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Facts
The assessee sold an immovable property for Rs. 64 lakhs. The Assessing Officer (AO), based on a DVO report, determined the fair market value at Rs. 1,20,00,000/- and added Rs. 25,43,630/- as short-term capital gain. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal found that the DVO's adopted rate of Rs. 2,168/- per Sq Ft was arbitrary. They noted that a comparable sale instance, which was closer to the assessee's plot and executed subsequently, had a rate of Rs. 1,706/- per Sq Ft.
Key Issues
Whether the addition to short-term capital gain based on the DVO's valuation under Section 50C is justified, considering comparable sale instances.
Sections Cited
50C, 147, 148, 50C(2)
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Income Tax Appellate Tribunal, “PATNA BENCH”,PATNA
Appearances by: Assessee represented by :Shri A.K. Rastogi, Sr. Adv. Shri Rakesh Kumar, Adv. Department represented by : Shri Ashwani Kr. Singal, JCIT Date of concluding the hearing : 28.11.2025 Date of pronouncing the order : 06.01.2026 O R D E R Per Rajesh Kumar, AM
The present appeal filed by the assessee arises from order dated 17.12.2024passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld. CIT(A)].
The only issue raised in various grounds of appeal is against the confirmation of addition of Rs. 25,43,630/- by the Ld. CIT(A) as made by the AO under Section 50C of the Act.
Sitaram Sultania 3. The facts in brief are that the assessee filed return of income on 21.09.2010 declaring total income at Rs. 26,73,287/-. The assessee is a dealer of SAIL and engaged/dealing in Steel and Scraps etc. During the year the assessee sold immovable property for Rs. 64 lakhs. As per the in- formation gathered by the AO from Stamp Valuation Authority, the value of the immovable property was determined at Rs. 1,20,00,000/-. Accord- ingly, the case of the assessee was reopened under Section 147 of the Act by issuing notice under Section 148 of the Act. The assessee computed Short Term Capital Gain and duly showed the same in the return of in- come. Finally, the Assessing Officer computed short term capital gain by taking sale consideration as per the valuation report at Rs. 86,72,000/- after reducing the cost of property sold of Rs. 61,28,370/- at Rs. 25,43,630/- and added the same to the income of the assessee.
4. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee.
After hearing the rival contention and perusing the material on record, we find that the property was sold by the assessee for considera- tion of Rs. 64.00 lacs as against the stamp valuation thereof of Rs. 1,20,00,000/-. The said property was purchased by the assessee on 03.11.2008 for a consideration of Rs. 61,28,370/-. The assessee comput- ed short term capital gain on sale of the said property at Rs. 2,71,630/- and offered the same to tax in the return of income. On the request of the assessee, the AO referred the matter to DVO and the DVO valued the property under Section 50C(2) of the Act at Rs. 86,72,000/-. Accordingly, the Assessing Officer computed the short-term capital gain at Rs. 25,43,630/- on the basis of DVO report and added the same to the in- come of the assessee. We note that the DVO in its report dated 26.03.2015 categorically mentioned the method of valuation of fair mar- ket value which is the comparable sale of land method. We note that the Assessing Officer has not adopted the per sq.ft. rate out of any of the five
Sitaram Sultania comparables quoted in valuation report and has adopted the arbitrary rate of Rs. 2,168/- per Sq Ft of arriving at fair market value at Rs. 86,72,000/-. For the sake of ready reference, the rates in the DVO report are extracted below:
We also note that the instance mentioned at serial no. 5 is closer to the plot in question in which the sale deed was executed on 21.07.2010
Sitaram Sultania almost 15 months subsequent to the sale by the assessee on 03.04.2009, wherein the per square feet rate was Rs.1,706/- per Sq. ft. whereas the DVO has adopted arbitrary rates of Rs. 2,168/- per Sq. ft. Considering the facts of the case, we are inclined to hold that the order passed by the Ld. CIT(A) dismissing the appeal of the assessee is unreasonable and therefore cannot be sustained. In our opinion, as per the method valua- tion by DVO, the value of that plot which is very close to the assessee’s plot and also the sale is much after the date of sale by the assessee. Therefore, it would be a reasonable if the rate is applied at Rs. 1,706 per square feet. If we compute the sale consideration on the basis of said rate it would comes to Rs. 68,24,000/- taking in the sale and the resultant addition should be Rs. 6,85,630/-. Considering these facts, we are in- clined to set aside the order of Ld. CIT(A) and direct the Assessing Officer to add Rs. 6,85,630/- as short-term capital gain instead of Rs. 25,43,630/-.
In result, appeal of the assessee is partly allowed.