AMIRLAL AGARAWAL,SAMBALPUR vs. ITO, WARD-1(1), SAMBALPUR

Per Bench : These are the appeals filed by the assessee against the separate orders passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, both dated 20.12.2021 for the assessment years 1998- 1999 & 1999-2000. 2. It was submitted by the ld. AR that the assessee has opted for the VDIS Scheme-97 and had declared raw and uncut diamonds held by the assessee from the assessment year 1973-1974 and valued at Rs.80,000/- being the cost as on A.Y.1973-1974. The assessee subsequently in the sold the same for a consideration of Rs.7,61,221/- during the assessment year 1998-1999 and Rs.3,03,500/- during the assessment year 1999- 2000. It was the submission that when the assessment came to be completed u/s.143(3) of the Act, the AO had adopted the cost declared by the assessee in the VDIS declaration and had applied the indexation. In short, the AO had adopted the value of Rs.80,000/- as on 01.04.1981. The assessee had in its computation given the calculation of the value of precious stones at Rs.3,19,970/- as the value of the precious stones as on 01.04.1981. It was submitted that as the AO had adopted wrong cost in respect of the precious stones disclosed by the assessee in the VDIS Scheme as on 01.04.1981, the assessee had originally filed a rectification application on 16.12.2002. The said rectification application remained undisposed. As the rectification application was undisposed the assessee filed a second application on 06.03.2014 reiterating its submissions. The AO rejected the rectification application holding that there was no mistake apparent from the record. It was the submission that the ld. CIT(A) has also upheld the same. It was the submission that the Special Bench of this Kolkata ITAT had in the case of Hiralal Lokchandani Vs. ITO, reported in 106 ITD 45 (Kol)(SB) categorically held that the AO is to compute the capital gains after considering the valuation report for determining of the market value of raw and uncut diamonds as on 01.04.1981. It was the submission that the fact that the AO has not followed the directions given by the Hon’ble Special Bench of this Tribunal categorically shows that the assessment order contained a mistake apparent from the record. It was the prayer that the AO may be directed to recompute the capital gains by adopting value declared by the assessee as per the valuation report determining the fair market value as on 01.04.1981. 3. In reply, the ld. Sr. DR vehemently supported the order of the AO and CIT(A). It was the submission that the Division Bench of this Tribunal should apply its independent judicial conscience un-effected by the decision of the Special Bench of the Tribunal. It was the submission that what has been sold by the assessee was not the original asset disclosed in the VDIS Scheme but it was further improved upon by polishing and doing such other improvements. It was the submission that the cost of the improvement has also been considered and deduction for the same has also been granted by the AO. It was the submission that the assessee had disclosed raw and uncut diamonds in its declaration in the VDIS application but what was sold was polished diamonds and consequently the asset sold was different from the asset disclosed in the VDIS. It was the submission that there was no mistake apparent from the record of the AO insofar as the valuation report was not before the AO. It was, therefore, submitted that the order of the CIT(A) deserves to be upheld.

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