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TMI Blog2016 (9) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... r. It is not clear as to whether the reference was made under clause 55A(a) or 55A(b)(ii) of the Act and if it was made under section 55A(b)(ii) then what were the relevant circumstances for making such a reference. Recording of reasons for invoking a particular section of the Act and justification for invoking the specific clause are not available and nor were they brought to our notice. As the value shown by the assessee was not less than the FVM, so, in our opinion, there was no justification for making any reference to the revenue authorities of state government, by the AO in the year under consideration. Amendment to the section 55A of the Act is effective from 01.07. 2012 and as per that now reference can be made if there is variance in the FMV We see no reasons to take any other view of the matter than the view so taken by us in the above case. Accordingly, the impugned additions in the computation of capital gains, on the basis of DVO report on valuation of transferred asset as on 1.4.1981, must stand deleted. - Decided in favour of assessee. - ITA No .67/RPR/2013 Assessment Year: 2008-09 - - - Dated:- 21-9-2016 - Pramod Kumar AM and C.M. Garg JM S.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir market value of an asset as on 1.4.81 was more than the fair market value claimed by the assessee. The very reference to Section 55A was thus illegal and devoid of any legally sustainable basis. The fact that the assessee herself requested for such a reference, as has been highlighted by the Assessing Officer time and again, would not clothe this reference with legality. The Assessing Officer cannot capitalize out of the ignorance of the assessee. A sense of fairplay by the field officers towards the taxpayers is not an act of benevolence by the field officers, but it is the minimum civilized behaviour that is required to be extended to the taxpayers. If authority is needed even for justifying these basics, one need not look beyond the circulars issued by the CBDT itself. In Circular No. 14, which has been taken note of by the Hon'ble Bombay High Court in the case of Dattatraya Gopal Bhotte vs. CIT (1984) 150 ITR 460 (Bom), the Board has these words of advice for the field officers : ..................Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist taxpayer in every reasonable way, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the state revenue authorities he reduced 3 ITA No. 180/BLPR/2011 Kabir Chadhha the value of the plot as on 01.04.1981,that he computed indexed cost of acquisition at ₹ 75,186/- in the hands of the assessee against ₹ 43,85,939/-claimed by him, that it resulted in addition of ₹ 43,10,753/- to the returned income of the assessee. The issue in short, before us, is to decide what was the FMV of the plot of land in question as on 01.04.1981. We would like to refer to the provisions of section u/s.55A of the Act. The provisions of the section were introduced, w.e.f. 01.01.1973, by the Taxation Laws (Amendment) Act 1972.Section reads as under 55A. Reference to Valuation Officer.- With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the AO may refer the valuation of the 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 AO is of opinion that the value so claimed is less than its fair market value ; (b) in any other case, if the AO is of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital assets for the purpose of Chapter IV. In our opinion, intention of the Legislature is obvious that the AO can make a reference to the DVO for determining the value of a capital asset. We are of the opinion that for the purpose of ascertaining the FMV of a capital asset, the statute has provided two group of cases namely: (i) the case mentioned at clause (a) above, where the value of the asset as claimed by the assessee is in accordance with the estimate by the registered valuer ; and (ii) other cases mentioned at clause (b) above. In the cases mentioned as (i) above, the AO assumes jurisdiction, when there is a valuation report in respect of the asset and the assessee adopts the value of the asset in accordance with such estimation and also if the AO is of the opinion that the value claimed by the assessee is less than the FMV. In other cases mentioned as (ii) above and which are covered by the provisions of clause (b) of section 55A,the AO is empowered to make a reference to the Valuation Officer, where the AO is of the opinion that the FMV of the asset exceeds the value of the assets as claimed by more than 15 % of the value claimed or by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to justify the action of the AO under any other provision of Sec.55A.Finally, it was held by the Hon'ble Court that the reference to the DVO was not in accordance with law and it had to be quashed.(209 ITR 568). Hon'ble Gujarat High Court in the case of Hinaben Jayantilal Shah(310 ITR 31)has held that as per the clause(b) of section 55A of the Act, the AO has to record an opinion that (i) the FMV of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage or by more than such an amount as may be prescribed ;or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference. Clause (b) of section 55A of the Act can be invoked only when the value of the asset claimed by the assessee is not supported by the valuation report of a registered valuer. We would also like to discuss the decision of the Hon'ble Bombay High Court, delivered in the case of Puja Prints(360ITR697). In that case, assessee had claimed value of the property as on 01. 04.1981 at ₹ 35.99 lakhs on the basis of the report of a government valuer. The AO referred the issue of valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the reference to the Departmental VO by the AO was not sustainable in view of section 55A(a)(ii). The following questions of law have been formulated by the Revenue for consideration by this court : (a) Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was right in holding that the reference made by the AO to the VO per se is bad in law ? Further, whether the Income-tax Appellate Tribunal was justified in observing that the reference to the DVO under section 55A of the Act is to be made when the value of the property disclosed by the assessee is less than the fair value and not vice versa thereby ignoring the provisions of section 55A(b)(ii) of the Act, and paragraphs 26 to 28 of Circular No.96, dated November 25, 1972, of the Central Board of Direct Taxes (see [1973] 91 ITR (St.) 1) ? (b) Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was right in directing the AO to accept the valuation given by the respondent as the fair market value on the basis of the registered valuer's report and workout capital gains ? (c) Whether, on the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective effect. This submission is in face of the fact that the 2012 amendment was made effective only from July 1, 2012. 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 VO only if the value declared by the assessee is in the opinion of AO less than its fair market value. The contention of the Revenue that the reference to the Departmental VO by the AO is sustainable in view of section 55A(a)(ii) of the Act is not acceptable. This is for the reason that section 55A(b) 6 ITA No. 180/BLPR/2011 Kabir Chadhha of the Act very clearly states that it would apply in any other case, i.e., ITA No .6 7/ RP R/ 2 01 3 Assessment Year: 2008-09 a case not covered by section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered 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 Central Board of Direct T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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