AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 176
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....peals) erred on facts and in law in upholding cost of acquisition of the said property at Rs. 3,31,512 as against Rs. 4,61,538 adopted by the assessee. 4. The learned CIT (Appeals) failed in adjudicating Ground No.1 raised before him regarding cost of acquisition of the said property. 5. The learned CIT (Appeals) failed to appreciate the facts of the case in its proper perspective. He failed to appreciate that the assessee has relied on valuation reports of the Government Registered Valuer and also failed to appreciate that the assessment was based on the basis of report of the Divisional Valuation Officer who has not accorded any opportunity to the appellant to represent its case and thus the report of the Divisional Valuation Officer is against the principle of natural justice. 3. The assessee has filed an additional ground of appeal which reads as under:- "The learned Assessing Officer erred on facts and in law in finalizing the assessment on the basis of directions/report of the District Valuation Officer, Bhopal when the Valuation Officer had already given a report in the matter. The District Valuation Officer has no jurisdiction over the matter and as such the ass....
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....ties. The case of assessee was referred to the Departmental Valuation Officer, Nagpur under sections 55A and 50C of the Act for determining the value of cost of acquisition as on 01.04.1981 and sale consideration as on 23.10.2008. The Valuation Officer, Nagpur intimated the proposed valuation of property to the assessee under sections 55A and 50C of the Act. However, the assessee objected to the said valuation on the account that the said property was under litigation and the suit was pending before the Hon'ble Bombay High Court. The assessee pointed out that till date the property was under litigation and was sub-judice and no development could take place on the land sold by the assessee since 2008. Considering the assessee's objections, the Valuation Officer valued the property under section 50C of the Act as on 23.10.2008 i.e. date of sale at Rs. 93,00,096/- and under section 55A of the Act at Rs. 3,31,512/-, as per valuation report dated 01.11.2011 received by the Assessing Officer on 14.11.2011. On the next date i.e. on 15.11.2011, the Assessing Officer received letter from the DVO, Bhopal that stamp duty valuation has not been mentioned by the Valuation Officer and further, t....
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.... that the notice for valuation was given by the Valuation Officer, who in turn, sent the report and the Assessing Officer proceeded to estimate the cost of the land in the hands of assessee, the basis of report of VO. The documents in this regard are placed at pages 2 to 6 of the Paper Book. He further referred to the Rule 3A of Wealth Tax Rules, wherein the RVO has supervisory powers and the DVO, VO and AVO were to carry out the functions of Valuation Officer. The said functions were to be carried out as assigned. Attention was drawn to the clauses (i) to (iii), where the exercise of power of several officers was value-wise. The proviso thereunder provides that the DVO may perform such functions as under the jurisdiction provided. Further, the VO's power to be exercised is provided. He stressed that the DVO does not sit in supervisory powers. Attention was drawn to date-wise events chart in this regard and it is pointed out that the DVO vide letter placed at page 119 of the Paper Book directs the Assessing Officer to ignore the valuation report of VO and complete the assessment on stamp duty valuation, which was incorrect and invalid. Further, attention was drawn to the communicat....
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....- on sale of balance share in the property. On the other hand, the stamp duty authorities had adopted the valuation of said plot of land under section 50C of the Act at Rs. 1,07,31,000/-. The Assessing Officer during the course of assessment proceedings had made reference to the Valuation Officer under section 50C of the Act as the assessee had objected to the valuation made by the stamp valuation authorities. The Assessing Officer also referred to the Valuation Officer the cost of acquisition of land as per section 55A of the Act. The first objection raised by the assessee is against invoking the provisions of section 55A of the Act, under which, cost of acquisition declared by the assessee has been adopted at a figure lesser than the value declared by the assessee. In this regard, I find that the issue is squarely covered in favour of assessee by the order of the Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra), wherein the Hon'ble High Court held 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 ca....
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....y clearly states that it would apply in any other case i.e. a case not covered by Section 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. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available ....
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....mp duty valuation, the value was at Rs. 1,07,31,000/-. The assessee in this regard pointed out that there was dispute in the title of property and a civil suit was pending in the Civil Court of Amravati as on the date of sale and asked the Assessing Officer to make reference to the Valuation Officer. The Assessing Officer vide letter dated 23.08.2011 referred the said valuation to the Valuation Officer, Income Tax Department Naupada, Thane and asked him to determine the fair market value as on 01.04.1981 and fair market value as on date of transfer for the purpose of capital gains tax. The copy of the said letter is placed at pages 95 and 96 of the Paper Book. The Valuation Officer issued notice to the assessee dated 14.09.2011 asking for the details and also for inspection of the property. Further, vide letter dated 10.10.2011, the assessee was informed that the inspection of property would take place on 14.10.2011, copy of the same is placed at page 99 of the Paper Book. On 20.10.2011, the Valuation Officer, Nagpur (MS), copy of which is placed at pages 100 to 102 of the Paper Book, show caused the assessee that he was proposing to estimate the fair market value as on 01.04.1981 ....
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.... by the Valuation Officer at Rs. 93,00,096/- should be adopted. The assessee was aggrieved by the order of the DVO and also he filed communication to the DVO and pointed out that since no opportunity of hearing was granted by the DVO at Bhopal, then the assessee was prevented by principles natural justice in putting up its case. Meanwhile, the Valuation Officer vide letter dated 28.11.2011 submitted a clarification in respect of all the points raised by the DVO which are placed at page 127 of the Paper Book. He also submitted that the review should be concluded by the DVO, Bhopal and the decision should be communicated at the earliest. Meanwhile, vide letter dated 27.11.2011, the DVO issued instructions to the Assessing Officer to adopt the stamp duty valuation fixed by the local Revenue authorities and note has been put by the DVO in his hand that all the cases before sending to ITO concerned are to be reviewed from the DVO, Bhopal during his visit to the Valuation Cell, Nagpur. The Assessing Officer in turn, finalized the assessment under section 143(3) of the Act by taking the stamp duty valuation as the sale consideration after acknowledging the fact that the civil case was pen....
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....ion Officer, the Valuation Officer and the Asst. Valuation Officer shall perform the functions of Valuation Officer in respect of such areas and in relation to such classes of assets as the Board may direct. Thereafter, under clause (3), jurisdiction of each of the Valuation Officer i.e. District Valuation Officer, Valuation Officer and the Asst. Valuation Officer is provided, which is linked to the value of asset to be valued. Where the value of asset as declared in the return of wealth made by the assessee exceeds Rs. 300 lakhs or if the asset is not disclosed and the value of asset in the opinion of the Assessing Officer exceeds the aforesaid amount, then the functions shall be performed by the District Valuation Officer. Similarly, the functions of the Valuation Officer are in respect of value of asset exceeding Rs. 40 lakhs but not exceeding Rs. 300 lakhs and in respect of Asst. Valuation Officer, exercise of jurisdiction in respect of value of its asset which does not exceed Rs. 10 lakhs. It is provided thereunder that the District Valuation Officer having jurisdiction in respect of area may, if he considers necessary or expedient to do so, for the purpose of proper and effic....
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....clause (3) i.e. under the jurisdiction of AVO. However, it is clear that all the three Officers perform their functions independent of each other and the exercise of power by each of them is linked to the valuation of asset that needs to be valued. The proviso comes into play at the juncture when valuation has to be carried out i.e. the DVO considers the necessary or expedient to do so for proper and efficient management of the work of valuation, may, perform functions in relation to an asset, jurisdiction of which lies with the Valuation Officer. In other words, it is very clear that the functions are to be performed by each of them independently and only the Regional Valuation Officer has the power of general supervision over the work of DVO, VO and the AVO. The DVO cannot sit in the supervisory power over the Valuation Officer. He has the power to value the property which the Valuation Officer is entitled to value but that exercise of power cannot be by way of supervisory power, it has to be exercised at the time when reference is made for carrying out the valuation of an asset by the Assessing Officer. Once the Assessing Officer has referred the matter of valuation to the Valua....
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....t Act, but such power of rectification of mistake is to be passed by the Officer passing the valuation report. In the facts of the present case, it is not akin to rectification of mistake and hence, no merit in the said exercise of power. 17. I find support from the proposition laid down by the Pune Bench of Tribunal in Rahul Constructions Vs. DCIT (2010) 38 DTR 19 in respect of exercise of power by the superior authority and in the absence of any mistake apparent on record, the so-called rectification of value carried out by the DVO is not valid as was held by the Jabalpur Bench of Tribunal in WTO Vs. Ajit singh Malhotra (supra). 18. Before parting, I also refer to Circular No.96, dated 25.11.1972 which was passed by the CBDT in relation to functions of Valuation Officer. It is very categorically laid down that in case the Valuation Officer is of the opinion that the value of an asset has been correctly declared in the return of wealth, then he would pass an order to that effect under section 16A(3) of the Wealth Tax Act and send the copy of same to the Wealth Tax Officer and also to the assessee. However, where the Valuation Officer is not so satisfied, then it is incumbent....