The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed a reassessment of capital gains, after ruling that the reliance on stamp duty valuation without a District Valuation Officer ( DVO ) report was unjustified.
Anilkumar Dwarkaprasad Modani,appellant-assessee,filed his income tax return for the Assessment Year 2013-14 on August 5, 2013, declaring an income of Rs. 65,92,970, which included salaries, trading income, capital gains, and other sources. During scrutiny, the Assessing Officer (AO) noticed discrepancies in the sale consideration declared for certain immovable properties in Jaipur compared to their stamp duty valuation (Jantri rate).
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Invoking Section 50C of the Act, the AO replaced the declared sale values with the higher stamp duty valuations, resulting in an addition of Rs. 54,99,196 to the assessee’s capital gains. This adjustment increased the total assessed income to Rs. 1,20,92,166.
The assessee appealed to the Commissioner of Income Tax(Appeals)[CIT(A)], challenging the AO’s use of stamp duty valuation instead of actual sale value, arguing it was done without a DVO report despite a referral under Section 50C(2). The CIT(A), however, upheld the AO’s decision, citing the absence of the DVO report.
Aggrieved by the decision of CIT(A) the assessee appealed before the tribunal.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee filed the appeal 191 days late, explaining that his Chartered Accountants(CA) missed the deadline due to being busy with other work. The delay was noticed when the Income Tax Department adjusted a refund. The assessee provided an affidavit supporting his claim that the delay was unintentional. Based on past court rulings, the delay was accepted, and the appeal was allowed to proceed.
The tribunal observed that the CIT(A) failed to provide the assessee with a proper opportunity to be heard. The assessee had requested a DVO valuation to challenge the stamp duty value, but the report was not available in time. The AO, therefore, relied solely on the stamp duty value for the assessment.
The appellate tribunal found that this denied the assessee a fair chance to present their case and set aside the CIT(A)’s order. It directed the AO to obtain an independent DVO report, reconsider the addition based on the DVO’s findings, and provide the assessee with an adequate opportunity to be heard.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two member bench comprising Suchitra Kamble(Judicial Member) and Makarand V Mahadeokar(Accountant Member) also instructed the AO to consider any evidence the assessee provides, such as comparable sales data, if the DVO report is delayed, ensuring a fair reassessment of the capital gains.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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