2018 (7) TMI 581 - AT - Income Tax

Capital gain computation - section 50C applicability - valuation adopted by the stamp duty authority - Challenge valuation before the Tax Board - Held that - Assessee has objected to the valuation adopted by the stamp duty authority before the Assessing officer during the course of assessment proceedings and the same is not in dispute and even, the ld CIT(A) has returned a similar finding. Therefore, the first condition as envisaged under section 50C(2) is satisfied in the instant case. The assessee having objected to the valuation so adopted before the Assessing officer and no information available regarding any challenge of such valuation before the Tax Board, the AO should have ordinarily referred the matter to the valuation officer. As during the appellate proceedings, the ld CIT(A) is ceased of this development that the assessee has moved a revision petition challenging the valuation by the Collector (stamps) before the Tax Board, Ajmer, the second condition as envisaged under section 50C(2) is not satisfied in the instant case. There is no way, she would have ignored such a revision petition as brought to her knowledge by the assessee himself and referred the matter to the valuation officer u/s 50C(2) of the Act exercising her coterminus powers as that of the Assessing officer. Given that the value so adopted by the Collector (stamps) is subject to outcome of the revision petition filed before the Tax Board, Ajmer, the value finally assessed as so envisaged under section 50C shall therefore be subject to the outcome of the revision petition - remand the matter back to the file of the Assessing officer to take into consideration the decision of the Tax Board, Ajmer in respect of revision petition filed by the assessee and determine the valuation of the property for the purposes of calculating the capital gains, after providing reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Challenge to addition under section 50C for sale consideration discrepancy.

Analysis:
The appeal was filed against the addition of ?16,73,839 under section 50C for a property sale consideration discrepancy. The assessee sold a plot for ?15,85,000 but the value was enhanced to ?32,80,869 by the Sub-Registrar. The Assessing Officer computed capital gains based on the enhanced value, resulting in a discrepancy with the assessee's reported loss. The ld. CIT(A) upheld the addition, stating that the Stamp Valuation Authority's value should prevail over the approved valuer's report. The assessee argued that the matter should have been referred to the Valuation Officer under section 50C(2) as he disputed the revised valuation. The timing of the assessee's appeal to the Tax Board was crucial in determining if the second condition of section 50C(2) was met.

The relevant provisions of section 50C state that if the value exceeds the fair market value and has not been disputed in any appeal or revision, the Assessing Officer may refer the valuation to a Valuation Officer. In this case, the assessee objected to the valuation before the Assessing Officer, satisfying the first condition. The second condition requires no dispute in any appeal or revision. The assessee's challenge to the valuation before the Tax Board was crucial for this condition.

The timing of the assessee's revision petition challenging the valuation was significant. Since the petition was filed after the assessment order, the AO should have referred the matter to the Valuation Officer. The ld. CIT(A) should have considered this development and referred the matter to the valuation officer. The value assessed by the Collector (stamps) is subject to the outcome of the revision petition. Therefore, the case was remanded back to the Assessing Officer to consider the Tax Board's decision and determine the property's valuation for capital gains calculation.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the importance of considering the timing of challenges to valuations and the impact on the assessment process.