SMT. JYOTIBEN VINODBHAI PATEL,SURAT vs. INCOME TAX OFFICER, WARD 2(3)(6), SURAT

The above captioned 5 appeals by the Assessee are directed against the order of learned Commissioner of Income tax (Appeals)- I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 2 of 14 2, Surat(in short “the CIT (A)”) first four dated 02.06.2017 and fifth one is dated 30.06.2017 all pertaining to Assessment Year 2014-15, which in turn has arisen from the assessment order passed under section 143 (3) all dated 22.12.2016 of Income Tax Act, 1961 (in short ‘the Act’) by the Income Tax Officer, Ward- 2(3)(6) Surat(in short “the AO”).

The above appeals belonging to Patel Group, of joint holder of property sold during year were heard together being common issue involved being considered together.

We are taking up the case of Shri Harishkumar Naginbhai Patel in I.T.A.No. 14/SRT/2017 for A.Y. 2014-15 as lead case, of which findings as given would be mutatis-mutandis apply to other four appeals of the assessees.

Ground No.1 to 3 of appeal states the ld. CIT (A) has erred upholding long-term capital gain of Rs. 41,03,549 as against Loss of LTCG of Rs.1,36,590 shown and computed by the assessee in respect of three pieces of land sold which were located are R.S.N. 191 , Block No. 149 at Moje Pal of Surat, by accepting DVO report and taking FMV as on 01.04.1981 at Rs.60 per sq. meter ignoring the FMV of the assessee at Rs.600 per sq. meter as on 01.04.1981 duly supported by the Government Approved Registered Valuer I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 3 of 14 report submitted by the assessee and non-admitting the comments on valuation as made by the Registered Valuer Shri B. H. Patel of the assessee terming it as additional evidence, which were in facts technical opinion of the government qualified Registered Valuer, based as well as comparable sale instances available and after applying there methods.

Succinct facts are that the assessee along with joint co-owners have sold three nonagricultural land for total sale consideration of Rs. 5,27,02,500 in which assessee`s shares comes to Rs.52,05,285. The assessee has not disclosed long-term capital gain in return of income but shown capital receipt of Rs.52,74,144 in the return of income. On enquiry, the assessee has filed working of long-term capital gain at loss of Rs.1,35,590 based on Government Registered Valuer report of Shri P. K. Desai dated 28.05.2013 by taking FMV as @ 600 per sq. meter as on 01.04.1981.The FMV of entire plot of land area of 8498 was computed at Rs.50,98,000. However, the AO made a reference to DVO and obtained report dated 29.11.2016 determined FMV at Rs.2,54,940 by taking FMV value @ 60 per sq. meter as on 01.04.1981. Accordingly, the AO computed long-term capital gain at Rs. 41,03,549 i.e. [ 52,05,285 being 1/10th of sale consideration of the assessee Less index cost of acquisition at Rs.11,01,736 ( I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 4 of 14 4,78,776+6,22,960)]. Therefore, a show-cause notice was issued to the assessee as to why long-term capital gain at Rs.41,03,549 should not be taken in his case against loss of long-term capital gain shown at Rs.1,36,590. It was explained that the assessee has got valuation done by the Government Approved Valuer who is approved by the Department and hence, same may be relied upon. The estimate made by the DVO is not correct as the DVO has not considered various factors like cost of converting the ln into non-agricultural land which is around 5% of the value of land, sale instances, it does not include cost of stamp duty, registration charges, legal and other charges which are approximately 20% of estimated value. However, the AO was of the view that the DVO has considered all the objection of the assessee and same is being scientific reliable in comparison to valuation report submitted by the assessee. Accordingly, the AO has taxed long-term capital gain at Rs. 41,03,549.

Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). Wherein it was contended that the AO has not provided the copy of DVO report to the assessee. Therefore, the AO was directed to provide the same to the assessee. The DVO report was provided to the assessee on 25.04.2017. The assessee has filed another valuation report from Government Approved Valuer Shri B. H. Patel, who has I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 5 of 14 calculated the FMV @ 6000 per sq. meter as on 01.04.1981 on the basis of comparable sale instances. Shri B.H. Patel, has also made comments of DVO report and pointed out many defects. However, the CIT (A) observed that the assessee has submitted fresh Registered Valuer report for Shri B.H. Patel at the appellate stage, which is fresh evidence under Rule 46A of Income-Tax Rules, 1962 for which no reasons are given as to why another report of Registered Valuer is being submitted after completion of assessment. The appellant has relied earlier on report of Shri P.K. Desai and subsequently it has filed fresh evidence under Rule 46A. Therefore, CIT (A) rejected the said report terming the valuation report as fresh evidence. With regard to Registered Valuer report of P. K. Desai, the CIT (A) observed that it was not based on any comparable sale instances. The Registered Valuer has compared the land price with Gold price fixed by the RBI at the time of April 1981, 2002 and May 2013. The valuation was based on totally general observations. Therefore, the valuation done by the DVO, who valued the land at Rs.2,54,940 as on 01.04.1981 @ Rs. 60 per sq. meter as against the valuation of the assessee claimed @ 600 per sq. meter was correct. According to CIT (A), when market value is determined the main factor is sale instances of similar and nearby land sold during the period. After that, there can be minor I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 6 of 14 adjustments. Therefore, the CIT (A) held that DVO has rightly taken the value of land as on 01.04.1981. Hence, the action of the assessee was confirmed.

Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the observation of CIT (A) that the assessee has submitted fresh Registered Valuer report for Shri B.H. Patel at the appellate stage amounts as fresh evidence under Rule 46A of Income-Tax Rules, 1962 is not correct as the assessee has duly filed valuation report of B.H. Pate before DVO , which find mention in DVO report dated 29.11.2016. (PB-161) The appellant has relied earlier on report of Shri P.K. Desai and subsequently it has filed fresh evidence under Rule 46A. The learned counsel for the assessee has drawn our attention to Paper Book Page No. 157 to 164, which is copy of DVO, report dated 29.11.12016 which contained a reference in para No. 10 P(Placed at Paper Book Page No. 161) and submitted that it has been clearly mentioned by the DVO that the assessee has submitted Registered Valuer`s report of Shri B.H. Patel. Therefore, in his comments on DVO report Shri B.H. Patel, are filed when the assessee has received valuation report during appellate proceedings. The CIT (A) observed the Registered Valuer of the assessee P.K. Desai not adopted any I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 7 of 14 comparable sale instances to derive the land rate & the Regd. Valuer arbitrarily adopted unit rate of land @ 600 per sq. meter as on 01.04.1981, by reverse calculation of Jantry rates i.e. for the year, which is not appropriate method. The rate adopted by the Registered Valuer is on higher side and not for acceptable. However, the learned counsel for the assessee contended that the findings of the Ld. CIT (A) are wrong as the Registered Valuer report of B.H Patel was duly given to DVO who made comments. Since the AO has not supplied the DVO report to the assessee hence, the assessee was not in position to comments on DVO. It is at the instance of the CIT (A), the AO has provided the valuation report of DVO to the assessee. The assessee has shown the DVO report to Shri B.H. Patel, who made comments of DVO reports, which were, submitted before the CIT (A). These comments are also placed at Paper Book Page No.

Accordingly, the Registered Valuer of the assessee has explained that there are three method for valuation as per judgement of Hon`ble Supreme Courts/High Courts, in sale instances are considered by multiplying 11.94 factors. Accordingly, the Registered Valuer has worked out rate of land in question at Rs.928 per sq. meter as per Method-I, Rs. 1277 per sq. meter as per method-II and Rs.293 per sq. meter as per method–III. The average of three method has been worked out at Rs. I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 8 of 14 833 per sq. meter. However, considering the average rate at Rs. 833 per sq. meter; the Registered Valuer has fixed the rate of land at Rs. 600 per sq. meter i.e. below the average of three method as on 01.04.1981 in the case of the assessee. Therefore, it was urged upon us to accept the Registered Valuer report who was approved valuer of the Department. The learned counsel for the assessee also supported his view by placing reliance on the decision of Ahmedabad Tribunal in the case of Shri Madhusudan P. Patel v. ITO, Ward-3 Gandhinagar [I.T.A.No. 2579/ Ahd/ 2010 /A.Y. 2007-08 dated 05.04.2013] (copy filed Paper Book Page No. 208 to 214], and decision in the case of Kaushik Sureshbhai v. ITO-Wd-7(2) Surat [I.T.A.No. 3374-3380/Ahd / 2009 dated 09.04.2010.]. In view of this matter, it was submitted that DVO has only considered the sale instances of agricultural land for the year 1981 or 1980 etc. of the same village or vicinity area and only average find out case in Pal Surat, average of four sale instances is Rs. 59.85 per i.e. Rs. 60 per sq. meter adopted but valuation not adopted / applied by taking other factors of adjustment /influence and not given any weightage even though clear guidelines published by the IT Department (Page No. 45 to 51) hence, Rs. 60 per sq. meter as on 01.04.1981 fixed by the DVO is quite unfair, unreasonable and on lower side also. It was also stated I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 9 of 14 that there 50 factors which were enclosed as Annexure VII, hence, same are also required to be considered for fixing the agricultural land price as on 01.04.1981.

Per contra, the ld. Sr. D.R. relied on the orders of lower authorities.

We have heard the rival submissions and perused the relevant material on record. We find that the observation of the CIT (A) that B.H. Patel valuation report is additional evidence under Rule 46A is not correct as the same was provided by the assessee to DVO of Department at the time of valuation being carried out by the DVO on which he had made his comments for not accepting same. Therefore, we are of the considered opinion that these were not additional evidence under Rule 46A, hence, the ld. CIT (A) ought to have given weightage of Registered Valuer report of B. H. Patel. We find that there are three methods of valuation of land first one relates to sale instances multiplied by 11.94 factors, which is based on Hon`ble Supreme Court and Hon`ble High Court judgements. Second method is to consider increase in agricultural land price per month one percent. Third method is based on reverse method per year reduction of 10% of Jantri rate/Circle rates. The Government Registered Valuer of the assessee has based his valuation report on the average out of I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 10 of 14 these three method for valuation of land, which in our opinion is correct method to be considered, in the case, where no specific sale instances of relevant period are available. The DVO has considered at Rs.600 per sq. meter land price as on 01.04.1981 as against the average of three method at Rs.833 per sq. meter. Therefore, we are of the view that the Registered Valuer has quite considerate in taking rate at 600 per sq. meter as against Rs. 833 being average rate. This view is further supported by the decision of Ahmedabad Tribunal in the case of Shri Madhusudan P. Patel v. ITO Ward-3 Gandhinagar dated 05.04.2013 (supra) wherein the Co-ordinate Bench of Tribunal held considered the average of three method and has relied upon sale instances of sale price prevalent in the neighborhood in the near about dates of 01.04.1981 . No other factors to determine the value of assets as on 01.04.1981 while the Registered Valuer has examined the relevant factors, which is important to estimate the market value of the land. Considering these factors, we are of the considered opinion that the valuation report of B.H. Patel in the case of the assessee is quite reasonable and therefore, the issue is decide in favour of the assessee. Accordingly, the AO is directed to apply rate of Rs. 600 per sq. meter for calculation if long-term capital gain in I.T.A.No. 12 to 15 & 260/SRT/2017/A.Y. 14-15 Page 11 of 14 the hands of the assessee. Accordingly, Ground No. 1 to 3 of appeal are allowed.

Ground No. 4 relates to non-admission of claim of deduction under section 54B on the ground that it was not made during the course of assessment proceedings.

The assessee has shown long-term capital gain loss hence, the assessee has not made claim of deduction of Rs.44,82,725 under section 54B of the Act However, when the long-term capital gain was not allowed then a claim of deduction under section 54B was made before the AO. However, the AO had not entertained the same.

Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). However, before CIT (A) this claim of deduction was left out therefore, it was raised as additional ground before CIT (A). However, CIT (A) observed that it is seen that the assessee has neither claimed deduction under section 54B of the Act in the return of income nor it was claimed during the course of assessment proceedings. This claim of deduction is filed during appellate proceedings. Since the assessee has not made this claim by filed return of income under section 139(5) of the Act. The CIT (A) has not allowed the same as the AO has no power to entertain the claim other than revised return of income.

Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee relying on the decision of tribunal decision dated 09.07.2019 in ITO Ward-5(2) Pune v. Smt. Uma Dnyanoba Bhintade[ I.T.A.No. 1485/PUN/2017 dated 09.07.2019 submitted that tribunal and Appellate Authorities have power to admit additional ground during appellate proceedings if the same was not claimed during assessment proceedings for genuine reason. Hence, the CIT (A) ought to have admitted the claim of additional ground and considered the deduction under section 54B of the Act.

Per contra, the ld. Sr. D.R. relied on the orders of lower authorities. 15. We have heard the rival submissions and perused the relevant material on record. We find that that Appellate Authorities have power to admit bona fide claim of deduction if is made during appellate proceedings before them. The decision relied by the assessee supports its case. Therefore, we are of the considered opinion that claim of additional ground is admissible and the AO should be allowed deduction under section 54B of the Act if consideration are prescribed in that section are satisfied. Hence, we allow these grounds of appeal