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TMI Blog2017 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer was not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. Accordingly, the Assessing Officer is directed to take the value declared by the assessee at ₹ 87 lakhs in order to work out the income from capital gains. - Decided in favour of assessee. - ITA No. 587/PUN/2014 - - - Dated:- 24-7-2017 - Ms. Sushma Chowla, JM Appellant by : Shri C.H. Naniwadekar Respondent by : Shri A.N. Honavar, JCIT ORDER Per Sushma Chowla, JM The appeal filed by the assessee is against the order of CIT(A)-2, Nashik, dated 09.01.2014 relating to assessment year 2009-10 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- Following grounds are without prejudice to each other 1. The learned CIT (Appeals) erred on facts and in law in upholding addition of ₹ 26,67,922 made by the AO on account of Capital Gain on sale of property by the assessee. 2. The learned CIT (Appeals) erred on facts and in law in upholding sale consideration of property sold by the assessee at ₹ 1,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the land admeasuring 1 Hector 56 R by way of gift, out of which she had sold land admeasuring 1 Hector 18R in financial year 2001-02 to Shri P.K. Soni for ₹ 1.65 crores. Out of the said amount, the assessee paid sum of ₹ 1.60 crores to Shri P.K. Deshmukh for surrendering his tenancy rights on the whole land of 1H and 56R. The assessee thus, received sum of ₹ 5 lakhs out of said transaction and the same was offered for taxation in assessment year 2002-03. The balance land admeasuring 0.38R was sold by the assessee in the year under appeal for total consideration of ₹ 87,21,000/-. The stamp duty valuation under section 50C of the Act was ₹ 1,07,31,000/-. The assessee had also calculated the cost of improvement on the said land of 0.38R at ₹ 38,97,436/-. The Assessing Officer noted that the assessee s father had acquired the said property prior to 1981 through Power of Attorney and therefore, the valuation of the property as on 01.04.1981 determined by the assessee at ₹ 4,61,538/- was based on the valuation report of Registered Valuer dated 14.10.2008. During the course of assessment proceedings, the assessee requested that the valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Valuation Officer. However, the DVO, Bhopal had directed to adopt sale value of the property as per stamp duty valuation made by the local Revenue authority under section 50C of the Act. In view of directions of DVO, Bhopal, the value of property under consideration was adopted as per stamp duty valuation under section 50C of the Act at ₹ 1.07 crores. 6. The CIT(A) upheld the order of Assessing Officer. 7. The assessee by way of additional ground of appeal has raised the issue of exercise of jurisdiction by the District Valuation Officer, Bhopal, where the Valuation Officer, Nagpur had already given a report in the matter. Hence, the DVO at Bhopal had no jurisdiction over the matter and the assessment order passed relying on the said report of DVO was vitiated and bad in law and invalid, since the DVO had no jurisdiction over the matter. 8. The learned Authorized Representative for the assessee pointed out that in hierarchy of Government Valuers, the top person was the Regional Valuation Officer, who had supervisory powers under whom was the District Valuation Officer (DVO), Valuation Officer (VO) and the Assessing Valuation Officer i.e. AVO, who had jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own by Jabalpur Bench of Tribunal in WTO Vs. Ajit singh Malhotra (1990) 32 ITD (JAB) 592. He further pointed out that the assessee had valued the said property at ₹ 87 lakhs, whereas as per the report of Valuation Officer, the value was ₹ 93 lakhs under section 50C of the Act, which was less than 10% and hence, the value declared by the assessee should be adopted. He further pointed out that there is no merit in reference made under section 55A of the Act for computing the cost of acquisition as on 01.04.1981, in view of ratio laid down by the Hon ble Bombay High Court in CIT Vs. Puja Prints (2014) 360 ITR 697 (Bom). 9. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below. 10. On perusal of record and after hearing both the learned Authorized Representatives, the preliminary issue which is raised by way of additional ground of appeal is a purely legal ground of appeal, which challenges the jurisdiction of the Assessing Officer in completing assessment both under sections 50C and 55A of the Act. In the facts of the case, the assessee had sold property at Amravati admeasuring 0 H 38R. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of Section 55A(a) of the Act is not justified. 8. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words is less then the fair market value is substituted by the words is at variance with its fair market value is clarifactory and should be given retrospective effect. This submission is in face of the fact that the 2012 amendment was made effective only from 1 July 2012. The Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the present case is Section 55A(a) of the Act as existing during the period relevant to the Assessment Year 2006-07. At the relevant time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was made by the revenue during the oral submissions. In any event, an order of remand in these facts does not give rise to any substantial question of law. 12. Accordingly, we see no reason to entertain questions (a), (b) and (c) as formulated by the revenue as they do not raise any substantial questions of law. Accordingly, appeal is dismissed with no order as to costs. 11. The Hon ble Bombay High Court in the case of CIT Vs. Daulal Mohta (HUF) reported in 360 ITR 680 has held that reference to DVO can only be made in a case where value of asset shown by the assessee is less than its fair market value of the land. 12. Following the same parity of reasoning, I hold that no reference can be made under section 55A of the Act in order to value the cost of acquisition of property as on 01.04.1981 at a figure lesser than the value declared by the assessee. Accordingly, the order of CIT(A) is reversed in this regard. 13. Now, coming to the next objection raised by the assessee is in respect of exercise of jurisdiction and power under section 50C of the Act. Under the said section, it is provided that where the assessee is not agreeable to the value adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been completed, then the same could not be disturbed, in view of the order of Tribunal in this regard. 14. Further, on 15.11.2011, the District Valuation Officer issued a letter to the Assessing Officer referring to the final assessment by the Valuation Officer under section 50C of the Act and pointed out that the assessment should be completed on stamp duty valuation due to different reasons as enumerated in the letter placed at page 119 of the Paper Book. It was clearly stated by him that the stamp duty has not been mentioned by the Valuation Officer to this office and further, where the valuation was lesser than stamp duty valuation, hence, valuation could not be used by the assessee, amongst the other reasons raised. In response thereto, the Assessing Officer issued a letter dated 22.11.2011 to the assessee, wherein he refers to the proposal made by the Valuation Officer, Nagpur and also refers to the letter received from the District Valuation Officer on 21.11.2011 intimating that while making assessment, the valuation of property may be taken as per stamp duty valuation. The assessee submitted its reply on 25.11.2011 and stressed that since the property of assessee was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , coming to the section 12A of the Wealth Tax Act, the Central Government is authorized to appoint as many Valuation Officers as it thinks fit. Then clause (2) is with regard to appointment of Oversears, Surveyors and Assessors as may be necessary to assist the Valuation Officer in the performance of their functions. The procedure of reference to the Valuation Officer is as per section 16A of the Wealth Tax Act, wherein the Assessing Officer is empowered to make reference of valuation of any asset to the Valuation Officer and the procedure to be followed in this regard i.e. reference to be made to the Valuation Officer by the Assessing Officer and then, notice of hearing to be allowed by the Valuation Officer and thereafter, passing an order in writing, estimating the value of asset, copy of which is to be sent to the Assessing Officer and the assessee. On receipt of the said order from the Valuation Officer, the Assessing Officer shall, so far as the valuation of asset in question is concerned, proceed to complete the assessment in conformity with the estimate of Valuation Officer as per clause 16A(6) of the Wealth Tax Act. Under Rule 3A of the Wealth Tax Rules, the Regional Valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, as per sub-clause (ii), the Valuation Officer shall transfer the reference to the Asst. Valuation Officer where the value of asset does not exceed ₹ 40 lakhs. In view of the provisions of Rule 3A of the Wealth Tax Rules, which provides the jurisdiction of Valuation Officer, Regional Valuation Officer is exercising the supervisory powers over the work of District Valuation Officer, Valuation Officer and the Asst. Valuation Officer. However, the three Valuation Officers under the Regional Valuation Officer i.e. the District Valuation Officer, Valuation Officer and the Asst. Valuation Officer have to perform the duties and functions of Valuation Officer in respect of such areas and in relation to such class of cases as the Board may prescribe. Further, clause (3) to Rule 3A of the Wealth Tax Rules very clearly provides the distribution of work of valuation between the three Officers i.e. DVO, VO and the AVO on the basis of value of asset disclosed in the return made by the assessee or where no such value is disclosed, but in the opinion of the Assessing Officer, it exceeds the aforesaid amount, the proviso further provides that the DVO having jurisdiction in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, the DVO, Bhopal issued a letter to the Assessing Officer and directs him to complete the assessment on the basis of stamp valuation authorities. The exercise of power by the District Valuation Officer in the absence of any reference being made by the Assessing Officer to him and supervising the assessment of Valuation Officer is beyond powers conferred on him. Where he has no power to supervise the work of Valuation Officer then, such exercise of powers and directions to the Assessing Officer are beyond the scope of the Act. The DVO at the first instance when reference was made by the Assessing Officer could have for proper and efficient management of the work, completed the process of valuation himself by following the procedure laid down in the Wealth Tax Rules. However, it is not the case herein. The procedure has been followed by the Valuation Officer, wherein to him, reference was made, who in turn, gave show cause notice to the assessee and also accepted the plea of assessee in respect of Court case pending and reduced the valuation further and completed the valuation report. Once the valuation report has been completed by the Valuation Officer, exercise of power by the DV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also provided in that Circular that the Valuation made by the Valuation Officer will be binding on the Wealth Tax Officer and it would not be open to him to depart from the order of Valuation Officer under section 16A(5) of the Wealth Tax Act. In the facts of present case, where the Valuation Officer has followed the procedure laid down in the Act and as prescribed in the CBDT circular, wherein he has show caused his proposal to adopt the value of asset at a particular value, thereafter, given an opportunity of hearing to the assessee and completed the valuation by passing an order in writing, which was communicated both to the Assessing Officer and the assessee then, the exercise of valuation stands completed. After the said valuation has been completed by the Valuation Officer, the exercise of any power by the DVO is barred under law as he cannot sit in judgment over the valuation completed by the Valuation Officer after following due process of law. Accordingly, there is no merit in the valuation of said asset made by the DVO. The Valuation Officer has adopted the value of property at about ₹ 93 lakhs as against the value declared by assessee at ₹ 87 lakhs and the va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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