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TMI Blog2024 (10) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been taken by the concerned officials to ensure that the report from the office of the valuation officer should reach to the office of the AO within a reasonable time period which both the lower authorities have miserably failed to do. If we allow the AO to modify the order after the receipt of the report from the valuation officer which otherwise is barred by limitations such action would not only reward the revenue with an enhanced limitation period but embolden unscrupulous tax officials to manipulate orders or otherwise mistreat the assessee. Therefore, we delete the addition made by AO who computed the amount of capital gains by taking Rs. 1,15,51,737/- being the value taken by stamp authorities as sale consideration as against Rs. 17,64,150/- as declared by the assessee - Appeal of assessee allowed. - Shri George Mathan, Judicial Member And Shri Manish Agarwal, Accountant Member For the Assessee : Shri S.K. Sarangi, CA For the Revenue : Shri S.C. Mohanty, Sr.DR ORDER PER BENCH : This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 06.06.2024, passed in appeal No.NFAC/2017-18/10047064 vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64,150/-, through ten sale deeds separately executed and after claiming indexed cost of acquisition of Rs. 12,03,248/- had offered Rs. 5,60,902/- as long term capital gain. The AO by observing that the stamp value authority has valued the said property at Rs. 1,15,51,737/- and, thus, show caused as to why the sale consideration should not be substituted to Rs. 1,15,51,737/- as against Rs. 17,64,150/- declared by the assessee in terms of Section 50C of the Act. In reply to this, assessee has objected the stamp duty value adopted by the authorities and requested the AO for referring the matter for valuation before the District Valuation Officer (DVO). The AO accordingly referred the matter to the DVO and since at the time of completion of the assessment no such report was received from the DVO, the AO has made the addition by substituting the sale consideration at the value adopted by the stamp value authorities instead of actual sale consideration received by the assessee and calculated the long term capital gain accordingly. In first appeal, ld. CIT(A) confirmed the action of the AO, therefore, the assessee is in appeal before us. 4. During the course of hearing, ld. AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on declared by the assessee is fair and reasonable and DVO has nothing contrary to report on the negative factors brought on record by the assessee, therefore, no report was submitted by him. Under these circumstances the sale consideration declared by the assessee deserves to be taken as the fair market value for the purpose of section 50C of the Act. He, accordingly requested for deletion of additions made by the AO. 5. On the other hand, ld. Sr. DR vehemently supported the orders of the authorities below and submitted that the reference was made u/s.50C of the Act whether there is no such limitation is provided for submitting of valuation report within the period of six months and the provisions of Section 142A(6) of the Act are not applicable in the present case. He accordingly prayed for the confirmation of the additions made by the lower authorities. Alternatively, ld. Sr. DR submitted that the AO and CIT(A) have also observed in the order that in the event the DVO s report was received at a later stage where the sale consideration determined by the DVO is less than the value adopted by the stamp duty authorities, necessary relief would be allowed to the assessee, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of the agreement for transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16-A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23-A, sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 24, 34AA, 35 and 37 of the Wealth Tax Act, 1957, shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. 9. Section 16A(1) of the Wealth Tax Act provides for making reference to the Valuation Officer. Sub-sections (2) to (5) of section 16A provide for the mode and manner in which the value of an asset is to be estimated. Sub-section (6) of provides that on receipt of an order under sub-section (3) or sub-section (5) from the Valuation Officer, the Assessing Officer shall, so far as valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. Accordingly, once a reference is made u/s 50C of the Act to the Valuation Officer for valuation of the capital asset, the Assessing Officer is obliged to complete the assessment in conformity with the estimate made by the Valuation Officer pursuant to such reference made by him. However, nowhere in the Wealth Tax Act nor in section 50C any time limit is provided for valuation officer to submit the report to the AO. It must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Provided that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent. of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration. (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or completeness of the accounts of the assessee. (3) The Valuation Officer, on a reference made under subsection (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957). (4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee. (5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions. (6) The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 142A of the Act could be considered as a guiding factor in other sections where a refence is made to the valuation office to determination the fair market value etc., even though it is not a special provision for the purpose of computing capital gains. This can be done only in the special circumstances where the valuation officer has delayed in submitting the report for indefinite time period such as in the instant case where after making refernce on 22.03.2021 by the AO till date i.e. after expiry of more than three and half year, no report is submitted. Nor the valuation officer has even bothered to communicate with the assessee or the assessing officer to collect the relevant details necessary for the purpose of valuation of the subject capital assets sold by the assessee. To our view any report submitted by the valuation officer after such an inordinate delay should be held as time barred and no cognizance of the same should be taken even where the reference is made u/s 50C of the Act. The Hyderabad bench of Tribunal in the case Shri Zulfi Revdjee vs. ACIT in ITA No. 2415/Hyd/2018 reported in [2019] 75 ITR (Trib.) 219 (Hyd.) vide its order dt. 05-09-2019 has held that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with the contentions of the learned Counsel for the assessee that the report of the Valuation Officer has to be filed within the time given u/s 142A(vi) of the Act and therefore, the assessment order passed on the basis of such report of Valuation Officer beyond the time limit is not sustainable. Therefore, we allow the assessee's appeal and the assessment order is set aside. 13. Simultaneously, in this case the assessing officer is also on default who after making refence to the valuation officer on 22.03.2021 has not bothered to communicate with the valuation officer to find out the status of the action taken by him on the reference made. While inserting the time limits in section 142A, the spirit of the law was to restrict the revenue authorities from playing arbitrarily and unscrupulously. Under these circumstances the assessee should not be punished for the lapses on the part of the valuation officer who has not submit the valuation report even after expiry of such a long period. Also the AO who has computed the capital gains in the hands of the assessee by taking sale consideration at the value taken by stamp authorities by ignoring the fact that the same was only i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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