TMI Blog2016 (8) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... see as on 01-04-1981 is more than the fair market value determined by the AO is a highly debatable issue, therefore, following the decision of Hon ble Supreme Court in the case of T.S. Baralam, ITO Vs. Volkart Brothers and Others (Supra) I hold that the CIT(A) was not justified in passing the order u/s.154 of the I.T. Act in the instant case which in my opinion is a highly debatable issue. Accordingly, set aside the order of the CIT(A) passed the order u/s.154 of the I.T. Act. Grounds raised by the assessee are accordingly allowed. - ITA No.185/PN/2016 And ITA No.186/PN/2016 - - - Dated:- 19-8-2016 - SHRI R. K. PANDA, AM For The Appellant : Shri Pramod Shingte For The Respondent : Shri Suhas S. Kulkarni ORDER PER R.K.PANDA, AM : The above two appeals filed by the respective assessees are directed against the separate orders dated 07-01-2016 of the CIT(A)-1, Nashik relating to the Assessment Year 2009-10. 2. Since identical grounds have been taken by the respective assessee in both the appeals, therefore, these were heard together and are being dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,63,507/- by making addition at ₹ 42,63,389/- on account of Long Term Capital Gain. 4. In appeal the Ld.CIT(A) following the decision of the Hon ble Bombay High Court in the case of Puja Prints deleted the addition made by the AO who has made the addition on account of long term capital gain relying on the report of the DVO. The relevant observation of the CIT(A) reads as under : 4.4 I have considered the facts of the case the submission of the appellant, the order of the assessing officer, the remand report and the rejoinder to the remand report. The fair market value of land adopted by appellant as on 01 104/1981 as per the report of the approved valuer is ₹ 2,80,705/- per acre. Valuation made by DVO denotes F.M.V. at ₹ 1,94,852/- per acre. Therefore, that the F.M.V. adopted by Appellant on 01/04/1981 is higher than the FMV adopted by the DVO. 4.5 The appellant first ground of appeal wherein it has challenged the very reference to the DVO by the AO under section 55A of the Act. The appellant's argument regarding the same is that under clause (a) of section 55A, the AO is entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( a) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the reference made by the AO to the valuation officer per se is bad in law? Further, whether the ITAT was justified in observing that the reference to the DVO u/s. 55A of the IT Act 1961 is to be made when the value of the property disclosed by the assessee is less than the fair value and not vice versa thereby ignoring the provisions of section 55A(b)(ii) of the Act 1961 and paragraph 26 to 28 of circular No. 96 dated 25.11.1972 of the CBDT? 4.5.4 The Hon ble Bombay High Court decided the issue involved in the above question in favour of the assessee by observing as under : 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent-assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 4.5.5 As the issue involved in the present case as well as all the material facts relevant thereto are similar to that of the case of CIT V/s Puja Prints(supra) decided by the Hon'ble Bombay High Court. I, respectfully follow the decision of jurisdictional High Court rendered in the said case and uphold the submission of the appellant deleting the addition made by the AO on account of LTCG relying on the report of DVO by holding that the reference made by AO to the DVO u/s 55A of the Act itself was bad in law. The addition of ₹ 42,63,889/- stands deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax, (Appeals)-I, is not justified in confirming the action of the AO of making reference for valuation of property to the DVO u/s. 55A of the Act. 2. On the basis of facts and in the circumstances of the case and as per law and without prejudice to above, the Commissioner of Income Tax, (Appeals)-l, is not justified in confirming the action of the AO of making reference for valuation of property to the DVO u/s. 55A of the Act by invoking the provisions of Section 154 of the Act particularly when in an order passed u/s. 250 of the Act, it was held by the Commissioner of Income Tax, (Appeals)-I that the reference made by the AO to the DVO u/s. 55A of the Act as bad in law. The Commissioner of Income Tax, (Appeals)-I is not justified in passing the order u/s. 154 of the Act particularly when the issue is debatable. 3. The appellant craves for the addition to, deletion, alteration, modification of any of the above grounds of appeals. 8. The Ld. Counsel for the assessee strongly objected to the order of the CIT(A) passed in the 154 proceedings. The Ld. Counsel for the assessee referring to Para 4.1 of the original orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . please be deleted. 8.1 Referring to Para 4.2 of the original order of the CIT(A) he submitted that the submission of the assessee along with report of the DVO was forwarded to the AO for necessary comments and his report. However, the AO in his remand report offered no comments on the objection raised by the assessee regarding reference to the DVO u/s.55A. However, he furnished the revised working of long term capital gain. Therefore, under these facts and circumstances whether the decision of Hon ble Bombay High Court in the case of Puja Prints (Supra) is applicable to a case when the reference was made after 01-07-2012 for an assessment year prior to that is a highly debatable issue. Referring to the decision of Hon ble Supreme Court in the case of T.S. Balaram, ITO Vs. Volkart Brothers and Others reported in 82 ITR 50 he submitted that rectification proceedings cannot be initiated in case of debatable issues. He submitted that the AO initially had an opportunity to comment on this issue. However, despite given an opportunity during the remand proceedings, he has not passed any comments on this issue. Therefore, the order of the CIT(A) under the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain by holding that the AO should not have referred the matter to the DVO u/s.55A of the I.T. Act. I find subsequently the Ld.CIT(A), based on the request of the AO to rectify the order u/s.154, issued notice u/s.154 to the assessee. Since none appeared on behalf of the assessee and observing that the reference to the DVO in the instant case was made by the AO after 01-07-2012, i.e. the date from which the amendment in section 55A came into operation, upheld the action of the AO in making a reference to the DVO. 12. It is the submission of the Ld. Counsel for the assessee that full facts were already before the CIT(A) as well as before the AO during the remand proceedings. Further, when the assessment year involved is 2009-10 and the amendment was brought in the statute book w.e.f. 01-07-2012 and when the Hon ble Bombay High Court in the case of Puja Prints (Supra) has already held that such amendment brought to the statute is not retrospective, therefore, whether a reference can be made to the DVO after 01-07-2012 for an assessment year prior to A.Y. 2012-13 is a highly debatable issue. 13. I find merit in the above submission of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e established by a long run process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. Since in the instant case the issue as to whether the AO can make a reference to the DVO u/s.55A(a) of the I.T. Act after the amendment brought in the statute book w.e.f. 01-07-2012 but for an assessment year prior to that date where the fair market value adopted by the assessee as on 01-04-1981 is more than the fair market value determined by the AO is a highly debatable issue, therefore, following the decision of Hon ble Supreme Court in the case of T.S. Baralam, ITO Vs. Volkart Brothers and Others (Supra) I hold that the CIT(A) was not justified in passing the order u/s.154 of the I.T. Act in the instant case which in my opinion is a highly debatable issue. Accordingly, I set aside the order of the CIT(A) passed the order u/s.154 of the I.T. Act. Grounds raised by the assessee are accordingly allowed. ITA No.186/PN/2016 : 17. Grounds raised by the assessee are as under : 1. On the basis of facts and in the circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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