SATISH KUMAR TANDON,NEW DELHI vs. ITO, WARD- 34(3), NEW DELHI

per stamp authority. Notice u/s. 143(2) of the Income Tax Act, 1961

was issued on 26.7.2016 and subsequently, statutory notices u/s.

142(1) of the I.T. Act, 1961 were issued and in response to the same,

the assessee has opted for E-scrutiny proceedings and filed necessary

details which have been examined. During the year under

consideration, the assessee is in an individual and has shown income

from house property, capital gain and other sources. AO observed that

assessee has sold 11 shops situated at Sadar Bazar, Delhi and the

sale value adopted for stamp duty is more than the sale consideration

on which the shops were claimed to be sold. AO asked the assessee

to explain the difference in the value adopted for stamp duty purposes

and sale consideration declared in the return. The Assessee did not

furnish any evidence to support the price at which the shops were

sold which were less than the rates for stamp duty purposes.

Therefore, the AO rejected the contention of the assessee that the

matter should be referred to the DVO u/s. 50C(2) of the Act. The AO

referred to the provisions u/s. 50C(1) of the Act and held that the

value adopted for stamp duty purposes shall be deemed to be the full

value of the consideration received as a result of such transfer.

Hence, the AO assessed full value of the consideration as per the

circuel rates and added Rs. 16,69,167/- to the total income of the

assessee and assessed the income at Rs. 27,49,520/- vide order

dated 26.12.2017. Against the assessment order, the assessee

appealed before the Ld. CIT(A), who vide his impugned order dated

23.5.2018 has dismissed the appeal of the assessee and confirmed the

addition. Aggrieved with the impugned order, the assessee is in appeal

before the Tribunal.

made a specific claim u/s. 50C(2)(a) that the circle rate of the shops

exceeded the fair market value of the shops and a reference may

kindly be made to the Valuation Officer. However, AO without

making reference to the Valuation Officer to determine the fair market

value of those properties and completed the assessment by

considering the circle rate of these properties and made an addition of

Rs. 16,69,167/- and raised a demand of Rs. 3,43,850/-. He further

stated that once the assessee makes a request for reference to DVO, it

is necessary to refer the matter to DVO as per 3rd proviso to section

56(2) r/w section 50C(2). Hence, he requested that the assessment

order passed by the AO making the addition of Rs. 16,69,167/- by

replacing the actual sale consideration of shops of Rs. 35,25,000/-

which was the fair market value as on the date of sale by the circle

rate of Rs. 55,20,000/- for the purpose of calculation of capital gain is

bad in law and facts and need to be quashed.

below. He stated that on this technical irregularity assessment

cannot be quashed as held by the Hon’ble Supreme Court of India in

its order dated 18.5.2018 the case of Home Finders Housing Ltd. vs.

ITO, Corporate Ward 2(3) (2018) 94 taxmann.com 84 (SC). He has

filed the copy of the order dated 18.5.2018 of the Hon’ble Supreme

Court of India (Supra). Hence, he requested to set aside the issue in

dispute to the AO with the directions to refer the same to the DVO to

determine the fair market value of the properties.

the assessment and appellate orders and the case laws relied upon by

the Ld. DR. I find that assessee has sold 11 shops situated at Sadar

Bazar, Delhi and the sale value adopted for stamp duty is more than

the sale consideration on which the shops were claimed to be sold.

AO asked the assessee to explain the difference in the value adopted

for stamp duty purposes and sale consideration declared in the

return. The AO rejected the contention of the assessee that the matter

should be referred to the DVO u/s. 50C(2) of the Act. The AO referred

to the provisions u/s. 50C(1) of the Act and held that the value

adopted for stamp duty purposes shall be deemed to be the full value

of the consideration received as a result of such transfer. Hence, the

AO assessed full value of the consideration as per the circle rates and

added Rs. 16,69,167/- to the total income of the assessee and

similarly, Ld. CIT(A) has held that AO was fully justified in taking the

full value of the consideration as per the value adopted for stamp duty

purposes, as the assessee failed to substantiate the claim of

distressing circumstances and also held on the issue of reference that

it is not mandatory for the A.O. to refer the matter to DVO

mandatorily, which in my opinion, is not sustainable in the eyes of

law and against the law laid down by the Hon’ble Supreme Court of

India in its order dated 18.5.2018 the case of Home Finders Housing

Ltd. vs. ITO, Corporate Ward 2(3) (2018) 94 taxmann.com 84 (SC)

wherein the Hon’ble Supreme Court in the Heads Notes had observed

as under:-

“Section 148, read with section 147, of the Income-tax Act,

1961 - Income escaping assessment - Issue of notice for

(General) - Assessing Officer noticed that income

chargeable to tax had escaped assessment and he initiated

reassessment under section 147 - Assessee raised

objections - However, Assessing Officer without giving

disposal to objections of assessee, passed reassessment

order - Assessee challenged reassessment order before

High Court on ground that by not passing a specific order

after receiving objections, Assessing Officer violated law

declared by Supreme Court in GKN Driveshafts (India) Ltd.

v. ITO [2002] 125 Taxman 963 that Assessing Officer

should pass a speaking order taking into account

objections for re-opening assessment under section 147,

and resultantly, order was bad in law - High Court held

that non-compliance of procedure indicated by Supreme

Court would not make order void or non est and such a

violation was a procedural irregularity which could be

cured by remitting matter to authority - Whether SLP

against impugned order was to be dismissed - Held, yes

favour of revenue]”

5.1 Respectfully following the aforesaid precedent and in the

interest of justice, I set aside the issue in dispute to the AO with the

directions to refer the matter to the DVO for valuation and DVO

should allow full opportunity of hearing to the assessee, as per law

and submit the Report to the AO. Thereafter, the AO shall decide the

matter in dispute afresh, after considering the Report of the DVO and

give adequate opportunity of being heard to the assessee, as per law.

Order pronounced on 04/01/2019.

Sd/- [H.S. SIDHU] JUDICIAL MEMBER Date 04/01/2019

“SRBHATNAGAR” Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches