Jayendrabhai Kantilal Patel Vs ITO (ITAT Ahmedabad)
Ahmedabad ITAT Quashes Addition Triggered by Invalid 55A Reference – Fresh Evidence from Co-owner’s Case & Binding Gujarat HC Law Establish AO’s Referral as Illegal
Ahmedabad tribunal allowed the Assessee’s appeal by holding that the AO lacked jurisdiction to make a reference to the DVO u/s 55A for determining FMV as on 01.04.1981, since the Assessee had already adopted the cost on the basis of a Registered Valuer’s report & the pre-2012 law permitted reference only when the value claimed was less than FMV, not when it was more. The AO had reduced the valuation drastically by adopting DVO’s figure of Rs.3,03,000/- without giving any opportunity of hearing & computed LTCG of Rs.47,14,403/- being Assessee’s 50% share. CIT(A) confirmed the addition.
Before the Tribunal, the Assessee relied on binding Gujarat High Court rulings in Hiaben Jayantilal Shah & Gaurangiben S. Shodhan, as well as the decision in the co-owner’s identical case where NFAC deleted the addition after holding that the 55A reference was legally incompetent for AY 2011-12. The ITAT noted that the Registered Valuer’s FMV was higher than FMV, that clause (a) of 55A applied exclusively, that the AO could not invoke clause (b), & that the amendment substituting “is at variance with FMV” w.e.f. 01.07.2012 could not apply retrospectively. Since the AO’s reference itself was void, the DVO’s report had no legal sanctity, & the entire computation collapsed. Following binding Gujarat HC law & fresh evidence from the co-owner’s appellate order, ITAT directed recomputation of capital gains without considering the DVO’s report & allowed the appeal in full.
