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TMI Blog2013 (10) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by AO - Therefore, in our view the valuation of the property was required to be made a fresh after allowing proper opportunity of hearing to assessee by the DVO - the order of CIT (A) was set aside and the matter was restored to the AO for passing a fresh order after obtaining fresh report from the DVO after hearing assessee. Reference u/s 55A - Whether in the absence of mandatory recording of satisfaction by the AO, there was no justification for making reference u/s 55A - Held that:- There was nothing in the section 55A which debars AO from making reference under clause (b) even when registered valuer report had been filed - In cases where registered valuer report had been filed reference under clause (a) of section 55A can be made if the AO finds the valuation lower than the market value - In any other case, clause (b) was applicable - Therefore, it was clear that clause (b) applies in situations where either no registered valuer report had been filed or if the registered valuer report had been filed but the valued determined was higher than the market value - Thus in case the AO was of the opinion that the value as per the registered valuer was higher than the market v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een prevented by the sufficient cause to file objections against the valuation report. The assessee also submitted that the report of the DVO valuing the property as on 1.4.1981 had no justification. It was pointed out that as per report in the " accommodation times", the rates for residential premises prevailing in Santacruz (w) as on 1.4.1981 were in the range of Rs.. 400/- sq. ft. to 1100 sq. ft. The rate adopted by the Government approved valuer was Rs.. 706/- per sq. ft. whereas the rate adopted by the DVO was Rs.. 310/- per sq. ft. It was further pointed out that the DVO had not considered the value of the terrace while arriving at value of the house as on 1.4.1981. CIT (A) however was not satisfied with the contentions raised. It was observed by him that the DVO had quoted three instances of the property having comparable rates and, thereafter, adopted the rate of Rs.. 310 per sq. ft. for valuing the property. Therefore, the valuation made by DVO could not be faulted with. The AO had computed the capital gain on the basis of report of the DVO and, therefore, CIT (A) held that there was no cause for interference in the action taken by AO and accordingly confirmed the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r pointed out that the DVO in the report a copy of which has been placed in the paper book, has himself written that on the date of inspection building had been demolished and the new building was under construction. Therefore, it was clear that the DVO could not have inspected the building. It was also pointed out that the property had a terrace of about 600 sq. ft. which had not been considered by the DVO. The learned AR also argued that the AO while making the reference under section 55A is required to record satisfaction regarding the market value of the property which had not been done in this case and, therefore, the reference made was not valid on this ground also for which assessee has raised the additional ground. 4. Learned DR on the other hand strongly defended the orders of authorities below. It was argued that even if the report of the registered valuer had been filed by the assessee, the reference to the DVO could be made by AO under clause (b) of section 55A. He referred to the judgment of Hon'ble High Court of Delhi in case of ACC Ltd. v. DVO (21 Taxman. Com 488) in which it was held that even if the registered valuer report had been submitted by the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uer had valued the land at the rate of Rs. 706 per sq. ft. whereas the DVO has adopted the rate at Rs.. 310 sq. ft. after considering comparable cases. The Learned AR for assessee has raised the legal dispute that assessee having declared the higher value of cost of acquisition than the value adopted by the AO, no reference could be made to the DVO u/s 55A. The said provision is reproduced below as ready reference : Section 55A With a view to ascertaining the fair market value of a capital asset, for the purpose of this chapter the AO may refer the valuation of the capital asset to the valuation officer. (a) In a case where the value of the asset as claimed by assessee is in accordance with the estimate made by a registered valuer, if the AO is of the opinion (i) that the value so claimed is less than its fair market value. (b) In any other case, if the AO is of the opinion (i) that the fair market value of the asset exceeds the value of the asset as claimed by assessee by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary to do so." 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined is higher than the market value. Thus in case the AO is of the opinion that the value as per the registered valuer was higher than the market value, he could make reference u/s 55A (b) (ii). Therefore, following the judgment of Hon'ble High Court of Gujarat in case of ACC Ltd. (supra) we hold that the reference made by AO to DVO on the facts of the case is justified and order of CIT (A) on this point is therefore upheld. 7. We may also point out here that even if the reference made by the AO to the DVO was not in accordance with law or illegal the valuation report obtained in pursuance of such a reference will be relevant and admissible evidence which can be used by the revenue authorities in the income tax proceedings. This view is supported by the decision of Hon'ble Supreme Court in case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505 in which it was held that even though the search and seizure had been conducted in contravention of the provisions of section 132 of the IT Act material obtained can be used by the Income Tax authorities. Thus even if the reference made by AO is considered not valid the valuation report can always be used in the income tax proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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