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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri S.S. Godara, JM & Shri M.Balaganesh, AM ]
ORDER Per M.Balaganesh, AM
This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-5, Kolkata [in short the ld CIT(A)] in Appeal No. 150/CIT(A)- 5/W-13(4)/15-16 dated 10.03.2017 against the order passed by the ITO, Ward-13(4), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 30.03.2015 for the Assessment Year 2012-13.
The only issue to be decided in this appeal of the revenue is as to whether the ld CITA was justified in deleting the addition by the ld AO by adopting the value u/s 50C of the Act, in the facts and circumstances of the case.
Sita Sonkar A.Yr. 2012-13 3. The brief facts of this issue are that the assessee is an individual deriving salary income and income from other sources. During the year under consideration, the assessee also had income from capital gains. The assessee filed her return of income for the Asst Year 2012-13 on 27.3.2014 declaring total income of Rs 4,43,640/-. The ld AO observed that the assessee had sold a flat for consideration of Rs 1,60,77,600/- during the year under consideration and no capital gains was offered by the assessee in this regard. The assessee was show caused accordingly by the ld AO. The assessee gave a reply to the show cause notice by giving the computation of capital gains and claim of exemption u/s 54 of the Act as under:-
The ld AO issued notice u/s 133(6) of the Act to The Additional Registrar of Assurances – I, Kolkata who certified the value of the property on the date of transfer at Rs 1,78,07,940/-, being the value determined by the stamp valuation authority u/s 50C of the Act. The ld AO substituted the full value of consideration of flat sold at Rs 1,78,07,940/- as against the figure disclosed by the assessee at Rs 1,60,77,600/- and reworked the capital gains accordingly. The ld CITA deleted the addition by observing as under:- 2
“3.2. The AO has not offered the appellant opportunity of valuation by the approved departmental valuer. He has simply adopted the stamp value figure, whose 10% is about or more than the difference between the stamp value and agreement/sale value. The AO has denied the appellant opportunity of the above reference and he has also denied the benefit of difference being less than 10% as described above. I, therefore, find it difficult to uphold the AO’s decision of mechanically applying stamp value figures for the purpose of section 50C. These grounds are, therefore, allowed.”
Aggrieved, the revenue is in appeal before us.
We have heard the ld DR. None appeared on behalf of the assessee. We find that the value of flat (i.e transferred property) determined by stamp valuation authority u/s 50C of the Act was Rs 1,78,07,940/- and whereas the assessee had returned the full value of consideration of the said flat at Rs 1,60,77,600/-. In this scenario, the provisions of section 50C(2) of the Act would come into play wherein the ld AO ought to have referred the valuation of the flat to Departmental Valuation Officer (DVO) for ascertaining the fair market value. This view of ours is also endorsed by the decision of the Hon’ble Jurisdictional High Court in the case of Sunil Kumar Agarwal vs CIT reported in (2015) 372 ITR 83 (Cal) wherein it was held as under:-
7. 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 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 Sita Sonkar A.Yr. 2012-13 assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer.
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.
For the aforesaid reasons, the order under challenge is set aside.
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.
6.1. Respectfully following the decision of Hon’ble Jurisdictional High Court supra, we direct the ld AO to make a reference to District Valuation Officer (DVO) of the subject mentioned property (i.e flat at southern avenue) which were sold by the assessee for determination of fair market value of the property in accordance with provisions of section 50C(2) of the Act. Accordingly, the grounds raised by the revenue are allowed for statistical purposes.
In the result, the appeal of the revenue is allowed for statistical purposes.