2024 (6) TMI 1204 - AT - Income Tax

Capital gain computation - Failure to refer valuation to the DVO as per section 50C - property in question was being developed as Rehabilitation of Slum Scheme by the Slum Redevelopment Authority which was not transferable by the assessee for a period of ten years - HELD THAT - We are of the considered view that the issue is required to be remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee who shall refer the matter to the DVO for valuation as per provisions contained under section 50C of the Act so as to compare the actual sale consideration with the stamp duty valuation as on date of the allotment letter (supra). Hence, the impugned order passed by the Ld. CIT(A) is set aside - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Validity of reassessment proceedings due to lack of approval u/s 151 of the IT Act.
2. Addition of the difference in property valuation for tax assessment.
3. Application of section 48 provisions on property valuation.
4. Failure to refer valuation to the DVO as per section 50C of the Act.

Issue 1:
The appellant challenged the reassessment proceedings citing the Assessing Officer's failure to obtain approval u/s 151 of the IT Act for issuing the notice u/s 148 within the specified timeframe. The appellant contended that this procedural error rendered the reassessment proceedings under section 147 invalid and requested the quashing of the same.

Issue 2:
The dispute revolved around the addition of Rs. 62,01,357 to the assessee's income, representing the variance between the purchase consideration for an immovable property and its valuation by the stamp duty authorities. The appellant contested this addition, arguing that the valuation should have been based on the property's allotment date rather than the registration date, as upheld by the CIT(A).

Issue 3:
The application of the 5th provision in section 48 was contested by the appellant, emphasizing that the property was purchased as per the allotment letter and agreement dated 20/12/2014, not on the registration date. The appellant argued that the Fair Market Value (FMV) should have been determined based on the allotment date, not the registration date.

Issue 4:
The failure to refer the property valuation to the Departmental Valuation Officer (DVO) as per section 50C of the Act was highlighted. The appellant requested the valuation matter to be referred to the DVO, but the Assessing Officer proceeded without doing so. The Tribunal, considering the facts and legal provisions, ruled that the issue should be remitted back to the AO for a fresh decision after providing an opportunity to the assessee and referring the valuation to the DVO as required by law.

In conclusion, the Tribunal set aside the impugned order passed by the CIT(A) and allowed the appeal filed by the assessee for statistical purposes, directing a reassessment in compliance with the provisions of the IT Act.