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Before: Shri C.M. Garg & Shri L.P. Sahu
ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the assessee against the order of ld. CIT(A), Karnal dated 18.04.2011 for the assessment year 2004-05 on the following grounds : “
1. That the order of the learned Commissioner of Income- Tax (Appeals), Karnal is against law and facts.
2. That in the facts and circumstances of the case of the appellant the order of the learned Commissioner of Income Tax (Appeals) in confirming the order of the Assessing Officer in adopting the valuation of factory land/building at Rs.78,37,000/- on the basis of highly exaggerated and excessive valuation report submitted by DVO which suffered from inherent patent mistakes, while not considering material facts/objection is altogether arbitrary, illegal, void and uncalled for.”
ITA No. 3500/Del./2011 2
The brief facts of the case are that the assessee filed return of income with long term capital loss of Rs.11,98,603/-. On scrutiny of return and submissions made by the assessee, the AO noted that the assessee has shown long-term capital loss on the sale of factory land and building situated at plot No. 47, sector-29, Panipat. The inspector was deputed, who visited the site and reported that the value adopted by the assessee is less than 25% of the fair market valuation of the land and building situated there. Therefore, matter was referred to the departmental valuation Officer, Chandigarh who submitted his report to the AO in which he calculated the value of land at Rs.60,75,000/- @ Rs.1500/- per sq. meter as per information gathered from HUDA, Panipat. He also determined the valuation of building at Rs.17,62,300/-. The DVO’s report was confronted to the assessee. Refuting the DVO’s report, the assessee submitted a conveyance deed with respect to plot No. 49, Sector 29, Panipat, in which the fair market value of the plot has been shown at Rs.516/- per sq. meter. The assessee received sale consideration towards land at Rs.9,84,912/- and building at Rs.10,99,992/- from M/s. Abhitex International, Panipat. Further M/s. Abhitex International had paid Rs.18,42,964/- on 05.11.2003
ITA No. 3500/Del./2011 3 directly to HUDA in respect of enhancement of cost, interest and penalty which were considered by the Assessing Officer. The ld. Assessing Officer after considering the DVO’s report, written submissions of the assessee and other material facts, computed the long term capital gain as under :
Fair Market Value of plot No. 47 & building as determined by the Valuation Officer, Chandigarh as per his report placed in file Rs.78,37,000/- Less: Indexed cost as claimed by the assessee 27,41,349/- Enhancement amount paid 18,42,264/- Rs.45,83,613/- Net capital gain Rs.32,53,387/- Aggrieved by the order of the AO, the assessee appealed before the first appellate authority who after considering all the materials available with him, upheld the action of the Assessing Officer. Being aggrieved, the assessee is in appeal before the Tribunal.
The ld. AR submitted that the Inspector visited the property in the year 2006 whereas the property was sold on 2004. The DVO has submitted his report on 19.12.2006 which are much after the sale took place and the DVO had no proper basis for applying Rs.1500/- per sq. meter for the land. He also submitted
ITA No. 3500/Del./2011 4 conveyance deed with respect to plot No. 49, sector 29, HUDA, Panipat, the same vicinity, which shows the value of the plot @ 516/- per sq. meter on 06.04.2004 and in respect of the impugned property, the assessee has received full and final payment on 31.03.2004. He also objected the valuation done by the DVO without any basis for applying Rs.1500/- per sq. meter. The assessee also relied on following decisions : (i). Pr. CIT vs. Quark Media House India (P) Ltd., 77 taxmann.com 301 (P&H) (ii). CIT vs. Punit Sabharwal, 16 taxmann.com 320(Delhi) (iii). Aneeta Singh v. ITO, 20 taxmann.com 93 (Delhi Tribunal).
It was also submitted that the AO could not establish that there was excess payment received over and above the sale consideration received by the assessee.
On the other hand, the ld. DR submitted that the Assessing Officer has correctly applied the provisions of section 55A. The AO has followed all the procedures for reference to the DVO and the DVO has submitted his report after making proper enquiry as per procedure. The AO has also allowed Rs.18,42,264/- which was not ITA No. 3500/Del./2011 5 claimed by the assessee while computing the capital gains and therefore, the assessee should not have any objection. The registered valuer has valued the said property at the rate of Rs.650/- per sq. meter without any basis. The DVO obtained information from HUDA that at that time, there was circle rate of 3500/- per sq. meter whereas the DVO has adopted the value @ Rs.1500/- per sq. meter which is quite reasonable.
We have heard the submissions of both the parties and have gone through the entire material available on record. It is notable that the ld. Assessing Officer has relied on the valuation report sent by DVO stating the valuation of land at the rate of 1500/- per sq. meter. We have gone through the valuation of report of the DVO available on record and we find that the DVO has reported the rate of land at Rs.1500/- per sq. meter on the basis of alleged information gathered from HUDA. However, no authentic information from HUDA is available on record to support the valuation made by the DVO. Besides, the valuation report nowhere speaks of the valuation of factory building. On the other hand, the assessee relies on the conveyance deed of plot No. 49 in the same
ITA No. 3500/Del./2011 6 vicinity, as referred to above which shows the rate of land at Rs.516/- per sq. meter. The Inspector’s report speaks that assessee has shown valuation of land less than 25% of the actual value. The Inspector’s report also does not corroborate the valuation determined by DVO. Thus, there being vast difference between the value of property reported by the inspector, DVO and as mentioned in the conveyance deed as referred above, and as declared by the assessee, we deem it expedient in the interest of justice to remit the matter back to the file of AO to decide the issue afresh after making proper enquiry for working out the actual valuation of the impugned property and then to compute the long-term capital gain/loss. Needless to say, the assessee shall be given reasonable opportunity of being heard. Accordingly, the appeal of the assessee deserves to be allowed for statistical purposes.