TMI Blog2002 (2) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... me for assessment year 1995-96 on 31-10-1995 which were processed under section 143(1)(a) on 30-9-1996. In these returns, the assessees had not disclosed the income from capital gains from the sale of said land. Accordingly, proceedings under section 147 were initiated by issue notice under section 148 on 30-9-1996 to bring their respective incomes from capital gains to tax. The assessees challenged the action of the Assessing Officer before the CIT(A) who upheld the action of the Assessing Officer. 4. Shri D.E. Robinson, the learned counsel for the assessee submitted that the assessees bona fide believed that the population of Canacona was less than 10,000 and the sale made on 27-10-1994 was not liable to capital gains tax for such reason. Therefore, the transaction was not part of the returns of income filed by the assessees for the assessment year 1995-96. He submitted that the information on record of the Assessing Officer or in possession did not indicate that income had escaped the assessment. The learned D.R. relied upon the orders of the authorities below. 5. We have considered the rival submissions and perused the facts on record. From the perusal of the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the land, the same was valued at Rs. 50 per sq. mtr. which was worked out to Rs. 54,00,000 as on 1-4-1981 as against the total sale consideration of Rs. 1,69,56,000 received by all the co-owners on the sale made in October, 1994. The Assessing Officer summoned the approved valuer and examined him on oath. It came out that Shri Vikas Desai had not visited the Sub-Registrar's office to collect information of sale deeds for comparison nor had he visited any Government Office for getting information on specific amenities available as on 1-4-1981 in and around the area where the said land was situated. He also confirmed that the land was considered as agricultural land in 1981 and the area was not yet notified as settlement zone although it had the potentialities of a settlement zone as there were cluster of houses around this land. On the request of the assessee Mr. Vikas Desai was allowed to be examined by the assessee's counsel. It appears that during this cross examination, it transpired that since Shri Vikas Desai was not a valuer of agricultural property, the market value as on 1-4-1981 may be got determined by some other Valuer dealing with agricultural property. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sale deed with Shri Kunde. But the principle is hereby decided and the opportunity will not be extended to refute this principle. This ground of appeal is disposed of accordingly." Aggrieved by the order of the CIT(A) both the assessees and the Revenue are in appeals before us. 8. The grievance of the assessees is that the learned CIT(A) erred in rejecting the valuation reports of the Registered Valuers for the purpose of determination of market value of the land sold during the year of account as on 1-4-1981 for purposes of section 55(2)(b)(ii) of the Act, while the grievance of the Revenue is that the learned CIT(A) has erred in holding that the gift deed referred to by the Assessing Officer for working out the fair market value as on 1-4-1981 does not reflect the fair market value being evident family arrangements. We will first take up the grievance of the assessees. 9. Shri D.L. Robinson, the learned counsel for the assessee submitted that the assessees secured a valuation report initially from a registered Valuer for immovable properties in which the value as on 1-4-1981 was stated at Rs. 54,00,000. This report was rejected by the Assessing Officer who required specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Mr. Kunde was dissolved in 1983 soon after the demise of the assessee's father in February, 1982, though the father of Mr. Dominic Dias was not a partner in the said firm. The firm M/s. Goa Chitrapur Bus Service was assessed to tax. The records are available with the Department. He also drew our attention to the affidavit of Mr. Dominic Dias. 10. The learned counsel further submitted that it is on record that Mr. Dominic Dias transferred this land back to his father and he was required to do so because on his marriage in 1979 to ensure that both Mr. Dominic Dias and his brother Mr. Richard Dias had the benefit of this land and the first purchase in Shri Dominic Dias name is not questioned as violating provisions of Portuguese Civil Code as being in excess of the father's disposable quota by the other son and to prevent the assessee's wife from acquiring interest in the property on the marriage of Mr. Dominic Dias. The transfer was done on 2-6-1979 and Mr. Dominic Dias was married on 5-6-1979. Considering the fact that the property was purchased by Mr. Dominic Dias's father from out of his own funds this transaction between the father and son cannot be considered as a regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale with a reputed hotel owner from Bombay Mr. Luthria of Sea Rock Hotels, in which the price offered was Rs. 51. The assessee had not accepted this price at the material time since it was not considered as adequate and thus not acceptable. A copy of the memorandum was filed before the Assessing Officer. Even on the basis of this memorandum taking into account the published inflation index for the purpose of capital gains, the equated index price per square metre would be Rs. 34 in 1981, and if the reduction in construct able area of 18.796 imposed in 1983 is taken into account the value equated would be Rs. 47.6. The learned counsel submitted that the valuation made by the valuer obviously took into account the restrictions imposed beginning from 1983 on beach properties which as stated above retarded therate of increase. The offer made by Mr. Luthria and the fact that it was rejected as inadequate are established by documents. There was substantial persuasion from Mr. Luthria which was repelled and offer was not accepted. The Assessing Officer was not justified in totally ignoring this evidence. In the light of established fully substantiated facts, the valuation reports give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advantage of the rule of Estoppel, having avoided payment of gift tax in respect of the gift made by the assessee's father in favour of the first two assessees on 11-9-1981, stating the value of the gift at Rs. 48,000 only. This, according to the learned D.R. is a fraud on the Department and the assessee cannot be allowed to take further advantage having thus deprived the Department of legitimate gift tax due. In support of this contention, he placed reliance on the judgment of the Supreme Court in the case of CIT v. B.N. Bhattacharjee [1979] 118 ITR 461. The learned D.R. further relied on the comparable cases of sales which had taken place near about the date relevant for valuation, the sales having been effected by Mr. Kunde. In these transactions, value may be substituted for the value determined by the approved valuer. The learned D.R. submitted that the Assessing Officer has collected very recently all the materials from the office of the Sub-Registrar. 13. With regard to the appeals filed by the Revenue, the learned D.R. submitted that the learned CIT(A) was not justified in holding that the gift deed referred to by the Assessing Officer for working out the fair market va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Act landlords are compelled to sell portions of the property in possession of Mundkars at an upset price determined by the Government. According to the learned counsel, by no stretch of imagination sales to Mundkars can be considered as comparable case. The learned counsel concluded that in view of the facts and circumstances of the case, the value determined by the approved valuer for agricultural land as expressly required, by the Assessing Officer be directed to be accepted. 15. We have considered the rival submissions and perused the facts on record. The subject land was purchased by Mr. Dominic Dias, the first assessee in the year 1969 for a consideration of Rs. 35,000 from one Mr. Kunde. At the material time, Mr. Dominic Dias was 22 years of age and had no source of income worth the name. At the material time he was a partner of Mr. Kunde from whom the property was purchased having been admitted to the benefits of the said firm in 1960 (Goa Chitrapur Bus Service) when he was a minor on the basis of capital provided by his father and on account of friendship between his father and Mr. Kunde. Accordingly there were extraneous considerations that governed the transaction on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he father of first two assessees by way of gift deed to his two sons viz., Mr. Dominic Dias and Mr. Richard Dias by taking the value at Rs. 48,000 in the registered gift deed. This, in our opinion, is clearly a family arrangement considering the antecedents. The father of the first two assessee's had intended the land to be inherited only by his sons excluding the daughters who were all married and made the gift deed in September, 1981 when his health deteriorated. He expired on 202-1982. We accordingly hold that none of the two transactions which clearly vested the subject land in the hands of the first two assessees is a regular commercial transaction. The learned CIT(A) has rightly accepted the plea that the later two of the three transactions are family arrangement and do not provide the basis for determination of the market value as on 1-4-1981. We accordingly reject the appeals of the Revenue. 17. After having held that none of the three transactions referred to supra were commercial transactions and hence cannot be the basis for determination of fair market value as on 1-4-1981, the issue to be resolved is what should be the fair market value of the subject land as on 1-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foregoing facts. In our opinion, the Assessing Officer was in error in rejecting the said report. Thereafter, the Assessing Officer required the assessee to file a report from an Agricultural Valuer and accordingly a report from Mr. Nagarsenkar who was an Agricultural Valuer was produced as specifically required by the Assessing Officer. The report of the Agricultural Valuer is at page 37 of the paper book and we find that the Agricultural Valuer had given a detailed report and had relied on the very same comparable cases already filed before the Assessing Officer and had made a reasonable valuation of the property which has been rejected by the Assessing Officer who is not a qualified valuer by merely stating that the valuation is a 'mere opinion' and the basis 'hypothetical'. Besides the comparable cases and the potentiality of the land, the Agricultural Valuer relied on the following factors for the purposes of valuation: "(1) The excellent location of the land and the near rectangular shape. (2) The made to order access to the Beach and the Main Road. (3) The flat topography making the land suitable for any purpose and in particular for construction of Beach Resorts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has taken into account the rich agricultural potentialities of the land and acceptance of the department of the value of Rs. 50 per sq. mtrs. of the inferior adjoining land made by him. Valuations being estimates are bound to vary and Rs. 10 variation in the circumstances cannot be described as wide in the circumstances explained. 19. The CIT(A) has further directed that the market value as on 1-4-1981 be determined by indexing the purchase price in 1969 by application of cost index. We agree with the learned counsel for the assessee that this method is falacious and wholly unwarranted in face of valuation reports of experts available on record. Besides, there was no approved inflation index prescribed earlier to 1981. The only index available during such period was based on cost of essential commodities and would have no relevance to determination of market price of land. 20. Now we come to the contentions of the learned D.R. His first contention that Mr. Kunde - the vendor had no friendly relation with the father of the first two assessees had already been dealt with by us in para 12 supra. The second contention was that the principle of Estoppel has exceptions and in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicata do not apply to Income-tax proceedings is too well established to be called into question as on this date. 21. In the light of the above discussion, we direct the Assessing Officer to adopt the fair market value of the subject land as on 1-4-1981 at Rs. 66,46,000 as determined by the approved valuer for agricultural land Mr. Nagarsenkar as expressly required by the Assessing Officer after rejecting the report of Mr. Vikas Desai, the approved valuer. 22. The next grievance of the assessee is that the learned CIT(A) erred in not considering the assessee's objection to levy interest under section 234B in the light of the provisions of the Act and written submissions made before him. It is noted that as held by the CIT(A) this ground is consequential in nature. The Assessing Officer is directed to levy interest under section 234B if any, after taking into consideration the observations made by us. 23. In the result, assessee's appeals are allowed in part while the departmental appeals are dismissed. Per Singhal, J.M. 24. After going through the order proposed by my Ld. brother, I have not been able to persuade myself to agree with the findings and conclusions arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to agree with such broad proposition. According to the generallaw of the land, all transfers of land by way of sale or gift are compulsorily registerable under the provisions of Registration Act, 1908. For the purpose of such registration, adequate stamp duty has to be paid by the parties in accordance with provisions of Stamp Act, 1899. Such stamp duty is to be paid on the basis of market value of the immovable property to be registered. The concerned registrar has to satisfy himself that adequate stamp duty has been paid. If he thinks that market value is more than stated in the deed, then either he can refuse to register the same or ask the parties to pay adequate stamp duty in accordance with the market value. No provision has been brought to our notice to show that transfer of property by way of family arrangement can be registered at the value below the market value. Therefore, even assuming that sale deed and gift deed were by way of family arrangement, it is difficult to hold that such deeds cannot represent the fair market value. Rather a legal presumption arises that value stated in such deeds represent the correct market value. No doubt such legal presumption ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly stated as under:-- "Whereas the Vendors herein have been carrying on intensive agricultural operations in the said agricultural operations in the said agricultural properties for the last several years and have grown substantial number of coconut trees, and other fruit bearing trees, besides growing paddy on part of the said agricultural property and," 2. The observations that the land had immense potentiality to be used for the purpose of Beach resort are not appealable. As on 1-4-1981, there is no evidence that any resort or hotel or lodge or any other object of tourist attraction was established. As mentioned earlier, the entire land was cultivated land in 1981. Merely the land is situated near the sea or river cannot be a ground for holding that there was immense potentiality for beach resort. Subsequent event as late as in 1987 (offer to purchase by Hotel Co.) cannot be considered as material for such finding as against the fact that the land was purely agricultural. 3. Mr. Desai, the approved valuer has considered the subject land as urban land falling within the municipal area of Canacona Municipal Council (Cols 7 and 11 of the report). Such considerations are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The valuer was influenced by the consideration that the land was urban land falling within the Municipal limit while in fact it was agricultural land outside the Municipal limit as on 1-4-1981. (3) There is no evidence or material to show that in 1981, this land was surrounded by urban growth or to show that there was an existence of any hotel or beach resort nearby such land. (4) The instance of sale taking into consideration by the valuer is not comparable in any manner. (5) The offer of Mr. Luthria in the year 1987 at the rate of Rs. 51 per sq. mtr. itself shows that valuation of this land in 1981 adopted by the valuer at the rate of Rs. 50 per sq. mtr. is arbitrary. (6) The report appears to be prepared on assumptions without looking into any material. It is also apparent from his statement that he visited the land in 1995 while the report was prepared in 1997. 29. Now let me consider the second valuation report by Mr. Nagarsenkar, which appears at page 37 of the paper book. This report is too general in nature without referring to any data or material relevant to the year 1981. No instance of any sale has been cited except the general statement that the rate of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have been as low as mentioned in the gift deed of the subject land dated 11-9-1981 executed by the father of the two assessees. To that extent, the assessee has been able to rebutt the legal presusmption. 31. But, that is not the end of the matter. The question still remains what should be the value of the land in 1981? In the absence of any factual data, it is not possible for us to determine such valuation. The power of the appellate authorities are co-terminous with that of the Assessing Officer as held by the Supreme Court in the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225. It is also well known that an appellate authority has the jurisdiction as well as the duty to correct all the errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC). The Legislature has communicated the provisions of section 55A which provide that the Assessing Officer may refer the valuation of capital asset to the DVO with a view to ascerta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire: "1. Whether on the facts and in the circumstances of the case and in law, the value of the land mentioned in the gift deed dated 11-9-1981 could be assumed as fair market value as on 1-4-1981 subject to rebuttal, if any, as held by the Judicial Member OR the value of the land mentioned in the aforesaid gift deed could not be considered as market value at all for determining the value of land as on 1-4-1981 merely because the transaction of the gift was a family arrangement as held by the Accountant Member? 2. Whether on the facts and in the circumstances of the case, and in law, the value of land as on 1-4-1981 can be accepted at Rs. 64.80 lakhs as held by the Accountant Member OR the matter of valuation be restored to the file of the Assessing Officer as held by the Judicial Member?" THIRD MEMBER ORDER Per Shri Satish Chandra, A.M.--On a difference of opinion between the Members constituting the Division Bench, following two questions were referred to me for my opinion under section 255(4) of the Income Tax Act, 1961-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land was considered as agricultural land in 1981, according to him, it had the potentiality of settlement zone as there were cluster of houses around this land and, therefore, he considered this as a settlement zone, although there was no notification of the Government to this effect. It was also admitted by him that the land which was shown as a comparable case, was the land of 600 sq. meters, which was sold during 1974 for residential purposes, and that it is located about 8 kms. away from the property and it was sold for Rs. 20 per sq. meters. He confirmed that he had not verified the genuineness of the sale deed from the Sub-Registrar's office. The Assessing Officer required the assessee vide his letter dated 5-12-1997 to show cause why the valuation report submitted by Shri Desai be not disregarded, he being not an agricultural valuer. A copy of the statement recorded by the Assessing Officer was also given to the assessee for comments. The assessee responded vide letter dated 8-12-1997. It was submitted, inter alia, that the potentiality of the land for non-agricultural use keeping in view such development and demand for beach properties for the purpose of construction of bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer the donor and the donees both have signed the document of gift deed in token of the donor having gifted and the donees having accepted the property. This registration resulted in change of the right in the property from Mr. Ubaldino Dias to his sons. It is a legal document in the eyes of law and therefore what is stated therein is binding on the parties. The Assessing Officer further found from the recital in the sale deed dated 2-6-1979 by virtue of which Mr. Ubaldino Dias had purchased this property from Mr. Dominic Dias for a consideration of Rs. 40,000 which is also a registered document that said Rs. 40,000 represented market price of the property and accordingly a stamp duty of Rs. 2,400 was paid for registration. On a query as to why the value mentioned in the gift deed dated 119-1981 be not taken as a fair market value of the property as on 1-4-1981, it was submitted before the Assessing Officer that the sale and gift transactions were made between the family members to have a measure of equitable distribution of the assets. Hence whatever value has been stated in the two transactions is neither dependable nor authentic. It was also stated that the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was worth Rs. 60 per sq. meters in Canacona in 1981 itself when there were no purchasers for beach resort hotel in Canacona area during that period. 5. The Assessing Officer was of the view that the property in question had undergone through two transactions viz. In 1979 and 1981. Placing reliance on those transactions the Assessing Officer observed that section 33 of the Stamp Act, 1899 provides that the Registrar is vested with the power to impound document presented for registration if in his opinion it was not properly stamped and the sale deed executed in 1979 and the gift deed executed in 1981 both were properly stamped, these were not impounded by the Registrar when these were presented for registration. This shows that the value shown in those documents were reasonable and correct. He referred to the provisions in the Indian Stamp Act relating to an instrument which is not duly stamped. He then referred to the provisions of section 49(1) of the Income-tax Act regarding cost of acquisition of capital asset where it becomes the property of the assessee under gift. It contains a deeming provision that in such a case, the cost of acquisition shall be deemed to be the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registered gift deed as true market value as on 1-4-1981. Accordingly, the Assessing Officer calculated long-term capital gain and brought it to tax. Aggrieved, the assessee appealed. 6. Before the CIT(A) an affidavit of Mr. Dominic Dias appears to have been submitted by Mr. D.E. Robinson, Advocate and counsel for the assessees wherein Mr. Dominic Dias confirmed certain facts mentioned by the CIT(A) in para 2.1 of the appellate order. On the strength of these facts, it was contended that none of the three transactions viz. Purchase of the property for Rs. 35,000 in 1969, sale thereof in the year 1979 and gift of the property in the year 1981 could be considered as regular commercial transactions, particularly latter two transactions which were between close relatives and thus represented only a family arrangement. It was submitted that the father having provided the funds for purchase of the land had insisted, when the son was to be married that the land reverts back to him so that the same could be transferred to both the sons and possible disputes be avoided. The very basis adopted by the Assessing Officer was thus refuted. It was then contended that sea-side periphery of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed valuer for agricultural properties, Rs. 34 per sq. meter arrived at by extrapolating the value in the memorandum of aborted sale to Shri Luthra and Rs. 48 per sq. mtr. purportedly taken by Mr. Kunde in respect of the adjacent property. He then recorded a finding that "the range of variation in these values itself is a clear indicator of their falsity". In the opinion of the CIT(A), the sale instances cited by the assessees are in respect of the lands whose nature, locale and potentiality are at considerable variance with that of the assessees' lands, could not be relied upon. The CIT(A) further observed that the two documents relied upon by the Assessing Officer i.e., the sale deed executed in the year 1979 and the gift deed executed in the year 1981 do not reflect the fair market value on account of being evident family arrangement. Regarding the sale price of Rs. 35,000 paid by Mr. Ubaldino Dias to Mr. Kunde in 1969 and whether it reflected the real market price in 1969 or not, the CIT(A) rejected the argument of the assessee that there were extraneous considerations governing this transaction. According to him, the price could not be so illusory merely because Mr. Kunde and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year of account as on 1-4-1981 for purposes of section 55(2)(b)(ii) of the Income-tax Act. 3. The learned CIT(A) erred in rejecting the comparable instances of sale without verification of the facts relating to such comparable cases though the copies of relative sale deeds were filed before him. 4. The learned CIT(A) erred in ignoring all the facts relating to the valuation process as brought out in the cross examination of the registered valuer on record. 5. The learned CIT(A) erred in not taking into account the aborted transaction of proposed sale of the same land in 1987, though all the facts relating to the said transaction were filed before him in a comprehensive compilation on pages 64 to 71 of the said compilation and though the said transaction was relevant and indicative of market value of the property as on 1-4-1981. 6. The learned CIT(A) erred in holding that the initial transaction of the purchase of the land in 1969 was not influenced by personal considerations though the circumstances relating to the said purchase were fully brought on record before him. 7. The learned CIT(A) erred in directing that the valuation as on 1-4-1981 should be based on the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for immovable properties in which the value as on 1-4-1981 was stated at Rs. 54,00,000. Besides other details, this report was accompanied by a site plan. The Assessing Officer rejected the report of the registered valuer Mr. Vikas Desai merely on the ground that he is not a registered valuer for agricultural land. The agricultural land is not defined for this purpose. The subject land had never been fully used for agricultural purposes and through treated as agricultural land on account of 200 coconut trees had immense potentiality to be used for purposes of a beach resort as the valuation report, the plan and an offer to purchase from a reputed hotel company establish the value of the property as suitable land for a resort. The Assessing Officer also examined Shri Vikas Desai. The sworn statement in cross-examination of Mr. Vikas Desai has brought on record very substantial fact concerning the value of the property, which had been ignored by the Assessing Officer in toto. Mr. Vikas Desai deposed that apart from being the valuer, he had personal knowledge of the terrain and the land having lived in Canacona from his childhood. He further deposed that the nature of the property s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is not taxed in Goa). 5. The pressure of resort hoteliers and the scramble to acquire beach land particularly in 1981 when there were no restrictions on constructions on Beach properties. 6. The fact that the land was not marked as Agricultural for in development plans in 1981 or now. 7. The open unrestricted conversion and construction permission that was available in 1981 and progressively subjected to restrictions later. 8. Total absence of tenants and mundarks. 9. Comparative rates for smaller holdings. The observations of the Assessing Officer that agricultural aspects of the land are not considered by valuer, clearly indicates that the Assessing Officer has not perused the valuation report fully. In fact the valuer had dealt with same aspects which the Assessing Officer states in the order had not been dealt with, by the valuer. There is absolutely no warrant to bind down a registered valuer to any particular set of considerations. Neither is it the prerogative of the Assessing Officer to do so. The Regd. valuer is entitled to consider all such factors that actually influence the market value. Accordingly we hold that the Assessing Officer ought to have accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11-9-1981, stating the value of gift at Rs. 48,000 only. This according to the learned DR is a fraud on the department and the assessee cannot be allowed to take further advantage having thus deprived the department of legitimate gift tax due, and in support of this contention, he placed reliance on the judgment of the Supreme Court in the case of CIT v. B.N. Bhattachargee. We do not find any merit in this contention of the learned DR. The matter dealt with by the Supreme Court in the said case relates entirely with procedure and deals with a situation in which the Supreme Court found the strictures. It was also held in the said case that Estoppel cannot be called into aid to stall performance of public duties and that the doctrine of Estoppel did not apply to, the facts of the case, in so far as the assessee's case is concerned, it would be clear from the decision of the C.G.T. v. S.N. Zaman S.M. Elahi [1966] 221 ITR 842 that a family dispute which is resolved by a family arrangement would not give rise to any gift tax liability. For this purpose, the dispute need not be an existing one nor the claims of disputants legally valid. A mere possibility of the dispute is settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value is more than stated in the deed, then either he can refuse to register the same or ask the parties to pay adequate stamp duty in accordance with the market value. No provision has been brought to our notice to show that transfer of property by way of family arrangement can be registered at the value below the market value. Therefore, even assuming that sale deed and gift deed hold that such deeds cannot represent the fair market value. Rather a legal presumption arises that value stated in such deeds represent the correct market value. No doubt such legal presumption can be rebutted by placing relevant material or evidence on the record. In such situation, the onus would be on the person who alleges that market price stated in the deeds is not correct. Therefore, in my view, the CIT(A) was not justified in rejecting the sale deed and gift deed executed in 1979 and 1981 in a summary manner. Consequently, his direction to take the 1969 value as base value and determine the market value as on 1-4-1981 considering the cost inflation index would also be unwarranted because if any value has to be taken into consideration would be the value nearer to the valuation date. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the value stated there is not a negotiated market value. He drew my attention to the definition of "Pair Market Value" in relation to capital asset in section 2(22B) of the IT. Act, according to which the Pair Market Value means (z) the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date; and (ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with the rules made under this Act. He submitted that the Income-tax Act is a self-contained code and therefore, the value as on 1-4-1981 should be determined only as per such definition given above. He argued that the value stated in the gift deed as market value is only an estimate and one estimate cannot be based on another estimate. He stated that res judicata does not apply to the tax proceedings. The assessee could not be bound down to value stated in a proceeding which is extraneous to Income-tax Act. In this connection, support was derived from the decision in Indira Bai's case. According to him, the family arrangement has no tax implication and the allegation of evasion of tax is incorrect. He referred to the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the reply of the valuer in Col. 7 of the report from which he submitted that there was pressure from Hotelier for beach land. He also adverted my attention to the special feature of the property in question mentioned by the valuer in Cols. 8 and 9 of the report. It is almost rectangular in shape. The west end of the property with a width of nearly 220 meters ends on the sea beach and the East touches the main road with a width of 150 meters. This special feature indicates the potential use of the land, which has been considered by the valuer. Mr. Robinson further submitted that the estimate of agricultural income of Rs. 5,00,000 per annum, if capitalized 12 1/2 times, it would give a figure of Rs. 62.5 lakhs which roughly tallies with his final valuation arrived at Rs. 64.8 lakhs. 16. Mr. Robinson further submitted that the offer of Sea Rock Hotel in 1987 at Rs. 51 per sq. meter would work out to Rs. 34 on reverse indexing to 1981. Taking into account the restriction imposed in 1983 and no construction zone upto 90 meters from the high tide, the value would be Rs. 47.50 per sq. meter. Mr. Robinson further submitted that the comparable cases cited by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich can be displaced only by evidence. Again the restriction on use imposed in 1983 and inclusion in municipal area in 1985 (involving higher taxes), argued Mr. Robinson, have retarted the rate of increase in prices but not reversed such increase. He also submitted that the details in Columns 7, 8 and 9 of the format of valuation report are intended to allow the valuer to state his finding on inspection which unless controverted should be accepted. According to him, these columns indicate such features, which show the importance of potentiality of land under consideration for valuation. He also submitted that perhaps, there is no agricultural valuer in the valuation cell as on date. Moreover, the topography of the land has changed during the last seven years by construction of hotel. Furthermore, under section 55A(a) reference is restricted only to the valuation which is lower than what the Assessing Officer estimates and in the case of the assessee reference under section 55A(b) is inapplicable. 18. Mr. Bahuguna, the ld. DR placed strong reliance on the findings of the learned Judicial Member which is more or less based on the observation and finding recorded by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deed executed on 11-9-1981 is a registered document and for the purpose of paying the stamp duty the Fair Market Value mentioned therein has been taken into account. According to him, for the above reason, the Assessing Officer was justified to determine the Fair Market Value of the property in question as on 1-4-1981 at Rs. 48,000 as the transaction of gift deed dated 11-9-1981 was very much nearer to the relevant valuation date i.e., 1-4-1981. He, therefore, submitted that if the Tribunal accepts the value of the land mentioned in the gift deed dated 11-9-1981 as fair market value as on 1-4-1981, there would be no need to consider the question No. 2. 19. I have gone through the proposed orders of my Learned Brothers as also carefully considered the arguments advanced by the learned Representatives of the parties. It is an admitted position that the subject property sold by the assessee to Dikshaw Holdings (P.) Ltd. during the previous year ended on 31-3-1995 relevant to the assessment year 1995-96 is exigible to capital gains tax. It is also not in dispute that for the purpose of computation of capital gains, the Fair Market Value of the subject property has to be ascertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital is situated at a distance of 6 kms. (via river) and 8.00 kms. By road, whereas the hospital is at a distance of 2 kms. in the case of subject land. Again in the case of said land all Government Offices are situated at a distance of 8 kms. by road, whereas in the case of the subject land these are situated at a distance of 1.50 kms. On the basis of the above comparison, the valuer hazarded a guess that the price of case of subject land could have been Rs. 35 per sq. meter or more in 1974 whereas the said land was sold for Rs. 20 per sq. meter in July 1974. In Part II of the report the valuer stated that considering the rise in prices of land by 3 to 496 every year in the vicinity considering the value mentioned in the aforesaid sale deed and after comparing it with the subject land, its pros and cons, he was of the view that the rate per square meter of the subject land, in 1981 was Rs. 50 per sq. meter. He thus arrived at the fair market value of the subject land at Rs. 54,00,000 (1,08,000 sq. meter x Rs. 50). One striking feature which stares at the face of it is a long gap of more than two and a half years between the date of personal inspection of the property by the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact of Mr. Desai being not an agricultural valuer came to light during his examination on oath on 5-12-1991 and certain startling facts emanating from his report/deposition were revealed (e.g. his non-visiting the Sub-Registrar's office to collect information of sale deed for comparison purposes, no attempt to obtain information from Government Offices on civic amenities as on 1-4-1981 in or around the area of the subject land, absence of notification of the Government to the effect that the subject land was in settlement zone and that he valued the subject land as a residential area) and when the assessees were confronted, the assessee stated in letter dated 8-12-1997 to the Assessing Officer that "we would also file a further valuation report by an agricultural valuer". The above request of the assessee in the aforesaid letter was acceded to. It is, therefore, incorrect to have an impression that the report of Mr. Ghanshyam A. Nagarsenkar the agricultural valuer was submitted by the assessees "at the instance of the Assessing Officer". This impression needs to be dispelled. 21. Within a short span of time, the assessee obtained the valuation report dated 20-1-1998 from Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o made inquiries regarding land transactions. He stated that he ascertained that one hotel project purchased land from a number of owners with a view to consolidate the land so purchased to use for hotel project. He further states that from a new vendors, he learnt that sale rate of individual holding varies from Rs. 40 to Rs. 200 per sq. meter then, he again reverts back to the subject land and observes that a single large track of land would command a better rate per sq. meter than multiple small holding owned by many. Finally, he summed up certain factors on which he relied for the purpose of valuation and arrived at the value of subject land at Rs. 64,80,000 (land measuring 1,08,000 m2 x Rs. 60). 22. As stated earlier, the site inspection of the subject land was carried out by Mr. Nagarsenkar on 16-1-1998 and the report is dated 20-1-1998. Evidently it appears to have been prepared in haste. Not a single instance of contemporaneous transaction i.e. a sale deed executed on or about valuation date, viz., 1-4-1981 has been relied upon by him. He solely relied on the "inquiries with those who had knowledge of this land and had lived or resided in the area". Who were these perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Judicial Member would have upheld the said value, especially since, he has not been able to agree with the valuation reports of the two valuers. But that is not the case. He has directed the Assessing Officer to examine the question of valuation and that is only because he is convinced that the value mentioned in the registered gift document has been shown to be incorrect by the assessee. That is the only logical manner in which I can understand the orders of the learned Members. In this view of the matter, it becomes unnecessary for me to seek to resolve the first question as if there is a difference of opinion between the learned Members. 24. Now moving to question No. 2 which, in my opinion, brings out the real controversy I am of the view that the course adopted by the learned Judicial Member is the appropriate one. The learned Accountant Member has fully accepted the valuation reports prepared by the two valuers. The learned Judicial Member has, however, rejected them by pointing out various defects in them in paragraphs 27-29 of the order. Before me, Mr. Robinson the ld. counsel for the assessee, has not been able to show that there are no such defects in the val ..... X X X X Extracts X X X X X X X X Extracts X X X X
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