2014 (1) TMI 1309 - AT - Income Tax

Compliance of the provision of Section 50C of the Act - Error in adopting circle tare as per section 50C of the Act Reference to the valuation officer not made - Value adopted exceeds the fair market value of the property - Deemed value of sale consideration adopted Held that - Relying upon SHRI ANIL KUMAR JAIN Versus INCOME TAX OFFICER 2014 (1) TMI 442 - ITAT DELHI - it was incumbent upon the Assessing Officer to refer the matter for valuation to a Valuation Officer has provided in sub-section 50C(2) of the Act - The view taken by the Assessing Officer as well as confirmed by the Commissioner of Income Tax(A) is not correct - Since the Assessing Officer failed to refer the matter to the valuation officer u/s 50C(2) of the Act, it would be proper to restore the matter back to the file of the Assessing Officer for a fresh adjudication after referring the matter to the Valuation Officer u/s 50C(2) of the Act Decided in favour of Assessee.

Summary

Issues:
Single issue - Dispute regarding adoption of circle rate under section 50C of the IT Act for calculating capital gain instead of actual sale consideration received by the assessee.

Detailed Analysis:

1. Background and Appeal: The appeal was filed by the assessee against the order of the ld. CIT (A) dated 5.09.2012 for A.Y. 2009-10. The primary contention of the assessee was that the Assessing Officer (AO) erred in adopting the circle rate as per section 50C of the IT Act for calculating the capital gain instead of the actual sale consideration received by the assessee.

2. Co-ownership Dispute: The assessee, a co-owner of a property, argued that the value adopted by the stamp value authorities for levy of stamp duty did not represent the fair market value of the property. The Tribunal in a related case involving the co-owner had set aside the order of the revenue authorities and directed the AO to refer the matter to the valuation officer under section 50C(2) for determining the fair market value of the property.

3. Assessment and Dispute: The AO observed that the value of the property for stamp duty purposes was higher than the actual sale consideration declared by the assessee. The AO, without referring the matter to the valuation officer as mandated by section 50C(2), determined the capital gain based on the circle rate. The CIT (A) upheld the AO's decision.

4. Tribunal's Finding: The Tribunal found that the AO failed to comply with the procedure provided in section 50C(2) by not referring the matter to the valuation officer despite the assessee's claim that the circle rate exceeded the fair market value. The Tribunal directed the matter to be restored to the AO for fresh adjudication after referring it to the valuation officer.

5. Judgment and Direction: The Tribunal allowed the appeal of the assessee and set aside the issue for re-adjudication by the AO following the directions given in the case of the co-owner. The AO was directed to provide a reasonable opportunity for both parties to present their contentions and evidence before deciding the issue afresh.

6. Conclusion: The Tribunal's decision emphasized the importance of following the statutory procedure under section 50C(2) when there is a dispute regarding the fair market value of a property. The judgment highlighted the necessity for the AO to refer the matter to the valuation officer for proper determination of capital gains based on the actual market value rather than the circle rate.

This detailed analysis outlines the key aspects of the judgment, focusing on the dispute over the adoption of the circle rate under section 50C of the IT Act and the Tribunal's direction for a fresh adjudication following the statutory procedure for determining the fair market value of the property.