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Issues involved: Whether the order passed u/s 154 of the Income Tax Act for the AY 2004-05 by the CIT(A) confirming the valuation of the property as on 1.4.1981 by the District Valuation Officer (DVO) is justified.
Issue 1: Jurisdiction of Assessing Officer u/s 154 The assessee contended that the Assessing Officer exceeded his jurisdiction by considering the valuation report of the DVO for the property as on 1.4.1981 under sec. 154, as the report was not available during the original assessment u/s 143(3). The assessee argued that the DVO's valuation was based on properties in a different locality, making it unreliable for determining the actual value of the property in question. Issue 2: Rectification u/s 154 The Assessing Officer, after receiving the DVO's report post-assessment, re-computed the long term capital gains based on the revised property valuation. The Assessing Officer's re-calculation resulted in a significant difference in the capital gains amount compared to the assessee's indexed cost of acquisition. The assessee contended that the issue of determining the Fair Market Value (FMV) as on 1.4.1981 was debatable and not a mistake apparent on record, thus falling outside the scope of rectification u/s 154. Decision: The Tribunal held that the Assessing Officer erred in passing the order u/s 154 as the issue of property valuation was debatable and required subjective consideration. It was emphasized that rectification u/s 154 is limited to correcting obvious mistakes on record, not for re-evaluating contentious issues. The Tribunal concluded that the Assessing Officer exceeded his jurisdiction by re-determining the FMV under sec. 154, and therefore set aside the order passed u/s 154 and deleted the additional capital gains calculated based on the DVO's valuation. The Tribunal allowed the appeal filed by the assessee, emphasizing the importance of jurisdictional limits in rectification proceedings.
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