Delhi High Court
Deepika Jain vs Income Tax Appellant Tribunal on 18 September, 2014
$ ~R-97 & R-98
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: September 18, 2014
+ ITA 245/2002
DEEPIKA JAIN
..... Appellant
Through Mr.Shashwat Bajpai, Advocate
versus
INCOME TAX APPELLANT TRIBUNAL
..... Respondent
Through Mr.Rohit Madan, Advocate
+ ITA 246/2002
VIKAS EXPORTS
..... Appellant
Through Mr.Shashwat Bajpai, Advocate
versus
INCOME TAX APPELLANT TRIBUNAL
..... Respondent
Through Mr.Rohit Madan, Advocate
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE V. KAMESWAR RAO
SANJIV KHANNA, J (ORAL)
1. These two appeals filed by Deepika Jain and Vikas Exports
relate to assessment year 1994-95 and the following substantial
question of law was admitted for hearing vide order dated
18.09.2002.
"Whether on the facts and in the circumstances
of the case, the Income-Tax Appellate Tribunal
was justified in setting aside the assessment
order without assigning any reason therefor?
2. As a very short and limited question arises for consideration,
we are not referring to the factual matrix in detail but notice that the
appellants assessees had jointly purchased along with Vibha Jain,
property situated at XI/4834/24, Ansari Road, Daryaganj, New
Delhi for consideration of Rs.16 lcas. The individual shares of
Vikas Exports, Deepika Jain and Vibha Jain were 50%, 25% and
25% respectively (counsel for the parties are not able to state what
had happened in the case of Vibha Jain but no appeal has been
preferred in the case of Vibha Jain).
3. During the course of assessment proceedings, the Assessing
Officer made reference under Section 131 of the Income Tax Act,
1961 ('Act' for short) to the Departmental Valuation Officer who
submitted his report on 07.03.96. He valued the property on the date
of purchase at Rs.24,94,900/-. It appears that the appellants
assessees objected to the said report on the following grounds:-
(i) Wrongly provides the extra development
gain on account of availing/having the
construction right of the basement.
(ii) Allowed less depreciation on account of
future life of building by treating the life
of 65 years for normal RCC building.
(iii) Not allowed the rebate on the difference
of two side and three side property.
(iv) Not allowed the rebate on account of old
load built up structure and new RCC
constructed property.
4. The Assessing Officer, however, did not accept the challenge
and made addition of Rs.2,33,725/- and Rs.1,11,863/- in the case of
Vikas Exports and Deepika Jain respectively. The reasoning given
by him reads as under:-
"As per, the comparative valuation and the
valuation report of the assessee‟s valuer the
assessee claimed the total fair market value of the
property as on 18.12.1993 comes to Rs.13,90,600/-.
Out of which the assessee‟s share i.e. 1/4th worked
out to Rs.3,47,650/- on examining the assessee
valuation report dtd. 11.03.1996 as well as the reply
filed by the assessee, which seems to be genuine but
the objection filed by the assessee should be raised
before the DVO. However, in view of the above and
considering all the facts it would be reasonable to
allow relief to the extent of 50% of the difference in
valuation Rs. 2,23,725/- i.e. Rs. 6,23,725/- - Rs.
4,00,000/- and the remaining 50% i.e. 1,11,863/- is
added to the Income of the assessee u/s 69 of the
Act."
5. The appellants assessees, however, succeeded before the
Commissioner of Income Tax (Appeals) who deleted the said
addition. He observed that the Departmental Valuation Officer had
gone on hypothetical basis and had made his assessment on the
basis of possibility of construction of basement and thereby raised
the valuation by 25%. The building was 50 years old but the
Departmental Valuation Officer had not taken correct depreciation
which should have been at least 50% and not 22.5%. Further, the
comparable rates were taken of properties which were 3 side open
properties, whereas the property in question was open on 2 sides,
for which at least 5% deduction, if not more, was required to be
made but this distinguishing aspect was ignored. Other aspects were
also highlighted. Accordingly, the addition made was deleted.
6. On further appeal, the Tribunal by order dated 28.03.2002
held as under:-
"4.We have heard the rival submissions. We are of
the view that the report of the Valuation Cell is
binding on the AO. Only CIT(A) has the power to
give relief. Considering the circumstances we set
aside the order of the CIT(A) and the AO. The
assessment year is sent back to the AO to be decided
a fresh in accordance with law after giving
adequate opportunity to the Assessee.
For a statistical purposes the appeal is treated as
allowed"
7. The appellants assessees thereafter filed an application for
rectification under Section 254(2) of the Act before the Tribunal as
in the present cases reference was not made under Section 55A of
the Act but under Section 131 of the Act. The valuation report,
therefore, was not binding on the Assessing Officer but only a
material or evidence which could be relied upon by the Assessing
Officer. The application was partly allowed by the Tribunal vide
order dated 07.08.2002 recording as under:-
"Accordingly the order of the ITAT dated 28.3.2002
setting aside the assessment and restoring it to the
file of the AO will continue as it is valid. However,
the comments „that the report of the Valuation
Officer is binding of the Valuation Officer. Only the
CIT(A) has the power to give relief "will be treated
as withdrawn and not a part of the ITAT order. The
misc. application stands disposed of accordingly."
8. When we read the quoted paragraph of order dated
28.03.2002 and the contents thereof and delete the relevant portions
from the order passed in terms of order dated 07.08.2002, it is
clearly noticeable that the reasoning given in the order dated
28.03.2002 was completely obliterated and the remand made by the
Assessing Officer cannot be sustained. The entire premise and
foundation of the order dated 28.03.2002 passed by the Tribunal
was on the assumption that the Departmental Valuation Officer's
report was under Section 55A of the Act. Once the said premise and
reasoning is erased and does not exist, the appeal required complete
re-consideration and fresh hearing.
9. In view of the aforesaid position, we answer the question of
law in favour of the appellants assessees and against the revenue but
pass an order of remand to the Tribunal to decide the appeals of the
revenue afresh. To cut short delay, we direct the parties will appear
before the Tribunal on 17th November, 2014, when a date of hearing
will be fixed. The appeals are disposed of. No costs.
SANJIV KHANNA, J
V. KAMESWAR RAO, J
SEPTEMBER 18, 2014/km
