Reference to DVO under Section 142A Unlawful in absence of tangible material

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:

2. At the beginning of the hearing, it was stated on behalf of the assessee that all the three matters captioned above are inter-connected and involves common issue. Accordingly, all the three matters were heard together for adjudication purposes.

3. We shall take assessee’s appeal in ITA No. 629/Ahd/2019 pertaining to Dashrathbhai G. Patel concerning AY 2013-14 as a lead case for adjudication.

ITA No. 629/Ahd/2019 – AY- 2013-14 (in case of Dashrathbhai G.  Patel

4. The ground of appeal raised by assessee reads as under:

“1. The Ld. CIT(A) has erred in not appreciating the submission as abstracted by him in his appeal order page 2 to 16 para 3 and therefore, inter alia erred in confirming the addition as per page 16, para 4 of the appeal order and therefore, the addition confirmed may please be deleted.

2. That, Ld. CIT(A) has also erred in not appreciating the fact that the whole proceedings started by AO including issuance of notice u/s 143(2) is itself bad in law and void and liable to be quashed.

3. CIT(A) has erred in facts and / or in law in not appreciating the facts that, the appellant has taken the purchased cost as on 01-04-1981 at Rs. 4,14,01,347/- based on registered valuer report and therefore, without pointing out any specific default by AO, reference to DVO is itself bad in law, void, ab initio and illegal and liable to be quashed.

4. CIT(A) has also erred in not appreciating the facts, the reference dated 27-11-2015 made by AO u/s 142A, however, the order of DVO dated 17-03-2016 u/s. 55A and therefore, the whole proceeding of reference and order passed by DVO are illegal and liable to be quashed.

5. CIT(A) has also erred on facts as well as law that, the addition based on the DVO Report u/s 55A is itself bad in law, void, ab initio as stated before him and even otherwise, the provision of 55A is not applicable and therefore, the addition made may please be deleted.

6. Ld. CIT(A) has also erred in not appreciating the facts that without prejudice, no opportunity of hearing given in a reasonable manner form the side of the AO or DVO and therefore, the addition made is required to be deleted.

7. That, Ld. CIT(A) has also erred on facts and / or law that, since no specific defect has been pointed out to the papers submitted before AO and therefore, reference to District Valuation Officer is arbitrarily action and not in consonance with the provision of sec. 142A / 55A and therefore, the whole proceeding is liable to be quashed.

8. That, even otherwise, CIT(A) has erred on merits in sustaining addition made of Rs.4,09,82,163/- as made by AO in an order dated 28-03-2016 and therefore, the addition is required to be “

5. The assessee filed return of income for the AY 2013-14 in question which was subjected to scrutiny assessment. In the course of the assessment, the AO noticed that during the FY 2012-13 relevant to AY 2013-14 in question, the assessee, alongwith other co-owners, had sold an immovable property being non-agricultural land situated at Survey Nos. 530 & 531 at Village Khoraj, District Gandhinagar on 28.03.2013 for a sale consideration of Rs.28 Crores. It was claimed that the said property was an ancestral property devolved and jointly owned with other co-owners. The assessee declared sale consideration of Rs.6 Crore attributable to his share of co-ownership in the property for the purposes of capital gain tax liability. As the capital asset being immovable property became the property of the previous owner and/or the assessee before 1^st April, 1981, the assessee adopted the fair market value (FMV) of the immovable property as on 01.04.1981 and substituted the same as cost of acquisition. The cost acquisition was thus substituted at Rs.48,59,313/- (1/4^th of 1,94,37,250/-) as on 01.04.198 as supported by the valuation certificate dated 16.07.2013 from the Registered Valuer (RV). The FMV as on 01.04.1981 being ‘cost of acquisition’ was increased by applying cost inflation index in terms of Section 48 of the Act. The indexation of Rs.48,59,313/- was worked out to Rs.4,14,01,347/-. The assessee accordingly claimed the ‘adjusted cost of acquisition’ at Rs.4,14,01,347/- based on the FMV of Rs.48,59,313/- (towards his 1/4^th share) as on 01.04.1981 determined as per the valuation carried by the RV namely Dr. Alpesh C. Patel. The AO disputed the FMV adopted by assessee as on 01.04.1981 at Rs.48,59,313/- (being 114^th of the total valuation at Rs.1,94,37,250/-) and invoked the provisions of Section 142A of the Act and made reference to the District Valuation Officer (DVO), Income Tax Department, Ahmedabad vide reference performa dated 27.11.2015 authorizing the Valuation Officer to inspect the property and determine the true and correct value of investment of the said property. In pursuance of such authorization, the DVO issued notice dated 10.12.2015 upon the assessee, however by invoking Section 55A of the Act. The assessee responded vide letter dated 06.01.2016 and filed the requisite documents pertaining to the properties as well as the valuation report of the RV. The assessee also filed objection for valuation reference in respect of assessee vide letter dated 19.03.2016. The DVO passed a draft order dated 08.03.2016 but however inexplicably under s.50C of the Act proposing estimated FMV to be Rs.1,96,800/- as on 01.04.1981. The assessee, in turn, responded to the DVO vide letter dated 14^th March, 2016 strongly objecting to the contents of the draft order. The Valuation Officer thereafter issued another draft order to the assessee dated 09.03.2016, but this time under s.55A of the Act retaining the same estimation of FMV at Rs.1,96,800/-. The assessee once again placed strong objection to the aforesaid corrigendum order under s.55A of the Act dated 09.03.2016 vide its reply dated 21.03.2016. The AO eventually adopted the FMV as on 01.04.1981 of the land at Rs.1,96,800/- as determined by DVO. The indexed cost of acquisition was accordingly reduced in same proportion and assessed at Rs.4,19,184/- as against Rs.1,94,37,250/- adopted by the assessee. The capital gains and consequent assessed income was accordingly re­computed in the light of the reduction in the FMV of cost of acquisition.

6. Aggrieved by the reduct ion in FMV of property as on 01.04.1981 by the AO resul t ing in enhanced capi tal gains on sale of land, the assessee prefer red appeal before the CIT(A) .

7. Before the CIT(A), the assessee reiterated the submissions made before the AO and inter alia questioned as to whether it was permissible for AO to replace the FMV determined by DVO with the RV report obtained by assessee in the facts and circumstances. A legal contention was also raised that in the absence of any reference made by AO under 55A of the Act for estimation of the FMV of the land to DVO, such FMV determined under s.55A of the Act by DVO could not have been adopted by the AO while making the assessment under s. 143(3) of the Act. It was pointed out that the reference was made under s.142A of the Act whereas the DVO has furnished report in terms of Section 55A of the Act which is not permissible in law.

8. The CIT(A) recorded various submissions made on behalf of the assessee in para 3.1 and 3.3 of its order but, however, did not find merit in the plea of the assessee. The action of the AO was thus confirmed vide reasoning as noted hereunder:

“I have carefully considered the assessment order, grounds of appeal raised and submissions of the appellant. The appellant has filed two additional grounds which are decided to be accepted are decision. The appellant has taken two original grounds saying that the reference to DVO was not proper and the DVO has not formed his opinion on the basis of correct facts. Both the grounds are taken together for adjudication. The AO has not accepted the valuation as on 1/04/1981 and referred the matter to the DVO on 27/11/2015. The DVO has sent report on 17/03/2016. The DVO, A’bad after considering the evidence produced by the assessee and after taking in to account all the material gathered by him had estimated the fair market value of the alleged property at Rs. 1,96,800/- as on 01/04/1981. Detailed show cause notice was issued by AO after receiving the report from DVO. The appellant was required to raise objection to the valuation rate before the DVO by filing cogent reasons such as disadvantages of land parcel etc., if any. The argument of the appellant at appellant level is contained in para 4 of assessment order and the same is reproduced as under: –

“The reply of the assessee had been examined but it is not found to be sustainable The DVO had passed order u/d. 55A of the IT. Act after giving opportunity to the assessee. He has also considered the reply of the assessee, evidences produced by him and after taking into account all the relevant materials gathered by DVO, the order u/s. 55A of the I.T. Act has been passed estimating the fair market value at Rs. 1,96,800/- as in 01/04/1981. The assesses had failed to produce anything contrary to the estimation made by the DVO, A’bad. Therefore there seems no force in the assesse’s argument that the order u/s 55A of the I.T. Act is bad-in law and without jurisdiction. The assesse’s argument that the land sold was a N.A. and is not comparable with agriculture land is also not found to be satisfactory and hence not acceptable for the reason that as on 01/04/1981, the said land was agricultural land. It was converted into N.A. much later in 2011. The fair market value has to be on the date of acquisition and not the date of conversion to N.A. In view of the above discussion, the reply of the assessee is not found to be satisfactory, convincing and hence the dame is not accepted.”

The appellant had relied on following case laws:-

– Sampatmal Gadhiya V/s Income tax Officer ITAT Kolkata Tribunal 39 CCH 69.

– Nitin Jayantilal Shah V/s ITO ITAT Ahmedabad Income Tax Act No 1988/AHD/2009 48 SOT 16 Devidayal Rolling and Refineries V/s ITO ITAT MUMBAI d Bench Income Tax Act No 3390/Mum/2013

– Shiv Dass Sawhney V/s. Valuation officer 109 taxman 349 (J&K) Omprakash Bamba V/s. Valuation officer 122 com (J&K)

– ITO V/s Prem Hotel 109 taxman 357 (K&K)

– Suresh Koshy George v. University of Kerala : [1969)1 SCR317

– M/S. Printers House Pvt. Ltd. VS. Wist Saiyadan (Deceased),(1994) 2 SCO 133

– Pfizer Ltd. V/s DCIT Mumbai Tribunal 56 com 260

– Mina Deogun ITAT Kolkatta 19 SOT 183

– CIT V/s Ashven Datla 37 com 261 (AP)

I have gone through the case law relied by the appellant. The appellant has raised technical objections on many counts but the matter of substance is getting ignored in his contentions. The AO has no discretion after a report from DVO and all objections of appellant have been fairly handled by the AO, hence the decision taken by AO is logical and as per I.T. procedure. In such circumstances, case laws relied by the appellant are distinguishable. The original ground No. 1 & 2 are dismissed.”

9. Further aggrieved by the denial of relief by the CIT(A), the assessee preferred appeal before the Tribunal to impugn the action of Revenue authorities.

10. Before the Tribunal, the learned AR for the assessee submitted at the outset that the action of the AO for substitution of FMV of capital asset estimated as on 01.04.1981 was prima facie bad in law as the reference was made to the DVO by the AO for determination of FMV under s.142A of the Act whereas in contradiction to such conferment of jurisdiction under s.142A of the Act, the notice was initially issued by the DVO to the assessee under s.50C of the Act and thereafter by way of corrigendum, the order was framed by DVO under s.55A of the Act. It was thus contended that the DVO has travelled beyond the scope of reference so made to him by AO and took recourse to Section 55A of the Act without any authority in this regard. The valuation estimated by the DVO in the aforesaid order under s.55A of the Act was adopted by the AO completely disregarding the methodology adopted by the RV.

10.1 In support of its objection, the learned AR firstly contended that the scope and ambit of Section 142A of the Act is vastly different from that of Section 55A of the Act. It was contended that the AO could not have resorted to the provisions of Section 142A of the Act for the purposes of valuation of the property, the acquisition of which was made long back and no acquired in the assessment year in question and secondly, the DVO could not have taken recourse to a wholly different provision i.e. Section 55A of the Act when the mandate given to him by the AO was for carrying out valuation in terms of s.142A of the Act. The learned AR contended that the DVO has no independent authority in the matter but derives its power on the basis of the delegations made by the AO in this regard. Therefore, the valuation report framed by DVO under s.55A of the Act without any reference obtained therein from AO is void ab initio and bad in law at the threshold.

10.2 The learned AR next adverted to the valuation report prepared by the DVO and submitted that determination of FMV of property in question as on 01.04.1981 has been made allegedly on comparable sale instance method for land. However, as pointed out vide letter dated 19.06.2017, the DVO has neither given any opportunity to the assessee while adopting so called comparable method nor the comparables adopted by the DVO are comparable at all. Making reference to letter dated 19^th June, 2017, it was pointed out that all comparable cases adopted by the DVO are not of old tenure agriculture tilling land at all. The cases adopted by the DVO are not relevant on facts as they are materially different in character as explained in the aforesaid letter appearing at page nos. 70 to 71 of the paper book.

10.3 It was thereafter submitted that the basis adopted by the RV that of reverse calculation of indexation is approved by Kolkata Bench in Smt. Mina Deogun vs. ITO 117 TTJ 121 (Kol.) and Pfizer Ltd. vs. Dy.CIT 153 ITD 433 (Mum.) and CIT vs. Ashven Datla 37 taxmann.com 261 (AP). The learned AR further added that the land belonging to assessee in question was a nonagricultural land and thus not comparable with the instances quoted on behalf of the Revenue.

10.4 The learned AR referred to the decision of the Delhi Tribunal in Sumit Khurana vs. ACIT ITA No.1877/Del/2011 order dated 15^th July, 2011 for the proposition that no reference can be made under s.142A of the Act to the Valuation Officer for estimating the full value of consideration of the property for the purpose of computation of capital gains under s.48 of the Act. It was also contended that reference to Valuation Officer under s.142A of the Act could be made for the purposes of estimating the value of any investment referred to in Section 69, 69A or 69B of the Act. Section 48 of the Act which provides for mode of computation of income chargeable under the head ‘capital gains’ provides for reference to valuation of capital asset only under s.55A of the Act for the purposes of determination of FMV of capital asset for which circumstances are not shown to be existing in the instant case. The learned AR further referred to the decision of Ahmedabad Tribunal in ITO vs. Chandrakant & Ors. in ITA No. 3139/Ahd/2009 & Ors. order dated 08.04.2011 for the proposition that Section 142A of the Act is limited in its scope and confined to the provisions of Section 69 etc. and consequently, Section 142A of the Act could not be pressed into service by AO to determine FMV as on 01.04.1981 for the purposes of computation of ‘capital gains’ under s.48 of the Act. The learned AR for the assessee also relied upon the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Manjulaben M. Unadkat (2015) 55 taxmann.com 62 (Guj) and U. J. Matain (1994) 209 ITR 568 (Guj) to submit that it was incumbent upon the AO to bring something on record indicating that the assessee has declared incorrect FMV to enable him to invoke Section 55A of the Act. It was thus submitted that in the absence of any material in this regard a reference could not have been made under s.55A of the Act either. To this extent, the AO was right in not taking shelter of Section 55A of the Act. The learned AR further relied upon the decision of the Tribunal in Vivek Bose vs. ITO (2015) 152 ITD 745(Kolkata-Trib.) wherein same view has been echoed. The learned AR further referred to the decision in the case of Prem Hotel vs. ITO (1997) 93 taxman 237 (J&K) for the plea that reference to Valuation Officer under s.55A of the Act is not permissible without giving the assessee an opportunity of being heard and without disclosing reason for such reference. The learned AR accordingly submitted that while the AO has, rightly, not made any reference under s.55A of the Act, he could not have done so either. The learned AR reiterated that reference has been made under s.142A of the Act which is clearly without jurisdiction.

10.5 The learned AR accordingly submitted that the CIT(A) has misdirected himself in law and on facts in endorsing the action of the AO with a very cryptic order disregarding the well settled law in the matter of valuation. The CIT(A) has not given any finding on plethora of decisions referred to and relied upon in the course of appellate proceedings. The facts towards the impugned land being nonagricultural land and thus not comparable has also been cursorily brushed aside in derogation of the legitimate expectations. The learned AR accordingly urged that action of the lower authorities be reversed and claim of the assessee be restored.

11. The learned DR for the Revenue, on the other hand, relied upon the order of the AO as well as the CIT(A). In furtherance, it was pointed out that the issuance of notice under s.142A of the Act is not a legal impediment for applying the FMV as determined by the DVO. It was submitted that the DVO has demonstrated over valuation of FMV as on 01.04.1981 in a rational manner which does not call for any interference.

12. We have carefully considered the rival submissions. The moot controversy in the instant case revolves around correctness of the action of the Revenue in substituting FMV of capital asset as on 01.04.1981 determined by the Registered Valuer appointed by the assessee with the FMV determined by the DVO on a reference made by AO concerning land sold during the year.

12.1 To begin with, we note that the provisions of Section 55 of the Act, at the relevant time, provided that for computation of capital gains, an assessee was entitled to an option to adopt FMV value of asset as on 01.04.1981. The assessee is also entitled to claim deduction for cost of improvement incurred after 01.04.1981, if any. Section 48 of the Act correspondingly provided for applicability of cost of inflation index on such FMV for claiming enhanced deduction towards cost of acquisition also.

12.2 The assessee in the instant case sold certain parcels of co-ownership ancestral land (acquired prior to 01.04.1981) situated at Village Khoraj, Gandhinagar, Gujarat, the sale consideration whereof as attributable to the assessee on account of co-ownership undisputedly stands at Rs.6 Crore. The assessee adopted the FMV (of the co-ownership properly so jointly held land) as on 01.04.1981 as per option available to him. The FMV as on 01.04.1981 was determined at Rs.4,14,01,347/- based on RV report. The cost of acquisition attributable to assessee based on the RV report was computed at Rs.48,59,313/- in proportion to its co-ownership right. The assessee claimed indexed cost acquisition at Rs.4,14,01,347/- in terms of Section 48 r.w.s. 55 of the Act. The 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.

12.3 The AO has disputed the FMV of cost of acquisition adopted by the assessee as on 01.04.1981 i.e. Rs.48,59,313/- and consequential indexed cost of Rs.4,14,01,347/- determined on the basis of FMV as per RV report. The AO elected to invoke provisions of s.142A of the Act and proceeded to make reference to the DVO. The ground for reference under s.142A of the Act appears to be that the matter was referred to determine correct valuation of the land having regard to the fact that the property is an ancestral property acquired prior to 01.04.1981 by the previous owner as no purchase documents are available and the assessee has adopted the cost of land to be FMV as on 01.04.1981 with reference to the valuation report of the RV. When read in verbatim, the reference was made under s.142A of the Act to elucidate the correctness of cost of investment as on 01.04.1981 claimed by the assessee. In pursuance of such reference under s.142A of the Act, the DVO furnished a valuation report dated 17.03.2016 to AO albeit under s.55A of the Act whereby the FMV of the property as on 01.04.1981 was determined at Rs.1,96,800/-. The 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.

13. On these facts, the assessee has raised multiple objections which we shall deal with hereunder:

13.1 The first and foremost legal objection raised by the assessee is that while the reference for valuation has been made by AO under s.142A of the Act, the DVO has passed the order under s.55A of the Act which is prima facie unsustainable and bad in law. Having regard to the legal objection, we take notice of the provisions of Section 142A of the Act which has been invoked for determination of FMV in terms of Section 142A of the Act as applicable to the relevant assessment year in question. We observe that power to make reference under s.142A of the Act is not general but is restricted to the matters concerning Section 69, 69A or 69B of the Act. We also pause to take note of circular no. 1/2015 dated 21.01.2015 explaining amendments carried out by Finance (No.2) Act, 2014 whereby provisions of Section 142A of the Act was substituted w.e.f. 01.10.2014. In the aforesaid circular also, Board did not express any material departure from the erstwhile provision except that erstwhile provisions of Section 142A of the Act did not envisage rejection of books of accounts as a pre-condition per se before making reference to Valuation Officer. The time limit for furnishing report by the valuation report was also found absent by the Board. Thus, the scope of erstwhile provisions of Section 142A of the Act as well as the substituted provision continue to envisage estimation of the value of any investment referred to in Section 69, 69A or 69B of the Act as its object. As a necessary concomitant, the scope of inquiry towards FMV of property or investment would be governed by the corresponding scope available under s. 69, 69A or 69B of the Act. As a corollary, the alleged overvaluation, in the value of investment could not be verified under the ambit of Section 142A of the Act where the subject matter of examination under s. 69, 69A or 69B of the Act is understatement in value of investments acquired during the year. Notably, the AO herein seeks to impugn the over valuation (in contrast to undervaluation) in the cost of property acquired. Such act of challenging alleged overvaluation is apparently outside the confines of Section 69, 69A or 69B of the Act. Thus, the reference under s.142A of the Act could not have been made for finding out the extent of alleged overstatement in the value of investment. The reference under s.142A of the Act to the DVO requires to be quashed on this ground alone. We however also simultaneously take note of the fact that Section 69 of the Act etc. would govern the investment made in the relevant financial year in question alone. A property acquired or investment made in the earlier financial years are outside the scope of additions under s.69 of the Act etc. for the purposes of assessment of the undisclosed income of a given assessment year. In the present case, Section 142A of the Act has been invoked to ascertain the correctness of the cost of acquisition of land acquired prior to 01.04.1981 i.e. an investment which was not made in FY 2012-13 relevant to AY 2013-14 in question. Such reference under s.142A of the Act is thus not tenable on this score too. The reference under s.142A of the Act thus defies the basic structure of mandate available in law and hence cannot be countenanced.

13.2 The reference made under s.142A of the Act, as noticed above, is also unsustainable for yet another reason that is, the AO merely seeks elucidation of the valuation carried out by the RV without reference to any adverse material against such valuation of RV. The RV and DVO, both performs the same task of value estimation notwithstanding that a RV work in private capacity but however are also recognized by the Income Tax Department under a license issued by the Board. Therefore, a report framed by the RV cannot be summarily demeaned as a spurious document or something from anybody from the street. Hence, there must be some justifiable reason to trigger a caution in the mind of a quasi judicial authority before embarking upon reference to another valuer.

13.3 It may be pertinent to observe here that such valuation need not be conservative or for the advantage of the Revenue but it needs to be fair. The exercise of valuation is technical and complex issue which should be appropriately left to the wisdom of the experts, having regard to many imponderables which enter the process of valuation. A valuation carried out by the expert cannot be assailed unless there is some material to show a tangible reason which demonstrates fundamental wrong approach or a fundamental error going to the root of the matter. It is so because valuation is an art, besides being a science and is subjective and thus cannot be expected to be absolute. There is always an element of subjectivity involved in the exercise of valuation and some amount of guesswork is typically involved in such exercise.

13.4 The RV in the instant case has adopted reverse calculation of indexation which method has been approved by the co-ordinate bench in Pfizer Ltd. (supra), Smt. Mina Deogun (supra) and Ashven Datla (supra). Therefore, the method adopted by the RV cannot be brushed aside in a light hearted manner in the absence of any compelling reasons. As noted earlier, the AO while making reference to DVO has not provided any reasons for doing so except to obtain elucidation on correct value. Such reasons cited for issuance of reference under s.142A of the Act for investment made in earlier year is clearly nondescript and unspecific. The provision of Section 142A of the Act cannot be invoked without assigning some tangible basis giving rise to doubt on the FMV adopted by the assessee. The Section does not confer any unfettered discretion on the AO to make such a reference for the sole reason that FMV has been substituted for the actual cost which act was done as per the statutory mandate of Section 55 of the Act. It is a fundamental principle of law that merely because there exists certain enabling provision in the statute, a quasi judicial authority cannot exercise the power in all cases and in all circumstances without application of mind. Objectivity and fairness in reaching any such decision for exercise of power is pre­condition even where the law does not explicitly provide for such stipulation. At this juncture, we are also required to take note of the allegation made by the AO that no evidence in connection with the claim of indexed cost of acquisition was furnished nor any valuation report in respect of alleged property was made available by the assessee. We however find substance in the plea of the assessee in rebuttal thereto that the valuation report was duly provided to the AO as well as to the DVO at the threshold. The correspondences made by the assessee clearly show that the AO was made privy to the valuation report. This aspect is also re-enforced by the reference made under s.142A of the Act itself where the AO himself has claimed the estimated cost of investment as per the assessee to be Rs.48,59,393/- as on 01.04.1981 which squares with the valuation report of the RV of the assessee. The other objection of AO towards absence of documents on actual cost of acquisition of property sold is also irrelevant. The actual cost of acquisition was not material since the property was acquired before 01.04.1981 and consequently FMV as on 01.04.1981 could be adopted to be the cost of acquisition for the purposes of subsequent indexation and determination of capital gains chargeable to tax. Thus, the reference made under s.142A of the Act for twin reasons noted above is not sustainable in the facts of the case. The reference under s.142A of the Act is also uncalled for as the unaccounted income, if any, in relation to assets acquired in earlier years could not be brought to ambit of taxation under s.69, 69B etc. of the Act in the impugned assessment year.

13.5 It will also be pertinent to note that Section 55A of the Act is a comprehensive Section for making a reference to DVO for the purpose of capital gains under Chapter IV-E of the Act concerning taxability of capital gains on transfer of capital asset. The FMV of capital asset as on 01.04.1981 is squarely governed by Section 55A of the Act. The AO thus could make appropriate reference under s.55A of the Act subject to the fulfillment of the pre-requisites of Section 55A of the Act. Needless to say, a specific provision would override general provision.

13.6 Notwithstanding the fact that no reference was made by AO under s.55A of the Act, the reference for valuation of capital asset is also tested on the touchstone of specific enactment codified in Section 55A of the Act. Section 55A of the Act defines the scope of its applicability for reference to Valuation Officer in circumstances as spelt out in sub­section (a) & (b) thereto. Section 55A(a) is not applicable on facts as the AO did not demonstrate any cogent reason to enable him to form an opinion towards variance/over valuation in the FMV of land in question. Section 55A(b)(i) of the Act concerns a situation where the FMV of the assets exceeds the value of asset claimed by the assessee. In the instant case, the FMV is sought to be lowered by AO than what is claimed by the assessee. Therefore, Section 55A(b)(i) of the Act is not relevant in the facts of the case. We now advert to Section 55A(b)(ii) of the Act which enables the AO to take recourse to Section 55A of the Act only on fulfillment of prescribed parameter therein i.e. nature of asset and other relevant circumstances. The AO has not pointed out existence of any such valid circumstance which could empower him under s.55A of the Act. The AO has merely issued reference to DVO under s.142A of the Act without any background or reasons and the Valuation Officer, in turn, has acted in a perfunctory manner and travelled beyond the jurisdiction mandate conferred within the sweep of Section 142A of the Act and has passed an order under s.55A of the Act without any reference therein.

13.7 It does not require to underscore that a DVO derives its authority in law which flows from the mandate as delegated by the AO. The Valuation Officer cannot exercise the power of valuation independent of such mandate. Where an express mandate was given under s.142A of the Act, the Valuation Officer could not have travelled in the arena of Section 55A of the Act 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. As further noted, the AO could not invoke powers vested under s.142A of the Act either in the given facts of the case. The RV has adopted reverse calculation of indexation which method has been approved by the co-ordinate bench in some cases as noted above. The AO has failed to bring on record any adversities in applicability of such method but has simply adopted the FMV determined by the Valuation Officer on the strength of some comparable instances under a different provision without any mandate. On facts too, the assessee has claimed that the case of the assessee is not comparable with such instances having regard to the different nature of land and different complexities. The AO has also failed to observe the principles of natural justice while confronting the findings of the DVO in as much as the copy of order of the DVO was also not provided at the time of hearing.

13.8. In totality, the action of the Revenue is seriously marred by multiple and intrinsic legal infirmities and violation of principles of natural justice. The assessee, on the other hand, has discharged its primary onus to support the FMV as on 01.04.1981. Thus, in our view, the jurisdictional defect in issuing firstly unlawful reference under s.142A of the Act and secondly, adopting FMV as per the valuation order passed under a wholly different Section i.e. 55A of the Act in gross contradiction of mandate is prima facie not curable. Coupled with this, the valuation report of RV could not be successfully demonstrated to be unworthy of acceptance. We thus set aside the order of the CIT(A) and direct the AO to restore the claim of the assessee.

14. In the result, the appeal of the assessee in ITA No.629/Ahd/2019 (Dashrathbhai G. Patel) is allowed and all other captioned appeals are also allowed for similarity of facts and circumstances.