Instructions regarding the type of cases to be referred to Valuation Cell. - Income Tax - 365/CBDT

INSTRUCTION NO. 365/CBDT Dated: December 28, 1971 Instructions regarding the type of cases to be referred to Valuation Cell were first issued vide Board's letter NO.5/876/68-ED dated 21-11-68. These were subsequently modified vide Boards letters No.319/5/70-W.T dated 27-4-70 and 30-4-71 and No.5/876/68-E.D dated 17-9-70. The instructions so far issued have been reviewed by the Board, in the light of the types of cases so far referred to the Valuation Cell, the performance of the various Valuation Units and the accumulation of cases with the units and it has been decided that a change in the types of cases to be referred to the Valuation Cell is called for. Accordingly, in supersession of the existing instructions, the following fresh instructions are issued by the Board. 2. The following types of cases shall be referred to the Valuation Cell:- i) all cases involving incorrect valuation of immovable property which are being processed for possible prosecution; ii) all cases of estate duty, wealth tax and gift tax: a) where the property is wholly rented and is fetching a net rent of Rs.10,000 per year or more; if the value declared by the accountable person/assessee is less than 8 times the net annual rental value; b) where the property is partly rented and is fetching a net rent of Rs.10,000 per year or more if the value of the rented part taken into consideration for the valuation of the whole property is less than 8 times of the net rent; iii) all cases under the I.T.Act where there is a reasonable suspicion that the assessee has understated the value of immovable property by Rs.50,000 or more; iv) all cases of estate duty, wealth-tax and gift-tax where the value of any individual immovable property has been shown at less than Rs.5 lakhs or more; v) all cases of estate duty, gift-tax and wealth-tax, where the value of any individual immovable property has been shown at less than Rs.5 lakhs but where the Assistant Controller of Estate Duty/Wealth-tax Officer estimates the under-valuation of the property at least by 20% with a monetary minimum of Rs.50,000 subject to the prior approval of the Controller of Estate Duty/CIT; and vi) all cases of Income-tax, estate duty, wealth tax and gift tax where in the opinion of the CIT/Controller of Estate Duty it is considered necessary, in the interest of revenue, for reasons to be recorded, to refer the valuation of an immovable property to a valuation cell. 3. For the purposes of calculation of the net annual rent, attention is invited to the Board's Circular No.8-D(WT) of 58 dated 8th August,1958 as modified by Circular No.5-D(WT) of 60 dated 17th June, 1960. 4. It should be clearly borne in mind that the multiplier of 8 for the net annual rent mentioned in item (ii)(a) and (b) of para 2 above is only to facilitate quick selection of cases to be referred to the Valuation Cell and not for determining the value of the property itself for tax purposes. 5. While referring the cases to the Valuation Cell, copies of valuation reports of approved Valuers filed by the accountable persons/assessees should be invariably furnished to the Valuation Cell along with other relevant particulars of the immovable property that might have been furnished by the accountable person/assessee. In so far as cases under categories (ii) and (iv) above are concerned, the estimate of the value of the property made by the Assistant Controller/Wealth-tax Officer, indicating clearly the basis thereof, should also be furnished to the Valuation Cell. 6. A short note on valuation by the income capitalisation method and land and buildings method is attached for guidance of the departmental officers.