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2018 (6) TMI 1184 - AT - Income TaxRefer a property for valuation to the Valuation Officer - capital gain computation - resort to manner as prescribed under section 50C(2) - Held that - Since the AO has determined the value of the property without following due procedure as provided u/s 50C(2) the CIT(A) was right in directing the AO to determine the value of the property in accordance with provisions of section 50C(2). As decided in the case of Sunil Kumar Agarwal vs CIT 2014 (6) TMI 13 - CALCUTTA HIGH COURT has held that in all such cases where the AO seeks to take the value of the property assessed for stamp duty purpose as the full value of consideration as a result of transfer then the AO is under a bounden duty to give the assessee an option to get the property valued by the valuation officer as prescribed u/s 50C(2) of the Act. CIT-A has directed the AO to refer the valuation of the property to the valuation officer and to assess capital gain thereafter in the manner as prescribed u/s 50C(2) of the Act. We find that there is no cause of grievance for the revenue - Decided against revenue
Issues Involved:
1. Whether the CIT(A) erred in directing the Assessing Officer (AO) to refer a property for valuation to the Valuation Officer under section 50C(2) of the Income Tax Act, 1961. 2. Whether the CIT(A) has the power to direct the AO to refer the property for valuation, as this may tantamount to setting aside the assessment order. 3. Whether the AO was obligated to give the assessee an option to get the property valued by the Valuation Officer during the assessment proceedings. Issue-Wise Detailed Analysis: Issue 1: Direction to Refer Property for Valuation The CIT(A) directed the AO to refer the property for valuation to the Valuation Officer under section 50C(2) of the Income Tax Act, 1961. The assessee argued that the AO invoked section 50C without referring the property for valuation, as required under section 50C(2). The CIT(A), after considering the assessee's submissions and relying on various judicial precedents, including the decision of the Hon’ble Calcutta High Court in Sunilkumar Agarwal vs CIT, directed the AO to refer the valuation to the DVO and assess capital gains thereafter. Issue 2: Power of CIT(A) to Direct AO The CIT(A) has the power to correct errors of the AO as his power is co-terminus with that of the AO. This principle was upheld in several Supreme Court decisions, including CIT v. Kanpur Coal Syndicate, Jute Corpn. of India Ltd. v. CIT, and Commissioner of Income-tax v. Nirbheram Deluram. These cases established that the CIT(A) can do what the AO can do and direct the AO to do what he has failed to do. Therefore, the CIT(A) was within his rights to direct the AO to refer the property for valuation. Issue 3: Obligation to Give Option for Valuation The AO is obligated to give the assessee an option to get the property valued by the Valuation Officer if the AO seeks to adopt the value assessed for stamp duty purposes as the full value of the sale consideration. The Hon’ble Calcutta High Court in Sunil Kumar Agarwal vs CIT held that the AO has a bounden duty to give this option to avoid miscarriage of justice. The CIT(A) followed this decision and directed the AO to refer the valuation of the property to the Valuation Officer. Conclusion: The appeal filed by the revenue was dismissed. The CIT(A) was right in directing the AO to determine the value of the property in accordance with the provisions of section 50C(2) of the Income Tax Act, 1961. The decision emphasized that the CIT(A) has the power to direct the AO to refer the property for valuation and that the AO must give the assessee an option to get the property valued by the Valuation Officer to ensure fair treatment and compliance with the law.
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