Income Tax Appellate Tribunal - Pune
Shri Manish Pramodkumar Firodiya, L/H. ... vs Income-Tax Officer, Ward - 1,, ... on 24 June, 2019
आयकर अपीऱीय अधिकरण पण
ु े न्यायपीठ एक-सदस्य मामऱा पण
ु े में
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "SMC", PUNE
सुश्री सुषमा चावऱा, न्याययक सदस्य के समक्ष
BEFORE MS. SUSHMA CHOWLA, JM
आयकर अपीऱ सं. / ITA No.2456/PUN/2017
यििाारण वषा / Assessment: 2010-11
Shri Manish Pramodkumar Firodiya,
& 3 others,
Legal Heirs of Late Shri Pramodkumar
Zumberlal Firodiya (Deceased)
Plot No.31/32, Arihant Colony,
Market Yard, Station Road,
Ahmednagar - 414 001
PAN : AAQPF2410D .... अऩीऱाथी/Appellant
Vs.
The Income Tax Officer,
Ward-1, Ahmednagar .... प्रत्यथी / Respondent
अऩीऱाथी की ओर से / Appellant by : Shri Prashant Munot
प्रत्यथी की ओर से / Respondent by : Shri M.K. Verma
सन
ु वाई की तारीख / घोषणा की तारीख /
Date of Hearing : 21.06.2019 Date of Pronouncement: 24.06.2019
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals) - 2, Pune dated 31.07.2017 relating to assessment year 2010-11 against order passed u/s 143(3) of the Income Tax Act 1961 (in short 'the Act').
ITA No.2456/PUN/20172 Pramodkumar Zimberlal Firodiya
2. The assessee has raised concise grounds of appeal, however has only pressed ground of appeal No.1. Ground of appeal No.1 reads as under :
"1. On facts and circumstances of the case and in law, ld. CIT(A) erred in directing the ld. AO to compute the Long Term Capital Gains on sale of land and building and adopting the fair market value (FMV) as on 01-04-1081 at Rs.4,55,000/- as valued by the Department Asst. Valuation Officer as against Rs.15,08,000/- as valued by the appellant's Govt. Registered Valuer."
3. Briefly, in the facts of the case, the assessee during the year under consideration had sold a piece of land and building and had declared income from long term capital gains. The assessee had adopted the fair market value as on 01-04-1981 at Rs.15,00,000/-. However, the Assessing Officer made a reference to the Divisional Valuation Officer for working out the fair market value of the said property. The report of the Divisional Valuation Officer was not received till the date of completion of the assessment proceedings and the Assessing Officer adopted the value of the said property at Rs.9,60,600/-.
During the course of appellate proceedings, the report of the Divisional Valuation Officer was received and the CIT(A) adopted the same at Rs.4,55,000/-. The assessee had filed the valuation report of a Registered Valuer in support of his fair market value as on 01-04-1981 at Rs.15,08,000/-
and the same was not accepted by the CIT(A) and the long term capital gains was recomputed in the hands of assessee.
4. The issue which arises is whether the Assessing Officer or the CIT(A) has the power to adopt the fair market value at a figure less than the value shown by the assessee which inturn is backed by the valuation of a Registered Valuer.
ITA No.2456/PUN/20173 Pramodkumar Zimberlal Firodiya
5. The learned Authorized Representative for the assessee submitted that the said issue stands covered by the order of Hon'ble Bombay High Court in CIT Vs. Puja Prints 360 ITR 697 (Bom.), which ratio has been applied by the Pune Bench of the Tribunal in Shri Rajendra Kanhiyalal Bhartiya Vs. ITO and another in ITA No.1424/PUN/2017 and ITA No.1425/PUN/2017 vide its order dated 28-08-2018 relating to assessment year 2010-11.
6. The learned Departmental Representative for the Revenue on the other hand placed reliance on the orders of the authorities below.
7. On the perusal of record and the decision of Tribunal in Shri Rajendra Kanhiyalal Bhartiya Vs. ITO and another (supra), it transpires that the issue of adoption of fair market value as on 01-04-1081 stands squarely covered by the judgment of Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra). The Tribunal applying the said ratio in Shri Rajendra Kanhiyalal Bhartiya Vs. ITO and another (supra) had held as under :
"9. On perusal of record and after hearing the learned Departmental Representative for the Revenue, it transpires that the issue of adoption of fair market value as on 01.04.1981 and whether the same can be adopted at value 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.ITA No.2456/PUN/2017
4 Pramodkumar Zimberlal Firodiya
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 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 ITA No.2456/PUN/2017 5 Pramodkumar Zimberlal Firodiya 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."
10. 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 ITA No.1424/PUN/2017 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 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 ITA No.2456/PUN/2017 6 Pramodkumar Zimberlal Firodiya 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 entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala ITA No.2456/PUN/2017 7 Pramodkumar Zimberlal Firodiya 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."
11. 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 at ₹ 10,000/- per acre. Accordingly, we reverse the order of CIT(A) in this regard and direct him to adopt the fair market value as on 01.04.1981 as declared by the assessee."
8. The issue arising in the present appeal is squarely covered by the decision of Hon'ble Jurisdictional High Court which has been applied by the Tribunal and the Assessing Officer/Commissioner of Income Tax (Appeals) are ITA No.2456/PUN/2017 8 Pramodkumar Zimberlal Firodiya precluded from adopting the fair market value at a figure lesser than the value declared by the assessee while calculating the income from long term capital gains. Accordingly, I reverse the order of CIT(A) and direct the Assessing Officer to adopt the fair market value as on 01-04-1981 at Rs.15,00,000/-.
9. In the result, the appeal of the assessee is allowed.
Order pronounced on this 24th day of June, 2019.
Sd/-
(SUSHMA CHOWLA) न्याययक सदस्य / JUDICIAL MEMBER ऩण ु े / Pune; ददनाांक Dated : 24 June, 2019 th Satish/GCVSR आदे श की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to :
1. अऩीऱाथी / The Appellant;
2. प्रत्यथी / The Respondent;
3. आयकर आयुक्त(अपील) / The CIT(A)-2, Pune;
4. प्रधान आयकर आयुक्त / The Pr.CIT-1, Pune;
5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-
6. सदस्य मामऱा / DR 'SMC', ITAT, Pune;
गार्ड पाईऱ / Guard file.
आदे शािस ु ार/ BY ORDER, सत्यावऩत प्रतत //TRUE COPY// Senior Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune