LACHHMAN,SALEM vs. ITO, SALE

Brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 admitting total income of ₹.1,18,93,740/- and the same was processed under section 143(1) of the Income Tax Act, 1961 [“Act” in short]. Subsequently, the case was selected for scrutiny through CASS and notice under section 143(2) of the Act was issued on 21.09.2018 and the same was served on the assessee on 26.09.2018. After following due procedure, the assessment was completed under section 143(3) of the Act dated 30.12.2019. A survey under section 133A of the Act was also conducted in this case. In the assessment order, the Assessing Officer has noted that the assessee has purchased two parcels of land for a sale consideration of ₹.2,40,00,000 + expenses on registration = ₹.2,81,25,085/- and the Special Deputy Collector (Stamps) had valued the property at ₹.5,86,88,501/-. The difference is of ₹.3,46,88,501/- and the Assessing Officer has disallowed the difference amount, which attracts the provisions of section 56(2)(vii)(b) of the Act. The Assessing Officer has further noted that as per section 56(2)(vii)(b) of the Act provides that in case of where there is transfer of an immovable property either without consideration or a consideration which is less than the stamp duty value of the property, the stamp duty value of such property as exceeds such consideration shall be deemed to be the value of the immovable property.

On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer by observing that the Assessing Officer gave opportunities to substantiate its claim and after making necessary enquires with the stamp valuation authority, the differential amount of ₹.3,46,88,501/- had been added. The assessee has not asked the Assessing Officer to refer the matter to the DVO to ascertain the fair market value and dismissed the appeal of the assessee.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that when there is an huge difference between the sale consideration and SRO value, as per section 50C(2) of the Act, the Assessing Officer has to refer to the DVO for valuation of FMV of the property and submitted that the issue may be remitted back to the Assessing Officer for reconsideration and pass the assessment order after referring the matter to DVO under section 50C(2) of the Act.

On the other hand, the ld. DR has strongly supported the orders of the authorities below and also submitted that it is not the case before the Assessing Officer that he has to refer the matter to DVO since no such request was made by the assessee. This issue was only raised before the ld. CIT(A) and therefore, no reference to the DVO is required.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Admittedly, there is a difference between the sale consideration and the value adopted by the Special Deputy Collector (Stamps). It is a fact that the assessee has not requested the Assessing Officer to refer the matter to the DVO to ascertain the FMV. In our opinion, the assessee should have asked the Assessing Officer to refer the matter to the DVO to ascertain FMV. However, the assessee has raised the issue before the ld. CIT(A) and the ld. CIT(A) did not consider this for the reason that the assessee has not asked for reference to DVO before the Assessing Officer. Under these facts and circumstances, we are of the opinion that one more opportunity to the assessee to substantiate his claim and to make a request to the Assessing Officer to refer the matter to the DVO to ascertain FMV. In view of the above, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer and by considering the request of the assessee, the Assessing Officer shall refer the matter to the DVO to ascertain the FMV and decide the issue afresh in accordance with law by allowing an opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.