RAMESHCHANDRA MAGANLAL GANDHI,NA vs. ARIVS.THE INCOME TAX OFFICER, WARD -4, NAVSARI, NAVSARI

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT (HYBRID HEARING) Before: Dr. B.RR. Kumar, Vice-President And Ms. Suchitra Kamble, Judicial Member ITA No: 1209/ SRT/2025 Assessment Year: 2009-10 Rameshchandra Maganlal ITO, Gandhi, Ward 5 4, Bhatru Prem, Convent Road, Vs Navsari Bilimora East, Gandevi, Navsari, Navsari -396360, Gujarat PAN: ABEPG7461N (Appellant Respon dent) Appellant Represented Respondent Represented Shri Hiren Ra Vepari, CA Shri Ajay Uke, Sr. DR Date of hearing Date of pronouncement 25-03-2026 29-05-2026 HTHIORDER PER SUCHITRA KAMBLEJM: The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), Addl/JCIT(A)-2, [in short "CIT(A)"], Lucknow on 09.0102025 for the Assessment Year (AY) 2009-10. LT.A No.1209/SRT/2025/AY 2009-10 Rameshchndra Maganlal Gandhi VS. ITO 2 2 The assessee has raised the following grounds of appeal: "(1) The CIT(A) ought to have accepted the FMV of the appellant as on 01.04.1981 for determining cost of acquisition as DVO report was redundant for reducing the FMV for the purpose of section 55A of the assessments prior to AY 2013-14. (2) With sales consideration within 10% tolerance range of the FMV, sales consideration ought to have been accepted since third prouiso to section S0C(1) is retrospective in nature; (3) On the facts and circumstances of the case and CIT(A) was not justified in aS per law, the determining the LTCG. (4) The above grounds are Without prejudicial to one another: (5) The appellant craves leave to add, alter or vary any of the grounds of appeal- 3 As per AIR information, it was found that the assessee had sold an immovable property during the AY 2009-10 for consideration of Rs.35,00,000 / - in his savings bank account, invested a sum of Rs.21,00,000 /- in bonds / debentures from his undisclosed sources of income and the assessee has not offered the same for taxation for AY 2009-10. Statutory notices were issued and the assessee, through its Authorized Representative (AR), attended the proceedings and filed the details along with written submissions: The Assessing Officer (for short, 'the AO') observed that the assessee sold a plot of land for consideration of Rs.35,00,000 / - and Stamp Duty thereon of Rs.2,04,500 / - paid as per stamp valuation authority. This plot was acquired by the assessee before 01.04.1981 and therefore the cost of acquisition of said land was taken at Rs.2,43,000 / - as on 01.04.1981 by adopting the value of Rs.350/- per square meter as Registered Valuers. Accordingly, the per estimation by Government capital gain (LTCG) in his return of assessee computed the long-term MaN 109/SRT/2025/AY_ Kamcshchndm 2009-10 Maqanlal Gandhi vs ITO 3 income: The AO observed that the valuation adopted by assessee as on 01.04.1981 is in higher side. Therefore, a reference was made to DVO on 28.10.2016 for determination of fair market value (FMV) as On 01.04.1981. Information was called from the office of Sub- registrar, District Navsari u/s 133(6) for sale instances of similar property. The AO observed that the selling cost of the said instance was Rs.48,600/- for an area 503 square meters. Therefore, rate to the nearby instance comes to Rs.48,600/503 96.62/square meter, approximate Rs.97 per square meter. On verification of the valuation report received by the office of Sub-registrar, it has come to notice that the value of stamp duty comes to Rs.41,73,469/- as on sale date: The assessee had computed net LTCG taking value of the sold property at Rs.35,00,000 / - During the assessment, the assessee requested for valuation of property to the DVO as on date of sale vide his letter dated 06.06.2008 for determination of FMV as per provisions of section S0C(2) of the Act: Reference was made to DVO for determination of FMV value on 10.11.2016. Since, the valuation report was not received by the AO and the assessment proceedings were getting barred by limitation, the AO on the basis of data available and subject to DVO report pending, determining the value at Rs.97 per square meter on the basis of sale instances furnished by the Sub-registrar, Gandevi. Thus, the LTCG worked out as under: Sale Consideration as per stamp duty Rs.41,73,469 Less: Indexed Cost of acquisition 695 x 97 = 67415 67415 x 582 100 Rs3,92355 Rs.37,81,114 Less: Deduction u/ s S4EC Rs2110,.00Q LTCG Rs.16,81,114 K.TA No.12()/s0t/2025/AY 2((9 10 Mameshc hndra Moganll Gundhl v# ITO Thus, the AO made addition of Rs.16,81,114/- towards LTCG. 4 Being aggrieved by thc order of AO, the assessee filed appeal before thc CIT(A): Thc CIT(A) has partly allowed the appeal for statistical purposes. 5 . The Ld. AR further submitted that the FMV as on 01.04.1981 under dispute as under: Authorlty Cost estimate of Ref: the land As per Appellant 2,43,000 Valuation Report of Regd. Valuer As per DVO 36,835 DVO Report The Ld. AR further submitted that prior to the AY 2013-14, the DVO had no power to reduce the FMV u/s 55A of the Act. The Amendment u/s 55A to reduce the cost (as on 01.04.1981) became effective only from 01.07.2012 and would not apply to any past assessment years. As per the direct decision of Hon ble Gujarat High Court in case of CIT vs. Gauranginiben S. Shodhan Indl,, (2014) 367 ITR 238 (Guj:) , the DVO has no power to reduce the valuation adopted by the assessce as on 01.04.1981 is based on the register valuer's report: The Ld. AR has relied upon the following decisions: (i) Kiritbai Jayantilal Kundalia (HUF), 73 taxmann:com 122 (Guj:) , (ii) Late Shantaben P, Patel, L/H Govindbhai P. Patel, R/Tax Appeal No 1204 of 2018 (Guj HC), (iii) Puja Prints, 43 taxmann com 247 (Bom HC), (iv) Daulal Mohta (HUF), 360 ITR 680 (Bom HC) , (v) Shri Mahavevbhai Mohanbhai Naik, ITA No.820/Ahd/2016 (Surat Trib ) , (vi) Balubhai Mustufabhai Mahida, 149 taxmann:com 378 (Surat Trib:), (vii) Shree Jayantibhai Chimanbhai Patel, ITA Nos. ILAN 1209/SRT/2O2S/AY 2009-10 Rameshchndro Maganlal Gandhi vS ITO 5 138 & 139/SRT/2017, (viii) Kukeshbhai Ramubhai Ahir , ITA No. 1652/Ahd/2017 (Surat Trib) , (ix) Kirankumar Ramanlal Naik, ITA No.18/Srt/2023 (Surat Trib:), (x) Virendra Natwarlal Jariwala, 131 taxmann.com 159 (Surat Trib:) , (xi) Nanubhai G. Ahir , ITA No_ 2289/Ahd/2016 (Surat Trib:) , (xii) Kaushikaben Nimeshbhai Patel, ITA No.06/Srt/2017 (Surat Trib:) , (xiii) Jagrutiben V Patel, Bharvinaben V. Patel, ITA Nos.650 & 651/Ahd/2017 (Surat Trib) , (xiv) Jigneshkumar S. Modi , ITA No.544/Srt/2018 (Surat Trib) , (xv) Chirag Bharatbhai Amin , ITA No.1694/Ahd/2016 (Surat Trib ), (xvi) Ranchhodbhai C. Patel, ITA Nos. 821 & 822/Ahd/2016 (Ahd Trib), (xvii) Apurva Narendra Patel, Meenaben Narendrabhai Pael, Mitesh Narendrabhai Patel, ITA Nos.143, 142 & 144/Ahd/2019, (xviii) Dipakkumar Someshwar Pandya, ITA No.1691 _ Ahd/2018 (Ahd Trib ) and (xix) Arvindbhai Popatlal Patel, ITA No.374/Ahd/2016 (Ahd Trib): 6_ As regards Ground No.2, the Ld. AR submitted that since the variation between sales consideration recorded by the assessee and the DVO's report is less than 15%, which is as follows: Sr: Authority Cost estimate of Ref: No. the land a. Asper Appellant 35,00,000 Sale Deed b_ As per DVQ_ 39,58,000 DVQ Report C As per the Regd. 31,27,500 Regd. Valuer's Valuer's report report d. Variation 13.08%6 (b-aJa As per the decision of Hon'ble Supreme Court in case of C. B. Gautam VS _ UOI & Others, 199 ITR 530 (SC), deeming provisions of section 50C would not come into play and that the value recorded by IAM i*Wnmiisu vav *(kin iu Keshc hta Akuuonku Gl va //0 (he {NNc'NN(( Mmitini bo uceepled; In alternative, the average of sales csthmto hcwc6h rckistercd vulticr M( DVO mY hc taken at Rs35,+12,750 (Rs31,27,500 Rn,39,58,000)/2 The Ld, AR also Ims kivcn (l working: (l' resultut cnpital gin under two altermtivos, 'Tc Id, Ak' Orther submitted tha cost aS per thc register valucr"s report prior to AY 2014-15 has t0 bc accepted as amnendlment t seetion 554 is prospective in nature, 7 The Ld, DR (o the revenue submitted that the AO has rightly made addition as the dillerence is more than 13.08% in respect of cost estimated o the land as per the assessce as wcll as DVO The Ld, DR further submitted that the CIT(A) has categorically directed the AO to verily the DVO's report and based on it recomputed the LTCG on sale of property by carry out necessary rectilication of the assessment The Ld. DR relied upon the order of the CIT(A)