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TMI Blog2017 (6) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... other co-owner of the property with the case of the assessee which case was decided by the ld. CIT(A), Bikaner (camp at Jaipur) vide appeal no. 684/Bikaner/2010-2011 dated 31-03-2015 in favour of Ms. Roopali Dhingra deleting the additions made by the lower authorities (APB page 39 to 60). It is thus observed that although the lower authorities have taken the recourse of Ms. Roopali Dhingra case with the assessee during the assessment order and made the additions yet the case of Ms. Roopali Dhingra has been decided by the ld. CIT(A), Bikaner (camp at Jaipur), supra deleting the additions. Therefore, the question does not arise to make addition in the case of assessee. In this view of the matter and also taking into consideration the decision of ITAT , Hyderabad Bench in the case of ACIT vs. Smt. S. Suvarna Rekha (2010 (10) TMI 1051 - ITAT HYDERABAD ), we find that the ld. CIT(A) is not justified in adopting the value of the impugned land at ₹ 1,67,52,562/- instead of ₹ 1,56,39,110/- u/s 50C of the Act. Thus Ground of the assessee are allowed. Addition made by the AO u/s 55A(a) - Held that:- The assessee and other 5 co-owners obtained a report from registered valuer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings of reassessment deserves to be quashed. 2. That the ld. lower authorities grossly erred in adopting the value of impugned land sold at ₹ 1,67,52,562/- u/s 50C of the Act as against ₹ 1,56,39,110/- shown and adopted by the assessee. 2.1 That the lower authorities grossly erred in ignoring several reasonable, plausible objections which had material bearing on the impugned case, ignoring the same is unjustified, bad in law, is in utter violation of principles of natural justice and ought to have been considered. Non-consideration and rejection in a summary manner is unjustified, bad in law and the entire addition deserves to be deleted. 2.2 That the District Valuation Officer having stated the objections are not considered, the same having been raised by the Assessing Officer, the Assessing Officer grossly erred in mentioning that the District Valuation Officer has considered the same/ considered by the erstwhile Assessing Officer when he himself (District Valuation Officer) had not considered the same, the non-consideration of objection is unjustified and deserves to have been considered. 3. That the ld. lower authorities grossly erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out fair market value as on01-04-1981 at the rate of ₹ 200/- per sq. yard the ld. lower authorities grossly erred in holding that a rate of ₹ 40/- per sq. yard is applied as on 01-04-1981. 3.2 The Assessing Officer grossly erred in solely and blindly relying upon the valuation adopted by the erstwhile Assessing Officer without any cogent reasons, the non-consideration is unjustified and deserves to be considered. 2.1 First of all, the appeal of the assessee Smt. Deepali Bhargava in ITA No. 158/JP/2016 for the assessment year 2008-09 is taken up for adjudication. 3.1 Apropos Ground No. 1 of the assessee, brief facts of the case are that the return of income declaring total income of ₹ 2,19,400/- was furnished on 30-07-2008 by the assessee which was processed u/s 143(1) of the Act at declared income in her return. The AO observed that during the year the assessee had entered into a sale transaction of land and had earned capital gain on sale of property from Gram Naya Nagar, Tatgarh Road, Beawar. Perusal of order made by the then AO, it was observed by the AO that same had not been disclosed by the assessee. Accordingly, notice u/s 148 was issued aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. (ix) Therefore, in view of the above discussion and looking into totality of facts and circumstances of the case, it is held that AO was justified in reopening the case of the appellant u/s 147 of the Act as a substantial income had escaped assessment within the provision of Section 147 of the Act. Hence, this ground of appeal is hereby rejected. 3.3 I have heard the rival contentions and perused the materials available on record. The ld. AR of the assessee filed the written submission on the issue in question but it is noted that the ld. AR of the assessee at the time of hearing of the case could not controvert the observations of the ld. CIT(A) on the issue in question. The ld. CIT(A) has rightly held that the AO was justified in reopening the case of the assessee u/s 147 of the Act as substantial income had escaped assessment within the provision of Section 147. In this view of the matter, the Ground No. 1 of the assessee is dismissed. 4.1 Apropos Ground No. 2, 2.1 and 2.2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 metes futher away from Parsvanath Hospital and no benefit on this account has been give by the DVO. On Perusal of the DLC rate Chart, It may be noted that no rate has been prescribed of land value is case the land is situated away from the main road in case of (Up Kshetra A) Whereas n case of up Kshetra B C the value adopted is half of the main road rate in case the land is away from the main road. Benefit of such depth from the main highway while calculating the valuation report ought to have been given but has not been given. At the time of physical inspection of the impugned land the DVO had noticed that the land is irregular and it is neither straight nor square nor rectangular, it has several turns after every 50 feet and is also situated in law lying area and at least 5 feet below from the main road and in comparison to other nearby lands. Thus at the time of selling the buyer would have discounted the irregular shape of land and would have adjusted the rate of filling up such huge and area. The id. Valuation officer has just given a benefit of 5% on this count which should have been at least 10% No comparative sale instance has been given by the DVO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Agreement to sell was ₹ 220/- per feet. A sum of ₹ 1,41,96,737/- was incurred towards land use conversion and land was converted for commercial use on 02.02.2008. It may be mentioned that these issues are not to be examined by the DVO as reference was made to the DVO for determining the FMV as on 31.03.2008. Further, the appellant has not provided a copy of the Agreement to sell dated 29.03.2007 and did not demonstrate how the date of sale could be taken as 29.03.2007 when the document for transferring the little of the property under consideration was registered on 31.03.2008 itself. Therefore, this contention is rejected. (vi) In view of the above discussion, it is held that the DVO has not followed the circle rates blindly but he has applied his mind, made the spot inspection of the property, considered the factors which may adversely affect the FMV and determined the FMV of the property under consideration of ₹ 10,05,15,372/- Therefore, I do not find any infirmity in the valuation report of the DVO. Hence this ground of appeal is rejected. (vii) It is pertinent to mention here that regarding the FMV of the property under consideration as on 01.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept the same. 2.3 That your honour shall notice that the ld. Assessing Officer has blindly applied the rates adopted in the case of Smt. Roopali Dhingra. That there were several important factors which the ld. DVO the ld. Assessing Officer has not considered / not given any benefit while working out the valuation at ₹ 16,752,562/- which are as under: Objection No. Remarks Relief by DVO 01 The valuation done by the Sub-Registrar is @ ₹ 700/- per square feet whereas it is to be noted that no specific valuation has been prescribed by the Sub-Registrar towards the land belonging to the Assessee appellant PB 67 . On perusal of the chart of DLC rate; as obtained from the office of Sub-Registrar your honour shall notice that the rate is ₹ 700/- per feet on Tatgarh Marg only upto Parsvanath Hospital. The land belonging to the Assessee appellant is situated at least 500 meters further away from Parsvanath Hospital PB 27. Furthermore no benefit on this account has been given by the ld. Valuation Officer. PB 69. NIL 02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in CIT v. Rameshwar Prasad Kacholia (DBITA 51/2014 dated 15.10.2015) PB 79- 86 wherein the Hon ble Rajasthan High Court has approved the discount given by the ld. CIT (A) and the Hon ble ITAT and disregarded the valuation u/s. 50C owing to adverse factors of Land. (b) In ITO v. Ms. Kumudini Venugopal [2011] 16 taxmann.com 136 (Chennai ITAT) PB 87-91 it was held: Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - Assessee had sold certain agricultural land - In course of assessment, provision of section 50C were applied to assessee's case and valuation of property as per guideline value of stamp valuation authority was accepted because same was found to be higher than sale consideration disclosed by assessee - Assessee invoked provisions of section 50C(2) and claimed that value as fixed by stamp valuation authority was on higher side - Assessing Officer thus referred valuation of property to DVO - DVO valued property at a figure much lower than value as fixed by stamp valuation authority - Whether on facts, claim of assessee was true and correct and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue the property de novo, in the light of our above observations, and in case the valuation so arrived at by the DVO is less than ₹ 11,42,100, the AO shall adopt the fresh valuation so done by the DVO for the purpose of computing capital gains under Section 48 of the Act. We direct so. (d) In Suresh C. Mehta vs. ITO [(2013) 35 taxmann.com 230 (Mumbai ITAT) PB 96-100 it was held: Valuation report of DVO is not binding upon CIT (A) and he is bound to look into the objections of the assessee. (e) In ACIT vs. MIL Industries Ltd. [(2013) 33 taxmann.com 120 (Chennai ITAT) PB 101-106 the report of the DVO was ignored. (f) In Chandra Bhan Agarwal vs. Addl. CIT [(2012) 21 taxmann.com 133 (Calcutta ITAT) PB 107-116 wherein the report of the DVO was ignored since objections of the assessee were not properly disposed and accordingly consideration given by the Assessee was accepted. (g) In Jai Kumar Chawla v. ITO [(2013) 39 taxmann.com 188 (Indore ITAT) PB 117-123 it was held: Valuation in case of land should be arrived at by taking into account adverse factors attached to land. Keeping into account all these factors, which are going to adversely affect fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guesswork or notionally. Therefore, as observed by the Pune Bench of this Tribunal, the difference of less than 10% has to be ignored. In view of the decision of the Pune Bench of this Tribunal in the case of Rahul Construction (supra), in our opinion, the CIT(A) has rightly deleted the addition made by the Assessing Officer. Therefore, we do not find any infirmity in the order of the lower authority. Accordingly the same is confirmed. 4.3 During the course of hearing, the ld. DR relied on the orders of the authorities below. 4.4 I have heard the rival contentions and perused the materials available on record. It is noted from the records that the assessee alongwith five other members jointly sold a commercial land at Naya Nagar, Titgarh Road, Beawar, Ajmer admeasuring 18777.21 Sq. Yards on 31-03-2008 for a consideration of ₹ 9,38,34,660/- and paid a stamp duty on ₹ 11,82,96,432/-. It is observed that as per assessee her 1/6th share of sale consideration was to the tune of ₹ 1,56,39,110/- only and for the purpose of stamp duty, the share of the assessee is worked out to ₹ 1,97,1,072/-. It is also noted that the AO during the course of assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty as on 01.04.1981. It is noted from the records that the Sub-Registrar had made valuation of the property at Tatgarh Road, i.e. upto Parsavnatrh Hospital, Beawar at ₹ 700/- per sq. ft (Assessee's Paper Book page 67). However, it is noted that the land of the assessee is situated further 500 meters away from Parsavnath Hospital (Assessee's Paper book page 27). On perusal of the DLC rate chart (PB 67) it is noted that no rate has been prescribed of and value in case of land which is situated away from the main road in case of Up Kshetra. It is also noted that at the time of physical inspection of impugned land the DVO observed that the land was neither straight nor square nor rectangular which had several turns after every 50 sq.ft. It is also noted that no comparative sale instance had been given by the DVO as to adjoining land of the assessee. It is noteworthy to mention that there are six co-owners of the land and the land in question cannot be sold without their consents. It is also noted that the AO had taken the case of Ms. Roopali Dhingra, another co-owner of the property with the case of the assessee which case was decided by the ld. CIT(A), Bikaner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the difference of 10% in valuation is always bound to occur. Therefore, when the difference between the value shown by the assessee and the estimated value is less than 10% the value shown by the assessee shall be adopted for the purpose of computation of capital gain. In this case also the difference is less than 10% between the value shown by the assessee and the value estimated by the valuation Officer. When the value of the property was estimated there will be a difference of 10% + depending upon the individual valuation Officer. No one is excepted to value the property accurately since some of the items are to be value on guesswork or notionally. Therefore, as observed by the Pune Bench of this Tribunal, the difference of less than 10% has to be ignored. In view of the decision of the Pune Bench of this Tribunal in the case of Rahul Construction (supra), in our opinion, the CIT(A) has rightly deleted the addition made by the Assessing Officer. Therefore, we do not find any infirmity in the order of the lower authority. Accordingly the same is confirmed. In this view of the matter and also taking into consideration the decision of ITAT , Hyderabad Bench in the case of AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in residential/ commercial/mixed area/industrial area)(PB-114), the Registered Valuer stated as residential area in 1981; converted to commercial on 02.02.2008 In column no. 16(Is there any restrictive covenant, in regard to use of land) and it was stated by the registered Valuer as for construction of residence (iv) Therefore, in view of the above facts and inherent contradictions in the valuation report of the Registered Valuer, it is held that the Registered Valuer was not justified in taking land cost (FMV) as on 01.04.1981 at ₹ 200/- per sq. yard and his valuation report con not be relied upon. Now the question comes what should be the FMV as on 01.04.1981 or cost of acquisition. As already stated above, the Registered Valuer has taken the rates for Naya Nagar area at ₹ 65/-per sq. yard for residential property whereas the AO has taken the value at ₹ 40/-per sq. Yard. thus, the FMV as on 01.04.1981, can at the most be ₹ 65-per sq. Yard for a residential land as is evident from the report the report of Registered Valuer as stated earlier. It is noted from the assessment order that the Registered Valuer stated before the AO of Ms Roopa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Registered Valuer cannot be relied upon because of inherent defects. Therefore, in view of the above discussion, I think it would be proper to take the FMV of the property as on 01.04.1981 at ₹ 40/- per Sq. Yard and not ₹ 65/- per Sq. Yard and not ₹ 65/- per Sq. Yard for a residential property as taken by the Registered Valuer on the basis of earliest available sale instance of 1990 and without making adjustment for the time gat of nine years. (vii) Therefore, in view of the above discussion, it is held that the AO was justified in taking the FMV of property under consideration @ ₹ 40/- per sq. yard as on 01.04.1981. Hence, this ground of appeal is rejected. (viii) It may be mentioned that during the appellate proceeding, the appellant invited my attention to the decision of the Ld. CIT(A), Bikaner (Camp at Jaipur) dated 31.03.2015 in the case of Ms. Roopali Dhingra for the AY 2008-09 wherein all the addition were deleted and the Ld. CIT(A) restored the valuation as on 01.04.1981 which was adopted on the basis of report of Registered Valuer. It is respectfully stated that I do not concur with the findings of the Ltd. CIT(A), Bikaner in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 01.04.1981 on the basis of Regd. Valuer s Report should be considered in these types of cases. (b) Hon ble Gujarat High Court in ACIT vs. Hiraben Govindbhai Patel [2014] 44 taxmann.com 29 [PB 144-149] has held: Value adopted by assessee cannot be substituted by A.O. merely on the basis of general inquiries. When the value declared by the assessee as on 01.04.1981 is supported by valuation report of a registered valuer and the A.O. has taken different valuation without obtaining valuation report from the DVO, such value taken by the registered valuer cannot be substituted by the A.O. merely on the basis of general inquiries without obtaining a report from DVO. (c) Hon ble Bombay High Court in CIT v. Puja Prints [(2014) 265 CTR 124 (Bom)] [PB 150-155] has held: 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent-assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. (d) In Barjinder Singh Bhatti v. ITO [ITA 1101/Chd/2014 (Chandigarh ITAT)] [PB 156-163] it has been held that: 9. We have considered rival submissions and do not subscribe to the views of the authorities below. The assessee filed report of Registered Valuer in support of the market value as on 01.04.1981. The Assessing Officer was not having any evidence or material before him to contradict the report of the Registered Valuer. The Assessing Officer, if was not satisfied with the report of the Registered Valuer, could have made a reference to the Departmental Valuation Officer under section 55A of the Act for the purpose of computing income from capital gains. The Assessing Officer has thus, not acted in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) Hon ble Mumbai ITAT in Seksaria Industries Pvt. Ltd. v. ITO [2016] 69 taxmann.com 342 [PB 176-186] has held that: Section 55A of the Income-tax Act, 1961 - Capital gains - Reference to valuation officer - Assessment year 2009-10 - Prior to 1-7-2012, reference could be made to DVO only if value declared by assessee is, in opinion of Assessing Officer, less than its fair market value [In favour of assessee] The assessee sold its property and adopted value of same at ₹ 5.63 crores as fair market value as on 1- 4-1981 on basis of valuation report of a Government approved valuer. The Assessing Officer referred issue of valuation to DVO, who valued property at ₹ 3.10 crores and the Assessing Officer computed capital gains accordingly. Held that since value adopted by the assessee was much more than fair market value as on 1-4-1981, then reference to Valuation Officer could not have been made as per provisions of section 55A(a) as it existed at relevant time. 5.3 During the course of hearing, the ld. DR relied on the orders of the lower authorities. 5.4 I have heard the rival contentions and perused the materials available on record. It is noted f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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