In Anuj Kumar Goswami vs ITO, the Agra Bench of Income Tax Appellate Tribunal ( ITAT ) held that Departmental Valuation Officer(DVO)’s valuation takes precedence over Stamp Valuation Authority’s valuation for determination of full value of consideration under Section 50C of the Income Tax Act, 1961.
The assessee, Anuj Kumar Goswami, had rented his land to his tenant fifty years ago for a consideration of Rs.45 per month. The tenant had constructed a house on the land. The possession of the property was with the tenant from the beginning, i.e., about for more than 50 years. The assessee had wanted to sell the property for necessity, but due to the possession of the tenant, nobody was interested to purchase the property specially the construction had been made by the tenant and the tenant’s family was living in property since long. Due to these peculiar circumstances, the assessee was bound to sell the property to the tenant. The assessee sold it for Rs.12 lac.
Upon learning about the transaction, the Assessing officer (A.O.) served a notice under section 148 of the Act. After hearing the assessee, the A.O. assessed long-term capital gain of Rs.33 Lac on sale of the residential property. The assessment was, accordingly, completed by him at a total income of Rs.33.3 lac as against the returned income of Rs.2.48 lac which the assessee had declared in his return of income filed in response to the notice under section 148 of the Act.
On appeal to the CIT (A) by the assessee, the CIT (A) confirmed the order of the A.O and dismissed the appeal. In the order the CIT(A) had observed that the assessee failed to produce the required documents for the valuation of the property. In an appeal before the ITAT, the counsel for the assessee referred many documents evidencing the fact that all demanded documents were submitted before the Departmental Valuation Officer and the DVO had stated that the property would be inspected ‘later on’. The Counsel for the assessee further contended that it was wrong of the A.O. to value the property without the report of the DVO.
The Departmental Representative (D.R) relied on the orders of the CIT(A). The D.R contented that as per the written submissions by the assessee no encumbrances over the property was mentioned. It was further contended that section 50C is specific and the option available there-under has not been exercised by the assessee.
The bench comprising of Judicial Member A. D. Jain relying on the decision in the case of CIT vs. Chandra Narain Chaudhri, observed “the Stamp Valuation Authority does not take into consideration the attributes of the property, such as encumbrance, for determining the fair market value in case, as in the present one, it is offered for sale and is purchased. He is required to value the property in accordance with the Circle rate. The object of the valuation by the Stamp Valuation Authority is to secure revenue on such sale and not to determine the true, correct and fair market value on which it may be purchased by a willing purchaser subject to and taking into consideration its situation, condition and other attributes such as its occupation by tenant. This was not done by the DVO. For the determination of the value u/s 50C, it is incumbent on the AO to make reference for valuation to the DVO and the DVO’s valuation is to be considered for the purposes of section This, in the case at hand, has not come about, as discussed and so, recourse to section 50C (1) of the Act is not as per law. Accordingly, as also requested by the assessee, the matter is remitted to the file of the AO to be decided afresh in accordance with law, in view of the provisions of the complete section 50C.”
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