Income-tax Officer, V. Late Shri Baburao Narhari Khandalkar, Solapur

ITA 42/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0263 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Capital asset; Retrospective amendment; Question of law; Fair market value; Corroborative evidences; Valuation report
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.42/PUN/2015 % % / ASSESSMENT YEAR : 2007-08 ITO, WARD - 2(3), SOLAPUR . / APPELLANT V/S LATE SHRI BABURAO NARHARI KHANDALKAR, L/H. PRABHAKAR BABURAO KHANDALKAR (SON), SMT. SHAKUNTALA BABURAO KHANDALKAR (WIFE) AND OTHERS, 3/4A, MURARJI PETH, SHIVAJI CHOWK, SOLAPUR PAN : AGBPK4808R . /RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI ANIL CHAWARE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 07-10-2014 OF THE CIT(A)-III, PUNE RELATING TO AS SESSMENT YEAR 2007-08. 2. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF T HE ASSESSEE. THEREFORE, THE APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPA RTMENTAL REPRESENTATIVE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 03-03-2008 DECLARING TOTA L INCOME / DATE OF HEARING :22.12.2016 / DATE OF PRONOUNCEMENT: 28.12.2016 2 ITA NO.42/PUN/2015 OF RS.68,222/- WHICH WAS SUBSEQUENTLY REVISED ON 08-03-2011 DECLARING TOTAL INCOME AT RS.2,53,620/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OB SERVED THAT ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN ON TRA NSFER OF AN IMMOVABLE PROPERTY. FROM THE DETAILS FILED BY THE ASSESSEE , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DETERM INED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.14,50,000/- BEING COST OF CONSTRUCTION AS ON 01-04-1981. HE, THEREFORE, ASKED THE ASSESSEE TO FURNISH THE DETAILS OF CAPITAL GAIN AND SUPPORTING EVIDENCE FO R ADOPTION OF FAIR MARKET VALUE OF RS.14,50,000/- AS ON 01-04 -1981. THE ASSESSEE FURNISHED A VALUATION REPORT DATED 09-03-2 007 OF SHRI K. L.KATARE, REGISTERED VALUER. FROM THE VALUATION REPORT FURNIS HED BY THE ASSESSEE THE ASSESSING OFFICER NOTED THAT THE VALUER HAS ADOPTED THE FAIR MARKET VALUE AT RS.10/- PER SQ.FT AS ON 01-04-1981. THE ONLY SALE INSTANCE QUOTED BY THE VALUE R IS THAT OF SIDDHAJIN COOPERATIVE HOUSING SOCIETY. HE OBSERVED THAT THE TOTAL LAND PURCHASED BY THE ASSESSEE IS 31,872.5 SQ.FT. FOR RS.44,6 21.50 IN 1974. CONSIDERING INCLUSION OF ASSESSEES LAND IN TP SCHEME AND OTHER DEVELOPMENTS AND SURROUNDING AREA THE VALUER HAS ESTIMATED THE FAIR MARKET VALUE OF ASSESSEES LAND AS ON 01-04-1981 AT RS.10/-PER SQ.FT. SINCE THE REGISTERED VALU ER HAS QUOTED INCOMPLETE SALE INSTANCE OF 1974 WITHOUT MENTIONING SURVEY NUMBER, PRICE OF THE PROPERTY, REGISTRATION NUMBER OF TRAN SACTION ETC. SAID TO HAVE BEEN PURCHASED FROM SIDDHAJIN COOPERATIVE HOUS ING SOCIETY THE ASSESSING OFFICER HELD THAT THE VALUE ADOPTED BY THE REGISTERED VALUER IS QUESTIONABLE. HE, THEREFORE, REFERRED T HE MATTER TO THE ASSISTANT VALUATION OFFICER OF THE I.T. DEPARTMENT FO R ASCERTAINING THE FAIR MARKET VALUE AS ON 01-04-1981 OF T HE 3 ITA NO.42/PUN/2015 IMMOVABLE PROPERTY BEARING NO.501/1, PLOT NO.74-146, NEAR V ASANT VIHAR, PUNE ROAD, SOLAPUR. THE VALUER VIDE HIS VALUATION R EPORT DATED 29-08-2011 DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04-1981 AT RS.3,99,000/-. THE ASSESSING OFFICER ACCORDINGLY CONFRONTED THE SAME TO THE ASSESSEE. AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE TO SUCH VALUATION REPORT THE ASSESSING OFFICER ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY AT R S.3,99,000/- AS ON 01-04-1981 AS AGAINST RS.14,50,000/- SHOWN BY THE ASSESSEE AND ACCORDINGLY DETERMINED THE LONG TERM CAPITAL GAIN. 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE REFERENCE MA DE BY THE ASSESSING OFFICER TO THE VALUATION OFFICER U/S.55A OF THE I.T. ACT. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT IF THE VALU E ADOPTED BY THE ASSESSEE EXCEEDS THE FAIR MARKET VALUE THE ASSE SSING OFFICER CANNOT MAKE A REFERENCE TO THE VALUATION OFFICER TO RED UCE THE VALUATION AND THE SAME IS OUT OF THE SCOPE OF SECTION 55 A. IT WAS ARGUED THAT BY THE FINANCE ACT, 2012 AN AMENDMENT HAS BEEN MADE W.E.F. 01-07-2012 WHEREIN IN SECTION 55A(A) THE WORDS IS LESS THAN ITS FAIR MARKET VALUE HAS BEEN SUBSTITUTED BY THE WORD S IS AT VARIANCE WITH ITS FAIR MARKET VALUE. IT WAS ARGUED THA T THIS AMENDMENT HAS BEEN BROUGHT WITH PROSPECTIVE EFFECT AND IT CLEARLY SUGGESTS THAT EARLIER THE SECTION WAS REFERRING TO CASE S OF VALUE LESS THAN FAIR MARKET VALUE AND NOT THOSE CASES WHERE VALUE IS MORE THAN FAIR MARKET VALUE. IT WAS ACCORDINGLY ARGUED THAT THE A CTION OF THE ASSESSING OFFICER IN MAKING A REFERENCE TO THE VALUATION OFFIC ER FOR DETERMINING THE VALUE AS ON 01-04-1981 IS BEYOND THE SC OPE OF THE SECTION AND THEREFORE NEEDS TO BE QUASHED. 4 ITA NO.42/PUN/2015 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DOULAL MOHTA (HUF) REPORTED IN 360 ITR 680 THE LD.CIT(A) HELD THAT SINCE THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE IS M ORE THAN THE ACTUAL FAIR MARKET VALUE THE ASSESSING OFFICER WAS NOT JUST IFIED IN REFERRING THE MATTER TO THE VALUATION OFFICER. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD.CIT(A)-III, PUNE CONTRARY T O LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A)-III, PUNE GROSSLY ERRED IN APPRECIAT ING THE PROVISIONS OF SECTION 55A(B)(II) OF THE I.T. ACT, 1961 UNDER WHICH THE AO HAS RIGHTLY REFERRED THE ASSET FOR VALUATION TO DEPART MENT AVO. 3. THE LD.CIT(A)-III, PUNE HAS ERRED IN APPRECIATING THE FACT THAT THE REFERENCE MADE BY THE AO TO THE AVO TO DETERMINE TH E FMV AS ON 01-04- 1981 AFTER RECORDING VALID REASONS U/S.55A(B)(II) OF T HE ACT AND NOT U/S.55A(A) AS STATED BY THE ASSESSEE. 4. THE LD.CIT(A)-III, PUNE HAS GROSSLY IN APPRECIATING THE PROVISIONS OF SECTION 55A(B)(II) WHICH ALLOWS AO TO REFER THE ISSU E OF DETERMINING THE FMV OF THE ASSET AS ON 01-04-1981 IF HAVING REGAR D TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IF IS NECESSAR Y TO SO AS MENTIONED IN THE PROVISO. 5. FOR THE FACTS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF LD.CIT(A)-I, PUNE MAY BE V ACATED AND THAT OF THE AO BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPE LLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE AS SESSEE IN THE INSTANT CASE WHILE COMPUTING ITS CAPITAL GAIN HAS CONSIDERE D THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04-1981 AT RS.14 ,50,000/-. TO SUPPORT THE SAID VALUATION THE ASSESSEE HAS ALSO FILED THE VALUATION REPORT OF A REGISTERED VALUER. SINCE ACCORDING TO THE ASS ESSING OFFICER 5 ITA NO.42/PUN/2015 THE VALUER HAS ADOPTED THE FAIR MARKET VALUE AT RS.10/- PER SQ.FT. AS ON 01-04-1981 ON THE BASIS OF ONLY ONE SALE INSTANCE OF THAT OF SIDDHAJIN COOPERATIVE HOUSING SOCIETY WHICH IS AN INCOMPLETE SALE INSTANCE, THEREFORE, THE SAME ACCORDING TO HIM WAS QUESTIONABLE. HE, THEREFORE, REFERRED THE MATTER TO THE ASSISTANT VALUATION OFFICER OF THE INCOME TAX DEPARTMENT FOR ASCERTAINING THE FAIR MARKET V ALUE AS ON 01-04-1981 WHO DETERMINED THE FAIR MARKET OF THE PROPER TY AT RS.3,99,000/- AS ON 01-04-1981. THE ASSESSING OFFICER ACCO RDINGLY DETERMINED THE LONG TERM CAPITAL GAIN ON THE SALE OF THE P ROPERTY. WE FIND WHEN THE ASSESSEE CHALLENGED THE VALIDITY OF THE REFERE NCE MADE BY THE ASSESSING OFFICER TO THE VALUATION OFFICER OF THE DEP ARTMENT, THE LD.CIT(A), FOLLOWING VARIOUS DECISIONS INCLUDING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DOULAL MOHTA (HU F) ACCEPTED THE CONTENTION OF THE ASSESSEE HOLDING THAT TH E ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING A REFERENCE U/S.55A OF T HE ACT TO THE DVO FOR DETERMINATION OF THE FAIR MARKET VALUE OF THE P ROPERTY WHEN THE VALUE ADOPTED BY THE ASSESSEE IS MORE THAN THE FAIR MARKET VALUE. 8. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A) ON T HIS ISSUE SINCE THE ISSUE SQUARELY STANDS DECIDED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DOULAL MOHTA (HUF ) REPORTED IN 360 ITR 680 WHEREIN IT HAS BEEN HELD THAT R EFERENCE TO THE DEPARTMENTAL VALUATION OFFICER CAN ONLY BE MADE IN CAS ES WHERE THE VALUE OF THE CAPITAL ASSET SHOWN BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE AS ON 01-04-1981. WHERE THE VALUE OF T HE CAPITAL ASSET SHOWN BY THE ASSESSEE ON THE BASIS OF THE APPRO VED VALUERS 6 ITA NO.42/PUN/2015 REPORT WAS MORE THAN ITS FAIR MARKET VALUE, REFERENCE U/ S.55A OF THE ACT, 1961 WAS NOT VALID. 9. WE FIND FOLLOWING THE ABOVE DECISION THE HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. PUJA PRINTS REPORTED IN 36 0 ITR 697 HAS HELD AS UNDER : REGARDING QUESTIONS (A) AND (B):- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND TH AT THE IMPUGNED ORDER DATED 18 FEBRUARY, 2011 ALLOWING THE RESPONDENT- ASSESSEE'S APPEAL HOLDING THAT NO REFERENCE TO THE DEPA RTMENTAL VALUATION OFFICER CAN BE MADE UNDER SECTION 55A OF THE ACT, ONLY FOLLOWS THE DECISION OF THIS COURT IN THE MATTER OF DAULAL MO HTA HUF (SUPRA). THE REVENUE HAS NOT BEEN ABLE TO POINT OUT HOW THE AFORE SAID DECISION IS INAPPLICABLE TO THE PRESENT FACTS NOR HAS THE REVENU E POINTED OUT THAT THE DECISION IN DAULAL MOHTA HUF (SUPRA) HAS NOT BEEN ACCE PTED BY THE REVENUE. ON THE AFORESAID GROUND ALONE, THIS APPEAL N EED 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 MADE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY TH E ASSESSEE WAS LESS THEN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT I S AN UNDISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESPONDENT-ASSE SSEE 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 V ALUATION OFFICER. IN FACT, THE ASSESSING OFFICER REFERRED THE ISSUE OF VALU ATION TO THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VI EW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT-ASSESSEE WAS HIGHER THEN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMST ANCES, THE INVOCATION OF SECTION 55A(A) OF THE ACT IS NOT JUSTIFIED. 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF TH E AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WOR DS 'IS LESS THEN THE FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS ' 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GIV EN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM 1 JULY 2012. THE PARLIA MENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, TH E LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EX ISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTA L VALUATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPI NION OF ASSESSING OFFICER LESS THAN ITS FAIR MARKET VALUE. 9. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFFICER IS SUSTAINABLE IN VIEW OF SECTION 55A(A) (II) OF THE ACT IS NOT ACCEPT ABLE. THIS IS FOR THE REASON THAT SECTION 55A(B)OF THE ACT VERY CLEARLY STA TES THAT IT WOULD 7 ITA NO.42/PUN/2015 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 CAN NOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF TH E ACT. IN VIEW OF THE ABOVE, THE CBDT CIRCULAR DATED 25 NOVEMBER 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 REVEN UE AS FOUND IN CIRCULAR ISSUED BY THE CBDT IS NOT BINDING UPON THE ASSE SSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. 10. THE CONTENTION OF THE REVENUE THAT THE ASSESSING O FFICER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PROPE RTY TO THE DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS POW ER UNDER SECTIONS 131, 133(6) AND 142(2) OF THE ACT IS ENTIRELY BASED U PON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SUP RA). HOWEVER, THE APEX COURT IN SMT. AMIYA BALA PAUL (SUPRA) HAS REVERSE D 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 ALR EADY AVAILABLE UNDER SECTIONS 131(1), 136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPECIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER H ELD THAT WHEN A SPECIFIC PROVISION UNDER WHICH THE REFERENCE CAN BE M ADE TO THE DEPARTMENTAL VALUATION OFFICER IS AVAILABLE, THERE I S NO OCCASION FOR THE ASSESSING OFFICER TO INVOKE THE GENERAL POWERS OF ENQUIR Y. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CL EAR PROVISIONS OF LAW AS EXISTING DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2 006-07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) DO NOT RAISE A NY SUBSTANTIAL QUESTION OF LAW. 10. SINCE THE ASSESSMENT YEAR INVOLVED IN A.Y. 2007-08 AN D SINCE THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF A VA LUERS REPORT IS MORE THAN THE FAIR MARKET VALUE, THEREFORE, RESPECTFULLY FO LLOWING THE BINDING DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF PUJA PRINTS (SUPRA) WE UPHOLD THE ORDER OF THE CIT(A) ON THIS IS SUE. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28-12-2016. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; ! DATED : 28 TH DECEMBER, 2016. 8 ITA NO.42/PUN/2015 ' (*+ ,+/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-III, PUNE 4. THE CIT- IV, PUNE 5. # &&' , ' , / DR, ITAT, A PUNE; 6. * / GUARD FILE. / BY ORDER, // # & //TRUE COPY // ,- & ' / SR. PRIVATE SECRETARY ' , / ITAT, PUNE