2018 (7) TMI 580 - AT - Income Tax

Valuation of property sold - Capital gain - provisions of section 50C applicability - CIT(A) confirming the sale consideration at ₹ 66,29,838/- as valued by the Sub - Registrar as against declared sale consideration of ₹ 32,71,000/- - Held that - Clause (a) of sub- section (2) of section 50C provides that where the assessee claims that the value adopted by the stamp value authority exceeds the fair market value of the property as on the date on the transfer, and value so adopted by the stamp valuation authority has not been disputed in any appeal/ revision or no reference has made before any authority, Court or the High Court, the Assessing Officer may refer the valuation of the capital assets to the Valuation Officer. In the instant case, we find that during the course of assessment proceedings, the assessee has specifically objected before the Assessing Officer that the valuation adopted by the stamp valuation authority exceeds the fair market value of the property and given the undisputed fact that the said valuation has not been disputed in any appeal or revision, the Assessing Officer is required to refer the matter to the Valuation Officer - remand the matter to the file of the Assessing Officer who shall determine the valuation of capital asset so transferred, after calling for the report from the valuation officer and after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.

Issues:
1. Challenge to sale consideration valuation by the Assessing Officer.
2. Applicability of section 50C of the Income Tax Act.
3. Dispute regarding valuation of property by the stamp duty authority.
4. Requirement for reference to Valuation Officer by Assessing Officer.

Analysis:

1. The appeal was filed by the assessee against the order of the ld. CIT(A)-III, Jaipur challenging the confirmation of the sale consideration at a higher value by the Sub - Registrar compared to the declared sale consideration for a property in Jaipur.

2. The Assessing Officer invoked section 50C of the Income Tax Act due to the higher valuation adopted by the Registrar, leading to a higher sale consideration. The assessee objected to this valuation, citing various reasons such as abnormal plot size, south-facing property, and lack of popularity in the locality.

3. The Assessing Officer rejected the assessee's objections as no evidence was provided to challenge the stamp duty valuation. The ld. CIT(A) upheld the AO's decision, stating that the valuation was in accordance with section 50C(1) of the Act.

4. The assessee contended that under section 50C(2) of the Act, when the valuation is disputed, the Assessing Officer must refer the matter to the Valuation Officer. The assessee cited relevant case laws to support this argument.

5. The Tribunal referred to the provisions of section 50C of the Act, emphasizing that if the assessee disputes the valuation before the Assessing Officer, the matter must be referred to the Valuation Officer. As the assessee had objected to the valuation during assessment proceedings, the Tribunal remanded the matter to the Assessing Officer for valuation determination by the Valuation Officer.

6. The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to determine the valuation of the property after obtaining the Valuation Officer's report and providing a reasonable opportunity to the assessee.

In conclusion, the Tribunal's decision highlighted the importance of following the procedures outlined in section 50C of the Income Tax Act when disputing property valuations, ensuring a fair and accurate assessment of capital gains.

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