TaxTMI 
TaxTMI 
2022 (9) TMI 192
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....rms of s. 55(2)(b), at Rs. 21.97 lacs, for which the assessee furnished a valuation report dated 30/4/2012 from a Government approved (registered) valuer (PB pgs. 56-60). The absence of any basis for the adopted value is the substratum of the Revenue"s case. This, in fact, was one of the reasons recorded u/s. 148(2), for which the assessee"s assessment for the relevant year was reopened (PB pgs.73-74). The reassessment was completed on 26/12/2019, accepting the returned capital gains. In the view of the ld. Pr. CIT, the Assessing Officer (AO) had failed to make proper enquiries on the issue, so that his order is erroneous and prejudicial to the interests of the Revenue in terms of Explanation 2(a)/(b) to sec. 263 of the Act (refer paras 2 & 3 of his order). He, accordingly, after hearing the assessee in the matter, set aside the assessment for a de novo consideration. Aggrieved, the assessee is in appeal. Arguments 3.1 Before us, the assessee"s case was that once the AO was, upon making due enquiry, satisfied therewith, and accepted the returned capital gain, it was not open for the ld. Pr. CIT to substitute his view in the matter. Adopting one of the two possible views precl....
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....ar was subject to reassessment proceedings, i.e., an absence of a basis for the value of Rs. 21.97 lacs (or, more aptly, Rs. 1.54 lacs per acre) in the VR dated 30/4/2012, also observing alongwith the non-reference by the AO to the VO u/s. 55A. The mention of the two in the same para should be understood in context. The ld. Pr. CIT found the two facts, i.e., the non-statement of any basis in the VR and the non-reference afore-said, inconsistent with each other. The absence of any basis of valuation by the valuing Engineer in his report forms the starting point or the basis for entertaining a reason to believe understatement of value (which is deemed as cost of the capital asset transferred) and, thus, escapement of income from assessment qua capital gain. In the succeeding para (#3), the ld. Pr. CIT observes a failure on the part of the AO to conduct proper enquiry in the matter. In his view, the same constituted lack of application of mind by the AO, and accordingly, set aside the assessment for fresh adjudication in the matter. 5.2 The issue arising for determination is whether there has been due application of mind by the AO in accepting the returned value (cost) of Rs. 21.97....
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....2,70,000. It is, however, as observed that the property was received by you in family partition held on 01/04/1971 and the cost of agricultural land is assumed as Rs. 21,97,000/- as on 01/04/1981 for the purpose of applying cost of inflation index in A.Y. 2012- 13. The value of Rs. 21,97,000/- is simply mentioned in valuation report of Engineer dated 30/04/2012 but there is no basis of value of Rs. 21,97,000/- as on 01/04/1981 has been given in the valuation report. Please explain." The assessee replied on 15/04/2019, as follows, enclosing along with the valuation report dated 30/04/2012: "5. That in respect of market value of land measuring 14.33 acres as on 01.04.1981, it is submitted that the value arrived at Rs.21,97,000/- by Govt. Reg. Valuer is after considering value of 4 Dug well with electric motor pump and pipe line, WBM Road, 35 Mango Trees and 5 Hutments for agriculture labors and domestic cattle etc. It is relevant to note that the land is fully irrigated land as detailed in valuation report copy of which is enclosed for ready reference. That from the copy of valuation report it can be observed that before arriving the value at Rs. 2197000/- valuer has cons....
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....lpur are no exceptions to this phenomenon. The agricultural land in April 1981, the date for which the value is to be reckoned as the deemed cost, located in a village, became, in April, 2012 (i.e., at the time the said land is being valued), a part of an upper middleclass urban residential locality (refer to question and answer at para 9 of "General Section" of the VR). The land, it needs to be borne in mind, though being valued on 30/4/2012, is as on 01/4/1981 (VD), over which period the entire eco-system around it, i.e., it"s nature, neighbourhood, demography, the user or potential user, etc. which has a direct bearing on the demand and supply equilibrium, on which, in effect, the value of land, a natural asset, with no intrinsic cost, in turn depends, stands drastically changed/altered. How, and on what basis, then, we wonder, the Valuer has valued the land? We are at a total loss to understand the same, and neither could Shri Bardia throw any light in the matter. The land being a part of the assessee"s wealth, the wealth-tax return (as on 31/03/1992) was also seen (PB pg.22), which, however, again is of no help as, being exempt from wealth-tax, no value stands assigned thereto....
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....is the rent or, in its absence, income capitalisation method, as where the subject land stands/is given on rent, or yields income. The wealth-tax rules provide a capitalisation rate. Being admittedly an agricultural land in April, 1981, the same could be applied thereto. Four dug-wells, 5 hutments for agricultural labourer and cattle indicate vigorous agricultural activity. The wealth-tax return for AY 1992-93 reflects agricultural income at Rs. 22,000/-, which may though also be in respect of 1/4th share in land at Imli Kheda, i.e., besides 14.5 acres of subject land at Nonia. Further, this value as on 01/4/1992 could be suitably discounted to arrive at that on VD. The value difference is stark. 5.5 The foregoing highlights a complete lack of application of mind by the AO in the matter, as well as the need to have referred the matter to the VO. Perhaps, as Shri Bardia would argue, as the whole scenario has changed considerably over the past three decades, a reference to him (sec. 55A) may not of much consequence. But, then, this is precisely why the AO, being not a technical person, ought to have met the assessee"s reliance on an expert opinion with another, and who could not b....