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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 ..... . 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 evidence. 3. That on the facts and in the circumstances of the case, Ld. Pr. ClT-Kol-17 is wrong and unjustified in concluding that decision to refer to ova was taken before passing order u/s 143(3) since the language used in section 55A of IT Act,1961 speaks for actual reference to ova and not so called as "decision" for making reference. 4. That on the facts and in the circumstances of the case, Ld. Pr. CIT, Kolkata-17 has erred in holding that reference to ova was made first and then order u/s 143(3) was passed without mentioning the actual date on which A.O's reference u/s 55A reached the office of DVO. 5. (i) That on the facts and in the circumstances of the case, Ld. ClT Kolkata- 17 is wrong in relying upon the note (not for the assessee) alleged to be attached with assessment order which clearly establish that everything is concluded and stage managed. (ii) That the said note which admits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O 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 Rs.1,41,332/- only/-. Subsequently on examination of the record, Ld. Pr.CIT observed that there is a report of DVO dated 22.02.2016 which has not been considered by the AO during the course of assessment proceedings due to the fact that it was received much after completion of assessment. As per the valuation report, the value for the cost of acquisition after indexation should have been Rs.16,82,535/-only. The valuation determined by the DVO for the cost of acquisition of asset and indexation cost stand 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 34,663.00 116 785 2,34,573.00 84-85 Ground floor 1,56,228.00 125 785 9,81,112,000 87-88 1st floor 89,207.00 150 785 4,66,850.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, Ld. Pr.CIT disregarded the contention of assessee and held that the order passed by AO is erroneous in so far as prejudicial to the interest of revenue by observing as under:- "l have considered the argument of the Ld. AR challenging the legal validity of making reference to Valuation Officer u/s.55A for determining the cost of acquisition of the property sold and using such legally invalid valuation report for initiating proceeding u/s.263 has not been correct. I do not find force in this argument because PCIT while initiating proceeding u/s.263, can examine all documents available in record at that time and when I examined the record, this valuation report was available on record but could not be considered by the AO as it was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 15,53,515/-, the DVO has determined the total value of property at Rs. 2,,80,098/. Therefore, it can be seen that the valuation report of Registered Valuer determining the cost of acquisition of the sold property as being very much inflated and in order to determine the correct value of such property, it was necessary for the AO to have referred this property to ova. Such inflation in the value of property can be seen from the cost of land itself. As per the lease deed allotting the land to the assessee, the cost of land by Govt. of West Bengal has been mentioned at Rs. 34,663/- but as against this amount, the Registered Valuer has taken the cost of land at Rs. 2,40,000/- by including the extra amount as spent on land development but no details of the amount incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 am seized with the issue of only to see whether the AO has committed any error in not taking decision judicially with respect to taking into account the DVO report for computing the correct taxable income of the assessee and not for reopening of the assessment proceeding as per the provision of section 147. The action taken by the AO of referring to DVO establishes that the AO was not satisfied with the value determined by the registered valuer. But because of making such reference very late, he could not consider the value of the property determined by the DVO and hence, an error has occurred in the order of the AO. As I have already given the details in para-1 showing that on the basis of the report of the ova, prima facie the income of the assessee has been ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 of DVO cannot be accepted. The AO referred the matter to DVO vide letter dated 25.03.2015 whereas the assessment order passed by AO on the same date i.e. 25.03.2015. Ld. AR also submitted that the amendment u/s 55A of the Act for referring the matter to the DVO was not applicable to the year under consideration. On the other hand Ld. DR submitted that the AO was not agreed to the valuation report filed by the assessee therefore the same was referred to DVO. The report obtained from DVO is part of assessment records. Therefore the reference made by Ld. Pr. CIT u/s 263 of the Act is within the provision of law. He vehemently relied on the order of Ld. Pr. CIT. 5. We have heard the rival contentions of both the parties and also gone through the orders of the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would be applicable to the subsequent assessment year. For example if the amendment under the statute is brought 30.9.2009 then it would be applicable from the AY 2010-11. In holding so, we find support & guidance from the judgment of Hon'ble Supreme Court in the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kerela reported in 60 ITR 262 where it was held as under : "10. Now, it is well-settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into, force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force." From the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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