LATE PADMABEN ZINABHAI TRIVEDI vs INCOME TAX OFFICER

C/SCA/19363/2017 CAV JUDGMENT DATED: 08/07/2026
Reserved On : 24/06/2026
Pronounced On : 08/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.19363 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-
================================================================
Approved for Reporting Yes No
a
==========================================================
LATE PADMABEN ZINABHAI TRIVEDI
Versus
INCOME TAX OFFICER
================================================================
Appearance:
MR TUSHAR HEMANI, SENIOR ADVOCATE, with MS VAIBHAVI K
PARIKH(3238) for the Petitioner
MR RUTVIJ R PATEL(10615) for the Respondent(s) No. 1
================================================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. By way of this writ petition, the petitioner has challenged
the notice dated 30.03.2017 issued by the respondent authority
under Section 148 of the Income Tax Act, 1961 (for short ‘the
Act’) seeking to re-open the assessment for the Assessment Year
(A.Y.) 2010-11.
FACTS OF THE CASE
2. The petitioner, during the year under consideration, sold a
parcel of land bearing Revenue Survey No. 285, admeasuring
13,626 sq. mtrs. out of total area of 20,200 sq. mtrs., situated at
village Bhimpore, Nani Daman to M/s.Perfect Filaments Pvt. Ltd.
for a total consideration of Rs.92,65,680/- vide registered sale
deed executed on 24.06.2009. Since, the petitioner owned such
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property even prior to 01.04.1981, the petitioner obtained a
valuation report dated 11.11.2009 from a registered valuer,
wherein the fair market value of such property as on 01.04.1981
was worked out at Rs.11,03,000/- (based on Rs.81/-per sq.
mtr.). Thereafter, the petitioner filed return of income for the
year under consideration on 23.08.2010 declaring total income
at Rs.24,31,170/- including Long Term Capital Gain of
Rs.22,94,720/- on sale of the said land. The petitioner,
unfortunately passed away on 21.05.2012. After a period of four
years from the end of the relevant A.Y. the respondent issued the
impugned notice dated 30.03.2017 under Section 148 of the Act.
The petitioner, vide letter dated 17.07.2017, requested the
respondent to treat the original return of income as return filed
in response to the Notice issued under Section 148 of the Act.
The respondent, vide letter dated 17.05.2017, supplied copy of
the reasons recorded for reopening. Thereafter, the petitioner
raised objections against reopening contending that there is no
escapement of income chargeable to tax and accordingly, the
respondent was requested to drop the reassessment proceedings.
However, respondent disposed of the objections vide order dated
15.09.2017 and held that the reopening of assessment is valid.
3. Thus, it is contended that the department lacked the
authority to issue the Notice dated 30.03.2017 post amendment
since as per the decision of the Bombay High Court in the case
of CIT vs. Puja Prints, 2014 360 ITR 697 (Bom.) the 2012
amendment was only made effect from 01.07.2012 and the
parliament has not given the retrospective effect and hence the
provision of Section 55A(a) of the Act, will not apply to the
transaction amendment. In the present case, the valuation of the
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sale transaction was done in the year 2009 vide sale deed dated
24.06.2009.
SUBMISSION ON BEHALF OF THE PETITIONER :
4. Learned Senior Advocate Mr.Tushar Hemani for the
petitioner has submitted that reference to a Valuation Officer is
governed by the provision of Section 55A of the Act. There was
an amendment to Section 55A of the Act, brought in by the
Finance Act 2012 with effect from 01.07.2012, whereby the
words “ is less than its fair market value ”, as appearing in Clause
(a) of Section 55A of the Act were substituted by the words “ is at
variance with its fair market value ”. Thus, for the period prior to
01.07.2012 an Assessing Officer can make reference to the
Valuation Officer for the purpose of valuation of the fair market
value of an asset only if he is of the opinion that the value
declared by the concerned assessee is less than the fair market
value of the asset. It is submitted that in the present case, the
fair market value adopted by the petitioner is based on the
report of the registered valuer which is Rs.81/- per sq. mtr.
which is higher than the value of Rs.1/- per sq. mtr. as worked
out by the respondent authority. It is further asserted that the
period under consideration falls prior to 01.07.2012. Therefore,
the reference to the Valuation Officer in the present case is not
tenable in the eye of law. In absence of any such reference, the
value declared by the petitioner on the basis of the opinion of a
Valuer cannot be disturbed by the respondent. It is further
submitted that the issue is squarely covered in favour of the
petitioner in the case of Hiaben Jayantilal Shah vs. Income Tax
Officer, (2009) 310 ITR 31 (Guj.), wherein it is held that no fault
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C/SCA/19363/2017 CAV JUDGMENT DATED: 08/07/2026
can be found with the petitioner’s working of capital gain, hence,
it cannot be said that an income chargeable to tax has escaped
assessment.
4.2 It is submitted that the respondent has worked out the fair
market value of the land in question as on 01.04.1981 at Rs.1/-
per sq.mtr., on the basis of the details of sale instance of land in
the year 1982 received from the office of "Sub-Registrar".
According to the information of the Sub-Registrar a land
admeasuring 53,700 sq.mtrs was sold in the year 1982 in the
village Bhimpore for Rs.60,001/-. Taking into consideration of
the cost inflation index for the years 1981 and 1982 was 100
and 109 respectively, the respondent worked out the
corresponding value of such land for the year 1981 at
Rs.55,046/- [i.e. Rs.60,001 / 109 X100]. Accordingly, the value
per sq.mtr. was calculated at Rs.1/- per sq.mtr. i.e. [Rs.55,046 /
53,700 sq.mtrs.]. It is submitted that the respondent has
adopted Rs.1/- per sq.mtr. as the fair market value of the land in
question as on 01.04.1981 on the basis of the same worked out
the alleged escapement of income.
4.3 Learned Senior Advocate Mr.Hemani has submitted that in
case the Court is not inclined to accept the aforesaid
submissions, the alternative submission about the exercise of
jurisdiction by the assessing officer by issuing the notice under
section 148 of the Act against a dead person may be examined. It
is submitted that the Assessing Officer had issued a Notice in
the name of the dead person i.e. Smt. Padmaben Trivedi who
had passed away on 21.05.2012 and the respondent had issued
notice under Section 148 of the Act in her name on 30.03.2017
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C/SCA/19363/2017 CAV JUDGMENT DATED: 08/07/2026
i.e. the very last day of limitation for A.Y 2010-11 which is
impermissible.
4.4 In support of his submissions, reliance is placed on the
decision of this Court in the case of Chandreshbhai Jayantibhai
Patel vs. Income Tax Officer, [2019] 101 taxmann.com 362
(Gujarat), as well as in the decision of Urmilaben
Anirudhhasinhji Jadeja vs. Income Tax Officer, [2020] 117
taxmann.com 504 (Gujarat). Thus, it is urged that the writ
petition may be allowed by quashing and setting aside the
impugned notice.
SUBMISSIONS ON BEHALF OF THE REVENUE :
5. Responding to the aforesaid submissions, learned Senior
Standing Counsel Mr. Rutvij Patel, has submitted that as per the
decisions of this Court in the cases of Chandreshbhai
Jayantibhai (supra ) and Urmilaben Jadeja (supra ) the
reassessment proceedings cannot be quashed and set aside,
even if, the Notice has been issued against a dead person. Since,
the petitioner after issuance of notice, had participated in the
proceedings by giving the reply in the form of objections dated
17.07.2012. It is submitted that the petitioner in the reply had
never objected the reopening of the assessment by contending
that the Notice was issued against that person and ultimately,
the assessing officer has disposed of objection for reopening of
the assessment and conveyed to the present petitioner.
5.1 With regard to the reliance placed by the petitioner on the
un-amended provisions of Section 55A of the Act, it is contended
that since the amendment under Section 55A(a) of the Act has
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C/SCA/19363/2017 CAV JUDGMENT DATED: 08/07/2026
been introduced in the year 2012. The department was well
within its jurisdiction to reopen the assessment looking to the
computation of capital gain on the said land in question by
taking the fair market value as on 01.04.1981 at Rs.81/- per
sq.mtr. as against Rs.1/- by the register value. It is submitted
that the petitioner had taken fair market value of the land in
question at Rs.81/- per sq.mtr., which is higher than Rs.1/-
looking to the said instances of the land situated at Bhimpore in
the year 1981. Thus, it is urged that the writ petition may not be
entertained.
ANALYSIS AND OPINION
6. We have heard the learned advocates appearing for the
respective parties and perused the materials on record.
7. We are called upon to examine the validity of the reopening
of the assessment for A.Y. 2010-11 by the respondent upon
issuance of the impugned Notice under Section 148 of the Act. It
is not in dispute that the notice has been issued against a dead
person namely, late Smt. Padmaben Jinabhai Trivedi. During the
relevant previous year, the deceased had sold the land in
question situated at Bhimpore on 24.06.2009 for a consideration
of Rs.92,65,680/-, by adopting the fair market value as on
01.04.1981 at Rs.81/- per sq.mtr. based on the Valuation report
dated 11.11.2009 issued by the registered valuer. She thereafter
filed her return of income on 23.08.2010, declaring long term
capital gain of Rs.22,94,720/- she passed away on 21.05.2012
and after a period of five years of her demise, on 30.03.2017 i.e.
the very last day of limitation for A.Y 2010-11 the respondent
issued a notice in the name of the deceased. The Assessing
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Officer on the basis of the sale instance of the year 1981
furnished by the Office of the sub-registrar, reversed calculated
the fair market value as on 01.04.1981 at Rs.1/- per sq.mtr. and
reduced the cost of acquisition adopted by the assessee and
alleged the escapement of long term capital gain of
Rs.69,62,580/-. This exercise was done under the provisions of
Section 55A(a) of the Act.
8. At this stage, we may refer to the observations of the
Division Bench of this Court in the case of Hiaben Jayantibhai
(supra) , dealing with the operation of the Section 55A of the Act.
The same reads thus:
“8. Section 55A of the Act, at the relevant point of time, reads
as under :-
"55A. Reference to Valuation Officer :- 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 Officer-
(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 opinion that the
value so claimed is less than its fair market value;
(b) in any other case, if the Assessing Officer is of 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 percentage of the value of the asset
as so claimed or 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,
and where any such reference is made, the
provisions of sub-sections (2), (3), (4), (5) and (6) of
section 164, clauses (he) and (1) of sub-section (1)
and sub-sections (3A) and (4) of section 23, sub-
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section (5) of section 24, section 34AA, section 35
and section 37 of the Wealth-tax Act, 1957 (27 of
1957), shall with the necessary modifications, apply
in relation to such reference as they apply in relation
to a reference made by the Assessing Officer under
sub-section (1) of section 16A of that Act.
Explanation: - In this section, Valuation Officer has
the same meaning, as in clause (r) of section 2 of the
Wealth-tax Act, 1957 (27 of 1957)."
9. The concept of fair market value for the purpose of Chapter
IV of the Act pertaining to computation of income from capital
gain can be found under section 55(2)(b) of the Act, whereunder
an assessee has the option to take the actual cost of the
acquisition of the asset or the fair market value of the asset on
1-4-1981, for the purpose of sections 48 and 49 of the Act. In
other words, for arriving at the taxable figure of capital gain
while deducting the cost of acquisition an assessee may adopt
the figure of cost of acquisition actually incurred or the fair
market value of the property as on 1-4-1981. It is only in this
fact situation that, with a view to ascertain the fair market
value of the capital asset, the Assessing Officer may refer the
valuation of the capital asset to a valuation officer.
10. Under clause (a) of section 55A of the Act, the Assessing
Officer is entitled to make the reference to the valuation officer
in a case where the value of the asset as claimed by the
assessee is in accordance with the estimate made by the
registered valuer, if the Assessing Officer is of the opinion that
the value so claimed is less than the fair market value. In any
other case, as provided under clause (b) of section 55A of the
Act, the Assessing Officer has to record an opinion that (i) the
fair market value of the asset exceeds the value of the asset as
claimed by the assessee by more than such percentage or by
more than such an amount as may bel prescribed; or (ii) having
regard to the nature of the asset and other relevant
circumstances, it is necessary to make such a reference. ”
9. The Coordinate Bench, while examining the provisions of
clauses of Section 55A of the Act, has held that the Assessing
Officer is entitled to make the reference to the valuation officer in
a case where the value of the asset as claimed by the assessee in
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accordance with the estimate made by the register valuer is less
than the fair market value. In the present case, it is not in
dispute that the deceased assessee had disclosed the fair market
value of the land at a higher rate of Rs.81/-, whereas the
assessing officer in converse has determined the fair market
value at Rs.1/-. Hence, the provisions of Section 55A(a) of the
Act will not apply nor the provisions of sub-clause (b) of Section
55A of the Act will get attracted since the fair market value of the
land has been determined on the basis of the register valuer
report dated 11.11.2009, which is less than the value assessed
by the assessing officer.
10. The amendment to Section 55A(a) of the Act introduced
vide Finance Act, 2012 w.e.f 01-07-2012, by which the words “ is
less than the fair market value ” is substituted by the words “ is at
variance with its fair market value ” does not have retrospective
effect, since the amendment has been made effective only from
01.07.2012. Thus, the case of the petitioner will be governed by
un-amended Section 55A(a) of the Act as existing during the
period relevant to the A.Y. 2009/10.
11. At the relevant time, very clearly reference could be made
to the Departmental Valuation Officer, only if the value declared
by the assessee is in the opinion of Assessing Officer less than
its fair market value. This position of law has been specifically
held in the case of CIT vs. Puja Prints (supra ), which is as
under:
“8. The contention of the revenue that in view of the
amendment to Section 55A(a) of the Act in 2012 by which the
words "is less then the fair market value" is substituted by the
words " "is at variance with its fair market value" is clarifactory
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and should be given retrospective effect. This submission is in
face of the fact that the 2012 amendment was made effective
only from 1 July 2012. The Parliament has not given retrospective
effect to the amendment. Therefore, the law to be applied in the
present case is Section 55A(a) of the Act as existing during the
period relevant to the Assessment Year 2006-07. At the relevant
time, very clearly reference could be made to Departmental
Valuation Officer only if the value declared by the assessee is in
the opinion of Assessing Officer less than its fair market value.
9. The contention of the revenue that the reference to the
Departmental Valuation Officer by the Assessing Officer is
sustainable in view of Section 55A(a) (ii) of the Act is not
acceptable. This is for the reason that Section 55A(b)of the Act
very clearly states that it would apply in any other case i.e. a
case not covered by Section 55A(a) of the Act. In this case, it is an
undisputable position that the issue is covered by Section 55A(a)
of the Act. Therefore, resort cannot be had to the residuary clause
provided in Section 55A(b)(ii) of the Act. In view of the above, the
CBDT Circular dated 25 November 1972 can have no application
in the face of the clear position in law. This is so as the
understanding of the statutory provisions by the revenue as
found in Circular issued by the CBDT is not binding upon the
assessee and it is open to an assessee to contend to the
contrary. ”
Hence, amended provisions of Section 55A(a) of the Act are
not applicable to the case of the petitioner. Thus, the re-opening
of the assessment is required to be quashed and set aside, for
the reason that the respondent had failed to appreciate the
provision of Section 55A(a) of the Act in light to the market value
determined as on 01.04.1981 as per the Registered Valuation
Report dated 11.11.2009.
12. As far as the issue of notice having being issued to a dead
person, and the effect of responding to the notice by the
petitioner, whether can be said to be participation in the
proceedings is not delved by this Court, and is left open.
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13. In view of the aforesaid, the impugned notice dated
30.03.2017 is hereby quashed and set aside. Accordingly, the
writ petition stands allowed . Rule is made absolute to the
aforesaid extent.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(VAIBHAVI D. NANAVATI,J)
*
Bhavesh-[PPS] - Radhika/01*
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