2013 (2) TMI 430 - HC - Income Tax

Valuation of two plots sold - Held that - CIT (Appeals) as also ITAT were fully justified in not placing any reliance on the Inspector s report and by describing it only as an opinion without any material evidence to back the same. Consequently, the Tribunal was justified in adopting the only other values that were available to it and those were the circle rates of the two localities at the time of the sales of the said plots. Going by the circle rates, the Tribunal has concluded that no inference was called for in respect of the plot at Radhey Shyam Park at Rs.2,900/- per sq. yd., whereas, the value of the plot at Rajinder Nagar Industrial Area was to be re-calculated at the rate of Rs.2,500/- per sq. yd. No substantial question of law arises for consideration.

Summary

Issues:
Correct valuation of two plots sold by the respondent/ assessee during the financial year ending 31.03.2003 for the assessment year 2003-04.

Analysis:
The appeal by the revenue was directed against the order passed by the Income Tax Appellate Tribunal regarding the correct valuation of two plots sold by the respondent/ assessee. In the first round of litigation, the Tribunal had directed the assessing officer to reevaluate the rate of the plots after supplying the Inspector's report to the assessee and allowing cross-examination. Despite this, the assessing officer maintained the rate of Rs.6,000/- per sq. yd., resulting in a total valuation. The CIT (Appeals) later adjusted the rates to Rs.2,500/- per sq. yd. for one plot and Rs.2,900/- per sq. yd. for the other, leading to appeals by both the revenue and the assessee before the Tribunal.

The Tribunal, in its impugned order, considered the circle rates for the plots and adopted them as the correct values. For one plot, the circle rate was lower than the apparent sale consideration, justifying its adoption. The Inspector's report, which formed the basis of the original valuation, was found to lack evidentiary value due to deficiencies in the Inspector's cross-examination and the outdated nature of the information gathered. Consequently, the Tribunal upheld the circle rates as the most reliable values for the plots.

The cross-examination of the Inspector revealed significant shortcomings in his report, such as lack of concrete evidence, reliance on verbal inquiries, and outdated information. The Inspector's inability to recall specific details and reliance on limited sources undermined the credibility of his valuation. The Commissioner of Income Tax (Appeals) and the Tribunal were justified in disregarding the Inspector's report and relying on the circle rates for determining the plot values, as they were the most reliable and verifiable indicators available.

In conclusion, the High Court found no substantial question of law warranting consideration and dismissed the appeal. The Tribunal's decision to adopt circle rates as the correct values for the plots was upheld, emphasizing the importance of reliable and current information in valuation assessments.