Amirlal Agarawal, Sambalpur V. ITO, WARD-1(1), Sambalpur

ITA 39/CTK/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6410 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 03-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Valuation report; Capital Gains

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA Nos.38&39/CTK/2022 (नििाारण वषा / Asses s m ent Years :1998-1999 & 1999-2000) Am irla l A grawa la, Near Gopa l J i Mandir, Sam balpur Badaba za r, Sam balpur-768003 P AN : AAC H A 409 6 G ............ ......As sess ee Versus IT O W ard-1(1), Sa m balpur ...... ...... ........Re venue Shri Rahul Agrawal, CA/AR for the assessee Shri S.C.Mohanty, Sr. DR for the Revenue Date of Hearing : 16/09/2022 Date of Pronouncement : 16/09/2022 आदेश / O R D E R Per Bench : These are the appeals filed by the assessee against the separate orders passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, both dated 20.12.2021 for the assessment years 1998- 1999 & 1999-2000. 2. It was submitted by the ld. AR that the assessee has opted for the VDIS Scheme-97 and had declared raw and uncut diamonds held by the assessee from the assessment year 1973-1974 and valued at Rs.80,000/- being the cost as on A.Y.1973-1974. The assessee subsequently in the ITA Nos.38&39/CTK/2022 2 year 1998 sent the precious stones for polishing and after polishing had sold the same for a consideration of Rs.7,61,221/- during the assessment year 1998-1999 and Rs.3,03,500/- during the assessment year 1999- 2000. It was the submission that when the assessment came to be completed u/s.143(3) of the Act, the AO had adopted the cost declared by the assessee in the VDIS declaration and had applied the indexation. In short, the AO had adopted the value of Rs.80,000/- as on 01.04.1981. The assessee had in its computation given the calculation of the value of precious stones at Rs.3,19,970/- as the value of the precious stones as on 01.04.1981. It was submitted that as the AO had adopted wrong cost in respect of the precious stones disclosed by the assessee in the VDIS Scheme as on 01.04.1981, the assessee had originally filed a rectification application on 16.12.2002. The said rectification application remained undisposed. As the rectification application was undisposed the assessee filed a second application on 06.03.2014 reiterating its submissions. The AO rejected the rectification application holding that there was no mistake apparent from the record. It was the submission that the ld. CIT(A) has also upheld the same. It was the submission that the Special Bench of this Kolkata ITAT had in the case of Hiralal Lokchandani Vs. ITO, reported in 106 ITD 45 (Kol)(SB) categorically held that the AO is to compute the capital gains after considering the valuation report for determining of the market value of raw and uncut diamonds as on 01.04.1981. It was the submission that the fact that the AO has not followed the directions given by the Hon’ble Special Bench of this Tribunal categorically shows that the ITA Nos.38&39/CTK/2022 3 assessment order contained a mistake apparent from the record. It was the prayer that the AO may be directed to recompute the capital gains by adopting value declared by the assessee as per the valuation report determining the fair market value as on 01.04.1981. 3. In reply, the ld. Sr. DR vehemently supported the order of the AO and CIT(A). It was the submission that the Division Bench of this Tribunal should apply its independent judicial conscience un-effected by the decision of the Special Bench of the Tribunal. It was the submission that what has been sold by the assessee was not the original asset disclosed in the VDIS Scheme but it was further improved upon by polishing and doing such other improvements. It was the submission that the cost of the improvement has also been considered and deduction for the same has also been granted by the AO. It was the submission that the assessee had disclosed raw and uncut diamonds in its declaration in the VDIS application but what was sold was polished diamonds and consequently the asset sold was different from the asset disclosed in the VDIS. It was the submission that there was no mistake apparent from the record of the AO insofar as the valuation report was not before the AO. It was, therefore, submitted that the order of the CIT(A) deserves to be upheld. 4. We have considered the rival submissions. 5. A perusal of the assessment order clearly shows that the assessee has disclosed the fair market value of asset as on 01.04.1981 at Rs.3,19,970/-. Thus, it cannot be said that the AO was unaware of the value or the valuation report in respect of diamonds sold by the assessee. ITA Nos.38&39/CTK/2022 4 A perusal of the decision of the Special Bench of the Tribunal in the case of Hiralal Lokchandani (supra) shows that categorical directions have been given by the Special Bench in respect of the determination of the capital gains by adopting the valuation as per the valuation report determining the fair market value of the diamonds as on 01.04.1981. When such categorical directions are available in the order of the Hon’ble Special Bench, it would be an act in futility for Division Bench of this Tribunal to interpret or apply its independent judicial conscience. The judicial discipline requires that the decision rendered by the wisdom of higher judicial forum must be followed by a subordinate authority. This being so, in respectful obedience to the principles laid down by the Hon’ble Special Bench decision in the case of Hiralal Lokchandani (supra), the AO is directed to recompute the capital gains on the basis of the fair market value determining in respect of the diamonds as on 01.04.1981 in the valuation report for both the assessment years under consideration. 6. In the result, both appeals of assessee stand allowed. Order dictated and pronounced in the open court on 16/09/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 16/09/2022 Prakash Kumar Mishra, Sr.P.S. ITA Nos.38&39/CTK/2022 5 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Am irla l A gra wa la, Near Gopa l J i Mandir, Sam balpur Badaba za r, Sam balpur-768003 2. प्रत्यथी / The Respondent- IT O W ard-1(1), Sa m balpur 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पिभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//