High Court Of Calcutta
CIT vs. Umedbhai International (P) Ltd.
Kalyan Jyoti Sengupta & Kalidas Mukherjee, JJ.
IT Appeal No. 383 of 2009
2nd February, 2010
by the court :
This appeal is sought to be preferred against the judgment and order of the Tribunal dt. 24th July, 2009 on the grounds formulated as stated hereunder :
(A) Whether on the facts and in the circumstances of the case Tribunal erred in law in holding that the AO did not form opinion before referring the matter to the Departmental Valuation Officer without appreciating the fact that the AO did not same in writing in the order sheet dt. 12th Dec., 2005 ?
(B) Whether on the facts and circumstances of the case the Tribunal erred in law in not considering the fact that the IT Act, 1961 does not prescribe manner of forming opinion before referring the matter to the Departmental Valuation Officer under s. 51A of the IT Act, 1961 ?”
We have gone through the judgment and order of the CIT(A) and also the judgment and order impugned before us. While reading the same we are of the view that in this matter no question of law is involved far less substantial one for the following reasons as stated hereunder.
The assessee is a trading company. On 15th Sept., 1977 it purchased an old rice mill with land appurtenant thereto at a consideration of Rs. 2,35,000. As the assessee company could not run the rice mill it during the relevant previous year converted the entire land of rice mill into its stock in trade and started selling the said stock in trade in part by part. The total land holding so controverted, was 8.25 acres. The assessee company got the property valued by registered valuer on 18th April, 2002 to determine the fair market value as on lst April, 1981 and it was valued at Rs. 71,91,850.
The assessee on the basis of registered valuer’s report worked out indexed cost as on 1st April, 2002 at Rs. 3,06,37,281. It was taken opening stock of land in the assessment year under consideration. With the returns the aforesaid valuation report was submitted. However, the AO did not accept valuation and referred the matter to the Departmental Valuer under s. 55A of the said Act to determine the fair market value as on 1st April, 1981 and it was done by the Departmental Valuer at Rs. 18,73,800. The AO did not accept valuation report submitted by the assessee on the ground that the same was not prepared on the basis of any sale instance. Naturally the AO proceeded on the basis of the valuation of the Departmental Valuer which made a lot of difference in assessing tax liability. Basing Departmental valuation report the AO came to conclusion that the assessee had overstated the value of the opening stock at Rs. 2,26,54,893 and instead of accepting the loss, as shown in the return the AO has determined the net profit of Rs. 6,09,025. Thus the conclusion arrived at by the AO based on valuation. Therefore, the point raised before the CIT(A) that the valuation was got to be done by the AO without
compliance of s. 55A of the IT Act, 1961. According to the assessee reference to the valuation officer is without jurisdiction as per-condition for reference was not satisfied. According to the assessee before making any reference the AO has to form opinion that the value so claimed is less than the fair market value without doing so reference is without jurisdiction. On this limited point the CIT(A) allowed the appeal and held that the reference was not done by the AO in compliance of provisions of s. 55A of the said Act. The Tribunal also upheld this finding. Reading the aforesaid question we are not concerned with any other portion of the judgment and order of the learned Tribunal.
The CIT(A) as well as the learned Tribunal has came to fact finding that the Department has not brought any material on record that AO had formed an opinion having regard to the nature of the assessment and considering the other relevant circumstances for making reference to Departmental Valuation Officer under s. 55A of the said Act. This concurrent fact finding of two authorities are not questioned to be perverse. This Court cannot make any endeavour to make any fact finding nor does it wish to do in absence of plea of perversity. In this case the admitted position is that the assessee submitted valuation made by the registered Valuer. Hence cl. (a) of the aforesaid section is applicable in this case which is set out hereunderâ “55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this chapter, the (Assessing) Officer may refer the valuation of capital asset to a Valuation Officerâ (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the (Assessing) Officer is of the opinion that the value so claimed is less than its fair market value. (b) In any other case, if the (Assessing) Officer is of the opinion (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such amount as may be prescribed in this behalf, or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do”. Thus it is clear based on the aforesaid concurrent fact findings that the formation of opinion of the AO that the value claimed by the assessee less than its fair market value is sine qua non. Reasons recorded after order of reference for valuation of the registered Valuer is not the substitute of pre-decisional formation of opinion. Therefore, the learned Tribunal has correctly held accepting the decision of the first appellate authority that on the facts and circumstances of the case there is no applicability of cl. (b) of s. 55A which is meant for other purpose. Both the authorities have considered the well settled principles of law regarding the applicability of s. 55A and various judgments of the Court on this issue have been considered. We have no doubt those judgments have been appropriately applied. When the law is settled and also the provisions of the aforesaid s. 55A is clear we do not think that any point of law needs to be decided in this case.
Hence we are not inclined to admit the appeal. Accordingly, the same is dismissed. All parties shall act on a xerox signed copy of this order on usual undertakings.
[Citation : 330 ITR 506]