TaxTMI 
TaxTMI 
2022 (8) TMI 128
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....n is assessment year 2014-15 and proceedings are u/s 143(3) of the Income Tax Act, 1961, in short "the Act". Heard all the assessees through their counsel Shri Deepak Sasar and the departmental represented by Shri M.G. Jasanani/DR. 2. The Revenue appeal ITA No.824/PUN/2019 raises the foregoing substantive grounds: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the reference made to the DVO is invalid by relying on the judgment of the Hon'ble Bombay High Court delivered in the case of CIT vs Pooja Prints 360 ITR 697 [2014], which relate to sec 55A and A.Y. 2006-07. Whereas, in present case reference was made under sec 142A for A.Y. 2014-15. 2. The appellant prays that the order of Ld. CIT(A) be held to be bad in law and be quashed and that of the Assessing Officer be restored. 3. The assessees three appeals on the other hand plead the following identical substantive grounds: 1) The Ld. CIT(A)-3 has erred in confirming the Assessing Officer's action of not considering the claim of the assessee that no cost of acquisition of Capital Assets, hence no capital gain. 2) The Ld. CIT(A)-3 has erred in confirming ....
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....- The submissions of the appellant and the material on record have been considered. 5.4. On this issue, the appellant has stated that there is an inherent limitation in concept of capital asset. This limitation is that the liability to tax on capital gain would arise in respect of only those capital assets in the acquisition of which an element of cost is etc actually present or capable of being reckoned and not in respect of those capital asset in the acquisition of which the element of cost is altogether inconceivable. The appellant has relied upon several case laws. The appellant raised this issue before the AO vide letter dated 28-08-2017. (Page 44 of paperbook). 5.5. However, in the submission, the appellant has himself narrated history of the property. The relevant portion is reproduced below - "The said property Survey No.38, Hissa No.1, Village Balewadi, Tal. Haveli, Dist Pune was in the name of Kondiba Rama Balwadkar and his name was mutated on 7/12 extract since 1954, above his name the name of Government was mentioned vide Mutation Entry No.716. There was KUL namely Mr. Gangaram Vitu Balwadkar, which was mutated vide Mutation Entry 583 dated 05/08/1954. The said KU....
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....e given facts and circumstances. This identical and first & foremost ground is rejected all these appeals. 7. The assessee's next ground is regarding validity of impugned assessments which have been claimed to be barred by limitation. The CIT(A)'s identical detailed discussion on the instant issue reads as follows: "7.3. DECISION :- The submissions of the appellant and the material on record have been considered. 7.4. On this issue, the appellant has stated that for A.Y. 2014-15 the notice u/s 143(2) of the Act was issued on 31/8/2015 and assessment was completed on 31/8/2017. The appellant argued that as per the provision of section 153 of the Act the time limit for completion of the assessment for assessment year 2014-15 is within the 21 months from the end of the assessment year. In our case the 21 months was expired on 31/12/2016. So the assessment order should have been completed on or before 31/12/2016. 7.5. The submission of the appellant has been considered. As per explanation 1 clause (iv) of the explanation to section 153 of the Act mentions the exclusion in computing the period of limitation that the period commencing from the date of which the assessing officer m....
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....applicable in the given facts and circumstances which could lead us to the conclusion that the DVO report itself was time barred. Ordered accordingly. 10. Coming to the assessee's fourth substantive ground that the land in issue stood converted into stock-in-trade and the learned lower authorities ought to have initiated section 147/148 reopening mechanism we hardly see any merit therein since the chargeability of capital gains to tax u/s 45(1) in an instance of a capital asset converted to stock-in-trade arises only in the year of transfer of the asset under sub-section (2) thereof. We make it clear that these assessees have transferred their respective shares in the land in financial year 2013-14 relevant to the impugned assessment year 2014-15 wherein the learned lower authorities have framed the respective assessments. We thus reject the assessees" instant fourth substantive ground as well. 11. The assessees" identical last substantive grievance is that the learned lower authorities have erred in law and on facts in converting the limited scrutiny to a complete one. We note herein as well from a perusal of page 26 in ITA No.933/PUN/2019 that the reason of scrutiny selection w....
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....amendment is prospective in the nature. Hence there was no jurisdiction to the assessing officer to refer the matter to the valuation officer. The appellant also argued, without prejudice to above submission, that the reference for assessment year 2014-15 is invalid reference u/s 142A of the Act as on the book of the statute the section 142A was amended w.e.f. 1/10/2014 i.e. it is applicable for AY. 2015-16 by Finance Act No.2 of 2014. 6.6. The appellant relied upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs Pooja Prints 360 ITR 697 (2014). In the case of Pooja Prints (Supra), the assessee adopted the value of his property at Rs.35.99 lakhs as a fair market value as on 1-4-1981 on the basis of a valuation report. The Assessing Officer was of the view that the value of property at Rs.35.99 lakhs as adopted by the assessee was high considering the fact that it was purchased at a consideration of Rs.1.45 lakh only 15 months earlier. Therefore, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer who valued the property at Rs.6.68 lakhs as on 1-4-1981 and the indexed cost at Rs.33.20 lakhs. Consequently, the Assessin....
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....n the value adopted by the assessee was less than the fair market value and that the amendment to Section 55A(a) of the Act in 2012 by which the words "is less than the fair market value" is substituted by the words "is at variance with its fair market value" has not been given retrospective effect by the Parliament. Therefore, the law to be applied in the present case is Section 55A(a) of the Act is as existing during the period relevant to the Assessment Year 2006-07. 6.7. Following the decision in the case of Pooja Prints (Supra), Hon'ble ITAT Pune decided on similar lines in the case of Anjali Bharat Kabra Vs ITO [2016] 75 taxmann.com 5. In this case, the assessee sold lands in 2009 for Rs. 1.11 crore. The value assessed by the stamp valuation authority for the purpose of stamp duty was Rs.1,99,57,350. The assessee objected for adopting the value of consideration as per stamp valuation authority. The Assessing Officer made a reference to the DVO. The DVO valued property in 2009 at Rs. 2.30 crore. He also determined the fair market value as on 1-4-1981 at Rs. 2.04 lakh while the assessee took value ascertained by the Registered valuer as on 1-4-1981 at Rs. 19.29 lakhs. The....
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....on 01.04.1981, then the reference to the DVO under section 55A of the Act is not warranted. In this regard, we find support from the ratio laid down by the Hon'ble Bombay High Court in Puja Prints case (supra), wherein it has been held that where the Assessing Officer referred the issue of valuation to the DVO only because in his view, the valuation of the property as on 01.04.1981 as made by the respondent assessee was higher than the fair market value, thus, in such cases, invocation of section 55A of the Act was not justified. The Hon'ble High Court further held that the amendment to section 55A of the Act in 2012 was made effective from 01.07.2012 and hence, was to be applied prospectively. It was further held that where the issue was covered by section 55A [clause (a)] of the Act, resort could not be made to the residuary clause provided in section 55A(b)(ii) of the Act. The CBDT circular dated 25.11.1972 was held to be not applicable. Following the above said proposition as laid down by the jurisdictional High Court and applying the same to the facts of the present case, in the instant case also, reference was made to the valuation officer in order to determine the fa....
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..... Thereafter, the assessment was framed u/s 143(3) of the Act vide order dt.28.03.2014 and the total income was determined at Rs.71,93,380/-. Thus, the amendment to the Sec 55A of the Act was made w.e.f. 01-07-2012 and the reference to DVO was made after this date (as the notice u/s 148 of the Act was issued on 25.03.2013). The CIT(A) confirmed the addition made by the AO saying that sec. 55A is a procedural section and any amendment to the procedural section is applicable from the date of amendment. It has no relevance to the assessment year. However, the Hon'ble ITAT Pune relied upon the decision of the Hon'ble Bombay High Court in case of Pooja Prints (Supra) and held as under: "We thus find that Hon'ble jurisdictional High Court has held that amendment to Proviso of Sec.55A(a) is applicable only w.e.f. 01.07.2012 and has no retrospective effect. Before us, Revenue has not placed any contrary binding decision in its support. We therefore relying on the aforesaid decision of Hon'ble Bombay High Court in the case of Puja Prints (supra) are of the view that in the present case, AO was not justified in making a reference to the DVO. We therefore set aside the order....
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....facts and judicial pronouncements of jurisdictional Bombay High Court and jurisdictional ITAT Pune, it is held that reference could not be made to DVO for valuation of property u/s 142A of the Act on a date prior to 01-10-2014. Accordingly, Ground No 2 of the appellant is ALLOWED." 13. Mr. Sasar vehemently supported the CIT(A)'s detailed discussion. His case is that section 55A stood amended w.e.f. 01.07.2012 (supra) whereas the first assessee herein Mr. Vilas Dasrath Balwadkar had converted his agricultural lands to stock-in-trade very well before that i.e. w.e.f. 01.04.2010. He argued in light of hon'ble Bombay high court Pooja Prints (supra) that the amendment to section 55A(a) is not retrospective but carries prospective effect only. 14. We have given our thoughtful consideration to the vehement rival stands and find no merit in assessee's arguments. We wish to clarify here at the cost of repetition that this is an instance of assessee having converted his agricultural lands to stock-in-trade as on 01.04.2010 followed by transfer thereof in the impugned assessment year giving rise to chargeability of income tax provisions in the latter assessment year 2014-15 in light of sect....