Dilip N. Shroff vs Joint Commissioner Of Income Tax, ...

In 1981 the cost of construction may be taken at Rs.275/- per S.FT. Further, considering the Builder's Profit Rs.700/- per S.Ft. and deducting both the value of cost of construction and the Builder's profits from the above stated works out to Rs.1,525/- per S.FT of saleable area. Considering that it is a jointly owned property, I take it as fair and reasonable.

16536.5 x 1525.00 = Rs.2,52,18,165.05 Say Rs.2,50,00,000.00 .(I) Though the building itself is old and dilapidated, I consider the scrap value of it at Rs.50/- per S.FT. As the Built up area is 16000 S.FT., the scrap value of structure comes to Rs.8,00,000.00. The value of the share of Late Mr. Natwarlal Shroff of this scrap value is Rs,8,00,000.00. The value of the share of Late Mr. Natwarlal Shroff of this scrap value is = Rs. 2,00,000.00 .(II) Therefore value of the property belonging to Late Mr. Nartwarlal Shroff works out to (I)+(II).

Rs.2,50,00,000.00+Rs.2,00,000.00 = Rs.2,52,00,000.00 I therefore value the share of the above property belonging to Late Mr. Natwarlal Shroff at Rs.2,52,00,000.00 (Rs. Two Crore Fifty Two Lakhs Only) as on 1/4/81"

The Valuer in his report, inter alia, stated :

6. The return filed by the Appellant on 30.09.1998 came up for scrutiny before the First Respondent, who in exercise of its power under Section 55A of the Income Tax Act, 1961 (for short, 'the Act') referred the matter for valuation of the said 1/4th undivided share of the Appellant as on 01.04.1981 to the District Valuation Officer; whereupon the District Valuation Officer submitted a report dated 29.06.2000 wherein the 1/4th undivided share of the Appellant in the said property as on 01.04.1981 was determined at Rs.1,14,92,907, the basis whereof is said to be as under :

220-Walkeshwar Road, Mumbai-400 006 1 Land Area as per records 5250 sq. yds. = 4389.63 sq. mt.

19.10.82 Flat No.302, 3rd floor at Sanudeep CHS Ltd. Plot No.631 (Pt) at Altamount Road, Mumbai Rs.68,00,000/-

9. The First Respondent having regard to the aforementioned valuation report of the District Valuation Officer passed an order of assessment on 08.08.2000 holding :

10. Thus, in the said order, valuation of the land as made by the District Valuation Officer was adopted and on the basis thereof long term capital gain was determined to be Rs.3,09,78,478 by taking the valuation of the 1/4th undivided share of the Appellant as Rs.1,44,92,907 as on 01.04.1981. In view of the said order of assessment, a show cause notice under Section 274 read with Section 271 of the Act was served to which a reply was filed by the Appellant on or about 14.08.2000 claiming that there was no concealment of income as all the details of property were submitted along with the return of income and the difference in the matter of valuation of the 1/4th share of the appellant does not amount to concealment. It was stated therein :

13. The said appeal was, however, dismissed by the Commissioner of Income Tax by an order dated 13.11.2000 holding :

14. The Appellant preferred an appeal before the Income Tax Appellate Tribunal being aggrieved by and dissatisfied with the said order. He also affirmed an affidavit stating that he had honestly relied on the professional advice of the Registered Valuer and the Chartered Accountant and had not approached the Valuer for the purpose of obtaining the report at any specified value in order to avoid paying taxes. The Income Tax Appellate Tribunal, however, dismissed the said appeal and confirmed the order of the Commissioner of Income Tax by an order dated 10.08.2001, holding :

28. Explanation 1, therefore, is applicable to the facts of the case.

73. In terms of sub-section (2) of Section 16A, the Valuation Officer may serve a notice upon the assessee. Sub-section (4) thereof empowers the Valuation Officer to serve a notice on the assessee intimating the value which he proposes to estimate and giving the assessee an opportunity to state when he is of the opinion that the value of the asset is higher than the value declare in the return made by him. The Valuation Officer in terms of Wealth Tax Act, therefore, is conferred with a statutory power.

(e) Whether the High Court's order is liable to be set aside in view of the errors apparent on record?

88. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly. The appeal is allowed. However, in the facts and circumstances of this case, there shall be no order as to costs.