KIRIT P THAKKER, MUMBAI V. ITO 14(3)(4), MUMBAI

ITA 5892/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 26-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARESH VAKHARIA
• Keywords: Value adopted by valuation officer; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 54; 154

Judgement Text

1 SHRI KIRIT P THAKKER IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI VIJAY PAL RAO, JM ITA NO. 5892/MUM/2010 (ASST YEAR 2004-05 ) SHRI KIRIT P THAKKER 124 MANGALDAS MARKET 1 ST LANE, KALBADEVI ROAD\MUMBAI 400 002 VS THE INCOME TAX OFFICER WARD 14(3)(4), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AANPT5674L ASSESSEE BY SHRI PARESH VAKHARIA REVENUE BY SHRI V V SHASTRI DT.OF HEARING 20 TH OCT 2011 DT OF PRONOUNCEMENT 28 TH , OCT 2011 PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3.5.2010 OF THE CIT(A) ARISING FROM THE ORDER PASSE D U/S 154 OF THE I T ACT FOR THE AY 2004-05. 2 THE ASSESSEE HAS RAISED VARIOUS GROUND IN THIS AP PEAL; HOWEVER, THE ONLY ISSUE ARISES FROM THE GROUND RAISED BY THE ASS ESSEE IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ORDER PASSED U/S 154 BY THE ASSESSING OFFICER ON T HE ISSUE OF FARE MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 BY CONSIDERING THE VALUATION REPORT OF BY THE DISTRICT VALUATION OFFICER (DVO). 2 SHRI KIRIT P THAKKER 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D VIDE LETTER DATED 18.10.2011 AS UNDER: THE LEARNED CIT (A) FAILED TO APPRECIATE THAT IN THE GIVEN FACTS OF THE CASE, THE ASSESSING OFFICER HAD NO POWER OR JURISDICTION TO R EFER THE VALUATION OF THE CAPITAL ASSET TO THE DEPARTMENT VALUATION OFFICER W ITHOUT SATISFYING THE BASIC CONDITION PURSUANT TO SECTION 55A (1) OF THE ACT TH AT NO SUCH REFERENCE CAN BE MADE UNLESS HE HAS RECORDED THE SATISFACTION THAT T HE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE (IN ACCORDANCE WITH THE EST IMATE MADE BY THE REGISTERED VALUER) IS LESS THAN ITS FMV. 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS SUBMITTED THAT THE VALUE OF THE PROPERTY AS ON 1.4.1981 IS A HIGHL Y DEBATABLE ISSUE, WHICH CANNOT BE CONSIDERED AND ADJUDICATED U/S 154 OF THE I T ACT; THEREFORE, THE ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION. HE HAS FURTHER SUBMITTED THAT THE VALUATION REPORT DATED 18.12.2007 ON THE B ASIS ON WHICH THE IMPUGNED ORDER U/S 154 WAS PASSED WAS NOT AVAILABLE ON RECORD AT THE TIME OF COMPLETION OF THE ASSESSMENT U/S 143(3). THEREF ORE, THE SAID MATERIAL, WHICH WAS NOT AVAILABLE ON RECORD, CANNOT BE RELIED UPON FOR RECTIFICATION AS A MISTAKE APPARENT U/S 154. THE LD AR HAS FURTHER SUBMITTED THAT THE VALUATION OF THE PROPERTY BY THE DVO WAS BASED ON T HE COMPARISON WITH THE PROPERTY SITUATED IN DIFFERENT LOCALITY AND HAVING DISTINCT FEATURE THEN THE PROPERTY IN REFERENCE; THEREFORE, THE SAID VALUATIO N CANNOT BE ADOPTED AS IT DOES NOT MATCH WITH THE REAL VALUE OF THE PROPERTY IN QUESTION. 4.1 ON THE OTHER HAND, THE LD DR HAS RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT SINCE THE VALUATION OF THE DVO WAS NOT AVAILABLE BEFORE COMPLETION OF THE ASSESSMENT; THER EFORE, AFTER RECEIVING THE REPORT OF THE DVO, THE ASSESSING OFFICER HAS RECTI FIED THE MISTAKE BY TAKING 3 SHRI KIRIT P THAKKER INTO CONSIDERATION THE EXPERTS REPORT ON THE FMV OF THE PROPERTY AS ON 1.4.1981. 5 AFTER CONSIDERING THE RIVAL CONTENTION AND RELEVA NT MATERIAL ON RECORD, WE NOTE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED ON 26.12.2006 WHEREBY THE LONG TERM CAPITAL GAIN ON SALE OF 1/3 RD SHARES IN THE RESIDENTIAL PROPERTY WAS COMPUTED AT RS. 25,62,833/-. THE ASSESSING OFF ICER ALLOWED DEDUCTION U/S 54 FOR INVESTMENT IN THE RESIDENTIAL PROPERTY B Y THE ASSESSEE. THOUGH, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER REFERRED THE PROPERTY TO THE DVO FOR DETERMINING THE FMV AS ON 1 .4.1981 UNDER THE PROVISIONS OF SEC.55A; HOWEVER, THE DVO REPORT WAS NOT RECEIVED BEFORE COMPLETION OF THE ASSESSMENT. SINCE THE ASSESSMENT WAS FRAMED WITHOUT THE VALUATION REPORT OF THE DVO; THEREFORE, RETURNE D INCOME WAS ACCEPTED BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED THE DVOS REPORT WHICH HAS VALUED THE PROPERTY AS ON 1. 4.81 AT RS. 8,73,054/- 5.1 AFTER RECEIVING THE REPORT OF THE DVO, THE ASSE SSING OFFICER INVOKED THE PROVISIONS OF SEC. 154 FOR RE-COMPUTATION OF TH E LONG TERM CAPITAL GAINS ON SALE OF 1/3 RD SHARES OF THE RESIDENTIAL PROPERTY. THE INDEXATIO N COST OF THE PROPERTY AS PER THE VALUATION OF THE DVO IS RS. 40,42,240/- AS AGAINST THE INDEXED COST OF ACQUISITION ADOPTED BY THE ASSE SSEE IS AT RS.1,04,17,500/-. THE ASSESSING OFFICER ACCORDINGL Y WORKED OUT THE CAPITAL GAIN AT RS. 46,87,920/- WHILE PASSING THE ORDER U/S 154 DT 24.3.2008. 6 IT IS THUS CLEAR THAT WHILE RESORTING TO THE PROV ISIONS OF SEC. 154, THE ASSESSING OFFICER RE-DETERMINED THE ISSUE OF LONG TERM CAPITAL GAINS AND PARTICULARLY, THE FMV AS ON 1.4.1981. IT IS SETTLE D PROPOSITION OF LAW THAT A 4 SHRI KIRIT P THAKKER DECISION OF A DEBATABLE POINT OF LAW OR FACT CANNOT BE CORRECTED U/S 154 OF THE I T ACT. THE ISSUE OF DETERMINING THE FMV AS O N 1.4.81 IS HIGHLY DEBATABLE ONE AND BASED ON THE ESTIMATES. THEREFO RE, ON SUCH ISSUE, ANY DECISION IS NOT FREE FROM SUBJECTIVE CONSIDERATION. IT IS NOT THE CASE OF THE SIMPLE OVERLOOKING A PROVISION OF LAW OR CLERICAL O R CALCULATION MISTAKE IN COMPUTATION OF INCOME; BUT IT IS A POINT TO BE DECI DED BY APPLICATION OF FACT, LAW AND MIND AS WELL. THEREFORE, THE ISSUE OF FMV AS ON 1.4.81 DOES NOT FALL UNDER THE EXPRESSION MISTAKE APPARENT ON RECORD, WHICH CAN BE RECTIFIED WITHOUT THERE BEING ANY NECESSITY TO RE-WORK THE MA TTER OR TO RE-APPRAISAL THE FACTS. FURTHER, THE DVO REPORT IS SUBSEQUENT DEVELOPMENT TO THE COMPLETION OF THE ASSESSMENT U/S 143(3) AND THEREFO RE, CONSIDERING THE FRESH MATERIAL ON THE POINT OF VALUATION/FMV OF THE PROPERTY IS BEYOND THE SCOPE OF SECTION 154. UNDER SEC. 154 ONLY A MISTAK E OBVIOUS AND APPARENT ON RECORD CAN BE RECTIFIED AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A PROCESS OF LONG DRAWN REASONING ON THE POINT ON WH ICH THERE MAY CONCEIVABLY BE TWO OPINION POSSIBLE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ISSUE OF VALUATION/F MV ACCEPTED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R U/S 143(3) CANNOT BE DISTURBED AND RE-DETERMINED UNDER THE PROVISIONS OF SEC. 154, AS THE SAID ISSUE, IN OUR VIEW, IS NOT AN ERROR OR MISTAKE APPA RENT ON THE FACE OF THE ORDER, WHICH CAN BE RECTIFIED UNDER THE PROVISIONS OF SEC. 154. THE ASSESSING OFFICER HAS TRAVELLED BEYOND HIS JURISDIC TION WHILE PASSING THE ORDER U/S 154. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED U/S 154 AS WELL AS THE ORDER OF THE CIT(A) AND DELETE THE ADDITION MAD E BY THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S 154. 5 SHRI KIRIT P THAKKER 6.1 AS WE HAVE SET ASIDE THE ORDER PASSED U/S 154 F OR WANT OF JURISDICTION; THEREFORE, WE DO NOT PROPOSE TO GO INTO THE VALIDIT Y OF REFERENCE U/S 55A, WHICH IN ANY CASE SUBJECT MATTER OF ORDER U/S 143(3 ). 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 28 TH , DAY OF OCT 2011. SD/ SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 28 TH ,OCT2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI