2024 (10) TMI 921 - AT - Income Tax

Addition u/s 50C - reference to DVO - difference between collector rate as compared to sale consideration mentioned in the sale deeds in respect of property sold by the assessee along with others, wherein, the assessee had share of 11.277% - HELD THAT - We find that so far as the contention regarding the fair market value on the date of sale is concerned, the report of the DVO in the case of another assessee relating to the same property and regarding the same transaction has been produced before us, wherein, fair market value of the property as on the date of sale has been mentioned at Rs. 7,50,15,600/-. We are inclined to accept the said value as the fair market value of the property as on the date of sale. We order accordingly. Cost of acquisition as on 01.04.1981 - The assessee in the case in hand has disputed the same and also furnished the report of the registered valuer. Neither the DVO nor the AO has pointed out any defect or infirmity in the same, rather, they have completely ignored the same and took the fair market value as on 01.04.1981 at Rs. 38.22 lakhs. So far as, the fair market value as on 01.04.1981 in the case of co-sharer is concerned, the ld. AR has submitted that in the said case, the co-sharer did not dispute the same. However, in the case of the assessee, the assessee has categorically disputed the same and has also furnished the report of the registered valuer. Considering the above submissions and totality of facts and circumstances, the cost of acquisition as on 01.04.1981 is directed to be taken as per the value estimated by the registered valuer i.e. at Rs. 1,51,94,000/-. AO is accordingly directed to compute the capital gains in the case of the assessee.

Summary

Issues:
- Dispute over addition made under section 50C of the Income Tax Act regarding property sale consideration.

Analysis:
The appeal was filed against the order of the National Faceless Appeal Centre regarding the addition made under section 50C of the Income Tax Act. The main issue raised was the difference between the collector rate and the sale consideration mentioned in the sale deeds for a property sold by the assessee. The Assessing Officer calculated the fair market value at the time of sale as Rs. 12.25 crores, based on the purchase value estimated by the DVO at Rs. 38.22 lakhs. The CIT(A) upheld this decision.

During the proceedings, the assessee argued that the Assessing Officer should have obtained the fair market value at the time of sale along with the purchase value. The assessee also disputed the cost of acquisition as of 01.04.1981. The counsel referred to previous cases and emphasized that the principles of natural justice were violated as the report of the registered valuer was ignored. The Department, however, contended that since the assessee did not dispute the sale consideration, the additions were justified.

The tribunal noted that while the assessee disputed the cost of acquisition, they did not initially object to the fair market value at the time of sale. The tribunal accepted the fair market value of the property at the time of sale as Rs. 7,50,15,600 based on another assessee's case. However, the tribunal directed the cost of acquisition as of 01.04.1981 to be taken as per the registered valuer's estimate of Rs. 1,51,94,000. The Assessing Officer was instructed to compute the capital gains accordingly. As a result, the appeal was partly allowed.

In conclusion, the tribunal addressed the dispute regarding the addition made under section 50C of the Income Tax Act by considering both the fair market value at the time of sale and the cost of acquisition as of 01.04.1981. The tribunal upheld the fair market value at the time of sale based on another assessee's case but directed the cost of acquisition to be as per the registered valuer's estimate. The decision resulted in the partial allowance of the appeal.