TMI Blog2005 (9) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have made a reference to the Valuation Officer and has completely erred in not doing so and straightaway adopting stamp duty rates for valuation and consequently the assessment is not in accordance with the provisions of law and is liable to be struck down." Brief facts of the case are as follows: 2. A survey operation was conducted on the assessee's premises under section 133A of the Income-tax Act, 1961. During the survey operation it came to the notice of the Assessing Officer that five open plots had been sold by the assessee to different persons. A perusal of the registered sale deeds indicated that the Sub-Registrar, while registering the sales, fixed the market value at Rs. 600 per sq. yd. for the purpose of levy of stamp duty. The Assessing Officer noticed that there was a difference in the value adopted in the registered sale deed and the value fixed by the Sub-Registrar. He concluded that the properties were transferred for inadequate consideration and invoked the provisions of section 4(1)(a) of the Gift-tax Act and levied gift-tax. Aggrieved, the assessee carried the matter in first appeal without success. Further aggrieved, the assessee has filed this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws: L.K. Kasliwal v. GTO [1991] 38 ITD 545 (Jp.) Rani Bai v. GTO [1996] 58 ITD 373 (Jp.) Nb. Jaffar Ali Khan v. Asstt. CWT [2003] 87 ITD 359 (Hyd.) Sharbati Devi Jhalani v. CWT [1986] 159 ITR 549 (Delhi) Raj Paul Oswal v. CWT [1988] 171 ITR 489 (Punj. Har.) For the proposition that the assessment itself has to be cancelled as it was made without reference to Valuation Cell, he relied on the following case laws:- Smt. Nawal Kanwar v. WTO [1981] 127 ITR 308 (Raj.) Smt. Uma Devi Jhawar v. WTO [1982] 136 ITR 662 (Cal.) CWT v. Master Kairas Tarapore [1987] 163 ITR 311 (Raj.) Smt. Bella Cajeton Travasso v. WTO [1987] 166 ITR 493 (Bom.) K.M. Ramdas Prabhu v. First WTO [1987] 166 ITR 706 (Kar.) M.V. Kibe v. CWT [1987] 168 ITR 82 (MP); [1988] 169 ITR 40 (MP) CWT v. Ravi Choloor [1989] 178 ITR 640 (Ker.) Shantilal Bhogilal Jhaveri v. WTO [1991] 187 ITR 395 (Bom.) Lakmi Devi Jain v. WTO [1992] 193 ITR 154 (All.) Jain V.K. v. WTO [1992] 193 ITR 898 (All.). The learned counsel also placed on record an extract of CBDT circular No. 96 dated 25-11-1972. 5. The learned departmental representative submitted a paper book running into 61 pages and submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of basic register value of the Sub-Registrar's office and the Assessing Officer was perfectly justified in adopting that value. In this connection, he submitted that the decision of the Hon'ble Madras High Court in the case of CGT v. Indo Traders Agencies (Madras) (P.) Ltd. [1981] 131 ITR 313, is in his favour. He relied on the judgment of the Hon'ble Madhya Pradesh High Court in the case of UOI v. Ku. Vijaya Raje [1999] 235 ITR 380, and submitted that reference to Valuation Cell is discretionary. Referring to the Schedule in the sale deed, he submitted that it refers to Industrial plot and this shows that on facts the assessee is wrong in claiming that the properties are located at a distance. He concluded by submitting that the method valuation by Sub-Registrar's office is a scientific method and hence the Assessing Officer was right in adopting the same for arriving at the deemed gift. 6. Replying to the contention of the revenue, the learned counsel for the assessee submitted that survey operations were carried out on 21-8-2000 and the gift-tax assessment was completed on 17-2-2003 and that the income-tax assessment was completed on 30-3-2001. He submitted that though incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave accepted the position that the returned value of the asset is not less than its fair market value. In other words, he has to accept the returned value for assessment purposes. On the other hand, if he chooses to make a reference to the Valuation Officer, is bound to adopt the value as reported by the Valuation Officer." Similar is the decision of the Jaipur Bench of the Tribunal in the case of Rani Bai, wherein it was held as follows (head note):- "Before the substitution of section 7 of the Wealth-tax Act and section 6 of the Gift-tax Act with effect from 1-4-1989, under both the Acts, the concept of 'market value' existed, as is evident from the words '... if sold in the open market...' used therein. Though the rules under the Gift-tax Act did not provide elaborately for the method of valuation, the rules as prescribed under the Wealth-tax Act were applied for gift-tax purposes also. And even when the concept of market value was there, the Supreme Court in the case of Bharat Hari Singhania v. CWT [1994] 207 ITR 1/73 Taxman 3, held that rule 1D of the Wealth-tax Rules was mandatory. The rules prescribed under the Wealth-tax Act were also applied for the taxation of gifts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 4(1)(a) considering the value fixed by the registration authorities for purposes of registration of the sale deed of the property in question. No material was found on refund as to the manner or basis of the fixation of the market value of the said property by the registering authority. In the absence of such evidence it was not easy to discern whether the value fixed by the authorities for purposes of registration of transferred documents was the true and fair market value. It was, no doubt, true that the valuation of properties when referred to the valuation officers under the relevant provisions of the wealth-tax and gift-tax laws was arrived at on a more reasonable, rational and scientific basis and more or less conformed to the accepted principles of valuation. In the instant case, apparently no enquiry or investigation was made by the Assessing Officer to find out about the adequacy or inadequacy of the consideration or whether or not the market value of the said property was fair or reasonable. In the absence of such a categorical finding it could not be held that the assessee had transferred the property in question without adequate consideration. Also, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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