Pr. Commissioner Of Income Tax-I, Jodhpur v. Shri Gulab Singh Bhandari, C

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 7/2024 Pr. Commissioner of Income Tax-I, Jodhpur ----Appellant Versus Shri Gulab Singh Bhandari, C-99, Navgul P and T Churaha,Shastri Nagar, Jodhpur. ----Respondent HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE MUNNURI LAXMAN Order 23/04/2024 1.Heard on admission. 2.This appeal has been filed by revenue proposing the following two substantial questions of law:- “1. Whether on the facts and in the circumstances ofthe case, the ITAT is legally justified in confirming theorder of CIT(A) who deleted the addition ofRs.4,95,90,711/- made by the AO under the head ofLTCG ignoring the DVO report accepted by the AO asrequired under the application provision of law? 2.Whether, on the facts and in the circumstances ofthe case, the ITAT is justified in confirming the order ofCIT(A) by accepting the valuation report submitted bythe assesses without considering the DVO report basedon reasonable sound concrete evidence obtained fromsub registrar-II, Jodhpur pertaining actual correct valueof property situated in similar situation and locality?” 3.Learned counsel for revenue submits that CIT (A) as well as ITAT both are completely perverse in ignoring DVO which wasprimarily made basis for making addition by the AO. Therefore, asubstantial question of law arises for consideration. 4.We have gone through the order passed by the CIT (A) andalso the impugned order passed by the Income Tax Tribunal. Aftergoing through the order particularly what has been recorded bythe Tribunal in Paragraphs 8.2 to 9, we find that present is not acase where the Tribunal has completely ignored to take intoconsideration DVO which was made a basis by the AO to makeaddition. The Tribunal has recorded detailed finding as to why theDVO has not been accepted as the evidence in support of revenue’s case with regard to valuation of the property. “8.1 A propose to all the grounds the facts on the issueis that the assessee has sold a property for considerationof Rs.30,00,00,000/- and offered the capital gain ofRs.21,49,18,380/-. The case of the assessee selected forlimited scrutiny through CASS In the assessmentproceeding the Id. AO noted that as the assessee isinherited the property which was acquired in 1959therefore, fair market value as on 01.04.1981 is requiredto be determined so as to compute the capital gain.Therefore, the assessee obtained a valuation report fromthe value who is registered as approved valued by thedepartment. The value has determined the value of theproperty at Rs. 66,77,000/- as on 1981. The valuer hasadopted Rs. 337.11 per sq.ft for residential part of landand Rs. 674.22 per sq.ft for commercial part of plot andaccordingly valuation report was issued. To verify therate, assessing officer u/s. 133(6) called for saleinstances from the office of the Sub Registrar-11 Jodhpurin the locality of Sardarpura, main "C" Road, Jodhpur for1981 period. From the information received the Id. AOnoted that the sale instances of properties. reported bysub Registrar-ll, Jodhpur and situated at C Road.Sardarpura, Jodhpur, the rate of land is worked out at Rs.10 per sq.ft Rs. 54 per sq.ft. and Rs. 55 per sq.ft.respectively which is less then rate of land as valued bythe assessee through authorized valuer. Therefore, ashow cause letter dated 09.09.2016 was issued in thematter. In compliance to the show cause notice theassessee filed reply on 14.09.2016 requesting to providethe copies of the material relied upon by Id. AO andobtained from the sub-registrar so as to file a suitabledefense reply. From the information so received by the idAO noted that the rates adopted by the assessee were 4to 5 times higher than instance he obtained and therefore, viewed that the valuation report furnished bythe assessee is not based on valid comparable. Furtherto this Id. AO deputed the Inspector to make the spotenquiry who submitted his report on the factual aspectand size of plot and the rate adopted. Based on this inputId. AO made reference to DVO for valuation of theproperty who submitted the report and made valuationat Rs. 14,65,023/- as on 01.04.1981 and Rs 4,80,899/-as on 1986 as against the value taken by the assessee atRs. 66,77,000/- as on 01.04.1981 and Rs. 5,73,000/- ason 1986 respectively. The DVO valued the rate of land ason 01.04.1981 @ 54.48 per sq.ft. as against rate of landtaken by the assessee at Rs. 337.11 per sq.ft. forresidential purpose and Rs. 674.22 per sq.ft. forcommercial purpose and as such the total value as on01.04.1981. Finally based on the DVO Id. AO allowed thecost of acquisition to the assessee. The assessee haschallenged the action of the Id. AO on technical groundabout the issue of the notice which was decided againstthe assessee by the Id. CIT(A) and as regards the meritsof the case the Id. CIT(A) has recorded his finding andthe same is reproduced here in below for the sake ofconvenience: “5.2 I have considered that assessment order,submissions of the appellant, facts of the case anddocuments on record and it is noted that one of themain objections of the appellant had been that theappellant was not provided copies of the 3 saledeeds relied upon by the AO and the DVO forarriving at the fair market value of the property inquestion. However, copies of the requisite sale deedswere provided to the assessee on the directions ofthe undersigned. Remand report was also obtainedfrom the AO which has also been considered. Another objection has been that claim of extraappreciation of land made at the rate of 10% onaccount of road-width and 10% on account of plot,being corner plot was not considered whereas, at thetime of purchase of plot no extra charges as claimedon account of road width and corner plot were inexistence. Appellant has also contended that all thethree properties compared by the A.O. none of theproperties is apparently comparable to the propertysold by the appellant. Appellant also contendedfurther that, the property of the assessee waslocated in the main commercial area and it was fourcorner plot and having size 8.5 times of the propertyat Sr. No.1, 24.8 times of the property at Sr.No.2and 25.16 times of the property at Sr. Noβ (supra), as considered by the AO, so it was bound to havehigher price and fair market value. as considered by the AO, so it was bound to havehigher price and fair market value. Appellant also has contended that the propertymentioned at S. No.1 of the table of the 3properties, measuring 1861 sq.ft. was registered atRs. 20,000/- Rs. 10 per sq.ft. and this property wasfree from all encumbrances, whereas the other twoproperties mentioned at S.No. 2 & 3 having area of637 and 628 sq. ft. (supra) respectively were soldfor Rs. 35,000/- each @ Rs. 54 per sq. ft. and Rs. 55per sq.ft. respectively and both of these propertieswere occupied by the tenants since long and asmentioned in the sale deeds the responsibility ofgetting these vacated was on the purchasers of suchproperties. Fact cannot be denied that such factorseffect the valuation of property, which should havebeen taken into account while calculating thevaluation of the property in question andsubsequently arriving at the long term capital gainon sale of this property. Further to above, appellanthas also relied upon certain judgments in support ofhis stand. Considering the above noted facts of thecase I am of the opinion that while arriving at theLTCG with respect to the property in question it isimportant that the comparable properties beconsidered and not the properties which are not atpar with the property under consideration. I notethat the objections raised by the appellant are validand thus, it I am inclined to accept the contention ofthe appellant, in this regard, especially in view of thedetailed differences brought out of the documentsconsidered by the assessing officer vis a vis thesubmissions of the appellant and inferences drawntherefrom. In view of the above, I find force in thearguments of the appellant as placed on file, coupledwith the case laws relied upon by the appellant.Accordingly, LTCG as computed by the appellant asper his return of income deserves to be accepted.Thus, addition made by the AO on this account isdirected to be deleted. Appellant succeeds on thisground. 8.2 From the above finding so recorded and argumentsof both the parties before us we have observed that asthe assessee was not given the sale instances reliedupon by the assessing officer and DVO the same wasprovided to the assessee in the first appellate stage. TheId. AR of the assessee filed a detailed objections to thatand the same was confronted to the assessing officer and 8.2 From the above finding so recorded and argumentsof both the parties before us we have observed that asthe assessee was not given the sale instances reliedupon by the assessing officer and DVO the same wasprovided to the assessee in the first appellate stage. TheId. AR of the assessee filed a detailed objections to thatand the same was confronted to the assessing officer and the relevant comments were called for. Even theassessee has submitted detailed objections to the rateson various aspects such as dimensions of area of land,Nature and size of the property, whether the propertysold is free hold or occupied by the tenant, whether theproperty is having the location advantage that is fourside open or not. Thus, the instances cited and reliedupon by the revenue were differentiated on variousaspects. The Id. AR of the assessee thus, citing all thefacets of the issue contended that in the absence of anyDLC it cannot be said that 3 sale deeds relied upon bythe revenue were registered on the fair market value andwere obviously having the various other factors as size,occupancies, locations advantage etc. (APB-7to13), Eventhese aspects were confronted to the revenue in theremand proceedings. Thus, we see that in theassessment proceeding the reference was made withoutfirst consulting the assessee on the sale instances reliedupon by the revenue. In the proceeding before the Id.CIT(A) the same was done and based on that remandreport there is nothing placed on record by the Id. AOthrough the Id. DR before us that whether there is agrave error on the part of the departmental approvedvaluer while issuing the valuation report which wasappointed by the assessee. Even the Id AO beforemaking the reference to the DVO has not feel itnecessary to call for the comments of the departmentregistered valuer and sought any comments from himfirst before making a case of reference to DVO. We havealso take note of the fact that the assessee is CivilEngineer and sold the property at 30 Cr when theproperty is having the DLC rate 5 Cr. This itself shows theconduct of the assessee white offering the capital gain.We note from the order of the Id. CIT(A) that in theproceeding before him he has directed the assessingofficer to provide the three sale instances which wereearlier not provided. The assessee made a detailedcomments on it and same was forwarded to the Id. AOfor remand report. The Id. CIT(A) has based on the replyof the assessee agreed that thee instances cited none ofthe instances apparently comparable to the property that11 the assessee sold. He further appreciated that thefact that the property of the assessee was located in themain commercial area [this contention support theconsideration that the assessee received 30 cr as againstthe DLC rate of 5 Cr] and having four corner plot andhaving the size of 8.5 times or property relied upon at srno. 1 and 24.8 times of the property at Sr no. 2 and25.16 times of the property listed at sr no. 3 in tablementioned at page 8 of his order. He further observed that in some of the property were occupied by the tenanteven this fact were not disputed by the revenue beforeus. The assessee relying on the judgment of Allahabadhigh court in the case of PCIT Vs. Smt. Vidhi Agarwal 88taxmann.com 306 where in the court observed as under that in some of the property were occupied by the tenanteven this fact were not disputed by the revenue beforeus. The assessee relying on the judgment of Allahabadhigh court in the case of PCIT Vs. Smt. Vidhi Agarwal 88taxmann.com 306 where in the court observed as under 12. In the instant case, the assessee clearly did notchose the value of the cost of acquisition of the assetby the previous owner, which was only Rs. 45,000/-in the year 1970 as her cost of acquisition. In factthe assessee specifically relied on the report of theapproved valuer disclosing the fair market value ofthe assets of Rs.1,05,02,677/-. The AssessingOfficer on his part only objected to the valuationreport for the reason of it not being supported withany evidence However, he perhaps lost sight of thefact thar the expert opinion ie approved valuer'sreport was itself a piece of evidence It was for theAssessing Officer to have led or required suchevidence c come on record as he may have wishedto rely upon if he doubted the correctness of thevalue disclosed in the report of the approved valuer.”chose the value of the cost of acquisition of the assetby the previous owner, which was only Rs. 45,000/-in the year 1970 as her cost of acquisition. In factthe assessee specifically relied on the report of theapproved valuer disclosing the fair market value ofthe assets of Rs.1,05,02,677/-. The AssessingOfficer on his part only objected to the valuationreport for the reason of it not being supported withany evidence However, he perhaps lost sight of thefact thar the expert opinion ie approved valuer'sreport was itself a piece of evidence It was for theAssessing Officer to have led or required suchevidence c come on record as he may have wishedto rely upon if he doubted the correctness of thevalue disclosed in the report of the approved valuer.” 5.A perusal of the aforesaid aspect of order of ITAT clearlyshows that ITAT has taken into consideration DVO report alsoalongwith other material evidence brought on record by both theparties to arrive on its own conclusion of fact with regard to thevaluation of the property. 6.In view of the aforesaid, no case for interference is made outas no substantial question of law arises for consideration of thisappeal. 7.Appeal is accordingly dismissed. (MUNNURI LAXMAN),J 9-Dharmendra Rakhecha/- (MANINDRA MOHAN SHRIVASTAVA),CJ