2018 (6) TMI 268 - AT - Income Tax

Applicability of section 50C - Reference of matter to DVO - whether the word may really provides discretion to the Assessing Officer even when the assessee has protested the valuation for stamp duty purpose? - Held that - In sum and substance the matter under section 50C is the part of the head Income from capital gains and therefore the preliminary objection raised by the assessee is rejected. Request or objection of the assessee against the value adopted by the stamp valuation authority by the Assessing Officer is against the spirit of section 50C of the Act. It is not optional for the Assessing Officer to make reference to DVO and the right of the assessee under section 50C is a statutory right. In the circumstances and facts of the case we find no infirmity in the order of the learned Commissioner of Income-tax (Appeals) that the Assessing Officer should have considered the objections raised by the assessee against the same and should have referred the matter to the DVO under sub-section (2) of section 50C of the Act

Summary

Issues:
Applicability of section 50C of the Income-tax Act regarding chargeability of capital gain on an asset acquired through inheritance and treated as a capital asset.

Analysis:
The Revenue appealed against the order of the Commissioner of Income-tax (Appeals) regarding the chargeability of capital gain on an asset, namely Jagir (immovable property being land) under section 50C of the Income-tax Act for the assessment year 2011-12. The Revenue raised multiple grounds of appeal related to the application of section 50C, focusing on the deletion of additions made by the Assessing Officer. The core issue revolved around whether the Assessing Officer should have referred the matter to the Department Valuation Officer (DVO) under section 50C(2) of the Act before adopting the valuation of the property sold by the stamp valuation authority.

The Tribunal considered the arguments presented by both parties. The authorized representative for the respondent contended that the grounds raised by the Revenue were not discussed by the Commissioner of Income-tax (Appeals), suggesting the appeal should be rejected on this basis. However, the Tribunal rejected this preliminary objection, stating that section 50C is part of the "Income from capital gains," and thus the objection raised by the assessee was not valid.

The Tribunal examined the facts of the case, where the Assessing Officer computed the income of the assessee based on the stamp duty valuation without referring the matter to the DVO due to pending litigation. The Commissioner of Income-tax (Appeals) had deleted the additions, emphasizing that the Assessing Officer should have considered the objections raised by the assessee and referred the matter to the DVO under section 50C(2) of the Act. The Tribunal agreed with this decision, highlighting that section 50C(2) provides the assessee with the option to object to the valuation for stamp duty purposes and seek a reference to the DVO.

Referring to relevant case laws, the Tribunal emphasized that denying the assessee the opportunity to challenge the stamp valuation authority's value goes against the principles of natural justice. The Tribunal concluded that the Assessing Officer's denial of the assessee's objection was against the spirit of section 50C, which grants the assessee a statutory right to refer the valuation to the DVO. Therefore, the Tribunal dismissed all grounds raised by the Revenue and upheld the order of the Commissioner of Income-tax (Appeals).

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming that the Assessing Officer should have considered the objections raised by the assessee and referred the matter to the DVO under section 50C(2) of the Income-tax Act. The decision was pronounced in open court on February 20, 2018.