2016 (9) TMI 1682 - AT - Income Tax

Addition as difference of long term capital gain which comes under business income - stamp duty valuation of the property on sale of which LTCG were offered to tax was much more than the stated consideration on sale of land - AO adopted the full value of consideration at stamp duty valuation u/s 50C as against value on which the property was actually sold HELD THAT - Even though the assessee may not have made a specific request for reference to the DVO it was bounden duty of the Assessing Officer to act fairly and should have given the assessee opportunity of referring the matter to the DVO for verification under section 50C(2). As relying on Raj Kumari Agarwal 2014 (7) TMI 867 - ITAT AGRA we deem it fit and proper to remit the matter to the file of the AO with the direction to refer the valuation of property to the DVO u/s 50C(2). This is precisely what the learned Counsel for the assessee before us has prayed for.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the addition made by the Assessing Officer of Rs. 27,25,071/- as a difference of long-term capital gain which comes under business income is arbitrary and unjustified.2. Whether the penalty under section 271(1)(c) confirmed by the CIT(A) is arbitrary and unjustified.3. Whether the revised return filed by the appellant should have been admitted at the time of the hearing.The detailed analysis of the issues is as follows:Issue 1:Relevant legal framework and precedents:- The Assessing Officer adopted the full value of consideration at stamp duty valuation under section 50C of the Income Tax Act, 1961.Court's interpretation and reasoning:- The Tribunal found that the Assessing Officer should have given the assessee an opportunity to refer the matter to the Departmental Valuation Officer (DVO) for verification under section 50C(2) even if the assessee did not specifically request it.Key evidence and findings:- The Tribunal referred to a Division Bench decision and a judgment of the Calcutta High Court emphasizing the importance of fair treatment to taxpayers and the necessity of referring valuation to the DVO.Application of law to facts:- The Tribunal held that the Assessing Officer should have referred the valuation of the property to the DVO in cases where the actual market value is less than the stamp duty valuation.Treatment of competing arguments:- The Tribunal considered the appellant's argument that the valuation should have been referred to the DVO and found it to be well taken based on legal precedents.Conclusions:- The Tribunal allowed the appeal and remitted the matter to the Assessing Officer with directions to refer the valuation of the property to the DVO for adjudication de novo.Issue 2:Relevant legal framework and precedents:- The penalty under section 271(1)(c) was confirmed by the CIT(A).Court's interpretation and reasoning:- The Tribunal did not provide detailed analysis or discussion on this issue in the judgment.Key evidence and findings:- Not explicitly mentioned in the judgment.Application of law to facts:- Not explicitly discussed in the judgment.Conclusions:- Not explicitly addressed in the judgment.Issue 3:Relevant legal framework and precedents:- The appellant filed a revised return which was not admitted by the CIT(A).Court's interpretation and reasoning:- The Tribunal did not provide detailed analysis or discussion on this issue in the judgment.Key evidence and findings:- Not explicitly mentioned in the judgment.Application of law to facts:- Not explicitly discussed in the judgment.Conclusions:- Not explicitly addressed in the judgment.Significant holdings:- The Tribunal emphasized the importance of fair treatment to taxpayers and the necessity of referring property valuations to the DVO under section 50C(2) of the Income Tax Act.- The Tribunal allowed the appeal and remitted the matter to the Assessing Officer for adjudication de novo after referring the valuation to the DVO.Overall, the Tribunal's decision focused on the procedural fairness and legal requirements concerning property valuations under section 50C of the Income Tax Act, leading to the allowance of the appellant's appeal.