TMI Blog2003 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had offered a sum of Rs. 9,39,106 as long-term capital gains attributable to the sale of the said house property. The assessee had also an income of Rs. 7,57,617 from other sources. Accordingly, the assessee had returned an income of Rs. 19,96,720 for the assessment year under appeal. 4. While working out the quantum of capital gains exigible to tax, the assessee had estimated the cost of the land at Rs. 37,50,000 as on 1st April, 1981. According to the AO, the value of the land adopted by the assessee as on 1st April, 1981 at Rs. 37,50,000 was excessively high and done only with an intention of reducing the tax liability by understating the long-term capital gains arising out of the sale of the said house property. The value adopted by the assessee was supported by a valuation report obtained from a registered valuer. Apart from the valuation of the land at Rs. 37,50,000, the assessee had valued the residential building at Rs. 4,67,400. The AO rejected the valuation report on the ground that the registered valuer has not cited any identical transaction that had taken place in identical localities during the relevant period. According to the AO, the reasons stated by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable instance of properties in Gulmohar Park and adjoining areas, which could throw some light in regard to the valuation of land as on 1st April, 1981. The Valuation Cell, New Delhi vide letter No. 290, dt. 4th Feb., 2000, invited the attention of the CIT(A) to certain facts regarding the rate of land quoted in the auction sales made by the Delhi Development Authority (DDA) and Municipal Corporation of Delhi (MCD). Then, the CIT(A) on the basis of the details collected from the valuation people in New Delhi discussed the market nature of various colonies in Delhi at length in pp. 5 to 10 of his order and came to a conclusion that Rs. 2,100 per sq. yd. would be a reasonable price of the land as on 1st April, 1981. Regarding the valuation of the structure, the CIT(A) directed the AO to adopt the value at Rs. 3,13,460 in place of Rs. 4,67,400 adopted by the AO. This direction was also given by the CIT(A) on the basis of the letter sent by the valuation cell of the IT Department at New Delhi. 7. As far as the claim of the assessee regarding investment of Rs. 10 lakhs is concerned, the CIT(A) found that even though the claim made by the assessee would not be eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. If the CIT(A) finds any infirmity in the order of the AO and feels that the assistance of the Departmental Valuer is called for in the case, he should have remitted back the case to the AO with suitable directions. The learned counsel contended that it is an error of law committed by the CIT(A) to make a reference to the Valuation Cell in New Delhi. The learned counsel then pointed out that the entire substance of the discussion made by the CIT(A) at length in his order is nothing but the personal observation of the CIT(A). The CIT(A) has referred to the auction rate proclaimed by DDA and MCD. Those rates were for different localities and there is a difference even between the rates declared by DDA and MCD. All these details are collected by the CIT(A) without affording an opportunity to the assessee to file her objections at the appropriate level. The learned counsel submitted that therefore, no, reliance could be placed on the materials collected by the CIT(A) through his correspondences made with the Valuation Cell of the IT Department at New Delhi. The learned counsel further filed a supplementary paper book at the time of hearing with a prayer to admit the same und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative, appeared for the Revenue and argued the case. It is the contention of the Revenue that the CIT(A) has not referred the matter for any valuation as such. Therefore, the question of illegality, as pointed out by the learned counsel for the assessee, did not arise in this case. The CIT(A) was actually collecting certain relevant information through his letter addressed to the Chief Engineer, Valuation Department, New Delhi. The said Engineer supplied certain relevant information through his reply sent to the CIT(A). It is in the light of these relevant materials that the CIT(A) has adjudicated the issue. The CIT(A) has clearly stated the value of the property started increasing only in late 1980s and, therefore, the contention of the assessee that prices of properties in areas like Gulmohar Park in New Delhi was shooting up since 1971 onwards cannot be accepted at its face value. The Revenue contended that for a span of 11 years from 1970 to 1981, the rate of increase in the property value according to the registered valuer and the assessee was about 300 times. At the same time, the increase in the value of the property for a span of 14 years from 1981 to 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebutted by the AO only in the light of reliable materials available with him. In the present case, the AO himself has not referred the matter to valuation. 15. In the facts and circumstances of the case, we have to hold that the AO as well as the CIT(A) have erred in coming to their conclusions regarding the valuation of the property as on 1st April, 1981. Their findings on valuation of the property are not, therefore, sustainable in law. 16. As already discussed, we find that the valuation suggested by the lower authorities do not render justice to the facts of the case. The value of properties in Gulmohar Park and adjoining areas had started increasing in 1979 onwards immediately after the notification of the setting up of Asian Games Village. This fact is clearly discernible from the materials placed before us. Therefore, the fair market value of the land as on 1st April, 1981, could not be far away from the value of Rs. 12,500 per sq. yd. returned by the assessee. There is justification in substantial increase in the price of the land as compared to the acquisition cost paid in 1970 in view of the fact that the nature of assessee's property and surrounding areas undergo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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