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KIRITBHAI JAYANTILAL KUNDALIA (HUF) Versus INCOME TAX OFFICER WARD NO. 2 (4)

2016 (8) TMI 690 - GUJARAT HIGH COURT

Referring the matter to the Valuation Officer under section 55A - reopening of assessment - Held that:- There was no finding of the Assessing Officer that there was variation in the valuation report given by the government approved valuer. The original assessment order was passed. Thereafter, the case was reopened and while reopening the assessment, the Assessing Officer observed that since there were discrepancies in the valuation report of the government approved valuer, the matter was referre .....

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he valuation of the property as per the valuation report of the government approved valuer is on the higher side. Had the valuation of the Asst. Valuation Officer been on the lower side, the matter would have been standing on a different foot. In that view of the matter, the authority ought not to have referred the matter to the Valuation Officer by applying provisions of section 55 A of the Income-tax Act by reopening of the assessment. Thus, in view of the decision of this court in Commissione .....

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ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal under section 260A of the Income-tax Act, 1961, the appellant-assessee has challenged the order of the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal ) whereby the Tribunal has dismissed the appeal preferred by the assessee by confirming the orders passed by the Assessing Officer and the Commissioner of Income-tax (Appeals). 2. This court, while admitting the appeal, has framed the following subs .....

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sition as on 1.4.1981 as per the valuation report of Asst. Valuation Officer (i.e. ₹ 1,68,468/- and ₹ 1,98,428/-) by 50% instead of rejecting the said valuation report and accepting cost as per the claim of assessee in his return (i.e. ₹ 5,08,170/- and ₹ 6,60,225/-)? 3. Whether in the facts and circumstances of the case, Income-tax Appellate Tribunal has erred in law in upholding action of Assessing Officer in making reference to the valuation officer u/s. 55A of the Act .....

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ssment by issue of notice under section 148 of the Act. The Assessing Officer completed the assessment under section 143(3) read with section 147 of the Income-tax Act by determining total income at ₹ 20,04,554/- on 31.3.2006. 3.1 Being aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the Commissioner of Income-tax (Appeals). The Commissioner (Appeals) confirmed the action of the Assessing Officer in reopening the assessment. The relevant observations o .....

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r the circumstances, I hold that the action of the Assessing Officer in reopening the assessment is correct and no interference is call for. 3.2 In further appeal by the assessee, the Tribunal vide its order dated 26.3.2008 has upheld the view taken by the Commissioner (Appeals). The relevant observations of the Tribunal are as under: We have heard the rival contention of both the parties. We find that the A.O. while framing the assessment order has referred the matter to Valuation Cell for dete .....

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he valuation officer. The ld. A.R. has taken the contention that while making the reference to the valuation officer there was no pendency of assessment order, therefore the pre-condition for making a reference to the valuation officer is not satisfied but that controversy is settled by the decision of Madhya Pradesh High Court in case of Union of India vs. Kumari Vijyaraja 235 ITR 380 and held that reference to valuation officer is only an aid, an instrument and too to the A.O. for use in case .....

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143 on 13.3.03 determining the total income at ₹ 59,996/-. The AO has referred the matter to the valuation cell and after obtaining the report from the valuation cell, i.e. the DVO, and AO found difference between the valuation shown by the registered valuer and the value determined by the DVO. In the instant case the assessee filed the return on 7.3.01 and same was processed u/s. 143(1) on 30.3.01. The matter was referred to the Valuation Officer on 27.12.2000, therefore at the time of or .....

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cond question regarding direction to the Assessing Officer to recalculate capital gain by increasing cost of acquisition as on 1.4.1981 as per the valuation report of the Asst. Valuation Officer by 50% instead of rejecting the said valuation report and accepting the cost as per the claim of the assessee in his return is concerned, the Tribunal has given its findings in paragraph Nos. 10 and 11 which are reproduced as under: para 10 - We have heard the rival contention of both the parties. Lookin .....

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easonable value of the land is fixed at 75/- per sq. mtr. After that the Asst. Valuation Officer of the department has determined the FMV with comparative sale instance in that locality which is at page 18 of the paper book. While valuing the property, the assessee did not file any objection to proposed valuation which was communicated to him. Moreover, valuation officer has considering all other factors have determined the FMV as on 1.4.81. It is also found from the record that the ITO has refe .....

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details are as under: Sale Rs. Date of sale Survey No. Sq. mtr. 20999.7 05/02/81 456 195-10 60000 19/06/1981 456 121-8 60000 09/07/91 456 101-91 25000 18/8/1981 461/27 205-00 12000 28/9/1981 456/27-B 144-60 56625 22/1/1982 456-41-B 126-43 90000 24/9/1982 456/20A 124-19 60000 15/10/1982 456/5 508-18 49500 12/11/82 461/5 200-00 55000 30/12/1982 456 131-5 As per the appellant, these details were obtained by the appellant from the Sub-Registrar, Rajkot Unit 1, Rajkot as per the Receipt No. 5236, da .....

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g Officer also. A perusal of the details show that the rate at which the property was sold was much higher than the rate at which the appellant s valuer had valued the property. However, we have to keep in mind that this cannot be the sole indicator for determining the value. It has been admitted by the government approved valuer (whose report was filed by the appellant) that no comparative instances in respect of agricultural land were available. Even a perusal of the report submitted by the As .....

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defined areas connected by roads with infrastructural facilities which is not so in the case of sale transaction under consideration which are for agricultural land. Not only this, the land is agricultural but falls within the Rajkot Municipal Corporation. At best, these can be one of the indicators of rates to be applied for agricultural plots. Incidentally, we have to keep in mind that the land is agricultural land, the area of plot of land was running into acres and on comparative instances f .....

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at ₹ 164468/- and ₹ 198428/- respectively is increased by 50% . The Assessing Officer is directed to recalculate the value after increasing the cost of acquisition given by the departmental valuer in respect of both the land by 50% and then recalculate the capital gains. The Assessing Officer has also to keep in mind that as per original order, the appellant s share was 62.5% in respect of Survey No. 461/4 and 66.67% in respect of Survey No. 156 respectively. The working should be do .....

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le instance in that area, the assessee has not given any evidence before valuation officer therefore, the CIT(A) has considered all the objections of the assessee and given the relief to the assessee, therefore, in our opinion our interference is not required. Thus we uphold the order of CIT(A). We order accordingly. 3.4 The learned counsel for the appellant has relied on the decision of this court in the case of Commissioner of Income-tax v. Gauranginiben S. Shodhan Indl. reported in (2014) ITR .....

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aimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such clause, therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. We are conscious that with effect from 1.7.2012, the expression now used in clause (a) of section 55A is is at variance with its fair market value. The situation may, therefore, be different after .....

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nces, it is necessary so to do. Sub-clause(i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to sub-clause(ii) of clause (b). In any case, clause(b) would apply where clause(a) does not apply since it starts with the expression in any other case. In other words if assessee has relied upon a Registered Valuers Report, Assessing Officer can proceed only under clause (a) and clause(b) woul .....

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ax (Appeals) and the same is required to be reversed. 4. Learned counsel appearing for the revenue Mr. Desai has taken us to the order of the Tribunal and contended that the view taken by the Tribunal is just and proper and no interference is called for with the same. 5. We have heard learned counsel for the parties. While passing the original assessment order, there was no finding of the Assessing Officer that there was variation in the valuation report given by the government approved valuer. .....

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