DCIT 24(2), MUMBAI V. VIDA D LIMA, MUMBAI

ITA 5976/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3608 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Value adopted by valuation officer; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, M UMBAI .. ( ) !'# ('% ) ' & BEFORE SHRI I.P BANSAL (JM) AND SHRI RAJENDRA ( AM) ./ I.T.A. NO. 5976/MUM/2011 ( ( ) *) ( ) *) ( ) *) ( ) *) / / / / ASSESSMENT YEAR : 2008-09) DCIT 24(2) C-13, 6 TH FLOOR, PRATYAKSH KAR BHAVAN BANDRA (EAST) MUMBAI-400 051. ( ( ( ( / VS. MS. VIDA DLIMA 401, MICKEY HEIGHTS, LOURDES COLONY, MALAD (WEST) MUMBAI-400 064. + '% ./ PAN :AGKPD 4299G ( +, / // / APPELLANT) .. ( -.+, / RESPONDENT) +, / 0 ' / APPELLANT BY : SHRI OM PRAKASH MEENA -.+, / 0 ' /RESPONDENT BY : SHRI SANJIV M. SHAH ( / 1% / // / DATE OF HEARING : 08/04/2013 23* / 1% /DATE OF PRONOUNCEMENT : 08/04/2013 '4 / O R D E R PER I.P. BANSAL (JM) : THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIREC TED AGAINST THE ORDER PASSED BY LEARNED CIT(A)-34,MUMBAI DATED 24.6.2011 FOR A.Y. 2008-09. GROUND OF APPEAL READS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER NOT TO RECTIFY THE ASSESSMENT ON THE BASIS OF VALUATION REPORT RECEIVED AFTER COMPLETION OF ASSES SMENT IN THIS CASE WAS ./ I.T.A. NO. 5976/MUM/2011 2 COMPLETED ON 31.12.2010 SUBJECT TO RECTIFICATION ON RECEIPT OF VALUATION REPORT FROM DVO. 2. AT THE OUTSET IT WAS BROUGHT TO OUR NOTICE BY LD. A.R THAT IN THE CASE OF CO-OWNER OF THE PROPERTY SIMILAR APPEAL WAS FILED BY THE REVENUE IN THE CASE OF MRS. EULA DSOUZA, WHICH WAS DECIDED AS PER ORDER D ATED 25/7/2012 IN ITA NO.5969/MUM/2011. IT WAS ALSO MENTIONED BY HIM TH AT DEPARTMENT HAS FILED AN APPEAL AGAINST THE SAID ORDER VIDE LETTER DATED 04/04/2013. HE HAS PRODUCED BEFORE US A COPY OF THE APPEAL FILED BY T HE REVENUE IN THAT CASE. A COPY OF THE SAID ORDER WAS ALSO GIVEN TO LD. D.R. IN THE SAID ORDER, ONE US I.E. JUDICIAL MEMBER IS A PARTY. THUS IT WAS SUBMITTED BY HIM THAT THE ISSUE IS SAME AND IT IS COVERED BY THE AFOREMENTIONED ORDER. 3. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE FIND THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORE MENTIONED ORDER. IT MAY BE MENTIONED HERE THAT SIMILAR GROUND WAS RAISED BY TH E REVENUE IN THE CASE OF MRS. EULA DSOUZA. FOR THE SAKE OF COMPLETENESS OF THE ORDER, AS ALL FACTS ARE SAME AS MENTIONED IN THE AFOREMENTIONED ORDER, WE REPRODUCE THE SAID ORDER IN ITS ENTIRETY: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRE CTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) DATED 24.6.2011 FOR A.Y. 2 006-07. GROUND OF APPEAL READS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER NOT TO REC TIFY THE ASSESSMENT ON THE BASIS OF VALUATION REPORT RECEIVED AFTER COMPLE TION OF ASSESSMENT IN THIS CASE WAS COMPLETED ON 31.12.2010 SUBJECT TO RE CTIFICATION ON RECEIPT OF VALUATION REPORT FROM DVO. 2. THE ASSESSEE OWNED 1/7 TH SHARE IN PLOT WHICH WAS SOLD DURING THE YEAR FOR A CONSIDERATION OF 26 CRORES. COST AS ON 1.4.1981 WAS TAKEN AT 4,63,17,438/- AS PER REPORT OF THE GOVERNMENT REGIS TERED VALUER. AFTER INDEXATION THE COST OF THE PROPERTY DETERMINED BY T HE ASSESSEE AT 25,52,09,083/- AND LONG TERM CAPITAL GAIN COMPUTED IN THE HANDS OF THE ASSESSEE AS HER SHARE WAS TAKEN AT 6,84,417. IN THE IMPUGNED ./ I.T.A. NO. 5976/MUM/2011 3 ASSESSMENT ORDER, WHICH IS DATED 31.12.2010, THE AS SESSING OFFICER HAS TAKEN COST AS ON 1.4.1981 OF THE ENTIRE PLOT AT 4,63,17,438/- AS PER GOVERNMENT REGISTERED VALUER REPORT SUBJECT TO REMA RKS:- THIS OFFICE HAS MADE REFERENCE TO THE DISTRICT VAL UATION OFFICER-II, MUMBAI TO ASCERTAIN THE VALUE OF THE SAID PLOT AS O N 1.4.1981 AND ALSO ON THE DATE OF SALE I.E. 3.5.2007. HENCE, THE INSTANT ASSESSMENT ORDER WOULD BE SUBJECT TO RECTIFICATION ON RECEIPT OF THE VALUATION REPORT FROM THE DISTRICT VALUATION OFFICE R, MUMBAI. SIMILAR WAS THE POSITION WITH RESPECT TO ANOTHER PL OT WHICH WAS SOLD FOR A TOTAL CONSIDERATION OF 40,04,000/-, COST OF WHICH AS ON 1.4.1981 WAS TAKE N AT 7,29,000/- AND LONG TERM CAPITAL GAIN WAS COMPUTED BY THE ASSESSEE AT 1,827/- BEING 1/7 TH OWNER AND THE COST OF THE SAID PLOT HAS ALSO BEEN TAKEN BY THE ASSESSING OFFICER WITH SIMILAR REMARKS. 3. AFOREMENTIONED ACTION OF THE ASSESSING OFFICER W AS CHALLENGED IN AN APPEAL FILED BEFORE LEARNED CIT(A). IT WAS PLEADED THAT SINCE VALUATION FROM VALUATION OFFICER WAS NOT RECEIVED UP TO 31.12.2010 (DATE OF THE ASSESSMENT ORDER), REFERENCE HAD BECOME INVALID. REFERENCE WAS MADE TO SEVERAL DECISIONS INCLUDING THIRD MEMBER DECISION OF ITAT IN THE CASE OF RUBAB KAZERANI VS. DCIT (91 ITD 492). LEARNED CIT(A) AFTER CONSIDERING THES E SUBMISSIONS OF THE ASSESSEE HAS CONCLUDED THAT REFERENCE BY THE ASSESSING OFFIC ER TO THE DVO WAS WITHOUT JURISDICTION AND IS CANCELLED IN THE FACTS AND CIRC UMSTANCES OF THE CASE. HE HELD THAT THE ASSESSING OFFICER CANNOT TAKE COGNIZANCE O F SUCH REPORT FROM THE DVO EVEN IF THE SAME IS RECEIVED LATER ON. HE DIRECTED THE ASSESSING OFFICER TO COMPUTE CAPITAL GAIN BY ACCEPTING DISCLOSED VALUE A S ON 1.4.1981 BASED ON THE REGISTERED VALUERS REPORT AND TO PROVIDE BENEFIT O F INDEXATION THEREON. IT IS AGAINST THESE FINDINGS OF LEARNED CIT(A), THE DEPAR TMENT HAS RAISED AFOREMENTIONED GROUNDS. 4. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ASSESSMENT ORDER AND PLEADED THAT THE ASSESSING OFFICER WAS RIGHT IN OBSERVING THAT THE COMPUTATION OF LONG TERM CAPITAL GAIN WILL BE SUBJE CTED TO VALUATION TO BE RECEIVED FROM VALUATION OFFICER. HE THEREFORE PLEADED THAT T HE ORDER OF LEARNED CIT(A) SHOULD BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5. ON THE OTHER HAND, LEARNED AR RELIED UPON THE DE CISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RALLIS INDIA LTD. VS. DCI T (284 ITR 159), WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER CANNOT REFER T HE VALUATION OF THE PROPERTY U/S. 55A TO THE VALUATION OFFICER AFTER HE HAS ALRE ADY ASSESSED THE INCOME OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER. LEARNED AR FURTHER SUBMITTED THAT BASED ON THE SAID DECISION THE COORDINATE BENCH OF THE MUMBAI ITAT VIDE ITS ORDER DATED 5.6.2009 IN THE CASE OF ITO VS. HIRENDR A KUMAR B. RUIA INDIA SAFETY VAULTS LTD. (ITA NO. 6474/MUM/07) HAS HELD SIMILAR PROPOSITION AND HE DREW OUR ATTENTION TOWARDS PARAGARAPH 5 TO 8 WHICH READ S AS UNDER :- ./ I.T.A. NO. 5976/MUM/2011 4 5 AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT THE GROUND OF THE DEPARTMENT I S LIABLE TO BE DISMISSED. IT IS SEEN THAT DURING THE ASSESSMENT PR OCEEDINGS, TO ASCERTAIN THE CORRECT VALUATION, THE MATTER WAS REFERRED TO T HE DEPARTMENTAL VALUER (DVO). THEREAFTER, THE DVO HAS VISITED THE PROPERTY AND A LETTER WAS WRITTEN TO THE ASSESSEE IN THIS RESPECT THAT HE HAS VISITED THE PROPERTY ALONG WITH SHRI SHRI SHISHPAL SINGH, JE ON 6.11.20 06. IT HAS BEEN MENTIONED IN THE PRELIMINARY REPORT THAT HE HAS P ERUSED THE RELEVANT DOCUMENTS AND HAVING CONSIDERED THE RELEVANT CIRCUM STANCES OF THE CASE, I PROPOSE TO ESTIMATE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS. 10,34,700/-. ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO FILE HIS OBJECTION IN WRITING ON OR BEFORE 12.1.2007 ALONG W ITH ANY DOCUMENTARY EVIDENCE ON WHICH THE ASSESSEE MAY WISH TO RELY IN SUPPORT OF ITS OBJECTION. 5.1 IT IS SEEN THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED ON 29.12.2006. FROM THESE FACTS, IT IS CLEARLY ESTABLI SHED THAT THERE WAS NO DVO REPORT AT THE TIME OF COMPLETION OF THE ASSESSM ENT. THE AO HAS ADOPTED THE ESTIMATED VALUE MENTIONED IN THE NOTICE ISSUED BY THE DVO. ON THE BASIS OF THE NOTICE ISSUED TO THE ASSESSEE O R ON THE BASIS OF ESTIMATED VALUE MENTIONED IN THE PRELIMINARY REPORT OF THE DVO IN OUR VIEW ACTION OF THE AO WAS NOT CORRECT. THE ESTIMATE D VALUE MENTIONED IN THE PRELIMINARY REPORT SENT TO THE ASSESSEE FOR FIL ING HIS OBJECTION, CANNOT BE TREATED AS PROPER VALUATION REPORT. AS PER THE L ETTER OF THE DVO DATED 26.12.2006, THE ASSESSEE WAS REQUIRED TO FILE ITS O BJECTION ON OR BEFORE 12.1.2007. THE CONTENTS OF THE LETTER OF THE DVO AR E VERY CLEAR. 5.2 WE HAVE FURTHER SEEN THAT EVEN THE AO HAS ACCEP TED THIS FACT AS THE AO WROTE A LETTER DATED 27.12.2006 WHEREBY IT H AS BEEN MENTIONED THAT THE ASSESSEES VALUER HAS DETERMINED THE FMV AS ON 1.4.81 AT RS. 49,56,350/-. IN THIS LETTER, IT IS MENTIONED BY THE AO YOUR ATTENTION IS DRAWN TO THE DVO-II, VALUATION CELL, UNIT II, MUMB AIS LETTER DATED 26.12.2006 STATING THAT AS PER THE DVOS REPORT, I HEREBY, ESTIMATE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1982 AT RS. 10,34,700/-. THE ASSESSEE FILED ITS REPLY IN RESPONSE TO LETTER DATE D 27.12.2006 ON 28.12.2006. IN THIS REPLY, IT HAS BEEN MENTIONED TH AT THE DVO HAS NOT YET PASSED ANY ORDER U/S 55A OF THE ACT R.W.S 16A(5) OF THE WEALTH TAX ACT AS THE DVO HAS GIVEN TIME TO THE ASSESSEE TO FILE ITS OBJECTION ON OR BEFORE 12.1.2007. IN THIS LETTER IT HAS BEEN MENTIONED BY THE ASSESSEE THAT HE WILL CONSULT HIS VALUATION OFFICER. IN PARA 6, IT I S FURTHER MENTIONED THAT THIS, NOT BEING A FINAL VALUATION REPORT, I OBJECT TO YOUR ADOPTION OF VALUATION OF RS. 10,34,700/- BASED ON DRAFT/PRELIMI NARY VALUATION AND WHICH IS CONTRARY TO THE PROVISIONS OF INCOME TAX A CT, 1961. COPY OF THIS LETTER IS PLACED AT PAGE 55 OF THE PAPER. COPY OF T HE LETTER WRITTEN BY THE AO TO THE ASSESSEE ON 27.12.2006 IS PLACED AT PAG E 47 OF THE PAPER BOOK AND THE COPY OF THE LETTER/PRELIMINARY REPORT OF TH E DVO IS PLACED AT PAGE 48 OF THE PAPER BOOK. 5.3 FROM THESE, IT IS CLEARLY ESTABLISHED THAT THER E WAS NO VALUATION REPORT OF THE DVO ON THE DATE OF ASSESSMENT ORDER I .E. 29.12.2006. THEREFORE, THE VALUATION ADOPTED BY THE AO, IN OUR CONSIDERED VIEW WAS ./ I.T.A. NO. 5976/MUM/2011 5 NOT CORRECT. THE ASSESSEE HAS NOT ALLOWED ANY OPPO RTUNITY. THIS WAS MERELY A PRELIMINARY REPORT PREPARED BY THE DVO. TH ERE WAS A VALID REPORT OF THE REGISTERED VALUER WHICH WAS FILED BEF ORE THE AO. COPY OF THE SAME WAS ALSO GIVEN TO THE DVO AND THEREAFTER, THE OBJECTIONS WERE TO BE FILED BEFORE THE DVO. THE DATE FOR FILING OBJECTION WAS GIVEN ON 12.1.2007. 5.4 KEEPING ALL THESE FACTS IN MIND, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS NO BASIS OF THE VALUATION OF RS. 10,34,70 0/-. 6 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF RE LIANCE JUTE AND INDUSTRIES LTD IN 150 ITR 643, HAS HELD THAT; WHERE A REFERENCE UNDER SECTION 55A OF THE I T AC T, 1961 FOR VALUATION OF A PROPERTY IS MADE BY THE ITO TO THE V ALUATION OFFICER WHEN THE ASSESSMENT IS STILL PENDING, BUT PRIOR TO THE RECEIPT OF THE VALUATION REPORT, THE ASSESSMENT IS COMPLETED BY TH E ITO, THE REFERENCE WOULD BECOME INVALID BECAUSE THE PURPOSE FOR WHICH A VALUATION REPORT CAN BE UTILISED, NAMELY, FOR COMPL ETION OF THE ASSESSMENT IN CONFORMITY WITH THE VALUATION REPORT, IS NO LONGER EXISTENT, THE ASSESSMENT HAVING BEEN COMPLETED IN T HE MEANTIME. 7 SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF RALLIS INDIA LTD IN 284 ITR159 (BOM). IN THIS CASE, THE HONBLE HIGH COURT HAS OBSERVED THAT THE AO IN THE ASSESSMENT ORDER APPLIED THE FORMULA FOR VALUATION OF THE PROPERTY O F THE ASSESSEE AS ON 1.1.81 BY DIVIDING THE VALUE AT WHICH THE PROPERTY WAS SOLD BY 7.5. ACCORDING TO HIM, THE VALUE OF THE PROPERTY AS ON 1 .1.81 WAS 7.5 TIMES LESS THAN THE VALUE AT WHICH IT WAS SOLD. AFTER HAV ING PASSED THE ASSESSMENT ORDER, HE SOUGHT VALUATION OF THE PROPER TY AND ISSUED NOTICE U/S 55A. ON A WRIT PETITION, THE HONBLE HIGH COURT ALLOWED THE PETITION BY HOLDING THAT NOTICE ISSUED ON 19.4.2005 WAS BAD IN LAW AND THE SAME WAS QUASHED. 7.1 THE RATIO OF THE DECISION OF THE HONBLE CALCUT TA HIGH COURT AND THE HONBLE BOMBAY HIGH COURT IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, REFERENCE WAS M ADE TO THE DVO. HOWEVER, NO VALUATION REPORT WAS RECEIVED BUT THE A SSESSMENT WAS COMPLETED. IN VIEW OF THE DECISION OF THE HONBLE C ALCUTTA HIGH COURT, REFERENCE TO THE DVO HAS BECOME INVALID AS THE AO H AS ADOPTED THE VALUE WITHOUT HAVING THE REPORT. 7.2 THE RATIO OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT HAS ALSO APPLICABLE FOR THE REASON THAT THE NOTICE FOR REFERENCE WAS SENT AFTER COMPLETION OF THE ASSESSMENT AND THE HONBLE HIGH C OURT HAS HELD THAT REFERENCE AFTER COMPLETION OF ASSESSMENT WAS INVALI D BY THE SAME AUTHORITY. AS IN THE PRESENT CASE, THE REFERENCE WA S MADE BY THE AO BUT NO REPORT WAS RECEIVED FROM THE DVO AND THE ASSESSM ENT WAS COMPLETED. THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE B OMBAY HIGH COURT ALSO, THE REFERENCE BECOMES INVALID. ./ I.T.A. NO. 5976/MUM/2011 6 8 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT REFERENCE MADE BY THE AO TO THE DVO WAS INVALID AND ACCORDING LY, THE VALUE SHOWN BY THE ASSESSEE ON THE BASIS OF THE REGISTERED VALU ERS REPORT HAS TO BE ACCEPTED, THEREFORE, THE GROUND OF THE DEPARTMENT I S DISMISSED. 6. WE HAVE HEARD BOTH PARTIES ON THIS ISSUE. AFTER CONSIDERING THEIR SUBMISSIONS, FACTS OF THE CASE AS WELL AS AFOREMENT IONED TWO DECISIONS, WE ARE OF THE OPINION THAT LEARNED CIT(A) HAS RIGHTLY HELD THAT THE ASSESSING OFFICER CANNOT TAKE ANY COGNIZANCE OF REPORT RECEIVED FROM THE DVO AFTER PASSING THE ASSESSMENT ORDER AND LONG TERM CAPITAL GAIN WAS TO BE COMPUTED BY ACCEPTING DISCLOSED VALUE AS ON 1.4.1981 BASED ON REGISTERED VALUERS REPORT. THEREFORE, WE CONFIRM THE FINDINGS RECORDED BY LEARNED CIT(A) AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.7.2012. FOLLOWING THE AFOREMENTIONED ORDER, AFTER HEARING B OTH THE PARTIES WE DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH DAY OF APRIL,2013 SD/- SD/- ( !'# /RAJENDRA) ( .. /I.P.BANSAL) '% /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; H( DATED 08/04/2013 '4 / -1IJ K'J*1 '4 / -1IJ K'J*1 '4 / -1IJ K'J*1 '4 / -1IJ K'J*1/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT (2) -.+, / THE RESPONDENT 3 L () / THE CIT(A)- (4) L / CIT 5. J MN -1( , , / DR, ITAT, MUMBAI 6 NO) P / GUARD FILE. '4( '4( '4( '4( / BY ORDER, .J1 -1 //TRUE COPY// Q QQ Q/ // /R R R R ! ! ! ! (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI VM