Income Tax Appellate Tribunal - Pune
Smt. Krishnabai Tingre vs Income-Tax Officer on 30 June, 2005
Equivalent citations: [2006]101ITD317(PUNE), (2006)103TTJ(PUNE)216
ORDER
Mukul Shrawat, Judicial Member
1. This is an appeal by the assessee arising out of the order of learned CIT(A)-in, Pune, dated 15-4-1998 and several grounds have been raised which arc argumentative and stated to be either alternative grounds or consequential in nature. Before us, the learned AR Mr. N.C. Khandelwal has stressed upon ground No. 1 which reads as follows:
On facts and circumstances prevailing in the case and as per provisions of law, it be held that the value of the property as on 1-4-1981 should have been taken at Rs. 4,61,000 as is adopted by the appellant. It may further be held that the reference made by the Assessing Officer is erroneous on facts and circumstances prevailing in the case is contrary to the scheme of the Act and is beyond his jurisdiction. It may further be held that Assessing Officer should have accepted the value adopted by the appellant and should have disregarded the value ascertained by the valuation officer as per the provisions of the Act and as per the scheme of the Act. Just and per relief be granted to the appellant in this respect.
2. The facts of the case in brief are that the assessee has declared capital gain arising on transfer of land admeasuring 7093.42 sq.m. situated at Survey No. 14, Wadgaon Sheri. The value of this land as on 1-4-1981 was worked out at Rs. 4,61,000 on the basis of valuation report of approved valuer. The basic issue before us is in respect of the valuation determined as on 1-4-1981 by an approved valuer. The Assessing Officer has observed that the valuation as on 1-4-1981 was determined at Rs. 65 per sq.m. by the approved valuer and the same was adopted by the assessee for the purpose of computation of long-term capital gain. The Assessing Officer has not accepted the fair market value as on 1-4-1981 on the ground that no sale instances have been quoted by the valuer in the valuation report relied upon by the assessee. According to the Assessing Officer, it was apparent that the fair market value as on 1-4-1981 claimed by the assessee had exceeded the fair market value as on 1-4-1981. With this observation, he had referred the valuation to the Departmental Valuation Officer (DVO) by invoking the provisions of Section 55A of the Income-tax Act. Vide Para 6, the Assessing Officer has mentioned that the DVO has determined the fair market value of the captioned asset at Rs. 2.13 lakhs as on 1-4-1981. This contention was carried before the first appellate authority.
3. After narrating the facts of the case, the learned CIT(A) has mentioned that the valuation as on 1-4-1981 determined by the DVO at Rs. 2.13 lakhs after adopting the land rate at Rs. 30 per sq.m. On merits, a detailed discussion have been made before the learned CIT(A) and it was argued that the property was situated closed to a posh and fast growing area of Kalyani Nagar having more potential of development. On the other hand, the DVO has cited the sale instances of the area of some distance having no development potential in that area. It was also argued that the sale instances quoted by the DVO were of small plots which were not comparable with the size of the land sold by the assessee. A legal question was also raised before the learned CIT(A) that whether the Assessing Officer has rightly invoked the provisions of Section 55A of Income-tax Act by referring the valuation to the DVO. It was contended before the learned CIT(A) that firstly Clause (b) of Section 55A was not applicable because the assessee has furnished the valuation report. If at all the only clause applicable is Clause (a) of Section 55A, but it was argued that the reference could be made to the DVO only in case when the value so claimed by the assessee is less than its fair market value. It was further argued that in the present case, the appellant has claimed higher value than the value proposed by the revenue. Therefore, Clause (a) of Section 55A was wrongly invoked. On merits again, it was argued that the DVO has cited two sale instances of the year 1997. However, he was supposed to rely upon the sale instances of 1981. Certain case laws as available at that time have also been relied upon. However, the first appellate authority has not accepted all those objections and confirmed the view taken by the Assessing Officer.
4. At the outset, during the course of hearing, the AR Mr. N.C. Khandelwal has cited a decision of ITAT, Third Member, in the case of Ms. Rubab M. Kazerani v. Jt. CIT [2004] 91ITD 429 (Mum.) in support of his argument that reference to valuation officer under Section 55A was wrongly made by the Assessing Officer because the valuation so claimed by the assessee as on 1-4-1981 was more than its fair market value, however, the reference can only be made in cases where the value so claimed is less than its fair market value.
5. Before we proceed further it is necessary to settle this legal issue. On behalf of the revenue, it was argued by the learned DR that the Assessing Officer has at prima facie reasonable belief that the fair market value was not correctly adopted by the assessee, therefore he has referred the matter to the DVO. In the opinion of learned DR, this was sufficient to refer the valuation to the DVO if prima facie the valuation was found to be incorrect as in the instant case, the approved valuer of the assessee has adopted the fair market value as on 1-4-1981 without relying upon any sale instances. The learned DR has also mentioned that first of all the issue is covered by Section 55A(a). However, Clause (b) is also applicable on any such other cases if in the opinion of the Assessing Officer having regard to the nature of the asset reference is necessary so to do. The learned DR has mentioned that Section 55A(b)(ii) has specifically been incorporated by the statute to cover up of such cases. He has also mentioned that on merits the revenue has strong case because there was a vast difference in the value as adopted by the assessee without any basis whereas the valuation of the DVO was very much based upon the sale instances. The learned DR has also mentioned that Section 142(A) has also been incorporated in the statute which empowers the Assessing Officer to refer the valuation to DVO. Referring to the scope of Section 55A, the learned DR has relied upon the decision in the case of CIT v. Dr. C. Ashokan Nambniar .
6. Both the sides have stressed upon the legal issue in respect of applicability of Section 55A whether applicable under the facts and circumstances of this case. In view of this, we deem it proper to first of all adjudicate upon this legal aspect. It is worth mentioning that the applicability of Section 55A in such cases where the value claimed by the assessee is higher than the fair market value has already been dealt with in detail by the Hon'ble Third Member decision in the case of Ms. Rubab M. Kazerani (supra). The admitted factual position is that the approved valuer has adopted the rate at Rs. 65 per sq.m. as on 1-4-1981, however, on the other hand, the DVO has adopted the land rate at Rs. 30 per sq.m. as on 1-4-1981. So, the factual position is that the value, so claimed by the assessee was not less than its fair market value but higher than its fair market value as on 1-4-1981. This was the basic question before the Mumbai Benches that whether in such a situation when the value so claimed is not less than its fair market value then the reference to valuation officer was in accordance of law and as per the statute or not. The question was answered vide para No. 18, page 474, relevant portion reproduced below:
The only section which is relevant for making reference to DVO/Income-tax Act is Section 55A only. The Sub-section (a) of Section 55A gives power to the Assessing Officer for making reference to the valuation of a capital asset to the valuation officer where the valuation of the asset claimed by the assessee in accordance with the estimate made by the registered valuer, less than its fair market value. It docs not talk about excess fair market value. In the present case, what I find is that the CIT has mentioned that the fair market value disclosed by the assessee at Rs. 1 crore as on 1-4-1981 as per the valuation report furnished by the assessee was on the higher side. The CIT or the Assessing Officer assumes power under the sub-Clause (a) of Section 55A only when in his opinion the fair market value disclosed by the assessee is less. Therefore neither the Assessing Officer nor the CIT can assume power to give such a direction where the value of the property disclosed by the assessee based on the approved valuer's report is on a higher side i.e., Rs. 1 crore in this case.
In view of clear finding on this issue by the Co-ordinate Bench, we have no option but to follow the same especially when the facts and circumstances are identical. Judicial propriety also requires consistency has to be maintained and under identical facts and circumstances one Bench is expected to follow the decision of another Bench. In addition to this decision of Third Member from the side of the appellant, one more decision of Gujarat High Court in the case of M.V. Shah, Official Liquidator, Anant Mills Ltd. v. U.J. Matain has also been cited wherein it was held that the reference could have been made if the ITO was of the opinion that having regard to the nature of assets and other relevant circumstances, it was necessary so to do. The Court was of the opinion that in that appeal there was nothing special about the nature of asset which would have justified to make a reference to the DVO. Further the Court has held that no attempt was made to justify the action of the ITO under any other provision of Section 55A. So, it was opined that the reference to DVO was not in accordance with law and the same was quashed. On careful perusal of the facts and circumstances of the present appeal, we can say that this precedent has also been correctly relied upon by the learned AR. Now, we have to examine the objection of the learned DR. First of all we want to mention that the decision of Kerala High Court in the case of Dr. C. Ashokan Nambniar (supra) is in respect of different context wherein the valuation was referred in respect of determination of cost of construction of a house. Prima facie this is not the question in hand, hence this precedent was wrongly relied upon. The next reference relied upon by the DR was Section 142A which was incorporated with retrospective effect from 15-11-1972. This section inserted for the purpose of making an assessment or reassessment where an estimate of the value of any investment referred to in Section 69 or Section 69B or the value of any bullion, jewellery or other valuable article referred to in Section 69A or 69B is required to be made. So the section is altogether in respect of ascertaining the unexplained investment, unexplained money or the amount in unexplained investment or any expenditure, etc. For that purpose only Section 142A is inserted and the Assessing Officer has been given power to refer the matter for the purpose of valuation to the valuation officer. On the other hand, the context for reference to the valuation officer in the present appeal was determination of long-term capital gain, hence, the aforesaid section of Income-tax Act has also been wrongly cited by the learned DR. There is one more argument of learned DR that the reference to the DVO can be made by the Assessing Officer in any other case as prescribed under Section 55A(b) having regard to the nature of the asset and other relevant circumstances if it is necessary so to do. On careful perusal of the Third Member decision, we have noticed that this objection of learned DR was also in that appeal and which was duly answered by the Co-ordinate Bench by holding that neither the Assessing Officer nor the CIT(A) can assume power to give such a direction where the value of the property disclosed by the assessee based upon the approved valuer's report. In our humble opinion, it was rightly held by the ITAT because the wordings of Clause (b) are such that "in any other case" if the Assessing Officer is of the opinion that having regard to the nature of the asset it is necessary so to do. So, the cases other than the case whether there is no valuer's report given by the assessee, the Assessing Officer is empowered to make reference under Clause (b) of Section 55A and not otherwise. With these remarks, we hereby conclude that the issue is directly covered by the decision of Ms. Rubab M. Kazerani's case (supra). Therefore, we hereby allow the main ground i.e., Ground No. 1 in favour of the assessee quashing the reference made by the Assessing Officer to the DVO. The findings of the authorities below are hereby reversed.
7. Rest of the grounds as stated by learned AR are either alternatively raised or consequential in nature. Hence, no separate adjudication is required to be taken on these grounds in view of the decision taken in respect of Ground No. 1.
8. As far as charging of interest under Sections 234A, 234B and 234C are concerned, the same are also consequential in nature.
9. In the result, the appeal of the assessee is allowed.