Shri Manohar Singh, JODHPUR v. DCIT, JODHPUR

ITA 122/JODH/2010 | 2007-2008
Pronouncement Date: 06-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 12223314 RSA 2010
Assessee PAN APOPS6390C
Bench Jodhpur
Appeal Number ITA 122/JODH/2010
Duration Of Justice 4 month(s) 27 day(s)
Appellant Shri Manohar Singh, JODHPUR
Respondent DCIT, JODHPUR
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 06-08-2010
Date Of Final Hearing 01-07-2010
Next Hearing Date 01-07-2010
Assessment Year 2007-2008
Appeal Filed On 10-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI B.R. JAIN ACCOUNTANT MEMBER AND SHRI K.S.S.PRASAD RAO JUDICIAL MEMBER ITA NO. 122/JU/2010 ASSTT. YEAR : 2007-08 SHRI MANOHAR SINGH VS. D.C.I.T. CIRCLE-2 41 INCOME-TAX COLONY JODHPUR. JODHPUR. (PAN APOPS 6390 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT KOTHARI C.A. RESPONDENT BY : SHRI NARENDRA GOUR CIT/DR ORDER PER K.S.S. PRASAD RAO J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 18.02.2010 OF LD. CIT(A) JODHPUR PERTAINING TO ASSESSMENT YEAR 2007- 08. 2. IN GROUND NO.1 THE ASSESSEE HAS CHALLENGED THE TERRITORIAL JURISDICTION OF THE ASSESSING AUTHORITY WHICH ACCORDING TO THE ASSESSEE LIES WITH RANGE-3 JODHPUR WHEREAS THE NOTICE U/S. 143(2) HAS BEEN ISSUED BY THE ASSES SING AUTHORITY RANGE-2 JODHPUR. THE ASSESSING OFFICER REJECTED THE JURISDICTIONAL OBJEC TION OF THE ASSESSEE FOR THE REASON THAT VIDE ORDER-SHEET ENTRY DATED 13.10.2009 THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE WAS APPRISED THAT THE ASSESSEE HIMSELF HAS FILED THE RE TURN OF INCOME ON 30.07.2007 WITH ASSESSING OFFICER RANGE-2 AND NOTICE U/S. 143(2) WA S ISSUED ON 30.07.2007 WHICH WAS SERVED ON THE ASSESSEE THE SAME DAY. IN RESPONSE TO THIS NOTICE THE ASSESSEE AND HIS AUTHORIZED REPRESENTATIVE BOTH ATTENDED THE HEARING ON 07.08.2009 AND TOTAL 9 NOTICES WERE ISSUED DURING THE PERIOD 30.07.2008 TO 13.10.2 009 BUT NO OBJECTION REGARDING THE JURISDICTION OF ASSESSING AUTHORITY WAS RAISED BY T HE ASSESSEE. THE ASSESSEE HOWEVER RAISED SUCH OBJECTIONS FOR THE FIRST TIME ON 13.10. 2009 AND SUBSEQUENTLY VIDE LETTER FILED ON 22.10.2009 AND AS SUCH THE OBJECTION OF JURISDI CTION CANNOT BE ENTERTAINED HAVING BEEN RAISED BEYOND THE PERIOD OF ONE MONTH FROM THE DATE OF ISSUANCE AND SERVICE OF 2 NOTICE U/S. 143(2) ON 30.07.2008 AS CONTEMPLATED U /S. 124(3)(A) OF THE ACT. THE LD. CIT(A) CONFIRMED THE DECISION REACHED BY THE ASSESS ING OFFICER. 3. THE LD. COUNSEL SHRI AMIT KOTHARI CONTENDS THAT SINCE THE TERRITORIAL JURISDICTION OVER THE ASSESSEES CASE LIES WITH ASSESSING OFFICE R RANGE-3 THE ORDER PASSED BY THE ASSESSING OFFICER RANGE-2 JODHPUR IS BAD IN LAW H AVING BEEN PASSED WITHOUT JURISDICTION. FILING OF RETURN IN RANGE-2 IS NOT DE CISIVE OF THE ACTUAL JURISDICTION PARTICULARLY WHEN THE ASSESSEE HAD CONSISTENTLY FIL ED THE RETURNS FOR OTHER YEARS IN RANGE-3. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SHRI NAREND RA GOUR CONTENDS THAT THERE IS NO DOCUMENTARY EVIDENCE WITH THE ASSESSEE TO SHOW T HAT THE JURISDICTION OVER THE ASSESSEE LIES WITH ASSESSING OFFICER RANGE-3. THE ASSESSEE HIMSELF HAS FILED THE RETURN OF INCOME WITH ASSESSING OFFICER RANGE-2. THE OBJECTION REG ARDING TERRITORIAL JURISDICTION WAS RAISED BY THE ASSESSEE BEYOND THE PERIOD PRESCRIBED IN THE STATUTE. THE ASSESSEE THEREFORE CANNOT BE REWARDED FOR HIS OWN REMISSNESS. THE ASSE SSEE HAD PARTICIPATED THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING AUTHORITY BUT NO SUCH OBJECTION WAS RAISED BEFORE HIM WITHIN THE STIPULATED TIME I.E WITHIN ONE MONTH F ROM THE DATE OF ISSUANCE OR SERVICE OF NOTICE U/S. 143(2) OF THE ACT. HE THEREFORE CONTE NDS THAT REJECTION OF SUCH OBJECTION CANNOT BE CHALLENGED BEFORE THE TRIBUNAL. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BAHADUR SETH T EOMAL VS. COMMISSIONER OF INCOME TAX & ANR. (1959) 36 ITR 9 (SC) AND OF HONBLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF JASWINDER KAUR KOONER VS. CIT (2007) 291 IT R 80 (P&H). 5. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AND RECORD AS WELL AS THE DECISIONS OF HONBLE APEX COURT WE FIND NO MERIT IN THE GROUND RAISED IN APPEAL BY THE ASSESSEE WHICH REMAINS UNSUBSTANTIATED. THE ASSESSING OFFICE R IN THIS CASE ASSESSED THE ASSESSEE WHERE THE ASSESSEE HIMSELF HAS FILED THE RETURN. TH E ASSESSEE ALSO PARTICIPATED IN ASSESSMENT PROCEEDINGS AND RAISED NO OBJECTION WITH IN THE TIME PRESCRIBED UNDER SECTION 124(3)(A) OF THE ACT. FURTHERMORE MATTER OF JURISD ICTION U/S. 124 IS NOT APPEALABLE BEFORE THE TRIBUNAL. THE GROUND RAISED IN APPEAL THEREFOR E STANDS REJECTED. 3 6. IN GROUNDS NOS. 2 TO 6 THE ASSESSEE HAS CHALLEN GED THE SUSTENANCE OF VARIOUS DISALLOWANCES AND ADDITIONS MADE BY THE ASSESSING O FFICER IN COMPUTING THE LONG TERM CAPITAL GAINS AS AGAINST NIL CAPITAL GAINS DECLARED BY THE ASSESSEE AFTER EXEMPTIONS AND DEDUCTIONS. 7. BRIEFLY THE FACTS ARE THAT THE ASSESSEE IN HIS RETURN OF INCOME DECLARED SALE OF HIS RESIDENTIAL HOUSE AT 8 RESIDENCY ROAD JODHPUR FOR RS.4 50 00 000/- AS PER SALE DEED. ITS VALUE AS PER SECTION 50C WAS RS.4 54 18 629/-. THE INDEXED COST OF ACQUISITION HAS BEEN DECLARED AT RS.3 29 51 310/-. THE ASSESSEE ALSO PUR CHASED A NEW RESIDENTIAL HOUSE AT 41 INCOME-TAX COLONY JODHPUR FOR RS.87 77 700/- INCLU DING REGISTRATION CHARGES OF RS.6 77 700/- AND CLAIMED DEDUCTION U/S. 54 OF THE ACT. HE ALSO CLAIMED TO HAVE INVESTED RS.4 78 000/- TOWARDS THE IMPROVEMENT ADDITIONS AN D ALTERATIONS MADE TO THE NEW HOUSE PURCHASED AND CLAIMED DEDUCTION OF THIS AMOUNT U/S. 54. THE ASSESSEE IS ALSO SHOWN TO HAVE CLAIMED DEDUCTION U/S. 54EC OF THE ACT OF RS. 33 00 000/- ON ACCOUNT OF INVESTMENT IN REC BONDS. HE THEREFORE MADE FOLLOWING DEDUCTI ONS FOR WORKING OUT THE CAPITAL GAINS AS UNDER : (I). DEDUCTION U/S. 54 ON ACCOUNT OF INVESTMENT IN PURCHASE OF NEW RESIDENTIAL HOUSE 87 77 700 /- (II). DEDUCTION U/S. 54 ON ACCOUNT OF INVESTMENT IN IMPROVEMENT ADDITIONS AND ALTERATIONS OF NEW HOUSE. 4 78 000/- (III). DEDUCTION U/S. 54EC ON ACCOUNT OF INVESTMEN T IN REC BONDS. 33 00 000/- THE LD. ASSESSING OFFICER ACCEPTED THE CLAIM OF ASS ESSEE MADE U/S. 54 OF THE ACT ON ACCOUNT OF INVESTMENT IN PURCHASE OF NEW RESIDENTIA L HOUSE AT RS.87 77 700/-. HE HOWEVER REJECTED THE CLAIM OF DEDUCTION OF RS.4 78 000/- MADE AS IMPROVEMENT COST OF NEW HOUSE ON THE REASONING THAT DEDUCTION IS NOT AL LOWABLE IF EXISTING HOUSE IS EXTENDED OR ANY INVESTMENT IS MADE ON MODIFICATION OR RENOVA TION OF EXISTING HOUSE. RELIANCE WAS 4 PLACED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF MRS. MEERA JACOB VS. ITO (2009) 313 ITR 411 (KER). 8. THE LD. ASSESSING AUTHORITY FURTHER REJECTED THE CLAIM OF ASSESSEE REGARDING DEDUCTION OF RS.33 00 000/- U/S. 54EC OF THE ACT ON ACCOUNT OF INVESTMENT IN REC BONDS STATING THAT THE SALE DEED WAS EXECUTED AND SIGNED BY THE ASSESSEE AND WITNESSES ON 19.08.2006. THE PAYMENT OF RS.2 61 00000/- WAS REC EIVED BY 12.09.2006 AND FOR THE BALANCE PAYMENT OF RS.1 89 00 000/- THE POST DATED CHEQUES WERE GIVEN TO THE ASSESSEE BY 19.08.2006. THEREFORE THE DATE OF SALE/TRANSFER WAS TO BE TREATED AS ON 19.08.2006. THEREFORE THE ASSESSEE WAS REQUIRED TO MAKE INVEST MENT IN THE BONDS BEFORE 19.02.2007. THE BONDS WERE ALLOTTED ON 31.03.2007 AND THE AMOUN T FOR THE BONDS WAS CREDITED ON 15.03.2007. AS PER COPY OF AXIS BANK ACCOUNT OF ASS ESSEE THE ASSESSEE TOOK LOAN OF RS.33 00 000/- IN FAVOUR OF REC AND THE SAID AMOUNT WAS TRANSFERRED AND CREDITED BY REC ON 15.03.2007. THE ASSESSING OFFICER THEREFORE OBSERVED THAT SINCE THE SALE OF PROPERTY TOOK EFFECT ON 19.08.2006 AND INVESTMENT I N BONDS WAS MADE ON 15.03.2007 I.E. BEYOND THE PERIOD OF SIX MONTHS THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 54EC OF THE ACT. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 9. THE LD. COUNSEL FOR THE APPELLANT CONTENDS THAT THE SALE DEED WAS EXECUTED ON 20.09.2006 AND WAS PRESENTED FOR REGISTRATION ON 20 .09.2006 BEFORE THE SUB-REGISTRAR. AS SUCH THE PERIOD OF SIX MONTHS WILL EXPIRE ON 20.03. 2007 AND THE SAID INVESTMENT IN BOND WAS MADE BEFORE SUCH PERIOD. IT WAS ALSO CONTENDED THAT THE PAYMENT OF SALE CONSIDERATION HAD BEEN MADE TILL MARCH 2007 AS IS CLEAR FROM THE BANK STATEMENT AND UNLESS THE CONSIDERATION IS RECEIVED IN FULL THE T RANSACTION WILL NOT GET COMPLETED. THEREFORE THE LD. ASSESSING OFFICER IS NOT JUSTIFI ED IN REJECTING THE CLAIM OF ASSESSEE U/S. 54EC OF THE ACT. AS REGARDS THE REJECTION OF ASSESS EES CLAIM REGARDING INVESTMENT IN IMPROVEMENT OF NEW HOUSE THE LD. COUNSEL INVITED O UR ATTENTION TO THE CIRCULAR NO. 667 DATED 18 TH OCTOBER 1993 WHICH PROVIDES THAT WHERE PLOT IS P URCHASED AND CONSTRUCTION IS MADE LATER ON THE COST OF PLOT SHALL ALSO BE INCLU DED IN THE COST OF NEW ASSET ELIGIBLE FOR EXEMPTION. THE AO WAS THEREFORE NO JUSTIFIED IN R EJECTING THE CLAIM OF ASSESSEE. 5 10. THE LD. DEPARTMENTAL REPRESENTATIVE REPUDIATIN G THE CONTENTIONS OF ASSESSEE CONTENDS THAT SINCE THE INVESTMENT IN REC BONDS MAD E BY ASSESSEE WAS BEYOND THE PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF P ROPERTY HE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 54EC OF THE ACT AS THE SALE DEED ST OOD EXECUTED ON 19.08.2006 WHEN THE ASSESSEE AND WITNESSES SIGNED THE DEED AND PAYMENTS STOOD RECEIVED BY THIS DATE. RELIANCE IS PLACED ON THE DECISION OF HONBLE GUJRA T HIGH COURT IN THE CASE OF CIT VS. MORMASJI MANCHARJI VAID 250 ITR 542 (GUJ.) 11. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE RECORD. THE CLAIM OF ASSESSEE FOR EXEMPTION U/ S. 54EC OF THE ACT OF RS.33 00 000/- IS FOUND NOT ACCEPTABLE AS THE ASSESSEE IS FOUND TO H AVE SIGNED THE CONVEYANCE DEED ON 19.08.2006 MUCH PRIOR TO ITS ACTUAL REGISTRATION ON 20.09.2006 EVEN THOUGH CERTAIN PAYMENTS ARE SHOWN TO HAVE BEEN RECEIVED AND WRITTE N IN THE CONVEYANCE DEED WHICH IS AFTER 19.08.2006 THE DATE ON WHICH THE ASSESSEE FA CTUALLY SIGNED THE CONVEYANCE DEED. THE DATE OF SIGNATURE I.E. 19.08.06 HAS TO BE TAK EN AS DATE OF EXECUTION LEADING TO TRANSFER AND GOING BY THAT THE INVESTMENT IN REC BO ND IS FOUND MADE BY THE ASSESSEE BEYOND THE STIPULATED PERIOD OF 6 MONTHS FROM THE D ATE OF TRANSFER OF PROPERTY. HONBLE FULL BENCH OF GUJRAT HIGH COURT IN THE CASE OF CIT VS. MORMASJI MANCHARJI VAID 250 ITR 542 (GUJ.) HAS HELD THAT THE DATE OF EXECUTION OF AGREEMENT HAS TO BE TAKEN AS THE DATE OF TRANSFER WHICH IS 19.08.2006 IN THE ASSESS EES CASE AND THE ASSESSEE HAS MADE INVESTMENT IN REC BONDS ON 15.03.2007. THEREFORE W E DO NOT FIND ANY INFIRMITY IN THE DECISION TAKEN BY THE LD. CIT(A) ON THIS ACCOUNT. 12. AS REGARDS THE DEDUCTION CLAIMED U/S. 54 ON ACC OUNT OF INVESTMENT IN IMPROVEMENT OF NEW ASSET WE FIND THAT IT IS NOT EL IGIBLE FOR DEDUCTION IN VIEW OF THE DECISION OF HONBLE KERALA HIGH COURT RENDERED IN T HE CASE OF MRS. MEERA JACOB VS. ITO (SUPRA). THE GROUND RAISED IN APPEAL BY ASSESSEE T HEREFORE STANDS REJECTED. 13. THE NEXT ISSUE INVOLVED IN THIS APPEAL IS WITH REGARD TO THE COST OF ACQUISITION AS ON 01.04.1981. THE ASSESSEE HAS TAKEN THE COST OF A CQUISITION AT RS.63 73 560/- AS ON 01.04.1981. THE ASSESSING OFFICER REQUIRED THE ASSE SSEE TO INTIMATE AS TO ON WHAT BASIS THE MARKET VALUE OF THE PROPERTY WAS TAKEN AT RS.63 73 560/- AS ON 01.04.81. IN RESPONSE 6 THE ASSESSEE PRODUCED VALUATION REPORTS OF THE TWO APPROVED VALUERS NAMELY SHRI SANJAY CHAUHAN AND SHRI ARUN KUMAR GOYAL. SHRI CHAUHAN VID E HIS REPORT DATED 06.03.2007 (PLACED AT PAPER BOOK PAGE 49 TO 59) VALUED THE PRO PERTY AT RS.65 71 000/- AT THE RATE OF RS.81/- PER SQ. FT. AS ON 1.4.81 AND SHRI ARUN KUMA R GOYAL VIDE HIS REPORT DATED 29.01.2007 (PLACED AT PAPER BOOK PAGE 65 TO 74) VAL UED THE SAME AT RS.63 67 000/- @ 79.18 PER SQ. FT. ON 1.4.1981. THE ASSESSEE HAS TAK EN THE LEAST AMOUNT OF THE TWO VALUATION REPORTS FOR THE PURPOSE OF COMPUTATION OF INCOME. S INCE NO BASIS WAS GIVEN FOR ADOPTING THE LAND RATES IN BOTH THE REPORTS THE ASSESSING O FFICER EXAMINED BOTH THE APPROVED VALUERS. SHRI CHAUHAN APPROVED VALUER UNFOLDED THA T HE HAD NO BASIS FOR THE RATE OF LAND AS ON 1.4.81 BUT HE HAS TAKEN THE RATES BY REVERSI NG THE ACTUAL VALUE OF PROPERTY AS ON 21.08.06 TO 01.04.1981 AFTER REDUCING THE VALUE BY ABOUT 10% FOR 25 YEARS FROM 2006 TO 1981. SIMILARLY DURING THE EXAMINATION OF SECOND A PPROVED VALUER SHRI ARUN GOYAL SUBMITTED ANOTHER VALUATION REPORT DATED 16.01.2006 TAKING VALUE OF THE LAND AT RS.42 65 755 AT THE RATE OF RS.65/- PER SQ. FT AND VALUE OF BUILDING AT RS.7 15 328/-. HE EXPLAINED THAT THERE WERE CERTAIN APPARENT ERRORS O F CALCULATION IN THE REPORT DATED 16.01.06 WHEREIN THE LAND RATE ADOPTED AS ON 01.04. 81 WERE BASED ON THE LAND RATES AS ON 01.04.1973 PRESCRIBED BY RAJASTHAN (L&B) TAX ACT AN D LAND RATES OF SHASTRI NAGAR JODHPUR AS PER UIT AUCTION DATED 22.1.1984. IN HIS STATEMENT SRI GOYAL STATED THAT THE BUILDING RATES WERE BASED ON X-3 RATES OF STATE PWD WHICH ARE TAKEN FOR DETERMINING THE RENT OF THE BUILDING FOR HIRE BY GOVERNMENT. THE L D. ASSESSING AUTHORITY THEREFORE AFTER TAKING INTO ACCOUNT THE INSTANCE OF SALE OF PROPERT Y IN THE SAME LOCALITY CALCULATED THE MARKET VALUE OF LAND PROPERTY MEASURING 65706.56 SQ . FT. AT RS.2 10 260 AT THE RATE OF 3.20 PER SQ. FT. AND THAT OF BUILDING AT RS.7 15 32 8/- TOTALING TO RS.9 25 588/- AS AGAINST RS.63 73 560/- DECLARED BY THE ASSESSEE AS ON 01.04 .1981. THE ASSESSING OFFICER TOOK INDEXED COST OF PROPERTY AT RS.47 85 290/- AS AGAIN ST RS.3 29 51 310/-. HE THEREFORE AFTER DEDUCTING THE INVESTMENT OF RS.87 77 700/- CL AIMED AS EXEMPT U/S. 54 OF THE ACT FROM THE SALE CONSIDERATION OF PROPERTY OF RS.4 54 18 629/- WORKED OUT THE NET TAXABLE CAPITAL GAINS AT RS.3 66 40 929/-. THE LD. CIT(A) A FFIRMED THE DECISION OF THE LD. ASSESSING OFFICER. 14. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE PROPERTY IN QUESTION SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS AL LOTTED TO HIS FATHER IN 1949 AS INAYAT 7 FOR A FEE OF RS.4/- ONLY AND THE COST OF THE YEAR 1 949 CANNOT BE COMPUTED IN THE CASE OF THE ASSESSEE OR IN THE HANDS OF ITS PREVIOUS OWNER AND AS SUCH COMPUTATION OF CAPITAL GAIN CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. R ELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. B.C. S RINIVASA SETTY 128 ITR 294 (SC). 15. IT HAS BEEN NEXT CONTENDED THAT THE ASSESSEE HA S ADOPTED THE LOWER VALUATION IN THE VALUATION REPORTS OF TWO APPROVED VALUERS FOR COMPU TATION OF INCOME AND WORKED OUT THE ADJUSTED COST ON THE DATE OF SALE IN THE INCOME COM PUTED BY HIM. THE ASSESSING OFFICER EXAMINED THE TWO VALUERS WHO SUBMITTED THEIR REPLIE S AND JUSTIFIED THE RATES ADOPTED BY THEM. COPIES OF SUCH REPLIES ARE PLACED AT PAPER BO OK PAGES 80 TO 89. THE SECOND VALUATION REPORT HAS NOT BEEN DISPUTED BY THE AO B UT HE MADE ONLY GENERAL COMMENTS. THE ASSESSING OFFICER DID NOT ACCEPT THE REPORT IN TOTO BUT BIFURCATED IN TWO PARTS. HE ACCEPTED THE REPORT TO BE CORRECT IN RESPECT OF CON STRUCTION OF BUILDING BUT DID NOT ACCEPT THE SAME FOR THE VALUATION OF LAND. HIS ACTION OF A CCEPTING ONE PART OF REPORT AND REJECTION OF OTHER PART THEREOF IS CONTRARY TO LAW. HE COULD HAVE ACCEPTED THE DOCUMENT OR REJECTED THE SAME AS A WHOLE. NO BENCHMARK RATES WERE AVAIL ABLE FOR DATE ON WHICH THE VALUATION OF PROPERTY WAS MADE. THEREFORE DLC RATES FIXED IN 1993 WERE TAKEN AS BASIS FOR WORKING OUT THE COST AS ON 01.04.1981. THE ASSESSIN G OFFICER DISBELIEVED THE REPORT ON VALUATION OF LAND AND PROCEEDED TO ADOPT LAND RATES ON THE BASIS OF A SOLITARY SALE DEED OF A PLOT OF SMALL SIZE IN THAT AREA. ISOLATED TRANSAC TION COULD NOT BE MADE A BASIS FOR DISCREDITING THE OPINION OF THE EXPERT. THE ASSESSE E IN HIS WRITTEN SUBMISSIONS REFERRED PAGE 8 WHEREIN COMPARABLE SALE OF SHASTRI NAGAR BY UIT JODHPUR IS QUOTED AT THE RATE OF ABOUT RS.1000/- PER SQ. YARDS WHICH COMES TO RS.112 PER SQ. FT. THE ASSESSEES PROPERTY HAS A FAR SUPERIOR LOCATION AND IS A FREE HOLD PROP ERTY AND DOES NOT HAVE END USE RESTRICTION. THEREFORE THE INSTANCE OF SALE DEED R ELIED UPON BY THE ASSESSING AUTHORITY CANNOT BE EQUATED WITH THE PROPERTY OF ASSESSEE. RE LIANCE IS PLACED ON THE DECISION OF TRIBUNAL DATED 26.12.2000 IN THE CASE OF SHRI DALP AT SINGH VS. ITO IN ITA NOS.1773 & 1774/JP/94 PLACED AT PAPER BOOK PAGE 91 115 AGAI NST WHICH NO SECOND APPEAL WAS PREFERRED BY THE REVENUE. 16. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND CONTENDS THAT THERE IS NO BASIS GIVEN IN THE VALUERS REPORTS FOR ADOPTING TH E LAND RATES AS ON 01.04.1981. NO 8 COMPARABLE CASES FROM SUB-REGISTRAR WERE OBTAINED B Y THE APPROVED VALUERS. THE AO MADE ENQUIRY AND FOUND THAT THE SALE INSTANCES OF T HE SAME AREA. THE APPROVED VALUER IN HIS STATEMENT HAS ADMITTED THAT X-3 RATES ARE MEANT FOR RENTAL VALUATION. THE REPORT OF SECOND VALUER IS ALSO NOT PROPER AS ONLY INFERENCE S HAVE BEEN DRAWN FOR THE PURPOSE OF ADOPTING THE LAND RATES. THE APPROACH OF THE ASSESS ING OFFICER IS LOGICAL AS HE HAS TAKEN INTO ACCOUNT THE RATES OF THE ADJOINING PLOT OF THE VICINITY. THE ASSESSEE CANNOT TAKE ADVANTAGE OF LOCATION IN THE INSTANT CASE. THE ASSE SSEE HAS CONCEALED THE FACTS WHICH ARE APPARENT FROM RECORD WITH REGARD TO THE COST OF THE PREVIOUS OWNER/ASSESSEE WHICH IN THIS CASE IS RS. 4/- AND NOT NIL. THE ASSESSEES PLEA TH AT SINCE THERE IS NO COST OF PROPERTY THE COMPUTATION PROVISION WILL FAIL IS FALLACIOUS AND N EEDS TO BE REJECTED. 17. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AND RECORD AS WELL AS THE DECISIONS CITED BEFORE US. THE ASSESSEES NAME IS FOUND RECORDED I N THE INAYATNAMA THROUGH WHICH THE LAND WAS ACQUIRED BY THE ASSESSEE AT A COST OF RS.4 /- ONLY. IT THEREFORE IS NOT A CORRECT STATEMENT OF FACT BY THE ASSESSEES COUNSEL SHRI K OTHARI THAT LAND DID NOT HAVE ANY COST PRIOR TO 01.04.1981. SINCE COST IS EMBEDDED TO LAND ACQUIRED BY THE ASSESSEE IT SHALL ALSO BE WRONG TO CANVASS THAT INCOME FROM CAPITAL GAINS CANNOT BE COMPUTED. THE SUPREME COURT DECISION IN THE CASE OF CIT VS. B.C. SRINIVAS A SETTY (SUPRA) WILL NOT BE APPLICABLE TO THE FACTS OF THIS CASE AS COMPUTATION PROVISION DOES NOT FAIL AS WRONGLY CANVASSED BY THE COUNSEL BY CONCEALING THE FACTS MORE THAN REVEA LING THE SAME IN ASSISTING THE TRIBUNAL FOR COMING TO A LOGICAL AND JUDICIOUS CONCLUSION. T HE GROUND RAISED ON THIS COUNT THEREFORE STANDS REJECTED. 18. IN SO FAR AS ASSESSEES CLAIM FOR ADOPTING COST AS ON 01.04.1981 ON THE BASIS OF APPROVED VALUERS REPORTS WHO ARE TECHNICAL IN THE MATTER OF VALUATION IS CONCERNED IT CAN BE SEEN FROM THE RECORD THAT THE ASSESSEE ACTED BON A FIDELY BY TAKING OPINION FROM EXPERTS AND TAKING LEAST OF THE COST AS ON 01.04.81 ESTIMATED BY THE TWO APPROVED VALUERS. THE SECOND VALUATION REPORT SUBMITTED BY ARUN KUMAR GOYAL WAS A VALID REPORT AS THE SAME MERELY CORRECTED THE CALCULATION ERRORS IN HIS FIRST REPORT. THE ASSESSING OFFICER HIMSELF IS NOT A PERSON COMPETENT TO COMMENT ON TEC HNICAL MATTERS. THIS VIEW ADMITTEDLY HAS BEEN TAKEN BY SUPREME COURT IN THE CASE OF SARS WATI INDUSTRIAL SYNDICATE LTD. VS. 9 CIT 237 ITR 1 (SC). THE ASSESSING OFFICER DID NOT MAKE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER AND PLACED HIMSELF IN THE SHOES O F AN EXPERT WHICH IS CONTRARY TO THE LAW STATED BY HONBLE SUPREME COURT. THE SOLITARY E XAMPLE OF THE LAND RATE IN AREA COULD NOT BE TAKEN AS A BASIS FOR DISCARDING THE EXPERTS OPINION ON WHICH THE ASSESSEE HAS RELIED. THE ORDER OF THE ASSESSING OFFICER AS WELL AS LD. CIT(A) DOES NOT STAND FOR LEGAL SCRUTINY IN REJECTING THE EXPERTS OPINION ON WHICH THE ASSESSEE HAS RELIED AND PLACING COST OF THE PROPERTY AS ON 1.4.81 ON THE BASIS OF A SOLITARY EXAMPLE WHICH IN FACT COULD NOT BE APPLIED TO THE CIRCUMSTANCES AND THE FACTS O F THE ASSESSEES CASE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO ADOPT THE COST AS O N 01.04.1981 AS PER SECOND VALUATION REPORT OF THE APPROVED VALUER OF SHRI ARUN KUMAR GO YAL AND WORK OUT INDEX COST ACCORDINGLY FOR WORKING OUT THE INCOME FROM CAPITAL GAINS. GROUND OF THE ASSESSEE ON THIS REASONING STANDS ALLOWED. 19. ASSESSEES ANOTHER PLEA THAT BACKWARD INDEXATIO N NEEDS TO BE APPLIED IN THIS CASE IS NOT SUPPORTED BY ANY LEGAL PRINCIPLE NOR THERE I S ANY SUCH PROVISION IN THE ACT TO MAKE ASSESSING OFFICER OBLIGATORY UNDER THE STATUTE TO T AKE BACKWARD INFLATION INDEX. THE TRIBUNAL JUDGMENT IN THE CASE OF SHRI DALPAT SINGH VS. ITO (SUPRA) ALSO IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE ASSESSING OFFICER IN THAT CASE HIMSELF HAS ADOPTED BACKWARD INFLATION INDEX FOR WORKING OUT THE COST A ND THE TRIBUNAL SIMPLY CORRECTED THE WORKING. THE ASSESSEES PLEA IS THEREFORE REJECTE D. 20. GROUND NO.7 CHALLENGING THE CHARGE OF INTEREST U/S. 234A 234B AND 234C OF THE ACT BEING CONSEQUENTIAL IN NATURE NEEDS NO INDEPE NDENT ADJUDICATION. 21. AS A RESULT THE APPEAL BY ASSESSEE STANDS ALLO WED IN PART. THE ORDER PRONOUNCED IN THE OPEN COURT ON 06 08 10 . SD/- SD/- (B.R. JAIN) (K.S.S. PRASAD RAO) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 6 TH AUGUST 2010 *AKS/- LIST FOR PRONOUNCEMENT ON 6.08.10. (AM) (JM) 10 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. D/R 6. GUARD FILE