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2018 (3) TMI 216 - AT - Income TaxRevision u/s 263 - validity of reference made by the AO to the DVO for the valuation of the property - Held that - The amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. Thus it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) as it is administered at the relevant time. Once we have reached to the conclusion no reference can be made to the DVO for the year under consideration in the given facts and circumstances. Thus on the same basis the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue.- Decided against revenue
Issues Involved:
1. Validity of the reference made by the Assessing Officer (AO) to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act, 1961. 2. Whether the assessment order dated 25.03.2015, passed under Section 143(3), is erroneous and prejudicial to the interest of revenue. 3. Applicability of the amendment to Section 55A of the Income Tax Act, effective from 01.07.2012, to the assessment year 2012-13. Detailed Analysis: 1. Validity of the Reference Made by the AO to the DVO: The primary issue revolves around whether the AO's reference to the DVO for the valuation of the property was valid under Section 55A of the Income Tax Act. The assessee argued that the reference was invalid because the valuation report was received after the completion of the assessment order. The AO referred the matter to the DVO on 25.03.2015, the same date the assessment order was passed. The Pr. CIT observed that the decision to refer the matter to the DVO was taken before passing the assessment order, as recorded in the assessment order's note. The Pr. CIT justified the reference, stating that the AO was not satisfied with the cost of acquisition declared by the assessee, leading to the reference to the DVO. However, the Tribunal noted that the reference to the DVO was against the provision of Section 55A as applicable prior to the amendment since the value declared by the assessee was higher than the fair market value determined by the DVO. 2. Erroneous and Prejudicial to the Interest of Revenue: The Pr. CIT held that the assessment order was erroneous and prejudicial to the interest of revenue because the AO did not consider the DVO's report, which indicated a lower cost of acquisition than declared by the assessee. The Pr. CIT argued that the AO's failure to consider the DVO's report resulted in an under-assessment of the Long Term Capital Gains (LTCG). The Tribunal, however, found that the AO had completed the assessment based on the information available at the time and that the subsequent DVO report could not retroactively invalidate the assessment order. The Tribunal emphasized that the AO had applied his mind and chosen not to make any addition under the head "capital gains" based on the valuation report submitted by the assessee. 3. Applicability of the Amendment to Section 55A: The Tribunal examined whether the amendment to Section 55A, effective from 01.07.2012, applied to the assessment year 2012-13. The amendment allowed the AO to refer the valuation of capital assets to the DVO if the value claimed by the assessee was at variance with its fair market value. The Tribunal clarified that amendments effective from any date other than the first day of April would apply to the subsequent assessment year. Therefore, the amendment effective from 01.07.2012 would apply from the assessment year 2013-14, not 2012-13. Consequently, the Tribunal concluded that the reference to the DVO was invalid for the assessment year 2012-13 under the provisions of Section 55A as they stood before the amendment. Conclusion: The Tribunal upheld the assessee's appeal, quashing the revision order passed by the Pr. CIT under Section 263 of the Income Tax Act. The Tribunal concluded that the AO's assessment order dated 25.03.2015 was neither erroneous nor prejudicial to the interest of revenue, as the reference to the DVO was invalid for the assessment year 2012-13. The assessee's appeal was allowed, and the assessment order was restored.
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