Dashrathbhai G. Patel Vs DCIT (ITAT Ahmedabad)
Unlawful reference u/s Sec 142A in absence of tangible material and adopting FMV under different section 55A was in gross contradiction of law
Conclusion: Since AO had merely issued reference to DVO under s.142A without any background or reasons and the Valuation Officer, in turn, had conferred within the sweep of Section 142A and had passed an order under s.55A without any reference therein. Thus, the jurisdictional defect in issuing firstly unlawful reference under s.142A unless there was some material to show a tangible reason which demonstrated fundamental wrong approach in valuation by assessee and secondly, adopting FMV as per the valuation order passed under a wholly different Section i.e. 55A in gross contradiction of mandate was prima facie not curable.
Held: Assessee had sold certain parcels of co-ownership ancestral land (acquired prior to 01.04.1981). Assessee adopted the FMV as on 01.04.1981 based on RV report. Assessee claimed indexed cost acquisition at Rs.4,14,01,347/- in terms of Section 48 r.w.s. 55. Assessee accordingly offered surplus towards taxation under capital gains having regard to the index cost of acquisition of land with reference to the valuation made by the RV as on 01.04.1981. AO elected to invoke provisions of s.142A of the Act and proceeded to make reference to the DVO. In pursuance of such reference under s.142A, the DVO furnished a valuation report dated 17.03.2016 to AO albeit under s.55A whereby the FMV of the property as on 01.04.1981 was determined. AO adopted the FMV as on 01.04.1981 determined by the DVO and enhanced the taxable capital gain by scaling down of the cost of acquisition i.e. FMV as on 01.04.1981 as determined by the DVO vis-a-vis the RV. In the instant case, FMV was sought to be lowered by AO than what was claimed by assessee. AO had not pointed out existence of any such valid circumstance which could empower him under s.55A . He had merely issued reference to DVO under s.142A without any background or reasons and the Valuation Officer, in turn, had acted in a perfunctory manner and travelled beyond the jurisdiction mandate conferred within the sweep of Section 142A and had passed an order under s.55A without any reference therein. Where an express mandate was given under s.142A, the Valuation Officer could not have travelled in the arena of Section 55A to determine the FMV. However, as noted earlier, the AO himself has not chosen to exercise powers under s.55A of the Act and therefore, we do not require to delineate any further on this aspect. AO had failed to bring on record any adversities in applicability of such method but had simply adopted the FMV determined by the Valuation Officer on the strength of some comparable instances under a different provision without any mandate. In totality, the action of the Revenue was seriously marred by multiple and intrinsic legal infirmities and violation of principles of natural justice. Thus, the jurisdictional defect in issuing firstly unlawful reference under s.142A and secondly, adopting FMV as per the valuation order passed under a wholly different Section i.e. 55A in gross contradiction of mandate was prima facie not curable.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeals directed at the instance of three different assessees arise from the respective orders of the Commissioner of Income Tax (Appeals) (`CIT(A)’) against different assessment years as tabulated below:
