TaxTMI 
TaxTMI 
2024 (2) TMI 697
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....the return of income filed on 01.07.2010 for the assessment year 2010-11 of Rs. 87,57,468/- on sale of above property for a total sale consideration (for her 1/3rd share) of Rs. 41,94,664/- on 03.10.2009. The AO noted that he assessee has adopted cost of acquisition as on 01.04.1981 at Rs. 21,58,689/ and hence, the AO issued notice u/s. 148 of the Act on 29.03.2012 by recording reasons by assuming jurisdiction u/s. 147 of the Act on account of inflation of cost of acquisition which resulted in capital loss and accordingly, escapement of income. According to AO, the fair market value of this land as on 01.04.1981 is @ Rs. 14.6 per sq.ft., and the cost of acquisition as on 01.04.1981 was estimated being fair market value at Rs. 70,664/-. The assessee's share of 1/3rd was to be adopted at Rs. 23,554/-. The AO referred the cost of acquisition of property as on 01.04.1981 to the DVO, Chennai u/s. 142A of the Act vide letter dated 26.10.2012. The DVO, Chennai sent a valuation report dated 05.12.2012 estimating the cost of acquisition of property as on 01.04.1981 at Rs. 27,000/-. The AO noted that the cost of acquisition is adopted as Rs. 27,000/- but assessee's liability to be paid as pe....
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....ie in this case and explain the factual and legal position. He drew our attention to the computation of capital gain / loss declared by assessee which is as under:- 1. Value of the property as on 08.02.1952 is taken as 50,000/- 2. Sale consideration on 03.09.2009 41,94,664/- 3. Increase in value during 57 years 41,44,664/- 4. Increase in value for one year 72,713/- 5. Increase in value for 29 years i.e., from 1.4.1981 21,08,688/- 6. Value as on 1.4.1981 21,58,689/- 7. Indexed cost of Acquisition 2158688*600/100 1,29,52,132/- 8. Capital Loss 1,299,52,132 - 41,94,664 87,57,468/- He pointed out that only disputed amount is the value declared by assessee as on 01.04.1981 at Rs. 21,58,689/-, which is under dispute. The ld.counsel for the assessee stated that the AO has referred the matter to DVO and also considered the guideline value of the property as on 01.04.1981 obtained from Sub-Registrar, Purasawalkam, Chennai wherein this land was valued @ Rs. 14.6 per sq.ft., as on 01.04.1981 and valued the land at Rs. 70,664/-. According to AO, the share of assessee i.e., 1/3rd share comes to Rs. 23,554/-. He referred t....
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....ment and estimating at Rs. 70,664/-. This issue has been examined by the Hon'ble Bombay High Court in the case of Puja Prints, supra and framed the following two questions:- (a) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the reference made by the AO to the valuation officer per se is bad in law? Further, whether the ITAT was justified in observing that the reference to the DVO u/s. 55A of the IT Act 1961 is to be made when the value of the property disclosed by the assessee is less than the fair value and not vice versa thereby ignoring the provisions of section 55A(b)(ii) of the Act 1961 and paragraphs 26 to 28 of circular No.96 dated 25.11.1972 of the Central Board of Direct Taxes? (b) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in directing the AO to accept the valuation given by the respondent as the Fair Market Value on the basis of the registered valuer's report and workout capital gain? These two questions have been answered by the Hon'ble Bombay High Court as under:- Regarding Questions (a) and (b):- 6 We have considered the r....
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....rence to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. 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....