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2019 (5) TMI 404 - AT - Income TaxCapital gain computation - reference was made to the DVO u/s 50C(2) - methodology adopted by the DVO - challenge of correctness of DVO report - HELD THAT - The assessee is indeed correct, even though somewhat serendipitously. that the CIT(A) ought to have examined the matter on merits. Of course, before doing so, the CIT(A) was under a statutory obligation to serve notice of hearing to the DVO and thus afford him an opportunity of hearing. Clearly CIT(A) took too narrow and somewhat superficial a view of his powers under the scheme of the law, and the assessee did not point out the specific legal provisions to him either. Be that as it may, the fact remains that correctness of the DVO s report is to be examined on merits and there is no adjudication, on that aspect, by the CIT(A). In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the CIT(A) for adjudication on merits in accordance with the scheme of the law, after giving a due and reasonable opportunity of hearing to the assessee as also to the DVO, and by way of a speaking order. We further direct the CIT(A) to dispose of the remanded proceedings within three months of receiving this order, and, in case the DVO does not avail the opportunity of hearing, on the basis of material on record and submissions of the assessee.
Issues involved:
- Challenge to the correctness of the DVO's valuation report for computing capital gains under section 50C of the Income Tax Act, 1961. Detailed Analysis: 1. The appeal was against the order of the CIT(A) regarding the assessment under section 143(3) for the assessment year 2013-14. The assessee disputed the addition of ?12,12,402 in the capital gains computation based on the fair market value of the property being less than the DVO's valuation. The legal position states that the Assessing Officer must proceed with the valuation as per the DVO's estimate. The Tribunal questioned if it could challenge the DVO's report when the Assessing Officer is bound to adopt it for capital gains computation. 2. The parties debated the Tribunal's powers to alter the DVO's valuation under section 50C. The Departmental Representative argued that the Assessing Officer must adopt the DVO's valuation when it's lower than stamp duty valuation. The assessee's counsel highlighted the Tribunal's broad powers for justice and challenged the correctness of the DVO's report, emphasizing the need for a grievance redressal mechanism against incorrect valuations. 3. The legal provisions of section 50C were scrutinized, emphasizing the incorporation of Wealth Tax Act provisions. The Tribunal noted that challenges to the DVO's report are permissible, and the Valuation Officer must be given a hearing opportunity as per the law. The scheme mandates a fair assessment process, ensuring the correctness of valuations through proper procedures and hearings. 4. The case involved an individual assessee disputing the DVO's valuation after selling a property. The Assessing Officer relied on the DVO's report, leading to the appeal before the CIT(A) and subsequently to the Tribunal. The CIT(A) upheld the Assessing Officer's decision based on the strict application of section 50C, without delving into the merits of the DVO's valuation methodology. 5. The Tribunal found that the CIT(A) failed to examine the correctness of the DVO's report on its merits and ordered a remittance of the matter back to the CIT(A) for proper adjudication. The Tribunal stressed the importance of affording both the assessee and the DVO a fair hearing opportunity, directing the CIT(A) to dispose of the proceedings within three months. The appeal was allowed for statistical purposes, emphasizing adherence to legal procedures and principles in valuation disputes.
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