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TMI Blog2010 (11) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer but the Assessing Officer did not choose to accept the same - It is to be noted that the Assessing Officer has no power to refer to valuation to fix the fair market value on the first day of April 1981 on the interpretation given to section 55A to a value “less than the value” offered by the assessee following the principles established by the Hon’ble Bombay High Court in the case of Daulal Mohta HUF, ITA No. 1031 of 2008 dated 22-9-2008 - Ground Nos. 1,2 & 3 are considered allowed Adoption of substituted value on the basis of DVO’s report - Consequent to the receipt of the report, the CIT(A) without considering the objections of the assessee, directed the Assessing Officer to adopt the valuation of ₹ 30,08,000 as sale consideration in place of ₹ 42,27,104 adopted by the Assessing Officer It is the objection of the assessee that the CIT(A) had not considered the objections as per the letter dated 1-6-2008 submitted to the DVO - The assessee should be given an opportunity before adopting the value – Decided in the favour of the assessee and the matter is remitted back to the file of AO for fresh adjudication - ITA NO. 1220/MUM/2010 - - - Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investment in NABARD Bonds Rs. 21,00,000 Restricted to Rs. 17,22,606 Income from Long Term Capital Gain Rs. Nil The assessee, while filing the return of income has taken its cost of acquisition as on 1-9-1978 as valuation as on 1-4-981 and arrived on the indexed cost of acquisition at Rs. 2,93,760. During the assessment proceedings assessee filed a valuation report stating the value as on 1-4-1981 at Rs. 3,80,000 and the indexed cost of acquisition has been arrived at Rs. 18,24,000. Assessing Officer did not accept this claim as the assessee has not filed any revised return. The Assessing Officer also did not accept the sale consideration at Rs. 21,00,000 and on noticing that the stamp value for the purpose of registration was at Rs. 42,27,104 has adopted the stamp value pending valuation by the DVO under the provisions of section 50C with a remark vide para 16.4 that the assessment would be rectified after the receipt of valuation report. As Assessing Officer stated in para 5 of the assessment order two issues in this case calls for consideration. One is the valuation adopted for the purpose of cost of acquisition as per the valuer s report as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to file the valuation report taking the value as on 1-4-1981 in the course of assessment proceedings when the Assessing Officer choose to modify the sale value as per section 50C. Assessee is well within her rights to choose the value as per the provisions of the Act. The Assessing Officer should have entertained assessee s claim when he choose to modify the capital gains working by adopting different sale value as per section 50C. The CIT(A) s objection also in rejecting the claim in stating that any claim has to be made by following true procedure of law and one value cannot be substituted by any other during the assessment proceedings except under the procedure given under the Act can not be accepted. He rejected assessee s claim ignoring the fact that it is the Assessing Officer whose choose to change the working of capital gains. Since the assessee has invested the capital gains so worked out by her in the NABARD bounds and claimed total exemption, there was no necessity to adopt fair market value when the return was filed. She even invested more than the Capital Gain so arrived at adopting the actual cost. Since the value under section 50C was being increased and the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower under section 251(1)(c). The said section reads as under:- Section 251(1): In disposing of an appeal, the Commissioner (A) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment. (b) in any appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit.: 21.2 The issue related power of first appellate Authority has been examined by the Hon ble Supreme Court in the case of Commissioner of Income-tax v. Nirbheram Deluram 224 ITR 610 (SC). The brie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra) has stated : The above observations are squarely applicable in the interpretation of section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminous with that of the Income-tax Officer, and if that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise, an appellate authority while hearing the appeal against the order of a subordinate authority, has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitation, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working out the capital gains after due examination. In fact the assessee, without prejudice to the claim under section 50C, has furnished a revised capital gains working to the Assessing Officer vide letter dated 17-12-2007, which is received by the Assessing Officer but the Assessing Officer did not choose to accept the same. The working was as under: - Market value as per section 50C subject to our objection to this value as per our letter dated 3-11-2007. In view of valuation Report dated Jan 2005 at Rs. 2040000 Less: Transfer cost 4227104 90000 4137104 Less : (1) Indexed cost of property based on value as on 1-4-1981 380000 480 1824000 (2) Amount invested 2100000 3924000 Long Term Capital Gain Subject to our objection 213104 9. In the course of argument the learned D.R., however, requested to restore the matter to the file of the Assessing Officer to consider the fair market value as on 1-4-1981. We consider it not necessary as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e record the objections of the assessee have not been considered and therefore the valuation report is to be considered by the Assessing Officer afresh taking into consideration the objections of the assessee. Since this aspect was not examined either by the Assessing Officer, the report being not with him by the time assessment was completed, or by the CIT(A), in the interest of justice, we are of the opinion that this aspect require examination by the Assessing Officer afresh as per the provisions of section 50C(2). The assessee should be given an opportunity before adopting the value. It is not out of place to mention that this exercise may become academic as the cost of indexation allowed under ground Nos. 1 to 3 may reduce the capital gains and the assessee having invested the money in the bonds may not be having any capital gains to be taxed even to the value as confirmed by the CIT(A). However, for the sake of completeness of the computation, we restore the matter to the file of the Assessing Officer to examine the valuation as per provisions of section 50C after giving due opportunity to the assessee and to adopt the value, which in any case should not exceed the value as d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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