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2022 (11) TMI 1296 - AT - Income TaxCapital gain computation - valuation of property by DVO - difference in sale value as estimated by DVO and declared value by assessee - value declared by assessee on 01.04.1981 is more than its fair market value - Scope of amendment in Section 55A - whether estimation of value of assets as on 01.04.1981 is required to be ignored? - HELD THAT - As find that there is no dispute that assessee has sold both the properties / assets prior to the amendment in Section 55A. Therefore as per the decision in the case CIT vs. Gaurangiben S. Shodhan Indl. 2014 (2) TMI 78 - GUJARAT HIGH COURT the amended provision in clause-(a) of Section 55A, which is inserted with effect from 01.07.2012 and the words at variance with its fair market value , is not applicable on the transaction of assessee. Therefore, find merit in the submission of assessee direct the Assessing Officer to verify the computation of income furnished by assessee which is recorded in para- 7 of this order and grant appropriate relief to assessee. Needless to direct that before passing the order the Assessing Officer shall grant opportunity of hearing to assessee. In the result, the grounds raised by assessee are allowed.
Issues Involved:
1. Validity of the reference to the Departmental Valuation Officer (DVO) under Section 55A of the Income Tax Act for the valuation of property as on 01.04.1981. 2. Adoption of stamp duty value instead of actual sale consideration. 3. Consideration of the investment in NHAI Bonds under Section 54EC for exemption against capital gains. 4. Adequacy of opportunity provided to the assessee by the CIT(A). Detailed Analysis: 1. Validity of the Reference to DVO under Section 55A: The primary issue raised by the assessee was the validity of the reference made by the Assessing Officer (AO) to the DVO for determining the fair market value of the properties as on 01.04.1981. The assessee contended that such a reference was not permissible for the assessment year 2011-12 as the amendment to Section 55A, which allowed such references if the value determined by the assessee was less than the fair market value, was effective from 01.07.2012. The Tribunal upheld this contention, citing the decision of the Hon'ble Gujarat High Court in CIT vs. Gaurangiben S. Shodhan Indl., which clarified that the amendment was not retrospective. Therefore, the reference to the DVO was deemed invalid for transactions prior to 01.07.2012. 2. Adoption of Stamp Duty Value: The AO had adopted the stamp duty value for computing the capital gains, which was higher than the actual sale consideration received by the assessee. The assessee argued that the jantri (stamp duty) value was inflated and not reflective of the actual market value, and that the purchaser paid excess stamp duty to avoid litigation with the Stamp Valuation Authority. The Tribunal noted that the AO and CIT(A) did not consider the actual sale consideration and blindly relied on the jantri value, which was not justified. The Tribunal directed the AO to verify the computation of income furnished by the assessee, taking into account the actual sale consideration. 3. Consideration of Investment in NHAI Bonds Under Section 54EC: The assessee claimed exemption under Section 54EC for the investment of Rs.5,00,000 in NHAI Bonds against the capital gains. The AO initially did not consider this investment, but the Tribunal noted that the AO had rectified the order to accept the investment in NHAI Bonds. The Tribunal directed the AO to grant appropriate relief to the assessee after verifying the computation of income, which included the exemption claimed under Section 54EC. 4. Adequacy of Opportunity Provided by CIT(A): The assessee contended that the CIT(A) had sent notices to the wrong address and did not provide adequate opportunity to present their case. The Tribunal acknowledged this procedural lapse and directed the AO to provide a proper opportunity of hearing to the assessee before passing the final order. Conclusion: The Tribunal allowed the appeal of the assessee, directing the AO to verify the computation of income furnished by the assessee and grant appropriate relief. The AO was instructed to consider the actual sale consideration, the invalidity of the reference to the DVO, and the investment in NHAI Bonds under Section 54EC. The AO was also directed to provide a proper opportunity of hearing to the assessee before passing the final order. The appeal was thus allowed in favor of the assessee.
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