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TMI Blog2016 (8) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on 28-03-2013. Thereafter the assessee filed return of income on 07-08-2013 in response to notice issued u/s. 148 of the Act declaring total Income at Rs. 5,63,507/-. The AO observed that during the year, the assessee along with other 5 members sold agricultural land situated in S.No. 150, Makhmalabad admeasuring 9.83 acres for total consideration of Rs. 1,80,00,000/- wherein the share of the assessee was 28.61%. As the said land is situated within 8 kilometers of the municipal limits of Nashik Municipal Corporation, the same is a capital asset within the meaning of section 2(14) of the Act. Hence the gain out of sale of such agriculture land is chargeable to Income-tax. As the said land was ancestral land the deemed cost of acquisition was to be taken as the fair market value of the said land as on 01- 04-1981. The assessee took the cost of acquisition at Rs. 8,96,782/- as per the report of approved valuer. The A.O. did not accept the valuation of the approved valuer and made a reference to Departmental Valuation Officer to determine the fair market value of the said land as on 01/04/1981. The valuation report from DVO was not received till finalization of assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the DVO was less than the fair market value shown by the appellant as on April, 1981 and hence clause (a) was not applicable. The appellant's case also did not fall in clause (b) and hence the reference was bad in law. 4.5.2 To buttress the above propositions, the appellant relied on the decision of Bombay High Court in Puja Prints, wherein, it was held that AO assumes power under clause (a) of section 55A only when in his opinion fair market value disclosed by the appellant is less and hence the reference was held to be invalid. The specific provisions contained in section 55A of the Act states that the same could be invoked only if the AO was of the opinion that the value declared by the assessee is less than its FMV. It is observed that the reference in the case of the assessee was however made by the AO to the DVO because he felt that the value of property as on 1.4.1981 declared by the assessee on the basis of registered valuer's report is actually more than its FMV. He held that the condition stipulated in clause (a) of section 55A thus was not satisfied. 4.5.3 The issue involved in the appeal is squarely covered in favour of the assessee by the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocation 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. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case i.e. a case not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the DVO was made after 01-07-2012, i.e. the date from which the amendment in section 55A came into operation was never pointed out by the Authorised Representative of the assessee. According to her, the suppression of vital fact led to wrong application of ratio of the decision in the case of Puja Prints (Supra). She, therefore, issued a notice u/s.154 of the Act. Since nobody appeared on behalf of the assessee despite notice was issued and duly served on the assessee, the Ld.CIT(A), following various decisions held that the reference made by the AO to the DVO was justified. Therefore, the addition made by the AO on account of long term capital gain on the basis of the report of the DVO which is binding on the AO is also justified. Thus she dismissed the appeal filed by the assessee in the rectified order. 7. Aggrieved with such order of the CIT(A) the assessee is in appeal before the Tribunal with the following grounds : "1. On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)-I, is not justified in confirming the action of the AO of making reference for valuation of property to the DVO u/s. 55A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27/08/2014. It is also clarified by Hon.ble Bombay High Court in the case of Puja Prints (Supra) that the amendment brought in section 55A w.e.f 01/06/2012 i.e. substituting the words "is less than the fair market value" by the words "is at variance with its fair market value" is not retrospective and the provisions of section 55A will have effect as per the provisions existing during the period relevant to the assessment year in question. Therefore, the present assessment year is 2009-10, therefore, the provisions of section 55A as existed as on 01/04/2009 shall be considered in the present case and as such the A. O. was not having powers to refer the valuation to DVO in the given situation as on 01/04/2009. Therefore, the impugned addition made by the A. O. please be deleted." 8.1 Referring to Para 4.2 of the original order of the CIT(A) he submitted that the submission of the assessee along with report of the DVO was forwarded to the AO for necessary comments and his report. However, the AO in his remand report offered no comments on the objection raised by the assessee regarding reference to the DVO u/s.55A. However, he furnished the revised working of long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the land as on 01-04-1981 on the basis of the report of the approved valuer which was Rs. 2,80,705/- per acre. The AO made reference to the DVO who valued the fair market value as on 01-04-1981 at Rs. 1,94,852/- per acre. Since the fair market value adopted by the assessee on 01-04-1981 was higher than the fair market value adopted by the DVO, the AO computed the long term capital gain at Rs. 48,18,644/- as against Rs. 4,86,023/- declared by the assessee as long term capital gain. I find the Ld.CIT(A) vide order dated 14-09-2015 following the decision of Hon'ble Bombay High Court in the case of Puja Prints (Supra) deleted the addition made by the AO on account of long term capital gain by holding that the AO should not have referred the matter to the DVO u/s.55A of the I.T. Act. I find subsequently the Ld.CIT(A), based on the request of the AO to rectify the order u/s.154, issued notice u/s.154 to the assessee. Since none appeared on behalf of the assessee and observing that the reference to the DVO in the instant case was made by the AO after 01-07-2012, i.e. the date from which the amendment in section 55A came into operation, upheld the action of the AO in making a referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court that such amendment to provisions of section 55A(a) is not retrospective and prospective, therefore, merely because the AO has made a reference to the DVO after the date of such amendment for an assessment year prior to the amendment is a highly debatable issue. The Hon'ble Supreme Court in the case of T.S. Balaram, ITO Vs. Volkart Brothers and Others reported in 82 ITR 50 has held that a mistake apparent on the record must be an obvious patent mistake and not something which can be established by a long run process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. Since in the instant case the issue as to whether the AO can make a reference to the DVO u/s.55A(a) of the I.T. Act after the amendment brought in the statute book w.e.f. 01-07-2012 but for an assessment year prior to that date where the fair market value adopted by the assessee as on 01-04-1981 is more than the fair market value determined by the AO is a highly debatable issue, therefore, following the decision of Hon'ble Supreme Court in the case of T.S. Baralam, ITO Vs. Volkart Brothers and Others (Supra) I hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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