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2018 (1) TMI 1523 - AT - Income TaxLegality of reference made to the DVO is u/s 55A - amendment made to Sec.55A(a) - 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. We thus find that Hon'ble jurisdictional High Court has held that amendment to Proviso of Sec.55A(a) is applicable only w.e.f. 01.07.2012 and has no retrospective effect. Before us, Revenue has not placed any contrary binding decision in its support. We therefore relying on the aforesaid decision of Hon'ble Bombay High Court in the case of Puja Prints 2014 (1) TMI 764 - BOMBAY HIGH COURT are of the view that in the present case, AO was not justified in making a reference to the DVO. We therefore set aside the order of AO and thus the grounds of the assessee are allowed.
Issues Involved:
1. Validity of the reference to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act. 2. Applicability of the amendment to Section 55A with respect to its retrospective effect. Detailed Analysis: 1. Validity of the Reference to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act: The primary issue in this case revolves around the reference made by the Assessing Officer (AO) to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act. The assessee had sold ancestral immovable properties and declared the cost of acquisition based on a valuation report from a government-approved valuer. The AO found this valuation excessive and referred the matter to the DVO, who determined a much lower fair market value. Consequently, the AO adopted the DVO's valuation, leading to a significant increase in the taxable income of the assessee. The assessee contested this reference, arguing that as per the unamended Section 55A, a reference to the DVO could only be made when the value adopted by the assessee was less than the fair market value. The assessee relied on the decision of the Bombay High Court in the case of CIT vs. Puja Prints, which supported this interpretation. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's action, stating that the amendment to Section 55A, which allowed for references when the value adopted was at variance with the fair market value, was applicable from 1st July 2012 and thus relevant to the case. 2. Applicability of the Amendment to Section 55A with Respect to its Retrospective Effect: The second issue pertains to whether the amendment to Section 55A, effective from 1st July 2012, could be applied retrospectively. The assessee argued that the amendment was prospective and not applicable to the assessment year in question (2010-11). The CIT(A) dismissed this argument, holding that procedural amendments apply to all pending assessments as of the amendment date. The tribunal examined the case of CIT vs. Puja Prints, where the Bombay High Court held that the amendment to Section 55A(a) was not retrospective. The court clarified that the reference to the DVO under the unamended Section 55A(a) could only be made if the value adopted by the assessee was less than the fair market value. Since the AO's reference to the DVO was made after the amendment date, the tribunal had to determine if the amendment could be applied retrospectively. Conclusion: After reviewing the submissions and the relevant legal precedents, the tribunal concluded that the AO was not justified in making the reference to the DVO under the unamended Section 55A. The tribunal relied on the Bombay High Court's decision in Puja Prints, which clearly stated that the amendment to Section 55A(a) was applicable only from 1st July 2012 and had no retrospective effect. Therefore, the tribunal set aside the AO's order and allowed the appeal of the assessee. In summary, the tribunal held that the reference to the DVO was invalid under the unamended Section 55A, and the amendment to the section did not have retrospective effect. The appeal of the assessee was allowed, and the order of the AO was set aside.
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