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Facts
The assessee sold a shop for Rs. 25 lakhs, but the stamp duty authority valued it at Rs. 49,31,000. The AO made an addition under Section 43CA based on this difference. The CIT(A) upheld the AO's action and refused to refer the matter to the DVO.
Held
The Tribunal condoned the delay in filing the appeal. It held that the CIT(A) has co-terminus powers with the AO regarding references to the DVO. The matter was restored to the AO to obtain a DVO report.
Key Issues
Whether the CIT(A) has the power to refer the matter to the DVO for valuation when the AO has not done so, and whether Section 50C(2) discretion allows for mandatory reference.
Sections Cited
254(1), 43CA, 50C(2), 250
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of Ld. CIT(A)/ADDL/JCIT(A)-1, Hyderabad dated 25.03.2025 for assessment year (AY) 2014-15. The assessee has raised following grounds of appeal:
“1. The Ld. CIT(A) fell in error of law in declining to make a reference to the DVO, as prayed for by the Appellant/assessee.
The Ld. CIT(A) misdirected himself in observing that since the assessee has accepted the valuation for the purpose stamp duty, the assessee cannot challenge the valuation for the purpose of Income tax Act. It is submitted that if that contention is to be accepted, then the provisions of sec.50C(2) would be otiose and superfluous.
3. The Ld. CIT (A) fell in error of law in not appreciating that the CIT(A) has power to make reference to the DVO for valuation, u/s. 250 of the Act and hence the Ld. CIT(A) ought to have made a reference to the DVO.
4. The appellant craves leave to add, alter, amend, modify any grounds of appeal.”
2. Rival submissions of both the parties have been heard and record perused.The learned Authorised Representative (ld. AR) of the assessee fairly submits that there is delay of 59 days in filing appeal before the Tribunal. The assessee has filed his affidavit for condonation of delay in filing appeal. The ld. AR of the assessee submits that delay in filing appeal is neither intentional nor deliberate. The assessee has not received SMS alert or copy of impugned order passed by ld. CIT(A). The assessee came to know about passing of the impugned order when his consultant assessed the Income Tax Business Application (ITBA) portal and find that appeal of assessee had already been dismissed. The assessee immediately took step and filed the present appeal.
The ld. AR of the assessee prayed for condoning the delay. On merit, the ld. AR of the assessee submits that assessee is a proprietor of Evergreen Enterprises and partner in the firm Evergreen Developer. The assessee being a developer sold certain unit including a shop having area of 1413 square Feet for a consideration of Rs. 25 lakhs. The stamp duty authority estimated the value of said shop at Rs. 49,31,000/-. The assessing officer made addition by invoking the provisions of section 43CA and added the difference vis-à-vis, the sale consideration and the value determined by stamp valuation authority. Before ld. CIT(A), the assessee made specific request to refer the matter to departmental /District Valuation Officer (DVO) for ascertaining/estimating the fair market value of impugned asset. The ld. CIT(A) not accepted the prayer of assessee and upheld the action of assessing officer. The ld. AR of the assessee that he has limited prayer to restore the matter back to the file of assessing officer for making reference to DVO and on receipt of report of DVO, passed assessment order afresh.
On the other hand, learned senior departmental representative (ld. Sr. DR) for the revenue not seriously opposed the plea of condonation of delay in filing appeal by assessee. However, on merit, the ld. Sr. DR submits that assessee has not made any prayer for making reference to DVO during assessment proceeding. The assessee made such prayer before ld. CIT(A).
The ld. CIT(A) has no power to make difference to DVO. Such power is only vested with assessing officer. Even otherwise, as per plain reading of language of section 50C(2), wherein the word “may” is used, so it makes clear that it is the discretion of assessing officer either to refer the matter to DVO or not.
I have considered the rival submissions of both the parties and perused the orders of lower authorities carefully. I have also deliberated on the affidavit filed by assessee for seeking condonation of delay. I find that there is slight delay of 59 days in filing appeal. The assessee in his affidavit has categorically contended that no SMS alert was received about passing of order by ld. CIT(A) and that delay in filing appeal is not intentional.
Considering the contention of assessee, I find that there is reasonable cause for delay in filing appeal. Therefore, the delay in filing appeal is condoned.
Now, adverting to merits of the case.
I find that the ld. AR of the assessee has made a limited prayer for making reference to DVO for ascertaining the value of asset on the date of sale. The ld. Sr. DR for the revenue objected on two counts (i) that the ld. CIT(A) has no power for making such reference and that power of assessing officer is discretionary for making such reference. In my view, both the contention of ld. Sr. DR for the revenue is misconceived. The ld. CIT(A) has co-terminus power as of assessing officer. Moreover, such prayer can be exercised by ld CIT(A) either by seeking remand report and during remand proceedings, the assessing officer can exercise his jurisdiction for making reference to DVO.
Further, the language of sub-section (2) of 50C clearly mandates for making reference to DVO and such statutory provisions cannot be left at the discretion of assessing officer. Thus, accepting the prayer of ld. AR of the assessee, the matter is restored back to the file of assessing officer with the direction to obtain report of DVO in respect of impugned asset on the date of sale. The assessee is directed to provide complete details of asset along with necessary evidence for making reference to DVO. The assessing officer on receipt of report of DVO shall pass order in accordance with law. In the result, ground of appeal of assessee are allowed for statistical purpose.
In the result, the appeal of assessee is allowed for statistical purpose.