MEGHA ADITYA PAWASKAR,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

Ld. AR appearing on behalf of the assessee stated at the Bar that he does not wants to press Ground No. 1. Accordingly, Ground No. 1 stands dismissed as not pressed.

Ground No. 2 raised by the assessee relates to the challenging the order of the learned CIT(A) in confirming the addition made under Section 50C of the Act.

In this regard, I have heard the counsels for both parties, perused the material placed on record, the judgments cited before me, and the orders passed by the Revenue Authorities. From the records, I notice that the assessee sold a residential flat on 19.11.2016 for a consideration of Rs. 57,00,000/-. The AO adopted the stamp duty valuation of Rs. 71,16,984 under Section 50C of the Act and computed the capital gains accordingly.

The Ld. AR submitted that during the course of assessment, the assessee had specifically objected to the adoption of the stamp duty value and contended that the same did not represent the fair market value (FMV) of the property. In support of this contention, copies of three registered sale deeds of other flats situated in the same building, which were sold during the same period at prices comparable to the sale consideration received by the assessee, were also furnished. Copies thereof are placed at PB Pages 26 to 28.

The Ld. AR further submitted that the property was sold during the demonetisation period in November 2016 and, therefore, had to be sold under compelling circumstances. It was contended that the comparable sale instances furnished by the assessee clearly supported the claim that the actual market value of similar flats was much lower than the stamp duty valuation.

In my considered view, once the assessee had disputed the stamp duty valuation and placed on record three comparable sale deeds in support of the claim that the stamp duty value exceeded the FMV of the property, the provisions of Section 50C(2) of the Act became applicable. In such circumstances, the AO ought to have referred the valuation of the property to the DVO for determination of its FMV. However, no such reference was made, nor did the AO undertake any independent enquiry regarding the FMV by considering the material placed on record.

Be that as it may, without expressing any opinion on the merits of the issue, I am of the view that the matter deserves to be restored to the file of the AO with a direction to determine the FMV of the property after obtaining a valuation report from the DVO and thereafter decide the issue afresh after duly considering the comparable sale instances furnished by the assessee.

Ground No. 3: Since the assessee could not properly assist the Revenue Authorities in substantiating its claim, this issue is also restored to the file of the AO. The assessee shall be at liberty to file further documents in support of its claim.

Before parting, I make it clear that my decision to restore the matter to the file of the AO shall in no way be construed as expressing any opinion on the merits of the dispute, which shall be adjudicated independently by the AO in accordance with law.

Needless to mention, the AO shall provide adequate opportunity of being heard to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of the proceedings.

In the result, appeal filed by the Assessee stands allowed for statistical purposes.