Tribunal invalidates DVO reference for 2012-13 assessment

The Tribunal held that the reference to the Departmental Valuation Officer (DVO) under the amended Section 55A was not valid for the assessment year 2012-13. It was determined that the valuation should be based on the registered valuer's report as of 01/04/1981, and the addition of long term capital gains based on the DVO's report was directed to be deleted. The appeals of the assessees were allowed, with the same legal reasoning applied to related appeals.

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Issues Involved:
1. Legality of the reference to the Departmental Valuation Officer (DVO) under Section 55A.
2. Applicability of the amended provisions of Section 55A effective from 01/07/2012.
3. Validity of the valuation reports and the determination of Fair Market Value (FMV) as on 01/04/1981.

Detailed Analysis:

1. Legality of the Reference to DVO under Section 55A:
The primary issue was whether the Assessing Officer (AO) could validly refer the valuation of the property to the DVO under Section 55A. The assessee argued that the AO could only make such a reference if the value claimed was less than the FMV, as per the provisions before the amendment effective from 01/07/2012. The AO, however, contended that the amended provisions allowed for a reference to the DVO if the value was "at variance with its FMV," which should apply retrospectively. The Tribunal noted that the amendment was not given retrospective effect by the Parliament and should apply prospectively from 01/07/2012. Therefore, the AO's reference to the DVO under the amended provisions was not valid for the assessment year 2012-13.

2. Applicability of the Amended Provisions of Section 55A Effective from 01/07/2012:
The Tribunal examined various judicial precedents, including decisions from the Hon’ble Bombay High Court and the Hon’ble Gujarat High Court, which consistently held that the amendment to Section 55A was prospective. The Tribunal emphasized that the law applicable at the time of the transaction should govern the assessment. Since the transaction in question occurred before 01/07/2012, the amended provisions did not apply. The Tribunal concluded that the AO lacked the jurisdiction to refer the matter to the DVO under the amended provisions for the assessment year 2012-13.

3. Validity of the Valuation Reports and Determination of FMV as on 01/04/1981:
The Tribunal scrutinized the valuation reports provided by both the registered valuer and the DVO. The assessee had claimed the FMV as on 01/04/1981 based on a registered valuer’s report, which was significantly higher than the value determined by the DVO. The Tribunal noted that under the unamended Section 55A, the AO could only refer the valuation to the DVO if the value claimed by the assessee was less than the FMV. Since the value claimed by the assessee was higher, the AO's reference to the DVO was invalid. Consequently, the Tribunal directed that the addition made under the head "long term capital gains" based on the DVO's valuation be deleted.

Conclusion:
The Tribunal allowed the appeals of the respective assessees, holding that the reference to the DVO under the amended Section 55A was not valid for the assessment year 2012-13. The Tribunal directed that the valuation as on 01/04/1981 should be based on the registered valuer's report, and the addition of long term capital gains based on the DVO’s report was to be deleted. The identical facts and circumstances in the related appeals were decided in favor of the assessees, applying the same legal reasoning.

Order:
The appeals of the respective assessees were allowed, and the order was pronounced in the Open Court on 26/06/2019.

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