GANGADHARAYYA G NARENDRAMATH ,HUBLI vs. INCOME TAX OFFICER WARD-3(2), HUBLI

The grounds raised by the assessee are as under. “General Ground 1. The order passed by the learned CIT(A) to the extent prejudicial to the appellant isbad in law and liable to be quashed. Reassessment is bad in law 2. The Id. CIT(A) has erred in confirming the action of Id. AO in passing the assessment order under section 143(3) read with section 147 of the Act.

This appeal was filed by the assessee on 10.11.2017 and as per the acknowledgment cum notice issued by the Registry at the time of filing of the appeal, the date of hearing was fixed on 17.01.2018. In spite of this, none appeared on behalf of the assessee on the appointed date of hearing and there is no request for adjournment and hence, the appeal was heard ex-parte qua the assessee. The ld. DR of revenue supported the order of CIT(A).

At this juncture, it was pointed out by the bench that as per the judgement of Hon'ble Calcutta High Court rendered in the case of Sunil Kumar Agarwal vs. CIT as reported in 372 ITR 83 (Cal), it was held that even in a case where no prayer is made by the assessee to refer the matter to DVO u/s. 50C (2) of the IT Act, the AO, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law i.e. valuation by the DVO and in the present case, the AO has not referred the matter to DVO and it is held by CIT(A) in para no. 7 of the impugned order that as per the assessment order, the assessee never objected to AO’s proposal to adopt 50C value for computation of capital gains nor did the assessee ask for reference to Valuation cell of the department and therefore, the judgment being Tribunal order rendered in the case of Jitendra Mohan Saxena Vs. ITO as reported in 305 ITR 62(AT) (Luck-Trib) is not relevant. The bench pointed out that in view of this judgement of Hon'ble Calcutta High Court, the AO should have referred the matter to DVO even in the absence of any request by the assessee. In reply, the ld. DR of revenue had nothing to say.

I have considered the facts of the present case and I find that a per para no. 7 of the impugned order, it is held by CIT(A) that since assessee never objected to AO’s proposal to adopt 50C value for computation of capital gains nor did the assessee ask for reference to Valuation cell of the department, the Tribunal order cited by ld. AR of assessee rendered in the case of Jitendra Mohan Saxena Vs. ITO (supra) is not relevant. But as per the judgement of Hon’ble Calcutta High Court rendered inthe case of Sunil Kumar Agarwal Vs. CIT (supra), it was held that even in a case where no prayer is made by the assessee to refer the matter to DVO u/s. 50C (2) of the IT Act, the AO, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law i.e. referring the matter to DVO. Respectfully following this judgement of Hon’ble Calcutta High Court, I set aside the order of CIT (A) and restore the matter back to the file of AO for fresh decision after obtaining report of DVO as

Regarding the second aspect of the matter i.e. Fair Market Value of the property as on 01.4.1981 also, I direct the AO to decide the issue afresh after providing adequate opportunity of being heard to assessee. I find that in para no. 11 of the impugned order, it is noted by CIT(A) that since the assessee was not having the original document of the property in respect of acquisition, the assessee submitted a report from an approved valuer who had arrived at the cost of the property at Rs. 7,38,324/- based on the circular of Special Deputy Commissioner, Dharwad. But the AO rejected the value as per the approved valuer and adopted another value of Rs. 4,34,307/- as cost of acquisition for the purpose of indexation and determined the capital gains and there is no further argument mentioned about this in the written submissions. In my considered opinion, when the matter is going back to the file of AO for fresh decision regarding value of the property sold u/s. 50C(2), this aspect of the matter regarding cost of acquisition being market value as on 01.04.1981 should also be decided afresh in the interest of justice after providing adequate opportunity of being heard to assessee and the AO should pass a speaking and reasoned order as to why the report of the approved valuer is not being adopted and why and how a different value of cost of acquisition as on 01.04.1981 was adopted by him at Rs. 4,34,307/- as against Rs. 7,38,324/- as per the report of the approved valuer.

In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.