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TMI Blog2015 (12) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... 46,250/-. iv. Adopting the fair market value of land at R.4,94,600 as on 1 April 1981 based on the estimate made by Departmental Valuation Officer vide order passed under section 55A of the Income-tax Act, 1961 r.w.s. 16A(5) of the Wealth Tax Act, 1957 and enhancing the long term capital gain by Rs. 28,60,863/-; v. Not considering the alternative prayer of the Appellant challenging the valuation report of Departmental Valuation Officer on merits." 3. In ITA No.6871/Mum/2012, assessee has filed appeal on following grounds: "On the facts and circumstances of the case, and in law, the learned Commissioner of Income-Tax (Appeals)-30, Mumbai, erred in i. Levying penalty of Rs. 6,48,272 under section 271(1)(c) read with Explanation 1 thereto of the Income-tax Act, 1961 for furnishing inaccurate particulars of income; ii. Levying penalty under section 271(1)(c) of the Incometax Act, 1961 for addition of income on account of difference in valuation of capital asset as on 1 April 1981 by two expert valuer's." 4. Briefly stated facts of the case are that assessee is a resident individual and during the year has shown income under the head 'income from other sources'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exation the same was worked out at Rs. 69,97,700/-. Thus, against Nil capital gain shown by assessee, Assessing Officer worked out long term capital gain at Rs. 57,02,300/- before allowing exemption u/s.54 of Income Tax Act. After allowing exemption u/s.54 taxable income was arrived at Rs. 55,13,900/-. The valuation report of DVO, Rajkot was received on 13.04.2011 vide letter dated 08.04.2011. As per valuation report of DVO, fair market value of said property was valued at Rs. 4,94,600/- as on 1.4.1981 as against the claim of assessee of Rs. 22,45,250/-. The Valuation Officer's comments on the registered valuer's report as under: "The registered valuer has adopted land rate of Rs. 2400/- per sqm. Adopted by the registered valuer is very very high and totally unrealistic without any base and cannot be relied upon." In view of above, since fair market value as per valuation report dated 8.4.2011 of DVO at Rs. 4,94,600/- which was far lower than the value estimated at Rs. 12,70,000/- by Assessing Officer in order passed u/s.143(3) dated 28.12.2010 long term capital gain needed to be recalculated and to be enhanced. This being so accordingly show cause notice was issued to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by DVO is Rs. 4,94,600/- 4,94,600x551/100 Rs. 27,25,246/- Rs.27,25,246/- CAPITAL GAIN Rs.99,74,754/- Computation of Exempiton 54F:- Rs.99,74,754/- Long Term Capital Gain Less: Exemption u/s. 54F Cost of New Asset/Net Consideration x Capital Gain 41,96,000 x 99,74,754/1,27,00,000 Rs.32,95,595/- Rs.32,95,595/- TAXABLE LONG TERM CAPITAL GAIN Rs.66,79,159/- Thus, as against the L.T.C.G. assessed at Rs. 38,19,296/- the correct L.T.C.G. is worked out at Rs. 66,79,159/-. Therefore, please show cause as to why your income should not be enhanced by Rs. 28,60,863 (Rs.66,79,159 - Rs. 38,18,296)." 5. In response to aforesaid show cause, learned Authorized Representative of assessee filed letter dated 20.12.2011. In aforesaid letter, assessee has challenged the very validity of reference to DVO u/s.55A of the Act. The stand of assessee is as under: "2. Applicability of section 55A of the Act to Appellant's case - The above high court decisions are followed by various tribunals while deciding the issue of reference to DVO under section 55A of the Act for valuation of property as on 01.04.1981. All the aforesaid decisions have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arise. 3. Some other Judicial Pronouncements supporting Appellant's view - Mrs. Asha Bharat Shah vs. ITO (Mum) ITA No. 1716/Mum/2010." 2.3 In addition to the above submissions the learned AR of the appellant has also relied upon the following case laws:- 1) Mrs. Ashah Bharat Shah vs. ITO (Mum) ITA NO.1716/Mum/2010 2) Smt. Sarla N. Sakraney vs. ITO(Mum)(2011) 130 ITD 167 3) ITO vs. Smt. Lalitaben Kapadia (Mum) (2008) 115 TTJ 938 4) Sajjankumar M. Harlalka vs. Jt. CIT (2006) 102 TTJ 974 (2006) 100 ITD 418(Mumbai Tribunal) 5) Smt. Krishnabai Tingre vs. ITO (2006) 103 TTJ 216(2006) 101 ITD 317 (Pune Tribunal)" In this background, learned Authorized Representative pleaded that reference to DVO u/s.55A was invalid and it was submitted that valuation report of registered valuer may be accepted and fair market value given therein as on 1.4.1981 may be accepted at Rs. 22,46,250/-. However, CIT(A) having considered the same, upheld the order of Assessing Officer. 6. Same has been opposed before us inter alia submitted that CIT(A) was not justified in upholding the validity of reference made to the DVO u/s.55A of the Income Tax Act. Not following the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he valuation of capital asset to a Valuation Officer - (a) In a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion ;that the value so claimed is less than its fair market value; (b) in any other case, if the Assessing Officer is of opinion - (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such per-centage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do" Thus reference to DVO can be made in two situations; first, the value is adopted based on report of registered valuer and second, in any other case. In assessee's case, fair market value adopted as on 01.04.1981 is based on valuation report of registered Valuer. Therefore, Assessing Officer should have applied the provisions of 55A(a) and according to said provision, fair market value claimed by assessee can be rejected only if fair market value is less than fair market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case is bad in law. Thus, on the sole grounds of appeal of the assessee has to be allowed. 6. Before passing, we have to mention that the assessee has submitted the arguments. As on the basis of the legal aspects itself we have decided the issue in favour of the assessee, we refrain from undertaking this academic exercise of disposing this case on merits. " 5. In view thereof there is no merit in the appeal. Appeal stands dismissed." Similar view has been taken by Mumbai Tribunal in case of Sajjankumar M. Harlalka vs. Jt.CIT (2006) 102 TTJ 974 (Mumbai Tribunal) and ITAT, Mumbai in case of ITO vs. Smt. Lalitaben Kapadia (Mum) (2008) 115 TTJ 938. In view of above legal discussion, Assessing Officer was not justified in rejecting the valuation report of assessee as on 01.04.1981 obtained by him from registerd Valuer and referred the same to DVO. Accordingly, the order of CIT(A) was set aside and Assessing Officer is directed to allow the claim of assessee as prayed. 8. As a result, appeal filed by assessee is allowed. 9. Now we take ITA No.6871/Mum/2012. 10. This appeal is with regards to penalty u/s. 271(1)(c) consequent to quantum proceedings. Since, we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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