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TMI Blog2018 (3) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... ember For The Appellant : Shri Manish Tiwari, AR For The Respondent : Shri G. Mallikarjuna, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- The assessee has filed this appeal dispute the order of Pr. Commissioner of Income Tax-17, Kolkata passed u/s. 263 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') dated 29.03.2017 set aside the assessment order dated 25.03.2015 u/s 143(3) of the Act for assessment year 2012-13 with a direction to re-do the assessment in respect of issue therein. The assessee has raised following grounds:- "1. That the findings of Ld. Pr. ClT Kolkata-17 that Assessing Officer first recorded his decision of referring the matter to ova in the order sheet and then passing of order u/s 143(3) was recorded do not support the languages used in section 55A of IT Act, 1961 which speaks for actual reference to DVO but not "decision" to make reference. 2. That the Ld. Pr. CIT, Kolkata-17 having admitted that reference to DVO and passing of order u/s 143(3) had been done on the same day is wrong and unjustified in drawing conclusion that the decision for referring to DVO was taken before passing order u/s 143(3) without any other supporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of ₹1.60 crores and assessee has shows its cost of acquisition after indexation at ₹89,76,971/- only. The details of cost of acquisition with indexation stands as under:- Cost of acquisition with indexation Year Particulars Cost Index of year Index of year Index value of purchase of sale i.e. FY 11-12 83-84 Land and land development 2,40,000 116 785 16,2,137.93 84-85 Ground floor 4,25,000 125 785 26,69,000.00 87-88 1st floor 8,95,000 150 785 46,83,833.33 Total cost of consideration 15,60,000 89,76,971.00 However, the AO was not satisfied with the cost of acquisition of the property as declared by assessee, therefore, he referred the matter to the District Valuation Officer vide letter No. ITO, Ward-49(4)/Kol/Valuation/u/s.55A/2014- 15/465 dated 25.03.2015 but AO could not received the valuation report prior to the completion of assessment. Being time barring case, the AO has taken the cost of acquisition of property as declared by assessee in her income tax return and accordingly assessment was framed by AO vide order dated 25.03.2015 at ₹1,41,332/- only/-. Subsequently on examination of the record, Ld. Pr.CIT obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for which alone a valuation report can be utilized, namely, for completion of the assessment in conformity with the valuation report is no longer existence, the assessment having been completed in the meantime. In such circumstances, to allow the assailed valuation proceeding to continue would militate against well-known canons of strict construction of taxing statutes." The necessary documents declaring the cost of acquisition was duly furnished during the course of assessment proceedings. The AO after applying his mind has chosen not to make any addition under the head "capital gains". The instant matter was referred to the DVO against the provision of Section 55A of the Act as the matter can be referred to DVO for the determination of fair market value if the value declared by assessee is less than the fair market value. In the instant case, the assessee has declared higher value than the value determined by the DVO. Therefore, the provision of Section 55A of the Act cannot be applied to the instant facts of the case. The assessee before Ld. Pr. CIT also submitted that no opportunity of being heard was given by DVO while determining the value of impugned property. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ill, Bidhannagar, Salt Lake City, Kolkata-700064. The reply in compliance to the said letter has not yet been received at this end. If any contrary is found after getting the reply, action as per Act will be taken." 7. Considering the above note of the AO along with the assessment order, it is dear that the AO has decided making reference to DVO before passing of the assessment order. This reference has been necessitated because the assessee has earlier shown the self-estimated cost of acquisition of the property at ₹ 15,60,000I- but later on when the valuation report of registered valuer has been filed, the value has been shown to be ₹ 15,53,515/-. Therefore, the Assessing Officer was not sure about the correct value of the cost of acquisition of property and hence, after going through the valuation report of registered valuer, he referred the valuation of the property to the DVO. After going through both valuation reports i.e. the valuation report by registered valuer and the valuation report submitted by the ova, I find that there is wide variation in both the reports. As against the total valuation of the property determined by the DVO at ₹ 15,53,515/-, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into assessing short amount of Long Term Capital Gain on the property sold as I have already discussed in para-1 of this order. Therefore, the assessment order passed by the AO u/s.143 (3) vide order dated 25/02/2015 is erroneous in so far prejudicial to the interest of revenue. 9. The Ld. AR has referred various case laws in his written submission in which, it has been held by the Hon'ble Courts that the report of the DVO is only based on estimate and it can not only be basis for assessing the income of the assessee or even on the basis of such valuation report, a case cannot Page 7 be reopened u/s.147. In this regard, it is to be noted that before adopting any ova report, it should be examined vis-a-vis the report of the registered valuer submitted by the assessee. This exercise is done at the time of assessment proceeding. During the assessment proceeding, before adopting valuation report of ova for computation of taxable income of the assessee, he/she is given full opportunity to file objections on merit of valuation report and after dealing with such objections only, the AO can use the findings of valuation report of DVO in the assessment order. In the instant case, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and restore to the file of the AO to pass a fresh assessment order de novo after examining the report of the DVO dated 22/02/2016 and also providing the opportunity to the assessee to offer her comments on report of the DVO and then the correct value of cost of acquisition of the property sold should be adopted for computing the Long Term Capital Gain on sale of the property as per law and revised assessment order should be passed." Aggrieved by the above finding of Ld. Pr. CIT, the assessee is in appeal before the Tribunal. 4. Before us Ld. AR for the assessee submitted that Assessing Officer has passed assessment order after considering the valuation report filed by assessee. There is no mentioned in the assessment order for making the reference to DVO for the determination of the value of the cost of acquisition declared by assessee. Therefore, no reference to the valuation report received subsequent to the assessment order should be referred for holding the order of AO as erroneous in so far as prejudicial to the interest of revenue. Ld. AR further stated that the AO has not pointed out any defect in the valuation report filed by the assessee. Therefore, the valuation report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, there was amendment u/s 55A of the Act with effect from 01.07.2012 which reads as under:- [Reference to Valuation Officer. 7855A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter79, the 80[Assessing] Officer may refer the valuation of capital asset to a Valuation Officer- (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the 80[Assessing] Officer is of opinion that the value so claimed 80a[is at variance with its fair market value]; There is no doubt that the amendment in section 55A of the Act was effective from 01.07.2012. Now, the issue arises whether amendment u/s 55A of the Act is applicable from the Assessment Year 2012-13 i.e. the year under consideration. It is well settled law that if the amendments are applicable from the first day of assessment year then it would be applicable from the relevant assessment year. For example if the amendment under the statute is brought 1.4.2009 then it would be applicable from the AY 2009-10. Similarly if the amendments are brought on any date other than the 1st day of April then it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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