [2011] 130 ITD 230 (MUMBAI), IT WAS HELD AS U NDER: 11. EVEN OTHERWISE, FOR THE SAKE OF ARGUMENT, IF IT IS PRESUMED THAT THE REFERENCE MADE BY THE ASSESSING OFFICER IS NOT AS PER THE PROVISIONS OF SECTION 55A, THE VALUATION REPORT OF THE DVO WILL NOT LOOSE/REDUCE ITS RELEVANCY BEING A GOOD PIECE OF EVIDENCE ON THE ISSUE OF FMV OF THE CAPITAL ASSETS AS ON 1-4-1981. THE ADMIS SIBILITY OF EVIDENCE IS DEPENDS UPON ITS RELEVANCE TO THE MATTER IN ISSUE AND NOT IN THE MANNER HOW IT HAS OBTAINED. IF THERE IS ANY IRREGULARITY IN OBTAINING THE EVIDENCE THE SAME WILL NOT RENDER EVIDENCE AS IT IS NOT ADMISSIBLE. IN THE CASE IN HAND, THERE IS NO DOUBT THAT THE ASSESSING OFFICER IS HAVING THE JURISDICTION OVER THE SUBJECT-MATTER, I.E., THE VAL UATION OF THE CAPITAL ASSETS AND THE VALUATION OFFICER IS ALSO HAVING AUTHORITY AND JURI SDICTION TO VALUE THE PROPERTY AND SUBMIT THE VALUATION REPORT. THUS, THE VALUATION REPORT OF THE DVO IS A RELEVANT AND ADMISSIBLE EVIDENCE IRRESPECTIVE OF A QUESTION WHETHER THE REF ERENCE WAS VALID OR NOT. THE HON'BLE SUPREME COURT IN THE CASE OF POORAN MAL. V. DIRECTO R OF INSPECTION (INV.) [1974] 93 ITR 505 HAS OBSERVED THAT EVEN IF THE SEARCH IS HELD AS IL LEGAL SEARCH NOTHING IN THE ARTICLE 19 OF THE CONSTITUTION WHICH BARS THE USE OF EVIDENCE OBTAINED AS A RESULT OF ILLEGAL SEARCH. AT PAGES 525, 526, 527 AND 528, THE APEX COURT HAS OBS ERVED AS UNDER : NOW, IF THE EVIDENCE ACT, 1871 WHICH IS A LAW 'CONS OLIDATING, DEFINING AND AMENDING THE LAW OF EVIDENCE, NO PROVISION OF WHICH IS CHALL ENGED AS VIOLATING THE CONSTITUTION PERMITS RELEVANCY AS THE ONLY TEST OF ADMISSIBILITY OF EVIDENCE (SEE SECTION 5 OF THE ACT) AND, SECONDLY, THAT ACT OR ANY OTHER SIMILAR L AW IN FORCE DOES NOT EXCLUDE RELEVANT EVIDENCE, ON THE GROUND THAT IT WAS OBTAIN ED UNDER AN ILLEGAL SEARCH OR SEIZURE, IT WILL BE WRONG TO INVOKE THE SUPPOSED SP IRIT OF OUR CONSTITUTION FOR EXCLUDING SUCH EVIDENCE. NOR IS IT OPEN TO US TO ST RAIN THE LANGUAGE OF THE CONSTITUTION, BECAUSE SOME AMERICAN JUDGES OF THE A MERICAN SUPREME COURT HAVE SPELT OUT CERTAIN CONSTITUTIONAL PROTECTIONS FROM T HE PROVISIONS OF THE AMERICAN CONSTITUTION. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 65 .....A POWER OF SEARCH.......... ........ IT, THEREFORE, FOLLOWS THAT NEITHER BY INV OKING THE SPIRIT OF OUR CONSTITUTION NOR BY A STRAINED CONSTRUCTION OF ANY OF THE FUNDAMENTA L RIGHTS CAN WE SPELL OUT THE EXCLUSION OF EVIDENCE OBTAINED ON AN ILLEGAL SEARCH . SO FAR AS INDIA IS CONCERNED ITS LAW OF EVIDENCE IS MODELED ON THE RULES OF EVIDENCE , WHICH PREVAILED IN ENGLISH LAW, AND COURTS IN INDIA AND IN ENGLAND HAVE CONSISTENTL Y REFUSED TO EXCLUDE RELEVANT EVIDENCE MERELY ON THE GROUND THAT IT IS OBTAINED B Y ILLEGAL SEARCH OR SEIZURE. IN BARINDRA KUMAR GHOSE AND OTHERS V. EMPEROR (1) THE LEARNED CHIEF JUSTICE SIR LAWRENCE JENKINS SAYS AT PAGE, 500 : MR. DAS ...... IN EMPEROR V. ALLAHABAD KHAN ..... IN KURUMA V. THE QUEEN (2) WHERE THE PRIVY COUNCIL HAD TO CON-SIDER THE ENGLISH LAW OF EVIDENCE IN ITS APPLICATION TO EASTERN AFRIC A, THEIR LORDSHIPS PROPOUNDED THE RULE THUS : 'THE TEST TO BE APPLIED, BOTH IN CIVIL AND IN CRIMI NAL CASES, IN CONSIDERING WHETHER EVIDENCE IS ADMISSIBLE IS WHETHER IT IS RELEVANT TO THE MATTERS IN ISSUE. IF IT IS, IT IS ADMISSIBLE AND THE COURT IS NOT CONCERNED WITH HOW IT WAS OBTAINED.' SOME.... CERTAIN... IN KURUMA'S CASE, KURUMA WAS SEARCHED BY TWO POLICE OFFICERS WHO WERE NOT AUTHORISED UNDER THE LAW TO CARRY OUT A SEARCH AND, IN THE SEARCH, SOME AMMUNITION WAS FOUND IN THE UNLAWFUL POSSESSION OF KURUMA. THE QUESTION WAS WHETHER THE EVIDENCE WITH REGARD TO THE FINDING OF THE AMMUNITI ON ON THE PERSON OF KURUMA COULD BE SHUT OUT ON THE GROUND THAT THE EVIDENCE HAD BEE N OBTAINED BY AN UNLAWFUL SEARCH. IT WAS HELD IT COULD NOT BE SO SHUT OUT BECAUSE THE FINDING OF AMMUNITION WAS A RELEVANT PIECE OF EVIDENCE ON A CHARGE FOR UNLAWFUL POSSESSION. IN A LATER CASE BEFORE THE PRIVY COUNCIL IN HERMAN KING V. THE QUEEN (3) W HICH CAME ON APPEAL FROM A COURT OF APPEAL OF JAMAICA, THE LAW AS LAID DOWN IN KURUMA'S CASE WAS APPLIED ALTHOUGH THE JAMAICAN CONSTITUTION GUARANTEED THE C ONSTITUTIONAL RIGHT AGAINST (1) 35 ALLAHABAD, 358. (2) [1955] A.C. 197. (3) [1969] (1) A.C. 304. SEARC H AND SEIZURE IN THE FOLLOWING PROVISION OF THE JAMAICA (CONSTITUTION) ORDER IN CO UNCIL 1962, SCH. 2, SECTION 19 : '(1) EXCEPT WITH HIS OWN CONSENT, NO PERSON SHALL BE SUB JECTED TO THE SEARCH OF HIS PERSON OR HIS PROPERTY OR THE ENTRY BY OTHERS ON HIS PREMISES . (2) NOTHING CONTAINED IN OR DONE UNDER THE AUTHORITY OF AN Y LAW SHALL BE HELD TO BE INCONSISTENT WITH OR IN CONTRAVENTION OF THIS SECTI ON TO THE EXTENT THAT THE LAW IN QUESTION MAKES PROVISION WHICH IS REASONABLY REQUIRED FOR TH E PURPOSE OF PREVENTING OR DETECTING CRIME. ...' IN OTHER WORDS, SEARCH AND SEIZURE FOR THE PURPOSES OF PREVENTING OR DETECTING CRIME REASONABLY ENFORCED WAS NOT INCONSISTENT WITH THE C ONSTITUTIONAL GUARANTEE AGAINST SEARCH AND SEIZURE. IT WAS HELD IN THAT CASE THAT T HE SEARCH OF THE APPELLANT BY A POLICE OFFICER WAS NOT JUSTIFIED BY THE WARRANT NOR WAS IT OPEN TO THE OFFICER TO ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 66 SEARCH THE PERSON OF THE APPELLANT WITHOUT TAKING H IM BEFORE A JUSTICE OF THE PEACE. NEVERTHELESS IT WAS HELD THAT THE COURT HAD A DISCR ETION TO ADMIT THE EVIDENCE OBTAINED AS A RESULT OF THE ILLEGAL SEARCH AND THE CONSTITUTIONAL PROTECTION AGAINST SEARCH OF PERSON OR PROPERTY WITHOUT CONSENT DID NO T TAKE AWAY THE DISCRETION OF THE COURT. FOLLOWING KURUMA V. THE QUEEN THE COURT HELD THAT IT WAS OPEN TO THE COURT NOT TO ADMIT THE EVIDENCE AGAINST THE ACCUSED IF TH E COURT WAS OF THE VIEW THAT THE EVIDENCE HAD BEEN OBTAINED BY CONDUCT OF WHICH THE PROSECUTION OUGHT NOT TO TAKE ADVANTAGE. BUT THAT WAS NOT A RULE OF EVIDENCE BUT A RULE OF PRUDENCE AND FAIR PLAY. IT WOULD THUS BE SEEN THAT IN INDIA, AS IN ENGLAND, WH ERE THE TEST OF ADMISSIBILITY OF EVIDENCE LIES IN RELEVANCY, UNLESS THERE IS AN EXPR ESS OR NECESSARILY IMPLIED PROHIBITION IN THE CONSTITUTION OR OTHER LAW EVIDEN CE OBTAINED AS A RESULT OF ILLEGAL SEARCH OR SEIZURE IS NOT LIABLE TO BE SHUT OUT. IN THAT VIEW, EVEN ASSUMING, AS WAS DONE BY THE HIGH COURT, THAT THE SEARCH AND SEIZURE WERE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 132 OF THE INCOME-TAX ACT, ST ILL THE MATERIAL SEIZED WAS LIABLE TO BE USED SUBJECT TO LAW BEFORE THE INCOME-TAX AUTHOR ITIES AGAINST THE PERSON FROM WHOSE CUSTODY IT WAS SEIZED AND, THEREFORE, NO WRIT OF PROHIBITION IN RESTRAINT OF SUCH USE COULD BE GRANTED. IT MUST BE THEREFORE, HELD TH AT THE HIGH COURT WAS RIGHT IN DISMISSING THE TWO WRIT PETITIONS. THE APPEALS MUST ALSO FAIL AND ARE DISMISSED WITH COSTS'. 12. THUS, IN VIEW OF THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF POORAN MAL (SUPRA), THE VALUATION REPORT OF THE DVO IS A R ELEVANT AND ADMISSIBLE EVIDENCE ON THE MATTER IN ISSUE IRRESPECTIVE OF ILLEGALITY OF REFER ENCE MADE BY THE ASSESSING OFFICER. THUS, THE ISSUE OF VALIDITY OR ILLEGALITY OF REFERENCE MA DE BY THE ASSESSING OFFICER UNDER SECTION 55A HAS BECOME PURELY ACADEMIC IN NATURE. 69. IN CASE OF VIJAY P. KARNIK VS.INCOME-TAX OFFICE R, WARD -19 (2)(2) [2013] 37 TAXMANN.COM 48 (MUMBAI - TRIB.), IT WAS HELD AS UNDER: 7. WE MAY ALSO POINT OUT HERE THAT EVEN IF THE REF ERENCE MADE BY THE AO TO THE DVO WAS NOT IN ACCORDANCE WITH LAW OR ILLEGAL THE VALUATION REPORT OBTAINED IN PURSUANCE OF SUCH A REFERENCE WILL BE RELEVANT AND ADMISSIBLE EVIDENCE WHICH CAN BE USED BY THE REVENUE AUTHORITIES IN THE INCOME TAX PROCEEDINGS. THIS VIE W IS SUPPORTED BY THE DECISION OF HON'BLE SUPREME COURT IN CASE OF POORAN MAL V. DIRE CTOR OF INSPECTION [1974] 93 ITR 505 IN WHICH IT WAS HELD THAT EVEN THOUGH THE SEARC H AND SEIZURE HAD BEEN CONDUCTED IN CONTRAVENTION OF THE PROVISIONS OF SECTION 132 OF T HE IT ACT MATERIAL OBTAINED CAN BE USED BY THE INCOME TAX AUTHORITIES. THUS EVEN IF THE REF ERENCE MADE BY AO IS CONSIDERED NOT VALID THE VALUATION REPORT CAN ALWAYS BE USED IN TH E INCOME TAX PROCEEDINGS FOR THE PURPOSES OF THE ACT. THE SAME VIEW HAS BEEN TAKEN B Y THE DECISION OF TRIBUNAL IN CASE OF CHATURBHUJ VALLABHDAS HUF (SUPRA) IN WHICH THE T RIBUNAL HELD THAT THE VALUATION REPORT HAVING ALREADY BEEN OBTAINED BY AO AND USED IN THE ASSESSMENT PROCEEDINGS, THE ISSUE OF VALIDITY OR ILLEGALITY OF THE REFERENCE HA D BECOME PURELY ACADEMIC IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF POORAN MAL (SUPRA). 70. IN CASE OF PRADEEP G. VORA VS. INCOME TAX OFFICER, 16(2)(1) [2015] 58 TAXMANN.COM 110 (MUMBAI - TRIB.), IT WAS HELD AS UN DER: ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 67 4.2 WE WOULD LIKE TO MENTION THE BROAD PRINCIPLES EMERGING OUT OF VARIOUS JUDICIAL DECISIONS OF THE HON'BLE COURTS WITH REGARD TO REFE RENCE TO BE MADE BY THE AO TO THE DVO U/S.55A OF THE ACT: (I) THE POWER OF THE AO IN THE COURSE OF MAKING AN ASSE SSMENT UNDER THE ACT IS WIDE AND, FOR OBTAINING FULL INFORMATION, HE MAY MAKE SUC H ENQUIRY AS HE CONSIDERS NECESSARY. IN THE COURSE OF SUCH ENQUI RY, THE AO MAY TAKE THE ASSISTANCE OF ANY PERSON HAVING EXPERTISE. BUT, THE AO IS NOT ENTITLED TO MAKE A REFERENCE TO THE VO U/S.55A OF THE ACT. A REFERENCE MADE TO A VO U/S.55A HAS A DEFINITE CONNOTATION AND A DEFINITE STATUTORY EFFECT AND, THEREFORE, UNLESS THE CONDITIONS PRECEDENT FOR MAKI NG SUCH REFERENCE ARE SATISFIED, IN EXERCISE OF HIS GENERAL POWER OF ENQU IRY, THE AO CANNOT MAKE A REFERENCE UNDER THE SAID PROVISION. (II) REFERENCE TO VO U/S. 55A CAN BE MADE ONLY TO ASCERTAIN FVM OF CA PITAL ASSET FOR DETERMINING CAPITAL GAINS. VALUATION OBTA INED IN A CASE NOT INVOLVING CAPITAL GAINS HAS NO STATUTORY EFFECT. (III) THE AO LOSES HIS POWER IN THE MATTER OF VALUATION O NLY WHERE THE VO MA KES A REPORT. IF THE VO DOES NOT SUBMIT HIS REPORT, THE POWER OF VALUATION HAS TO REVERT TO THE AO. UNLESS THE VO SE NDS HIS REPORT, THERE IS NO BAR ON THE AO 'S COMPLETING THE ASSESSMENTS TAKI NG THE VALUE OF THE ASSET REFERRED FOR VALUATION IN THE BEST POS SIBLE METHOD IN THE LIMITING CIRCUMSTANCES OF THE SITUATION. SO, IF, TILL THE EX PIRY OF LIMITATION, NO REPORT OF VALUATION COMES FROM THE DVO, THE ORIGINA L POWER OF THE AO TO VALUE THE ASSET HIMSELF REVIVES. (IV) REFERENCE UNDER CLAUSE (B)(II) OF SECTIO N 55A CAN BE MADE, IF THE AO IS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT WAS NECESSARY SO TO DO. IN THE CASE OF ANANT MILLS LTD. A REFERENCE UNDER C LAUSE (B)(II) OF SECTION 55A OF THE ACT WAS MAD E BY THE AO AND THE ASSET IN QUESTION WAS A PIECE OF LAND. DECIDING THE WRIT PETITION FILED BY THE AS SESSEE, HON'BLE GUJARAT HIGH COURT HELD THAT REFERENCE COULD HAVE BEEN MADE , IF THE AO WAS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT WAS NECESSARY SO TO DO, THAT THERE WAS NOTHING SPECIAL ABOUT THE NATURE OF THE ASSET WHICH WOULD H AVE JUSTIFIED THE AO TO MAKE A REFERENCE TO THE VO. NO OTHER RELEVANT CIRCU MSTANCES COULD BE POINTED OUT, THAT NO ATTEMPT WA S MADE TO JUSTIFY THE ACTION OF THE AO UNDER ANY OTHER PROVISION OF SECTION 55A. FINALLY, IT WAS HELD BY THE HON'BLE COURT THAT THE REFERENCE TO THE DVO WAS NOT IN ACCORDANCE WITH LAW AND IT HAD TO BE QUASHED. MV. SHAH, OFFICIAL LIQUIDATOR, ANANT MILLS LTD. V. U.J. MATAIN [1994] 209 ITR 568 (GUJ.) (V) THE PURPOSE OF SECTION 55A OF THE ACT IS NOT TO ENA BLE THE AO TO MAKE A ROVING AND FISHING INQUIRY FOR FINDING OUT MAT ERIALS FOR REOPENING OR REVISING A COMPLETED ASSESSMENT. PENDENCY OF AN ASS ESSMENT INCLUDING ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 68 REASSESSMENT IS A SINE QUA NON FOR GIVING JURISDICT ION TO THE AO TO MAKE A REFERENCE UNDER THE SAID SECTION OF THE ACT. IT HAS NO RELEVANCE AND CANNOT BE APPLIED A FTER THE ASSESSMENT IS COMPLETED AND BEFORE THE REASSESSMENT HAS COMMENCED, THAT IS, TO CONSIDER TH E QUESTION WHETHER THE COMPLETED ASSESSMENT IS BASED ON UNDERVALUATION . (VI) A VALUATION REPORT IS ONLY AN OPINION OF A VALUER. THE SAME DOES NOT AMOUNT T O INFORMATION WITHIN THE MEANING OF SECTION 147 NOR CAN IT FORM A GROUND FOR REASON TO BELIEVE THAT THE ASSESSEE HA D FAILED TO DISCLOSE HIS INCOME FULLY AND TRULY WITHIN THE MEANING OF SECTIO N 147 OF THE ACT. THE REASON TO BELIEVE OF AN AO CANNOT BE SUBSTI TUTED BY AN OPINION OF A VALUER. IN OTHER WORDS, THE VALUATION REPORT COULD, AT BEST, BE CONSIDERED AS A MERE REASON, BUT COULD NOT BE A REASON TO BE B ELIEVED BY THE ASSESSING AUTHORITY (VII) THE SCOPE OF SECTION 55A OF THE ACT IS CONFINED TO ASCERTAINI NG THE FAIR MARKET VALUE OF A CAPITAL ASSET WHICH IS THE SUBJEC T MATTER OF TRANSFER. THOUGH THE EXPRESSION UNDER THIS CHAPTER IS REFERRE D TO IN SECTION 55A, THE SECTION HAS APPLICATION ONLY TO TRANSACTIONS IN VOLVING CAPITAL GAINS. (VIII) FAA IS NOT REQU IRED STATUTORILY TO GIVE NOTICE UNDER SECTION 246 O R SECTION 250 OR 251 OF THE ACT TO THE VALUATION OFFICER. SUB - SECTION (3A) OF SECTION 23 AND THE PROVISO TO SUB-SECTION (5) OF SECTION 24 OF THE WEALTH- TAX ACT, 1957, DEALING WITH APPEALS BEFORE THE FAA AN D THE TRIBUNAL, SPECIFICALLY PROVIDE FOR OPPORTUNITY OF HEARING TO BE GRANTED TO THE VALUATION OFFICER. THERE ARE NO CORRESPONDING PROVISIONS IN SECTIONS 2 50 AND 254 OF THE ACT. MUTATIS MUTANDIS APPLICATION OF CERTAIN PROVIS IONS OF SECTIONS 16A, 23 AND 24 OF THE WEALTH-TAX ACT VIS-A- VIS SECTION 55A COULD NOT CHANGE THE POSITION. (IX) THE POWER OF THE AO UNDER SECTIONS 131(1) AND 133(6 ) IS DISTINCT FROM AND DOES NOT INCLUDE THE POWER TO REFER A MATTER TH E UNDER U/S. 55A OF THE ACT. A REPORT OF THE VO UNDE R SECTION 55A MAY BE CONSIDERED BY THE AO, AS A PIECE OF EVIDENCE IF IT IS RELEVANT. HOWEVER, THE POWER OF INQUIRY GRANTED TO AN AO UNDER SECTIONS 133(6) AND 142(2) D OES NOT INCLUDE THE POWER TO REFER THE MATTER TO THE VO FOR AN ENQUIRY BY THE LATTER. WE A RE OF THE OPINION THAT IF THE POWER TO REFER ANY DISPUTE TO A VO WAS ALREADY AVAILABLE IN SECTIONS 131(1), 133(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE AO TO DO SO IN CER TAIN CIRCUMSTANCES U/S. 55A. BUT, ORDER ISSUING COMMISS ION TO VO UNDER SECTION 131(1)(D) OF THE ACT WITH REGARD TO COST OF CONSTRUCTION IS PERM ISSIBLE AND IN THAT SITUATION IT WOULD NOT BE A REFERENCE U/S. 55A OF T HE ACT. (X) FOR INVOKING THE PROVISIONS OF SECTION 55A OF THE A CT FORMATION OF OPINION OF THE AO THAT THE VALUE CLAIMED BY THE ASSESSEE IS LESS T HAN ITS FMV IS A SINE QUA NON. RECORDING REASONS AFTER THE ORDER OF REFERENCE, FOR VALUATION OF THE REGISTERED VALUER, IS NOT A SUBSTI TUTE FOR PREDECISIONAL ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 69 FORMATION OF OPINION. CIT V. UMEDBHAI INTERNATIONAL (P.) LTD. [2011] 330 ITR 506/[2014] 223 TAXMAN 152 (MAG.)/45 TAXMANN.COM 306 (CAL.). (XI) A REFERENCE CAN BE MADE TO VO, UNDER SECTION 55A, C LAUSE (B) SUB-CLAUSE (II),ONLY IF AO RECORDS EXISTENCE OF 'SUCH OTHER RE LEVANT CIRCUMSTANCES' ON THE BASIS OF WHICH HE FORMS SUCH OPINION. IN OTHER WORDS, A REFERENCE CAN BE MADE IF CERTAIN PRE-CONDITIONS EXIT. IN THE MATTER OF HOTEL JOSHI, HON'BLE RAJASTHAN HIG H COURT HA S HELD THAT FOR INVOKING SUB- CLAUSE (II)OF CLAUSE (B) OF SECTION 55A OF THE ACT, AO IS REQUIRED TO FORM AN OPINION ON THE BASIS OF THE MAT ERIAL ON RECORD THAT REFERENCE TO THE DVO FOR ASCERTAINING THE FMV OF AN ASSET, IS NECESSARY HAVING REGARD TO THE NATU RE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES CIT V. HOTEL JOSHI [2000] 242 ITR 478/108 TAXMAN 199 (RAJ.). HON'BLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JA YAN TILAL SHAH (SUPRA) HAS HELD THAT AS PER THE CLAUSE(B) OF SECTI ON 55A OF THE ACT, THE AO HAS TO RECORD AN OPINION THAT (I) THE FMV OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MO RE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN AM OUNT AS MAY BE PRESCRIBED ;OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUCH A REFERENCE. CLAUSE (B ) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY THE VALUATION REPORT O F A REGISTERED VALUER. (XII) THE ASSESSEE CAN BE SAID TO BE EFFECTIVELY PREJUDIC ED ONLY WHEN ACTION IS TAKEN BY THE INCOME- TAX AUTHORITIES ON THE BASIS OF THE REPORT SUBMITTE D BY THE DVO. EVEN OTHERWISE THE RE IS NO PROVISION IN THE ACT WHICH DEALS WITH THE SITUATION AS TO WHAT WOULD HAPPEN TO A REF ERENCE MADE TO THE DVO U/S. 55A WHICH IS PENDING COMPLETION AT THE TIM E OF PASSING THE ASSESSMENT ORDER. OBVIOUSLY, THE ASSESSMENT ORDER C ANNOT BE DEFERRED IN VIEW OF THE LIMITATION PRESCRIBED FOR PASSING THE SAME. THE REPORT OF THE DVO AS AND WHEN RECEIVED BY THE AO, MAY BE ACTED UP ON BY HIM AND IF HE DOES SO, THE VALIDITY OF THAT ACTION CAN BE QUES TIONED BY THE ASSESSEE. SECTION 55A DOES NOT CREATE ANY BAR ON THE DVO TO VALUE THE PROPERTY ON THE BASIS OF A VALID REFERENCE MADE BY THE AO . 71. FURTHER, WE FIND THAT SIMILAR VIEW HAS BEEN TAK EN EARLIER BY THE HONBLE SUPREME COURT IN CASE OF SMT. AMIYA BALA PAUL VS. C OMMISSIONER OF INCOME-TAX [2003] 130 TAXMAN 511 (SC) WHEREIN IT WAS HELD AS U NDER: 9. THE COMMON FEATURE OF SECTIONS 133(6) AND 142(2 ) IS THAT THE ASSESSING OFFICER IS THE FACT-FINDING AUTHORITY. IT IS HIS OPINION ON THE BA SIS OF THE FACTS AS FOUND ON AN ENQUIRY CONDUCTED BY HIMSELF WHICH RESULTS IN THE ASSESSMEN T ORDER. A REPORT BY THE VALUATION ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 70 OFFICER UNDER SECTION 55A IS ON THE OTHER HAND THE OUTCOME OF AN INQUIRY HELD BY THE VALUATION OFFICER HIMSELF AND REFLECTS HIS OPINION ON THE EVIDENCE BEFORE HIM. SUCH A REPORT WOULD NOT BE THE RESULT OF AN INQUIRY BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 133(6) OR SECTION 142(2). IT IS TRUE THA T THE ASSESSING OFFICER IS NOT BOUND BY STRICT RULES OF EVIDENCE AND A REPORT OF A VALUATIO N OFFICER UNDER SECTION 55A MAY BE CONSIDERED BY THE ASSESSING OFFICER AS A PIECE OF E VIDENCE IF IT IS RELEVANT. (SEE CIT V. EAST COAST COMMERCIAL CO. LTD. [1967] 6 3 ITR 449 , 457 (SC). HOWEVER, THE POWER OF INQUIRY GRANTED TO AN ASSESSING OFFICER UN DER SECTIONS 133(6) AND 142(2) DOES NOT INCLUDE THE POWER TO REFER THE MATTER TO THE VA LUATION OFFICER FOR AN ENQUIRY BY HIM. 72. IN LIGHT OF ABOVE DISCUSSIONS, WE FIND THAT EVE N WHERE THE REFERENCE TO DVO HAS BEEN HELD AS INVALID IN THE EYES OF LAW, TH E VALUATION REPORT SO SUBMITTED BY THE DVO CAN BE CONSIDERED BY THE ASSES SING OFFICER AS A RELIABLE PIECE OF EVIDENCE AS THE ASSESSING OFFICER IS NOT B OUND BY STRICT RULES OF EVIDENCE AND WHERE THE REPORT IS FOUND TO BE RELEVA NT, THE SAME CAN BE CONSIDERED BY THE ASSESSING OFFICER. HOWEVER, WHET HER THE VALUATION REPORT ISSUED BY THE DVO IS FOUND TO BE RELEVANT IN THE FA CTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE SHALL BE DEALING WITH THE SAME IN THE SUBSEQUENT PARAGRAPHS. 73. NOW COMING TO THE CROSS OBJECTION (NO. 2) FILED BY THE ASSESSEE WHEREIN THE ASSESSEE HAS CHALLENGED THE REFERENCE OF THE MA TTER TO DVO U/S 55A ON THE BASIS OF INCORRECT ASSUMPTION OF FACTS AND WITHOUT PROVIDING APPROPRIATE OPPORTUNITY TO THE ASSESSEE BEFORE THE MATTER WAS R EFERRED TO THE DVO. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO PARA 4.2 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS OBSERVED AS UNDER:- ON PERUSAL OF THE REGISTERED VALUERS REPORT, THE FOLLOWING FACTS HAVE BEEN NOTICED:- (I) THE REGISTERED VALUER HAD ESTIMATED THE VALUE OF TH E PROPERTY AT RS. 90,98,000/- BY TAKING THE RATE OF RS. 1,093/- A S ON 1.4.1981 AND MAKING ADJUSTMENTS ON ACCOUNT OF CORNER PLOT, LOCAT ION ETC. AND ARRIVED AT THE VALUE BY TAKING RATE OF RS. 3,306/-. IN THE SAME VALUATION REPORT, HE HAS TAKEN THE VALUE AT RS. 2,72,94,000/- TAKING THE RATE AT RS. 9,918/- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 71 IF THE PARTY USES IT AS COMMERCIAL. THERE IS HUGE V ARIATION IN THE VALUE ESTIMATED BY THE REGISTERED VALUER AT RS. 90,98,000 /- AND RS. 2,72,94,000/-; (II) IN S. NO. 6, THE REGISTERED VALUER HAS HIMSELF GIVE N THE NATURE OF THE PROPERTY AS RESIDENTIAL LAND. THEREFORE, THE NATURE OF THE ASSET AND ITS USE AT THE RELEVANT TIME IS NOT CLEAR FROM THE REGISTERED VALUERS REPORT; (III) FURTHER, THERE WAS NO BASIS OR EVIDENCE FOR T HE ADJUSTMENTS MADE BY THE REGISTERED VALUER; (IV) HAVING REGARD TO THE NATURE OF THE ASSET AND I TS USE AT THE RELEVANT TIME, I AM OF THE OPINION THAT FOR COMPUTATION OF T HE LONG TERM CAPITAL GAIN, IT IS NECESSARY TO HAVE THE REPORT OF ANOTHER TECHNICAL EXPERT I.E. DVO TO WHOM A REFERENCE IS MADE U/S 55A OF THE IT A CT, 1961. THEREFORE, A REFERENCE IN THE PRESCRIBED PERFORMA W AS SENT TO THE DVO ON 8.1.2014; VIDE HIS OFFICE LETTER NO. 1646. 74. IN THIS REGARD, THE LD. AR SUBMITTED THAT A PER USAL OF THE REASONS GIVEN BY THE LD. A.O. IN PARA 4.2 AS REPRODUCED HEREINABO VE, TO ARRIVE AT AN OPINION THAT THE VALUATION CLAIMED ON THE BASIS OF THE REGI STERED VALUERS REPORT REQUIRES REFERENCE TO THE DVO SHOWS THAT THE SAID R EASONS ARE (A) WITHOUT ANY SUBSTANTIVE MATERIAL; (B) MAINLY BECAUSE OF NOT CON SIDERING THE REPORT OF THE REGISTERED VALUER IN RIGHT PERSPECTIVE; AND (C) DUE TO INCORRECT ASSUMPTIONS OF THE FACT, WHICH COULD OTHERWISE BE AVOIDED BY PROVI DING OPPORTUNITY BEFORE MAKING REFERENCE. COMING SPECIFIC ON EACH OF THE OB SERVATIONS OF THE AO, THE LD AR FURTHER SUBMITTED THAT:- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 72 (A) IN THE FIRST POINT, IT WAS OBSERVED BY THE AO THAT THERE IS A HUGE DIFFERENCE BETWEEN THE VALUATION ARRIVED AT BY THE REGISTERED VALUER OF THE PROPERTY AS RESIDENTIAL AT RS. 90,98,000/- AND AS C OMMERCIAL AT RS. 2,72,94,000/-. IT WAS SUBMITTED THAT REGISTERED VAL UER HAS SIMPLY TRIPLED THE VALUE OF RESIDENTIAL PROPERTY TO ARRIVE VALUE OF CO MMERCIAL PROPERTY. IT IS AN ESTABLISHED PRACTICE AND ALSO HAS BEEN ADOPTED FOR STAMP DUTY PURPOSES BY STAMP DUTY AUTHORITIES. SECONDLY, HE HIMSELF HAS RE PORTED IN PARA 9 OF HIS REPORT ABOUT THE LOCALITY, WHEREIN, IT IS MENTIONED THAT PROPERTY IS SITUATED IN MIXED AREA, THEREFORE, BY APPLYING THE PRINCIPLE TH AT FOR THE PURPOSE OF ASCERTAINING THE FMV, ONE HAS TO TAKE THE VALUE WHI CH IS MOST ADVANTAGEOUS AND ACCORDINGLY, HE ADOPTED THE VALUE AS COMMERCIAL PROPERTY. THEREFORE, IN THIS REGARD, THE APPROACH OF THE REGISTERED VALUER WAS SUPPORTED WITH THE SUBSTANTIATING MATERIAL AND GUIDELINES FOR DETERMIN ING FMV. ON THE OTHER HAND, THE PRESUMPTION OF THE LD. A.O. IS ARBITRARY AND BA SED ON MERE SUSPICION, HENCE, SHOULD NOT HOLD GOOD. (B) IN THE POINT NO. 2, IT WAS MENTIONED BY THE AO THAT IN S. NO. 6, REGISTERED VALUER HAS HIMSELF GIVEN THE NATURE OF P ROPERTY AS RESIDENTIAL LAND, THEREFORE, IT IS CONCLUDED THAT AT RELEVANT TIME, T HE LAND USE IS NOT CLEAR FROM THE REGISTERED VALUERS REPORT. IN THIS REGARD, IT WAS SUBMITTED THAT WE HAVE TO READ THE REPORT OF THE REGISTERED VALUER IN TOTALIT Y AND COMMENTS TO SPECIFIC POINT IN SPECIFIC MANNER. ACCORDINGLY, S. NO. 6 AS POINTED OUT, IS ONLY ABOUT THE DESCRIPTION OF THE PROPERTY AND COMMENTS SHOULD BE READ RESTRICTED TO THE DESCRIPTION OF THE PROPERTY NOT WITH RESPECT TO ASC ERTAIN POTENTIAL USE IN MOST ADVANTAGEOUS MANNER, PARTICULARLY WHEN, THERE IS AN OTHER POINT AT S. NO. 9 OF THE REPORT WHICH SPECIFICALLY ASKED, WHETHER PROPER TY IS SITUATED IN RES./COMMERCIAL/ MIXED AREA/INDUSTRIAL AREA AND IT HAS BEEN COMMENTED THAT PROPERTY IS IN MIXED AREA. THEREFORE, IT IS VERY MU CH CLEAR THAT POTENTIAL USE IS COMMERCIAL SINCE THE PROPERTY IS SITUATED IN MIXED AREA; HENCE, FROM THE FACT ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 73 DISCUSSED, THE REGISTERED VALUERS REPORT IS VERY M UCH CLEAR ABOUT THE POTENTIAL USE. CONCLUSION ARRIVED AT BY THE LD. A.O. IS ONLY DUE TO NOT CONSIDERING THE REGISTERED VALUERS REPORT IN RIGHT PERSPECTIVE, RA THER, CONCLUSION HAS BEEN DRAWN BASED ON COMMENTS GIVEN IN S. NO. 6 WHICH IS NOT RELATED TO THE POTENTIAL USE AND LIMITED TO THE DESCRIPTION OF THE PROPERTY. (C) IN THE THIRD POINT, IT WAS POINTED OUT BY THE AO TH AT FOR FACTOR OF ADJUSTMENT, THERE IS NO BASIS NOR ANY EVIDENCE HAS BEEN PROVIDED BY THE REGISTERED VALUER. IT WAS SUBMITTED THAT THIS IS IN CORRECT OBSERVATION AS THE REGISTERED VALUER HAS GIVEN THE BASIS FOR ADJUSTMEN T IN BRIEF. HOWEVER, THE SAME COULD BE CALLED IN DETAIL IF ANY CLARIFICATION WAS REQUIRED AND BASED UPON SUCH CLARIFICATION, A JUDICIOUS OPINION COULD BE FO RMED, WHICH HAS NOT BEEN DONE IN THE INSTANT CASE. IT IS PERTINENT TO NOTE A ND RATHER SURPRISING TO SEE THAT THE DVO IN HIS REPORT WHILE MAKING THE FACTOR OF AD JUSTMENT HAS GIVEN THE BASIS OR EVIDENCE IN SIMILAR FASHION AS OF THE REGISTERED VALUER, WHICH HAS BEEN ACCEPTED WHOLE HEARTEDLY BY THE A.O. THE SAID ACT O F THE LD. A.O. IS CONTRADICTORY AND SHOWS THAT HE HAS USED DIFFERENT YARDSTICK OF JUSTIFICATION ACCORDING TO HIS OWN CONVENIENCE. (D) IN THE FOURTH POINT, A GENERAL STATEMENT HAS BEEN M ADE BY THE AO WITHOUT ANY BASIS AND MATERIAL, WHICH CANNOT BE THE BASIS TO FORM SUCH AN OPINION. 75. IT WAS SUBMITTED BY THE LD AR THAT A PERUSAL OF THE SECTION 55A(A) SHOWS THAT THERE MUST BE A SITUATION, WHEREIN, THE A.O. S HOULD FORM AN OPINION. THE WORD OPINION HAS BEEN USED IN THE SECTION TO REST RICT THE USE OF SUCH REFERENCE IN A DISCRETIONARY MANNER, OTHERWISE, A B LANKET POWER COULD BE GIVEN TO THE A.O. AND WHICH IS NOT THE INTENT OF THE LEGI SLATURE. THEREFORE, THEY HAVE USED THE WORD OPINION WHICH DEMANDS AN APPLICATIO N OF MIND IN OBJECTIVE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 74 MANNER ON THE FACTS AND CIRCUMSTANCES OF ANY GIVEN CASE. HENCE, FOR INVOKING THE PROVISIONS OF SECTION 55A OF THE ACT FORMATION OF OPINION OF THE AO THAT THE VALUE CLAIMED BY THE ASSESSEE IS LESS THAN ITS FMV IS A SINE QUA NON . IN SUPPORT, RELIANCE WAS PLACED ON FOLLOWING DECISIONS : (A) IT HAS BEEN OBSERVED BY THE SUPREME COURT IN AMRIT BANASPATI CO LTD (2014-TIOL-64-SC-WT) THAT IT IS TRUE THAT THE INVOCATION OF RULE 8(A) CANNOT BE BASED ON IPSI DIPSI OF THE AO. THE DISCRE TION VESTED IN THE AO TO DISCARD THE VALUE DETERMINED AS PER RULES 3 HAS TO BE JUDICIALLY EXERCISED. IT MUST BE REASONABLE, BASED ON SUBJECTIVE SATISFACTIO N; THE POWER MUST BE SHOWN TO BE OBJECTIVELY EXERCISED AND IS OPEN TO JU DICIAL SCRUTINY. (B) IN THE MATTER OF HOTEL JOSHI (242 ITR 478), HON BLE RAJASTHAN HIGH COURT HAS HELD THAT FOR INVOKING SUB-CLAUSE (II) OF CLAUS E (B) OF SECTION 55A OF THE ACT, AO IS REQUIRED TO FORM AN OPINION ON THE BASIS OF T HE MATERIAL ON RECORD THAT REFERENCE TO THE DVO FOR ASCERTAINING THE FMV OF AN ASSET, IS NECESSARY HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES. 76. IT WAS FURTHER SUBMITTED THAT WITHOUT PREJUDICE , EVEN IF FOR SAKE OF ARGUMENT, IT IS PRESUMED THAT FOR THE PERIOD UNDER CONSIDERATION SECTION 55A(A) APPLIES IN A CASE WHERE THE ASSESSING OFFICE R IS OF OPINION THAT THE VALUE SO CLAIMED IS AT VARIANCE WITH ITS FAIR MARKET VALU E. THUS, FORMING THE REQUISITE OPINION, IN A JUDICIOUS MANNER REQUIRES THE CONCLUS ION OF AT VARIANCE, IS THE BASIC CONDITION FOR MAKING REFERENCE TO THE DVO. TH E AO HAS NOT FORMED ANY SUCH OPINION AS IS CLEAR FROM HIS NOTE REPRODUCED A T PAGE 3 OF THE ASSESSMENT ORDER AND WITHOUT FULFILLING THIS BASIC LEGAL REQUI REMENT, THE REFERENCE CANNOT BE MADE. FACT IS THAT AFTER POINTING OUT SOME IMAGI NARY SHORT COMINGS IN THE REPORT OF THE REGISTERED VALUER AS EXPLAINED HEREIN BEFORE, THE AO PROCEEDED TO RECORD THAT I AM OF THE OPINION THAT FOR COMPUTATION OF THE LO NG TERM CAPITAL ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 75 GAIN, IT IS NECESSARY TO HAVE THE REPORT OF ANOTHER TECHNICAL EXPERT I.E. DVO.... THERE IS NO REFERENCE, WHATSOEVER, OF THE VALUE DET ERMINED BY THE REGISTERED VALUER BEING AT VARIANCE WITH THE FMV. IN FACT, HE COULD NOT HAVE FORMED ANY SUCH OPINION AS HE HAD NO OTHER FACT/DATA TO SHOW T HE VARIANCE. THE TERM AT VARIANCE MEANS DIFFERENCE OR DISCREPANCY BETWEEN T HE TWO STATEMENTS/DOCUMENTS/FACTS ETC. TO CLAIM VARIANCE, AT LEAST TWO DATA ARE REQUIRED. IN THE PRESENT CASE, THE AO HAD ONLY ONE FIGURE GIVEN BY THE REGISTERED VALUER AND HE HAS NOT MADE ANY ATTEMPT T O COLLECT SOME MORE RELEVANT DATA REGARDING THE FMV TO SHOW THE VARIANC E. IT IS OBVIOUS THAT THE TERM AT VARIANCE IS USED ONLY FOR COMPARISON BETW EEN THE TWO OR MORE ITEMS. FINDING SOME FAULTS IN THE METHODOLOGY ADOPTED BY T HE REGISTERED VALUER DOES NOT GIVE RISE TO ANY SUCH OPINION. FOR EXAMPLE, O NE EXIT POLL COMES OUT WITH A FIGURE IN FAVOUR OF A POLITICAL PARTY. IF ONE POINT OUT THAT SAMPLE SIZE WAS SMALL OR SAMPLES NOT DRAWN UNIFORMLY ETC, THEN THERE CAN BE JUST A DOUBT ABOUT THE AUTHENTICITY OF THIS POLL. BUT, WHEN ONE SAYS THAT OTHER EXIT POLLS HAVE GIVEN VARIOUS OTHER FIGURES, ONLY THEN ONE CAN SAY AT VA RIANCE. THE AO HAS FAILED TO FORM AN OPINION AS REQUIRED BY THE LAW HENCE, SUBSE QUENT ACTIONS DESERVES TO BE DELETED. 77. IT WAS ACCORDINGLY SUBMITTED THAT IN THE INSTAN T CASE, ON THE BASIS OF DISCUSSION MADE ABOUT THE REASON FOR ARRIVING AT SU CH AN OPINION, IT IS CLEAR THAT BEFORE MAKING THE REFERENCE, NEITHER MIND WAS APPLIED OBJECTIVELY NOR THE REQUIREMENT OF THE LAW HAS MET AND NOR A PROPER OPP ORTUNITY WAS PROVIDED TO THE ASSESSEE TO REPRESENT HIS VERSION ON THOSE REAS ONS. HOWEVER, IN THIS REGARD, IT CAN BE SAID THAT THERE IS NO EXPRESS PRO VISION IN THE ACT FOR PROVIDING AN OPPORTUNITY TO THE ASSESSEE BEFORE ARRIVING SUCH AN OPINION, EVEN THOUGH, IT IS A SETTLED PRINCIPLE OF NATURAL JUSTICE CONSIDERI NG THE NATURE OF WORK AND DUTY TO BE PERFORMED, THERE CAN BE IMPLIED PRACTICES TO SECURE JUSTICE. IN THE INSTANT CASE, CALLING THE ASSESSEES VIEW ON THE REASONS FO R FRAMING THE OPINION COULD ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 76 NOT HAVE AFFECTED THE WORK OF THE LD. A.O. IN ANY W AY, RATHER COULD ONLY ASSIST HIM TO FORM AN OPINION BASED UPON THE CORRECT FACTS AND THE CIRCUMSTANCES. IN THE INSTANT CASE, LOOKING TO THE REASONS AND EXPLAN ATIONS BROUGHT ON RECORD HEREINBEFORE, IT IS A CASE WHERE BY PROVIDING SUCH OPPORTUNITY, THE POSSIBILITY OF MISCARRIAGE OF JUSTICE COULD HAVE BEEN AVOIDED. 78. PER CONTRA, THE LD CIT DR SUBMITTED THAT THE AS SESSING OFFICER HAS NOT MADE THE REFERENCE TO DVO IN A ROUTINE MANNER BUT A FTER CONSIDERING THE REPORT OF THE REGISTERED VALUER AND OTHER RELEVANT FACTORS AND AFTER FORMING AN OPINION THAT THE MATTER REQUIRED TO BE EXAMINED BY ANOTHER TECHNICAL EXPERT. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO MERIT IN THE CONTENTION SO ADVANCED BY THE LD AR AND THE SAME SHOULD BE DISMIS SED. 79. WE HAVE ALREADY DECIDED EARLIER THAT THE REFERE NCE TO DVO IS INVALID IN THE EYES OF LAW, THEREFORE, WE DONT DEEM IT NECESS ARY TO EXAMINE DEEPER INTO THE ISSUE AROUND FORMATION OF OPINION BY THE ASSESS ING OFFICER AND WHAT SHOULD BE THE INGREDIENTS OR THE BASIS/TANGIBLE MATERIAL I N POSSESSION OF THE ASSESSING OFFICER BEFORE HE REFERS THE MATTER TO THE DVO THOU GH THE LD AR HAS RAISED SOME RELEVANT ISSUES IN THIS REGARD. HENCE, IN VIE W OF THE SAME, THE CROSS OBJECTION SO RAISED IS NOT ADJUDICATED UPON. 80. NOW COMING TO ANOTHER CROSS OBJECTION (NO. 3) R AISED BY THE ASSESSEE WHEREIN THE ASSESSEE HAS CHALLENGED THE DVOS REPOR T ON THE BASIS OF INCORRECT ASSUMPTION OF FACTS AND AGAINST THE ESTABLISHED NOR MS OF THE VALUATION AND WITHOUT FOLLOWING STANDARD PRACTICE AND PROCEDURES OF THE REVENUE DEPARTMENT FOR DETERMINATION FMV. 81. IN THIS REGARD, IT WAS SUBMITTED BY THE LD. AR THAT THE DEPARTMENT HAS COME OUT WITH VALUATION GUIDELINES WHEREIN PRESCRIB ED PROCEDURES, PRACTICES ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 77 AND VALUATION METHODOLOGY HAVE BEEN LAID DOWN TO GU IDE THE DVO TO COMPLETE HIS WORK IN JUDICIOUS MANNER. HOWEVER, THE SAME HAS NOT BEEN FOLLOWED BY THE DVO IN THE INSTANT CASE AND THEREFORE, THE VALUATIO N SO DETERMINED BY THE DVO SUFFERS FROM VARIOUS INFIRMITIES AND THE VALUATION REPORT ISSUED BY THE DVO CANNOT BE RELIED UPON. 82. IT WAS SUBMITTED BY THE LD AR THAT THE DVO IN H IS REPORT HAS STATED THAT THE INSPECTION THE PROPERTY WAS CARRIED OUT BY HIM ALONG WITH THE JUNIOR ENGINEER ON 10.07.2004 IN THE PRESENCE OF THE ASSES SEES PARTNER MR BAJAJ WHEREAS THE FACT OF THE MATTER IS THAT NO SUCH INSP ECTION WAS CARRIED OUT IN THE PRESENCE OF MR BAJAJ. FURTHER, IN REPLY TO THE RTI APPLICATION, IT HAS BEEN STATED BY THE DEPARTMENT THAT INSPECTION REGISTER WHICH IS REQUIRED TO BE MAINTAINED AS PER GUIDELINES HAS NOT BEEN MAINTAINED AND EVEN THE INSPECTION NOTE HAS NOT BEEN MAINTAINED. IT WAS FURTHER SUBMITTED THAT ON THE ALLEGED DATE OF INSPECTION, THE PROPERTY WAS UNDER THE POSSESSION O F THE BUYER AND IT WAS CLOSED, THEREFORE, THE DVO WAS REQUIRED TO TAKE PER MISSION AND KEYS FROM THE BUYER HOWEVER, NO SUCH PERMISSION OR KEYS WERE GIVE N BY THE BUYER AND THEREFORE, CLAIM OF THE DVO TOWARDS INSPECTION IS W RONG. IT WAS FURTHER SUBMITTED THAT THE NOTICE FOR INSPECTION WAS SERVED ONLY IN THE MONTH OF JANUARY 2014 WHEREIN THERE WAS NO SPECIFIC DATE OF INSPECTION AND THEREAFTER IN THE DVOS REPORT, IT HAS BEEN CLAIMED THAT THE INSP ECTION WAS CARRIED OUT ON 7.3.2014 WHICH MEANS THAT THERE MUST HAVE BEEN A SE PARATE NOTICE FOR INSPECTION AND WHICH THE ASSESSEE DENIES TO HAVE RE CEIVED ANY SUCH NOTICE EITHER IN WRITING OR VERBALLY. IT WAS FURTHER SUBM ITTED THAT THE ASSESSEE HAS FILED HIS OBJECTION TO THE PROPOSED DVOS REPORT. H OWEVER, THE SAME HAS NOT BEEN CONSIDERED BY THE DVO WHICH EFFECTIVELY MEANS THAT ASSESSEE HAS NOT HEARD AND HIS OBJECTIONS TO THE DRAFT VALUATION REP ORT HAS NOT BEEN CONSIDERED WHICH IS A GROSS VALUATION PRINCIPLE OF NATURAL JUS TICE. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 78 83. IT WAS FURTHER SUBMITTED THAT THE DVO IN HIS RE PORT (PARA 4.6) HAS CONCLUDED THAT THE LAND UNDER REFERENCE WAS A RESID ENTIAL USE ONLY AS ON 01.04.1981. HOWEVER, HE HAS NOT DISCLOSED ANY BASIS ON WHICH HE CONCLUDED THAT THE LAND UNDER REFERENCE WAS A RESIDENTIAL USE ONLY AT THE RELEVANT POINT OF TIME. IT WAS SUBMITTED THAT THE PROPERTY WAS SITUAT ED ON 128 FEET WIDE ROAD, ONE OF THE BIGGEST WIDE ROADS OF THE CITY NOT ONLY IN THE YEAR 1981 BUT ALSO AT PRESENT AS WELL. THE PROPERTY WAS ON A NATIONAL HIG HWAY, ITSELF SHOWS THAT ROAD UNDER CONSIDERATION WAS A PROMINENT ROAD OF TH E CITY IN THAT YEAR AS WELL AND WAS ALSO HAVING FLOW OF TRAFFIC. 84. IT WAS FURTHER SUBMITTED THAT IT IS A FACT THAT THE PROPERTY WAS OWNED BY A PARTNERSHIP FIRM WHICH WAS REGISTERED WITH THE DI C AND ALSO WAS CARRYING ON TRADING ACTIVITY FROM THE SAME PLACE. IT IS IMPORTA NT TO NOTE HERE THAT THE DVO HAS CLAIMED THAT INDUSTRIAL LAND WILL HAVE LESS DLC S IN COMPARISON TO THE RESIDENTIAL BUT ISSUE IS THAT IN THE YEAR 1981, VAR IOUS INDUSTRIES WERE RUNNING IN THE RESIDENTIAL AND COMMERCIAL AREAS, WHEREAS, AT P RESENT, ONE CANNOT RUN THE INDUSTRIAL ACTIVITIES IN RESIDENTIAL AND COMMERCIAL AREAS BECAUSE OF STRICT ENFORCEMENT OF THE LAWS. THEREFORE, THE TREND OF TH E RATE PREVAILING IN THE INDUSTRIAL AREA CANNOT BE COMPARED WITH THE INDUSTR Y RUNNING IN THE RESIDENTIAL AND COMMERCIAL LOCALITY. FURTHER, THE APPROVED VALU ER IN HIS REPORT IN PARA 9 HAS REPORTED THE LOCALITY AS MIXED AREA WHICH HAS N OT BEEN DENIED BY THE DVO AS WELL, THEREFORE, SUCH JUSTIFICATION IS ONLY TO J USTIFY HIS PREDETERMINED ACT, SINCE HE HIMSELF IS OF THE VIEW THAT PROPERTY IS OF RESIDENTIAL USE AND THUS IT HAS DESIRED TO SHOW THAT THE LAND IN 1981 WAS NOT IN AN INDUSTRIAL BELT. 85. IT WAS FURTHER SUBMITTED THAT THE FINDING OF TH E DVO THAT THERE WAS NO COMMERCIAL WORKING FROM THE PREMISES AS ON 1.04.198 1 IS CONTRARY TO THE FACTS. IT IS AN UNDISPUTED FACT THAT THE PROPERTY WAS USED FOR FACTORY AS WELL AS FOR TRADING ACTIVITY AS IS EVIDENT FROM THE PROVISIONAL REGISTRATION CERTIFICATE OF THE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 79 RAJASTHAN SALES TAX DEPARTMENT AND CENTRAL SALES TA X EFFECTIVE FROM 16.03.1981 TO 16.09.1981. NOW IT IS NECESSARY TO AP PRECIATE THE MEANING OF WORD COMMERCIAL ACTIVITY PREVAILING IN THE YEAR 1 981 RATHER THAN TODAYS ERA. IN THE YEAR 1981, COMMERCIAL ACTIVITIES WERE CONSID ERED TO BE THE ACTIVITIES OF MANUFACTURING AND TRADING AND A LOCATION WHICH WAS NEAR TO THE RESIDENTIAL AREA. SUCH PLOTS WHICH COULD BE USED FOR SUCH ACTIV ITIES WERE HAVING THE HIGHEST VALUE SINCE IN THAT TIME, PEOPLE WERE NOT H AVING MUCH OF TRANSPORTS, THEREFORE, PROXIMITY TO THE RESIDENTIAL AREA WERE C ONSIDERED TO BE THE BEST COMMERCIAL LOCATION. FURTHER, THE ACTIVITY OF MANUF ACTURING AND TRADING IS VERY WELL INCLUDED IN THE TERM COMMERCIAL ACTIVITY. THER EFORE, WHILE CONCLUDING THAT THERE WAS NO COMMERCIAL WORKING, THE DVO ACTED UNFA IRLY, UNREASONABLY AND PREJUDICE ON EVIDENCE AND FOR THIS REASON ALONE, TH E ORDER IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE, SINCE THE NATURAL JUS TICE DEMANDS FAIR PLAY, REASONABLENESS AND WITHOUT PREJUDICE ON EVIDENCE, W HICH IS ABSENT IN THE INSTANT CASE . 86. IT WAS FURTHER SUBMITTED THAT A PERUSAL OF THE REPORT OF THE DVO SHOWS THAT WHILE DERIVING THE FMV OF THE PROPERTY, HE ONL Y TOOK THE VALUE OF THE LAND, WHEREAS, THERE WAS A STRUCTURE OF BUILDING WHICH DI D NOT FIND PLACE IN THE FINAL VALUATION. ON RAISING THE OBJECTION ON THE ISSUE SU BSEQUENT TO THE VALUATION, IT WAS CLARIFIED BY THE DVO THAT THE REGISTERED VALUER ALSO DID NOT TAKE THE SAID VALUE IN CONSIDERATION. NOW THE QUESTION ARISES WHE THER HE IS BOUND WITH THE FACT NOTED BY THE REGISTERED VALUER OR NOT AND THE ANSWER IS CERTAINLY NOT. FURTHER, IN THE PROCESS OF VALUATION, IT IS EXPECTE D BY THE LAW AND ESTABLISHED PRACTICES THAT THE DVO MUST VISIT THE SITE AND BY A PPLYING HIS EXPERTISE THE AGE OF THE CONSTRUCTION CAN BE DETERMINED. FURTHER, IN THIS CASE, IT IS VERY WELL NOTED ON THE PAGE 6 OF THE SALE DEED EXECUTED ON 6. 12.2010 AND REGISTERED ON 7.12.2010 THAT THERE IS A RCC CONSTRUCTION OF 344 S Q. FT., PATTI ROOFING CONSTRUCTION OF 380.63 SQ. FEET AND TIN SHADE OF 29 0.75 SQ. FEET, WHICH IS 30 ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 80 YEARS OLD WHICH MEANS THAT IT WAS VERY WELL THERE O N 1.4.1981. THE SAID SALE DEED WAS WITH THE DVO, THEREFORE, IT IS CLEAR THAT HE HAS NOT VISITED THE SITE AND THE REPORT HAS BEEN PREPARED WITHOUT GOING THRO UGH ALL THE FACTS NOTED ON THE DOCUMENTS AVAILABLE BEFORE HIM. IT MEANS THAT H E HAS NOT GIVEN THE THOUGHTFUL CONSIDERATION TO HIS WORK. HENCE, THE RE PORT OF THE DVO IS NOT REFLECTING THE CORRECT FMV, PRIMARILY, ON ACCOUNT O F SUCH GROSSLY NEGLIGENT APPROACH TO THE WORK AND SECONDLY, THE VALUE OF SAI D STRUCTURE COULD NOT FIND PLACE IN THE FINAL VALUE DETERMINED BY HIM. 87. IT WAS FURTHER SUBMITTED THAT FMV IS THE ESTIMA TED PRICE WHICH ANY ASSET IN THE OPINION OF THE VALUATION OFFICER WOULD FETCH , IF SOLD IN THE OPEN MARKET ON THE VALUATION DATE AND IN THE INSTANT CASE, FOLL OWING FACTORS SHOULD BE CONSIDERED: THE FRONT OF THE PROPERTY IS SITUATED ON 128 FEET W IDE N.H. ROAD; THE PROPERTY IS SITUATED APPROX 200 METERS FROM TON K ROAD FLYOVER WHICH WAS THERE EVEN BEFORE 1981; THE SAID FLYOVER WAS THE FIRST FLYOVER OF THE JAIPU R WHICH SHOWS THAT THERE WAS ADEQUATE TRAFFIC AT THAT TIME ALSO ON THE SAID ROAD; SINCE THE PROPERTY IS A CORNER PROPERTY AND LEFT SI DE OF THE PLOT IS ON AVERAGE 85 FEET WIDE ROAD AND THAT ROAD CONNECTS TO GANDHI NAGAR RAILWAY STATION WHICH IS ONLY 500 FEET AWAY FROM TH E PROPERTY; THE OPEN FRONT IS 120 FEET AND OPEN LEFT SIDE IS 24 0 FEET WHICH PROVIDES THE FLEXIBILITY TO USE IT EITHER AS A SINGLE PLOT O R SUB DIVIDE INTO THE SMALLER PLOTS FOR USE IN THE MOST ADVANTAGEOUS MANNER; THE PROPERTY WAS USED FOR BUSINESS PURPOSES. HOWEVE R, THE LAND USE PERMITTED IN THE SURROUNDING AREAS WAS NOT RESTRICT ED TO THE INDUSTRIAL USE ONLY WHICH MEANS ACCORDING TO THE LOCAL LAWS, T HERE WAS NO RESTRICTION AS FAR AS THE USE WAS CONCERNED. HENCE, IT COULD AND CAN BE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 81 USED ACCORDING TO THE POTENTIAL POSSIBILITIES IN IT S MOST ADVANTAGEOUS MANNER; THE LAND IN THE LOCALITY WHEREIN THE PROPERTY IS SI TUATED WAS IN MIXED USE IN 1981 AND WHICH HAS NOT BEEN DENIED BY THE DVO 88. IT WAS FURTHER SUBMITTED THAT THE FACTOR WISE A NALYSIS FOR WHICH ADJUSTMENT SHOULD BE TAKEN ACCORDING TO THE GVIP, 2 009 AND THE VALUATION REPORT OF THE DVO IS AS UNDER:- FACTORS TO BE TAKEN ACCORDING TO THE GVIP, 2009 FACTS OF THE SALE INSTANCE OF THE INSTANT CASE ADJUSTMENT TAKEN BY DVO SIZE 372.5 SQ. MTRS. 82X50 2750.77 SQ. MTRS. 120X2469 (-) 20% COMMENTS:- THE COMPARABLE IS OF VERY SMALL SIZE IN COMPARISON TO THE SIZE OF THE CASE UNDER CONSIDERATION. THE GVIP, 2009 HAS PROVIDED THREE DIFFERENT SITUATIONS, WHEREIN, ACCORDING TO THE SIT UATION, ADJUSTMENT SHOULD BE MADE. (I) 0.5% PER 100 SQ. M., IN THE INSTANT CASE, THAT WILL COME TO ADJUSTMENT @ (-) 11.89%, (II) POSSIBILITIES OF SUB- DIVISION MUST BE EXAMINED AND ON THE BASIS OF HYPOTHETICAL LAYOUT, VALUE MAY BE DETERMINED. THE PROPERTY IS HAVING TWO SIDE ROADS AND WIDTH OF THE ROAD ON BOTH SIDES ARE REASONABLY GOOD, THEREFORE, IT CAN REASONABLY DIVID ED INTO 2 OR 3 PLOTS I.E. (120X1269 AND 120X120) OR (120X90 AND 120X8 0 AND 120X76). UNDER SUCH CIRCUMSTANCES, THE SIZE OF THE EACH PLOT COULD NOT BE MUCH LARGER IN COMPARISON TO THE COMPARABLE AND WILL NOT REQUIRE A NY ADJUSTMENT ON THIS ACCOUNT AND (III) CONSIDERING THE POSSIBILITIES UND ER BYLAWS, IF MULTI STORY ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 82 BUILDING CAN BE CONSTRUCTED AND SIZE OF THE PLOT IS MORE THAN 1,500 SQ. M. THEN THE VALUE OF THE BIGGER PLOT WOULD BE MORE THA N THE SMALL SIZE PLOT. THE PROPERTY IS HAVING 2,750 SQ. MTRS. WHICH IS MORE TH AN 1,500 SQ. MTRS. AND THERE IS POSSIBILITY OF CONSTRUCTION OF MULTI STORY BUILDING. UNDER SUCH CIRCUMSTANCES, EVEN ACCORDING TO THE GUI DELINES INSTEAD OF REDUCTION, THERE SHOULD BE ADDITION ON ACCOUNT OF L ARGE SIZE PLOT. HOWEVER, WITHOUT ADMITTING, THE REDUCTION AS CORRECT, IT IS IMPORTANT TO NOTE THAT THE LD. DVO HAS MADE A REDUCTION OF 20% ON THIS ACCOUNT , WHEREAS, EVEN UNDER WORST SITUATION, ACCORDING TO THE SAID GUIDELINES, IT COULD NOT EXCEED 12%, WHICH SHOWS THAT THE ENTIRE EXERCISE WAS ARBITRARY WITHOUT ANY BASIS. SHAPE ONE SIDE NORTH TO WEST IS IN ROUND SHAPE, OTHERS ARE STRAIGHT. RECTANGULAR NIL COMMENTS :- (I) THE SALE INSTANCE IS HAVING ROUND SHAPE ON O NE SIDE, WHEREAS, THE PROPERTY IS RECTANGULAR, THEREFORE, HA VING ADVANTAGEOUS POSITION IN COMPARISON TO THE SALE INSTANCE FOR BET TER BUILDING LAYOUT AND GENERAL ARCHITECTURAL PLANNING, (II) IN CASE OF SAL E INSTANCE, AFTER LEAVING THE SET BACK; THERE WOULD BE A LITTLE SPACE AVAILABLE F OR CONSTRUCTION, (III) FURTHER, DUE TO ODD WIDTH, THE SALE INSTANCE CANNO T BE FURTHER SUB DIVIDED, HENCE, REDUCES THE FLEXIBILITY FOR ANY ALTERNATIVE USE. THE LD. DVO FAILED TO TAKE INTO NOTE THE ADVANTAGEO US POSITION OF THE PROPERTY WHILE WORKING OUT THE FACTOR FOR ADJUSTMEN T AND HAD NOT TAKEN ANY ADDITIONAL % FOR THE SAME. WHEREAS, THE ADVANTAGE C ONSIDERING THE SHAPE IS FACTUALLY EVIDENT. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 83 FRONTAGE 82 120 NIL COMMENTS :- (I) BOTH THE PROPERTIES ARE CORNER PROPERTY, HOW EVER, IT IS PERTINENT TO NOTE THAT PROPERTY IS SITUATED ON MAIN NATIONAL HIGHWAY ROAD HAVING GOOD FRONTAGE THAT WILL DEFINITELY HAVE HIGH ER VALUE EVEN COMPARED TO A PROPERTY HAVING SAME FRONTAGE BUT SITUATED IN INN ER COLONY LANE. (II) IT IS FURTHER IMPORTANT THAT IN BOTH THE CASES, TWO SIDES CAN BE USED AS FRONTAGE AND WHILE COMPARING THE ROAD WIDTH OF THESE TWO SID ES WITH CORRESPONDING FRONTAGE, IT IS CLEAR THAT PROPERTY IS HAVING MUCH MORE EFFECTIVE FRONTAGE ON BOTH SIDE INDEPENDENTLY, HENCE, HAVING ADVANTAGE OV ER THE SALE INSTANCE. THE LD. DVO HAS FAILED TO TAKE INTO ACCOUNT THE FAC TOR OF ADJUSTMENT ON THIS ACCOUNT. LOCALITY AND SURROUNDINGS RESIDENT IAL AND GRAVEYAR D ON MAIN TONK ROAD SHOPS, PETROL PUMP AND IN CLOSE PROXIMITY TO GANDHI NAGAR RAILWAY STATION AND RESIDENCES IN THE INNER LANES OF THE LOCALITY. 35% COMMENTS :- (I) THE SALE INSTANCE IS SITUATED IN THE INNER L ANE OF THE RESIDENTIAL AREA, WHEREAS, THE PROPERTY IS ON THE M AIN NATIONAL HIGHWAY AND ALMOST ADJACENT TO THE RAILWAY STATION. FURTHER, SU RROUNDED BY SHOPS, PETROL PUMP ETC., WHEREAS, THE SALE INSTANCE IS IN PURE RE SIDENTIAL AREA. THEREFORE, AT THE OUTSET, THE ADVANTAGE OF THE LOCALITY AND SU RROUNDINGS OF THE PROPERTY HAS NOT BEEN CONSIDERED IN COMPLETE, NEEDS FURTHERM ORE UPWARD ADDITION IN THE ADJUSTMENT FACTOR. (II) IT IS PERTINENT TO NOTE THAT THE SALE INSTANCE IS SITUATED OPPOSITE TO THE GRAVEYARD WHICH IS CONSIDE RED AS MORE DISADVANTAGEOUS FACTOR IN THE SOCIETY. IT IS CLEAR FROM THE REPORT THAT THE LD. DVO FAILED TO GIVE EFFECT TO THIS FACT EITHER DUE T O OVER SIGHT OR MIGHT HAVE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 84 NOT CONDUCTED THE PHYSICAL VERIFICATION OF THE SALE INSTANCE. SINCE, IT IS NOT EVIDENT THAT THE DVO CONDUCTED PHYSICAL VERIFICATIO N OF THE SALE INSTANCE AND IN ABSENCE OF SUCH PHYSICAL INSPECTION; NOBODY CAN WORK OUT THE ADVANTAGEOUS AND DISADVANTAGEOUS POSITION OF A PROP ERTY CONSIDERING THE LOCALITY AND SURROUNDINGS OVER THE OTHER PROPERTY. THEREFORE, ON ACCOUNT OF DISADVANTAGE ASSOCIATED WITH THE SALE INSTANCE, THE ADJUSTMENT OF THE FACTOR NEEDS TO BE REVISED UPWARD. AMENITIES AND FACILITIES SHOPS AND LOCAL TRANSPORTS ARE FAR AWAY. COMMERCIAL SHOPS, PETROL PUMP, CONNECTED TO LOCAL TRANSPORT. NIL COMMENTS :- (I) THE PROPERTY IS SITUATED IN THE AREA WHERE A LL DAY TO DAY REQUIREMENT CAN BE FULFILLED EASILY BECAUSE OF AVAI LABILITY OF AMENITIES AND FACILITIES IN THE LOCALITY ITSELF, WHEREAS, THE SAL E INSTANCE SITUATED IN AN AREA WHERE NO SHOPS ARE AVAILABLE, NO LOCAL TRANSPORT IS AVAILABLE AND MORE PRECIOUSLY EXCEPT RESIDENCE, THERE IS NO OTHER AMEN ITIES AND FACILITIES WHICH ARE OTHERWISE REQUIRED IN DAY TO DAY LIFE EITHER AS RESIDENT OR OCCUPIER OF COMMERCIAL PROPERTY. (II) THE LD. DVO HAS FAILED TO CONSIDER THE SAID FA CTORS FOR ADJUSTMENT. FAR OR FSI HEIGHT UPTO 63 FEET HEIGHT UPTO 192 FEET NIL COMMENTS :- (I) THE SALE DEED OF THE SALE INSTANCE SHOWS THAT IT IS A CONSTRUCTED PROPERTY HAVING GROUND AND FIRST FLOOR. PERUSAL FURTHER SHOWS THAT THE MAP WAS ALREADY APPROVED AND THE CONSTRUCT ION MADE EVEN TILL FIRST FLOOR WAS FOUND EXCESS AND REGULARIZED BY PAYING CO MPOUNDING FEES WHICH SHOWS THAT LIMITED FAR WAS AVAILABLE WITH THE SALE INSTANCE, WHEREAS, THE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 85 PROPERTY IS SITUATED ON NATIONAL HIGHWAY AND ON 128 FEET WIDE ROAD ON ONE SIDE AND AVERAGE 85 FEET WIDE ROAD ON THE OTHER SID E SINCE THE FAR ARE BROADLY GOVERNED BY THE WIDTH OF THE ROAD, HENCE, T HE PROPERTY WAS HAVING MUCH MORE FAR. FURTHER, THE FAR OF THE SALE INSTANC E WAS EXHAUSTED TILL THE CONSTRUCTION OF FIRST FLOOR ONLY BECAUSE THE AVAILA BILITY OF FAR WAS VERY LESS DUE TO NARROW WIDTH OF THE ROAD. (II) THE LD. DVO HAS FAILED TO CONSIDER THE SAID FA CTORS FOR ADJUSTMENT. CONNECTIVITY PROPERTY IS SITUATED APPROX 1025 FAR FROM BHAWANI SINGH ROAD THROUGH INDIRECT APPROACH ROAD. FROM MAIN RAILWAY STATION APPROX 3 KMS. AND FROM AIRPORT 14-15 KMS. ON N.H. 12, RAILWAY STATION IS ONLY 270 FAR FROM SITE AND ON THE WAY TO AIRPORT APPROX 7 KMS. NIL COMMENTS :- THE CONNECTIVITY OF THE PROPERTY IS FAR BETTER THA N THE CONNECTIVITY OF THE SALE INSTANCE AS NARRATED ABOVE , HOWEVER, THE LD. DVO HAS FAILED TO CONSIDER THE SAID FACTOR FOR ADJUSTME NT. ROAD WIDTH FRONT 31 FEET WIDE ROAD, SIDE 41 FEET WIDE ROAD FRONT 128 FEET WIDE ROAD, SIDE AVERAGE 85 FEET WIDE ROAD. NIL COMMENTS :- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 86 (I) ROAD WIDTH FACILITATED THE USE OF THE PROPERTY AND HAVING VERY CRUCIAL ROLE TO WORK OUT THE VALUE OF THE PROPERTY. A PERUS AL OF THE FACT SHOWS THAT THE ROAD WIDTH AVAILABLE TO THE PROPERTY IS FA R BETTER THAN THE SALE INSTANCE. (II) SECTION 48 OF THE BY-LAWS OF MUNICIPAL COUNCIL, JA IPUR KNOWN AS BUILDING BY-LAWS, 1970 (PBP NO. 149-163) GOVERNS TH E HEIGHT OF THE BUILDING AS RELEVANT TIME I.E. 1981 AND FOR READY R EFERENCE, WE REPRODUCE THE SAME AS FOLLOWS:- 48. HEIGHT OF BUILDING:- THE HEIGHT OF THE BUILDIN G IN A SCHEME AREA SHALL NOT EXCEED 1 TIMES THE WIDTH OF THE ROAD. IN THE CASE OF BUILDING FACING MORE THAN ONE ROAD HEIGHT OF THE BU ILDING WILL BE GOVERNED BY THE WIDTH OF THE MAJOR ROAD. APPLYING THE PREVAILING RULE, THE HEIGHT OF THE PRO PERTY CAN BE UPTO 192 FEET AS AGAINST 63 FEET IN THE CASE OF THE SALE INSTANCE, MEANING THEREBY, THE PROPERTY CAN HAVE 3 TIMES CONSTRUCTION IN COMPARISON TO THE SALE INSTANCE. IT IS A VERY IMPORTANT FACTOR, W HICH GOVERNS THE PRICE OF THE PROPERTY AND WHICH HAS NOT BEEN TAKEN CARE BY THE DVO AT ALL. (III) THAT VERY IMPORTANT FACTOR HAS NOT BEEN CO NSIDERED BY LD. DVO WHILE WORKING OUT THE FACTORS FOR ADJUSTMENT. LAND TENURE (5.2.1.3) (H) LEASEHOLD LAND FREEHOLD LAND NIL COMMENTS :- THE TENURE OF THE SALE INSTANCE AND OF THE PROPE RTY IS TOTALLY DIFFERENT. HOWEVER, THE LD. DVO FAILED TO TAKE INTO CONSIDERATION THE SAID ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 87 FACT WHILE DETERMINING THE FACTOR OF ADJUSTMENT, RE SULTANTLY, TOOK NO ADJUSTMENT ON ACCOUNT OF SAID DIFFERENCE IN TENURE. 89. IT WAS FURTHER SUBMITTED THAT AS DISCUSSED HERE INBEFORE, THE BASE RATE OF THE PROPERTY HAS BEEN TAKEN BY THE LD. DVO AT RS. 1 ,093/- SQ. MTR. IT IS CLAIMED IN THE ANNEXURE A ATTACHED TO THE DVOS R EPORT DATED 7.3.2014 THAT RATE OF THE LAND PER SQ. MTR. AS PER THE SALE REFE RENCE SUBMITTED BY THE ASSESSEE. A PERUSAL OF THE SALE INSTANCE SHOWS THA T THERE WAS A CONSTRUCTED PROPERTY AND LAND WAS 372.50 SQ. MTRS. AND THE TOTA L CONSIDERATION WAS RS. 5,50,000/-. THE LD. DVO HAS NOT PROVIDED THE BIFURC ATION OF THE SALE CONSIDERATION BETWEEN THE CONSTRUCTED AREA AND OF T HE LAND EITHER IN HIS VALUATION REPORT OR DURING THE VALUATION PROCEEDING S TO THE ASSESSEE. THEREFORE, THE WORKING OF BASE RATE ITSELF REQUIRES A PROPER EXAMINATION AND OPPORTUNITY TO THE ASSESSEE TO SUBMIT HIS OWN VIEW ON THE BIFURCATION OF THE SALE CONSIDERATION. 90. IT WAS FURTHER SUBMITTED THAT THE REGISTERED VA LUER WHILE MAKING HIS REPORT CONSIDERED THE FACTOR OF ADJUSTMENT OF THE L OCALITY AND SURROUNDING (CORNER PLOT, LOCATION NEAR GANDHI NAGAR RAILWAY ST ATION AND GOOD LOCATION ON N.H. TONK ROAD) AND REMAINING FACTORS HAVE BEEN CON SIDERED ON LUMP SUM BASIS WHILE DOUBLING THE BASE RATE FROM RS. 1,093/- TO RS. 2,186/- AND, THEREFORE, HAVE NOT BEEN ADDRESSED SEPARATELY. THE SAME IS AVAILABLE IN PART II OF HIS VALUATION REPORT. FURTHER, HE HAS CONSIDERED THE USE OF THE PROPERTY AS COMMERCIAL IS ALSO CORRECT SINCE HE HAS REPORTED TH E AREA AS MIXED AREA AND CONSIDERING THE CONCEPT OF THE FMV AS DISCUSSED HER EINBEFORE, ONE HAS TO TAKE THE MOST ADVANTAGEOUS USE TO ASCERTAIN THE FMV AND THEREFORE IT HAS BEEN CORRECTLY TAKEN COMMERCIAL. FURTHER, AFTER ASSUMING THE POTENTIAL USE OF THE LAND AS COMMERCIAL THE RATE ARRIVED AFTER GIVING TH E EFFECT OF ADJUSTMENT FOR FACTOR HAS BEEN MULTIPLIED BY THREE. THE SAID MULTI PLICATION IS VERY WELL ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 88 SUPPORTED BY THE PRACTICE ADOPTED BY THE STAMP AUTH ORITIES FOR WORKING OUT THE STAMP DUTIES. IN VIEW OF THE SAME, THE FMV ASCERTAI NED BY THE REGISTERED VALUER MUST BE ACCEPTED AND THE FMV DERIVED BY THE DVO MUST BE REJECTED FOR THE REASONS/INFIRMITIES BROUGHT ON RECORD HEREINBEF ORE IN LENGTH. 91. IT WAS FURTHER SUBMITTED THAT THE SAME LD. DVO HAS ASCERTAINED THE FMV VIDE HIS REPORT DATED 12.3.2014 IN THE CASE OF ANOT HER PROPERTY SITUATED AT A-2, PRITHVIRAJ ROAD, C SCHEME, JAIPUR OF M/S MAHARAJA SHREE UMMAID MILLS LIMITED. THE SAID REPORT IS VERY MUCH RELEVANT SINC E IN BOTH CASES (I) THE SAME ISSUE I.E. ASCERTAINMENT OF THE FMV 1.4.1981, (II) THE SAME PERIOD AS OUR REPORT HAS BEEN MADE ON 7.3.2014 AND THIS REPORT HAS BEEN MADE ON 12.3.2014 AND (III) THE COMMON COMPARABLE I.E. S-6, BHAWANI SINGH ROAD IS INVOLVED. IN THIS REGARD, IT WAS SUBMITTED THAT: (I) IN THAT CASE, IT WAS PROPOSED IN THE DVOS PR OPOSED VALUATION REPORT DATED 28.2.2014 TO TAKE THE AVERAGE OF 15 COMPARABL ES AS THE BASE RATE I.E. RS. 362/- PER SQ. MTR. THEN AFTER CONSIDERING THE O BJECTIONS OF THE ASSESSEE, HE ADOPTED THE SALE INSTANCE I.E. S-6, BHAWANI SINGH R OAD, C SCHEME, JAIPUR AND CONSEQUENTLY ADOPTED THE BASE RATE OF RS. 1,093/- P ER SQ. MTR. IT IS IMPORTANT TO NOTE THAT IN THE PARA 10 OF THE FINAL REPORT DAT ED 12.3.2014 (PBP NO. 168), IT IS SPECIFICALLY MENTIONED BY THE DVO THAT THE OBJEC TION MADE BY THE ASSESSEE IN PERSON OR VIDE WRITTEN SUBMISSION DATED 11.3.201 4 ARE NOT RELEVANT. WHEN THE OBJECTIONS ARE NOT RELEVANT EVEN THEN THE BASE RATE HAS BEEN CHANGED IN THAT CASE. (II) IN THE SAID REPORT, ADJUSTMENT FOR LARGE SIZ E PLOT HAS BEEN MADE AT (-) 25% AS AGAINST (-)20% IN THE CASE OF THE APPELLANT. AS POINTED OUT EARLIER, THE GVIP, 2009 SAYS THAT ON ACCOUNT OF SIZE, THERE SHOU LD BE 0.5% PER 100 SQ. MTR. ADJUSTMENTS. BY TAKING THE UMMAID MILLS CASE A S A BASE IN OUR CASE, THE ADJUSTMENT ON THIS ACCOUNT SHOULD BE (+) 57% INSTEA D OF (-) 20% {19,134.81 SQ. MTRS. UMMAID MILLS AREA 2,750.77 SQ. MTRS. IN OUR CASE = (16,384.04 SQ. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 89 MTRS./100)*0.5= (81.92%-25%) = APPROX 57%}. PERUSAL OF THE SAME SHOWS THAT IN THIS CASE, THE LD. DVO DID NOT TAKE THE JUD ICIOUS VIEW OR MIGHT HAS NOT CONSIDERED THE FACTS CORRECTLY. EVEN ACCORDING TO T HIS REPORT WHICH IS IDENTICAL, THE APPELLANT DESERVES TO HAVE ADJUSTMENT FACTOR OF +57% INSTEAD OF (-) 20% ON THIS ACCOUNT ALONE IF COMPARED TO THE UMMAID MIL LS CASE. (III) THE LD. DVO IN THAT CASE HAS TAKEN (+)70% AS FACTOR OF ADJUSTMENT ON ACCOUNT OF COMMERCIAL POTENTIAL AS AGAINST IN THE C ASE OF APPELLANT, HE HAS NOT EVEN CONSIDERED THE CONCEPT OF COMMERCIAL POTENTIAL AND ASCERTAINED THE FMV BASED ON THE LAND USED REPORTED BY HIM. FURTHERMORE , WHILE MAKING THE COMMENTS IN PARA 7.3 OF THE REPORT, THE LD. DVO MEN TIONED THE DETAILS OF SURROUNDINGS WHICH ARE IN THE NATURE OF INSTITUTION AL ACTIVITY RATHER THAN COMMERCIAL, WHEREAS, IN THE CASE OF THE APPELLANT, COMMERCIAL ACTIVITIES IN THE SURROUNDINGS AREAS WERE GOING ON. THIS FACT SHOWS T HAT IN THE CASE OF THE APPELLANT, WHILE DETERMINING THE FMV, THE CONCEPT O F PROBABLE USE IN THE MOST ADVANTAGEOUS MANNER HAS NOT BEEN CONSIDERED AND ALS O THE ACTIVITIES IN SURROUNDINGS HAVE NOT BEEN TAKEN CARE. (IV) THE SAID PROPERTY IS SITUATED ON A ROAD HAVING WIDT H OF 90 FEET AS AGAINST THE SAME THE APPELLANTS PROPERTY IS ON 128 FEET WIDE ROAD. IT IS IMPORTANT TO NOTE THAT WHILE ASSIGNING THE FACTOR O N ACCOUNT OF LOCATION, THE WIDTH OF THE ROAD HAS BEEN CONSIDERED IN THE CASE O F UMMAID MILLS AND + 35% ADJUSTMENT WAS MADE, WHEREAS, IN THE CASE OF APPELL ANT, ON ACCOUNT OF WIDTH, WHICH IS MUCH MORE, NO ADJUSTMENT HAS BEEN MADE BUT ONLY ON ACCOUNT OF MAIN ROAD AN ADJUSTMENT HAS BEEN MADE THAT TOO IS + 35%. (V) THE PLOT OF THE UMMAID MILLS IS NOT A CORNER PLOT. THE APPELLANT DEMANDED AN ADJUSTMENT ON ACCOUNT OF CORNER PLOT. I T HAS BEEN TURNED DOWN BY SAYING THAT THE SALE INSTANCE IS ALSO A CORNER P LOT BUT NO ADJUSTMENT HAS BEEN MADE IN THE CASE OF UMMAID MILLS ON THIS ACCOU NT IN COMPARISON TO THE ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 90 SALE INSTANCE. IT IS CLEAR THAT OVER ALL POTENTIALI TY TO USE THE PLOT HAS BEEN CONSIDERED. ACCORDINGLY, THE PROPERTY HAVING ENOUGH WIDE ROADS ON TWO SIDES HAS BETTER POTENTIALITY OF USE. THEREFORE, APPLYING THE SAME ANALOGY AS EXPLAINED, THE APPELLANT DESERVES FOR ADJUSTMENT ON THIS ACCOUNT AS WELL. (VI) LOOKING TO THE ABOVE FACTS, IT IS CLEAR THAT WHILE ASCERTAINING THE FMV, THE LD. DVO DID EITHER NOT ACT JUDICIOUSLY OR MADE THE REPORT IN HASTE WITHOUT CONSIDERING THE FACTS PROPERLY. IT IS FURTHER EVIDE NT FROM THE FORGOING DISCUSSIONS THAT HE WAS NOT CONSISTENT IN HIS APPRO ACH WHILE ASCERTAINING THE FMV OF TWO DIFFERENT PROPERTIES AT THE SAME TIME AN D MORE IMPORTANTLY, APPLYING THE SAME SALE INSTANCE. THEREFORE, THE REP ORT OF THE DVO DESERVES TO BE REJECTED AND THE REPORT OF A REGISTERED VALUER S HOULD BE ACCEPTED. 92. IT WAS ACCORDINGLY SUBMITTED THAT THE REPORT OF THE DVO SHOULD NOT BE TAKEN AS THE BASIS FOR CALCULATING THE COST OF ACQU ISITION AND RESULTANT CAPITAL GAIN. IN SUPPORT, THE RELIANCE WAS ALSO PLACED ON T HE DECISION IN CASE OF RAVIKANT VS. ITO, DELHI WHEREIN IT WAS OBSERVED AS UNDER:- 9. ON A PERUSAL OF VALUATION REPORT, HOWEVER, WE F IND THAT EVEN THE VALUATION BY THE DVO HAS PLACED TOO MUCH OF EMPHASI S ON THE ASSESSMENT OR VALUATION BY THE STAMP VALUATION AUTH ORITY. THIS IS NEITHER DESIRABLE NOR PERMISSIBLE. THE REASON IS THIS. THE VALUATION BY THE STAMP VALUATION AUTHORITY IS BASED ON THE CIRCLE RATES. T HESE CIRCLE RATES ADOPT UNIFORM RATE OF LAND FOR AN ENTIRE LOCALITY, WHICH INHERENTLY DISREGARDS PECULIAR FEATURES OF A PARTICULAR PROPERTY. EVEN IN A PARTICULAR AREA, ON ACCOUNT OF LOCATION FEATURES AND POSSIBILITIES OF C OMMERCIAL USE, THERE CAN BE WIDE VARIATIONS IN THE PRICES OF LAND. HOWEV ER, CIRCLE RATES DISREGARD ALL THESE FACTORS AND ADOPT A UNIFORM RAT E FOR ALL PROPERTIES IN THAT PARTICULAR AREA. IF THE CIRCLE RATE FIXED BY T HE STAMP VALUATION ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 91 AUTHORITIES WAS TO BE ADOPTED IN ALL SITUATIONS, TH ERE WAS NO NEED OF REFERENCE TO THE DVO UNDER SECTION 50C(2). THE SWEE PING GENERALIZATIONS INHERENT IN THE CIRCLE RATES CAN NO T HOLD GOOD IN ALL SITUATIONS. IT IS, THEREFORE, NOT UNCOMMON THAT WHI LE FIXING THE CIRCLE RATES, AUTHORITIES DO ERR ON THE SIDE OF EXCESSIVE CAUTION BY ADOPTING HIGHER RATES OF THE LAND IN A PARTICULAR AREA AS TH E CIRCLE RATE. IN SUCH CIRCUMSTANCES, THE DVOS BLIND RELIANCE ON CIRCLE R ATES IS UNJUSTIFIED. THE DVO HAS SIMPLY ADOPTED THE AVERAGE CIRCLE RATE OF R ESIDENTIAL AND COMMERCIAL AREA, ON THE GROUND THAT INTERIOR AREA O F THE LOCALITY, WHERE THE ASSESSEES PROPERTY IS SITUATED, IS MIXED DEVEL OPED AREA I.E. SHOPS AND OFFICES ON THE GROUND FLOOR AND RESIDENCE ON TH E UPPER FLOORS. WHEN DVOS VALUATION REQUIRED TO COMPARE THE SAME WITH T HE VALUATION BY THE STAMP VALUATION AUTHORITY, IT IS FUTILE TO BASE SUC H A REPORT ON THE CIRCLE REPORT ITSELF. SUCH AN APPROACH WILL RENDER EXERCIS E UNDER SECTION 50C(2) A MEANINGLESS RITUAL AND AN EMPTY FORMALITY. IN OUR CONSIDERED VIEW, IN SUCH A CASE, THE DVOS REPORT SHOULD BE BASED ON CO NSIDERATION STATED IN THE REGISTRATION DOCUMENTS FOR COMPARABLE TRANSACTI ONS, AS ALSO FACTORS SUCH AS INPUTS FROM OTHER SOURCES ABOUT THE MARKET RATES. FOR THE REASONS SET OUT ABOVE AND WITH THESE OBSERVATIONS, WE REMIT THE MATTER TO THE FILE OF THE AO. THE DVO WILL VALUE THE PROPE RTY DE NOVO, IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND IN THE CASE THE VALUATION SO ARRIVED AT BY THE DVO IS LESS THAN RS. 11,42,100/-, THE AO SHALL ADOPT THE FRESH VALUATION SO DONE BY THE DVO FOR THE PURPOSE OF COM PUTING CAPITAL GAINS UNDER SECTION 48 OF THE ACT. WE DIRECT SO. 93. FURTHER, RELIANCE WAS ALSO PLACED ON THE DECISI ON IN CASE OF SURESH C. MEHTA VS. ITO (IN ITA NO. 33/MUM/2011 DATED 17.05.2 013) WHEREIN IT WAS HELD AS UNDER:- ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 92 7. PROVISIONS OF SECTION 23A GIVES SCOPE OF FIRS T APPEAL AND THE SUBJECT MATTER WHICH CAN BE APPEALED BEFORE THE LEA RNED COMMISSIONER (APPEALS) INCLUDING THAT OF ANY ORDER OF THE V.O. A ND THE POWERS OF THE LEARNED COMMISSIONER (APPEALS) IN RELATION TO SUCH VALUATION. SECTION 24 DEALS WITH THE APPEAL TO THE APPELLATE TRIBUNAL AND SECTION 34AA DEALS WITH THE APPEARANCE OF THE ASSESSEE THROUGH REGISTE RED VALUERS BEFORE THE LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL AND SECTION 35 DEALS WITH RECTIFICATION OF MISTAKES. A COMBINED RE ADING OF THESE SECTIONS PROVIDE THAT INSOFAR AS THE ASSESSING OFFICER IS CO NCERNED, HE IS BOUND BY THE VALUATION ADOPTED BY THE V.O. WHEREAS THE LEARN ED COMMISSIONER (APPEALS) AND THE TRIBUNAL CAN ENTERTAIN OBJECTIONS RELATING TO SUCH VALUATION AND V.O'S VALUATION IS NOT BINDING UPON T HEM. SUB-SECTION (3) OF SECTION 50C PROVIDES THAT IF THE VALUE ASCERTAIN ED BY THE V.O. EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITY THEN SUCH VALUATION ADOPTED OR ASSESSED BY THE STAMP VAL UATION AUTHORITY SHALL BE TAKEN, THAT IS, IF THE V.O'S VALUE EXCEEDS THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, THE SAME SHOULD BE I GNORED BY THE ASSESSING OFFICER. FROM THE CONJOINED READING OF SU B-SECTION (1), (2) AND (3) OF SECTION 50C ALONG WITH THE RELEVANT PROVISIO NS OF WEALTH TAX ACT AS HAVE BEEN REFERRED TO IN SUB-SECTION (2), IT IS EVIDENT THAT THOUGH THE ASSESSING OFFICER IS BOUND BY THE V.O'S REPORT IN C ASE IT IS LOWER THAN THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY, HO WEVER, THE SAME IS NOT BINDING UPON THE LEARNED COMMISSIONER (APPEALS) OR THE TRIBUNAL WHEREIN THE ASSESSEE CAN FURTHER RAISE OBJECTION TO SUCH VALUATION. 94. PER CONTRA, THE LD CIT DR HAS SUBMITTED THAT T HE CONTENTIONS SO RAISED BY THE LD AR HAS NO MERIT AS ALL THE OBJECTIONS RAISED BY THE ASSESSEE FIRM HAS BEEN DULY CONSIDERED AND DISPOSED OFF BY THE DVO. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE ASSESSMENT ORDER WHERE T HE FINDINGS OF THE DVO ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 93 DISPOSING OFF THE ASSESSEES OBJECTIONS HAVE BEEN C LEARLY STATED AND TAKEN NOTE OF BY THE ADD. CIT AS WELL BEFORE ISSUING DIRECTION S U/S 144A OF THE ACT AND THE SAME READS AS UNDER: NOW REGARDING THE OBJECTIONS RAISED AGAINST THE VA LUATION REPORT OF THE DVO BY THE ASSESSEE, I FIND THAT THE SAME HAVE DULY BEE N DEALT WITH BY THE DVO, VIDE HIS LETTER NO. 218 DATED 19/03/2014, WHICH IS PLACED ON THE ASSESSMENT RECORD. IN THIS LETTER, THE DVO HAS DISPOSED OF THE OBJECTIONS OF THE ASSESSEE AS UNDER:- ' THIS IS WITH REFERENCE TO YOUR OBJECTIONS DATED 1 3/3/2014 SUBMITTED IN THE MATTER. IN THIS REGARD, IT IS TO I NTIMATE THAT YOUR STATEMENT OBJECTIONS DATED 07/03/2014 WAS FIRST REC EIVED BY THE DVO ON 10/3/2014 IS TOTALLY FALSE AND BASELESS. THI S IS DUE TO THE FACT THAT COPY OF THE SAME LETTER WAS FIRST PERSONA LLY HANDED OVER BY YOUR AR TO DVO ON 07/03/2014 AT 11.00 AM ITSELF AND BASED ON THAT SUBMISSION ONLY THE FINAL ORDERS WERE PASSED B Y THE DVO ON THE SAME DAY, I.E. ON 07/03/2014. FURTHER, IT IS AL SO SURPRISING THAT THE DRAFT REPORT WAS ISSUED TO YOU LONG BACK, YOUR GOOD-SELF IN YOUR OBJECTIONS DATED 07/03/2014 HAVE NEVER RAISED DETAI LED RESERVATIONS REGARDING VARIOUS FACTORS IN PERCENTAG E ADOPTED BY THE DVO. HOWEVER, THE PARA-WISE REPLY TO YOUR OBJECTION S SUBMITTED VIDE LETTER DATED 13/3/2014 IS AS GIVEN BELOW:- (1) THE SALE REFERENCE SUBMITTED BY YOU IS ALSO A CORNER LAND. SO WHEN WE ARE DERIVING RATES OF YOUR LAND IN REFERENC E TO A PARTICULAR SALE REFERENCE, ADJUSTMENT OF ONLY THOSE FACTORS AR E REQUIRED TO BE DONE WHICH DO NOT EXIST IN THE SALE REFERENCE PLOT. THAT IS WHY, NO FURTHER ADDITION FOR CORNER PLOT IS DONE. IN THIS R EGARD, PLEASE ALSO REFER TO THE DETAILS GIVEN UNDER PARA 4.6 OF THE VA LUATION REPORT ; ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 94 (2) WHAT YOU ARE DESCRIBING NOW AND WHAT THE DVO HA S SEEN DURING INSPECTION IS THE STATUS OF CONSTRUCTION AS ON DATE OF INSPECTION I.E. ON 7/2/2014. BUT PROBABLY YOU HAVE FORGOTTEN THAT DVO HAS BEEN ASKED TO REPORT FAIR MARKET VALUE OF THE PROPERTY AS ON 0 1/04/1981. YOU HAVE NOT SUBMITTED ANY DOCUMENTARY EVIDENCE TO DVO REGARDING ACTUAL STATUS AND QUANTUM OF CONSTRUCTION EXISTING ON 01/04/1981. RATHER AS PER YOUR OWN SUBMISSION OF REGD. PVT. VAL UER'S REPORT, S.NO. 24 P-3, THERE IS NO STRUCTURE EXISTING AS ON 01/04/ 1981. SO THE FMV OF CONSTRUCTION HAS BEEN RIGHTLY TAKEN AS ZERO ON THE RELEVANT DATE. (3) THE ADJUSTMENT FACTOR OF 35% HAS ALREADY BEEN T AKEN ON ACCOUNT OF SITUATION AND LOCATION. NO DOCUMENTARY E VIDENCE REGARDING COMMERCIALLY APPROVED STATUS OF PLOT AS O N 01/04/1981 HAS BEEN SUBMITTED AT YOUR END. SO SEPARATE FACTOR FOR COMMERCIAL USAGE AS ON 1/4/1981 CANNOT BE ADOPTED. WHY FACTOR FOR CORNER PLOT TAKEN, PLEASE REFER TO REPLY GIVEN AS PER PARA 1 ABOVE. (4) YOUR PLOT UNDER REFERENCE IS SALE REFERENCE PLO T AROUND 3.5 TIMES THE AREA OF THE PLOT NO. S-6 (SALE REFERENCE). SO T HE FACTOR OF -20% HAS BEEN JUDICIOUSLY ADOPTED AGAINST LARGE PLOT AREA. (5) THE EVIDENCE SUBMITTED BY YOU IS FOR INDUSTRIAL USE AND NOT COMMERCIAL USE. THE SIMILAR CERTIFICATE DATED 06/07 /1981 WAS ALSO SUBMITTED EARLIER BY YOUR GOOD-SELF WHICH IS FOR IN DUSTRIAL USAGE ONLY AND NOT COMMERCIAL USE. IN THIS REGARD, REFER TO THE OBSERVATIONS OF DVO UNDER PARA 7.3 OF THE VALUATION REPORT. IT IS TO REITERAT AGAIN THAT THE INDUSTRIAL DLC RATES ARE AL WAYS MUCH LESSER THAN RESIDENTIAL DLC RATES OF A PARTICULAR AREA AT ANY GIVEN TIME. STILL ADOPTING A MORE CONSERVATIVE APPROACH IN FAVO UR OF THE ASSESSEE, DVO HAS NOT ADOPTED ANY FACTOR FOR LOWERI NG THE FMV ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 95 FURTHER BELOW THE RESIDENTIAL RATES. THERE CANNOT B E A MORE JUDICIOUS APPROACH THAN THIS. (6) YOU ARE ACTUALLY STATING THE STATUS OF THE PROP ERTY AT THE POINT OF SALE AND NOT AS ON 1/4/1981. SO YOUR SUBMISSION CAN NOT BE ACCEPTED CONSIDERING THE STATUS OF THE LAND EXISTING ON 1/4/ 1981; (7) REPLY SAME AS ABOVE . (8) THE ADJUSTMENT FACTOR OF 35% TAKEN ON ACCOUNT O F SITUATION AND LOCATION IS APPROPRIATE CONSIDERING THE SALE RE FERENCE ADOPTED FOR CALCULATIONS. 35% FACTOR ADOPTED IS FOR THE REL ATIVELY BETTER SITUATION AND LOCATION OVER THAT OF THE SALE REFERE NCE PLOT WHICH ITSELF HAS GOT A VERY GOOD LOCATION JUST FEW FEETS AWAY FROM THE MAIN BHAWANI SINGH ROAD. AS PER THE DETAILS GIVEN A BOVE, HOPE YOUR GOOD-SELF WILL NOW AGREE THAT THE ORDERS HAVE BEEN PASSED BY DVO CONSIDERING ALL THE RELEVANT FACTS AND IN A JUD ICIOUS MANNER.'. FROM THE ABOVE, IT IS SEEN THAT ALL THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE VALUATION MADE BY THE DVO HAVE DULY BEE N CONSIDERED AND DISPOSED OF BY THE DVO IN DETAIL AS MENTIONED ABOVE . IT IS QUITE PERTINENT TO NOTE THAT THE REGISTERED VALUER, SHRI G.S. BAPNA HI MSELF HAS TAKEN THE NATURE OF THE LAND AS 'RESIDENTIAL' VIDE S.NO. 6 OF HIS VA LUATION REPORT. FURTHER, THE REGISTERED VALUER HIMSELF HAS MENTIONED 'NO STRUCTU RE AVAILABLE' VIDE S.NO. 24 OF THE VALUATION REPORT. THE RATE OF LAND FOR INDUS TRIAL USAGE IS EVEN LESSER THAN THE RATE OF LAND FOR RESIDENTIAL LAND AS STATE D BY THE DVO. STILL ADOPTING A CONSERVATIVE APPROACH, THE DVO HAS NOT ADOPTED AN Y FACTOR FOR LOWERING THE FMV AS ON 01/04/1981. FURTHER, THE DVO HAS GIVE N THE BASIS FOR ADJUSTMENTS MADE BY HIM AS AGAINST THE ADJUSTMENTS MADE BY THE REGISTERED VALUER, WHICH WAS ON A VERY HIGHER SIDE. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 96 95. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD. AS WE HAVE HELD ABOVE, THOUGH THE REFE RENCE TO THE VALUATION OFFICER BY THE ASSESSING OFFICER U/S 55A IS NOT VAL ID, AT THE SAME TIME, THE VALUATION REPORT SO OBTAINED BY THE ASSESSING OFFIC ER CAN BE USED AS RELIABLE PIECE OF EVIDENCE WHERE THE SAME IS FOUND TO BE REL EVANT. THEREFORE, IT NEEDS TO BE EXAMINED WHETHER IN THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE, THE VALUATION REPORT TAKES INTO CONSIDERATION THE V ARIOUS FACTORS EFFECTING THE FMV OF THE PROPERTY UNDER CONSIDERATION OR NOT AND CAN BE USED BY THE ASSESSING OFFICER. FIRSTLY, WE FIND THAT THE VALUAT ION OFFICER HAS CONSIDERED THE STATUS OF THE LAND AS ON 01.04.1981 AS RESIDENTIAL AS THERE WAS NO COMMERCIAL WORKING FROM THE PREMISES ON THIS DATE. THEREFORE, WE FIND THAT THE VALUATION OFFICER IS REFERRING TO THE DATE WHEN HE HAS CARRIE D OUT THE INSPECTION. HOWEVER, WHAT NEEDS TO BE EXAMINED IS WHETHER THERE WAS ANY COMMERCIAL ACTIVITIY CARRIED OUT AS ON THE VALUATION DATE I.E. 01.04.1981. IN THIS REGARD, WE FIND THAT THERE IS REGISTRATION CERTIFICATE ISSUED BY THE OFFICE OF THE JOINT DIRECTOR DISTRICT INDUSTRY CENTRE, JAIPUR DATED 21.10.1980 W HICH PROVIDES THE PROVISIONAL REGISTRATION NUMBER ALLOTTED TO THE ASS ESSEES FIRM FACTORY SITUATED AT TONK ROAD, JAIPUR FOR CARRYING OUT THE MANUFACTU RING ACTIVITIES RELATING TO FERROUS, NON FERROUS WIRE, AND WIRE PRODUCTS ETC. THEREAFTER, THERE IS A REGISTRATION CERTIFICATE ISSUED BY THE APPROPRIATE AUTHORITY UNDER THE CENTRAL SALES TAX ACT, 1956 WHEREIN THE ASSESSEE HAS BEEN R EGISTERED AS A DEALER U/S 7(1)/7(2) OF CST ACT, 1956 IN RESPECT OF MANUFACTUR ING, TRADING AND COMMISSION AGENCY IN THE LINE OF COPPER WIRE PRODUC TS ETC AND THIS CERTIFICATE IS EFFECTIVE FROM 16.03.1981. WE THEREFORE, FIND AT TH E RELEVANT POINT IN TIME I.E. ON 01.04.1981, THE ASSESSEE WAS CARRYING OUT COMMER CIAL ACTIVITIES FROM THE PREMISES LOCATED AT TONK ROAD, JAIPUR WHICH IS SUBJ ECT MATTER OF PRESENT PROCEEDINGS. THEREFORE, THE FINDINGS OF THE VALUATI ON OFFICER THAT THERE WERE NO COMMERCIAL ACTIVITIES IN THE PREMISES IS NOT BORNE OUT FROM THE RECORDS AND THEREFORE, CANNOT BE ACCEPTED. WE FIND THAT THESE A RE DOCUMENTS BROUGHT ON ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 97 RECORD BY THE ASSESSEE AND WHICH ARE ISSUED BY THE APPROPRIATE GOVERNMENT AUTHORITIES AND CANNOT BE SELF CREATED BY THE ASSES SEE FIRM. THEREFORE, BASIS THIS VERY FUNDAMENTAL DIFFERENCE WHERE THE DVO HAS TAKEN THE STATUS OF THE PROPERTY AS RESIDENTIAL WHEREAS THE FACTS ON RECORD SUGGEST THAT THE ASSESSEE WAS CARRYING OUT COMMERCIAL ACTIVITIES BY ITSELF PU T A BIG QUESTION MARK ON THE VALUE FINALLY DETERMINED BY THE VALUATION OFFICER. FURTHER, ON PERSUAL OF THE SALE DEED, WE FIND THAT IT TALKS ABOUT THE RCC CONS TRUCTION WHICH APPARENTLY HAS NOT BEEN CONSIDERED BY THE VALUATION OFFICER. F URTHER, WE FIND THAT THE SALE INSTANCE TAKEN BY THE VALUATION OFFICER IS A PROPER TY OF SIZE OF 372.5 SQ.MTS AS AGAINST 2750.77 SQ. M IN THE INSTANT CASE AND GIVEN THE SIZE OF THE PLOT AND THE POTENTIAL AND POSSIBILITIES OF CONSTRUCTION, WE FIN D THAT THE ADJUSTMENT FACTORS OF (-) 20% APPLIED BY THE DVO IS ALSO BORNE OUT FRO M THE RECORD EVEN AS PER THE STATED GUIDELINES OF THE DEPARTMENT. FURTHER, T HE LD. AR HAS POINTED OUT VARIOUS DISCREPANCIES IN TERMS OF NON-CONSIDERATION OF THE FRONTAGE, LOCALITY SURROUNDINGS AND FAR OF THE PROPERTY WHICH AGAIN PU T A QUESTION MARK ON THE VALUE SO DETERMINED BY THE VALUATION OFFICER. FURTH ER, THE LD. AR HAS DRAWN OUR REFERENCE TO ANOTHER VALUATION CARRIED OUT AT THE S AME TIME IN CASE OF ANOTHER PROPERTY WHEREIN DIFFERENT YARD STICKS HAVE BEEN AP PLIED BY THE VALUATION OFFICER IN TERMS OF THE ADJUSTMENT TOWARDS THE SIZE OF THE PLOT AND COMMERCIAL POTENTIAL. WE THEREFORE FIND THAT THE VALUATION REP ORT SO ISSUED BY THE VALUATION OFFICER SUFFER FROM SERIOUS DEFICIENCIES AND THE SA ME CANNOT BE HELD AS RELIABLE PIECE OF EVIDENCES WHICH CAN BE APPLIED BY THE ASSE SSING OFFICER. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ADJUSTMENT MADE BY THE ASSESSING OFFICER B ASIS THE VALUATION REPORT SO SUBMITTED BY THE DVO CANNOT BE ACCEPTED AS THE SAME SUFFER FROM SERIOUS INFIRMITY. IN THE RESULT, THE CROSS OBJECTION TAKE N BY THE ASSESSEE IS ALLOWED. 96. CROSS OBJECTION NO. 4 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOESNT REQUIRE ANY SEPARATE ADJUDICATION. ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 98 97. IN CROSS OBJECTION NO. 5 RAISED BY THE ASSESSEE , IT HAS CHALLENGED THE ACTION OF THE LD. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 6, JAIPUR IN DIRECTING THE AO TO COMPLETE ASSESSMENT ON THE BASI S OF REPORT SUBMITTED BY DVO VIDE HIS ORDER PASSED U/S 144A DATED 24.03.2014 . WE FIND THAT THE PRESENT PROCEEDINGS ARE AGAINST THE FINDINGS OF THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S 143(3) WHERE FOLLOWING THE DI RECTIONS OF THE ADD. CIT U/S 144A, HE HAS COMPLETED THE ASSESSMENT PROCEEDINGS. THE ADD. CIT U/S 144A HAS DIRECTED THE AO TO COMPLETE THE ASSESSMENT ON T HE BASIS OF THE VALUATION REPORT OF THE DVO ON THE ISSUE OF FAIR MARKET VALUE AS ON 1.4.1981 OF THE PROPERTY DISCUSSED ABOVE WHICH IS IN CONSONANCE WIT H THE PROVISIONS OF SECTION 16A OF THE WEALTH TAX ACT WHICH EQUALLY APPLIES IN THE CONTEXT OF SECTION 55A OF THE ACT. FURTHER, IN RESPECT OF OTHER ISSUES DEALT WITH BY THE ADD. CIT, THE SAME HAVE ALREADY BEEN DEALT WITH AND EXAMINED BY U S AND DOESNT REQUIRE ANY SEPARATE ADJUDICATION. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED A ND CROSS-OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED IN LIGHT OF AFORESAID DI RECTIONS. PRONOUNCED IN THE OPEN COURT ON 09/08/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09/08/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ITO, WARD 6(3), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S BAJAJ UDYOG, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 273/JP/2017 & CO. NO. 10/JP/2017 ITO, JAIPUR VS. M/S BAJAJ UDYOG, JAIPUR 99 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 273/JP/2017 & CO NO. 10/JP/2017 } VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 100