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2018 (10) TMI 1123 - AT - Income TaxAddition u/s. 50C on account of STCG - non referring the mater to DVO for determination of Fair Market Value - Held that - Assessee having income from Salary, Short Term Capital Loss & Bank F.D. Interest etc. Assessee filed the return of income for A.Y. 2010-11 on 02.04.2011 declaring total income of ₹ 92,400/-. During the course of assessment, appellant filed all necessary documents and detailed submissions and during assessment proceeding, assessee raised an objection towards valuation of the property. But A.O. did not bother to refer matter to the DVO. In appellant proceedings CIT(A) clearly mentioned that assessee s only objection to application of section 50C is that the Assessing Officer did not refer his case to the Valuation Officer for determination of Fair Market Value because despite the fact that appellant raised an objection before the lower authorities for referring the mater to DVO for determination of Fair Market Value but lower authorities did not bother. Therefore, stand of the revenue is not sustainable. Therefore, we set aside the order of the A.O. and remand this matter back to the Assessing Officer who will refer this matter to the file of the DVO. Thereafter will decide the matter in accordance with law. - Decided in favour of assessee for statistical purpose.
Issues Involved:
1. Addition under Section 50C of the Income Tax Act, 1961 without reference to Valuation Officer. 2. Failure to issue a show cause notice to the assessee for the addition under Section 50C. Analysis: Issue 1: Addition under Section 50C without reference to Valuation Officer The appellant contested the addition of ?20,57,672 under Section 50C of the Income Tax Act, 1961, pertaining to Short Term Capital Gain (STCG). The appellant argued that the Assessing Officer (A.O.) did not refer the matter to the Valuation Officer (DVO) for determining the Fair Market Value (FMV) of the property, which was essential before making such an addition. The appellant raised this objection during the assessment proceedings, emphasizing the need for a proper valuation. The CIT(A) acknowledged this objection, noting the failure to refer the case to the DVO. The Tribunal agreed with the appellant, setting aside the A.O.'s order and remanding the matter back to the A.O. for necessary referral to the DVO. This decision was based on the principle that the valuation under Section 50C should involve the DVO to ensure accuracy and fairness in determining the FMV, ultimately leading to the allowance of the appeal for statistical purposes. Issue 2: Failure to issue a show cause notice Another contention raised by the appellant was the failure of the CIT(A) to issue a show cause notice regarding the addition under Section 50C. The appellant argued that proper procedural requirements were not met, as no notice was served before making the said addition. However, the primary focus of the Tribunal's decision was on the necessity of the DVO's involvement in determining the FMV, rather than on procedural irregularities related to the show cause notice. As a result, the Tribunal's decision primarily addressed the valuation aspect and the lack of reference to the DVO, leading to the remand of the matter for proper valuation procedures. In conclusion, the Tribunal's judgment emphasized the importance of referring matters to the Valuation Officer for determining Fair Market Value under Section 50C of the Income Tax Act, 1961. The decision highlighted the need for accurate valuations to ensure fairness in assessing capital gains, ultimately resulting in the allowance of the appeal for statistical purposes.
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