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Income Tax Appellate Tribunal, “SMC” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Nashik dated 16-03-2017 for the assessment year 2012-13. The solitary issue raised by the assessee in appeal is against the valuation of property without reference to DVO under the provisions of section 50C of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
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The brief facts of the case as emanating from records are : The assessee is engaged in the business of industrial digital photography and videography. The assessee had 1/12th undivided shares in the ancestral immovable property i.e. Plot No. 3, Cottah 1 Chittak admeasuring 2230 Sq. ft. along with 100 Sq. ft. single storied residential house at 3H, Mahesh Chandra Dutta Lane, Chetla, Kolkatta. The assessee along with other co- owners sold the aforesaid property on 31-01-2012 for a consideration of Rs.32,00,000/-. The Government valuation of the said property was stated to be Rs.1,23,81,291/-. The assessee in its return of income did not declare the Capital Gains arising from sale of aforementioned property. Notice u/s. 148 was issued to the assessee on 28-11-2014. The assessee in response to aforesaid notice filed return of income on 05-01-2015 declaring total income of Rs.1,48,410/- and offered Long Term Capital Gain of Rs.1,07,500/-. The Assessing Officer adopted the valuation as per Government stamp duty value and computed assessee’s share in Long Term Capital Gain at Rs.5,31,774/-.
Aggrieved by the assessment order dated 14-09-2015 passed u/s. 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the Commissioner of Income Tax (Appeals). Before the Commissioner of Income Tax (Appeals) the assessee filed valuation report from approved valuer whereby the property was valued at Rs.13,99,000/-. The Commissioner of Income Tax (Appeals) rejected the additional evidence filed by the assessee and confirmed the addition made by Assessing Officer. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals).
Shri Sanket Joshi appearing on behalf of the assessee submitted that the Assessing Officer was duty bound to refer the valuation to DVO
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under the provisions of section 50C(2) if the value adopted by the assessee is less than the Government valuation for stamp duty purpose. In support of his submissions, the ld. AR placed reliance on the decision of Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. Commissioner of Income Tax in GA No. 3686 of 2013 in ITAT No. 221 of 2013 decided on 13-03-2014 and the decision of Delhi Bench of the Tribunal in the case of Income Tax Officer Vs. Aditya Narain Verma (HUF) reported as 187 TTJ 476. The ld. AR submitted that in the present case the Assessing Officer in an arbitrary manner has adopted the valuation as per stamp duty rate without making reference to DVO. The fair market value of the property is less than the stamp duty rate. Under such circumstances the Assessing Officer was duty bound to refer the valuation to DVO.
On the other hand Shri Achal Sharma representing the Department vehemently defending the impugned order submitted that the assessee never asked for making reference to DVO either during assessment proceedings or in the proceeding before First Appellate Authority. The assessee furnished valuation report from the Government Approved Valuer before the Commissioner of Income Tax (Appeals). No reason whatsoever has been given by the assessee as to why such valuation report was not furnished during assessment proceedings. The ld. DR prayed for dismissing the appeal of assessee and confirming the findings of Commissioner of Income Tax (Appeals).
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue in appeal by the assessee is against the addition of Rs.5,31,774/- made by the Assessing Officer in respect of Long Term Capital Gains arising from
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sale of ancestral property. The assessee acquired 1/12th undivided share in the ancestral property. The ancestral property was sold on 31-01-2012 for a consideration of Rs.32,00,000/-. Whereas, the Assessing Officer valued the property at Rs.1,23,81,291/- on the basis of Government stamp duty valuation. The Assessing Officer determined assessee’s share in Long Term Capital Gains at Rs.10,31,774/- as against Rs.5,00,000/- returned by the assessee. Thus, the Assessing Officer made addition of Rs.5,31,774/-. During the proceedings before the Commissioner of Income Tax (Appeals), the assessee furnished valuation of the property from approved valuer as additional evidence. However, the additional evidence furnished by the assessee was not admitted by the Commissioner of Income Tax (Appeals).
The contention of the assessee is that the Assessing Officer was duty bound to refer valuation under the provisions of section 50C to the DVO where the value assessed by the stamp valuation authority exceed the fair market value of the property on the date of transfer.
We find that in the case of Sunil Kumar Agarwal Vs. Commissioner of Income Tax (supra) where the Assessing Officer failed to refer valuation to DVO and had fixed the value of property merely on the basis of valuation for stamp duty purpose, such valuation was held to be bad in law. The relevant extract of the observation of Hon’ble High Court reads as under :
“8. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the
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basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer. 9. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. 10. For the aforesaid reasons, the order under challenge is set aside. 11. The impugned order including orders passed by the CIT(A) and the assessing officer are all set aside. The matter is remanded to the assessing officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is made, the assessment shall be made de novo in accordance with law.”
We find that similar view has been taken by the Delhi Bench of the Tribunal in the case of Income Tax Officer Vs. Aditya Narain Verma (HUF) (supra).
Thus, in view of the facts of the case and decisions discussed above, we are of considered view that the Assessing Officer after having coming to the conclusion that the fair market values disclosed by the assessee is less than the value as per Government stamp duty valuation has erred in not making reference to DVO u/s. 50C(2) of the Act. Hence, the impugned order is set aside and the issue is restored to the Assessing Officer for de
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novo adjudication, after seeking valuation from the DVO, in accordance with law.
In the result, the appeal of assessee is allowed for statistical purpose.
Order pronounced on Tuesday, the 14th day of August, 2018.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 14th August, 2018 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-1, Nashik 3. 4. The Pr. Commissioner of Income Tax-1, Nashik ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “एक-सदस्य मामऱा” बेंच, 5. ऩुणे / DR, ITAT, “SMC” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune