2017 (12) TMI 856 - AT - Income Tax

Adoption of sale consideration invoking provisions of Section 50C - assessee is co-owner of property with 1/4th share - AO failed to refer the matter to DVO - Held that - In this case, however, the assessee had given reasons why the stamp value should not be adopted, but not made any specific request for reference to valuation officer. Even though specific objections were raised before the Ld.CIT(A), CIT(A) failed to consider the grounds and in fact, got confused with another issue of admission of Long Term Capital Gain during the survey, to opine that assessee tried to evade taxes. The action of CIT(A) in rejecting the specific contentions is not correct. He should have directed the AO to refer the matter to valuation cell. In fact, the grounds raised are not addressed by CIT(A), even though he had considered the mandatory nature of Section 50C in his decision part. Thus it is fit and proper to remit the matter to AO for adjudicating denovo after making a reference to the DVO and after giving due opportunity to assessee and considering his objections. The issue in these grounds are accordingly set aside to the file of AO for adjudicating afresh as per facts and law. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Adoption of sale consideration invoking provisions of Section 50C of the Income Tax Act for the AY 2008-09.

Analysis:
The appeal was against the Commissioner of Income Tax (Appeals) order regarding the adoption of sale consideration under Section 50C of the Income Tax Act. The assessee sold two properties, one of which had Long Term Capital Gain claimed as exempt, while the dispute was about the second property. The Assessing Officer invoked Section 50C due to the variance between the sale consideration and the value as per the Sub-Registrar's Office (SRO). The assessee argued that the SRO rates do not reflect the actual fair market value and requested adoption of the sale deed value. The AO added the difference to the income returned, stating the SRO value should be adopted as per Section 50C.

Before the Ld.CIT(A), the assessee contended that the AO should have referred the matter to a valuation officer, but the Ld.CIT(A) upheld the AO's decision, stating that the assessee did not dispute the SRO assessment or request a valuation officer. The Ld.Counsel argued that the reference to a valuation officer is mandatory under Section 50C and failure to do so should nullify the adoption of values. The Ld.DR supported the AO and CIT(A), suggesting a re-reference to the AO for compliance.

The ITAT Hyderabad noted that while the assessee provided reasons against adopting the SRO value, no specific request for a valuation officer was made. The ITAT referred to similar cases where failure to refer to a valuation officer led to setting aside the assessment for a fresh adjudication. Citing precedents, the ITAT remitted the matter to the AO for a de novo adjudication after referring to the DVO and considering the assessee's objections, ultimately allowing the appeal for statistical purposes.