VIKRAM SHAH,PUNE vs. DCIT, CIRCLE-2, PUNE

आदेश / ORDER PER S.S. GODARA, JM :

Case called twice. None appears at assessee’s behest. He is accordingly proceeded ex parte. Case file perused.

“9.3 DECISION; The observations of the AO, submissions of the appellant and the material on record have been considered. 9.3.1 In the assessment order, it was seen that the appellant, along with his father, had sold a property at Aundh on 30.12.2005 for Rs. 30,00,000/- whereas the Stamp Duty Valuation of the said property was Rs. 46,13,000/-. The AO asked the appellant as to why provisions of Section 50C(1) of the Act should not be applied to him for computing capital gain to which the appellant replied that the plot was under reservation and its value was low. Thereafter, the AO referred the matter to the DVO for determining the FMV of the said property on 17.12.2008. Since the report of the DVO was not received before completion of the assessment on 30.12.2008, the AO adopted the Stamp Duty Value of Rs. 46,13,000/- and made addition of Rs. 8,06,500/- which was the appellant's share of Long Term Capital Gain. 9.3.2 The appellant has raised the ground that the assessment order dated 30.12.2008 was invalid because the AO did not have jurisdiction to adopt valuation of the property other than what the DVO would recommend and therefore the assessment order was null and void. He also contended that applying the provisions of Section 50C(1) of the Act was contrary to the provisions and scheme of the Act and the facts prevailing in the case because once the valuation is referred to the DVO, then the AO cannot make valuation of the property on his own. The appellant also submitted that as per the provisions of Section 50C(2) of the Act, the DVO report is binding on the AO. The appellant relied on the decision in the case of S. Muthuraja Vs. CIT 37 Taxmann.com 352 (Mad). In the same breath, the appellant also contended that once the assessment order was passed pending the receipt of the DVO report, the reference to DVO became invalid. For this, he relied on the decision of Reliance Jute and Industries Ltd. 150 ITR 643 (Kol) and decision of Hon'ble Mumbai ITAT in the case of DCIT Vs. Vida D'Lima IT A No. 5976/Mum/2011 and the case of Eula D'Souza IT A No. 5969/Mum/2011. He contended that the returned income of Rs. 15,09,930/- should be taken as the assessed income as against Rs. 23,16,430/- determined by the AO.

9.3.3 Section 50C(1) of the Act states that where the consideration received or accruing as a result of transfer by the appellant of a capital asset is less than the value adopted or assessed by the Stamp Valuation Authority, the value so adopted by the Stamp Valuation Authority shall for the purposes of Section 48 be deemed to be the full value of the consideration received or accruing as a result of such transfer. Section 50C(2) of the Act states that without prejudice to the provisions of Section 50C(1) of the Act, where the appellant claims before any AO that the value adopted or assessed by the Stamp Valuation Authority u/s 50C(1) of the Act exceeds the FMV of the property as on the date of transfer, the AO may refer the valuation of the capital asset to the DVO. The DVO's report is binding on the AO.

9.3.4 On perusal of the assessment order, it is very clear that the AO, on the basis of the facts of the case and the submissions of the appellant, was of the considered opinion that the property needed to be referred to the DVO for valuation of its FMV u/s 50C of the Act. Since, the report of the DVO had not been received upto the end of December, 2008, the AO had passed the assessment order making an addition of Rs. 8,06,500/- in the appellant's case. The AO is well within his rights in referring the matter to the DVO as per the provisions of Section 50C of the Act as the value of the asset as reflected by the appellant was lower than the Stamp Duty Valuation of the same. Therefore, the appellant has no grouse when the valuation as per the DVO report is adopted in this order as he himself has been emphasizing time and again in his submissions that the valuation of the DVO is to be adopted and not that of the Stamp Valuation Authority. He has also reiterated that the DVO report was sacrosanct and had to be adhered to by the AO. Now since the DVO's report has been received, the appeal is being decided after giving due opportunity to the appellant during the appellate stage and considering the submissions that he has given thereafter to this office. 9.3.6 In light of the above facts, it is held the FMV of Rs. 22,01,000/- as on 3.01.2006, vide the report of the DVO dated 23.04.2009 takes precedence once it has been received. Thus, the contentions of the appellant that the valuation determined by the DVO is to be adopted and not the Stamp Duty Valuation as adopted by the AO in the assessment order is acceptable. Simultaneously, the appellant's contention that the DVO's report is binding on the AO as per the provisions of Section 50C(2) of the Act and the AO cannot make addition u/s 50C(1) of the Act based on the Stamp Duty Valuation is also acceptable. However, the appellant's contention that the DVO report becomes invalid once assessment order is passed is not acceptable in view of the discussions above. The decisions relied upon by the appellant, in connection with the submission that the DVO report becomes invalid once the assessment order is passed, are not relevant to the facts of the appellant's case. 9.3.7 The DVO after due consideration, has determined the FMV of the said property at Rs. 22,01,000/-. The appellant has not submitted any objection before the DVO. In view of the facts above, the DVO has correctly adopted the FMV of the property under consideration at Rs. 22,01,000/- and I have no reason to differ with the same. Therefore, in light of the above, the AO has rightly made the addition in the case of the appellant. However, in view of the discussions above, the addition is restricted to Rs. 22,01,000/- and the addition of Rs. 7,01,000/- (Rs. 22,01,000/- less Rs. 15,00,000/-) is sustained. The addition made by the AO is partly upheld. Therefore, Ground of Appeal Nos. 1 & 2 and Additional Ground of Appeal No. 2, filed by the appellant, are PARTLY ALLOWED.”

4. It is therefore clear that the assessee has already succeeded on the very issue before the CIT(A) and also he has not challenged the DVO’s valuation of the relevant capital asset. That being the case, I find no merit n the assessee’s pleadings. The same stand rejected.