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Facts
The assessee, a farmer, sold agricultural land for Rs. 75,00,000/-. The AO invoked Section 50C, considering the stamp duty value of Rs. 1,50,00,000/- as the sale consideration and initiated reassessment proceedings under Section 147.
Held
The Tribunal found that the First Appellate Authority's remarks regarding the assessee's valuation report were without basis and restored the case to the AO to obtain a report from the Departmental Valuation Officer for a fresh adjudication.
Key Issues
Whether the AO was justified in invoking Section 50C based on stamp duty value without considering the assessee's valuation report and whether the reassessment proceedings were validly initiated.
Sections Cited
147, 148, 144, 50C, 271(1)(c), 271F, 55A, 50C(2)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2012-13 Hari Singh Chouhan v. The Income Tax Officer 3(5) 1, Naramau Kanpur Kanpur Nagar (U.P) TAN/PAN:ASKPC3749A (Appellant) (Respondent) Appellant by: Srhi Rakesh Garg, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. O R D E R
This appeal has been preferred by the assessee against order, dated 12.09.2023, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2012-13.
2.0 The brief facts of the case are that the assessee is a farmer and the assessee has never filed return of income. The Income Tax Department was in possession of information that the assessee, who was having 1/3 share in the agricultural land situated at Mauza-Naramau, Kachaar, Kanpur Nagar, had sold the same on 15.09.2011, relevant to the assessment year under consideration, for a consideration of Rs.75,00,000/-. As per the Assessing Officer (AO), the value adopted by the Stamp Valuation Authority for the purpose of payment of Stamp Duty in this case was Rs.1,50,00,000/- and, therefore, as per the provisions of section 50C of the Act, the value adopted by the Stamp Valuation Authority for the purpose of payment of Stamp Duty was deemed to be the full value of consideration received by the assessee. The AO observed that the sale consideration Rs.1,50,00,000/- had escaped assessment for the year under consideration. The AO, accordingly reopened the case of the assessee under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act. In response to notice under section 148 of the Act, the assessee’s Counsel appeared before the AO and filed the required documents. After considering the submissions made on behalf of the assessee and the materials placed on record, the AO completed the assessment under section 147 read with 144 of the Act, calculating the Long Term Capital Gain earned by the assessee as under and added the same to the total income of the assessee:
Calculation of Capital Gain / Loss Amount (Rs.) Sale Consideration as per Circle Rate Rs.1,50,00,000/- Less: Index cost of acquisition date 01.04.1981 2485x35000 / Hectare) Rs.43,697/- Index cost of above value 15.09.2011 43697x785/100 = Rs.3,43,021/- Capital Gain on sale of property Rs.1,46,56,979/- (1/3rd share of the assessee) 14656979/3 Rs.48,85,660/- Long Term Capital Gain of the assessee Rs.48,85,660/- 2.1 The AO also initiated penalty proceedings under section 271(1)(c) and 271F of the Act, separately.
2.2 Aggrieved, the assessee preferred an appeal before the NFAC, which dismissed the appeal of the Assessee on merits.
2.3 Now, the Assessee has approached this Tribunal challenging impugned order of the NFAC by raising the following grounds of appeal:
1. Because there being no material to form reasons to believe as mandated in section 147, the notice issued u/s.148 and the reassessment framed thereafter is all without jurisdiction, the order passed u/s 147/143(3) as upheld by the CIT(A) be quashed.
2. Because the entire reassessment proceedings have been initiated on the basis of borrowed satisfaction and there being no inquiry or independent satisfaction of the AO, approval accorded being mechanical, the reassessment framed is without jurisdiction, bad in law be quashed. the 3. Because the CIT(A) has failed to appreciate the facts and circumstances of the case and has erred in upholding the addition of Rs.48,85,660/- Long Term Capital Gains (LTCGs), which addition is contrary to facts bad in law be deleted.
Because the CIT(A) was not justified in not referring the matter to the Valuation Officer inspite of the assessee's specific request, failure to do so has made the order bad in law the same be quashed.
5. Because as per the provision of Section 55A, if the AO is of the opinion that the value of the land as declared based on the Registered Valuer's Report is not acceptable, he ought to have referred the matter to the Valuation Officer for determination of Fair Market Value, the same having not been done the order passed by the CIT(A) is contrary to the provisions of law, the same be quashed.
6. Because as per the provisions of section 55A and 50C(2), the CIT(A) was not justified in not referring the valuation to the Valuation Officer for determination of Fair Market Value as on the date of acquisition and transfer of the land, that being in gross violation of law, the order passed by the CIT(A) be quashed. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee is a farmer residing in a village near Kanpur and is fully dependent on farming. It was submitted that the agricultural land was under the joint ownership and the assessee had 1/3rd share and the sale consideration received by the assessee was to the tune of Rs.75 lakhs, whereas the circle rate value was Rs.1.50 crores for the purposes of Stamp Duty. It was submitted that the addition in terms of section 50C of the Act was made by the AO by not considering the real market value of the agricultural land, its situation and its indexed cost. It was further submitted that the assessee had filed a valuation report from the registered Income Tax Valuer during the course of first appellate proceedings, but the same was not considered at all by the Ld. First Appellate Authority. A copy of the said report is placed at pages 8 and 9 of the paper book and brief submission of the Ld. A.R. was that in absence of anything to the contrary, the assessee’s claim, that the price received was the actual market value of the land sold, be accepted or alternatively the issue may be restored to the AO for the purpose of reference to the Departmental Valuation Officer and its adjudication thereafter.
4.0 Per contra, the Ld. Sr. D.R. submitted that provisions of section 50C of the Act were very clear that the Stamp Duty rate had to be adopted and it was submitted that the Ld. First Appellate Authority has given detailed reasoning for not accepting the valuation report submitted by the assessee. It was prayed that the assessee’s appeal be dismissed.
5.0 I have heard the rival submissions and have also perused the material on record. It is seen that the assessee’s claim is that the price received by him was the prevailing market price and, thus, it would follow automatically that the circle rate was not the fair market value of the property. The assessee did file a valuation report before the Ld. First Appellate Authority challenging the valuation as per in the circle rate which was dismissed on the ground that the valuation report of the property was belated and was more of an afterthought and fabrication. These remarks of the Ld. First Appellate Authority are apparently without any basis and sound reasoning. In such a situation, it would be in fitness of things if a report from the Departmental Valuation Officer is obtained. Accordingly, on the facts of this case, I restore this file to the office of the AO with a direction to obtain a report from the Departmental Valuation Officer and on receipt of such report and after giving a proper opportunity to the assessee, re-examine and adjudicate the issue de novo.
5.1 The assessee has also challenged initiation of reassessment proceedings in its grounds of appeal. However, no arguments were advanced by either of the sides on the validity of reassessment proceedings. Accordingly, these grounds are dismissed as not pressed.
6.0 In the final result, the appeal of the assessee stands partly allowed for statistical purposes.
Order pronounced in the open Court on 25/08/2025.