41. C.V. Sunny vs. CIT; [2019] 415 ITR 127 (Ker.) Date of order: 19th
March, 2019;
Section 55A of ITA 1961 – Capital gain – Cost of acquisition – Reference
to Valuation Officer – Refusal by AO to make reference to Valuation Officer not
proper – Matter remanded to AO for reference to Valuation Officer
The assessee, his son and
wife purchased land comprised in the same survey number for the same price on
the same day in 1975. The assessee and his son sold the land on 19th
January, 2006 at the same price. The assessee showed the cost of acquisition of
the land as on 1st April, 1981 at Rs. 1,15,385 per cent, which was
later revised to Rs. 94,132 per cent. The AO did not accept this. He held that
since the cost of acquisition of land owned and sold by the assessee’s son as
on 1st April, 1981 was fixed at Rs. 1,000 per cent, the cost of
acquisition of the land owned and sold by the assessee should also be fixed at
the same rate.
The Commissioner (Appeals) dismissed the appeal
filed by the assessee. The Tribunal found that the cost of acquisition
determined in respect of the land owned by the assessee’s son had been approved
by the court in the case filed by him. It held that there existed no
circumstances to make a reference u/s 55A of the Income-tax Act, 1961 as
contended by the assessee and that there was no illegality committed by the AO
and the Commissioner (Appeals) in adopting the same value as the cost of
acquisition in respect of the land owned and sold by the assessee.
The Kerala High Court allowed the appeal filed by
the assessee and held as under:
‘i) The AO
should have made a reference to the Valuation Officer u/s 55A in respect of the
cost of acquisition of the land sold by the assessee.
ii) The AO
had taken it for granted that since the assessee and his son had purchased the
property in the same survey number on the same day at the same rate, the cost
of acquisition would not be different in respect of the two lands and therefore
it was not necessary to make a reference u/s 55A.
iii) In the
assessee’s son’s judgement the court had not approved or disapproved the
valuation of the capital asset made by the AO in respect of the land owned and
sold by the son of the assessee who did not seek any reference u/s 55A at the
first Appellate stage but raised such contention only before the Tribunal for
which reason the court did not interfere with the valuation of the land made by
the AO. Therefore, the authorities were not justified in holding that the court
had approved the cost of acquisition of the land owned and sold by the son of
the assessee as Rs. 1,000 per cent. Even before the AO, the assessee had
produced the report of a registered valuer and the assessee had based his claim
on the estimate made by the registered valuer. The AO had not shown any reason
whatsoever to have rejected the valuation made by the registered valuer.
iv) The
assessment order passed by the AO and the revised order as confirmed by the
Appellate authorities are set aside. The matter is remitted to the AO to make a
reference u/s 55A to the Valuation Officer.’
