Investigation for Search & Seizure Case & Sound Waves Theory of Finding Rates in the absence of Sale Instances by: Anup Aijanlal Mohabansi (+91-9422252446) In the Practice of Valuation some time one has to undergo the Process of Investigation Few types of Investigation are applicable for Valuers (1) (2) (3) (4) (5) (6)
Police Investigation CBI Investigation Auditor Investigation Inquiry Investigation Court Cases Investigation & Other Investigations
In all such Investigation Investigation officer are always Non-Technical Person having very little idea/exposure about Valuation He may be Police officer, CBI officer, Revenue officer, Auditor from Co. opr Dept. / Nationalised Bank Case 1– Location Nashik, Maharashtra. 16 year ago, one of my Valuer friend has given Valuation as a Panelled Valuer to Bank, an Amount of Rs.15000 per Sq.m. for Land the site is near to Ramkund Panchavati, Nashik (A famous Holi Place), Where after every 12 year KumbhMela is celebrated. Bank was in Financial Problem and Administrator was appointed and inquiry officer started the search. He was searching each & every defaulter cases, he felt that in this case the FMV is exaggerated, Police case was registered. In police inquiry Valuer requested the officer to at least discuss with me as a second opinion. I have given the explanation though the owner is in default but the FMV is much higher what was quoted by my friend. It was at the point of time, when Business at the time of KumbhMela was in Pick. In this case the FMV at the time of Mela was not highlighted and explained properly. Case 2– Location Jalgaon, Maharashtra. In this Case, the Bungalows FMV given by Valuer was rupees 6 Lakh but in Auction it was sold at Rs.7 Lakh. The Auditor pointed out these ambiguity and Valuer was in problem for quit a sometime. Valuer did not mentioned the “PURPOSE” of valuation properly THE PURPOSE OF VALUATION was for AUCTION PURPOSE and not for FMV, Auction price is always Less than FMV.
Case 3– Location Nashik, Maharashtra. One of the case of search & Seizure the Income tax Dept. made Raid to XXXX family (9 Brother & Their Sons) Family is having No. of ancestral Land around Nashik. Land was in Sawargaon Village near Nashik (NMC) Limits, and around 90 acre, Sold to YYYY Builders The Dept. come to knowledge of transaction at the of Search & seizure, I have made Valuation for Capital Gain Tax Purpose for aforesaid Land and they have paid Capital Gain Tax by following my Report. My Valuation Report was also recorded and I was also called for Investigation of the same. I have been going no. of times for such Investigations of I.T. mostly because I am dealing with Income Tax Raid Cases and Capital Gain Tax Cases. On Actual Investigation, initially they ask your details like following question:
Statement on oath of Shri. Anup Aijanlal Mohabansi recorded in response to summons u/s. 131 of the I.T. Act , 1961, at Room No. 307, 3 rd Floor, Aayakar Bhavan, Gadkari Chowk, Old Agra Road, Nashik On “Date” in connection with the search action conducted in the case of XXXX Group of Nashik. Q. No. 1. Please identify yourself and confirm that an oath has been administered upon and the consequences of making a false statement explained. Q. No. 2. Kindly give the details of your family members along with their occupations. Q. No. 3. Kindly give the details of the business activities carried by you and your family members. Q. No.4. Kindly give the details of bank accounts maintained by you, your family members and business concerns. Q. No. 5. Kindly five the details of books of accounts maintained by you, your family members and business concerns. Q. No. 6. Kindly five the details of income tax particulars in respect of yourself, your family members and business concerns. Q. No. 7. Please furnish the details of movable and immovable properties purchased / sold by you and your family members during last six years. Q. No. 8. Whether you have purchased or sold any property with XXXX family whose premises were searched u/s 132 of Income Tax Act, 1961, on Said Date?
Now Questions on Technical, Legal & Financial Aspect: When we are answering above aspects we must possess the Requisite Weapon & Tools with us, not for attack but to protect ourselves What can be our Weapon & Tools? 1) Indian Valuation Standards 2) International Valuation Standards 3) USPAP (Uniform Standard of Professional Appraisal Practice) CA Club: Fair Market Value – Meaning – S.2(22B) Income Tax Glossary Meaning of ‘Fair Market Value’ – Income Tax As per S.2(22 B) of the Income Tax Act, 1961, unless the context otherwise requires. The term “fair value market”, in relation to a capital asset, means-the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date. and Where the price referred to in sub-clause (i) Is not ascertainable, Such price as may be determined in accordance with the rules made under this Act. In beginning in year 1998, first time we have read and understood the GLOSSORY (Dictionary meaning of Valuation Words) part of USPAP by spending a Day. In most of the Cases Investigation officer are not Valuer, He know little Idea about Valuation we have to clear so many terminology in terms of Valuation Cost: The Amount required for producing the Good Price: The amount required to produce good + Profit + Taxes Value:
A. As per InVS Cost
:-
1) The price paid for goods or services becomes its cost to the
buyer. 2) The amount required to create or produce the goods or service. Cost is production –related concept, distinct from exchange. Once the good are completed or the service is rendered, its cost becomes an historic fact. The total cost of a property includes all direct indirect costs of its production.
Fair value: The amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s-length transaction. Price:- An amount asked, offered, or paid for a goods or service. The concept of price relates to the exchange of a commodity, goods or service. Price is the amount asked, offered, or paid for the item. Once the exchange has been transacted, the price, whether disclosed or undisclosed, becomes an historic fact. The price paid represents the intersection of supply and demand. Value:- The price most likely to concluded by the buyers and sellers of goods or services that on available for purchase. Value establishes the hypothetical or notional price that buyers and sellers are most likely to conclude for the goods or service. Thus, value is not a fact, but an estimate of the likely price to be paid for a goods or services available for purchases at a given time. Q.No.2. As you have submitted in answer to Q.No.13 in your statement recorded dated 23.10.2015 u/s 131 of IT Act, 1961 that you have taken into consideration the agriculture potential of land for valuation. You have submitted that the land is adjoining the Gangapur Dam and it can be converted into agriculture properties. Please substantiate with evidences that on what basis you have taken to value and how this potential you have taken to calculate the value of land at Rs. 105 per Sq. Meter. Please further substantiate with evidence that the assessee have used this land for agriculture purposes in 1981 which you have taken into consideration and how you have arrived the rate of Rs. 105 per Sq. Meter and not more or less than it. Ans. I have given you statement recorded that 1) Agriculture is one of the potential for land concern. I have also mentioned other potential like a) Agriculture Potential b) Residential Potential c) Motel & Resort potential, one potential I forgotten to mentioned and this potential I have for forgotten to give d) Industrial Potential As I have already mentioned in Q.No.1 Date 23.10.2015 that we have applied HABU (Highest and Best use) of the properly as per USPAP (Uniform Standard of Professional Appraisal Practice), International Valuation Standards(IVS) and in InVS [ Indian Valuation Standard ] we have to apply all the potential in the Land.
Q.No.7. I am showing you the valuation of Savargaon land done by the Joint District Registrar Class-1, Nashik, as per this document the total valuation of Savargaon land i.e. S.N. 53/2, S,N. 54 and S.N. 55 (if we consider that the land is ‘BAGAYAT’ i.e. fully irrigated) is coming to Rs. 9,16,840/- ( Rs.5,16,880/- + Rs.2,15,280/- + Rs.2,29,680/-) and the same valuation you have done (As per valuation report prepared by you Annexure-9 seized at 2820, Kokanipura, Nashik) is of amount Rs.2,91,37,500/-. Please substantiate the difference in both these valuation and explain your stand with evidences. Ans. I can not comment on the Report given by Joint District Registrar Class-1 Nashik. Because it is not Valuation. It does not comply with the Guideline & Principal of Valuation 40% discounting from year 1981 to 1989 is followed by him.Then why not considered Value it is against the Guideline given by Income Tax dept. If Reverse Rate Method is permissible than I calculate the Value as per adopting the correct and Honest Rate available in 13-14, Consideration of Rs.652125992.
Calculation of Reverse Index Ratio for xxx
Consideration=Rs.652125992; 100 Index (1981) and for 2013-14 was 939. As per Reverse Index Valuation as on 1981 works out to be 69448987.4 Rate Per Sq. Meter works out to be area in 370000 sq.m. As per above Rate per Sq. Meter as on 1.4.1981 was Rs.187.699 per Sq.m. I have given the sale instance Satpur which is 8km from CBS and Savargaon is 14 km from CBS the sale instance rate is 450.45 per Sq.m a) I have discounted and adopted Rate Rs. 105 per sq. m. b) I have given Rate of 1521.03 from Nashik and discounted Rs= 105 to Savergaon c) I have given Rate of 363.36 per Sq.m of Adgaon with is 10 km from CBS and discounted and adopted Rs= 105 per Sq. m. for Savargaon. Anup Aijanlal Mohabansi
CERTIFICATE OF VALUE (This certificate is issued for a specific purpose only. It is subject to Disclaimer clause and Declaration and statement of Limiting Condition as are recorded in part 1)
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Documents Produce before us.
List of Documents
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Site Plan 7/12 Extract
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References with consultants Derivation of Rates
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INTENDED USE INTENDED USER CLASSIFICATION OF ASSET IDENTIFIED BY Anup A. Mohabansi INSPECTED BY DEFINITION OF VALUE FOR THIS SPECIFIC PURPOSE This exercise is to assess fair market value of the under reference as on The term Fair Market Value is defined as UNDERLYING ASSUMPTIONS We assume no responsibility for matters of legal nature affecting the property appraised or the title thereto, nor do we render our opinion as to the title, which is assumed to be good and marketable. The property is valued as though under responsible ownership. It is assumed that the property is free of liens and encumbrances. It is assumed that there are no hidden or unapparent conditions of the subsoil or structure that would render it more or less valuable. No responsibility is assumed for such conditions or for engineering that might be required to discover such factors. We have not made Plain Table Survey of property concern. The term Fair Market Value is “The most probable Price, as of a specified date, in cash, terms equivalent to cash, or in defined as
a
b c d
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No Rates refer from Sub-Registrar Office & market survey. Fair Market Value
other precisely revealed terms for which the specified property rights would sell after reasonable exposure in a competitive market under all conditions requisite. 11
Fundamental assumptions and conditions presumed in this definition are a
Buyer and seller are motivation by self interest.
b c d
Buyer and seller are well information and are acting prudently. The property is exposed for a reasonable time on the open market. Payment is made in cash or equivalent or in specified financing terms.
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Method of Valuation
Sales Comparison & Market Analysis Approach method & Market Analysis a method
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Regarding Ownership About Documents About Title
Lease Agreement is not given Xerox copy only We have not verified Title of Asset
