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TMI Blog2019 (8) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... LTCG which is not maintainable as per Income Tax Act, 1961." Grounds of Assessee's cross-objections: "1. Under the facts and circumstances of the case, the Ld. CIT(A) has erred by confirming the action of Ld. AO of adopting the value so adopted by the stamp authority i.e. 18,99,76,208 instead of transaction value of Rs. 18,63,71,000 as full value of the consideration and confirming the addition of Rs. 35,99,208. 2. Under the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not deciding ground of Appeal no. 2 before him while Ld. AO has erred in:- (i) not considering the valuation report of a registered valuer, submitted during the course of assessment proceedings in right prospective. (ii) Referring the case to DVO u/s 55A for determining the fair market value of property. (iii) Drawing inferences for referring the case to DVO which were based on incorrect assumption of facts and without providing opportunity of being heard, hence, against the principle of natural justice. (iv) not considering the submission made during the course of assessment proceedings in right prospective. (v) not considering in logical manner, the legal and factu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sra No. 463), Rampura Roopa (presently Main Tonk Road, Near Glass Factory, Jaipur) for a consideration of Rs. 18,63,71,000/- to M/s Triveni Kripa Enterprises. In its return of income, the assessee firm has shown the capital gains on sale of the property as under:- Date of sale 06/12/2010 Sale consideration Rs. 17,61,42,188/- Purchase Date 1/4/1981 Purchase Cost Rs. 2,72,94,000/- Indexed cost of acquisition Rs. 19,40,60,340/- Loss Rs. 1,79,18,152/- 3. As per sale deed, the land was initially allotted to Vasudev Nagarmal on 02.12.1943 by the then Maharaja of the Jaipur State. Subsequently, the land was sold to M/s Jaipur Glass and Potteries and thereafter, to Sh. Sri Narayan Bajaj on 13.11.1964. In the year 1980, the assessee firm M/s Bajaj Bros came into existence with Shri Sri Narayan Bajaj as one of its partners and the said land became the asset of the assessee firm. Further, it is also apparent from records that the Sub-Registrar has determined the value of this property at Rs. 18,99,70,208/- for the purpose of levying the stamp duty as against stated sale consideration of Rs. 18,63,71,000/-. 4. In the aforesaid factual background, during the course of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort was deleted by the ld CIT(A) holding that the reference to DVO itself is not valid and hence, the valuation so determined by the DVO cannot be adopted. Further, the Revenue has challenged the action of the ld. CIT(A) in allowing at Rs. 1 cr u/s 48 while computing the long term capital gains. In its cross appeal, the assessee firm has challenged the adoption of the full value of consideration as per the valuation done by the Stamp Duty Authority as against the transaction value recorded in the sale deed. Further, the assessee firm has challenged the action of the ld. CIT(A) in non adjudication of grounds of appeal on merits relating to determination of FMV as on 01.04.1981 by the Assessing Officer. 7. Firstly, we take up the matter relating to adoption of the Stamp Duty Valuation for the purpose of determining the full value of consideration u/s 50C of the Act. In this regard, the ld. AR submitted that the value determined by Stamp Valuation Authority is Rs. 18,99,70,208/- as against transaction value of Rs. 18,63,71,000/-, there is thus a difference of Rs. 35,99,208/-, which is 1.49% of the value determined by the Stamp Valuation Authority. It was submitted that DLC rates are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide ITA No. 441/Pn/2004 for the asst. yr. 1992-93 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by the AO can not be sustained. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at Rs. 20,55,000/- as against the actual sale consideration of Rs. 19,00,000 disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the AO to take Rs. 19,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, as a result of the transfer of the asset at Rs. 18,99,70,208/- as against the sale consideration of Rs. 18,63,71,000/- declared by the appellant. Hence, this ground of appeal is dismissed." 10. We have heard the rival contentions and perused the material available on record. We find that during the course of assessment proceedings, the Assessing Officer observed that the value determined by the stamp duty authority is higher than what has been stated in the sale deed and the assessee has not disputed the value so adopted by the stamp duty authority and accordingly, he has adopted the full value of consideration of Rs. 18,99,70,208/- as against stated sale consideration of Rs. 18,63,71,000/- for the purpose of determining the capital gains in the hands of the assessee as per the provisions of section 50C of the Act. In terms of section 50C(2), where the assessee objects to such valuation and states that the same exceeds the FMV of the property, the AO is required to refer the matter to the valuation officer as is apparent from the plain language of section 50C(2) which reads as under: "(2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he context of deeming fiction where the liability is fastened on the assessee based on such stamp duty valuation and a fact which has lately been recognized by the legislature whereby tolerance range of 5% has been specified by way of third proviso to section 50C(1) has been inserted by the Finance Act, 2018, w.e.f. 1-4-2019 which reads as under: "Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration." 13. In the instant case, the variation is only Rs. 35,99,208/-, which is 1.49% of the value determined by the Stamp Valuation Authority which should thus be ignored and the value so declared by the assessee should be accepted. In the result, the value so declared by the assessee should be adopted as full value of consideration and the addition of Rs. 35,99,208 is hereby directed to be deleted. The ground of appeal taken by the assessee is thus decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain and contains that from the value of sale consideration, under clause (i) of section 48, expenditure incurred wholly and exclusively in connection with such transfer shall be reduced. It is also important to note that clause (i) of section 48 allows deduction of the expenditure incurred in connection with transfer and it is not restricting the expenditure for transfer only. Hence, the said expenditure ought to be reduced while making the final computation of Long Term Capital Gain, since without paying said amount, the sale under consideration could not be affected. Therefore, the said expenditure is very well incurred wholly and exclusively in connection with such transfer and rightly claimed and deductable. 19. It was submitted that the Ld. A.O. did not decline the said claim but simultaneously, did not reduce the same also while making the final computation of the Long Term Capital Gain and it may be an inadvertent mistake on his part and which in any case, has been duly examined by the ld CIT(A). He accordingly supported the findings of the ld. CIT(A) which are contained at para No. 7.3 of his order which reads as under:- "7.3 I have gone through the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MOU that Mr. Ram Chandra Agarwal has agreed to assign his rights in the property in favour of M/s Triveni Kripa Enterprises Pvt. Ltd and has also agreed with M/s Triveni Kripa Enterprises Pvt. Ltd for higher sale consideration of Rs. 18,63,71,000/- to be paid to the assessee firm as against the earlier sale consideration of Rs. 17,27,25,000/- agreed upon between the assessee firm and Mr. Ram Chandra Agarwal. And in consideration thereof, the assessee firm shall pay a sum of Rs. 1 cr to Shri Ram Chandra Agarwal and the amount of Rs. 4,11,01,111/- already paid by Shri Ram Chandra Agarwal shall be considered towards payment of part consideration by M/s Triveni Kripa Enterprises Pvt. Ltd. Basis the said understanding between the parties, the assessee firm has paid a sum of Rs. 50,000,00/- on 26.10.2010 and another Rs. 50,000,00/- on 27.10.2010 through two separate cheques issued from its bank account maintained with HDFC Bank. Subsequently, the sale deed was executed between M/s Bajaj Udyog and M/s Triveni Kripa Enterprises Pvt. Ltd on 06.12.2010 wherein the payment of Rs. 4,11,01,111/- has been duly disclosed as part of the total payment received by the assessee firm from M/s Trive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 144A dated 18/3/2014, report of the Assessing Officer and the submissions made by the assessee during the course of hearing on 21/3/2014. After due consideration, the position emerged is discussed as under:- (a) On perusal of the case records, I find that the assessee filed the copy of the valuation report of the registered valuer, Shri G.S. Bapna in support of the fair market value of the asset as on 1/4/1981. It is on the basis of the value of Rs. 2,72,94,000/- that the assessee has claimed the benefit of indexed cost of acquisition. The Assessing Officer referred the matter to the DVO u/s 55 A of the IT Act, 1961 on 8/1/2014 after considering the following factors for forming an opinion in the matter :- "The assessee has filed copy of valuation report of Shri G.S. Bapna, registered valuer in support of the fair market value of the land as on 1/4/1981. It is on the basis of this value that the assessee has claimed indexed cost of acquisition. On perusal of the registered valuer's report, the following facts have been noticed :- (5) The registered valuer had estimated the value of the property at Rs. 90,98,000/- by taking the rate of Rs. 1093/- as on 1/4/1981 and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is less than its market value". If the fair market value of the asset is taken at a higher figure, then the capital gain being offered for tax would be lower. It is with an intention to cure this lacuna or mischief that the amendment has been brought in with effect from 01/07/2012, enabling the AO to refer the case w.e.f. 1/7/2012 if he is of the opinion that the value of the property as on 01/04/1981 estimated by the Registered Valuer is at variance with the fair market value of the asset as on 01/04/1981. This is a curative and procedural amendment made effective from the date 01/07/2012 as specifically mentioned in the memorandum explaining the provisions of Finance Bill. If the intention of the Legislature was to make the amendment with effect from a particular assessment year, then the assessment year from which amendment is effective should have been mentioned by it. As mentioned above, the Legislature has clearly specified that the amendment will be effective from the date 01/07/2012, from which date the Assessing Officer has been enabled to make the reference to DVO where he is of the opinion that the value of asset claimed by the assessee on the basis of report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 1/4/1981. I am of the opinion that the value estimated by the register valuer is at variance with the fair market value of the asset having regard to the nature of the asset and its use at the relevant time. Therefore, I consider it necessary to refer the below- mentioned case for determination of the fair market value of the case on the relevant date as indicated below." This is also in consonance with Sec. 55A(b)(ii) as the AO found that it was necessary to refer the matter having regard to the nature of the asset and other relevant factors." 25. It was accordingly submitted by the ld. CIT DR that the reference to the DVO was made by the Assessing officer after the amendment with effect from 01.07.2012 and the same being curative and procedural amendment, the amendment applies to all pending proceedings on or after dated 01.07.2012. It was further submitted that the first notice u/s 143(2) was issued by the AO on 03.08.2012 and thereafter the reference was made to the DVO on 08.01.2014 after the amendment has been brought on the statue w.e.f 1.07.2012. Therefore, the Assessing Officer was duly empowered to make the reference u/s 55A to DVO in respect of determination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do," 29. It was submitted that a perusal of the above referred legal provision makes it abundantly clear that a reference to the DVO for the relevant period can be made, where the A.O. is of the opinion that the value so claimed is less than the FMV whereas, in the instant case, the A.O. is of the opinion that the value so claimed was more than the FMV. Thus, it is very much clear that the reference was made without having any jurisdiction to make such reference. Hence, the same is illegal and, therefore, consequently the subsequent DVO report is also illegal. 30. It was submitted that during the assessment proceedings, the aforesaid objection was raised before the AO and substantiated with plethora of judgments on the issue whether in such a circumstance, the reference can be made or not. The same has been dealt by the Ld. A.O. in his assessment order at Page nos. 9 to 12. On perusal of the assessment order, it is clear that the sole basis of justifying his action by the AO is the amendment made by the Finance Bill, 2012 in the section 55A(a) w.e.f. 01.07.2012 according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2012, wherein, it is specifically mentioned that it is applicable w.e.f. 1.7.2012 can apply to the proceedings relevant to the assessment year 2011-12 ?" 33. It was submitted that the Ld. A.O. at Page 10-11 of his assessment order has held that the intention to bring the amendment is to remove lacunae and it is a curative amendment. On perusal of the memorandum explaining the provision of the Finance Bill, 2012, nowhere, it is written that the amendment is to remove any lacunae. It is only written that in a particular situation, reference cannot be made and that can lead to lower amount of capital gain which does not mean that it is to remove lacunae. It was submitted that it is only expanding the circumstances, wherein power of reference by the A.O. can be exercised. Such expansion of power is with respect to a new particular circumstance; hence, it is very much clear that the amendment under consideration cannot be said to be curative in nature, since it expands the scope to cover new circumstances, for which there is no existing provision for reference and curative action is only possible to an existing provision. Further, if it is for a circumstance for which pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial pronouncements in this regard: (a) Hon'ble Bombay High Court in the case of CIT Vs. Puja Prints [2014] 360 ITR 697 (Bom) while deciding the case on the issue of reference under section 55A(a) of the Act, observed that:- "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 than the fair market value" is substituted by the words "is at variance with its fair market value" is clarificatory 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." The above referred case is for the A.Y. 2006-07. The Hon'ble High Court while making the observations over the amendment made with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to sub-clause (ii) of clause (b). In any case, clause (b) would apply where clause (a) does not apply since it starts with the expression "in any other case". In other words if the assessee has relied upon a Registered Valuer's Report, the Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable." On perusal of the order, it is clear that the clause as it stood at the relevant time shall be applicable. The relevant time here means the assessment year under consideration and it is further stated that the amendment shall be applied only after 1.7.2012. The date 1.7.2012 does not fall under the relevant time in the instant case as well. Hence, it is clear that according to this judgment also, the said amendment is not operative for the period under consideration. (c) Hon'ble Gujarat High Court in ITA No. 1204 of 2018 in the case of DCIT V/s. Late Shantaben P Patel - L/H Govind Bhai P. Patel vide order dated 8.10.2018 decided the question under consideration by following the judgment given in the case of CIT V/s. Gauranginiben S Shodhan. 37. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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." Commissioner of Income Tax vs. Gauranginiben S Shobhan Indl., Hon'ble Gujarat High Court held that "Coming to the question of reference to DVO for ascertaining the fair market value as on 1.4.1981 also, we find that such reference was not competent, we have noticed that prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the judicial pronouncement relied upon by the appellant carefully. The abstract from judgment of Hon'ble Bombay High Court in the case of CIT Vs. Puja Prints 360 ITR 697, is "In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort can not be held to the residuary clause provided in Section 55A(b)(ii) of the Act." Hon'ble Gujarat High Court in the case of Commissioner of Income Tax vs. Gauranginiben S Shodhan Indl. held that "Clause (b) of section 55A is in two parts and permits a reference to DVO if the Assessing Officer is of the opinion that (i) the fair market value of the asset exceeds the value of the asset so claimed by the assessee by more than such percentage of the value of the asset so claimed or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. Sub-clause (i) of clause (b) also for the same reasons recorded above; would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to sub-clause (ii) of clause (b). In any case, clause (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, it is necessary so to do, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.-In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)." 41. The aforesaid provisions are as amended by the Finance Act, 2012 with effect from 1.07.2012 wherein in clause (a), for "is less than its fair market value" was substituted for "at variance with its fair value". As per the Revenue, the amended provisions of section 55A(a) are applicable for the impugned assessment year 2011-12 and the Assessing officer was well within his jurisdiction to refer the matter to the valuation officer. The assessee's contention is that unamended provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation officer. However, the amended provisions takes care of both the scenarios and has provided that where the value so claimed by the assessee is at variance with its fair market value, the matter can be referred to the valuation officer. In the instant case, the Assessing officer has invoked the amended provisions and has held that the value so claimed by the assessee is at variance with its fair market value. The contention of the assessee is that the amended provisions have only been brought on the statue books w.e.f 1.07.2012 and the same cannot be invoked in the instant case and therefore, the AO lacks the necessary jurisdiction to refer the matter to the valuation officer. 43. The question is how one should read the amendment in section 55A(a) which has been brought on the statue books w.e.f 1.07.2012. Whether we should read the amendment in the context of transactions which have happened on or after 1.07.2012 and which are liable for capital gains tax and therefore, satisfying the initial condition of reference "for the purposes of this chapter" to the valuation officer. Alternatively, irrespective of period to which the transaction pertains, where the assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er remains in respect of which all transanctions, the Assessing officer is empowered to make a reference to the valuation officer with effect from 1.07.2012. 45. In this regard, we refer to the decision of the Hon'ble Bombay High Court in case of CIT vs. Puja Prints (Supra) wherein it was held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. The findings of the Hon'ble High Court are as under:- "6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent- assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this appeal need not be entertained. However, as submissions were made on merits, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. In view of the above and particularly in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words if assessee has relied upon a Registered Valuer's Report, Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable. 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiaben Jayantilal Shah v. ITO [2009] 310 ITR 31/181 Taxman 191 (Guj.). In the said decision, it was held and observed as under:- "10. Under clause(a) of sec. 55A of the Act under the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause(b) of Sec. 55A of the Act, the Assessing Officer has to record an opinion that (i) the fair market value of the asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, was of the view that the cost of acquisition declared by the assessee as on 01.04.1981 was higher and Assessing Officer made reference to the Stamp Valuation Authority in this regard and relying on the report of the Stamp Valuation Authority, adopted the cost of acquisition as on 01.04.1981 at Rs. 64,675/- and worked out the indexed cost of acquisition at Rs. 3,76,409/-. The CIT(A) on the other hand, has relied on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra). The dictate of the Hon'ble Bombay High Court is that reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In case the value adopted by the assessee of any property was more than the fair market value as determined by the DVO, then such invocation of provisions of section 55A(a) of the Act was held to be not justified. Reference was also made to the amendment to section 55A(a) of the Act in 2012, wherein for the words "is less than the fair market value" was substituted by the words "is at variance with its fair market value", was held to be clarificatory and it was categorically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Courts and Tribunal as referred above, hence, Ground No. 1(1) to (5) of the appeal are allowed." 51. We also refer to decision of the Co-ordinate Bench in case of Sonali Roy vs. Pr. CIT, Kolkata (in ITA No. 1329/Kol/2017 dated 28.02.2018) wherein it was held as under:- "5. We have heard the rival contentions of both the parties and also gone through the orders of the lower authorities and the case laws relied upon by the assessee. In the instant case, assessee has declared the value for the cost of acquisition for the property at a higher value than the value determined by the DVO. The first technical issue arose before us is whether the reference made by the AO to the DVO for the valuation of the property is valid for the year under consideration. In this regard we note there was an amendment u/s 55A of the Act which was effective from 01.07.2012. Prior to the amendment u/s 55A of the Act, the provision of said section reads as under:- "[Reference to Valuation Officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the 60[Assessing] Officer may refer the valuation of capital asset to a Valuation Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: "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 above proposition of law, it is clear that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. For example, in the instant case, the amendment was brought with effect from 01.07.2012. Thus, the amendment would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14. Thus, it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) of the Act as it is administered at the relevant time. Once, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in case of Karimtharuvi Tea Estate (supra) has further clarified that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. The amendment brought with effect from 01.07.2012 in section 55A would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14 and not applicable to Assessment Year 2012-13. 54. In light of above discussions, in the facts of the present case, the transaction of sale of property has taken place during the financial year 2010- 11 relevant to Assessment year 2011-12, therefore, the amended provisions of section 55A(a) would not be applicable and one shall be guided by the erstwhile provisions of section 55A(a) of the Act and therefore, the Assessing officer was not correct in holding that the amended provisions are applicable in the instant case and therefore, reference to the valuation officer under the amended provisions of section 55A(a) cannot be sustained in the eyes of law. 55. A related question that arises for consideration is given that the reference has been made under section 55A of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the amendment of Sec. 55 A w.e.f. 01-072012, the AO is empowered to invoke clause (a) as he was of the opinion, after considering the relevant factors, that the value shown by the assessee on the basis of report of the registered valuer was at variance with the fair market value as on 1/4/1981. Both the clauses (b) of Sec. 55A is governed by the overriding expression " in any other case", which expression, as held by the Hon'ble Gujarat High Court in the case of Hira Ben Jayantilal Shah Vs. CIT, refers to a case where the value declared by the assessee is not in accordance with the estimate made by the registered valuer. Also there are judicial decisions to the effect that even in a case there is registered valuer's report, there is no bar for making reference under clause (b) (ii) of Sec. 55A. However, the enabling section for referring the matter of valuation for computation of capital gain is section 55A of the IT Act, 1961. In the instant case the AO has clearly mentioned in the reference itself that "During the course of assessment proceedings, the assessee has filed a copy of the valuation report of the register valuer, Shri G.S. Bapna (copy enclosed for ready re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and it is open to an assessee to contend to the contrary." (b) In the case of CIT vs. Gauranginiben (supra), the Hon'ble Gujarat High Court has observed:- "16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiraben Jayantilal Shah vs. Income-tax Officer and another reported in [2009] 310 ITR 31 (Guj). In the said decision, it was held and observed as under:- "10. Under clause (a) of sec. 55A of the Act under the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause (b) of Sec. 55A of the Act, the Assessing Officer has to record an opinion that (i) the fair marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though, in the instant case, the reference has been made expressly under section 55A(a). 60. In the instant case, we find that it is an undisputed fact that the assessee firm has determined the FMV basis the valuation report issued by a Registered Valuer. Further, from perusal of the letter dated 8.01.2014 issued by the Assessing officer addressed to the District Valuation officer which is available on record, we find that the Assessing officer has referred the matter to the DVO u/s 55A(a) of the Act. Therefore, where the valuation so adopted by the assessee firm is based on a registered valuer report and the Assessing officer has formed an opinion that the value estimated by the registered valuer is at variance with the fair market value of the asset having regard to the nature of the asset and its use at relevant time, the Assessing officer has invoked the provisions of section 55A(a) of the Act. In fact, as we have discussed above, the main argument of the Revenue is regarding the amendment brought in by the Finance Act 2012 in section 55A(a) and which has been claimed as applicable for the impugned assessment year. Further, the Hon'ble High Courts referred supra have also hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st in any form with the AO nor such valuation report can be used when specific provisions for reference are not available at first place. It was accordingly submitted that the order of the Mumbai Tribunal relied upon by the Assessing Officer is per inquirum as the decision of the Supreme Court has not been considered therein. 64. Regarding the decision of the Hon'ble Supreme Court in case of Pooran Mal vs. Director of Income Tax (Inv.) relied upon by the Assessing officer, it was submitted that in that case, the issue was whether evidences seized during the illegal search can be used, whereas, the issue under consideration in the instant case, is related to the reference to the DVO and use of the report given, in response to such reference. The DVO is a Technical Expert and there is another report of the Registered Valuer who is also a Technical Expert. It is pertinent to note that a report of Technical Expert, the DVO, has legal value only because of the provision contained in section 55A of the Act for the proceedings under consideration. Without such provision, the report of the DVO does not have any legal relevance. Whereas, the evidence seized during the search does not requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jay P. Karnik vs. Income-tax Officer and thereafter, in case of Pradeep G. Vora v. Income Tax Officer that the report of a valuation officer under section 55A may be considered as a piece of evidence where the same is found relevant by the Assessing officer even where the reference made by the AO is not as per the provisions of section 55A of the Act. In this regard, we refer to the relevant findings of the Coordinate Benches as under: 68. In case of Deputy Commissioner of Income-tax vs Chaturbhuj Vallabhdas (HUF) [2011] 130 ITD 230 (Mumbai), it was held as under: "11. Even otherwise, for the sake of argument, if it is presumed that the reference made by the Assessing Officer is not as per the provisions of section 55A, the valuation report of the DVO will not loose/reduce its relevancy being a good piece of evidence on the issue of FMV of the capital assets as on 1-4-1981. The admissibility of evidence is depends upon its relevance to the matter in issue and not in the manner how it has obtained. If there is any irregularity in obtaining the evidence the same will not render evidence as it is not admissible. In the case in hand, there is no doubt that the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in civil and in criminal cases, in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is, it is admissible and the court is not concerned with how it was obtained.' Some.... Certain... In Kuruma's case, Kuruma was searched by two Police Officers who were not authorised under the law to carry out a search and, in the search, some ammunition was found in the unlawful possession of Kuruma. The question was whether the evidence with regard to the finding of the ammunition on the person of Kuruma could be shut out on the ground that the evidence had been obtained by an unlawful search. It was held it could not be so shut out because the finding of ammunition was a relevant piece of evidence on a charge for unlawful possession. In a later case before the Privy Council in Herman King v. The Queen (3) which came on appeal from a Court of Appeal of Jamaica, the law as laid down in Kuruma's case was applied although the Jamaican Constitution guaranteed the constitutional right against (1) 35 Allahabad, 358. (2) [1955] A.C. 197. (3) [1969] (1) A.C. 304. search and seizure in the following provision of the Jamaica (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Pooran Mal (supra), the valuation report of the DVO is a relevant and admissible evidence on the matter in issue irrespective of illegality of reference made by the Assessing Officer. Thus, the issue of validity or illegality of reference made by the Assessing Officer under section 55A has become purely academic in nature." 69. In case of Vijay P. Karnik vs.Income-tax Officer, Ward -19 (2)(2) [2013] 37 taxmann.com 48 (Mumbai - Trib.), it was held as under: "7. We may also point out here that even if the reference made by the AO to the DVO was not in accordance with law or illegal the valuation report obtained in pursuance of such a reference will be relevant and admissible evidence which can be used by the revenue authorities in the income tax proceedings. This view is supported by the decision of Hon'ble Supreme Court in case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505 in which it was held that even though the search and seizure had been conducted in contravention of the provisions of section 132 of the IT Act material obtained can be used by the Income Tax authorities. Thus even if the reference made by AO is considered not valid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of Anant Mills Ltd. a reference under clause (b)(ii) of section 55A of the Act was made by the AO and the asset in question was a piece of land. Deciding the writ petition filed by the assessee, Hon'ble Gujarat High Court held that reference could have been made, if the AO was of the opinion that having regard to the nature of the asset and other relevant circumstances, it was necessary so to do, that there was nothing special about the nature of the asset which would have justified the AO to make a reference to the VO. No other relevant circumstances could be pointed out, that no attempt was made to justify the action of the AO under any other provision of section 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. MV. Shah, Official Liquidator, Anant Mills Ltd. v. U.J. Matain [1994] 209 ITR 568 (Guj.) (v) The purpose of section 55A of the Act is not to enable the AO to make a roving and fishing inquiry for finding out materials for reopening or revising a completed assessment. Pendency of an assessment including reassessment is a sine qua non for giving jurisdiction to the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission to VO under section 131(1)(d) of the Act with regard to cost of construction is permissible and in that situation it would not be a reference u/s. 55A of the Act. (x) For invoking the provisions of section 55A of the Act formation of opinion of the AO that the value claimed by the assessee is less than its FMV is a sine qua non. Recording reasons after the order of reference, for valuation of the registered valuer, is not a substitute for predecisional formation of opinion. CIT v. Umedbhai International (P.) Ltd. [2011] 330 ITR 506/[2014] 223 Taxman 152 (Mag.)/45 taxmann.com 306 (Cal.). (xi) A reference can be made to VO, under section 55A, clause (b) sub-clause (ii), only if AO records existence of 'such other relevant circumstances' on the basis of which he forms such opinion. In other words, a reference can be made if certain pre-conditions exit. In the matter of Hotel Joshi, Hon'ble Rajasthan High Court has held that for invoking sub-clause (ii)of clause (b) of section 55A of the Act, AO is required to form an opinion on the basis of the material on record that reference to the DVO for ascertaining the FMV of an asset, is necessary having regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a report of a Valuation Officer under section 55A may be considered by the Assessing Officer as a piece of evidence if it is relevant. (See CIT v. East Coast Commercial Co. Ltd. [1967] 63 ITR 449 , 457 (SC). However, the power of inquiry granted to an Assessing Officer under sections 133(6) and 142(2) does not include the power to refer the matter to the Valuation Officer for an enquiry by him." 72. In light of above discussions, we find that even where the reference to DVO has been held as invalid in the eyes of law, the valuation report so submitted by the DVO can be considered by the Assessing officer as a reliable piece of evidence as the Assessing officer is not bound by strict rules of evidence and where the report is found to be relevant, the same can be considered by the Assessing officer. However, whether the valuation report issued by the DVO is found to be relevant in the facts and circumstances of the present case, we shall be dealing with the same in the subsequent paragraphs. 73. Now coming to the cross objection (No. 2) filed by the assessee wherein the assessee has challenged the reference of the matter to DVO u/s 55A on the basis of incorrect assumption of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as commercial at Rs. 2,72,94,000/-. It was submitted that Registered Valuer has simply tripled the value of residential property to arrive value of commercial property. It is an established practice and also has been adopted for Stamp Duty purposes by Stamp Duty Authorities. Secondly, he himself has reported in Para 9 of his report about the locality, wherein, it is mentioned that Property is situated in mixed area, therefore, by applying the principle that for the purpose of ascertaining the FMV, one has to take the value which is most advantageous and accordingly, he adopted the value as commercial property. Therefore, in this regard, the approach of the Registered Valuer was supported with the substantiating material and guidelines for determining FMV. On the other hand, the presumption of the Ld. A.O. is arbitrary and based on mere suspicion, hence, should not hold good. (b) In the Point No. 2, it was mentioned by the AO that in S. No. 6, Registered Valuer has himself given the nature of property as residential land, therefore, it is concluded that at relevant time, the land use is not clear from the Registered Valuer's report. In this regard, it was submitted that we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the A.O. and which is not the intent of the legislature. Therefore, they have used the word "opinion" which demands an application of mind in objective manner on the facts and circumstances of any given case. Hence, for invoking the provisions of section 55A of the Act formation of opinion of the AO that the value claimed by the assessee is less than its FMV is a sine qua non. In support, reliance was placed on following decisions: (a) It has been observed by the Supreme Court in AMRIT BANASPATI CO LTD (2014-TIOL-64-SC-WT) that "It is true that the invocation of Rule 8(a) cannot be based on ipsi dipsi of the AO. The discretion vested in the AO to discard the value determined as per Rules 3 has to be judicially exercised. It must be reasonable, based on subjective satisfaction; the power must be shown to be objectively exercised and is open to judicial scrutiny." (b) In the matter of Hotel Joshi (242 ITR 478), Hon'ble Rajasthan High Court has held that for invoking sub-clause (ii) of clause (b) of section 55A of the Act, AO is required to form an opinion on the basis of the material on record that reference to the DVO for ascertaining the FMV of an asset, is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that before making the Reference, neither mind was applied objectively nor the requirement of the law has met and nor a proper opportunity was provided to the assessee to represent his version on those reasons. However, in this regard, it can be said that there is no express provision in the Act for providing an opportunity to the assessee before arriving such an opinion, even though, it is a settled principle of natural justice considering the nature of work and duty to be performed, there can be implied practices to secure justice. In the instant case, calling the assessee's view on the reasons for framing the opinion could not have affected the work of the Ld. A.O. in any way, rather could only assist him to form an opinion based upon the correct facts and the circumstances. In the instant case, looking to the reasons and explanations brought on record hereinbefore, it is a case where by providing such opportunity, the possibility of miscarriage of justice could have been avoided. 78. Per contra, the ld CIT DR submitted that the Assessing officer has not made the reference to DVO in a routine manner but after considering the report of the registered valuer and other relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, claim of the DVO towards inspection is wrong. It was further submitted that the notice for inspection was served only in the month of January 2014 wherein there was no specific date of inspection and thereafter in the DVO's report, it has been claimed that the inspection was carried out on 7.3.2014 which means that there must have been a separate notice for inspection and which the assessee denies to have received any such notice either in writing or verbally. It was further submitted that the assessee has filed his objection to the proposed DVO's report. However, the same has not been considered by the DVO which effectively means that assessee has not heard and his objections to the draft valuation report has not been considered which is a gross valuation principle of natural justice. 83. It was further submitted that the DVO in his report (Para 4.6) has concluded that the land under reference was a residential use only as on 01.04.1981. However, he has not disclosed any basis on which he concluded that the land under reference was a residential use only at the relevant point of time. It was submitted that the property was situated on 128 Feet wide Road, one of the biggest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, while concluding that there was no commercial working, the DVO acted unfairly, unreasonably and prejudice on evidence and for this reason alone, the order is against the principle of natural justice, since the natural justice demands fair play, reasonableness and without prejudice on evidence, which is absent in the instant case. 86. It was further submitted that a perusal of the report of the DVO shows that while deriving the FMV of the Property, he only took the value of the land, whereas, there was a structure of building which did not find place in the final valuation. On raising the objection on the issue subsequent to the valuation, it was clarified by the DVO that the registered Valuer also did not take the said value in consideration. Now the question arises whether he is bound with the fact noted by the registered Valuer or not and the answer is certainly not. Further, in the process of valuation, it is expected by the law and established practices that the DVO must visit the site and by applying his expertise the age of the construction can be determined. Further, in this case, it is very well noted on the page 6 of the Sale Deed executed on 6.12.2010 and regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the GVIP, 2009 Facts of the Sale Instance Of the instant case Adjustment taken by DVO Size 372.5 Sq. Mtrs. 82'X50' 2750.77 Sq. MtRs. 120'X246'9" (-) 20% Comments:- The comparable is of very small size in comparison to the size of the case under consideration. The GVIP, 2009 has provided three different situations, wherein, according to the situation, adjustment should be made. (i) +/- 0.5% per 100 Sq. M., in the instant case, that will come to adjustment @ (-) 11.89%, (ii) possibilities of Sub-Division must be examined and on the basis of hypothetical layout, value may be determined. The Property is having two side roads and width of the road on both sides are reasonably good, therefore, it can reasonably divided into 2 or 3 plots i.e. (120'X126'9" and 120'X120') or (120'X90' and 120'X80' and 120'X76'). Under such circumstances, the size of the each plot could not be much larger in comparison to the comparable and will not require any adjustment on this account and (iii) Considering the possibilities under bylaws, if multi story building can be constructed and size of the plot is more than 1,500 Sq. M. then the value of the bigger plot would be more than the sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated in the inner lane of the residential area, whereas, the Property is on the main National Highway and almost adjacent to the Railway Station. Further, surrounded by shops, Petrol Pump etc., whereas, the Sale Instance is in pure residential area. Therefore, at the outset, the advantage of the locality and surroundings of the Property has not been considered in complete, needs furthermore upward addition in the adjustment factor. (ii) It is pertinent to note that the Sale Instance is situated opposite to the graveyard which is considered as more disadvantageous factor in the society. It is clear from the report that the Ld. DVO failed to give effect to this fact either due to over sight or might have not conducted the physical verification of the Sale Instance. Since, it is not evident that the DVO conducted physical verification of the Sale Instance and in absence of such physical inspection; nobody can work out the advantageous and disadvantageous position of a property considering the locality and surroundings over the other property. Therefore, on account of disadvantage associated with the Sale Instance, the adjustment of the factor needs to be revised upward. Amenitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Property is far better than the Sale Instance. (ii) Section 48 of the by-laws of Municipal Council, Jaipur known as Building by-laws, 1970 (PBP No. 149-163) governs the height of the building as relevant time i.e. 1981 and for ready reference, we reproduce the same as follows:- "48. Height of building:- The height of the building in a scheme area shall not exceed 1½ times the width of the road. In the case of building facing more than one road height of the building will be governed by the width of the major road." Applying the prevailing rule, the height of the Property can be upto 192 Feet as against 63 Feet in the case of the Sale Instance, meaning thereby, the Property can have 3 times construction in comparison to the Sale Instance. It is a very important factor, which governs the price of the Property and which has not been taken care by the DVO at all. (iii) That very important factor has not been considered by Ld. DVO while working out the factors for adjustment. Land Tenure (5.2.1.3) (h) Leasehold Land Freehold Land NIL Comments:- The tenure of the Sale Instance and of the Property is totally different. However, the Ld. DVO failed to take into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property situated at A-2, Prithviraj Road, 'C' Scheme, Jaipur of M/s Maharaja Shree Ummaid Mills Limited. The said report is very much relevant since in both cases (i) the same issue i.e. ascertainment of the FMV 1.4.1981, (ii) the same period as our report has been made on 7.3.2014 and this report has been made on 12.3.2014 and (iii) the common comparable i.e. S-6, Bhawani Singh Road is involved. In this regard, it was submitted that: (i) In that case, it was proposed in the DVO's proposed valuation report dated 28.2.2014 to take the average of 15 comparables as the base rate i.e. Rs. 362/- per Sq. Mtr. Then after considering the objections of the assessee, he adopted the sale instance i.e. S-6, Bhawani Singh Road, 'C' Scheme, Jaipur and consequently adopted the base rate of Rs. 1,093/- per Sq. Mtr. It is important to note that in the para 10 of the final report dated 12.3.2014 (PBP No. 168), it is specifically mentioned by the DVO that the objection made by the assessee in person or vide written submission dated 11.3.2014 are not relevant. When the objections are not relevant even then the base rate has been changed in that case. (ii) In the said report, adjustment for large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that over all potentiality to use the plot has been considered. Accordingly, the Property having enough wide roads on two sides has better potentiality of use. Therefore, applying the same analogy as explained, the appellant deserves for adjustment on this account as well. (vi) Looking to the above facts, it is clear that while ascertaining the FMV, the Ld. DVO did either not act judiciously or made the report in haste without considering the facts properly. It is further evident from the forgoing discussions that he was not consistent in his approach while ascertaining the FMV of two different properties at the same time and more importantly, applying the same Sale Instance. Therefore, the report of the DVO deserves to be rejected and the report of a Registered Valuer should be accepted. 92. It was accordingly submitted that the report of the DVO should not be taken as the basis for calculating the cost of acquisition and resultant capital gain. In support, the reliance was also placed on the decision in case of Ravikant Vs. ITO, Delhi wherein it was observed as under:- "9. On a perusal of valuation report, however, we find that even the valuation by the DVO has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o placed on the decision in case of Suresh C. Mehta Vs. ITO (in ITA No. 33/Mum/2011 dated 17.05.2013) wherein it was held as under:- "7. ... Provisions of section 23A gives scope of first appeal and the subject matter which can be appealed before the learned Commissioner (Appeals) including that of any order of the V.O. and the powers of the learned Commissioner (Appeals) in relation to such valuation. Section 24 deals with the appeal to the appellate Tribunal and section 34AA deals with the appearance of the assessee through registered valuers before the learned Commissioner (Appeals) and the Tribunal and section 35 deals with rectification of mistakes. A combined reading of these sections provide that insofar as the Assessing Officer is concerned, he is bound by the valuation adopted by the V.O. whereas the learned Commissioner (Appeals) and the Tribunal can entertain objections relating to such valuation and V.O's valuation is not binding upon them. Sub-section (3) of section 50C provides that if the value ascertained by the V.O. exceeds the value adopted or assessed by the stamp valuation authority then such valuation adopted or assessed by the stamp valuation authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to a particular sale reference, adjustment of only those factors are required to be done which do not exist in the sale reference plot. That is why, no further addition for corner plot is done. In this regard, please also refer to the details given under para 4.6 of the valuation report ; (2) what you are describing now and what the DVO has seen during inspection is the status of construction as on date of inspection i.e. on 7/2/2014. But probably you have forgotten that DVO has been asked to report fair market value of the property as on 01/04/1981. You have not submitted any documentary evidence to DVO regarding actual status and quantum of construction existing on 01/04/1981. Rather as per your own submission of regd. Pvt. Valuer's report, S.No. 24 P-3, there is no structure existing as on 01/04/1981. So the FMV of construction has been rightly taken as ZERO on the relevant date. (3) The adjustment factor of 35% has already been taken on account of situation and location. No documentary evidence regarding commercially approved status of plot as on 01/04/1981 has been submitted at your end. So separate factor for commercial usage as on 1/4/1981 cannot be adopted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he FMV as on 01/04/1981. Further, the DVO has given the basis for adjustments made by him as against the adjustments made by the registered valuer, which was on a very higher side." 95. We have heard the rival contentions and pursued the material available on record. As we have held above, though the reference to the Valuation Officer by the Assessing Officer u/s 55A is not valid, at the same time, the valuation report so obtained by the Assessing Officer can be used as reliable piece of evidence where the same is found to be relevant. Therefore, it needs to be examined whether in the facts and circumstances of the present case, the valuation report takes into consideration the various factors effecting the FMV of the property under consideration or not and can be used by the Assessing officer. Firstly, we find that the Valuation Officer has considered the status of the land as on 01.04.1981 as residential as there was no commercial working from the premises on this date. Therefore, we find that the Valuation Officer is referring to the date when he has carried out the inspection. However, what needs to be examined is whether there was any commercial activitiy carried out as on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Valuation Officer. Further, the ld. AR has drawn our reference to another valuation carried out at the same time in case of another property wherein different yard sticks have been applied by the Valuation Officer in terms of the adjustment towards the size of the plot and commercial potential. We therefore find that the valuation report so issued by the Valuation Officer suffer from serious deficiencies and the same cannot be held as reliable piece of evidences which can be applied by the Assessing Officer. Therefore, in the facts and circumstances of the present case, we are of the considered view that the adjustment made by the Assessing Officer basis the valuation report so submitted by the DVO cannot be accepted as the same suffer from serious infirmity. In the result, the cross objection taken by the assessee is allowed. 96. Cross Objection No. 4 raised by the assessee is general in nature and doesn't require any separate adjudication. 97. In Cross Objection No. 5 raised by the assessee, it has challenged the action of the Ld. Additional Commissioner of Income Tax, Range - 6, Jaipur in directing the AO to complete assessment on the basis of report submitted by DV ..... X X X X Extracts X X X X X X X X Extracts X X X X
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