VISHAL NAVINCHANDRA SHAH,JAMNAGAR vs. OFFICE OF THE COMMISSIONER OF INCOME TAX, APPEAL, BHUBANESWAR
Facts
The assessee sold two properties for ₹31,89,100, but the stamp duty authority valued them at ₹55,15,000. The Assessing Officer invoked Section 50C, adding ₹23,26,000 to the long-term capital gain without referring the matter to a Departmental Valuation Officer (DVO), despite the assessee's request. The CIT(A) confirmed the addition.
Held
The Tribunal held that Section 50C was not applied in the correct spirit of law, as the AO failed to refer the matter to a DVO despite the assessee's request. The case was remanded back to the AO to obtain a DVO report and re-adjudicate the matter after providing the assessee with an opportunity to be heard.
Key Issues
The key legal issue was whether the Assessing Officer erred in making an addition under Section 50C without referring the property valuation to a Departmental Valuation Officer (DVO) despite the assessee's specific request, and if the CIT(A) was justified in confirming this addition.
Sections Cited
Section 50C, Section 50C(2), Section 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & DR. DINESH MOHAN SINHA
आदेश / ORDER Per, Dr. Dinesh Mohan Sinha, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2013-14, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi dated 23.05.2025, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3) of the Income Tax Act, 1961, vide order dated 02.03.2016. 2. Grounds of appeal raised by the assesse, are as follows: “1. That the Learned CIT(A) erred in law and on facts in confirming the addition of 23,26,000/- made by the Assessing Officer under Section 50C of the Income Tax Act, 1961 without referring the matter to the Departmental Valuation Officer (DVO), despite specific request by the assessee.
ITA No. 482/RJT/2025 Vishal Navinchandra Shah 2. That the Learned CIT(A) failed to appreciate that Section 50C(2) mandates that if the assessee claims that the value adopted by the stamp valuation authority exceeds the fair market value, the AO shall refer the matter to a DVO before making any addition. 3. That the addition made under Section 50C is unjust, arbitrary and in gross violation of principles laid down by Hon'ble Courts including the binding decision of Sunil Kumar Agarwal v. CIT [(2015) 372 ITR 83 (Cal)]. 4. That the CIT(A) erred in confirming the assessment order u/s 143(3) as valid despite it being passed in breach of the assessee's fundamental right to be heard and without application of mind. 5. That the learned CIT(A) also erred in confirming the addition without appreciating that the stamp duty valuation is only a deeming fiction and cannot override the actual consideration received unless duly rebutted by fair valuation. 6. That the entire assessment is bad in law and deserves to be quashed.”
Brief facts of the case that the Appellant is an Individual engaged in Manufacturing of Stationery Items. During the year under consideration the Appellant had derived income from Business and Profession, House Property, Capital Gains and Other Sources. The Appellant e-Filed Return of Income for A.Y. 2013-14 on 29.09.2013 declaring income of Rs. 15, 15,940/-. Appellants case was selected for Assessment Proceedings under Section 143(3) for A.Y. 2013-14. During the Course of Assessment, Learned Assessing Officer came to know that the appellant had sold two properties situated at Kalher, Taluka Bhiwandi, District Thane during FY 2012-13 (AY 2013-14) for total consideration of ₹31,89, 100/- as per registered sale deeds. The stamp duty authority valued the said properties at ₹55,15,000/-, which led the Assessing Officer to invoke Section 50C and make an addition of Rs. 23,26,000/- to Long Term Capital Gain. During the assessment proceedings, the appellant clearly submitted that the actual market value is lower and made an alternate request to refer the matter to the DVO under Section 50C(2). That the assessment computed on dated 02.03.2016 with an addition of Rs. 23,26,000/- u/s. 50C of the Act.
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ITA No. 482/RJT/2025 Vishal Navinchandra Shah 4. That the assessee filed an appeal against the order of the AO, before the Ld.CIT(A). That the appeal was dismissed the by the Ld.CIT(A) order dated 23.05.2025 by following observation: “4.1.1 On going through the assessment order, it is seen that the Assesssing officer has rightly taken the stamp duty value of the two properties sold during the year and has applied 50C to re-compute Long term capital gains and has added Rs.23,26,000/-. An opportunity to be heard was provided to the assessee vide notice dated 23.12.2024 to which no reply is received. Hence the addition is confirmed. This ground is dismissed.”
That the assessee challenged the legality and validity of impugned order by moving of an appeal before this Tribunal. 6. During the course of hearing, the Ld.AR of the assesse requested for an opportunity given to the assessee to explain the case before lower authorities. 7. On the other hand, the Ld.DR for the revenue relied on the order of the Ld.CIT(A). 8. We have heard rival contention of both the parties and perused the material available on record and perused the order of the Ld.CIT(A) dated 23.05.2025. We note that the Ld.CIT(A) has issued only one notice dated 23.12.2024, and order does not talked about the service of notice. The Ld.CIT(A) has upheld the order of the AO on the issue of completion of capital gain on the basis of valuation made by the Stamp Valuation Authority. We note that section 50C of the Income Tax Act was not applied in correct spirit of law, after considering the facts and circumstance of the case, the assessment order is to be completed after binding the DVO report. We are of the view that one more opportunity should be given to the assessee to present his case before the AO. Therefore the matter restored back to the file of the AO with direction of obtaining report of DVO and adjudicate the matter in accordance with law, after giving due opportunity of being heard to the assessee. The assessee will also be at liberty to let in further
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ITA No. 482/RJT/2025 Vishal Navinchandra Shah evidence to substantiate it’s case. The appeal of the assessee is treated as allowed, for statistical purpose
In the result, appeal of the assessee, is allowed for statistical purpose.
Order is pronounced in the open court on 12/02/2026.
Sd/- Sd/- (Dr. Arjun Lal Saini) (Dr. Dinesh Mohan Sinha) Accountant Member Judicial Member Rajkot //True Copy// �दनांक/ Date: 12/02/2026 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot By Order 6. Guard File Assistant Registrar/Sr. PS/PS ITAT, Rajkot
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