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Facts
The assessee, a co-owner of a property, sold it jointly. The Assessing Officer (AO) determined a long-term capital gain higher than declared, making an addition after finding the cost of acquisition unexplained, and assessed total income at Rs. 2,17,55,651/-. The Ld. CIT(A) dismissed the assessee's appeal.
Held
The Tribunal observed discrepancies in the AO's capital gain calculation and the failure to refer the property for valuation by a Departmental Valuation Officer (DVO) under Section 55A. It also noted a potential violation of natural justice. The ITAT set aside the orders of the lower authorities and remitted the matter back to the AO for proper verification and fresh adjudication.
Key Issues
Dispute regarding the computation of long-term capital gain, valuation of property under Sections 50C and 55A, and alleged denial of natural justice to the assessee.
Sections Cited
143(2), 142(1), 50C, 55A, 48
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeals)- NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 08.01.2025 for AY 2016-17.
Assessment Year: 2016-17 Soumitra Kumar Shaw 2. Brief facts of the case of the assessee is that the assessee filed return of income for AY 2016-17 declaring total income of Rs. 45,36,510/-. The case of the assessee was selected for scrutiny, notices u/s 143(2) and 142(1) were issued as during the course of scrutiny assessment it was noticed that the assessee has jointly sold the property with Shri Gita Shaw for full value consideration of Rs. 4,01,00,000/- but as per sale deed the whole property land and building has been sold to M/s Sakhi Regency Pvt. Ltd. and the certified market value of property as assessed by the competent authority is Rs. 4,07,13,538/-. The AO after going over the reply of the show cause notice and the valuation report assessed long term capital gain at Rs. 2,03,56,769/- and held that cost of acquisition with index given by the assessee in its report i.e. Rs. 1,72,19,141/- remained unexplained. The AO has made an addition of Rs. 1,72,19,141/- and total income assessed at Rs. 2,17,55,651/-.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
The Ld. A.R challenges the very impugned order thereby submitting that the order passed by the AO confirmed by the Ld. CIT(A) erred in law and facts as the AO failed to understand the calculation of the long term capital gain as he did not understand that the valuation made by the valuer is with respect to the entire amount in question upon which the building is situated. The AR submits that that assessee took only a portion of the value later on premises. He submits that the calculation made by the AO is wrong as the assessee is co-owner of the property wherein the mother Smt. Geeta Shaw is 50% undivided owner and she filed separate return with respect to her income. The Ld. A.R further submits that the AO failed to consider the facts contained in the written submission and valuation report of the competent authority, valuation filed by the assessee in its true perspective. He further submits that there was a gross valuation of natural justice by giving no scrip to the assessee to give reply to the clarification of the valuation made by Chartered Engineer based on which the AO has passed an order. The Ld. Counsel further submits that Section 50C of the Act comes into operation when Assessment Year: 2016-17 Soumitra Kumar Shaw the stamp value exceeds sale consideration and in that case the consequence in the valuation adopted by the stamp duty authority shall be taken into full value consideration for the purpose of computation of capital gain. The Ld. CIT(A) further submits that the Ld. CIT(A) on the one hand has observed that the AO should have referred the property for the valuation of the valuation officer appointed by the income tax department as per Section 55A of the Act but failed to pass necessary order where the AO did not accept the value of the asset claimed by the assessee in accordance to the asset made by the registered valuer in terms of Section 55A of the Act. The submission of Ld. A.R is that the matter be remitted back to the file of AO for proper verification and after affording opportunity to the assessee to submit and place the case with documentary evidence.
The Ld. D.R though supports the impugned order but did not raise any objection in remitting the appeal back to the file of AO for proper verification.
Upon hearing the submission of the counsel of the respective parties. On perusal of the order of AO the following facts have been emerged: i) The assessee filed return of income declaring total income of Rs. 45,36,516/-. ii) Notice u/s 143(2) was issued, the assessee submitted reply along with copy of income tax return, audited balance sheet, profit and loss account, computation of income, copy of bank statement etc.
The submission of the AR is that he took only a portion of valuer of the mother case and AO calculated the same by taking the report of the valuer with respect to entire loan in question upon which the building is situated. The assessee has claimed deduction u/s 48 of the Act. We further find that the Ld. CIT(A) in its order has observed that the AO should have referred the property for valuation of the valuation officer appointed by the Income Tax Act as per Section 55A of the Act. It is important to mention here that as per the order of the Ld. CIT(A) the assessee could not give proper explanation before the AO made addition of Rs. 17,21,914/-. The Ld. CIT(A) has clearly observed that the AO has mentioned that the value of the land and building have not been properly taken in the valuation report submitted by the assessee. It is a fact that the AO should have Assessment Year: 2016-17 Soumitra Kumar Shaw referred the property for the valuation by DVO of the department as per Section 55A of the Act. The Ld. A.R submitted before us the matter be remitted back to the file of AO for proper verification. Considering the order passed by the Ld. CIT(A) and documents filed by the assessee before us, we are inclined to restore the appeal of the assessee before the AO for proper verification, we find substance in the argument of the Ld. A.R, accordingly order passed by the AO confirmed by the Ld. CIT(A) is hereby set aside. The appeal is restored to the file of AO for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 22nd May, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 22nd May, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Soumitra Kumar Shaw, 66, B. K. Paul Avenue, Kolkata-700005 2. Respondent – ACIT, Circle-43, Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)