The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has directed a fresh assessment in a property valuation dispute involving Niket Ravibhai Patel, a resident of Vadodara, under Section 50C of the Income Tax Act, 1961.
The assessee had appealed against the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year (AY) 2013-14.
The appellant, Niket Ravibhai Patel, along with other co-owners, sold two immovable properties on February 26, 2013. The properties measured 9038 square meters and 13913 square meters, with sale considerations of Rs. 1,20,60,000 and Rs. 1,85,40,000 respectively. The assessee held a 5% share in both properties and declared his share as Rs. 6,03,000 and Rs. 9,27,000 in his income tax return. However, the stamp duty value of the properties was significantly higher at Rs. 3,34,40,600 and Rs. 5,14,78,100 respectively.
The Assessing Officer (AO) issued a show-cause notice, questioning why assesseel’s share should not be determined at Rs. 16,72,030 and Rs. 25,73,905 as per Section 50C of the Income Tax Act, which deals with the valuation of capital gains based on stamp duty value.
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The assessee, contended that the properties sold were agricultural lands, and the buyers insisted on converting them into non-agricultural lands, leading to a difference in the Jantri value (government-determined land value). He argued that since the possession of the land was given on December 4, 2012, when the land was still agricultural, the value mentioned in the Banakhat (agreement to sell) should be considered, and Section 50C of the Income Tax Act should not apply. The AO rejected this argument and made an addition of Rs. 27,15,935 to assessee’s income under Section 50C of the IncomeTax Act, demanding tax on the same.
The assessee who was aggrieved by the decision of the AO appealed before the CIRT(A) that in the case of other co-owners, the matter had been referred to the District Valuation Officer (DVO) for valuation, and the same should apply to him. But there were no favourble results.
The counsel on behalf of the assessee contended that the CIT(A) should have considered the DVO’s valuation report obtained in the case of a co-owner, Ravibhai Kanjibhai Patel, which determined the fair market value of the properties at Rs. 1,93,11,000 and Rs. 1,25,44,000, respectively.
The tribunal observed that the DVO’s valuation report, dated April 18, 2016, was not available to the AO during the assessment but was presented before the CIT(A).
The bench noted that CIT(A) failed to consider this report or the assessment order in the co-owner’s case. In the interest of justice, the ITAT set aside the orders of the lower authorities and directed a fresh assessment, considering the DVO’s valuation report and providing the assessee with a reasonable opportunity to be heard.
The ITAT comprising Makarand V. Mahadeokar (Accountant Member) and T.R. Sennthil Kumar (Judicial Member) allowed the appeal filed by the assessee for statistical purposes.
The appeal was allowed for statistical purposes, and the order was pronounced in open court on December 10, 2024.
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