PARVATHAMMA,BENGALURU vs. INCOME TAX OFFICER, WARD-2(2)(2), BENGALURU

Smt. Parvathamma, the Assessee/Appellant, filed ITA No. 2075/Bangalore/2025 for Assessment Year 2016–17 against the appellate order dated 29.07.2025 passed by the National Faceless Appeal Centre, Delhi [Ld. CIT(A)]. By that order, the Ld. CIT(A) dismissed the Assessee’s appeal against the assessment order dated 17.12.2018 passed under section 143(3) of the Income-tax Act, 1961, by the Income Tax Officer, Ward–2(2)(2), Bangalore.

Briefly stated, the Assessee, an individual, filed her return of income on 23.12.2016 declaring total income of Rs. 2,72,630/-. Her case was selected for limited scrutiny, and notices were issued requiring her to substantiate the computation of capital gains and her claim for deduction under section 54F of the Act.

In response to the notices, the Assessee furnished the sale deed, computation of income, bank statement, and property valuation.

On examining the documents, the Ld. Assessing Officer concluded that the property was undervalued and that section 50C of the Income-tax Act applied, as the stamp duty guidance value was Rs. 1,87,20,000/-, which exceeded the declared sale consideration of Rs. 1,56,30,000/-. The Assessing Officer further noted that the Assessee had not furnished documentary evidence showing completion of construction before the due date for filing the return, norhad she deposited the capital gain in the Capital Gains Account Scheme before that date. Accordingly, the capital gain was computed by adopting net sale consideration of Rs. 1,87,20,000/-, reducing it by the cost of acquisition of Rs. 19,834/- and the investment in the new property of Rs. 75,95,955/-. The assessment was completed by order dated 17.12.2018.

Aggrieved by the assessment order, the Assessee preferred an appeal before the Ld. CIT(A). In the statement of facts,she submitted that she had sold the property to M/s. Reddy Structures Private Limited on

Relying on 118 ITR 461, the Ld. CIT(A) held that the Assessee was not interested in pursuing the appeal and dismissed it for non-prosecution, without assigning reasons on the merits.

The Assessee is in appeal before us and has filed a paper book comprising 54 pages. On the applicability of section 50C of the Act, the Assessee submitted that a valuation report dated 16.11.2018 had been furnished, indicating the fair market value of the property; therefore, the applicability of section 50C was disputed before the Ld. Assessing Officer. Regarding the claim for deduction under section 54F of the Act, it was submitted that the Assessee had utilized the amount for constructing a residential house on a site owned by her within one year from the date of transfer. It was further contended that the issue is squarely covered in the Assessee’s favour by the decision of the

The Ld. Departmental Representative strongly stated that the Assessee had not appeared before Ld. CIT(A), who dismissed the appeal for non-prosecution. It was further concluded that the Assessee had not furnished any documentary evidence before the Ld. Assessing Officer, and therefore her claim could not be considered at this stage.

We have considered the rival contentions and perused the orders of the lower authorities. In paragraph 1 of the assessment order, relating to undervaluation of the property, the Ld. Assessing Officer adopted sale consideration of Rs. 1,87,20,000/-, though the Assessee had declared a different sale consideration. Since the Assessee had furnished a registered valuer’s report and disputed the adoption of stamp duty value as deemed sale consideration under section 50C of the Act, the Assessing Officer ought to have followed the prescribed procedure, including reference to the DVO. However, no questions were put to the Assessee on these issues. As regards the deduction claimed under section 54F of the Act, the Assessee submitted that all relevant details had been furnished before the Ld. Assessing Officer through communication dated 05.10.2018 uploaded on the e-filing portal, a copy of which is placed at pages 12–13 of the paper book. The Assessee also stated in her response dated 14.11.2018 that the building valuation report would be submitted within five days and thereafter filed the property valuation report on 19.11.2018. Thus, it is evident that the Assessee had objected to the valuation under section 50C before the Ld. Assessing Officer himself. The proper course for the Assessing Officer was therefore to refer the matter to the Valuation Cell for determining the value of the property as on the date of sale.

In view of the above facts, the matter is restored to the file of the Ld. Assessing Officer with a direction to consider the Assessee’s objection supported by the valuation report filed on 19.11.2018, particularly as the assessment order was passed thereafter on 17.12.2018. The Ld. Assessing Officer shall also reconsider the Assessee’s claim for deduction under section 54F of the Act in accordance with the decision of the Hon’ble Karnataka High Court referred to above. 13. Accordingly, the Assessee’s appeal is allowed for statistical purposes.