RASHMIKANT BAXMI (HUF), MUMBAI V. CIT 30, MUMBAI

ITA 6871/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3119 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Assessee Lawyers: NILESH PAREKH
• Keywords: Value adopted by valuation officer; Capital asset; Question of law; Fair market value; Valuation report
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER. ITA. NOS. 3711 & 6871/MUM/2012 (ASSESSMENT YEAR:2008-09) RASHMIKANT BAXI (HUF), 9-B, HILL TOP APARTMENTS, 49 PALI HILL, BANDRA (WEST), MUMBAI 400 050 APPELLANT VS. ITO 19(3)(2), MUMBAI RESPONDENT PAN: AAEHR0044K / BY ASSESSEE : SHRI ANUJ KISNADWALA & SHRI NILESH PAREKH, A.R. / BY REVENUE : SHRI CHANDRA VIJAY, D.R. /DATE OF HEARING : 23.09.2015 /DATE OF PRONOUNCEMENT : 30.09.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THE APPEALS IN QUANTUM AND PENALTY ARE ARISING OUT FROM THE RESPECTIVE ORDERS OF COMMISSIONER OF INCOM E-TAX ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 2 (APPEALS)-30, MUMBAI, DATED 27.03.2012 & 24.09.2012 RESPECTIVELY FOR A.Y. 2008-09. SO, THEY ARE BEING DISPOSED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.3711/MUM/2012, ASSESSEE HAS FILED APPE AL ON FOLLOWING GROUNDS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-30, MU MBAI , ERRED IN I. UPHOLDING THE VALIDITY OF REFERENCE MADE TO THE DEPARTMENTAL VALUATION OFFICER UNDER SECTION 55A OF THE INCOME-TAX ACT, 1961; II. NOT FOLLOWING THE DECISION OF JURISDICTIONAL HI GH COURT IN THE ABSENCE OF ANY OTHER CONTRARY HIGH COURT DECISION ON THE MATTER UNDER CONSIDERATION; III. UPHOLDING THE AO'S REJECTION OF VALUATION REPO RT AS ON 1 APRIL 1981 OBTAINED BY THE APPELLANT FROM GOVERNMENT APPROVED REGISTERED VALUER VALUING THE LAND AT RS.22,46,250/-. IV. ADOPTING THE FAIR MARKET VALUE OF LAND AT R.4,94,600 AS ON 1 APRIL 1981 BASED ON THE ESTIMATE MADE BY DEPARTMENTAL VALUATION OFFICER VIDE ORDER PASSED UNDER SECTION 55A OF THE INCOME-TAX ACT, 1961 R.W.S. 16A(5) OF THE WEALTH TAX ACT, 1957 AND ENHANCING THE LONG TERM CAPITAL GAIN BY RS.28,60,863/-; V. NOT CONSIDERING THE ALTERNATIVE PRAYER OF THE APPELLANT CHALLENGING THE VALUATION REPORT OF DEPARTMENTAL VALUATION OFFICER ON MERITS. 3. IN ITA NO.6871/MUM/2012, ASSESSEE HAS FILED APPE AL ON FOLLOWING GROUNDS: ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-30, MU MBAI , ERRED IN I. LEVYING PENALTY OF RS.6,48,272 UNDER SECTION 271 (1)(C) READ WITH EXPLANATION 1 THERETO OF THE INCOME-TAX A CT, 1961 FOR FURNISHING INACCURATE PARTICULARS OF INCOM E; II. LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961 FOR ADDITION OF INCOME ON ACCOUNT OF DIFFERENCE IN VALUATION OF CAPITAL ASSET AS ON 1 AP RIL 1981 BY TWO EXPERT VALUERS. 4. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS A RESIDENT INDIVIDUAL AND DURING THE YEAR HAS SHOWN I NCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. DURING YEAR UNDER CONSIDERATION, ASSESSEE HAS SOLD LAND AT PREM MANDI R, KASTURBA ROAD, NEAR JAWAHAR ROAD CROSSING, RAJKOT, GUJARAT, VIDE AGREEMENT DATED 7.7.2007. THE TOTAL AREA OF LAND W AS 922.60 SQ.MTRS. AND AS PER THE VALUATION REPORT OF THE REG ISTERED VALUER THE SAME WAS VALUED AT THE RATE OF RS.2400/- PER SQ UARE METERS. AS PER COMPUTATION OF LONG TERM CAPITAL GAIN, COST OF LAND AS ON 1.4.1981 HAS BEEN VALUED AT RS.22,45,250/- AND AFTE R INDEXATION THE VALUE WAS ARRIVED AT RS.1,23,76,838/-. THE SAI D VALUATION HAS BEEN TAKEN AS PER THE VALUATION REPORT DATED 24 .09.2007 OF M/S. STAR ARCHITECTS. ASSESSING OFFICER OBSERVED T HAT SAID PROPERTY IS SITUATED AT RAJKOT, GUJARAT WHICH WAS A VERY SMALL CITY IN THE YEAR 1981 AND THE VALUATION REPORT DOES NOT APPEAR TO BE ACCEPTABLE LOOKING INTO THE STATUS OF THE PROPER TY. THEREFORE, VALUATION AS PER THE VALUATION REPORT WAS FOUND TO BE ON HIGHER SIDE. THIS BEING SO ASSESSING OFFICER ISSUED NOTIC E U/S.133(6) OF INCOME TAX ACT TO THE VALUER ASKING CERTAIN INFORMA TION. IN ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 4 RESPONSE TO SAME, REPLY WAS FILED BY M/S. STAR ARCH ITECTS. ON VERIFICATION OF VALUATION REPORT, ASSESSING OFFICER FOUND THAT VALUER HAS NO INSTANCE OF LAND SALE IN THE YEAR 198 1 WITH HIM. THE VALUER VALUED THE PROPERTY AT RS.2000 PER SQ.YA RD AS PER HIS PERSONAL ACQUAINTANCE. ASSESSING OFFICER OBSERVED THAT VALUER HAD NOT ADOPTED THE VALUE BY FOLLOWING ANY SCIENTIF IC METHOD. SO, HE HELD THAT VALUATION REPORT OF REGISTERED VALUE B EING OUT OF PERSONAL EXPERIENCE OF VALUER AND THEREFORE, DOES N OT STAND TO PROFESSIONAL SCRUTINY AND HENCE THIS COULD NOT BE R ELIED UPON. IN VIEW OF ABOVE, MATTER WAS REFERRED TO DVO, MUMBAI U/ S.55A(B)(II) OF THE INCOME TAX ACT. HOWEVER, TILL DATE OF PASSI NG OF ASSESSMENT ORDER NO REPORT WAS RECEIVED FROM DVO. THEREFORE, ASSESSING OFFICER ESTIMATED THE VALUE AS ON 1.4.198 1. REGISTERED VALUER VALUED THE PROPERTY AT RS.2000 PER SQ.YARD. ASSESSING OFFICER NOTED THAT IT WAS DIFFICULT TO BELIEVE LAND VALUED AT RS.22,46,250/-, HAS INCREASED BY 5.5 TIMES IN THE Y EAR OF SALE I.E. 2007. THEREFORE, ASSUMING THAT LAND PRICES HAS GON E UP 10 TIMES IN SPAN OF 25 YEARS THE COST AS ON 1.4.1981 I S RECALCULATED AS UNDER: COST ON 7.07.2007 RS.1,27,00,000 ASSUMING THAT COST AS ON 1.4.1981 WAS 10 TIMES LOWER 1/10 OF 1,27,00,000 = RS.12,70,000 THUS, ASSESSING OFFICER ADOPTED THE COST AS ON 1.4. 1981 AT RS.12,70,000/- AND AFTER ALLOWING INDEXATION THE SA ME WAS WORKED OUT AT RS.69,97,700/-. THUS, AGAINST NIL CA PITAL GAIN SHOWN BY ASSESSEE, ASSESSING OFFICER WORKED OUT LON G TERM ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 5 CAPITAL GAIN AT RS.57,02,300/- BEFORE ALLOWING EXEM PTION U/S.54 OF INCOME TAX ACT. AFTER ALLOWING EXEMPTION U/S.54 TAXABLE INCOME WAS ARRIVED AT RS.55,13,900/-. THE VALUATION REPORT OF DVO, RAJKOT WAS RECEIVED ON 13.04.2011 VI DE LETTER DATED 08.04.2011. AS PER VALUATION REPORT OF DVO, FAIR MARKET VALUE OF SAID PROPERTY WAS VALUED AT RS.4,94,600/- AS ON 1.4.1981 AS AGAINST THE CLAIM OF ASSESSEE OF RS.22, 45,250/-. THE VALUATION OFFICERS COMMENTS ON THE REGISTERED VALUERS REPORT AS UNDER: THE REGISTERED VALUER HAS ADOPTED LAND RATE OF RS. 2400/- PER SQM. ADOPTED BY THE REGISTERED VALUER IS VERY V ERY HIGH AND TOTALLY UNREALISTIC WITHOUT ANY BASE AND CANNOT BE RELIED UPON. IN VIEW OF ABOVE, SINCE FAIR MARKET VALUE AS PER VA LUATION REPORT DATED 8.4.2011 OF DVO AT RS.4,94,600/- WHICH WAS FA R LOWER THAN THE VALUE ESTIMATED AT RS.12,70,000/- BY ASSES SING OFFICER IN ORDER PASSED U/S.143(3) DATED 28.12.2010 LONG TERM CAPITAL GAIN NEEDED TO BE RECALCULATED AND TO BE EN HANCED. THIS BEING SO ACCORDINGLY SHOW CAUSE NOTICE WAS ISS UED TO ASSESSEE ASKING TO SHOW CAUSE AS TO WHY INCOME OF A SSESSEE SHOULD NOT BE ENHANCED BY RS.28,60,863/-. SHOW CAU SE READS AS UNDER: IN YOUR CASE ASSESSMENT WAS COMPLETED U/S 143(3) O F THE I. TACT, ON 28/12/2010. DURING THE YEAR UNDER CONSIDER ATION, LAND AT PREM MANDIR, KASTURBA ROAD, NR. JAWAHAR ROA D CROSSING, RAJKOT, GUJRAT WAS SOLD VIDE AGREEMENT DA TED 07/07/2007 AND THE TOTAL AREA OF THE LAND IS 922.60 SQ.MTRS AND RATE AS VALUED AS PER THE VALUATION REPORT IS R S. 2,400/- PER SQ.MTR. AS PER THE COMPUTATION OF LONE TERM CA PITAL GAIN THE COST OF LAND AS ON 01/04/1981 HAS BEEN VAL UED AT ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 6 RS. 22,45,250/- AND AFTER INDEXATION THE VALUE IS A LL ARRIVED AT RS. 1,23,76,838/-. THE SAID VALUATION HAS BEEN TAKEN AS PER THE VALUATION REPORT DATED 24/09/2007 BY M/S ST AR ARCHITECTS. THE VALUATION REPORT HAS BEEN KEENLY PER USED. ON VERIFICATION, IT WAS FOUND THAT THE VALUE HAD NO INSTANCE OF LAND SALE IN THE YEAR 1981, AVAILABLE WITH HIM. IT IS ALSO SEEN THAT THE VALUE HAS NOT BEEN ADOPTED BY THE VAL UER ON SCIENTIFIC BASIS. HE HAS NOT CITED ANY COMPARABLE I NSTANCES BEFORE DERIVING THE FAIR MARKET VALUE AS ON 10/04/1 981. THIS BEING SO, THE A.O. DID NOT RELY UPON THE REPOR T OF THE REGISTERED VALUER ON THE GROUND THAT THE SAID REPOR T WAS PREPARED OUT OF PERSONAL EXPERIENCE OF THE VALUER A ND DOES NOT STAND TO PROFESSIONAL SCRUTINY. THE A. O. ALSO STATED THAT THE SAID PROPERTY WAS SITUATED AT RAJKOT, GUJR AT, WHICH WAS VERY SMALL CITY AND THE VALUATION SEEMS TO BE O N THE HIGHER SIDE. THEREFORE. REFERENCE WAS MADE TO THE DEPARTMENTAL VALUER U/S 55A OF THE I.T. ACT. SINCE T HE DEPARTMENTAL VALUER'S REPORT WAS NOT RECEIVED, TILL THE LIMITATION DATE OF ASSESSMENT, THE A. O. ESTIMATED THE VALUE AS ON 01/04/1981 AT RS. 12,70,000/-. BY ADOPTING TH E VALUE AT RS. 12,70,000/- AND INDEXING THE SAME AT RS.69,97,700/-, THE CAPITAL GAIN WAS ARRIVED AT RS.57,02,300/-, WHICH WAS SUBSEQUENTLY RECTIFIED TO RS.38,18,296/-. THEREAFTER, THE VALUER'S REPORT WAS RECEIVED FROM THE VALUATION OFFICER, I. T. DEPARTMENT, RAJKO T AND A COPY OF WHICH IS ALSO MARKED TO YOU, WHEREIN THE FA IR MARKET VALUE OF THE SAID PROPERTY AS ON 01/04/1981 IS VALU ED AT RS. 4,94,600/-. THE REVISED WORKING OF L.T.C.G. IS WORKED OUT AS UNDER :- SALE PROCEEDS OF LAND AT RAJKOT [DATE OF SALE 07.07.2007] RS.1,27,00,000/- LESS: INDEXED COST:- COST AS ON 01.04.1931 AS PER VALUATION REPORT DATED 08.04.2011 SUBMITTED BY DVO IS RS. 4,94,600/- 4,94,600X551/100 RS.27,25,2 46/- RS.27,25,246/- CAPITAL GAIN RS.99,74,754/- COMPUTATION OF EXEMPITON 54F :- RS.99,74,754/- ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 7 LONG TERM CAPITAL GAIN LESS: EXEMPTION U/S. 54F COST OF NEW ASSET/NET CONSIDERATION X CAPITAL GAIN 41,96,000 X 99,74,754/1,27,00,000=RS.32,95,595/- RS .32,95,595/- TAXABLE LONG TERM CAPITAL GAIN RS.66,79,159/- THUS, AS AGAINST THE L.T.C.G. ASSESSED AT RS.38,19, 296/- THE CORRECT L.T.C.G. IS WORKED OUT AT RS.66,79,159/ -. THEREFORE, PLEASE SHOW CAUSE AS TO WHY YOUR INCOME SHOULD NOT BE ENHANCED BY RS.28,60,863 (RS.66,79,159 RS.38,18,296). 5. IN RESPONSE TO AFORESAID SHOW CAUSE, LEARNED AUT HORIZED REPRESENTATIVE OF ASSESSEE FILED LETTER DATED 20.12 .2011. IN AFORESAID LETTER, ASSESSEE HAS CHALLENGED THE VERY VALIDITY OF REFERENCE TO DVO U/S.55A OF THE ACT. THE STAND OF ASSESSEE IS AS UNDER: 2. APPLICABILITY OF SECTION 55A OF THE ACT TO APPE LLANT'S CASE - THE ABOVE HIGH COURT DECISIONS ARE FOLLOWED BY VARI OUS TRIBUNALS WHILE DECIDING THE ISSUE OF REFERENCE TO DVO UNDER SECTION 55A OF THE ACT FOR VALUATION OF PROPE RTY AS ON 01.04.1981. ALL THE AFORESAID DECISIONS HAVE BEEN RULED IN FAVOUR OF THE ASSESSEE AND IT IS A SETTLED LEGAL POSITION THAT A REFERENCE TO DVO CAN BE MADE UNDER SECTION 55A OF THE ACT ONLY IN THE FOLLOWING TWO CA SES- A. IN A CASE WHEN THE VALUE ADOPTED BY THE ASSESSEE IS BASED ON ESTIMATE MADE BY THE REGISTERED VALUER; AN D B. IN ANY OTHER CASE, NAMELY WHEN THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY AN E STIMATE MADE BY A REGISTERED VALUER. DURING THE YEAR THE APPELLANT SOLD LAND LOCATED AT ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 8 KASTURBA ROAD, RAJKOT, GUJARAT FOR RS. 1,27,00,000 AND DERIVED LONG TERM CAPITAL GAINS(L TCG) WHICH WAS IN VESTED IN NEW RESIDENTIAL HOUSE FOR EXEMPTION UNDER SECTIO N 54F OF THE ACT. THE LAND SOLD DURING THE YEAR WAS PURCHASED PRIOR T O 1 APRIL 1981. THEREFORE THE LTCG WAS CALCULATED BY AD OPTING THE FAIR MARKET VALUE (FMV) OF LAND AS ON 1 APRIL 19 81 AS PER THE PROVISIONS OF SECTION 55(2)(B) (I) OF THE A CT. THE AFORESAID FMV IS ADOPTED AT RS. 22,46,250 BASED ON VALUATION REPORT DATED 24 SEPTEMBER 2007 OF M/S. ST AR ARCHITECTS, GOVERNMENT APPROVED REGISTERED VALUER. THE APPELLANT ADOPTED VALUE BASED ON ESTIMATE MADE BY REGISTERED VALUER AND THEREFORE THE APPELLANT'S CAS E IS COVERED BY SECTION 55A(A) OF THE ACT AND NOT OTHERW ISE. IT HAS BEEN FURTHER HELD IN THE ABOVE DECISIONS THA T FOR REJECTING THE VALUE CLAIMED BY THE APPELLANT AS ON 01.04.1981 AND MAKING REFERENCE TO DVO UNDER SECTIO N 55A(A) OF THE ACT, THE AO SHOULD FORM AN OPINION TH AT THE VALUE SO CLAIMED BY THE APPELLANT IS LESS THAN ITS FAIR MARKET VALUE. IN THE APPELLANT'S CASE THE VALUE ADO PTED BY THE APPELLANT IS RS.22,46,250 WHICH IS MORE THAN TH E FMV OF RS. 12,70,000 AS ESTIMATED BY THE AO AND ALSO MO RE THAN THE VALUE OF RS.4,94,600 AS PER DVO'S REPORT DA TED 08.04.2011. THEREFORE APPLYING THE ABOVE DECISIONS TO THE APPEL LANT'S CASE THE AO SHOULD FORM AN OPINION UNDER SECTION 55 A(A) OF THE ACT TO REJECT THE CLAIM OF APPELLANT. HOWEVE R THE AO FORMED AN OPINION. THAT THE FMV OF THE PROPERTY IS MORE THAN THAT DECLARED BY THE APPELLANT WHICH IS NOT IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 55A(A) OF THE ACT AND THUS THE REFERENCE MADE TO DVO FOR VALUATION AS ON 01.04.1981 UNDER SECTION 55A(B)(II) IS INVALID A ND BAD AT LAW. AS THE REFERENCE TO DVO UNDER SECTION 55A OF THE ACT IS INVALID AND BAD AT LAW THE QUESTION OF ADOPT ING THE VALUE AS PER DVO'S REPORT (WHICH IS CALLED FOR UNDER SECTION 55A OF THE ACT) DOES NOT ARISE. 3. SOME OTHER JUDICIAL PRONOUNCEMENTS SUPPORTING ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 9 APPELLANT'S VIEW - MRS. ASHA BHARAT SHAH VS. ITO (M UM) ITA NO. 1716/MUM12010.' 2.3 IN ADDITION TO THE ABOVE SUBMISSIONS THE LEARN ED AR OF THE APPELLANT HAS ALSO RELIED UPON THE FOLLOWING CA SE LAWS:- 1) MRS. ASHAH BHARAT SHAH VS. ITO (MUM) ITA NO.1716/MUM/2010 2) SMT. SARLA N. SAKRANEY VS. ITO(MUM)(2011) 130 IT D 167 3) ITO VS. SMT. LALITABEN KAPADIA (MUM) (2008) 115 TTJ 938 4) SAJJANKUMAR M. HARLALKA VS. JT. CIT (2006) 102 T TJ 974 (2006) 100 ITD 418(MUMBAI TRIBUNAL) 5) SMT. KRISHNABAI TINGRE VS. ITO (2006) 103 TTJ 21 6(2006) 101 ITD 317 (PUNE TRIBUNAL) IN THIS BACKGROUND, LEARNED AUTHORIZED REPRESENTATI VE PLEADED THAT REFERENCE TO DVO U/S.55A WAS INVALID AND IT WA S SUBMITTED THAT VALUATION REPORT OF REGISTERED VALUE R MAY BE ACCEPTED AND FAIR MARKET VALUE GIVEN THEREIN AS ON 1.4.1981 MAY BE ACCEPTED AT RS.22,46,250/-. HOWEVER, CIT(A) HAVING CONSIDERED THE SAME, UPHELD THE ORDER OF ASSESSING OFFICER . 6. SAME HAS BEEN OPPOSED BEFORE US INTER ALIA SUBMI TTED THAT CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALI DITY OF REFERENCE MADE TO THE DVO U/S.55A OF THE INCOME TAX ACT. NOT FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT IN ABSENCE OF ANY OTHER CONTRARY DECISION ON THE MATTE R WAS NOT JUSTIFIED ON PART OF AUTHORITIES BELOW. UPHOLDING THE ASSESSING OFFICERS REJECTION OF VALUATION REPORT AS ON 1 ST APRIL, 1981 OBTAINED BY ASSESSEE FROM GOVERNMENT APPROVED REGIS TERED VALUER VALUING THE LAND AT RS.22,46,250/- WAS NOT J USTIFIED. ADOPTING THE FAIR MARKET VALUE OF LAND AT RS.4,94,6 00/- AS ON 1 ST APRIL, 1981 BASED ON ESTIMATE MADE BY DEPARTMENTAL ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 10 VALUATION OFFICER VIDE ORDER PASSED U/S.55AOF THE A CT, 1961 AND ENHANCING LONG TERM CAPITAL GAIN BY RS.28,60,86 3/- WAS NOT JUSTIFIED. IN THIS BACKGROUND, LEARNED AUTHORI ZED REPRESENTATIVE OPPOSED THE ORDER OF CIT(A) AND ON O THER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF AUTHORITIES BELOW. 7. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THAT ISSUE BEFORE US IS WHETHER ASS ESSING OFFICER WAS JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION55A(B)(II) OF THE ACT AT RELEVANT POINT OF T IME. AS STATED ABOVE, DURING THE YEAR ASSESSEE SHOWN LAND SITUATED AT RAJKOT, GUJARAT FOR RS.1,27,00,000/- AND DERIVED LONG TERM CAPITAL GAIN, WHICH WAS INVESTED IN NEW RESIDENTIAL HOUSE O F EXEMPTION U/S.54F OF THE ACT. THE LAND SOLD DURING THE YEAR WAS PURCHASED PRIOR TO 1 ST APRIL, 1981. THEREFORE, LONG TERM CAPITAL GAIN WAS CALCULATED BY ADOPTING FAIR MARKET VALUE O F LAND AS ON 1 ST APRIL, 1981 AS PER THE PROVISIONS OF SECTION 55(2) (B)(I) OF THE ACT. ASSESSEE ADOPTED FAIR MARKET VALUE AT RS. 22, 46,250/- BASED ON VALUATION REPORT DATED 24 TH SEPTEMBER, 2007 OF M/S. STAR ARCHITECTS, GOVERNMENT APPROVED REGISTERED VAL UER. ASSESSING OFFICER AFTER NOT ACCEPTING THE CLAIM OF ASSESSEE REFERRED THE MATTER TO DVO U/S.55A(B)(II) FOR ASCER TAINING FAIR MARKET VALUE OF LAND AS ON 01.04.1981. AFTER OBTAI NING DVO REPORT, ASSESSING OFFICER REJECTED THE FAIR MARKET VALUE ADOPTED BY ASSESSEE AND COMPLETED ASSESSMENT U/S.143(3) OF THE ACT ESTIMATING THE FAIR MARKET VALUE AS ON 01.04.1981 A T ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 11 RS.12,70,000/- (BEING 10%) OF TOTAL INCOME AT RS.55 ,13,900/- WHICH WAS SUBSEQUENTLY RECTIFIED TO RS.38,18,296/-. ASSESSING OFFICER HAS REFERRED THE VALUATION TO THE DVO U/S.5 5A(B)(II), FOR THE SAKE OF CONVENIENCE THE PROVISION OF SECTION 55 A OF THE ACT REDS AS UNDER: 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET V ALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MAD E BY A REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF OPINION ;THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE; (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PER-CENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO THUS REFERENCE TO DVO CAN BE MADE IN TWO SITUATIONS ; FIRST, THE VALUE IS ADOPTED BASED ON REPORT OF REGISTERED VALU ER AND SECOND, IN ANY OTHER CASE. IN ASSESSEES CASE, FAI R MARKET VALUE ADOPTED AS ON 01.04.1981 IS BASED ON VALUATIO N REPORT OF REGISTERED VALUER. THEREFORE, ASSESSING OFFICER SH OULD HAVE APPLIED THE PROVISIONS OF 55A(A) AND ACCORDING TO SAID ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 12 PROVISION, FAIR MARKET VALUE CLAIMED BY ASSESSEE CA N BE REJECTED ONLY IF FAIR MARKET VALUE IS LESS THAN FAI R MARKET VALUE AS PER ASSESSING OFFICER. AS FAIR MARKET VALUE CLA IMED BY ASSESSEE AS ON 1 ST APRIL, 1981 IS HIGHER THAN THAT ESTIMATED BY ASSESSING OFFICER PROVISIONS OF 55A SHOULD NOT BE I NVOKED. THE PROVISIONS OF SECTION 55A(B)(II) AS RESORTED BY ASS ESSING OFFICER FOR REFERRING THE MATTER TO DVO CAN BE INVOKED ONLY IN CASE THE VALUATION REPORT IS NOT SUBMITTED BY ASSESSEE. THU S, REFERENCE MADE BY ASSESSING OFFICER U/S.55A(B)(II) WAS NOT CO RRECT. WE FIND THAT HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. DAULAL MOHTA (HUF) IN ITA NO. 1031 OF 2008 (BOMBAY HIGH CO URT) , WHEREIN RESPONDENT HAD ADOPTED FAIR MARKET VALUE OF PROPERTY AS ON 01.04.1981 AT RS.2,13,31,000/- BASED ON THE V ALUATION REPORT OF GOVERNMENT APPROVED VALUER AND ASSESSING OFFICER DETERMINED THE FAIR MARKET VALUE AS ON 1 APRIL 1981 AT RS.1,35,40,000/- BASED ON VALUATION REPORT OF DVO. HONBLE BOMBAY HIGH COURT UPHELD THE ORDER OF TRIBUNAL BY O BSERVING AS UNDER: '3. WE HAVE PERUSED THE JUDGMENT OF THE TRIBUNAL. I T IS EXPLICITLY CLEAR THAT THE QUESTIONS SOUGHT TO BE RA ISED ARE WITH REGARD TO THE QUANTUM OF VALUATION WHICH IS ON LY A FINDING OF FACT AND THERE IS ABSOLUTELY NO QUESTION OF LAW INVOLVED IN THE ABOVE APPEAL. 4. THE TRIBUNAL IN ITS ORDER DATED 23RD JULY, 2008 HAS CATEGORICALLY OBSERVED THUS: '5. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATI ON IS WHETHER THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO U/S 55A IS BAD IN LAW UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS ISSUE, IN OUR CONSIDERED OPINION, IS COVERED IN FAVOUR OF THE ASS ESSEE ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 13 AND AGAINST THE REVENUE BY THE JUDGMENT IN THE CASE OF RUBAB M.KAZERANI REPORTED IN 91 ITD 429 (MUM(TM). FURTHER THE ASSESSEE ALSO COVERED BY THE THIRD MEMBER DECISION OF THE PUNE BENCH OF THE TRIBUNAL, THE CASE OF KRISHNABHAI TINGORE VS.ITO REPORTED IN 101 ITD 317 (PUNE) (TM) WHEREIN IT HAS BEEN HELD THAT REFERENCE TO DVO CAN ONLY BE MADE IN CASES WHERE THE VALUE OF CAPITAL ASSET SHOWN BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE OF LAND AS ON 1ST APRIL, 1981 SHOWN BY THE ASSESSEE ON THE BASIS OF APPROVED VALUER'S REPORT BEING MORE THAN ITS FAIR MARKET VALUE, REFERENCE UNDER S.55A WAS NOT VALID. RESPECTFULLY FOLLOWING THE PROPOSITIONS LAID DOWN T HESE TWO CASES BY THE COORDINATE BENCHES WE UPHOLD THE CONTENTION OF THE ASSESSEE AND HOLD THAT THE REFERE NCE MADE BY THE ASSESSING OFFICER TO THE DVO U/S 55A IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IS BAD IN LAW. THUS, ON THE SOLE GROUNDS OF APPEAL OF THE ASSESSEE HAS TO BE ALLOWED. 6. BEFORE PASSING, WE HAVE TO MENTION THAT THE ASSESSEE HAS SUBMITTED THE ARGUMENTS. AS ON THE BASIS OF THE LEGAL ASPECTS ITSELF WE HAVE DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE, WE REFRAIN FROM UNDERTAKING THIS ACADEMIC EXERCISE OF DISPOSING THI S CASE ON MERITS. ' 5. IN VIEW THEREOF THERE IS NO MERIT IN THE APPEAL. APPEAL STANDS DISMISSED. ' SIMILAR VIEW HAS BEEN TAKEN BY MUMBAI TRIBUNAL IN C ASE OF SAJJANKUMAR M. HARLALKA VS. JT.CIT (2006) 102 TTJ 9 74 (MUMBAI TRIBUNAL) AND ITAT, MUMBAI IN CASE OF ITO V S. SMT. LALITABEN KAPADIA (MUM) (2008) 115 TTJ 938. IN VIE W OF ABOVE LEGAL DISCUSSION, ASSESSING OFFICER WAS NOT JUSTIFI ED IN REJECTING THE VALUATION REPORT OF ASSESSEE AS ON 01.04.1981 O BTAINED BY HIM FROM REGISTERD VALUER AND REFERRED THE SAME TO DVO. ACCORDINGLY, THE ORDER OF CIT(A) WAS SET ASIDE AND ASSESSING ITA NOS.3711 & 6871/MUM/12 A.Y. 2008-09 (RASHMIKANT BAXI (HUF) VS. ITO) PAGE 14 OFFICER IS DIRECTED TO ALLOW THE CLAIM OF ASSESSEE AS PRAYED. 8. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . 9. NOW WE TAKE ITA NO.6871/MUM/2012. 10. THIS APPEAL IS WITH REGARDS TO PENALTY U/S. 271 (1)(C) CONSEQUENT TO QUANTUM PROCEEDINGS. SINCE, WE HAVE ALLOWED THE CLAIM OF ASSESSEE IN QUANTUM AS PRAYED IN PRECE DING PARA OF THIS CONSOLIDATED ORDER, SO, PENALTY IN CONSEQUE NT TO QUANTUM IN WHICH RELIEF HAS BEEN GRANTED, DOES NOT SURVIVE AND SAME IS SET ASIDE. 11. AS A RESULT, ITA NO.3711/MUM/2012 AND ITA NO.6871/MUM/2012 BOTH ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF SEPTEMBER, 2015. SD/- SD/- (ASHWANI TANEJA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 30/09/2015 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ! / CONCERNED CIT 4. !- $%&' / CIT (A) 5. )*+& ,--, $%&' $, / / DR, ITAT, MUMBAI 6. +12 34' / GUARD FILE. BY ORDER / 5 , 6%/8 % &, $%&' $, / 9