Diva Singh, J.M. - (1.) THE assessee has filed the present miscellaneous application under Section 254(2) against the order dt. 14 Nov., 2002, in ITA No. 1650/Del/2002 pertaining to 1998-99 assessment year.
(2.) Before adverting to the specific grievance of the assessee, it would be appropriate to briefly refer to the facts of the case which are discussed in paras 3 to 6 of the impugned order which read as under : "3. The/relevant facts of the case are that the assessee filed his return declaring a total income of Rs. 2,30,930. The assessee declared capital gain on sale of property and income from other sources. The capital gain was shown on account of sale of plot No. 99, measuring 173.33 sq. yards, Dera Gaziklour Distt. Refugee House Building Co-operative Society Ltd., Delhi known as Taruh Enclave, Pitam Pura, Delhi for a sum of Rs. 4,02,000 to Shri Chanan Dass S/o Rewal Dass, r/o AG-26, Shalimar Bagh, Delhi-110 052. After indexing, the cost declared was Rs. 187,570 The AO considered the sale price of the plot to be low. Accordingly, the Income-tax inspector of the ward was deputed to visit the site and make local enquiries and thereafter submit his report. A perusal of the assessment order bears out that the inspector of the ward contacted shop keepers and residents of the area and submitted his report saying that the value of the plot was understated and the prevailing rate was much higher. In view of the same, the matter was referred to the District Valuation Officer, IT Department under Section 55A of the Act for determining the fair market value of the plot on the date of the sale i.e. 6th June, 1997. The AO made a reference to the valuation cell; invoking Section 55A relying upon Jindal Strips Ltd. v. ITO (1979) 116 ITR 825 (P&H)(FB). Reliance was also placed upon William De Noronha v. Asstt. CIT (1997) 227 ITR 27 (All). 4. The Valuation Officer, Unit-III; IT Department determined the value of the plot at Rs. 24,10,621 on the date of sale. As per the assessment order, the Valuation Officer before determining : the fair market value of the plot contacted the assessee and asked for the agreement to sell and purchase documents. Referring to Col. 3.2 of the Valuation Report, the AO observed that the assessee did not furnish original allotment/purchase of plot evidence and no other document other than the sale purchase agreement had been submitted by the assessee. The Valuation Officer gave notice to the assessee vide No. VOI/ND/ Co-01/2001-01/100 dt. 17th Nov., 2000. On 22nd Nov., 2000, an adjournment request was received on behalf of the assessee. Thereafter, further reminder on 1st Dec., 2000, was sent by the Valuation Officer and inspection notice dt. 8th Dec., 2000, was also sent. The inspection of the plot on 12th Dec., 2000, was done in the presence of Shri Praveen Garg, CA of the assessee and the Valuation Officer along with R.S. Sharma, JE and S.R. Gupta, JE. Thereafter notice under Sections 55A and 16A(4) for filing objection was issued to the assessee on 15th Jan., 2001, and subsequently objections dt. 23rd Jan., 2001 and 24th Jan., 2001, were received by the Valuation Officer and according to the AO, duly taken into account by the Valuation Officer. The AO observed that the Valuation Officer adopted the method of valuation by comparing sale instances in similar localities. The Valuation Officer quoted sale instance dt. 18th Nov., 1996, by DDA auction of plot No. E-15, Prashant Vihar, Pitam Pura, Delhi, land area 121.67 sq. mtr. of Rs. 21,01,000 i.e. @ Rs. 17,527 per sq. mtr. leasehold residential plot. Commenting upon the adjustments made by the Valuation Officer, the AO observed that the adjustments of situation/location were allowed at the rate of 10 per cent on account of size at 0.10 per cent The value of the plot as such was taken at Rs. 15,757 per sq. mtr. for the said plot at Rs. 22,83,662. 5. The AO further observed that before determining the aforesaid value, the Valuation Officer duly took into consideration the assessee's objections mentioned in his letter dt. 23rd Jan., 2001. The justification of the Valuation Officer is reproduced at p. 3 vide paras 2(a) to 3(c) of the assessment order. Accordingly, the AO observed that the decision of the Valuation Officer determining the fair market value of the plot on the said date at Rs. 22,83,662 was communicated to the assessee who in his reply, submitted letter dt. 5th March, 2001 which was also taken into consideration by the AO. 6. Accordingly, relying upon Killick Nixon & Co. v. CIT (1967) 66 ITR 714 (SC), the AO was of the view that the onus lies upon the assessee to prove, that whatever amount mentioned in the sale deed is correct. The AO accepted the valuation report of the Valuation Officer and capital gain was worked out as a result of which addition was made to the extent of Rs. 20,77,272." Before the CIT(A), the specific challenge posed to the reference made to the DVO without affording an opportunity to the assessee was dismissed by the CIT(A). This has been discussed in the impugned order in paras 7 & 8. They read as under:- "7. In appeal before the first appellate authority, it was contended that the reference was made to the Departmental Valuation officer without affording an opportunity to the assessee. Accordingly, no addition could be made on the basis of the said report unless it is proved that the actual consideration received by the ; assessee was nothing more than the amount disclosed by the assessee. It was further contended that there is no basis on which a notional income was added in the hands of the assessee. The CIT(A) rejected this contention of the assessee stating that the case, law relied upon by the assessee related to the now defunct Section 52(2) whereas in the present context, the concept of fair market value for the purpose of capital gains derives its sustenance from the definition contained in Section 2(22B). Accordingly, the reference made to the Departmental Valuation Officer was held to be valid in law. 8. With regard to the contention that the opportunity has to be granted to the assessee before making a reference, he was of the view that the: opportunity is retired only if the assessment proceeding was proposed to be reopened for this purpose. In view of the feet that this case did not fall under that category, the ground and the arguments pertaining to this were rejected.
(3.) RELIANCE has been placed upon the decision of the apex Court in the case of K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) was distinguished by the CIT(A) and held to be not applicable. This has been brought out in the impugned, order in para 9 : "9. With regard to the contention of the assessee that the fair market value could not be adopted unless there is a receipt of higher consideration than what was disclosed, the CIT(A) was of the view that the reliance placed upon by the assessee on the decision of the Delhi High Court has placed reliance on the decision of the Supreme Court in the case of K.P. Varghese (supra). In view of the fact that Section 52 of the Act which no longer stood on the Statute, hence, is not the subject matter of the present case.";