Shri Joginderkaur Gurudevsingh Tank, Surat v. The Dy.CIT.,Circle-9,, Surat

ITA 1627/AHD/2010 | 2007-2008
Pronouncement Date: 24-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 162720514 RSA 2010
Assessee PAN AFRPT8505M
Bench Ahmedabad
Appeal Number ITA 1627/AHD/2010
Duration Of Justice 7 month(s) 7 day(s)
Appellant Shri Joginderkaur Gurudevsingh Tank, Surat
Respondent The Dy.CIT.,Circle-9,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 24-12-2010
Date Of Final Hearing 29-10-2010
Next Hearing Date 29-10-2010
Assessment Year 2007-2008
Appeal Filed On 17-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL V.P.(AZ) & HON BLE SHRI T.K. SHARMA J.M. ) I.T.A. NO. 1627/AHD./2010 ASSESSMENT YEAR : 2007-2008 MRS. JOGINDERKAUR GURUDEVSINGH TANK -VS.- DEPUTY COMMISSIONER OF INCOME TAX SURAT (PAN : AFRPT 8505 M) CIRCLE-9 SURAT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.P. SHAH RESPONDENT BY : SHRI SHELLEY JINDAL CIT D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 18.03.2010 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V SURAT UPHOL DING THE ORDER OF ASSESSING OFFICER WHEREBY HE COMPUTED THE LONG-TERM CAPITAL GAIN OF R S.1 06 33 703/- BY TAKING THE INDEX COST ACQUISITION OF THE PROPERTY AT RS.20 95 639/- IN PL ACE OF THE LONG-TERM CAPITAL GAIN OF RS.13 02 750/- SHOWN BY THE ASSESSEE BY ADOPTING TH E INDEX COST OF ACQUISITION OF THE PROPERTY AT RS.1 86 84 000/- FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE O WNED 56.25% OF THE SHARE PROPERTY BEARING NO.60 BUILT ON PLOT NO. 28 STREET-C SECTOR 27A CHANDIGARH MEASURING 999 SQ.YDS. WITH CONSTRUCTED AREA OF 4000 SQ.FT. OF 1 STOREY. THIS PROPERTY WAS SOLD VIDE SALE DEED DATED 15.1.2007 FOR A CONSIDERATION OF RS.2.10 CRORES. IN HER RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE DISCLOSED LONG-TERM CAPI TAL GAIN AT RS.13 02 750/- AS UNDER :- COMPUTATION OF TOTAL INCOME RUPEES RUPEES 1. LONG-TERM CAPITAL GAIN SALE PROCEEDS OF THE PROPERTY SITUATED AT H. NO. 60 PLOT NO. 28 STREET C SECTOR 21-A CHANDIGARH 2 10 00 000 2 ITA NO. 1627/AHD/2010 LESS INDEX COST OF ACQUISITION RS.36 00 000/- COST AS ON 1.4.1981 519 INDEX COST OF FY 2006-07 100 INDEX COST AS ON 1.4.1981 ICA = RS.36 00 000 X 519/100 1 86 84 000 TOTAL LONG-TERM GAIN 23 16 000 LESS 43.75% SHARES OF OTHER CO- OWNERS 56.25 OF MY CAPITAL GAIN 1 06 33 703 10 13 250 GROSS TOTAL INCOME INCLUDING LONG-TERM CAPITAL 13 02 750 2.1. THE AFORESAID PROPERTY WAS ACQUIRED BY THE ASS ESSEE BEFORE 1.4.1981. THEREFORE FOR THE PURPOSE OF COMPUTING LONG-TERM CAPITAL GAIN THE AS SESSEE ADOPTED THE VALUE OF THE PROPERTY AS ON 1.4.81 AT RS.36 LAKHS. THIS VALUE WAS ADOPTED RELYI NG UPON THE VALUATION REPORT OF ONE REGISTERED VALUER SHRI HARPREET SINGH. IN THIS REPORT THE RE GISTERED VALUER ATTRIBUTED A VALUE OF RS.33 LAKHS AS THE VALUE OF THE LAND AND RS.3 LAKHS AS THE VALU E OF CONSTRUCTED PROPERTY ON THE SAID LAND. 2.2. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE VALUATION OF THE PROPERTY ESTIMATED AS ON 1.4.81 AT RS.36 LAKHS WAS ON HIGHER SIDE. HE ASKED THE ASSESSEE TO PRODUCE EVIDENCE BASED ON WHICH THE VALUATION OF THE PROPERTY WAS ADOPTED AT RS.36 LAKHS AS ON 1.4.1981. BEFORE THE ASSESSING OFFICER THE ASSESSEE FURNISHED NO REPLY. THEREAFTER THE ASSESSING OFFICER ISSUED A COMMISSION TO THE DEPUTY DIRECTOR OF INCOME TAX (IN V.) UNIT-II CHANDIGARH FOR COLLECTION OF EVIDENCE. THE COMMISSION WAS ISSUED FOR CONDUCTING ENQUIRIES ON THE FOLLOWING ISSUES :- (A) WHETHER THE VALUE DETERMINED BY THE VALUER AS O N 1.4.19181 AT RS.36 LAKHS FOR THE PURPOSE OF INDEXATION BENEFIT IS PROP ER. (B) WHETHER THE SALE PRICE OF THE SAID PROPERTY DEC LARED AT RS.2.10 CRORES IS AS PER THE FAIR MARKET VALUE AS ON THE DATE OF SALE . (C) WHETHER THE PURCHASERS HAVE ONLY PAID RS.2.10 C RORES AS FULL CONSIDERATION FOR THE PROPERTY. 3 ITA NO. 1627/AHD/2010 2.3. THE DDIT-II CHANDIGARH AFTER CONDUCTING ENQUI RIES SENT A DETAILED REPORT VIDE LETTER DATED 11.12.2009. THE SAID REPORT CONTAINED GIST OF 7 SALES INSTANCES COLLECTED BY THE SUB- REGISTRARS OFFICE UNION TERRITORY CHANDIGARH REG ARDING SALES EFFECTED OF OPEN LAND AND CONSTRUCTED PROPERTY IN CHANDIGARH ON SEVERAL DATES STARTING FROM 7.1.1981 TO 21.4.1981. IT WAS FOUND THAT THE SALE INSTANCES RANGED FROM RS.36 000 /- TO RS.5 00 000/-. THE DDIT-II CHANDIGARH ALSO EXAMINED THE STATEMENT OF THE VALUER SHRI HARP REET SINGH RECORDED ON OATH UNDER SECTION 131 ON 10.12.2009. THE DETAILS OF THE FINDINGS OF T HE ENQUIRY REPORT OF DDIT-II CHANDIGARH ARE AVAILABLE IN PARA 9 I.E. AT PAGE 4-6 OF THE ASSESS MENT ORDER. 2.4. THE ASSESSING OFFICER CONVEYED THE FINDINGS TO ASSESSEE AND THE ASSESSEE WAS ASKED HER SHOW-CAUSE VIDE LETTER DATED 16.12.2009 AS TO WHY T HE CAPITAL GAIN ON THE SOLD PROPERTY SHOULD NOT BE RECOMPUTED CONSIDERING THE COST OF PROPERTY AT RS.4 03 784/- (AVERAGE RATE OF 403.86 PER SQ.MTR. ) AS ON 1.4.1981 INSTEAD OF RS.36 LAKHS. TH E SAID SHOW-CAUSE NOTICE READS AS UNDER :- YOUR ASSESSMENT PROCEEDING FOR AY 2007-08 IS UNDER PROGRESS IN THIS OFFICE. YOU HAD DISCLOSED LONG TERM CAPITAL GAIN ON THE SALE OF HOUSE BEARING NO. 60 BUILT ON PLOT NO. 28 STREET C SECTOR-27A CHANDIGARH MEAS URING 999.8 SQ.YDS. RP NO. 9883 CONSTRUCTED UPTO 1/1/2 STOREY AT RS.13 02 75 0/-. YOUR AUTHORIZED REPRESENTATIVE HAD BEEN ASKED TO FILE THE BASIS OF ASSUMING VALUE AS ON 1.4.1981 OF THE SOLD PROPERTY AT RS.36 LAKHS FOR THE INDEXAT ION BENEFIT. HOWEVER YOU HAVE NOT FILED ANY DETAILS ON THE SAME TILL DATE. THIS O FFICE HAS OBTAINED A FEW SALE INSTANCES DURING 1981 FROM CHANDIGARH. THE SAME ARE AS BELOW :- SL. NO. ADDRESS OF THE PROPERTY SIZE OF THE PROPERTY DATE OF REGISTRATIONS AMOUNT AT WHICH REGISTERED WITH SUB- REGISTRAR RATE PER SQ.YARD 1. H. NO. 3462 SECTOR-27D CHANDIGARH 250 SQ.YDS. 7.1.1981 RS.1 00 000/- 400 PER SQ.YDS. 2. H. NO. 662 SECTOR-16D CHANDIGARH 996.5 SQ.YDS. 10.4.1981 RS.3 26 000/- 996.5 PER SQ. YDS. 3. PLOT NO. 1348 SECTOR-33C CHANDIGARH 1014 SQ.YDS. 5.1.1981 RS.1 80 000/- 177.514 PER SQ.YDS. 4. PLOT NO. 3141 SECTOR 21D CHANDIGARH 1000 SQ.YDS. 12.2.1981 RS.5 00 000/- 500 PER SQ.YDS . 5. H. NO. 1547 SECTOR 18D CHANDIGARH 1000 SQ.YDS. 9.2.1981 RS.2 50 000/- 250 PER SQ.YDS. 4 ITA NO. 1627/AHD/2010 6. H. NO. 230 SECTOR 9C CHANDIGARH 3025 SQ.YDS. 31.3.1981 RS.3 00 000/- (50% SHARE) 99.173 PER SQ.YDS. TOTAL 7285.5 2423.187 AVERAGE RATE 2423.187/6 = 403.86 COST FOR INDEXATION AT 1.4.1981 ON THE ABOVE DATA C OLLECTED BY THIS OFFICE SHOWING SALE PRICE IS AT RS. 403.86 PER SQ.YDS. AS SEEN ABOVE NONE OF THE ABOVE MATCH FIGURE OF RS. 36 LAKHS QUOTED BY YOU OF RS.36 LAKHS AS ON 1.4.1981. YOU ARE ASKED TO SHOW CAUSE WHY THE FOLLOWING COMPU TATION OF LONG-TERM GAIN IS ADOPTED IN YOUR CASE. COMPUTATION OF TOTAL INCOME RUPEES RUPEES 1. LONG TERM CAPITAL GAIN SALE PROCEEDS OF THE PROPERTY SITUATED AT H. NO. 60 PLOT NO. 28 STREET C SECTOR 21A CHANDIGARH 2 10 00 000 LESS : INDEX COST OF ACQUISITION RS.4 03 784/- COST AS ON 1.4.1981 519 INDEX COST OF FY 2006-07 100 INDEX COST AS ON 1.4.1981 ICA = RS.4 03 784 X 519/100 20 95 639 TOTAL LONG TERM CAPITAL 1 89 04 361 LESS : 43.75% SHARES OF OTHERS CO- OWNERS 56.25 OF MY CAPITAL GAIN 1 06 33 703 82 70 658 GROSS TOTAL INCOME INCLUDING LONG TERM CAPITAL 1 06 33 703 3. YOU ARE ALSO ASKED TO ATTEND THIS OFFICE TO INSP ECT THE INFORMATION COLLECTED AS ABOVE AS ON 17 TH OR 18.12.2009 BETWEEN 3 P.M. TO 6 P.M. YOU ARE ASKE D TO SHOW CAUSE WHY YOUR INDEXATION COST SHOULD NOT BE RECOMPUTED AS ABOVE. YOUR REPLY SHOUL D REACH THIS OFFICE WITHIN 3 DAYS OF THE RECEIPT OF THIS LETTER. IF YOU FAIL TO DO SO THE OR DER SHALL BE PASSED BASED ON THE COMPUTATION AS ABOVE. 2.5. IN RESPONSE TO AFORESAID SHOW-CAUSE NOTICE TH E AR OF THE ASSESSEE APPEARED ON 18.12.2009. THE ASSESSING OFFICER SUPPLIED HIM ALL THE RELEVANT DOCUMENTS VIZ. COPIES OF SALE DEEDS OF THE SALES INSTANCES NOTED IN THE SHOW-CAUS E NOTICE STATEMENT OF THE VALUER STATEMENT OF THE WITNESSES TO THE SALE DEED ETC. THE ASSESSING OFFICER ALSO ALLOWED AN OPPORTUNITY TO APPEAR 5 ITA NO. 1627/AHD/2010 ON 21.12.2009 TO PRODUCE ANY EVIDENCE IN HER FAVOUR IN SUPPORT OF THE ASSESSEES CLAIM ON THE INDEXATION BENEFIT. 3. BEFORE THE ASSESSING OFFICER THE ASSESSEE OBJEC TED TO THE COMPUTATION OF LONG-TERM CAPITAL GAIN IN THE SHOW-CAUSE NOTICE. IT WAS SUBMI TTED THAT IT IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE TO REJECT THE VALUATION OF GOVERNMENT VALUE RS REPORT WHO VALUED THE PROPERTY IN QUESTION AT RS.36 LAKHS. IT WAS ALSO CONTENDED THAT SALES IN STANCES VARY FROM RS.99.123 PER SQ.YRD TO 996.50 PER SQ.YRD. AND THEREFORE BASE RATE ADOPT ED BY THE ASSESSING OFFICER WAS NOT PROPER. 4. THE ASSESSING OFFICER AFTER CONSIDERING THE REPL Y OBSERVED THAT MARKET PRICE VARIES DEPENDING UPON FACTORS LIKE LOCATION CONSTRUCTION QUALITY APPROACHABILITY NEARNESS TO LANDMARK CONVENIENCE OF THE PURCHASER ETC. CONSID ERING THESE FACTORS THE FAIR MARKET VALUE AS ON 1.4.1981 HAS BEEN TAKEN AT THE AVERAGE OF ALL SA LES INSTANCES. INSPITE OF NUMBER OF OPPORTUNITIES GIVEN THE ASSESSEE HAS FAILED TO BRI NG ON RECORD ANYTHING WHICH CAN SUBSTANTIATE THE CLAIM. THE ASSESSEE WAS GIVEN CHANCE TO PRODUCE THE VALUER BEFORE THE A.O. WHICH THE ASSESSEE FAILED TO DO SO. THE A.O TOOK UPON HIMSEL F TO CAUSE NECESSARY ENQUIRIES FOR COLLECTING SALES INSTANCES AND GOT THE STATEMENT OF THE CONCER NED VALUER RECORDED. OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO EXAMINE THE EVIDENCE COLLECTED WHICH WERE BEING USED AGAINST IT. THE AR OF THE ASSESSEE WAS DIRECTED TO INSPECT THE EVIDENCES WHICH HE DID. THE OBJECTIONS RAISED BY THE ASSESSEE ACCORDING TO THE A.O. ARE FRIVOLOUS AND TH E SAME HAVE BEEN RAISED FOR THE SAKE OF DOING IT WITHOUT ANY SUBSTANCE. WITH REGARD TO THE REPORT OF THE GOVERNMENT APPROVED VALUER THE A.O. HELD THAT THE ASSESSEE CANNOT SHRUG OFF THE RESPONS IBILITY OF SUBSTANTIATING ITS CLAIM BY MERELY STATING THAT THE REPORT WAS OBTAINED FROM THE EXPER T AND THE GOVT. APPROVED VALUER. ON CONSIDERATION OF ALL RELEVANT FACTS THE A.O. TOOK THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.4 03 784/- AND AFTER GIVING INDEXATI ON BENEFIT DETERMINED THE LONG TERM CAPITAL GAIN AT RS.1 06 33 703/-. 5. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS :- 6 ITA NO. 1627/AHD/2010 (I) THE LEARNED A.O. IS NOT ALL COMPETENT UNDER THE ACT TO MAKE VALUATION OF THE CAPITAL ASSETS AT ANY GIVEN POINT OF TIME HIMSELF. THE ACTION OF THE A.O. IN DETERMINING THE VALUE IS ILLEGAL. (II) IN ORDER TO COMPUTE THE CAPITAL GAIN THE ASSE SSEE MAY ADOPT THE ACTUAL COST OF THE ACQUISITION OR FAIR MARKET VALUE OF THE PROPERT Y AS ON 1.4.1981. HOWEVER FOR DETERMINING THE FAIR MARKET VALUE OF THE ASSETS TH E A.O. MAY REFER THE VALUATION OF THE CAPITAL ASSTS TO A VALUATION OFFICER UNDER S ECTION 55A OF THE ACT. THE A.O. IS ENTITLED TO MAKE A REFERENCE TO A VALUATION OFFICER UNDER CLAUSE (A) OF SECTION 55A WHERE THE VALUE OF THE ASSETS CLAIMED BY AN ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE OF A REGISTERED VALUER AND IF THE AO IS OF THE OPIN ION MAT THE VALUE SO CLAIMED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE THE PROVISION OF CLAUSE (B) OF SECTION 55A IS APPLICABLE WHEREIN THE AO HAS TO RECORD HIS OPINION THAT (I) THE FAIR MARKET VALUE EXCEEDS THE VALUE CLAIMED BY THE ASSES SEE BY MORE THAN THE PRESCRIBED PERCENTAGE OR BY MORE THAT THE PRESCRIBED AMOUNT; O R (II) HAVING REGARD TO THE NATURE OF THE ASSET OR OTHER RELEVANT CIRCUMSTANCES IT IS NE CESSARY LO MAKE SUCH A REFERENCE. ACCORDING TO THE AR IN THE PRESENT CASE THE PROVI SION OF CLAUSE (A) OF SECTION 55A IS NOT APPLICABLE. THE PROVISION OF SECTION 55A(B)(I) IS A LSO NOT APPLICABLE. THEREFORE THE AO MUST HAVE TO APPROACH AND APPLY THE PROVISION OF SE CTION 55A(B)(II) OF THE ACT INSTEAD OF ISSUING COMMISSION AND MAKING THE VALUATION HIMSELF . (III) IT IS IMPORTANT TO NOTE THAT CLAUSE (B) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY IN ANY OTHER CASE VIZ; WHEN THE VALUE OF THE ASSETS CLAIMED BY THE ASSESSES IS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUE R. THEREFORE WHERE THERE IS A VALUATION REPORT OF THE REGISTERED VALUER THERE IS NO QUESTION OF HAVING RECOURSE TO SECTION 55A(B)(II) AND HENCE THERE IS NO RECOURSE T O ALTER THE VALUATION OF THE REGISTERED VALUER FOR THE PURPOSE OF SECTION 55(2)(B). IN THIS CONNECTION THE AR HAS PLACED RELIANCE ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CA SE OF HIABEN JAYANTILAL SHAH V/S. INCOME TAX OFFICER (2009) 227 CTR (GUJ) 666 AND DEC ISION OF ITAT KOLKATA IN THE CASE OF NEVILLE DE NORANHA V/S ASSTT. COMMISSIONER OF I NCOME TAX (2008) 115 TTJ 390 (IV) WITHOUT PREJUDICE TO THE ABOVE THE AR HAS SUBMITTED IN HIS WRITTEN SUBMISSION THAT THE REGISTERED VALUER HAS MADE VALUATION AFTER TAKING INTO ACCOUNT 4 BROAD ASPECTS WHICH ARE BONAFIDE ASPECTS NORMALLY CONSIDERED TO V ALUE ANY PROPERTY. UNDER THESE CIRCUMSTANCES THE LAW DOES NOT PERMIT TO DISTURB T HE VALUATION BASED ON REGISTERED VALUER REPORT. (V) SUB-REGISTRAR UNION TERRITORY CHANDIGARH HAS INFORMED THE OFFICE OF THE DDIT-II THAT AS ON 1.4 1981 THERE WAS NO PREVAILING FIXED COLLECTORATE RATES IN FORCE IN RESPECT OF RESIDENTIAL PROPERTIES LOCATED IN CHANDIGARH. THAT MEANS THE SALES RECORDED IN THE SUB- REGISTRAR'S OFFICE DURING THOSE PERIOD HAD NO VALUA TION BASE FOR COLLECTING STAMP/REVENUE ON IT. IN THE CIRCUMSTANCES THE REGISTERED SALE DO CUMENTS CANNOT BE TREATED AS RELIABLE EVIDENCE FOR THE PURPOSE OF FAIR MARKET VALUE AS ON 1.4.1981. (VI) THE SALES INSTANCES SUPPLIED TO THE AO SHOWS W IDE VARIATION IN RATE FROM RS.99.123 PER SQ.YRD. TO 996.50 PER SQ.YD. SUCH INSTANCES SHO W INCONSISTENCIES IN THE VALUE OF THE DOCUMENTS REGISTERED AS THERE WAS NO FIXED MARKET RATE PREVAILING AT THOSE TIMES. (I) THE PRICE THAT THE CAPITAL ASSET WOULD ORDINARILY F ETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE; AND 7 ITA NO. 1627/AHD/2010 (II) WHERE THE PRICE REFERRED TO IN SUB-CLAUSE (I) IS NO T ASCERTAINABLE SUCH PRICE AS MAY BE DETERMINED IN ACCORDANCE WITH THE RULES MADE UNDER THIS ACT. 6. AFTER CONSIDERING THE AFORESAID REPLY IN THE IM PUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TOOK THE VIEW THAT REFERENC E TO THE VALUATION OFFICER IS OPTIONAL. EVIDENCE COLLECTED FROM THE SUB-REGISTRARS OFFICE C LEARLY DEMONSTRATES THE PREVAILING PRICES AT WHICH SALES WERE REGISTERED. THE LEARNED COMMISSION ER OF INCOME TAX(APPEALS) ALSO EXAMINED THE VALUATION REPORT OF THE REGISTERED VALUER SUBMI TTED BY HIM AND TOOK THE VIEW THAT THE SAID REPORT IS CASUAL UNPROFESSIONAL AND LACKS CREDIBIL ITY. HE ALSO STATED THAT THE VALUATION REPORT IS PREPARED IN A HIGHLY IRRESPONSIBLE MANNER TO SUIT A SELF-SERVING PURPOSE. IT IS COMPLETELY UNRELIABLE. TO SUM UP FOR THE DETAILED REASONS GIV EN IN PARA 14 OF THE IMPUGNED ORDER HE UPHELD THE ACTION OF ASSESSING OFFICER ADOPTING OF RS.403. 86 PER SQ.YRD AS FAIR MARKET PRICE ON 1.4.1981. ACCORDINGLY THE ASSESSING OFFICERS COMP UTATION OF LONG-TERM CAPITAL GAIN AT RS.1 06 33 703/- WAS CONFIRMED. AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI J.P. SHAH APPEARED AND CONTENDED THAT KEEPING IN VIEW THE PRINCIPLE OF NAT URAL JUSTICE THE ASSESSING OFFICER OUGHT TO HAVE MADE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE PROPERTY OF ASSESSEE IS SITUAT ED IN SECTOR 27A CHANDIGARH. NONE OF THE SALES INSTANCES RELIED BY THE ASSESSING OFFICER PERTAINED TO SECTOR 27A. THEREFORE THESE SALES INSTANCES CANNOT BE CONSIDERED. WITHOUT PREJUDICED TO THIS THE LD. COUNSEL OF THE ASSESSEE ARGUED AT LENGTH THAT VALUATION OF THE PROPERTY AS ON 1.4. 1981 AT RS.36 00 000/- IS FAIR AND REASONABLE KEEPING IN VIEW THE FACT THAT THIS PROPERTY HAD BEE N SOLD FOR RS.2.10 CRORES ON 15.01.2007. WITH REGARD TO DEFECT IN VALUATION REPORT HE SUBMITTED THAT VALUE ADOPTED BY ASSESSING OFFICER IS ON THE LOWER SIDE THEREFORE THE BENCH MAY ADOPT A RE ASONABLE VALUE. 8. ON THE OTHER HAND SHRI SHELLEY JINDAL LD. CIT D.R. APPEARING ON BEHALF OF THE REVENUE SUPPORTED BOTH THE ORDERS OF DEPARTMENTAL AUTHORITI ES BELOW. HE SUBMITTED THAT THE REFERENCE FOR VALUATION UNDER SECTION 55A CAN BE MADE WHEN THE AS SESSEE HAS DECLARED THE LESSER VALUE. FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IT IS N OT NECESSARY THAT THE ASSESSING OFFICER SHOULD MAKE A REFERENCE UNDER SECTION 55A OF THE INCOME TA X ACT 1961. HE SUBMITTED THAT IN THE 8 ITA NO. 1627/AHD/2010 IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS RECORDED A FINDING OF FACT THAT VALUATION REPORT OF THE REGISTERED VALUER SUBMITTED BY THE ASSESSEE IS NOTHING BUT SELF- SUBMITTED VALUATION REPORT. IN THE SAID VALUATION R EPORT THE ASSESSEES VALUER HAS NOT RELIED ON THE SALES INSTANCES WHEREAS THE ASSESSING OFFICER DETER MINED THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AS ON 1.4.1981 ON THE BASIS OF SALES INSTA NCES COLLECTED AND CONFRONTED TO THE ASSESSEE. THE LD. D.R. POINTED OUT THAT SECTOR 27A IS JUST AD JACENT TO SECTOR 27C. SINCE NO SALES INSTANCE OF SECTOR 27C WAS AVAILABLE ASSESSING OFFICER WAS HAV ING NO OPTION BUT TO RELY ON THE SALES INSTANCES OF NEAREST SECTOR. HE ACCORDINGLY TOOK TH E AVERAGE OF ALL THE NINE SECTORS TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION A S ON 1.4.1981. THEREFORE THE VIEW TAKEN BY THE ASSESSING OFFICER BE UPHELD. 9. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE PROPERTY IN QUESTION WAS SOLD BY THE ASSESSEE FOR A SUM OF RS.2.10 CRORES. ADMITTEDLY THIS PROPERTY WAS ACQUIR ED PRIOR TO 1.4.1981. THERE IS NO DISPUTE TO THE FACT THAT FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAIN THE ASSESSEE HAS OPTION TO ADOPT THE VALUE OF SUCH PROPERTY AS ON 1.4.1981. FOR THIS PUR POSE THE ASSESSEE APPOINTED A GOVERNMENT APPROVED VALUER WHO VALUED THE PROPERTY AS ON 1.4. 1981 AT RS.36 LAKHS I.E. RS.33 LAKHS FOR THE COST OF VALUE OF LAND AND RS.3 LAKHS FOR THE COST O F CONSTRUCTION THEREON. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS ADOPTED THE COST AS ON 1. 4.1981 AT RS.4 03 784/- AND AFTER ALLOWING THE BENEFIT OF INDEXATION HE WORKED OUT THE LONG-TERM CAPITAL GAIN AT RS.1 06 33 703/- AS UNDER :- COMPUTATION OF TOTAL INCOME RUPEES RUPEES 1. LONG TERM CAPITAL GAIN SALE PROCEEDS OF THE PROPERTY SITUATED AT H. NO. 60 PLOT NO. 28 STREET C SECTOR 21A CHANDIGARH 2 10 00 000 LESS : INDEX COST OF ACQUISITION RS.4 03 784/- COST AS ON 1.4.1981 519 INDEX COST OF FY 2006-07 100 INDEX COST AS ON 1.4.1981 ICA = RS.4 03 784 X 519/100 20 95 639 TOTAL LONG TERM CAPITAL 1 89 04 361 LESS : 43.75% SHARES OF OTHERS CO- OWNERS 56.25 OF MY CAPITAL GAIN 1 06 33 703 82 70 658 9 ITA NO. 1627/AHD/2010 GROSS TOTAL INCOME INCLUDING LONG TERM CAPITAL 1 06 33 703 10. ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE T HE VALUE OF CONSTRUCTED PORTION AS ON 1.4.1981 SHOULD BE ON THE BASIS OF REPLACEMENT COST . THE AREA CONSTRUCTED WAS OF 4000 SQ.FT. OF 1 STOREY THEREFORE ITS VALUE AS ON 1.4.1981 ADOPT ED BY THE REGISTERED VALUER AT RS.3 LAKHS IS FAIR AND REASONABLE. IT IS PERTINENT TO NOTE THAT S TATEMENT OF ASSESSEES VALUER NAMELY HARPREET SINGH WHO VALUED THE PROPERTY IN QUESTION AT RS.36 LAKHS AS ON 1.4.1981 WAS RECORDED AND EXTRACT OF THE STATEMENTS AS REPRODUCED BY THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER READS AS UNDER :- STATEMENT OF SH. HARPREET SINGH MANJIT (VALUER) Q. PLEASE IDENTIFY YOURSELF. A. I AM HARPREET SINGH S/O. SH. MANJIT SINGH AGE 3 9 YEARS. I AM RESIDING AT ROOM NO. 998 & 3-B-2 MAHALI. Q. PLEASE STATE YOUR SOURCE OF INCOME AND EDUCATION AL QUALIFICATION. A. I HAVE PASSED MY B. TECH FROM GNDU AMRITSAR IN THE YEAR 1991 AND SINCE THEN I AM DOING MY BUSINESS ON ASSOCIATE IN CHANDIGARH IN THE NAME OF DERIGAM INC 1283 FF SECTOR 21B CHANDIGARH. I AM ALSO REGD. VALUE I ASS ESSED TO TAX WITH RANGE 6 MAHALI. MY PAN IS ACJPS 5949 M. Q. I AM SHOWING YOU VALUATION REPORT DONE BY YOU IN REPLY OF HOUSE NO. 60 SECTOR 27 CHANDIGARH MEASURING 2 KANAL. THIS VALUATION HAS BE EN DONE ON 1.9.1981. YOU HAVE VALUED THIS PROPERTY AS UNDER : VALUE OF PLST. AS ON 1.09.1981 : RS.32 00 000 CONSTRUCTION COST @ 100% X 400 STAFF : RS. 4 00 00 0 ___________ RS.36 00 000/- ___________ PLEASE STATE ON WHAT BASIS THIS VALUATION HAS BEEN MADE BY YOU IN SUPPORT TO ABOVE MENTIONED PROPERTY AS ON 1.4.1981. A. I MADE THIS VALUATION AFTER TAKING INTO ACCOUNT THE FOLLOWING ASPECTS :- (1) ENQUIRY FROM ESTATE OFFICE CHANDIGARH. (2) AFTER CONSULTING THE PROPERTY DEALS OF THE CITY. (3) TAKING IN TO ACCOUNT THE LOCATION OF THE PLOT. (4) TAKING IN TO ACCOUNT THE PERSON RELATING IN THAT LO CALITY. BASED ON THE ABOVE PARAMETER THIS WAS MY ONLY BONA FIDE OPINION FOR THE VALUATION OF ABOVE SAID PROPERTY. Q. YOU HAVE STATED THAT YOU HAVE MADE VALUATION OF THE PROPERTY AFTER ENQUIRING FROM THE ESTATE OFFICE CHANDIGARH ALSO. PLEASE STATE WHAT WA S THE PRIOR AT THAT TIME IN RESPECT OF THIS PROPERTY OR PROPERTIES IN THE SAME LOCALITY. ANS. I ENQUIRED FROM THE ESTATE OFFICE VERBALLY AND CAME TO KNOW THAT REGISGTRIES WERE BEING DONE IN RESPECT OF RESIDENTIAL PROPERTIES BET WEEN RS. 3 LAC TO RS. 5 LAC FOR HOUSES MEASURING 2 KANAL. Q. YOU HAVE VALUED THE COST OF CONSTRUCTION AT RS.4 00 000/- PLEASE STATE THE BASIS OF IT. ANS. THIS HAS BEEN VALUED AT RS.100/- PER SQ.FT. OF THE TOTAL COVERED AREA WHICH WERE PREVALENT AT THAT TIME. 10 ITA NO. 1627/AHD/2010 Q. DO YOU WANT TO SAY ANYTHING ELSE? ANS. NO. 11. FROM THE ABOVE IN THE ASSESSMENT ORDER THE ASS ESSING OFFICER MENTIONED THAT FOLLOWING POINTS EMERGE WHICH FALSIFIES THE VALUATION REPORT OF THE PROPERTY IN QUESTION :- (A) THE VALUER SAYS THAT HE VALUED THE SAID PROPERT Y ON THE BASIS OF 4 ISSUES ONE OF WHICH WAS ENQUIRY WITH THE ESTATE OFFICE. ON THIS I SSUE HE STATES THAT THE SAID OFFICE INFORMATION INDICATED A SALE VALUE OF RS.3-5 LAKHS FOR A HOUSE PROPERTY ADMEASURING 2 KANALS (SIMILAR TO THE ASSESSEES PRO PERTY). YET HE DOES NOT MENTION WHY HE VALUED THE ASSESSEES PROPERTY AT RS .36 LAKHS. (B) THE VALUER COULD NOT PRODUCE ANY EVIDENCE LIKE SALE INSTANCES DONE AT RS.36 LAKHS IN THE AREA IN THE CONCERNED PERIOD. 12. AFTER CONSIDERING THE ABOVE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DETERMINED THE VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.4 03 784/- AND THEREAFTER ALLOWED THE BENEFIT OF INDEXATION. IT IS PERTINENT TO NOTE THAT NEITHER TH E ASSESSEES VALUER IN THE VALUATION REPORT NOR DURING THE COURSE OF PROCEEDING BEFORE BOTH THE DEP ARTMENTAL AUTHORITIES BELOW PRODUCED A SINGLE SALE INSTANCES JUSTIFYING THE FAIR MARKET VALUE AS ON 31.03.1981 AT RS.36 00 000/-. ON THE CONTRARY THE ASSESSEES VALUER NAMELY SHRI HARPRE ET SINGH IN THE DETAILED STATEMENT RECORDED BY DDIT-II CHANDIGARH HAS STATED THAT THE PROPERTIES SIMILAR TO ASSESSEES PROPERTY I.E. ADMEASURING 2 KANALS WERE SOLD AT RS.3-5 LAKHS. IF IT IS PRESUMED THAT THIS IS VALUE OF TWO KANAL PLOTS AS ON 31.03.1981 THEN ON THIS BASIS FAIR MAR KET VALUE OF THE PLOT IN QUESTION AT THE MOST CAN BE RS.5 LAKHS. NOW COMING TO THE FAIR MARKET VALUE OF THE COST OF CONSTRUCTION ON REPLACEMENT COST THIS ACCORDING TO ASSESSEES VALUER IS RS.3 L AKHS (3000 SQ.FT. @ RS.100/- PER SQ.FT.). IN CASE THIS VALUE IS ACCEPTED IN THAT EVENT THE TOTAL VA LUE OF THE RESIDENTIAL HOUSE WORKS OUT TO RS.8 LAKHS (RS.5 LAKHS FOR COST OF LAND AND RS.3 LAKHS F OR COST OF CONSTRUCTION). IN OUR OPINION IT WILL BE FAIR AND REASONABLE IF ASSESSING OFFICER WILL WO RK OUT THE CAPITAL GAIN BY ADOPTING FAIR MARKET VALUE OF THE PROPERTY IN QUESTION AT RS.8 LAKHS AND THEREAFTER ALLOWING THE BENEFIT OF INDEXING. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY TO RE-W ORK OUT THE CAPITAL GAIN. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24.12.20 10 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 24 / 12 / 2010 11 ITA NO. 1627/AHD/2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.