ATUL PAINTS AND BHEMICALS CO, MUMBAI V. ADDL CIT RG 23(2), MUMBAI

ITA 3837/MUM/2011

• Counselvise Citation: 383719914 RSA 2011
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA NAIR
• Assessee Lawyers: B V JHAVERI
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Difference of opinion; Corroborative evidences; Valuation report; Change of opinion
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3837/MUM/2011 (ASSESSMENT YEAR: 2006-07) M/S. ATUL PAINTS & CHEMICAL CO. ADDL CIT - 23(2) 5, NAMANDAS INDL. ESTATE PRATYAKSH KAR BHAVAN DR. R.P. ROAD, MULAND (W) VS. BANDRA KURLA COMPLEX MUMBAI 400080 BANDRA (E), MUMBAI 400051 PAN - AAAFA 2539 E APPELLANT RESPONDENT APPELLANT BY: SHRI B.V. JHAVERI RESPONDENT BY: SMT. USHA NAIR DATE OF HEARING: 12.10.2011 DATE OF PRONOUNCEMENT: 31.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT-23, MUMBAI UNDER SECTION 263 OF THE IT ACT DATED 22.03.2011. 2. IN THIS CASE ASSESSMENT WAS ORIGINALLY COMPLETED UN DER SECTION 143(3) OF THE ACT VIDE ORDER DATED 29.12.2008 ASSESSING TH E TOTAL INCOME AT ` 3,01,47,782/-. ON EXAMINATION OF RECORD THE CIT(A) WAS OF THE OPINION THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF REVENUE, THEREFORE, A SHOW CAUSE NOTICE UNDER SECTI ON 263 WAS SERVED ON THE ASSESSEE TO RE-ASSESS THE INCOME UNDER THE HEAD CAPITAL GAINS. 3. DURING THE RELEVANT PREVIOUS YEAR ASSESSEE HAS TRAN SFERRED/SOLD THE DEVELOPMENT RIGHTS OF THE PROPERTY ADMEASURING 3471 .18 SQ.MTRS (37350 SQ. FT.) SITUATED AT SURVEY NO. 250 PT., CTS NO. 18PT, VILLAGE MULUND (W), TALUKA KURLA, MUMBAI FOR A SUM OF ` 3,25,00,000/-. THE STAMP DUTY AUTHORITIES ADOPTED THE SALE PRICE AT `6, 31,69,000/-. THE A.O. ADOPTED THE VALUE AS PER THE STAMP DUTY AUTHORITIES AND REWORKED OUT THE CAP ITAL GAIN IN THE ASSESSMENT ORDER. THE CIT WAS OF THE VIEW THAT THE COST OF ACQUISITION ADOPTED BY ASSESSEE AT ` 168/- PER SQ.FT. BASED ON THE VALUATION REPORT DATE D ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 2 20 TH FEBRUARY 2006 WAS ERRONEOUS AS THE LAND AT THAT PO INT OF TIME AS PER THE INDIAN VALUERS DIRECTORY AND ALSO SUPPORTED BY THE STAMP DUTY AUTHORITIES WAS AT ` 72/- PER SQ.FT. AND, THEREFORE, HE INVOKED THE POWE RS UNDER SECTION 263 TO DIRECT THE A.O. TO ADOPT THE C OST OF ACQUISITION AT ` 72/- PER SQ.FT. AS PRESCRIBED BY THE STAMP DUTY AUTHORIT IES. ASSESSEE IS QUESTIONING THE JURISDICTION OF THE CIT UNDER SECTI ON 263 TO ADOPT THE SAID RATE. 4. ASSESSEE HAS RAISED FOUR GROUNDS ON THE VALIDITY OF SHOW CAUSE NOTICE UNDER SECTION 263, VALUATION REPORT OF REGISTERED V ALUER, ROLE OF COMMISSIONER AND VALUATION OF LOCAL AUTHORITY IN IT S GROUNDS WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. THE LEARNED COUNSE L SUBMITTED THAT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE JOINT CIT VIDE HIS LETTER DATED 21ST JANUARY, 2008 SOUGHT THE FOLLOWING INFORMATION FROM THE ASSESSEE FIRM: - WITH REGARD TO LTCG DECLARED DETAILED EXPLANATION ABOUT THE ACQUISITION AND TAXABILITY UNDER LONG-TERM CAPITAL GAIN CLAIMED BY YOU ON CORRESPONDING AMOUNT CONSIDERED BY YOU FOR W ORKING INDEXED COST WORKING WITH SUPPORTING EVIDENCE. IN REPLY THERETO THE ASSESSEE FIRM VIDE THE LETTER OF M/S.R.L. SANGOI & CO., TAX CONSULTANTS, STATED AS UNDER: - WITH REFERENCE TO ABOVE SUBJECT AND AS PER YOUR LE TTER DATED 21.01.2008, WE STATE AS UNDER: 1. WITH REGARD TO LTCG ON LEASEHOLD LAND WITH SHED THEREON WE HAVE PURCHASED THIS LAND FROM MR. S.S. UPPAL ON 08. 07.1975. SINCE, LAND BECAME THE PROPERTY OF ASSESSEE PRIOR TO 1.4.1 981, ASSESSEE HAS OPTED U/S 55 TO SUBSTITUTE FMV AS ON 1.4.1981 A S DEDUCTION FOR COST OF ACQUISITION. VALUATION REPORT OF APPROVED V ALUER ENCLOSED WITH RETURN CONTAINS 1975 AGREEMENT. IN THE FINANCIAL YE AR 1989-90 WE CONSTRUCTED A SHED FOR RS.5,77,997/-. THIS ALL AMOU NT ARE SHOWN IN OUR BALANCE SHEET AND BOOKS OF ACCOUNTS IN RESPECTI VE YEARS. THE PROPERTY IN QUESTION IS HELD FOR A PERIOD OF MORE T HAN 36 MONTHS AND CAPITAL GAIN ON IT WOULD BE TREATED AS LONG TERM CA PITAL GAIN. RATE OF TAX ON L.T.C.G. IS PAID @ 20% AS PER PROVISIONS OF SECTION 112. THIS WORKING IS PROPERLY SHOWN AS PER STATEMENT OF LONG TERM CAPITAL GAIN ON SALES OF PLOT WITH SHED. THE ASSESSEE HAD FILED VALUATION REPORT OF M/S. V.S . MODI ASSOCIATES, CHARTERED ENGINEERS, GOVERNMENT APPROVED VALUERS AN D SURVEYORS. THE AFORESAID GOVERNMENT APPROVED VALUERS VALUED THE PR OPERTY OF THE ASSESSEE FIRM AS ON 01.04.198 1 WHEREIN THE VALUER OBSERVED AS UNDER: ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 3 IN OR AROUND 1981, SEVERAL INDUSTRIES IN THE VICIN ITY OF LAND WERE FUNCTIONING. [EXAMPLE: DIVECHA GLASS FACTORY, GANES H FLOUR MILLS, POWER LINE PRODUCTS, VENUS TILES ETC.] THEREFORE , IN OR ABOUT 1981, LAND IN THIS AREA CAN BE SAID TO HAVE VERY GOOD POT ENTIAL FOR INDUSTRIAL DEVELOPMENT. THEREFORE, TO VALUE SUCH TY PE OF LAND, ONE MAY START BASE FIGURE AS APPLICABLE TO LAND PLUS B UILDING AND THEN REDUCE COST OF CONSTRUCTION AND DEVELOPERS MARGI N. WE CONSIDER INDIAN VALUERS DIRECTORY & REFERENCE BOOK FOR MARK ET VALUE OF PROPERTY IN MUMBAI AS ON 1.4.1981 AS AUTHORITATIVE BOOK ON THE SUBJECT AS THE SAME IS COMPLIED BY EXTRACTING INFOR MATION FROM VARIOUS DOCUMENTS REGISTERED WITH SUB-REGISTRAR. IN THIS BOOK, RATE APPLICABLE FOR PROPERTY UNDER REFERENCE IS RS.400/- PER SQ. FT. (I.E. OF LAND PLUS BUILDING FOR INDUSTRIAL USE) SEE PAGE 4 2 OF SAID BOOK. HOWEVER, TO DERIVE LAND VALUE, ONE HAS TO DEDUCT COST OF CONSTRUCTION @ RS.70/- PER SQ. FT. NORMALLY THIS IS THE STANDARD COST OF CONSTRUCTION [AS PER PAGE 12 OF SAID BOOK.]. FUR THER REDUCTION HAS TO BE MADE NORMALLY BETWEEN 20% FOR DEVELOPERS MAR GIN. THEREFORE, RATE PER SQ. FT. OF LAND, BASED ON ITS DEVELOPMENT POTENTIAL IS ARRIVED AS UNDER: - RS. PER SQ. FEET RATE OF LAND PLUS BUILDING (AS REFERRED & DISCUSSE D ABOVE) 400 COST OF CONSTRUCTION (AS REFERRED & DISCUSSED ABOVE ) 70 330 DEVELOPERS MARGIN @20% OF 330 (AS REFERRED & DISCUSSED ABOVE) 66 DERIVED VALUE OF LAND 264 HOWEVER AS PER SAID BOOK I.E. INDIAN VALUERS DIRE CTORY AND REFERENCE BOOK MARKET VALUE OF PROPERTY IN MUMBAI A S ON 1.4.198 1. THE VALUE OF LAND GIVEN IS RS.72/- PER SQ. FT. THERE BEING GOOD VARIATION BETWEEN THE TWO VALUES, WE ADOPT RATE OF RS.168/- PER SQ. FT. I.E. AVERAGE OF RS.264/- AND RS. 72/-. SIZE OF THE PLOT OF LAND UNDER REFERENCE IS 37350 SQ. FT. THEREFORE, VALUE OF THE PLOT IS 37350 SQ.FT. X RS. 168/- = RS. 62,74,800.00 AFTER CONSIDERING THE AFORESAID VALUATION REPORT OF THE GOVERNMENT APPROVED VALUERS, THE ADDL. CIT PASSED THE ORDER UNDER SECTI ON 143(3) OF THE ACT AND COMPUTED THE LONG-TERM CAPITAL GAIN AT ` 2,98,90,062/- BY DISALLOWING LEGAL FEES OF ` 2,58,255/- AND BROKERAGE EXPENSES OF ` 3,25,000/-. IT WAS FURTHER SUBMITTED THAT: (I) THE JURISDICTIO NAL CONDITIONS PRECEDENT TO THE APPLICATION OF SECTION 263 IS THAT THE ORDER SO UGHT TO BE REVISED MUST BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE AND ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 4 NEITHER OF THESE CONDITIONS IS SATISFIED, (II) THE A.O. PASSED THE ORDER UNDER SECTION 143(3) OF THE ACT AFTER TAKING INTO CONSIDE RATION THE GOVERNMENT APPROVED VALUERS REPORT FOR THE PURPOSE OF COMPUTIN G THE LONG-TERM CAPITAL GAINS. THEREFORE, THE VIEW ADOPTED BY THE A.O. FOR THE PURPOSE OF COMPUTING THE LONG-TERM CAPITAL GAINS IS ONE OF THE POSSIBLE, PLAUSIBLE, PERMISSIBLE AND BONAFIED VIEW INASMUCH AS THE ASSESSING OFFICER REL IED UPON THE GOVERNMENT APPROVED VALUER WHO IS SUPPOSED TO KNOW THE INTRICACIES OF THE VALUATION OF IMMOVABLE PROPERTY. THEREFORE, THE VIE W ADOPTED BY THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS VI EW OR THE ONE WHICH IS UNSUSTAINABLE IN LAW, (III) THERE MUST BE MATERIAL BEFORE THE CIT TO HOLD THAT AN ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE AND A MERE CHANGE OF OPINION CANNOT RENDER THE ORDER ERRO NEOUS. THE CIT HAS CONSIDERED ONLY THE BOOK INDIAN VALUERS DIRECTORY & REFERENCE PUBLISHED BY ARCHITECT PUBLISHING CORPORATION OF INDIA WHICH WAS CONSIDERED BY THE GOVERNMENT APPROVED VALUER WHOSE REPORT WAS FILED B Y THE ASSESSEE AND ACCEPTED BY THE A.O. WHILE COMPLETING THE ASSESSMEN T UNDER SECTION 143(3) OF THE ACT, AND (IV) THE PROVISIONS OF SECTION 263 CONTEMPLATE TO COVER WITHIN ITS AMBIT AND SCOPE THE ERROR WHICH IS COMMI TTED BY THE AO AND NOT THOSE ERRORS WHICH ARE COMMITTED BY ANY OTHER AUTHO RITY. 5. THE LEARNED D.R., HOWEVER, REITERATED THE CONTENTIO NS OF THE CIT THAT THE VALUE ADOPTED BY THE A.O. WAS NOT CORRECT AND T HE A.O. HAS NOT ENQUIRED ABOUT THE COST OF ACQUISITION AS HIS ORDER WAS REAL LY ON ADAPTATION OF SALE VALUE AND NOT COST OF ACQUISITION, THEREFORE, THE C IT(A) HAS CORRECTLY EXERCISED THE JURISDICTION. 6. WE HAVE EXAMINED THE RECORD AND RIVAL CONTENTIONS. IT IS ON RECORD THAT A.O. HAS ISSUED SHOW CAUSE NOTICE TO THE ASSES SEE TO ENQUIRE ABOUT THE WORKING OF THE CAPITAL GAINS. IT IS ALSO ON RECORD THAT ASSESSEE HAS REPLIED IN DETAIL AS STATED IN THE ARGUMENTS WITH REFERENCE TO THE WORKING OF LONG TERM CAPITAL GAIN OF LESE HOLD LAND AND RELIED ON THE VA LUERS REPORT. AS SEEN FROM THE VALUATION REPORT, THE SAID VALUER GAVE A SALE I NSTANCE RELYING ON THE INDIAN VALUERS DIRECTORY AND REFERENCE BOOK FOR MAR KET VALUE OF PROPERTY WHERE IT WAS CLEARLY STATED THAT VALUE OF OPEN LAND GIVEN WAS ` 72/- PER SQ.FT. HE ALSO REFERRED TO THE RATE APPLICABLE FOR PROPERT Y I.E. THE RATE OF LAND AND ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 5 BUILDING FOR INDUSTRIAL WAS AT ` 400/- PER SQ.FT. AND HE ARRIVED AT THE LAND VALUE BY TAKING THE COST OF CONSTRUCTION AND FURTHE R DEVELOPERS MARGIN TO ARRIVE AT THE DERIVED VALUE OF LAND AT ` 264/-. THEREFORE, HE ADOPTED THE RATE OF ` 168/- PER SQ.FT. AS AN AVERAGE OF ` 264/- AND ` 72/- TO ARRIVE AT THE COST OF LAND AT ` 62,74,800/-. THIS REPORT WAS PLACED BEFORE THE A.O. , WHO IN THE ASSESSMENT ORDER REWORKED OUT THE CAPITAL GAINS BY ADOPTING THE SALE PRICE AS THAT OF STAMP DUTY AUTHORITY AT ` 6,31,69,000/-. HE ALSO, VIDE PARA 3.2, DISALLOWED CERTAIN EXPENSES CLAIMED BY WAY OF LEGAL FEES AND BROKERAGE. ACCORDINGLY THE CAPITAL GAINS WERE REWORKED OUT AT ` 2,98,90,062/- AS AGAINST THE CAPITAL GAIN OF ` 2,93,06, 807/- OFFERED BY ASSESSEE. EVEN THOUGH ASSESSEE DID MAKE A CONTENTION THAT STAMP DUTY AUTH ORITYS VALUE IS NOT ACCEPTABLE UNDER SECTION 50C, HOWEVER, THAT ISSUE I S NOT BEFORE US, BUT THE POINT IS THAT THE A.O. DID EXAMINE THE ISSUE OF CAP ITAL GAINS BEFORE REWORKING OUT THE CAPITAL GAINS AS STATED ABOVE. THEREFORE, F OLLOWING THE PRINCIPLES ESTABLISHED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. 321 ITR 92 IT CANNOT BE STATED THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS T HE VIEW TAKEN BY THE A.O. IS UNSUSTAINABLE IN LAW. 7. EVEN THOUGH THE A.O. DID NOT MENTION ELABORATELY A BOUT THE PRICE THAT WAS ADOPTED FOR ARRIVING AT THE COST OF ACQUIS ITION, THAT PART BEING SILENT, IT CANNOT BE STATED THAT HE HAS NOT EXAMINE D THE ISSUE AS ASSESSEE HAS PLACED THE VALUATION REPORT IN SUPPORT OF THE C ONTENTIONS ON RECORD AND ALSO THE VALUER HAS RELIED ON THE INDIAN VALUERS R EPORT IN ARRIVING AT A PRICE AT AN AVERAGE METHOD WHICH THE CIT NOW DISPUTES. TH E ORDER CANNOT BE TERMED AS ERRONEOUS JUST BECAUSE THE A.O. DID NOT W RITE ELABORATELY ON THE ISSUE, AS CONSIDERED BY THE HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108. THIS SECTION DO ES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE CIT FOR THAT OF THE INCOME-TAX OFFICER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. NOWHER E THE CIT ESTABLISHED THAT THE ORDER IS ERRONEOUS. THE CITS CONTENTION I S ONLY THAT THE VALUER HAS ADOPTED A DIFFERENT VALUE THAN PRESCRIBED FOR OPEN LAND, THEREFORE, THE MISTAKE, IF ANY, IS NOT IN THE ORDER OF THE A.O. BU T IN THE ORDER OF THE GOVERNMENT VALUER WHOSE REPORT IS ON RECORD BEFORE AO. ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 6 8. EVEN OTHERWISE AS SEEN FROM THE RECORD THE BASIS FO R ISSUING SHOW CAUSE NOTICE DATED 18.02.2011 WAS THE INFORMATION F ROM THE STAMP VALUATION AUTHORITY. THE RELEVANT PART OF CITS SHO W CAUSE NOTICE IS AS UNDER: - THE COST OF LAND AS ON 1.4.1981 BASED ON THE VALUA TION REPORT OF THE VALUER, M/S. V.S. MODI ASSOCIATES WAS TAKEN AT ` 62,74,800/- (I.E. ` 168 PER SQ.FT.). HOWEVER, IT WAS FOUND THAT THE VALUE OF THE LAND AS ON 1.4.1981 WAS ` `` ` 72/- PER SQ.FT. AS PER INFORMATION FROM THE STAMP VALUATION AUTHORITY. IT IS SEEN THAT AS PER THE VALUATION REPORT OF THE VALUER, M/S. V.S. MODI ASSOCIATES, TH E VALUE OF THE LAND WAS ` 72/- PER SQ.FT. WHICH WAS ENHANCED TO ` 168/- PER SQ.FT. AFTER CERTAIN CALCULATIONS. IT WAS ALSO SEEN FROM THE REC ORDS THAT THE LAND WAS PURCHASED ON 8.7.1974 @ RS.1.67 PER SQ.FT. IN O THER WORDS, THE INCREASE IN THE FMV OF THE LAND IN JUST ABOUT 6 YEA RS IS FROM RS.1.67 TO RS.168/- PER SQ.FT. AND HENCE THE VALUE ADOPTED BY THE VALUER, M/S. V.S. MODI ASSOCIATES IS INCORRECT. (EMPHASIS SUPPLIED) 9. AS CAN BE SEEN FROM THE RECORD THE A.O., ASSISTANT COMMISSIONER OF INCOME TAX 23(2) HAS ISSUED A LETTER DATED 03.02.20 11 FOR WHICH THE OFFICE OF THE DISTRICT COLLECTOR OF STAMPS, KURLA REPLIED VI DE LETTER DATED 09.02.2011. AS PER THE FREE ENGLISH TRANSLATION PROVIDED OF THE LETTER RECEIVED IN MARATHI IT SEEMS THAT THE A.O. ASKED ABOUT THE RATES IN 198 1-82 AND IT WAS STATED THAT THE GOVERNMENT HAD NOT PREPARED READY RECKONER IN THE YEAR 1981. IN THE YEAR 1989, FOR THE FIRST TIME READY RECKONER WA S PREPARED AND RELEVANT INSTRUCTIONS WERE ISSUED IN RESPECT OF HOW TO ADOPT THE VALUATION OF PROPERTIES OF 1981 ON THE BASIS OF THE VALUATION AD OPTED IN THE YEAR 1989. ACCORDING TO THE SAID RATES THE ABOVE OPEN LAND WAS PRESCRIBED AT ` 72/- PER SQ.FT. AND FOR RESIDENTIAL BUILDING AT ` 240/- PER SQ.FT. AND FOR SHOPS AND COMMERCIAL PREMISES AT ` 480/- PER SQ.FT. AS SEEN FROM THE ABOVE LETTER IT I S VERY CLEAR THAT THERE WAS NO FIXED GUIDELINES AS OF YEAR 1981 AND IT IS ONLY ON ESTIMATION AND PRESUMPTIONS THE VALUATION WAS DONE, THEREFORE, EVEN THE RATE AT WHICH THE CIT TOOK DECISION OF ` 72/-PER SQ.FT. IS NOT BASED ON ANY AUTHENTIC DOCUMENTATION BUT ONLY ON CERTAIN INSTRUC TIONS GIVEN HOW TO ADOPT VALUATION OF PROPERTY BASED ON READY RECKONER 1989. IN FACT THE VALUATION AS MADE OUT BY THE STAMP AUTHORITY IS ALS O ON THE SAME BASIS WHICH THE VALUER M/S. V.S. MODI ASSOCIATES ADOPTED IN ITS VALUATION REPORT. ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 7 10. ANOTHER ASPECT WHICH IS NOTICED IS THAT THIS ENTIRE CORRESPONDENCE WITH THE STAMP AUTHORITY WAS SUBSEQUENT TO THE COMP LETION OF ASSESSMENT. AT THE TIME OF PASSING THE ASSESSMENT ORDER THE A.O . HAS RELIED ON THE VALUATION REPORT IN WHICH THE VALUER FOR THE REASON S STATED THEREIN HAS ADOPTED THE AVERAGE VALUE OF THE VALUE OF OPEN LAND AND VALUE OF LAND WITH BUILDINGS AND ADOPTED AN AVERAGE VALUE SO ARRIVED A T. THEREFORE, IT CANNOT BE STATED THAT THE INFORMATION WITH REGARD TO VALUATIO N WAS AVAILABLE AT THE TIME OF PASSING THE ASSESSMENT ORDER AND THE A.O. H AS ERRONEOUSLY TAKEN A HIGHER VALUE. THE LETTER ITSELF INDICATES THAT THE ENQUIRY WAS MADE SUBSEQUENT TO THE COMPLETION OF ASSESSMENT AND WE A RE OF THE OPINION THAT THE INFORMATION OBTAINED SUBSEQUENTLY CANNOT BE A B ASIS FOR REOPENING THE ASSESSMENT UNDER SECTION 263. THAT CAN BE A GOOD IN FORMATION FOR INVOKING OTHER PROVISIONS OF THE ACT BUT CANNOT BE STATED TH AT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE BASIS OF THE SUBSEQUENT INFORMATION OBTAINED BY THE A.O., FO R THE PURPOSE OF INVOKING SECTION 263, AS THAT INFORMATION WAS NOT A VAILABLE ON RECORD AT THE TIME OF COMPLETION OF ASSESSMENT. THE A.O. HAS ACCE PTED THE AVERAGE VALUE IN ARRIVING AT COST OF ACQUISITION AND PASSED A DET AILED ORDER RECALCULATING THE CAPITAL GAINS AFTER DUE EXAMINATION. IN VIEW OF THIS, IT CAN BE CONCLUDED THAT THE A.O. HAS TAKEN ONE OF THE POSSIBLE VIEWS I N ADOPTING THE COST OF ACQUISITION AS SUPPORTED BY THE VALUATION REPORT. T HEREFORE, THE ACTION OF THE CIT IN INVOKING OF SECTION 263 IS WITHOUT ANY JURIS DICTION FOR THE REASONS STATED ABOVE. WE ARE OF THE OPINION THAT THE ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SO AS TO EXE RCISE JURISDICTION UNDER SECTION 263 BY THE CIT. FOR THESE REASONS THE ORDER IS SET ASIDE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 31 ST OCTOBER 2011 ITA NO. 3837/MUM/2011 M/S. ATUL PAINTS & CHEMICAL CO. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) , MUMBAI 4. THE CIT CIT 23, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.