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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by Revenue is against order of CIT(A)-2, Nashik, dated 05.08.2016 relating to assessment year 2011-12 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
The Revenue has raised the following grounds of appeal:-
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Whether on the facts and in the circumstances of the case, the CIT(A)- 2, Nashik was justified in quashing the order of the AO by holding that AO was not justified in adopting value of the impugned property. 2. On the basis of facts and circumstances of the case, whether the Ld. CIT(A) was justified in deleting the addition of Rs.1,01,34,950/- which was based on the basis of valuation report of Government Authority recognized for the purpose of determining the value of property and not on the basis of report of DVO. 3. The appellant prays that the order of the Ld. CIT(A)-II, Nashik may please be cancelled and the order of Assessing Officer may please be confirmed.
The present appeal is filed by the Revenue against order of CIT(A) in quashing the order of Assessing Officer, wherein the Assessing Officer had adopted the cost of acquisition of property sold on the basis of valuation report of Government Authority.
Briefly, in the facts of the case, the assessee for the year under consideration had sold his immovable property at MERI Colony, Nashik. The assessee had sold the said asset for ₹ 4.71 crores. The case of assessee was picked up for scrutiny. The assessee had taken the cost of acquisition of land @ ₹ 750/- per sq.mtr. as on 01.04.1981. In support, the assessee furnished report of Registered Valuer, wherein the total cost of acquisition of plot of land has been calculated at ₹ 30,74,342/-. The said cost of land was then indexed and the long term capital gains of ₹ 1.27 crores (approx.) was shown by the assessee. The Assessing Officer was of the view that the cost of acquisition adopted by assessee was very much inflated and he sought the value of property from DVO, Thane, which was not received till passing of assessment order. In the meanwhile he also issued notice under section 133(6) of the Act to Joint District Registrar, Class-1, Nashik, seeking the information with regard to stamp valuation of property as on 01.04.1981. As per the said Authority, the
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value of property in question was ₹ 2,05,000/-. Consequently, the Assessing Officer re-worked the income from long term capital gains in the hands of assessee.
Before the CIT(A), the plea of assessee was that the Assessing Officer had no power to take cost of acquisition of said property as on 01.04.1981 at a figure less than the one shown by assessee on the basis of Registered Valuer certificate. In this regard, reliance was placed on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. M/s. Puja Prints (2014) 360 ITR 697 (Bom). The CIT(A) took note of the said decision and held that there is no power with the Assessing Officer to adopt fair market value of the property at a price lesser than the one shown by assessee. He also referred to the decision of the Hon’ble Bombay High Court, wherein it was held that the amendment in section 55A(a) of the Act was w.e.f. 01.07.2012 and same could not be considered as clarificatory in nature having retrospective application. The CIT(A) thus, allowed the claim of assessee, against which the Revenue is in appeal.
Despite service of notice, none appeared on behalf of assessee nor any application was filed for adjournment but since the issue is squarely covered by the order of jurisdictional High Court, we proceed to decide the same after hearing the learned Departmental Representative for the Revenue.
On perusal of record and after hearing the learned Departmental Representative for the Revenue, we find that the issue of adoption of fair market value as on 01.04.1981 and whether the same can be adopted at value
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lesser than the value declared by the assessee, while computing Income from Capital Gains, has been deliberated upon by the Hon’ble Bombay High Court in CIT Vs. Puja Prints (2014) 360 ITR 697 (Bom) and it has been held as under:- “6 . We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this appeal need not be entertained. However, as submissions were made on merits, we have independently examined the same. 7 . We find that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondent-assessee of the property at Rs.35.99 lakhs was much more than the fair market value of Rs.6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of Section 55A(a) of the Act is not justified. 8. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words "is less then the fair market value" is substituted by the words " "is at variance with its fair market value" is clarifactory and should be given retrospective effect. This submission is in face of the fact that the 2012 amendment was made effective only from 1 July 2012. The Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the present case is Section 55A(a) of the Act as existing during the period relevant to the Assessment Year 2006-07. At the relevant time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case i.e. a case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is
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entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. In view of the above and particularly in view of clear provisions of law as existing during the period relevant to Assessment Year 2006-07, we are of the view that questions (a) and (b) do not raise any substantial question of law. Regarding Question (c):- 11 . The Tribunal by its impugned order has merely remanded the issue to the Assessing Officer to determine the date on which the respondent-assessee acquired the property for the purpose of working out the cost of acquisition. No specific submissions in regard to this issue was made by the revenue during the oral submissions. In any event, an order of remand in these facts does not give rise to any substantial question of law. 12. Accordingly, we see no reason to entertain questions (a), (b) and (c) as formulated by the revenue as they do not raise any substantial questions of law. Accordingly, appeal is dismissed with no order as to costs.”
The Tribunal applying the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Puja Prints (supra) in series of cases with special mention in ITA No.587/PUN/2014, relating to assessment year 2009-10, in the case of Smt. Ratnakanta B. Agrawal Vs. ITO vide order dated 24.07.2017 had held as under:- “10. On perusal of record and after hearing both the learned Authorized Representatives, the preliminary issue which is raised by way of additional ground of appeal is a purely legal ground of appeal, which challenges the jurisdiction of the Assessing Officer in completing assessment both under sections 50C and 55A of the Act. In the facts of the case, the assessee had sold property at Amravati admeasuring 0 H 38R. The assessee had received her share in the said property as gift from her father and had sold one portion of the property much earlier. During the year under consideration, the assessee received total consideration of Rs.87,21,000/- on sale of balance share in the property. On the other hand, the stamp duty authorities had adopted the valuation of said plot of land under section 50C of the Act at Rs.1,07,31,000/-. The Assessing Officer during the course of assessment proceedings had made reference to the Valuation Officer under section 50C of the Act as the assessee had objected to the valuation made by the stamp valuation authorities. The Assessing Officer also referred to the Valuation Officer the cost of acquisition of land as per section 55A of the Act. The first objection raised by the assessee is against invoking the provisions of section 55A of the Act, under which, cost of
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acquisition declared by the assessee has been adopted at a figure lesser than the value declared by the assessee. In this regard, I find that the issue is squarely covered in favour of assessee by the order of the Hon’ble Bombay High Court in CIT Vs. Puja Prints (supra), wherein the Hon’ble High Court held as under:- “6 . We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this appeal need not be entertained. However, as submissions were made on merits, we have independently examined the same. 7 . We find that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondent- assessee of the property at Rs.35.99 lakhs was much more than the fair market value of Rs.6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent- assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of Section 55A(a) of the Act is not justified. 8. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words "is less then the fair market value" is substituted by the words " "is at variance with its fair market value" is clarifactory and should be given retrospective effect. This submission is in face of the fact that the 2012 amendment was made effective only from 1 July 2012. The Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the present case is Section 55A(a) of the Act as existing during the period relevant to the Assessment Year 2006-07. At the relevant time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case i.e. a case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary.
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The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. In view of the above and particularly in view of clear provisions of law as existing during the period relevant to Assessment Year 2006-07, we are of the view that questions (a) and (b) do not raise any substantial question of law. Regarding Question (c):- 11 . The Tribunal by its impugned order has merely remanded the issue to the Assessing Officer to determine the date on which the respondent-assessee acquired the property for the purpose of working out the cost of acquisition. No specific submissions in regard to this issue was made by the revenue during the oral submissions. In any event, an order of remand in these facts does not give rise to any substantial question of law. 12. Accordingly, we see no reason to entertain questions (a), (b) and (c) as formulated by the revenue as they do not raise any substantial questions of law. Accordingly, appeal is dismissed with no order as to costs.” 11. The Hon’ble Bombay High Court in the case of CIT Vs. Daulal Mohta (HUF) reported in 360 ITR 680 has held that reference to DVO can only be made in a case where value of asset shown by the assessee is less than its fair market value of the land. 12. Following the same parity of reasoning, I hold that no reference can be made under section 55A of the Act in order to value the cost of acquisition of property as on 01.04.1981 at a figure lesser than the value declared by the assessee. Accordingly, the order of CIT(A) is reversed in this regard.”
The year under appeal before the Tribunal is assessment year 2010-11 and in case the same simile is applied to the facts of the present case, the Assessing Officer is not empowered to adopt the fair market value of the said property for adopting cost of acquisition at a figure lesser than the one shown
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by assessee. Accordingly, upholding the order of CIT(A), we dismiss the grounds of appeal raised by Revenue.
In the result, appeal of Revenue is dismissed.
Order pronounced on this 12th day of December, 2018.
Sd/- Sd/- (D.KARUNAKARA RAO) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 12th December, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Nashik; 4. The Pr.CIT-2, Nashik; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “ए” / DR 5. ‘A’, ITAT, Pune; 6. गार्ड पाईऱ / Guard file. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune