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TMI Blog2020 (4) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... nbad admeasuring 7234 sq. meter area for Rs. 2,82,11,000 during the year under consideration on which long-term capital gain is disclosed at Rs. 42,18,883 by claiming fair market value as on 01.04.1981 at Rs. 380 per sq. meter as per Registered Valuer report of Shri B. H. Patel dated 17.10.2013. However, the AO considered fair market value rate at Rs. 64.30 per sq. meter as per report of DVO. The AO issued a show-cause notice as to why FMV rate be adopted at Rs. 64.30 per sq. meter as estimated by the DVO. The assessee has explained that DVO report is not valid and irrelevant, as no base has been given. There DVO stated that Registered Valuer valued the land by comparing price with RBI gold price, which is not correct. It was submitted that Registered Valuer has considered 1 to 10 various factors and shown his valuation report in para 10(A). These ten ground are not considered by the DVO and DVO report is based only on sale instances which is irrelevant and far from truth. The sale of contemporary was not determined by any qualified valuer person or not technical qualified person. Whereas the Approved Valuer has valued the land on the basis of reverse valuation. The same is support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order it is manifest that there is no reference to any material on record prompting the AO to form an opinion that reference to the DVO for ascertaining the fair market value of assets was necessary having regard to nature of assets and other relevant circumstances. The learned counsel for the assessee referred para No. 4.1 of the assessment order and submitted that the AO has issued show-cause notice based on DVO report i.e. after receipts of DVO report. Hence, the AO has not formed an opinion before referring the Valuation Officer for ascertaining fair market value of land sold by the assessee and how the Registered Valuer report submitted by the assessee was not correct. The learned counsel for the assessee further submitted that the assessee has filed Government Approved Valuer from Shri B.H. Patel, copy of which is placed at Paper Book Page No. 12 to 27. The Registered Valuer at Paper Book Page No. 18 of his report has explained the methodology adopted for computation of agricultural land as on 01-04.1981. The Registered Valuer observed that all factors like land rate, size, shape m, situation, location, utility frontage, time leg, potentiality, surrounding developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /93 CCH 314 ( KarHC) wherein it was held that "52. In the present case, the assessee had provided the reasons for determining Rs. 225/- per sq. ft. as the fair market value of the property by producing the relevant material, including valuation report of a registered valuer, which all have been ignored while arriving at the price of Rs. 84/- per sq. ft. The Assessing Officer assessed the value of the property as on 1.4.1981 on the basis of sale deeds of some nearby properties registered for such price in the year 1981 and thus, arrived at that figure. In our opinion, the same cannot be the proper mode of arriving at the 'fair market value' of the property in question as on 1.4.1981, for the purpose of determining 'Capital gains' under the Act." 6. Per contra, the ld. Sr. D.R. supported the order of lower authorities. The ld. Sr. D.R. submitted that the AO clearly formed his opinion that fair market value adopted by the assessee is not correct. 7. We have heard the rival submissions and perused the relevant material on record. We find that the observation of the CIT (A) that B.H. Patel valuation report is not based on guidelines of the Department. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some nearby properties registered for such price in the year 1981 and thus, arrived at that figure. In our opinion, the same cannot be the proper mode of arriving at the 'fair market value' of the property in question as on 1.4.1981, for determining 'Capital gains' under the Act. Accordingly, the AO is directed to apply rate of Rs. 380 per sq. meter for calculation if long-term capital gain in the hands of the assessee. Accordingly, Ground No. 1 and 2 of appeal are allowed. 8. Ground No. 3: is not pressed before us by the learned counsel for the assessee, ex-consequenti, it is treated as dismissed as not pressed. 9. Ground No. 4 and 5 relates confirming addition of Rs. 73,13,300 as unexplained investment in property and not allowing deduction under section 54B of the Act. 10. Brief facts are that the AO found that the assessee has purchased land from Shri Mohan Bhai for which first payment was made on 20.06.2011 of Rs. 25 Lakh, Rs. 12.50 Lakh was made on 08.07.2011, Rs. 12.50 Lakh was made on 12.07.2011, and Rs. 23.13 Lakh was made on 08.05.2012. The assessee was asked to explain source of payment. It was submitted that cheques made the payment from saving b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration received on sale of impugned land , he returned amount to K B Patel only when he sold impugned land to another person and received payments for the same. 13. Au contraire, the ld. Sr. D.R. relied on lower authorities. 14. We have heard the rival submissions and perused the relevant material on record. We find that payment of Rs. 50 Lakh during period from 22.06.2011 to 12.07.2011, hence, payment so made does not fall during the assessment year under consideration. Therefore, even if the source is not proved, then no addition of this amount can be made for the assessment year under consideration. Further, the assessee has explained that payment were made by cheque out of sale consideration received against agreement to sale. The payment received from K B Patel has been duly reflected in confirmation account appearing at Paper Book Page No. 7. This amount is also reflected in bank statement placed at Paper Book Page No. 8 to 11. This facts shows that funds were received as part of advance from Shri K B Patel for sale of said property. These funds were utilized for purchase of ne property. However, later on said party has changed his mind and agreement to sale was cance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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