TaxTMI 
TaxTMI 
2015 (12) TMI 510
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....t from government approved registered valuer valuing the land at Rs. 22,46,250/-. 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 ....
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....0 = Rs.12,70,000 Thus, Assessing Officer adopted the cost as on 1.4.1981 at Rs. 12,70,000/- and after allowing indexation 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....
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....f sale 07.07.2007] Rs.1,27,00,000/- Less: Indexed Cost:- Cost as on 01.04.1931 as per valuation report dated 08.04.2011 submitted 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....
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....r section 55A(b)(ii) is invalid and bad at law. As the reference to DVO under section 55A of the Act is invalid and bad at law the question of adopting the value as per DVO's report (which is called for under section 55A of the Act) does not 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/-.....
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....sessing Officer has referred the valuation to the DVO u/s.55A(b)(ii), for the sake of convenience the provision of Section 55A of the Act reds as under: "55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the 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....