TMI Blog2013 (11) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... AMAKOTAIAH AND DR. S.T.M. PAVALAN, JJ. For the Appellant : Shri Reepal Tralshawala For the Respondent : Shri T.D. Singh ORDER Per: B Ramakotaiah: This is an assessee s appeal against the order of CIT(A)-27, Mumbai dated 29.11.2011. The assessee has raised the following two grounds :- 1. In law and on the facts in the circumstances of the appellant s case the Hon ble C.I.T.(A) erred in upholding the validity of the notice issued u/s 148(2), without appreciating that there were no cogent reasons recorded for the reopening of the assessment and there was no new material gathered by the A.O. for reopening of the assessment. 2. In law and on the facts in the circumstances of the appellant s case, the Hon ble C.I.T.(A) erred in relying on the valuation report as prepared by Shri Umrigar, which adopted rent capitalization method under Wealth Tax Act instead of relying on the Valuation Report of Shri Ganjawala which was for the purpose of determining the fair market value (FMV) as on 01-04-1981 which was under the provisions of the Income Tax Act, 1961 for the purpose of computing the capital gains made on the sale of the impugned property. 2. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of cost inflation index from F.Y. 2001-02 on the ground that the property was inherited by the assessee as per the Will of Smt. Indumati P. Shah on her death. Thus, the AO recomputed the long term capital gains chargeable to tax. 3.2 Before CIT(A) the assessee contested re-opening of the assessment u/s. 147 which was held against him on the reason that there was no assessment originally and return was processed u/s. 143(1). With reference to contention that value was adopted as determined by stamp duty authorities without giving opportunity to the assessee or referring the matter to the valuation officer, it was also accepted by CIT(A) following the decision of ITAT in the case of Mrs. Asha Bharat Shah vs. Income Tax Officer, another co-owner of the property and accordingly matter was referred to DVO for determining the FMV as per provisions of section 50C(2). With reference to actual cost applicable from 01.04.81 this issue also was accepted by the ld. CIT(A) following the decision of the Hon ble High Court of Bombay in the case of Manjula J. Shah dated 11.10.11. Since the property was received on partition and erstwhile HUF held the property as on 01.04.81, the direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lization method without considering the open land available for future development. It was further submitted that in the case of Indira Bai vs. ITO (42 ITD 397) it was held that valuation report prepared for Wealth Tax and Income tax are different and value of property adopted by the assessee for the purpose of Wealth tax does not estop him from contenting otherwise in proceeding for calculating tax on capital gains. It was further submitted that Mr. Ganjawala s report was the report accepted in other group cases by ITAT, which directed the AO to accept the valuation. Justifying the valuation at Rs.43.00 lacs., it was also submitted that the assessee is now able to locate the Departmental valuation officer s report adopted for Wealth Tax purposes wherein the AO referred the valuation to the DVO as on 31.03.1987 and 31.03.88 and same was determined at Rs.54.82 lacs and Rs.69.92 lacs. Working backwards on cost inflation Index (CII) and taking the average value it was submitted that value as on 01.04.81 comes to Rs.42.89 lacs which is almost equivalent to valuation adopted by M/s. H. Ganjawala Co. It was the submission that the AO may be directed to adopt the value as adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain was admitted from this transaction. This was explained by a note stating that deducting the cost of the property as the estimated market value as on 1-1-1964 at Rs. 3 lakhs from the sale value of Rs. 10,80,000 the capital gains was Rs. 7,80,000/- and since the assessee had purchased a new house property at Rs.7 lakhs and incurred stamp duty of Rs. 1 lakh and also made investments in Unit Trust of India for Rs. 25,000 and in National Savings Certificates for Rs.2,50,000, the capital gain arising from the transaction was not exigible to tax. The ITO did not agree with the assessee, with respect to, inter alia, value of the property as on 31-3-1964. He found that the value of the property had been taken at Rs. 1,30,000 as on 31-3-1964 for wealth-tax purposes. He was, therefore, of the view that the same value should be adopted for capital gains purposes also. On appeal, the Commissioner (Appeals) also upheld the said view. On second appeal, the revenue contended that the assessee was precluded from going back on the value returned and accepted for wealth-tax purposes in respect of the determination of the value of the same property for the purposes of capital gains. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the provisions of rule 1BB. On the other hand, tax on capital gains is a one-time tax on the difference between the consideration received and the market value as on 1.1.1964. Since the assessee was not estopped from contending that the value taken for wealth-tax purposes need not be followed for capital gains purposes, that value taken for wealth tax purposes could be considered to be the only one piece of evidence which could be contradicted by the assessee by producing further data for a more accurate determination of the market value. In the present case, the assessee had done only that by producing the sale deed relating to the sale of an adjacent property in April 1964 which indicated a value similar to that adopted by the assessee. In the circumstances, the value of the property could be reasonably estimated at Rs. 3 lakhs as on 11.1964 for the purpose of computing the capital gains. 8.2. Following the principles laid down therein, we are of the opinion that the report given for the Wealth tax purposes need not be considered for the Income tax purposes, particularly for computation of capital gains. However, this aspect was not before AO at the time of completing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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