Varinder Kumar v. Commissioner Of Income Tax

ITA No. 88 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 88 of 2010 Date of Decision: 21.7.2010 Varinder Kumar Versus ....Appellant. Commissioner of Income Tax ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. S.K. Mukhi, Advocate for the appellant. ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short, “the Act”) againstthe order dated 24.6.2009 passed by the Income Tax AppellateTribunal, Chandigarh Bench 'B', (hereinafter referred to as “theTribunal”) in ITA No. 44/CHANDI/2009, for the assessment year 2004-05 proposing to raise the following substantial questions of law :- “I.Whether the ITAT was justified in confirmingthe findings of CIT (A) in adopting the rate ofland at Rs.70/- per sq. yd. being the basicallotment rate by the Housing Board as againstthe findings of CIT (A) in adopting the rate ofland at Rs.70/- per sq. yd. being the basicallotment rate by the Housing Board as against II. III. the rate of Rs.1260/- per sq. yd. as adopted byRegistered Valuer which is the Market Valueon the date of Valuation as per the normalpractice and the provisions of law so that sothe findings of the ITAT are perverse and thusbad in law? Whether the ITAT was justified in confirmingthe findings of CIT (A) in ignoring the valuationof working shed at Rs.5,54,400/- as perGovernment Registered Valuers report being inconformation to the existence of the same asauthenticated by him on personal visit/inspection of the impugned property and assupported by the decree of trial Court and copyof Sale Deed confirming the existence of OilMill also so that the findings of the ITAT areperverse and thus bad in law? Whether on the facts and circumstances of thecase, the ITAT was justified in confirming theorder of CIT (A) and thereby reversing theorder of the A.O., qua the value of landwherein the A.O. has accepted the value ofland as declared by the appellant atRs.18.40,130/- without rebutting the findings ofthe A.O., but blindly confirming the findings ofthe CIT (Appeals) which is erroneous and bad in law in view of the fact that even the CIT (A)never conformed to the procedure of lawregarding enhancement of income which isagainst the provisions of law and thus needsconsideration by this Hon'ble Court? IV. Whether on the facts and circumstances of thecase, the findings of ITAT are perverse andagainst the evidences on record thusunsustainable in law? V. Whether the ITAT has misdirected itself inbeing influenced by irrelevant factors andapplying erroneous criteria while deciding theissue in dispute?” 2.Briefly stated, the facts of the case are that the assesseesold a plot by adopting sale consideration of Rs.1,20,00,000/- and thecost of acquisition as on 1.4.1981 was taken at Rs.26,13,850/-. TheAssessing Officer did not accept the cost of acquisition as claimed bythe assessee and also that the cost of acquisition was only with regardto 1/6[th] share initially acquired by Shri Baldev Krishan, the previousowner. Accordingly, the cost of acquisition was taken at Rs.14,19,965/-by the Assessing Officer after applying the cost inflation index and thecapital gain from the sale of plot was computed at Rs.1,05,80,035/-. Onappeal, the CIT (A) applied the rate of land at Rs.70/- per square yardas on 1.4.1981 and enhanced the income from capital gain toRs.1,10,18,953/-. The plea of the assessee was that the cost ofacquisition should be calculated at the rate of Rs.1260/- per square yard as against Rs.70/- per square yard applied by the Assessing Officer.The assessee relied upon the valuation report from a registered valuerand submitted that the allotment rate does not reflect the fair marketvalue. On further appeal, the Tribunal did not accept the plea of theassessee and held as under:- as against Rs.70/- per square yard applied by the Assessing Officer.The assessee relied upon the valuation report from a registered valuerand submitted that the allotment rate does not reflect the fair marketvalue. On further appeal, the Tribunal did not accept the plea of theassessee and held as under:- “......Ostensibly, ascertaining the Fair Market Valueas on 01-04-1981 does involve an exercise ofestimation, so however, the same is required to bedone with reference to the appropriate and crediblematerial. The assessee adopted the rate of land atRs.1260/- per sq. yds valuing it at Rs.18,40,130/-.The CIT (Appeals) has adopted the rate of Rs.70 persq yds leading to a value of Rs.1,02,229/-. In thisconnection, we find that the reason advanced by theCIT (Appeals) to disregard the rate adopted by theassessee is quite justified. The CIT (Appeals)observes that the rate adopted by the assessee,based on the report of the Registered Valuer, iswithout any basis. In this connection, we haveperused the valuation report dated 19.3.2005 of theregistered valuer, a copy of which is placed onrecord. It is discernible from the report, that no basishas been referred to by the Registered Valuer toadopt the rate of land at Rs.1260/- per sq. yds. Onthe contrary, the CIT (Appeals) has referred to therate at which land allotment was being done by the authorities at the relevant point of time. Theevidence sought to be relied upon by the CIT(Appeals), when compared with bald unsupportedassertion of the Registered Valuer, in our view,deserves to be preferred. Even before us, apart frommaking a generalized assertion, no material hasbeen led by the appellant to support the rate ofRs.1260/- per sq yds adopted by the RegisteredValuer. Therefore, on this aspect, in our consideredopinion, the CIT (Appeals) made no mistake inapplying the rate of Rs.70/- per sq yds to value theland as on 01.04.1981 in order to compute the cost ofacquisition for the purpose of Capital Gain. ....Though we agree with the Revenue that there isno direct evidence available but considering thecircumstantial evidence and the certificate of theInspection by the Registered Valuer and in theabsence and the certificate of Inspection by theRegistered Valuer and in the absence of anyclinching adverse evidence on record, in our view,the CIT (A), was not justified in ignoring the value ofthe working shed in its entirety for the purpose ofcomputing the cost of acquisition. The only otheraspect left to be decided is the value of thebuilding/structure to be considered to arrive at FairMarket Value as on 01.04.1981. The assessee has considered it at Rs.7,73,720/- including the workingshed and the CIT (Appeals) has adopted the same atRs.1,09,660/- excluding the working shed. .... We, therefore uphold the action of the CIT(Appeals) in adopting the value of the building/structure at 50% of the value estimated by theRegistered Valuer, with the modification that whiledoing so, the value of the Working shed should alsobe taken into consideration, subject of course, to itbeing valued at 50% of the amount estimated by theRegistered Valuer. We, therefore, set aside theorder of the CIT (Appeals) and direct the AssessingOfficer to re-work the cost of acquisition on the abovelines and recomputed the Long Term Capital gains.”3.We have heard learned counsel for the appellant. 4.Learned counsel for the appellant submitted that the reportof the registered valuer was produced by the assessee but theAssessing Officer and the appellate authorities have not accepted thesame without any basis. 4.Learned counsel for the appellant submitted that the reportof the registered valuer was produced by the assessee but theAssessing Officer and the appellate authorities have not accepted thesame without any basis. 5.We are unable to accept the submission of the learnedcounsel for the appellant. It was not incumbent upon the AssessingOfficer or the appellate authorities to have accepted the report of theregistered valuer merely because there was no other evidence to rebutthe report of the registered valuer. It is not essential that whatevermaterial is produced by the assessee regarding valuation must beaccepted. The authorities below have relied upon the rate of allotment by the Housing Board as against the rate adopted by the registeredvaluer which is alleged to be the market value as on 1.4.1981. Thedifference being extra-ordinary and there being no acceptable materialto support the report, the rate of allotment of the Housing Board wasaccepted on the basis of allotment which could not be held to beirrelevant. No specific instances were produced by the assessee. Inany case the finding of the CIT (A) as well as the Tribunal, against theassessee cannot be held to be a perverse finding. No substantialquestion of law arises in the appeal. 6.Accordingly, the appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 21, 2010gbs (AJAY KUMAR MITTAL)JUDGE