TaxTMI 
TaxTMI 
2014 (9) TMI 1200
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....s under : Sale Consideration Rs. 4,00,00,000 Less : 1. Cost of selling Rs. 8,26,854 2. Claim of 54EC Rs. 4,00,000 3. Cost of acquisition Rs. 1,25,90,350 Rs. 1,38,17,204 Rs. 2,61,82,796 2.1 From the details furnished by the assessee the Assessing Officer noted that the land was acquired prior to 1981. Therefore, the assessee has adopted the value of the land as on 01-04-1981 at Rs. 22,85,000/- as the cost of acquisition and accordingly arrived the indexed cost of acquisition at Rs. 1,25,90,350/-. On being questioned by the Assessing Officer to justify the claim of cost of acquisition, the assessee submitted the valuation report prepared by one Shri Vishwas Bhat. However, the Assessing Officer referred the matter to the DVO who submitted his report valuing the land at Rs. 12,18,000/- as on 01-04-1981. The Assessing Officer, therefore, asked the assessee to explain as to why Rs. 12,18,000/- should not be treated as value as on 01-04-1981 as again....
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....the CIT(A) the assessee vehemently challenged the legality of the action of the Assessing Officer in making reference u/s.55A of the I.T. Act. It was submitted that the Assessing Officer can make the reference u/s.55A only in a case where the value of the asset as claimed by the assessee in accordance with the estimate made by the registered valuer, in the opinion of the Assessing Officer, is less than its fair market value. It was argued that the assessee had adopted the fair market value of the land as on 01-04- 1981 at Rs. 22,85,000/- which is supported by the report of the approved valuer. It was submitted that DVO has determined the fair market value at Rs. 12,18,000/-. It was accordingly argued that the fair market value adopted by the assessee is not less than the fair market value adopted by the DVO. Relying on various decisions it was argued that the Assessing Officer should be directed to adopt the fair market value at Rs. 22,85,000/- and accordingly accept the capital gains determined by the assessee. 3.1 Without prejudice to the above the assessee also questioned the reliance placed by the Assessing Officer on the valuation made by the DVO on the ground that the Asse....
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.... valid reference particularly when the value determined by the registered valuer is not less than the value as estimated by the Government approved valuer. He accordingly held that the reference made by the Assessing Officer u/s.55A to the DVO is not a valid reference. He, however, held that the valuation report of the DVO will not lose its relevance being a good piece of evidence on the issue of fair market value of the property as on 01-04-1981. 3.3 Referring to the decision of the Hon'ble Supreme Court in the case of Pooran Mal Vs. Director of Inspection (Investigation) reported in 93 ITR 505 wherein the Apex Court has observed that even if the search is held as illegal search, nothing in the Article 19 of the constitution bars use of evidence obtained as a result of such illegal search, the Ld.CIT(A) held that the valuation report of the DVO will not lose its relevance and consequently as evidence. After considering the totality of the facts of the case and in absence of any comparable cases, the Ld.CIT(A) held that there is no flaw in the approach of the Government approved valuer and the Assessing Officer in taking into consideration the stamp duty reckoner rates notified ....
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....he appellant. 2. On the facts and in the circumstances of the case and without prejudice to above Ground No. 1 CIT(A) has erred in not adopting the valuation made by the Registered valuer without pointing out any defect therein as well as without taking note of the patent errors in the valuation made by the District Valuation Officer whose report has been considered by the CIT(A) as an admissible piece of evidence despite holding that reference to the District Valuation Officer was illegal. 3. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice." Grounds by Revenue : "1. The order of the Ld. Commissioner of Income Tax (Appeals) is contrary to the law and facts and circumstances of the case. 2. The Ld. Commissioner of Income-tax (Appeals) erred on facts and in law in allowing 5 times the Govt. Rate of Rs. 75,000/- for Cost of Acquisition instead of 4 times fixed the Govt., rate of Rs. 75,000/- as on 01.04,1931, where as the rate of cost of acquisition was fixed by Govt. approved valuer relying on Ready Reckoner Rate as per the Town Planning and Valuation Department, 1....
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....ble the CIT(A) has erred in relying on the same for the purpose of rejecting the valuation made by the approved valuer. ii) The CIT(A) has not found any vital defect in the valuation made by the approved valuer the same should be adopted as fair and reasonable. iii) There are several methods of valuation in the absence of comparable instances. It is possible that by adopting those methods there is bound to be difference in the valuation of FMV finally arrived at. Therefore relying on some other method where the FMV as of 01-04-1981 is found to be lesser than the FMV estimated by the approved valuer that per se should not be the criteria for outrightly rejecting the valuation made by the approved valuer. The CIT(A) has therefore erroneously relied on different methods perhaps only because it is beneficial to the revenue. It is submitted that in the converse situation Department does not adopt such an approach. iv) In a case where appellant's claim in respect of FMV is supported by the registered valuer's valuation the Assessing Officer neither could make any reference to the DVO nor there would be any enquiry and examination even if the valuation r....
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....nd alone, this appeal need not be entertained. However, as the submissions were made on the merits, we have independently examined the same. We find that section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondentassessee of the property at Rs. 35.99 lakhs was much more than the fair market value of Rs. 6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of section 55A(a) of the Act is not justified. The contention of the Revenue that in view of the amendment to section 55A(a) of the Act in 2012 by which the words "is less then its fair market value" is substituted by the words "is at variance with its fair market value....