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TMI Blog1986 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Haryana State Government for a girls school since 4-4-1936 originally at the rate of Rs. 150 per month which was later increased to Rs. 310 per month. On the front of this school complex was a contiguous piece of land measuring 300 sq. yards on which eight shops were constructed in 1966-67. We are not concerned with these shops in this case. The assessee, being the owner of the said school complex, sold it to the Haryana Government for Rs. 3,56,448 vide sale deed dated25-3-1976. The question of computation of the capital gains on the transfer of this property arose with reference to the market value as on1-1-1954. In the first return filed on29-6-1976the capital gains were declared at Rs. 1,13,586 on the basis that the value of the property as on1-1-1954was Rs. 2 lakhs. The ITO, thereafter, made a reference to the Valuation Officer under section 55A(b) of the Income-tax Act, 1961 (' the Act ') on30-1-1977. The Valuation Officer vide his report dated20-1-1979valued the property as on1-1-1954at Rs. 54,000 only. Thereafter, the assessee filed the first revised return dated15-2-1979taking the value of the property as on1-1-1954at Rs. 1,86,448. This was done on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between the second return and the income assessed was less than Rs. 1 lakh and so the assessment order passed under section 143(3)/144B of the Act was a nullity. In elaboration of (iii) above it was argued by Shri P.N. Chopra, the learned counsel for the assessee, that the competence to try a case goes to the root of the matter and so the assessment order had to be annulled as even consent could not confer jurisdiction. In this connection reliance was placed by him on the following decisions : CIT v. Ranisukh Motilal [1955] 27 ITR 54 (Bom.), Hira Lal Patni v. Kali Nath AIR 1962 SC 199, N. Naganatha Iyer v. CIT [1966] 60 ITR 647 Mad.), CIT v. Smt. Minabati Agarwalla [1971] 79 ITR 278 (Cal.), Narinder Singh Dhingra v. CIT [1973] 90 ITR 110 (Delhi), P. Vittal Pai v. Agri. ITO [1976] 104 ITR 794 (Kar.) and CIT v. Mohini Thapar Charitable Trust [1986] 160 ITR 408 (Cal.). Shri Chopra also cited the decision of the Madhya Pradesh High Court in CIT v. Aich Kay Furni [1983] 141 ITR 928 for the proposition that if the variation in income does not exceed Rs. 1 lakh, the provisions of section 144B are not attracted. 5. On the other hand, Smt. Archana Ranjan, the learned departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed on21-9-1979, and the assessment order was passed on19-7-1980. Therefore, the assessee's contention that the assessment was time barred, cannot be accepted. We cannot also accept the contention put forward on behalf of the assessee that even though an observation in the IAC's order under section 144A does not amount or operate as a direction in terms of section 144A it would remain binding on the ITO. So far as the reference of the ITO to the IAC under section 144B is concerned, it was made on17-7-1980, i.e., after the second revised return was filed on21-9-1979. In terms of section 144B the variation in income exceeded Rs. 1 lakh in terms of the second revised return. Therefore, on facts, the procedure under section 144B became attracted. The proposition laid down in the various decisions cited on behalf of the assessee are no doubt there but on facts as they obtain in the present case, the assessee cannot derive any advantage therefrom. Therefore, in none of the aspects of the first ground referred to above is there any force or merit. 7. This brings us to the question of value of the property in question as on1-1-1954for the purposes of computation of the capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been placed on the record by either of the parties. What an assessee itself admits to be the valuation of its property may verily be taken to be true. But like all admissions, the assessee can explain the circumstances in which that admission came to be made. The assessee can also show that that admission was wrong or against facts. Therefore, the principle of sub-standard morality, strictly speaking, will not be attracted in such a situation. We have, therefore, to see whether, on the basis of the material on the record, the said admission is fortified or falsified wholly or partly. We cannot right away say that it was an admission which must operate against the assessee conclusively. 11. We have, therefore, to consider the material on the record, relevant for determining the value of the property in question as on1-1-1954. It is pertinent to notice here that in paragraph 8 of its letter dated 12-10-1978 to the Valuation Officer as also in paragraph 8 of the summary dated 5-2-1980 put forward by the assessee before the IAC for hearing under section 144A, it had tried to explain the circumstances in which the report dated 22-12-1968 of the approved valuer, Shri M.R. Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956 Bom. 617, Devi Prasad v. State AIR 1967 All. 64, Sri Lal v. IAC (order dated 31-3-1986 of Chandigarh Bench), Bommidala Poornaish v. Union of India AIR 1967 AP 338, State of Kerala v. P. P. Hassan Koya AIR 1968 SC 1201, Debi Prasad Poddar v. CWT [1977] 109 ITR 760 (Cal.), Wenger Co. v. DVO [1978] 115 ITR 648 (Delhi) and Jai Prakash Singh v. CIT [1978] 111 ITR 507 (Gauhati). We have gone through these decisions, the principles underlying which are not in dispute. We, therefore, proceed to examine the material on the record. Although the property in question may have been surrounded by agricultural lands but there is no material on the record to establish that the property in question was agricultural on1-1-1954. The Valuation Officer himself in his comments on the assessee's letter dated12-10-1978stated that the area around the property in question was mostly agricultural land up to the year 1960 or so. In fact, admittedly the property in question stood rented out to the school since4-4-1936wherein a building stood. Therefore, the property could not be valued as an agricultural land. It appears that the approved valuer, Shri M.R. Sharma, valued the property in question for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 sq. yards was sold by one Atma Ram to one Krishna Kumar for Rs. 7,000 at the rate of Rs. 10.25 per sq. yard. That plot was located besides the new bus stand road near railway station colony, i.e., near the property in question. The fifth sale instance is of19-1-1956, i.e., two years after1-1-1954. A plot of 236 sq. yards alongBahera Roadnear bus stand was sold by Dr. Babu Lal and Pyare Lal to L. Beer Chand for Rs. 3,186 at the rate of Rs. 13.50 per sq. yard. The sixth sale instance is of13-9-1957, i.e., three and a half years after1-1-1954. A plot of 426 sq. yards onBahera RoadoppositeDevSamajCollegewas sold by Shri Amar Nath and Shri Prem Nath to one Ram Chand for Rs. 5,946 at the rate of Rs. 14 per sq. yard. Two instances were mentioned in the report of the Valuation Officer. One of 1959-60 of 2,500 sq. yards at the rate of Rs. 6 per sq. yard in the name of Ambala Co-operative Society and the other of 1963-64 of 5,000 sq. yards at the rate of Re. 1 per sq. yard. They were both in Bagichi Bal Mukand, the purchaser being a co-operative society. These instances do not assist the department. There were said to be two further instances of sale of 1968 where a rate of Rs. 300 per sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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