SHABBIR BENGALI,KOLKATA vs. I.T.O., WARD - 37(1), KOLKATA, KOLKATA

The sole issue raised in this appeal is relating to the addition made by the lower authorities u/s 50C of the Act on account of difference between collector rate as compared to sale consideration mentioned in the sale deeds in respect of property sold by the assessee along with others, wherein, the assessee had share of 11.277%.

During the assessment proceedings, the assessee disputed the purchase value/market value of the property as on 01.04.1981 Assessment Year: 2013-14 Shabbir Bengali estimated by the DVO at Rs.38.22 lakhs as against the value taken by the assessee at Rs.1,51,94,000/- as per report of the Registered Valuer. The Assessing Officer took the fair market value as on the date of sale at Rs.12,25,41,968/-. The Assessing Officer, thereafter, calculated the capital gains taking the purchase value/acquisition value as on 01.04.1981 at Rs.38.22 lakhs and the sale value at Rs.12.25 crores after giving the benefit of cost of indexation.

The ld. CIT(A) confirmed the findings of the Assessing Officer.

Before us, the ld. Counsel for the assessee has submitted that as per the settled law, the Assessing Officer at the time of referring the matter to the DVO was also supposed to get the fair market value of the property as on the date of sale also. He has further referred to the report of the DVO in case of co-sharer, wherein, the DVO in respect of same property and relating to the same transaction of sale has took fair market value of the property as on the date of sale at Rs.7,50,15,600/-. The ld. Counsel has further submitted that even the cost of acquisition as on 01.04.1981 as calculated by the registered valuer at Rs.1,51,94,000/- has not been taken into consideration either by the DVO or by the Assessing Officer. The ld. Counsel has submitted that even the DVO did not give opportunity to the assessee to dispute the cost of acquisition as on 01.04.1981. He has further relied upon the decision of the Coordinate Bench in the case of ‘Southern Road Carriers Ltd. vs. DCIT’ in order dated 11.08.2023, wherein, the Coordinate Bench has further referred to the decision of the Jurisdictional Calcutta High Court in the case of ‘Sunil Kumar Agarwal vs. CIT’ in GA No.3686 of 2013 ITAT No.221 of 2013 vide order dated 13.03.2014, wherein, the Hon’ble High Court has held that even in a case where no prayer has been made to the DVO, out of ignorance Assessment Year: 2013-14 Shabbir Bengali or otherwise, the Assessing Officer discharging a quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving the assessee an option to follow the course provided by law. The ld. Counsel, therefore, has submitted that principles of natural justice have been violated and that the report of the registered valuer has been ignored by the DVO and under the circumstances, the impugned additions are liable to be quashed.

The ld. DR, however, on the other hand, has submitted that the assessee did not dispute fair market value as on the date of sale. The assessee disputed the cost of acquisition as on 01.04.1981. The ld. DR has further submitted that though in the case of another assessee, the fair market value as on the date of sale has been taken by the DVO at Rs.75015600/-, however, at the same time, the cost of acquisition as on 01.04.1981 in the said case has been taken as Rs.38.22 lakhs. The ld. DR, therefore, has submitted that since the assessee had not disputed the sale consideration, therefore, the impugned additions are justified.

We have heard the rival submissions and gone through the record. In the case in hand, the assessee in the assessment order had disputed the cost of acquisition as determined by the Assessing Officer and thereafter, the matter was referred to the valuation officer who estimated the cost of acquisition as on 01.04.1981 at Rs.38.22 lakhs. However, the assessee during the appellate proceedings before the CIT(A) had taken a ground that while referring the matter to the DVO, the Assessing Officer should have also got the report of the DVO about the fair market value of the property on the date of sale also. The ld. Counsel referring the decision in the case of the ‘Southern Road Carriers Ltd. vs. DCIT’ (supra), wherein, the decision of the Jurisdictional Calcutta High Court in the case of ‘Sunil Kumar Agarwal Assessment Year: 2013-14 Shabbir Bengali vs. CIT’ (supra) has been referred to has submitted that even otherwise, it was the duty of the Assessing Officer to refer the matter to the DVO in relation to cost of acquisition and fair market value on the date of sale of property to arrive at the correct conclusion for the purpose of estimating capital gains in the case of the assessee. However, the fact on the file is that the assessee before the Assessing Officer had disputed only the cost of acquisition as on 01.04.1981 but did not give any objections relating to the fair market value as on the date of sale, but, later on disputed the same. The contention of the ld. AR is that the entire additions are liable to be set aside. However, we find that so far as the contention regarding the fair market value on the date of sale is concerned, the report of the DVO in the case of another assessee relating to the same property and regarding the same transaction has been produced before us, wherein, fair market value of the property as on the date of sale has been mentioned at Rs.7,50,15,600/-. Under such circumstances, we are inclined to accept the said value as the fair market value of the property as on the date of sale. We order accordingly. 7.1 However, so far as the cost of acquisition as on 01.04.1981 is concerned, the assessee in the case in hand has disputed the same and also furnished the report of the registered valuer. Neither the DVO nor the Assessing Officer has pointed out any defect or infirmity in the same, rather, they have completely ignored the same and took the fair market value as on 01.04.1981 at Rs.38.22 lakhs. So far as, the fair market value as on 01.04.1981 in the case of co-sharer is concerned, the ld. AR has submitted that in the said case, the co-sharer did not dispute the same. However, in the case of the assessee, the assessee has categorically disputed the same and has also furnished the report of the registered valuer. Considering the above submissions and totality Assessment Year: 2013-14 Shabbir Bengali of facts and circumstances, the cost of acquisition as on 01.04.1981 is directed to be taken as per the value estimated by the registered valuer i.e. at Rs.1,51,94,000/-. The Assessing Officer is accordingly directed to compute the capital gains in the case of the assessee.

In the result, the appeal of the assessee is treated as partly allowed.