KABEER CHADHA, BILASPUR(CG) V. THE DY.CIT-1(1), BILASPUR(CG)

ITA 36/BIL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3520 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S R RAO
• Keywords: Value adopted by valuation officer; Capital asset; Retrospective amendment; Cost of acquisition; Fair market value; Valuation report; Set aside
• Section: 133(6); 6; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH , RAIPUR BEFORE S HRI N.K. BILLAIYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 36/RPR /201 5 ASSESSMENT YEAR: 2010 - 11 & ITA NO. 375 /RPR /20 1 4 ASSESSMENT YEAR: 2011 - 12 SHRI KABEER CHADHA, GULMOHAR, MINOCHA COLONY , MUNGELI ROAD, BILASPUR PAN: AFLPC0986K VS. THE DY. COMMISSIONER OF INCOME TAX - CIRCLE 1(1), MAHIMA COMPLEX, VYAPAR VIHAR, BILASPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.R. RAO ( CA ) REVENUE BY : SHRI SANJAY KUMAR (DR ) DATE OF HEARING: 09 /03 /201 8 DATE OF PRONOUNCEMENT: 25/ 05 /201 8 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST ORDER S DATED 07.10.2014 AND 19.08.2014 PASSED BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS), BILASPUR , FOR THE A S S ESSMENT YEAR S 2010 - 11 AND 2011 - 12 RESPECTIVELY , WHEREBY THE LD. CIT (A) HAS DISMISSED BOTH THE APPEAL S FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER S PASSED 143 (3) OF THE INCOME TAX ACT, 1961 ( FOR SHORT THE A CT). ITA NO. 36/RPR/2015 (ASSESSMENT YEAR: 2010 - 11) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A BUILDER AND DEVELOPER, FILED ITS RETURN OF INCOME FOR THE A.Y. 2010 - 11 DECLARING THE 2 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 TOTAL INCOME OF RS. 31,77,430/ - . SINCE, THE CASE W AS SELECTED FOR SCRUTINY, AO ISSUED NOTICE U/S 143 (2) AND 142 (1) OF THE ACT. IN RESPONSE TO THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED THE WRITTEN SUBMISSIONS. THE AO NOTICE D THAT D URING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE WAS ENGAGED IN THE DEVELOPMENT OF PROJECT OF SAGAR HOMES AT USLAMPUR AND SAGAR PARISAR AT NEHRU NAGAR, BILASPUR . THE ASSESSEE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION SOLD JOINTLY OWNED LAND ADMEASURING 48717 SQ. FT. FOR A TOTAL CONSIDERATION OF RS. 94,80,400/ - . THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF INDEXED COST OF ACQUISITION AT RS. 53,88,100/ - AND WORKED OUT THE TOTAL LONG TERM CAPITAL GAIN AT RS. 40,92,300/ - AND OFFERED HIS SHARE OF LONG TERM CAPITAL GAI N I.E. RS. 20,46,150/ - . HOWEVER, THE AO ON THE BASIS OF REPORT OF THE DVO ACCEPTED THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1980 @ RS, 3,693/ - PER SQUARE ACRE AND WORKED OUT THE TOTAL LONG TERM CAPITAL GAIN IN RESPECT OF THE SALE OF THE AFORESAID LAND AT RS. 94,54,360/ - . ACCORDINGLY, THE AO MADE ADDITION OF RS. 26,80,980/ - TO THE INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN. SIMILARLY, THE AO MADE AN ADDITION OF RS. 30,630/ - AS LONG TERM CAPITAL GAIN IN RESPECT OF SALE OF 765 SQ. FT. OF FLOOR AREA BY TAKING THE COST OF LAND @ RS. 3.63 PER SQ. FT. ON THE BASIS OF REPORT FURNISHED BY DVO THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981. IN THE FIRST APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE AO AND DISMISSED THE APPEAL OF THE ASSESSE E. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: - 3 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 1. THE LD. CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 27,11,610 / - MADE BY THE AO AFTER RECALCULATING THE QUANTUM OF LONG TERM CAPITAL GAIN AT RS. 47,73,370 / - ON THE BASIS OF VALUATION MADE BY THE DVO WHICH WAS OBTAINED CONTRARY TO PROVISIONS OF SECTION 55A OF THE INCOME - TAX ACT, 1961 AND THE ENTIRE IS ABINITIO AGAINST THE STATUTORY PROVISIONS. PRAYED TO D ELETE THE ADDITION OF LTCG OF RS. 27,11,610/ - . 2. THE LD. CIT (APPEALS) HAS ERRED IN CONFIRMING APPLICATION OF FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AGAINST PROVISIONS OF SECTION 55A OF THE ACT AS APPLICABLE TO A.Y . 2010 - 11 . 3. THE ORDER OF THE L D. CIT (APPEALS) IS BAD IN LAW AND ON FACTS. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE ITAT HAS DECIDED THE IDENTICAL ISSUE S IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE ITA NO. 180/BLPR/2011 FOR THE A.Y. 2008 - 09, THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ADDITIONS MADE BY THE AO. THEREFORE, THE IMPUGNED ORDER BEING INCONSISTENT WITH THE ORDER OF THE TRIBUNAL IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CONCU RRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE AO HAS CALCULATED THE LONG TERM CAPITAL GAIN ON THE BASIS OF VALUATION REPORT OF THE DVO, THERE IS NO INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH THE SAME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISION OF RAIPUR BENCH OF THE TRIBUNAL. THE ONLY GRIEV ANCE OF THE ASSESSEE IS THAT SI N C E THE AO HAS CALCULATED THE LONG 4 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 TERM CAPITAL GAIN ON THE BASIS OF VALUATION MADE BY DVO WHICH WAS OBTAINE D CONTRARY TO THE PROVISIONS OF SECTION 55A OF THE ACT , T HE LD. CIT (A) HAS WRONGLY CONFIRMED THE ADDITION MADE BY THE AO. WE FIND MARIT IN THE ARGUMENT OF THE LD. COUNSEL THAT SINCE THE RAIPUR BENCH OF ITAT HAS DECIDED THE IDENTICAL ISSUES IN FAVOUR OF T HE ASSESSEE IN THE ASSESSEES OWN CASE, THE LD. CIT(A) OUGHT TO HAVE DECIDED THE ISSUES IN FAVOUR THE ASSESSEE IN PRESENT CASE ALSO. WE NOTICE THAT THE LD. CIT(A) HAS ITAT BENCH, RAIPUR HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE HOLDING AS U NDER: - 5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD SOLD A PART OF LAND, THAT HE GOT IT VALUED BY A REGISTERED VALUER, THAT HE ADOPTED THE VALUE GIVEN IN THE VALUATIO N REPORT OF THE PLOT AS ON 01.04.1981, THAT THE AO WAS OF THE OPINION THAT VALUE SHOWN BY THE ASSESSEE WAS VERY HIGH AND THUS HE HAD TRI ED TO AVOID PAY TAXED ON LONG T ERM CAPITAL GAINS, THAT THE AO COLLECTED INFORMATION FROM THE OFFICE OF THE REGISTRAR, T HAT CONSIDERING THE MATERIAL RECEIVED FROM THE STATE REVENUE A UTHORITIES HE REDUCED THE VAL UE OF THE PLOT AS ON 01.04.1981 , THAT HE COMPUTED INDEXED COST OF ACQUISITION AT RS.75,186/ - IN THE HANDS OF THE ASSESSEE AGAINST RS.43,85,939/ - CLAIMED BY HIM, THAT IT RESULTE D IN ADDITION OF RS.43,10,753/ - TO THE RETURNED INCOME OF THE ASSESSEE. THE ISSUE IN SHORT, BEFORE US, IS TO DECIDE WHAT WAS THE FMV OF THE PLOT OF LAND IN QUESTION AS ON 01.04.1981. HERE, WE WOULD LIKE TO REFER TO THE PROVISIONS OF SECTION U/S. 55A OF THE ACT. THE PROVISIONS OF THE SECTION WERE INTRODUCED , W.E.F. 01.01.1973, BY THE TAXATION LAWS(AMEND MENT) ACT 1972.SECTION READS AS UNDER : '5 5A. REFERENCE TO VALUATION OFFICER. - WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSE T FOR THE PURPOSES OF THIS CHAPTER, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER - (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE AO IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE ; 5 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 (B) IN ANY OTHER CASE, IF THE AO IS OF OPINION - (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASS ET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENT AGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH ''AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (I) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO.' BY AN AMENDMENT, W.E.F. 01.07.2012 , WORDS 'IS LESS THAN ITS FAIR MARKET VALUE' WERE SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE'. FOR BETTER UNDERSTANDING OF THE PURPOSE OF INTRODUCING IT IN THE ACT, ONE HAS TO TAKE NOTE OF THE EXPLANATORY NOTES TO THE SECTION. CIRC ULAR NO.96 OF 25.11.1972 IS RELEVANT IN THIS REGARD AS IT READS AS UNDER: 'UNDER THE NEW PROVISIONS, AN INCOME TAX OFFICER MAY REFER THE VALUATION OF ANY CA PITAL ASSET TO A VO IN A CASE W HERE THE ASSESSEE HAS GOT THE ASSETS VALUED BY A REGISTERED VALUE R AND THE INCOME TAX OFFICER IS OF THE OPINION THAT THE VALUE AS ESTIMATED BY THE REGISTERED VALUER (I.E., A PERSON REGISTERED AS A VALUER UNDER SECTION 34AB OF THE WEALTH - TAX ACT ) IS LESS THAN THE FAIR MARKET VALUE OF THE ASSET. OTHER CASES IN WHICH A REF ERENCE MAY BE MADE TO THE VO WOULD BE WHERE THE INCOME TAX OFFICER IS OF THE OPINION THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSETS AS CLAIMED BY MORE THAN 15 PERCENT OF THE VALUE CLAIMED OR BY MORE THAN RS. 25,000, WHICHEVER IS LE SS OR WHERE, HAVING REGARD TO THE NATURE OF THE ASSET AND THE RELEVANT CIRCUMSTANCES, THE INCOME - TAX OFFICER CONSIDERS IT NECESSARY TO DO SO. IT WILL BE SEEN THAT IN A CASE WHERE THE ASSESSEE HAS OPTED FOR SUBSTITUTION OF THE COST OF ACQUISITION OF AN ASS ET BY ITS FAIR MARKET VALUE AS ON JANUARY 1,1954, THE FAIR MARKET VALUE AS CLAIMED BY HIM MAY BE HIGHER THAN ITS ACTUAL FAIR MARKET VALUE. THE PROVISIONS OF SECTION 55A(A) AND (B)(I) WILL THEREFORE, NOT APPLY IN SUCH A CASE. IT WILL, HOWEVER, BE OPEN TO TH E INCOME - TAX OFFICER TO MAKE A REFERENCE TO THE VO UNDER SECTION 55A(B)(II).' A PERUSAL OF THE MEMORANDUM EXPLAINING THE REASONS BEHIND THE INTRODUCTION OF THE SECTION AND THE EXPLANATORY NOTES FOR INTRODUCTION OF AMENDMENT TO SECTION W.E.F.01.07.2012 PRO VES THAT THE SECTION WAS INSERTED IN THE ACT WITH THE DELIBERATE OBJECT OF EMPOWERING THE AO TO FIND OUT THE MARKET VALUE OF CAPITAL ASSETS FOR THE PURPOSE OF CHAPTER IV. IN OUR OPINION, INTENTION OF THE LEGISLATURE IS OBVIOUS THAT THE AO CAN MAKE A REFERE NCE TO THE DVO FOR DETERMINING THE VAL UE OF A CAPITAL ASSET. WE ARE OF THE OPINION THAT FOR THE PURPOSE OF ASCERTAINING THE FMV OF A CAPITAL ASSET, 6 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 THE STATUTE HAS PROVIDED TWO GROUP OF CASES NAMELY : (I) THE CASE MENTIONED AT CLAUSE (A) ABOVE, WHERE THE VALU E OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE BY THE REGISTERED VALUER ; AND (II) OTHER CASES MENTIONED AT CLAUSE (B) ABOVE. IN THE CASES MENTIONED AS (I) ABOVE, THE AO ASSUMES JURISDICTION, WHEN THERE IS A VALUATION REPORT I N RESPECT OF THE ASSET AND THE ASSESSEE ADOPTS THE VALUE OF THE ASSET IN ACCORDANCE WITH SUCH ESTIMATION AND ALSO IF THE AO IS OF THE OPINION THAT THE VALUE CLAIMED BY THE ASSESSEE IS LESS THAN THE FMV. IN OTHER CASES MENTIONED AS (II) ABOVE AND WHICH ARE COVERED BY THE PROVISIONS OF CLAUSE (B) OF SECTION 55A, THE AO IS EMPOWERED TO MAKE A REFERENCE TO THE VALUATION OFFICER, WHERE THE AO IS OF THE OPINION THAT THE FMV OF THE ASSET EXCEEDS THE VALUE OF THE ASSETS AS CLAIMED BY MORE THAN 15 % OF THE VALUE CL AIMED OR BY MORE THAN RS. 25,000, WHEREVER IS LES S OR WHERE, HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCE, THE AO CONSIDERS IT NECESSARY TO DO SO. IN OTHER WORDS, SECTION DEALS WITH CASES WHERE THE BASIS FOR FMV OF THE ASSET IS THE VALUATION REPORT ITSELF AND THE ASSESSEE FAILS TO ADOPT THE VALUE OF THE ASSET IN ACCORDANCE WITH THE ESTIMATE OF SUCH VALUATION REPORT AND CASES WHERE THE BASIS FOR SUCH FMV OF THE ASSET IS OTHER THAN THE VALUATION REPORT. THE OTHER SITUATION ENVISAGE S THE EXISTENCE OF SUCH CIRCUMSTANCES, THAT TO MAKE REFERENCE IS JUSTIFIABLE. IN SUCH A CASE, NATURE OF THE ASSETS AND OTHER RELEVANT FACTORS ALSO PLAY A DECISIVE ROLE. A REFERENCE CAN BE MADE TO VO, UNDER SECTION 55A, CLAUSE (B) SUB - CLAUSE (II),ONLY IF AO RECORDS EXISTENCE OF SUCH OTHER RELEVANT CIRCUMSTANCES ON THE BASIS OF WHICH HE FORMS SUCH OPINION. IN OTHER WORDS, A REFERENCE CAN BE MADE IF CERTAIN PRE - CONDITIONS EXIT. 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. RECORDING REASONS AFTER THE ORDER OF REFERENCE, FOR VALUATION OF THE REGISTERED VALUER, IS NOT A SUBSTITUTE FOR PRE DECISIONAL FORMATION OF OPINION.(330 ITR506).IN THE MATTE R OF HOTEL JOSHI, HONBLE RAJASTHAN HIGH COURT HAS HELD THAT FOR INVOKING SUB - CLAUSE (II)OF CLAUSE (B) OF SECTION 55A OF THE ACT, THE AO IS REQUIRED TO FORM AN OPINION ON THE BASIS OF THE MATERIAL ON RECORD THAT REFERENCE TO THE DVO FOR ASCERTAINING THE FM V OF AN ASSET AND HAVING REGARD JO THE NATURE OF THE ASSET AND OTHER RELEVANT 7 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 CIRCUMSTANCES(242 ITR 478). IT WILL BE USEFUL TO DISCUSS A FEW CASES, DEALING WITH SECTION 55A OF THE ACT. IN THE CASE OF ANA MILLS LTD. A REFERENCE UNDER CLAUSE (B)(II) OF SECT ION 55A OF THE ACT WAS MADE BY THE AO AND THE ASSET IN QUESTION WAS A PIECE OF LAND. DECIDING THE WRIT PETITION FILED BY THE ASSESSEE, HON'BLE GUJARAT HIGH COURT HELD THAT REFERENCE COULD HAVE BEEN MADE ,IF THE AO WAS OF THE OPINION THAT HAVING REGARD TO T HE 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 HAVE JUSTIFIED THE AO TO MAKE A REFERENCE TO THE VO. NO OTHER RELEVANT CIRCUMSTANCES COULD BE POINT ED OUT, THAT NO ATTEMPT WAS MADE TO JUSTIFY THE ACTION OF THE AO UNDER ANY OTHER PROVISION OF SEC.55A.FINALLY, IT W AS HELD BY THE HONBLE COURT THAT THE REFERENCE TO THE DVO WAS NOT IN ACCORDANCE WITH LAW AND HAD TO BE QUASHED.(209 ITR 568). H ONBLE GUJAR AT HIGH COURT IN THE CASE OF HINABEN JAYANTILAL SHAH(310ITR3 L)HAS HELD THAT AS PER THE CLAUSE(B) OF SECTION 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 MORE THA N SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED ;OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUCH A REFERENCE. CLAUSE (B) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY WHE N THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS SUPPORTED BY THE VALUATION REPORT OF A REGISTERED VALUER. WE WOULD ALSO LIKE TO DISCUSS THE DECISION OF THE HONBLE BOMBAY HIGH COURT, DELIVERED IN THE CASE OF PUJA PRINTS(360ITR697).IN THAT CASE, ASSESS EE HAD CLAIMED VALUE OF THE PROPERTY AS ON 01. 04.1981 AT RS.35.99 LAKHS ON THE BASIS OF THE REPORT OF A GOVERNMENT VALUER. THE AO REFERRED THE ISSUE OF VALUATION TO THE DVO, WHO VALUED THE PROPERTY AT RS. 6.68 LAKHS AS ON FIRST APRIL, 1981. CONSEQUENTLY, THE AO ENHANCED THE TAXABLE CAPITAL GAINS OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE FAA DECIDED THE ISSUE AGAINST THE IT. ORDER OF THE FAA WAS CHALLENGED BEFORE THE TRIBUNAL. DECIDING THE ISSUE OF FMV, THE TRIBUNAL HELD THAT IN VIEW OF SECTION 55A IT WAS NOT PERMISSIBLE FOR THE AO TO MAKE A REFERENCE TO THE DVO FOR THE PURPOSE OF VALUATION, AS THE VALUE OF THE PROPERTY DECLARED BY THE ASSESSEE WAS NOT LESS THAN ITS FMV. DEPARTMENT AGITATED THE ISSUE BEFORE THE HONBLE HIGH COURT. UPHOLDING THE ORDE R OF THE TRIBUNAL AND FOLLOWING THE JUDGMENT 8 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 OF DAULAL MOHTA (HUF)(360ITR680) HONBLE COURT HELD AS UNDER: THERE WAS NO DISPUTE THAT THE VALUE ADOPTED BY THE ASSESSEE OF THE PROPERTY AT RS. 35.99 LAKHS WAS MUCH MORE THAN THE FAIR MARKET VALUE OF RS. 6.68 LAKHS EVEN AS DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE AO REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENT - AL VO ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE ASSESSEE WAS HIGHER THAN THE FAIR MAR KET VALUE. THEREFORE, THE INVOCATION OF SECTION 55A(A) WAS NOT JUSTIFIED. (II) THAT THE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS 'IS LESS THAN ITS FAIR MARKET VALUE' WERE SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR M ARKET VALUE' WAS MADE EFFECTIVE ONLY FROM JULY 1,2012. PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE ASSESSEE'S CASE WAS SECTION 55A(A) AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006 - 07. AT THE RELEVANT 'TIME, VERY CLEARLY REFERENCE COULD BE MADE TO THE DEPARTMENTAL VO ONLY IF THE VALUE DECLARED BY THE ASSESSEE WAS IN THE OPINION OF AO LESS THAN ITS FAIR MARKET VALUE. (II) THAT SECTION 55A(B) STATES THAT IT WOULD APPLY IN ANY OTHER CA SE, I.E., A CASE NOT COVERED BY SECTION 55A(A). THERE WAS NO DISPUTE THAT THE ISSUE WAS COVERED BY SECTION 55 A(A). THEREFORE, RECOURSE COULD NOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55 A(B)(II) . THEREFORE, THE CENTRAL BOARD OF DIRECT TAXES CI RCULAR DATED NOVEMBER 25 1972 (SEE [1973] 91 ITR (ST.) 1), COULD HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITION IN LAW. HENCE, THE REFERENCE T O THE DEPARTMENTAL VO BY THE AO , WAS NOT SUSTAINABLE IN VIEW OF SECTION 55A(A)(II). THE FOLLOWING QUESTION S OF LAW HAVE BEEN FORMULATED BY THE REVENUE FOR CONSIDERATION BY THIS COURT: (A) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME - TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE REFERENCE MADE BY THE AO TO THE VO PER SE IS BAD IN LAW ? FURTHER, WHETHER THE INCOME - TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN OBSERVING THAT THE REFERENCE TO THE DVO UNDER SECTION 55A OF THE ACT IS TO BE MADE WHEN THE VALUE OF THE PROPERTY DISCLOSED BY THE ASSESSEE IS LESS THAN THE FAIR VALUE AND NOT VICE VERSA THEREBY IGNORING THE PROVISIONS OF SECTION 55A(B)(II) OF THE ACT, AND PARAGRAPHS 26 TO 28 OF CIRCULAR NO.96, DATED NOVEMBER 25, 1972, OF THE CENTRAL BOARD OF DIRECT TAXES (SEE [1973] 91 ITR (ST.) 1) ? (B) WHETHER, ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW, THE INCOME - TAX APPELLATE TRIBUNAL WAS RIGHT IN DIRECTING THE AO TO ACCEPT THE 9 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 VALUATION GIVEN BY THE RESPONDENT AS THE FAIR MARKET VALUE ON THE BASIS OF THE REGISTERED VALUER'S REPORT AND WORKOUT CAPITAL GAINS ? (C) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME - TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE OWNERSHIP OF THE PROPERTY IS REQUIRED TO BE EXAMINED VIS - A - VIS THE VARIOUS PARTNERSHIP DEEDS ENTERED INTO BY THE FIRM AND TO THA T LIMITED EXTENT RESTORING THE ISSUE TO THE FILE OF THE AO FOR DETER - MINING THE DATE OF ACQUISITION BY THE FIRM FOR THE PURPOSE OF INDEXATION, PARTICULARLY WHEN THIS ISSUE WAS NOT RAISED EITHER BEFORE THE AO OR THE COMMISSIONER OF INCOME - TAX (APPEALS) AND, HENCE, DID NOT ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) ? WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE IMPUGNED ORDER DATED 18.02.2011, ALLOWING THE RESPONDENT - ASSESSEE'S APPEAL HOLDING THAT NO REFERENCE TO THE DEP ARTMENTAL VO CAN BE MADE UNDER SECTION 55A OF THE ACT ONLY FOLLOWS THE DECISION OF THIS COURT IN THE MATTER OF DA ULAL MOHTA (HUF) (SUPRA). THE REVENUE HAS NOT BEEN ABLE TO POINT OUT HOW THE AFORESAID DECISION IS INAPPLICABLE TO THE PRESENT FACTS NOR HAS TH E REVENUE POINTED OUT THAT THE DECISION IN DAULAL MOHTA (HUF) (SUPRA) HAS NOT BEEN ACCEPTED BY THE REVENUE. ON THE AFORESAID GROUND ALONE, THIS APPEAL NEED NOT BE ENTERTAINED. HOWEVER, AS THE SUBMI SSIONS WERE MADE ON THE MERITS, WE HAVE INDEPENDENTLY EXAMI NED THE SAME. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLEARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MADE TO THE DEPARTMENTAL VO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN THE 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 DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE AO REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VO ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT - ASSESSEE WAS HIGHER THAN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECTION 55A(A) OF THE A CT IS NOT JUSTIFIED. THE CONTENTION OF THE REVENUE THAT IN VIEW OF THE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS 'IS LESS THAN ITS FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFA CTORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM JULY 1, 2012. PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN TH E PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006 - 07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VO ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE 10 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 OPINION OF AO LESS THAN ITS FAIR MARKET VALUE. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DEPARTMENTAL VO BY THE AO IS SUSTAINABLE IN VIEW OF SECTION 55A(A)(II) OF THE ACT IS NOT ACCEPTABLE. THIS IS FOR THE REASON THAT SECTION 55A(B) OF THE ACT VERY CL EARLY 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 HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR DATED NOVEMBER 25, 1972, CAN HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FO UND IN CIRCULAR ISSUED BY THE CENTRAL OF DIRECT TAXES IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. THE CONTENTION OF THE REVENUE THAT THE AO IS ENTITLED TO REFER THE ISSUE OF VA LUATION OF THE PROPERTY TO THE DEPARTMENTAL VO IN EXERCISE OF ITS POWER UNDER SECTIONS 131, 133(6) AND 142(2) OF THE ACT IS ENTIRELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SUPRA).HOWEVER, THE APEX COURT IN SMT. AMIYA BA LA PAUL(SUPRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AND HELD THAT IF THE POWER TO REFER ANY DISPUTE WITH REGARD TO THE VALUATION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTIONS 131(1), 136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE AO TO DO SO IN CIRCUMSTANCES SPECIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFIC PROVISION UNDER WHICH THE REFERENCE CAN BE MADE TO THE DEPARTMENTAL VO IS AVAILABLE, THERE IS NO OCCASION FOR THE AO TO INVO KE THE GENERAL POWERS OF ENQUIRY. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CLEAR PROVISIONS OF LAW AS EXISTING DURING . PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006 - 07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) DO NOT RAISE A NY SUBSTANTIAL QUESTI ON OF LAW. IN OUR OPINION AFTER THE ABOVE ORDER OF THE HONBLE BOMBAY HIGH COURT, THERE IS NO CONFUSION WITH REGARD TO THE MATTERS WHERE THE ASSESSEE ADOPTS THE VALUE SUGGESTED BY A REGISTERED VALUER. IF THE FMV ADOPTED BY HIM IS IN ACCORDANCE WITH THE V ALUATION REPORT I.E. NOT LESS THAN THE VALUATION REPORT TILL 01.07.2012, THAN THE PROPERTY IN QUESTION CANNOT BE REFERRED FOR VALUATION BY THE AO. THE RECORD AVAILABLE WITH US, DOES NOT INDICATE AS TO WHAT WAS THE OPINION FORMED BY THE AO BEFORE MAKING REF ERENCE TO THE DVO. THEREFORE, IT IS APPARENT THAT HE HAD, AT NO POINT OF TIME, FORMED AN OPINION THAT THE FMV DETERMINED BY THE VALUER. IN OTHER WORDS, IT IS NOT CLEAR AS TO WHETHER THE REFERENCE WAS MADE UNDER CLAUSE 11 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 55A(A) OR 55A(B)(II) OF THE ACT AND IF IT WAS MADE UNDER SECTION 55A(B)(II) THEN WHAT WERE THE RELEVANT CIRCUMSTANCES FOR MAKING SUCH A REFERENCE. RECORDING OF REASONS FOR INVOKING A PARTICULAR SECTION OF THE ACT AND JUSTIFICATION FOR INVOKING THE SPECIFIC CLAUSE ARE NOT AVAILABLE AND NOR WERE THEY BROUGHT TO OUR NOTICE. AS THE VALUE SHOWN BY THE ASSESSEE WAS NOT LESS THAN THE FVM, SO, IN OUR OPINION, THERE WAS NO JUSTIFICATION FOR MAKING ANY REFERENCE TO THE REVENUE AUTHORITIES OF STATE GOVERNMENT, BY THE AO IN THE YEAR UNDER CONSIDERATION. AM ENDMENT TO THE SECTION 55A OF THE ACT IS EFFECTIVE FROM 01.07. 2012 AND AS PER THAT NOW REFERENCE CAN BE MADE IF THERE IS VARIANCE IN THE FMV. THE ISSUE BEFORE US PERTAIN T O AY.2007 - 08. RESPECTFULLY, FOLLOWING THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT , WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. 7. THE RAIPUR BENCH OF ITAT HAS DECIDED THE IDENTICAL ISSUE S IN FAVOUR OF THE ASSESSEE IN ASESSEES OWN CASE FOR THE A.Y. 2008 - 09, VIDE DECI SION DATED 19.12.2014. SINCE, THE FACTS OF THE CASE AND ISSUE S INVOLVED IN THE PRESENT APPEAL ARE ALSO IDENTICAL TO THE FACTS OF THE CASE AND THE ISSUE S INVOLVED IN THE ASSESSEES OWN APPEAL FOR THE A.Y. 2008 - 09 AFORESAID, WE DO NOT FIND ANY REASON TO DEVI ATE FROM THE DECISION OF THE ITAT. HENCE , RESPECTFULLY FOLLOWING THE DECISION OF THE RAIPUR BENCH OF ITAT, WE ALLOW THE APPEAL OF THE ASSESSEE AND DECIDE BOTH THE ISSUE S IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITION CONFIR MED BY THE LD. CIT (A). ITA NO. 375/RPR/2014 (ASSESSMENT YEAR: 2011 - 12 ) SINCE, T HE FACTS AND THE ISSUE S INVOLVED IN THE PRESENT APPEAL ARE SIMILAR TO THE FACTS OF THE CASE AND THE ISSUE S RAISED BY THE ASSESSEE IN ITS APPEAL PERTAINING TO THE ASSESSMEN T YEAR 2010 - 11 , EXCEPT THE AMOUNT OF ADDITION CONFIRMED BY THE LD.CIT(A), WE DO NOT CONSIDER IT NECESSARY TO 12 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 MENTION THE FACTS OF TH IS CASE. IN THIS CASE ALSO, THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO AND THE ASSESSEE IS IN APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD.CIT(A). 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), VIDE WHICH THE LD. CIT(A) HAS CONFIRMED THE ADDITION, ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS. 52,49,023/ - MADE BY THE AO AFTER RECALCULATING THE QUANTUM OF LONG TERM CAPITAL GAIN AT RS. 93,07,944/ - ON THE BASIS OF DVOS REPORT, WHICH WAS OBTAINED CONTRARY TO PROVISIONS OF SECTION 55A OF THE INCOME - TAX ACT, 1961 AND THE ENTIRE IS AB INITIO AGAINST THE STATUTORY PROVISIONS. 2. THE LD. CIT (APPEALS) HAS ERRED IN DISALLOWING THE COST OF IMPROVEMENT (DEVELOPMENT COST) OF RS. 7,29,940/ - . 3. THE LD. CIT (APPEALS) HAS ERRED IN CONFIRMING APPLICATION OF FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.198 1 AGAINST PROVISIONS OF SECTION 55A OF THE ACT AS APPLICABLE TO A.YR. 2011 - 12. 4. THE ORDER OF THE LD. CIT (APPEALS) IS BAD IN LAW AND ON FACTS. 3. THE FACTS OF THE PRESENT CASE AND THE ISSUE S INVOLVED ARE IDENTICAL TO THE FACTS OF THE CASE AND THE ISSU E S INVOLVED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2010 - 11 AFORESAID. W E HAVE DECIDED THE IDENTICAL GROUND OF APPEAL OF THE ASSESSEE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE RAIPUR BENCH OF THE ITAT RENDERED IN THE ASSESSEES OWN APPEAL ITA NO. 180 /BLPR/2011 FOR THE A.Y. 2008 - 09 . SINCE, THE ISSUES INVOLVED IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE ASSESSEES OWN APPEAL FOR THE ASSESSMENT YEAR 2010 - 11 AFORESAID , CONSISTENT WITH OUR FINDING, 13 ITA NO S . 36/RPR/2015 & 375 / RPR/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 WE ALLOW THE PRESENT APPEAL OF THE A SSESSEE AND DECIDE BOTH THE GROUND S OF APPEAL IN FAVOUR OF THE ASSESSEE FOR THE REASONS MENTIONED IN OUR ORDER PERTAINING TO THE ASSESSEES CASE FOR THE A.Y. 2010 - 11. IN THE RESULT, APPEAL S FILED BY THE ASSESSEE FOR A SSESSMENT YEAR S 2010 - 11 AND 2011 - 2 012 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY , 2018 . SD/ - SD/ - ( N.K. BILLAIYA) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR, DATED: 25 / 05 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , RAIPUR / DR, ITAT, RAIPUR 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) / PS , RAIPUR / ITAT, RAIPUR