IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM ITA No.224/JP/15 Assessment Year : 2010-11 Income Tax Officer, Ward cuke Shri Aroop Mukherjee, Hathi 3(2), Jaipur Vs. Babu Ka Bagh, Station Rod, Jaipur PAN No. AFCPM 7904 E Appellant Respondent Assessee by : Shri Praveen Saraswat, (CA) Revenue by : Shri O.P. Bateja (Addl.CIT) Date of Hearing : 22.09.2016 Date of Pronouncement : 29/09/2016. ORDER PER SHRI VIKRAM SINGH YADAV, A.M. This is appeal filed by Revenue against order of Ld. CIT(A)-I, Jaipur dated 19.12.2014 wherein Revenue has taken following grounds of appeal: 1. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in deleting LTCG of Rs. 61,57,568/- on ground that no reference was made by AO to DVO ignoring fact that no specific request was made by assessee during assessment proceedings for reference to DVO. 2. Whether on facts and in circumstances of case and in law ld. CIT(A) has erred in deleting addition ignoring his own decision in case of brother of assessee for A.Y. 2004-05 wherein cost of acquisition of similar property as on 01.04.1981 was upheld at Rs. 225/-per sq. mt. ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur 2. facts of case are that assessee filed its return of income for A.Y. 2010-11 on 28.03.2011 disclosing capital gain income besides income from house property and other sources. Actual sales consideration received on sale of capital assets was Rs.43,50,000/- while value adopted by stamp authority u/s 50C was Rs. 56,53,738/-. Accordingly, assessee computed its capital gains liability by substituting its actual sales consideration by consideration determined by stamp authority at Rs. 56,53,738/- and cost of acquisition as on 01/04/1981 as estimated by Registered valuer at Rs. 9,00,000/- was considered. However, Ld. AO enhanced sale consideration to Rs.65,68,431/- invoking section 50C, consequent to revised valuation by Stamp Authority in 2013 and also substituted FMV taken by assessee and considered FMV at Rs. 65,010/- as on 01.04.1981. assessee carried matter in appeal before ld CIT(A) and against said order, Revenue is in appeal before us. 2.1 We now refer to findings of ld CIT(A) which are reproduced as under: I have duly considered AO s contention and appellant s submission, perused materials on record, duly considered factual matrix of case and also applicable legal position. AO took sub-registrar s valuation u/s 50C for this said property which was objected by assessee in support, assessee provided valuation report from Shri J.K. Agarwal and AO examined him on oath. Further, assessee has also request AO to refer this matter to DVO which was not rejected but nothing has been mentioned in his regard in assessment order. It is fact that assessee sold his residential property to Shri Sajan Singh & Stamp duty valuation was done treating it as inherited property. But after gap of 3 years, sub-register re-valued it as commercial property and enhancement of stamp duty valuation was done. AO employed his own method of calculation for cost indexation and took value as on 01.04.1981 whereas assessee has provided copy of valuation report. AO summarily rejected not only that valuation report but also rejected assessee s request for making reference to DVO u/s 16A for ascertaining correct value of those properties and took fair market value of 2 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur property as on 01.04.1981 which is not correct as AO is not competent authority for valuation of property. There is no reference in assessment order as to why and what are reasons for not referring this for valuation to DVO. Assessee in his support relied on decision of jurisdictional ITAT Jaipur Bench in case of ITO vs. Binod Mehta (supra) ratio of which is directly in favour of assessee. In view of these facts, I am inclined to accept cost of acquisition taken by assessee as correct. In view of facts, addition made by AO is deleted and AO is directed to consider cost of acquisition as adopted by registered value. Assessee s appeal succeeds on this ground. I have duly considered AO s contention and appellant s submission, perused materials on record, duly considered factual matrix of case and also applicable legal position. On perusal of submission made by assessee, it is seen that AO took value at Rs. 65,68,431/- while assessee took it at Rs. 56,53,738/- thus difference of Rs. 9,14,693/- which is because of fact that AO took enhanced valuation on basis of report of Sub-Registrar as on 15.01.2013 for property no.13 by considering its cost as commercial upto date of further inspection Rs. 26,48,512/- instead of Rs. 17,33,819/- (1/2). It is also submitted that on perusal of sale deed, said plot No.13 was continued on rent and tenant was using that residential property for commercial activities and running in name of Sajjan Palace. This issue is also covered by ground No.2 which has been decided in favour of assessee in para No.3.1.2. assessee s appeal succeeds and addition made in this regard is deleted. 2.3 ld AR submitted that assessee, though did not dispute revised value of Rs 65,68,431 in any appeal or revision or any reference but had requested ld. AO to refer matter to Valuation Officer u/s 16A of Wealth Tax Act, 1957, in accordance with section 50C(2). However, Ld. AO out-rightly rejected request and took notional value of Rs. 65,68,431/- as sales consideration. Secondly, assessee opted for Fair Market Value of Rs. 9,00,000/- as on 01.04.1981 as cost of acquisition of capital asset and submitted valuation reports by approved registered valuer as supporting evidence for FMV. Even after submitting report, assessee requested ld. AO to further obtain opinion of Second Valuer i.e. departmental Valuation Officer to put matter beyond doubt. However, AO neither considered registered Valuer s report nor referred valuation 3 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur u/s 55A to EVO and went ahead by substituting its own FMV of Rs. 65,010/- as on 01.04.1981. 2.4 Now referring to ground No.1 of Revenue, ld AR submitted that said ground alleging No specific request was made by assessee during assessment proceedings for reference to DVO is incorrect. Assessee is specifically requested ld. AO that Sub Registrar has valued property by considering it as commercial property. Hence it is not acceptable to assessee, so value assessed by stamp Valuation Authority u/s 50C(1) exceeds fair market value and it has not been disputed in appeal or revision any-where by assessee. So this may kindly be refered to Valuation Officer u/s 216A for ascertaining correct value of property. However,, ld. AO had rejected request of assessee in following words: value adopted by Registering Authority (evaluated value) is final value as per section 50C of Income Tax Act, 1961 which should be taken as sale consideration. In case assessee has any dispute with evaluation value/DLC rate adopted by State Registering Authorities, then assessee is free to challenge same before appropriate appellate authorities. If he did not challenge same and disputes value adopted by Sub Registrar before Income Tax Authorities will not help case of assessee as Income Tax Authorities are not empowered to adjudicate issues relating that value adopted by State Registering authorities. Section 50C is unambiguous on issue as value finally adopted by Registering Authorities would be considered as final sale value of property transacted between parties. Therefore law does not require this office to refer case to valuation cell for determination for value of property. 2.5 In respect of ground No.2 of Revenue, ld AR submitted that said ground alleging that Ld. CIT(A) has erred in deleting addition ignoring his own decision in case of brother of assessee for A.Y. 2004-05 wherein cost of acquisition of similar property.... is not correct due to following facts: 4 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur Ground refers to case of Alok Mukherjee brother of assessee. However issue of FMV as on 901.04.1981 @ Rs. 224/- per sq.mtr. was neither before ld. CIT(A) not adjudicated by her in said decision. Department has wrongly assumed sold properties as Similar Property . property claimed to be similar is one sold to Ram Rikh Joshi/Mohan Joshi in 1980 by father of appellant. said similar property and those sold by assessee had lot of difference which are narrated as under: a) Location: Ram Rikh Joshi property was located in Kachhi Basti, Hathi Babu Ka Ahta, Jaipur. Kachhi Basti which did not have civil facilities cluld not be compared to properties located in good localities. Properties sold by assessee were on 30 ft. width road and 100 to 200 meters away from Main station Road Jaipur. b) Tenancy: Ram Rikh Joshi property was tenanted property since 1959 and it as almost impossible to get same vacated from tenant and therefore, it was finally sold to tenant itself under compelling circumstances in 1980 and at much lower price as compared to prevailing prices of property with vacant possession. c) Title Defects: There wer legal hurdles in effecting sale eof propeprty by seller due to ongoing bproperty related family disputes and this fact was acknowledged in sale Agreement dated 01.09.1980. Property with defective title can not command same price which property with clear title deserves. 2.6 ld AR further submitted that Registered valuer, who has been approved by Income Tax Department vide Registration No. CAT- I/171/CCIT/JPR/T-2/2003-04 had carried out valuation after considering all relevant factors such as land price of adjacent properties, construction thereof, clear title etc. AO if not satisfied with report of Registered Valuer, 5 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur could make reference to Departmental Valuation Officer u/s 55A of Act. Section 55A reads as under: With view to ascertaining fair market value of capital asset for purpose of this chapter, AO may refer valuation of capital asset to Valuation Officer.(a) In case where value of asset as claimed by assessee in accordance with estimate made by registered valuer, if AO is of opinion that value so claimed is at variance with its fair market value. Thus as per amended section 55A(a) w.e.f. 01.07.2012, ld. AO had full power to refer FMV (as on 01.04.981) to Valuation Officer, if he disagreed with valuation of registered valuer. Post amendment ld. AO should not have assumed role of Valuation Officer himself, when law itself, has now provided for reference to Valuation Officer. Besides inherent powers of ld. AO for reference to DVO, assesesee himself had requested ld. AO to obtain fresh valuation by stating that: Therefore valuation provided by approved valuer for cost of acquisition is correct and acceptable, it is binding on you being technical report for calculating land value and cost of construction, even than if any doubts in your mind then second opinion can be obtained. Ld. AO instead of referring matter to Valuation Officer, had called Registered Valuer u/s 131 to his office and took his detailed 12 page long statement under Oath. Registered valuer confirmed same valuation worked, out as per his technical & professional knowledge and competence. However, ld. AO ignoring valuation by registered Valuer and request of assessee to refer matter to DVO, substituted his own valuation which was illegal, arbitrary and whimsical. Hon ble Co-ordinate Bench in case of 6 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur DCIT, Circle- 3, Jaipur vs. Vinod Mehta Jaipur (ITA No.825/JP/2012) having similar factual matrix, has held that AO should had accepted registered valuer s report for FMV as on 01-04-1981. 2.3 We have heard rival contentions and perused material available on record. Undisputedly, assessee had submitted before Assessing Officer that revised valuation of Rs 65,68,431 (as against Rs. 56,53,738/- computed earlier and considered by assessee) by Stamp duty authorities in year 2013 is not acceptable to him and same may be referred to Valuation Officer. It is noted that reason for variation in value relates to and limited to Flat No. 13, Hathi Babu Ka Bagh and in respect of rest all properties, there is no variation. In our view, said claim of assessee before AO is in due compliance with provisions of sub- section (2) of section 50C of Act and on receipt of such request, it is incumbent on part of AO to refer matter regarding valuation of subject capital asset i.e, Flat No. 13, Hathi Babu Ka Bagh to Valuation Officer. Therefore, AO was not correct in stating that Section 50C is unambiguous on issue as value finally adopted by Registering Authorities would be considered as final sale value of property transacted between parties. Therefore law does not require this office to refer case to valuation cell for determination for value of property. AO having ignored request of assessee u/s 50C(2) of Act , it would be in interest of justice and fair play that matter is set-aside to file of AO with direction to refer matter relating to valuation of property Flat No. 13, Hathi Babu Ka Bagh to Valuation Officer as already requested by assessee in original assessment proceedings and consider said valuation as per law after providing due opportunity to 7 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur assessee. Similarly, it is noted that Assessing officer has not accepted fair market value of properties as on April 1, 1981 taken by assessee and while rejecting said valuation, has not referred matter to valuation officer even though same was again requested by assessee. matter relating to determination of fair market value as on April 1, 1981 in respect of all properties is also remitted back to file of AO with direction to refer matter to valuation officer and consider same as per law after providing reasonable opportunity to assessee. In result, with above directions, appeal filed by Revenue is allowed for statistical purposes. Order pronounced in open court on 29/09/2016. Sd/- Sd/- (KUL BHARAT) (VIKRAM SINGH YADAV) Judicial Member Accountant Member Jaipur Dated:- 29/ 09/2016 Pillai Copy of order forwarded to: s 1. Appellant- ITO, Ward 3(2), Jaipur 2. Respondent- Shri Aroop Mukherjee, Jaipur 3. CIT I, Jaipur 4. CIT(A)-I, Jaipur 5. DR, ITAT, Jaipur 6. Guard File (ITA No.224/JP/2015) By order, Assistant. Registrar 8 ITA No. 224/JP/15 ITO Ward 3(2), Jaipur vs. Shri Aroop Mukherjee, Jaipur 9 Income Tax Officer, Ward 3(2), Jaipur v. Aroop Mukherjee