TaxTMI 
TaxTMI 
2021 (6) TMI 942
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....8 per sq. meter as per DVO report as against Rs. 350 adopted by assessee on the basis of Government approved valuer. 3. On the facts and circumstances of the case as well on the subject, the learned Commissioner of Income Tax (Appeals) has erred in not admitting the additional evidence filed in the course of appellate proceedings being report from the registered valuer Shri Ramesh Jain estimating the value at Rs. 225 per sq. meter as against the report from another registered valuer estimating the value at Rs. 350. 4. It is therefore prayed that the above addition made by assessing Officer and confirmed by learned Commissioner of Income-tax (Appeals) may please be deleted. 2. At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that he is not pressing ground no.1, which relates to validity of re-opening under section 147 of the Income Tax, 1961 [hereinafter referred to as 'the Act']. Considering the submission of ld. AR of the assessee, ground no.1 of appeal is dismissed as not pressed. 3. Brief facts of the case in regard to remaining grounds of appeal are that during the assessment, the Assessing Officer (AO) noted that ....
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....wer authorities. The ld. AR of the assessee submits that assessee along with his co-owner sold a piece of land admeasuring 13606 Sq Mtr on 06.09.2011. The assessee adopted the FMV of property as on 01.04.1981 @ 350 per sq. mtr on the basis of Government Registered Valuer Shri P.K. Desai. The AO made reference to the DVO. The DVO suggested the rate of land as on 01.04.1981 @ 48 per sq. mtr. The AO on the basis of report of DVO made addition on LTCG by taking value @ 48 per sq. mtr in place of Rs. 350 per sq.mtr. The ld. AR submits that assessee has shown higher rate than FMV at the time of sale of land. The amended provision of section 55A(a) i.e. substitution of word "is at variance with FMV" was inserted in Income Tax Act w.e.f. 01.07.2012 and the amended provision is not applicable retrospectively. Before making the reference to the DVO, the AO must form an opinion that FMV adopted by assessee is not a fair value. The amendment made in section is not applicable for the AY under consideration. Therefore, the reference made by AO is not valid. The ld. AR of the assessee further submits that Hon'ble jurisdictional High Court in CIT v/s Gauranginiben S. Sodhan [367 ITR 238 (Guj.)]....
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....f assessee and the learned Department of representative for revenue. We have also gone through the orders of lower authorities carefully. We learned of the assessee submits that he has raised purely a legal grounds to challenge the validity of reference to the valuation officer. The learned submitted that before making reference under section 55A, the assessing officer has to form an opinion that fair market value is on 1st April 1981 claimed in the computation of income is less than fair market value. In the present case the assessee has shown the value of asset at a higher rate than the fair market value and the amendment to the section 55A( a) i.e. substitution of the words "is at variance with the fair market value" were inserted with effect from 1st July 2012 and the same is not applicable retrospectively, further the assessing officer has to form an opinion that fair market value as on1st April 1981 as claimed by assessee is not fair value. The learned AR of the assessee would submit that the ratio of decision of Hon'ble was rather High Court in case of CIT Versus Gauranginiben S Shodhan Ind. reported in (367 ITR 238) is squarely applicable on the facts of the presen....
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.... (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 percentage 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, and where any such reference is made, the provisions of subsections (2),(3), (4), (5) and (6) of ection 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and 4) of section 23, subsection (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under subsection (1) of section 16A of that Act. Explanation.-In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)." 14. The aforesaid provisions are as amended by the Finance Act, 2012 with effect from 1.07.2....
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....med by the assessee is less than its fair market value. Therefore, only in a scenario, the value so claimed by the assessee of the capital asset is less than its fair market value in the opinion of the Assessing officer, the matter can be referred to the valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter couldn't be referred to the valuation officer. However, the amended provisions takes care of both the scenarios and has provided that where the value so claimed by the assessee is at variance with its fair market value, the matter can be referred to the valuation officer. In the instant case, the Assessing officer has invoked the amended provisions and has held that the value so claimed by the assessee is at variance with its fair market value. The contention of the assessee is that the amended provisions have only been brought on the statue books w.e.f 1.07.2012 and the same cannot be invoked in the instant case and therefore, the AO lacks the necessary jurisdiction to refer the matter to the valuation officer. 16. The question is how one should read the amendment in section 55A(a) ....
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.... the asset as on that date and in order to check whether the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, has lead to a lower amount of capital gains being offered for tax. It is therefore an empowering provision wherein the Assessing officer has been given requisite power and authority w.e.f 1.07.2012 to refer the matter relating to valuation of a capital asset to the valuation officer. The question however remains in respect of which all transactions, the Assessing officer is empowered to make a reference to the valuation officer with effect from 1.07.2012. 17. In this regard, we refer to the decision of the Hon'ble Bombay High Court in case of CIT vs. Puja Prints [2014] 224 Taxman 22 (Bom) wherein it was held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. The findings of the Hon'ble High Court are 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 t....
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....able. This is for the reason that Section 55A(b)of the Act very 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....
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....than such percentage of the value of the asset 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. Sub-clause(i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to sub-clause(ii) of clause (b). In any case, clause (b) would apply where clause(a) does not apply since it starts with the expression "in any other case". In other words if assessee has relied upon a Registered Valuer's Report, Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable." 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiaben Jayantilal Shah v. ITO [2009] 310 ITR 31/181 Taxman 191 (Guj.). In the said deci....
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....e Hon'ble Gujarat High Court, being the jurisdictional High Court is binding on us. 24. Further, we find that the Coordinate Benches are also of the consistent view and having been following the legal proposition so laid down by the Hon'ble Bombay and Gujarat High Court. The Coordinate Bench in case of Sonali Roy (supra) drawing support from the decision of the Hon'ble Supreme Court in case of Karimtharuvi Tea Estate (supra) has further clarified that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. The amendment brought with effect from 01.07.2012 in section 55A would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14 and not applicable to Assessment Year 2012-13. 25. In light of above discussions, if the facts of the present case are examined, the transaction of sale of land has taken place during the financial year 2011-12 relevant to Assessment year 2012-13, therefore, the amended provisions of section 55A(a) would not be applicable and one shall be guided by the erstwhile provisions of section 55A(a) of the Act. ....