These are two appeals filed by assessee relating to assessment year 1996-97 against order of learned CIT(A) XVIII, Mumbai dated 22-9- 2000. proceedings arise out of assessments completed under section 143(3). 2. assessee had co-ownership in flat No. 9, 2nd floor, Laxmi Bhavan, D-Road, Churchgate, Mumbai and this property was sold for Rs. 3,25,00,000 to Smt. Veena Vasant on 29-11-1995. property was constructed in 1961 and assessee opted to adopt value as on 1-4-1981 for computation of capital gain. assessee filed report of registered valuer Barve Suresh R. & Associates dated 1-3-1996 who worked out value at Rs. 24,36,400 as on 1- 4-1981. Assessing Officer however, referred matter to valuation cell of Income-tax Department who worked out value at Rs.15.74 lakhs as on 1-4-1981. One appeal has been filed against report of departmental valuer under section 55A of Income-tax Act read with provisions of Wealth- tax Act. other appeal has been filed against assessment under section 143(3) in which long-term capital gain has been calculated on basis of report of departmental valuer. One common ground in both appeals taken by assessee is that references made to valuation made by Assessing Officer was beyond scope of section 55A and as such, it is void ab initio. 3. This ground was also raised before learned CIT(A) who has dismissed appeal of assessee and held that Assessing Officer could make references if he was of opinion that it was necessary in view of nature of asset and other circumstances. He further stated that in present case it was flat and there was sudden increase in cost of flats at Marine Lines and report of registered valuer is vague and incomplete and no comparable case for nearby sale are mentioned in report. As such, there were sufficient reasons to refer to valuation cell. 4. Before us, it is stated by learned counsel of assessee Shri K.S. Kejriwal stated that references made to valuation cell under section 55A is not valid and he further stated that as per provisions of section 55A(a) references can only be made if Assessing Officer was of opinion that estimate by registered valuer is less than its fair market value and Assessing Officer could not have formed such opinion as case of Assessing Officer is that fair market value as estimated by registered valuer as on 1-4-1981 is on higher side and not on lower side. He further stated that even if it assumed that Assessing Officer had made said references under section 55A, clause (b) sub-clause (ii) then it was necessary for him to record reasons, stating relevant circumstances on basis of which he forms such opinion. He also referred to decisions of Hon'ble Rajasthan High Court in case of CIT v. Hotel Joshi [2000] 242 ITR 478 and decision of Hon'ble Gujarat High Court in case of M.V. Shah, Official Liquidator, Anant Mills Ltd. v. U.J. Matain [1994] 209 ITR 568. 5. On other hand, learned Departmental Representative Shri B.R. Uitsey pleaded with help of case law, as Assessing Officer was competent to make references under section 55A. 6. After hearing both parties and pursuing case law we are of opinion that matter before us to be adjudicated is not as to whether Assessing Officer was competent to refer matter to Valuation Officer or not. In our view matter which requires to be adjudicated is that whether references made under section 55A of Income-tax Act by Assessing Officer was valid reference or not. As per provisions of section 55A(a) reference can only be made by Assessing Officer to valuation cell if he is of opinion that fair market value as estimated by registered valuer is less than fair market value. Assessing Officer could not have form such opinion in this case as whole basis of references is that fair market value estimated by registered valuer is on 1-4-1981 is higher than its actual fair market value. reference can be made under section 55A, clause (b), sub-clause (ii) by Assessing Officer if he is of opinion having regard to nature of asset and other relevant circumstances that it is necessary to do so. We are of considered view that it is obligatory on part of Assessing Officer to record such other relevant circumstances on basis of which he forms such opinion in order to refer matter to valuation cell under said clause. Hon'ble Rajasthan High Court in case of Hotel Joshi (supra) has held that for invoking sub-clause (ii) of clause (b) of section 55A Assessing Officer is required to form opinion on basis of material on record that reference to District Valuation Officer for ascertaining fair market value of asset is necessary having regard to nature of asset and other relevant circumstances. It is also necessary to record as to why it is necessary to adopt such course. 7. Nothing has been shown to us by Revenue to state that reference was made under clause 55A(a) or 55A(b)(ii) and if it was made under section 55A(b)(ii) then what circumstances were in existence on basis of which Assessing Officer had formed his opinion to make such reference. In absence of same we hold that references made to Valuation Officer was invalid. 8. Since we are deciding legal issue in favour of assessee we do n o t find any need to go into merits of case and as such, other grounds of assessee's appeals are allowed for statistical purposes. 9. In result, appeals of assessee are allowed. *** SAJJANKUMAR M. HARLALKA v. JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE-52