2018 (10) TMI 1593 - AT - Income Tax

Long Term Capital Gain - non reference of matter to the Valuation Officer as per section 50C(2) - FMV determination - Held that - We direct the AO to refer to the Valuation Officer to determine the fair market value u/s 50C(2). Accordingly determine the capital gain after giving proper opportunity of being heard to the assessee. Therefore, the impugned order is set aside and AO is directed to redo assessment de-novo. Appeal of the assessee allowed for statistical purposes.

Issues Involved:
1. Application of Section 50C of the Income Tax Act in determining the sale consideration.
2. Validity of the assessment order passed by the Assessing Officer.
3. Consideration of capital gains under Section 50C.
4. Requirement to refer the matter to the Valuation Officer as per Section 50C(2).

Issue 1: Application of Section 50C of the Income Tax Act in determining the sale consideration:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2012-13. The Assessing Officer invoked Section 50C of the Income Tax Act, determining the sale consideration at a higher value based on the market value fixed by the Sub Registrar. The assessee contended that Section 50C was not applicable to her case due to the property's disadvantages and pleaded for consideration of the actual sale value. The Commissioner upheld the AO's decision, stating that the assessee failed to prove the actual sale value against the stamp duty value. The appellant challenged this decision, arguing that the AO should have referred the matter to the Valuation Officer as per Section 50C(2).

Issue 2: Validity of the assessment order passed by the Assessing Officer:
The Assessing Officer issued a notice under Section 148, asserting that the Long Term Capital Gain from the sale transaction was not assessed. Despite the assessee's detailed explanation on the property's disadvantages and reasons for the sale at a lower value, the AO determined the total income including capital gains. The appellant contended that the AO should have considered the submitted explanation and referred the matter to the Valuation Officer. The Tribunal directed the AO to refer to the Valuation Officer for fair market value determination under Section 50C(2), setting aside the previous assessment order.

Issue 3: Consideration of capital gains under Section 50C:
The AO calculated the long term capital gains invoking Section 50C, resulting in a higher figure than the assessee's calculation. The CIT(A) confirmed this decision, leading to the appellant's appeal. The Tribunal referred to a previous case where it was held that the Valuation Officer should determine the fair market value under Section 50C(2). Following this precedent, the Tribunal directed the AO to redo the assessment after determining the capital gain with proper opportunity for the assessee to be heard.

Issue 4: Requirement to refer the matter to the Valuation Officer as per Section 50C(2):
The appellant argued that the AO should have referred the matter to the Valuation Officer as per Section 50C(2) for fair valuation. The Tribunal agreed with this contention and directed the AO to refer to the Valuation Officer to ascertain the fair market value. This decision led to setting aside the previous assessment order and directing a de-novo assessment.

This detailed analysis of the judgment covers the issues involved in the appeal regarding the application of Section 50C, validity of the assessment order, consideration of capital gains, and the requirement to refer the matter to the Valuation Officer as per the Income Tax Act.

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