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Facts
The assessee sold an immovable property for Rs. 29,40,000/- and computed a loss based on a valuation report. The AO adopted the stamp duty valuation of Rs. 53,20,000/- as deemed income under section 50C. The assessee's appeal to the CIT(A) was unsuccessful.
Held
The Tribunal held that if the AO intended to adopt a higher value than the one presented in the registered valuer's report, it was necessary to refer the matter to the DVO for examination. The Tribunal also directed the AO to consider objections regarding the reopening of the case.
Key Issues
Whether the AO was justified in adopting the stamp duty valuation over the registered valuer's report without referring to the DVO, and whether the reopening of the assessment was valid.
Sections Cited
50C, 147, 151
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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Appearances by: Assessee represented by : Siddharth Agarwal, Advocate Department represented by : Subhendu Datta, CIT-DR, Banik Deb Barman, Sr. DR Date of concluding the hearing : 21.01.2025 Date of pronouncing the order : 03.03.2025
ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal arises from the order of the Ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the “Ld. CIT(A)”], dated 07.05.2024 for the AY 2014-15. 1.1 In this case, the Ld. AO passed an order u/s 147 of the Act dated 23.12.2019 through these proceedings before the Ld. AO it was found that Meera Sonthalia the assessee had sold an immovable property during the year under consideration for a total sum of Rs. 29,40,000/-. The assessee had submitted a valuation report for determining the fair market value of the said property and thereafter, computed a loss of Rs. 2,80,770/-. However, the Ld. AO adopted the sale price as per the report of District Registrar/stamp duty valuation. After this, the Ld. AO held that Rs. 53,20,000/- was deemed to have been received by the assessee u/s 50C of the Act. 1.2 Aggrieved with this action of Ld. AO, the assessee approached the Ld. CIT(A) where also he could not succeed.
Further aggrieved with the action of Ld. CIT(A), the assessee is now in appeal before the ITAT with the following grounds: “
1. For that the reopening proceedings were invalid and improper thereby, vitiating the reassessment proceedings.
2. For that the purported sanction u/s. 151 was not in accordance with law, thus vitiating the re-assessment proceedings.
3. For that the Ld. CIT(A) was not justified in confirming the action of the A.O. in making an addition of Rs.50, 13,435/- under the head Long Term Capital Gain by invoking the provisions of sec. 50C of the Act.
4. For that the Ld. CIT(A) ought to have directed the A.O. to refer the matter to DVO for proper valuation of the property in question.
5. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.” 2.1 Before us, the Ld. AR argued that the Ld. AO should not have adopted the stamp duty valuation inspite of the report of the Registered Valuer which estimated the fair market value of the said property, without referring the matter to the DVO. The Ld. AR relied on the case of Sunil Kumar Agarwal reported in 372 ITR
83. (Kolkata) to canvass the point that a technical report submitted by the registered valuer could only have been analysed by an equally competent authority, in this case the DVO. He argued that the Ld. AO fell in an error in disregarding the contention of Meera Sonthalia the assessee in this regard. The Ld. AR also assailed the order of Ld. CIT(A) for upholding the action of the Ld. AO. 2.2 The Ld. DR on the other hand, supported the orders of the authorities below and stated that there was no viable reason why a lower value was adopted by the assessee.
3. We have carefully considered the rival submissions and gone through the orders of the authorities below and also the paper book filed by the assessee. It is clear that once a valuation report is submitted and in case a higher value has to be adopted then the correct legal course of action would have been to have got the same examined by the DVO. Under the circumstances, we direct that this matter should be re-examined by the Ld. AO by necessarily making a reference to the DVO. Also, once such value has been arrived at then the Ld. AO would also consider any other claim of the assessee with respect to setting off of the capital gains through purchase of any other property. We direct accordingly. 3.1 It also needs to be mentioned that the Ground Nos. 1 & 2 challenged the reopening of the case. At this stage, we deem it fit to direct the Ld. AO to consider and appropriately dispose of the objections of the assessee in this regard at his level.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the court on 03.03.2025