RITU TIWARI,BHILAI, CHHATTISGARH vs. INCOME TAX OFFICER, WARD 1(3), BHILAI, BHILAI, CHHATTISGARH

None appeared for the assessee. We have heard Ld. Departmental Representative and studied the record.

In this case, assessee had not filed return of income for AY 2014-15. Based on the information that assessee has sold land on 24.10.2013, Ld. Assessing Officer (‘AO’) issued notice under section 148 dated 27.09.2019. Assessee filed return of income in response to notice under section 148 declaring total income at Rs.1,28,925/-. Assessee’s representative attended the assessment proceedings.

The Ld. AO has mentioned in the assessment order that the assessee has sold land for Rs.4,11,000/- on 24.10.2013 along with two other persons. The value of the said land as per stamp authorities for the purpose of stamp duty was Rs.3,75,00,000/-. Therefore, the Ld. AO held that 1/3 share which comes to Rs. 93,75,000/- as long term capital gain. It is important to mention here that the Ld. AO has not reduced cost of acquisition from sale consideration.

Aggrieved by the assessment order assessee filed appeal before the Ld. Commissioner of Income Tax [CIT(A)]. Ld. CIT(A) confirmed the addition. Aggrieved by the order of Ld. CIT(A) assessee filed appeal before this Tribunal.

It has been submitted by the assessee before the Ld. CIT(A) that impugned land was encroached by anti-social elements and assessee had filed case before the appropriate court having petition No. 283/10. Assessee also pleaded that Ekrarnama was entered on 02.02.2007 with the buyer by the assessee for sale of the impugned land. Assessee submitted before the Ld. CIT(A) that the agreement could not be registered due to encroachment. Assessee also pleaded before Ld. CIT(A) to refer the issue to DVO for valuation. However, Ld. CIT(A) had not considered the request of assessee to refer the issue to DVO for valuation. We have already mentioned that Ld. AO had not reduced the cost of acquisition from sale consideration which is mandatory as per section 48 of the Income Tax Act.

Regarding reference to valuation to the DVO in the context of Sec.50C(2) of the I.T.Act, Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs CIT reported in 372 ITR 83 / 47 Taxmann.com 158 observed that even where no prayer is made by Advocate representing the assessee who may not have been properly instructed in law, the Assessing Officer discharging a quasi-judicial function has bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law and remanded the issue of valuation to Assessing Officer for reference to DVO for proper valuation as per law. Hon’ble ITAT, Pune-Trib in the case of Subhash Vinayak Supnakar vs. ACIT reported in 152 ITD 389 has observed that when assessee had objected stamp valuation adopted by Assessing Officer, the Assessing Officer should refer matter to valuation. Hon’ble ITAT, Delhi-Trib in the case of Sarwan Kumar vs ITO reported in 150 ITD 289 held that where an assessee has claimed before Assessing Officer that the value of the land and building assessed by Stamp Valuation Authority exceeded Fair Market Value of the property, then in terms of Sec.50C(2)(a), Assessing Officer ought to have referred matter to Valuation instead of straight away deeming the value adopted by Stamp Valuation Authority. The ratio of the decisions of the Hon’ble ITAT, Pune, Hon’ble ITAT, Delhi and Hon’ble High Court, Calcutta cited supra squarely applies to the facts of the case.

In this case, assessee had made a request to refer the issue for valuation to DVO. However, neither the AO and Ld. CIT(A) refer the issue to DVO, which is violation of law laid down by Hon’ble Culcutta High Court (supra) and ITAT (supra). In this case, the Ld. AO is directed to refer the impugned land for valuation. The Ld. AO shall also find out cost of acquisition and reduce index cost of acquisition while calculating long term capital gain. Accordingly, with the above mentioned directions, we set aside the assessment order to the Assessing Officer for de-novo adjudication. Accordingly, revised ground no. 2 raised by the assessee is allowed for statistical purpose.

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