Rekhaben D.Contractor, Ahmedabad vs Department Of Income Tax

Date of pronouncement :24/6/2015/06/2015 ITA No.1702/Ahd/2011 2 Asst. Year 2007-08

ORDER

PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER.

This is an appeal filed by the Revenue against the order of ld.

CIT(A) dated 26/04/2011 for AY 2007-08. The only effective

ground raised by the Revenue in its appeal is as under :-

1. The ld. CIT(A) has erred in law and on facts in holding that the reference made by the Assessing Officer under section 55A to the DVO was without jurisdiction, thereby deleting the addition of Rs.70,16,582/- on account of long term capital gain from the sale of plot.

2. The facts of the case are that the assessee's father-in-law had

purchased the property in question sometime in 1975, and by his

Will dated 1982 left the property equally to his son and daughter-

in-law. On his demise in 1995, the property devolved on the

assessee and her husband. Since the property would be considered

as acquired prior to 1981, the assessee opted to value the same as

on 1.4.1981 to arrive at the cost of acquisition. It was also noted ITA No.1702/Ahd/2011 3 Asst. Year 2007-08

that though the half share of the assessee was sold for a net

consideration of Rs.2,11,11,550, the property was not reflected in

the balance-sheet of the assessee as on 31.03.2006. Further, no

wealth tax return had been filed. A query in this regard resulted in

the reply that all the joint properties with the husband were

reflected in a separate joint balance sheet of the two. This practice

is contrary to the requirements of the Wealth-tax Act, since these

assets have remained un-assessed to wealth tax in the hands of

either the assessee or her husband.

The matter was referred to District Valuation Officer and on

the basis of DVO's report the AO made the impugned addition of

Rs.70,16,582/-.

The assessee went in appeal before the CIT(A) and the

CIT(A) after considering the assessment order and the submissions

of the assessee and by following the decision of the Jurisdictional

High Court in the case of Hiaben Jayantilal Shah vs. ITO & ITA No.1702/Ahd/2011 4 Asst. Year 2007-08

Anr.310 ITR 31 (2009) (Guj) deleted the addition of

Rs.70,16,582/- by observing as under :-

''2.3 I have considered the facts of the case, assessment order and appellant's submission. It is not in dispute that appellant was 50% owner of the land along with her husband Shri Deepak S. Contractor. The identical addition was made in the case of Deepak S. Contractor and CIT(A) XV, Ahmedabad passed order on 20.12.2010. The relevant extract of the order is quoted below :-

"During the course of appellate proceedings it was argued that sale consideration was not doubted by the AO that according to the AO the value of land as on 1.04.1981 was less than what was calculated by the appellant for the purpose of taking out LTCG._____

6. it is seen that honourable Gujarat High Court decision in the case of Hiraben J. Shah versus ITO 310 ITR 31 is applicable in the case of appellant wherein it was held -

The estimated value proposed by the DVO is at Rs.397000 which is less than the fair market value shown by the assessee as on 1.04.1981. Therefore, clause (a) of section 55A cannot be made applicable. Clause (b) of section 55A can be invoked only in any other case namely when the value of asset claimed by the assessee is not supported by an estimate made by registered valuer.

In the conclusion honourable High Court stated as under :-

"Reference made by the AO under section 55A to DVO on 26 April 1996 for determining the value of property as on 1.04.1981 and on the date of sale was without jurisdiction for the reasons that return was filed by the assessee only on 27.08.1986, value of property as on 1.04.1981 as declared by the assessee supported by estimate of registered valuer was higher than estimated by DVO and no opinion was formed by the AO that the fair market ITA No.1702/Ahd/2011 5 Asst. Year 2007-08 value as claimed by the assessee was required to disturb because prescribed parameters were fulfilled."

7. After going through facts of the case, the AO is directed to delete the addition as honourable Gujarat High Court decision 310 ITR 31 is directly applicable in the appellant's case as mentioned in para -6 above. The value of the property was declared as per registered valuer's report by the appellant and the value estimated by the DVO was less than the declared by the appellant, therefore, 310 ITR 31 is applicable.

8. In the result the appeal is allowed.''

My learned colleague CIT(A) XV, Ahmedabad in the case of appellant's husband who is joint owner of the property held that in view of the jurisdictional High Court decision, the reference made by the assessing officer under section 55A to DVO is without jurisdiction. Since the value as on 1.04.1981 was shown by the appellant higher, reference to DVO cannot be made by the assessing officer and accordingly the addition made purely on such DVO's report cannot be sustained. Respectfully following the decision referred above, the change in value as on 1.04.1981 made by the assessing officer is not confirmed. The addition is therefore deleted.''

The Revenue is in appeal before us.

3. The ld. DR supported the order of Assessing Officer and

submitted that the ld. CIT(A) has wrongly deleted the addition. His

order may be set aside and that of the AO be restored. ITA No.1702/Ahd/2011 6 Asst. Year 2007-08

On the other hand, the ld. AR relied on the order of ld.

CIT(A) and submitted that the ld. first appellate authority has

rightly deleted the addition. He also submitted that the issue is

covered in favour of the assessee by the decision of the Tribunal

vide order dated 20.03.2015 in ITANo.284/Ahd/2011 for AY

2007-08 in the case o DCIT vs. Shri Dipakbhai Shankarlal

Contractor.

4. We have considered the rival submissions and gone through

the facts and circumstances of the case. We find that a similar issue

came up before the Tribunal in the case of DCIT vs. Shri

Dipakbhai Shankarlal Contractor, husband and co-owner of the

same property. The Tribunal, wherein after considering the facts

and circumstances of that case deleted the addition made by AO

with the following observation:-

'7. We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) while granting the relief to the assessee had relied on the decision of Hon'ble Gujarat High Court in the case of Hiraben Jayantilal Shah vs. ITO 310 ITR 31 (Guj) and had held that the ratio of the aforesaid decision was ITA No.1702/Ahd/2011 7 Asst. Year 2007-08

directly applicable to the case of Assessee. Before us, Revenue has not brought any contrary binding decision nor could controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed."

In the case before us the facts and circumstances are identical to

that of Shri Dipakbhai Shankarlal Contractor (supra). Therefore,

following the above order of the Tribunal, we observed that ld.

CIT(A) has rightly deleted the addition. There is no infirmity in his

order. We uphold the same. The ground raised by the Revenue is

dismissed.

5. In the result, the appeal filed by the Revenue is dismissed.

Pronounced in the open Court on this the 24th day of June, 2015 Sd/- Sd/-

(Anil Chaturvedi) (Shailendra Kumar Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated :24/6/2015

Mahata/- ITA No.1702/Ahd/2011 8 Asst. Year 2007-08

Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. The CIT concerned 4. The CIT(A) concerned 5. The DR, ITAT, Ahmedabad 6. Guard File BY ORDER

Dy.Registrar,ITAT, Ahmedabad

1. Date of dictation: 09/06/2015

2. Date on which the typed draft is placed before the Dictating Member: 10/6/2015 other Member:

3. Date on which approved draft comes to the Sr. P. S./P.S.:

4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________

5. Date on which the fair order comes back to the Sr. P.S./P.S.:

6. Date on which the file goes to the Bench Clerk: 24/6/2015

7. Date on which the file goes to the Head Clerk:

8. The date on which the file goes to the Assistant Registrar for signature on the order:

9. Date of Despatch of the Order: