TaxTMI 
TaxTMI 
2016 (10) TMI 407
X X X X Extracts X X X X
X X X X Extracts X X X X
....Surat. While scrutinizing such assessment, the Assessing Officer desired to obtain the valuation of such properties, for which purpose he made a reference to the DVO. On 26.10.2010, the Assessing Officer wrote to the DVO calling for his valuation report on the estimated fair market value of the properties sold by the petitioner. In the caption to this letter, he referred to Section 50C(2) of the Income-Tax Act,1961 (for short 'the Act'). In the said letter, he conveyed to the DVO as under : "2. Under the power conferred by the IT Act,1961, u/s 131(d) on the undersigned you are hereby issued commission to value the property mentioned below for the purpose of estimation of fair market value of the property. The above named person has sold the properties specifications of which are as per Annex-A attached herewith. 3. You are requested to send your valuation report to the undersigned in duplicate urgently preferably within 30 days of receipt of this letter. This is time barring matter, as the assessment u/s 143(3) of the IT Act for A.Yr.2008-09 is pending and the same is barred by limitation by 31.12.2010." 1.2 The DVO therefore, on 29.10.2010 wrote to the petitioner call....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o Rs. 39.47 per sq. mtrs. The SUDA auction documents for the said area during the same period reflected price range of Rs. 1000/- to Rs. 1500/- per sq. mtrs. Likewise, in case of the agricultural land at village Segva, Taluka - Kamrej, District - Surat sold by the petitioner on 14.10.2007, sale price as per the sale deed was Rs. 22.81 per sq. mtrs as against SUDA documents which showed the price range of Rs. 500/- to Rs. 750/- per sq. mtrs. He also pointed out that the Jantri price in Surat had not been revised since the year 1999 and came to be revised only after 9 years on 1.4.2008 i.e. barely few months after the petitioner's sale deeds. There was a margin of Rs. 900/- to Rs. 1600/- between the petitioner's sale price and the fresh Jantri rates. According to him, the entire appreciation could not have been achieved in last few months. Along with his letter, he had also annexed supporting documents received from SUDA. In this letter, the Assessing Officer also pointed out to the assessee that as on 31.3.2008 he was holding 9 different immovable properties, majority of them being agricultural lands. According to him therefore, it would appear that the sale transactions in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ah for the petitioner vehemently contended that a reference to the DVO made by the Assessing Officer was wholly incompetent. He submitted that Section 50C of the Act would not permit the Assessing Officer to substitute any other figure for the actual sale consideration except in terms of sub-section (2) of Section 50C of the Act which has reference to the Jantri rates. In the present case, since the petitioner had offered capital gain on such Jantri rates, reference to the DVO is wholly incompetent. He further submitted that valuation under Section 50A of the Act can be made only for the purpose of computation of capital gain and no other. Even if the Assessing Officer is desirous of taxing the sale receipts as business income, it is not open for the Assessing Officer to call for the DVO's report. In this context, learned counsel relied on a decision of the Division Bench of this Court in case of Me & Mummy Hospital V/s. Assistant Commissioner of Income-Tax, reported in 45 Taxmann.com 248. Learned counsel lastly contended that the Assessing Officer had under a letter dated 9.12.2010 called upon the assessee to show cause why the entire sale consideration of Rs. 1.57 crores towards ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (f) of sub-section (1) and sub-sections (6) and (7) of section 23A, subsection (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation [1]: For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.--For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted [or assessed or assessable] by the stamp valuation authority referred to in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nted out that the assessee was as on 31.3.2008 holding as many as 9 different immovable assets, 7 out of them were agricultural lands. Many of these properties were acquired only in recent times. Though they were technically agricultural lands, they were situated within the periphery of municipal limits of city of Surat and were surrounded by developed industrial zone. No agricultural activities were carried on in recent years. According to him therefore, looking the properties held by the assessee, frequency of the property transactions, holding period of these plots of land, history of transactions in the property and absence of any agricultural activity on such properties would indicate that they had been held by the assessee as stock-intrade and not as investment with primary motive of making profit. He therefore proposed to tax the receipts out of the sale of said properties as assessee's business income. 7. In this very communication, in the context of the variance between reflected sale consideration in the sale deeds and the prima facie indication of the prevailing market rates, he pointed out that the agricultural lands at Bhimrad was sold at a rate of Rs. 654/- per sq. m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ryana High Court in case of Jindal Strips Ltd. V/s. Income-tax Officer, Central Circle-2, New Delhi and Anr., reported in 116 ITR 825 in which it was held that Section 55A of the Act would apply only to the capital gains. However, the Income-tax Officer can refer to the powers under sub-section (6) of Section 133 of the Act for valuation and mere mention of a wrong section in the requisition sent to the Valuation Officer would not vitiate the valuation. 13. As was correctly pointed out by learned counsel, Shri Shah, similar issue came up for consideration before the Supreme Court in case of Smt.Amiya Bala Paul V/s. Commissioner of Income-Tax, reported in 262 ITR 407. The facts in the said case were that the assessee built up a house in a suburb of Calcutta during the years 1981 to 1983. In the return for the Assessment Year 1982-83, she disclosed that she had invested an amount of Rs. 1.75 lacs for the construction of the house. In the return for the subsequent year 1983-84, she disclosed that she had invested further amount of Rs. 1.70 lacs in construction of the house. The Assessing Officer did not accept such declaration and referred the question of construction cost to the DVO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounts of the assessee. (3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957(27 of 1957). (4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee. (5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions. (6) The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or subsection (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y is a fundamental right, it is subject to reasonable restrictions. It was further observed as under : "10. ... When a legislation, especially one in the fiscal realm is being examined by courts to check whether it infringes the right of individuals to privacy in own affairs, it has to be borne in mind that the larger public and economic interest of nation is to be balanced against such right to privacy. All decisions which have espoused the right to privacy have been cautious in pointing out that such rights would not extend to militate against right of the State to gather information under its fiscal administration." 17. The Statute thus recognizes the power of the revenue authorities to call for information in certain cases subject to safeguards, even in cases where the assessment may not be pending. Such powers as observed by the Kerala High Court in case of Pattambi Service Co-operative Bank Ltd. (Supra), have been invested bearing in mind the larger public and economic interest and in furtherance to the right of the revenue to gather information under fiscal administration. 18. Reverting back to the facts of the case, as noted, as held and observed by the Supreme Court in....