The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner Of Income Tax (Appeals)[CIT(A)]’s decision to refer Long Term Capital Gain ( LTCG ) valuation to the Departmental Valuation Officer( DVO ), citing title defects and disputes over stamp duty valuation as reasons for the referral under Section 50C(2) of Income Tax Act,1961.
Ketaben Janakbhai Patel, the respondent-assessee, had jointly purchased a plot of land for Rs.8,15,000 with the deed registered on 19.12.2006. The plot was sold with two others for Rs. 2,15,00,000, and stamp duty of Rs. 24,44,500 was paid. The assessee’s 60% share was conveyed on 03.03.2012. The assessee filed her return for assessment year(AY) 2012-13 on 28.09.2012, declaring Rs. 11,33,490 but excluded LTCG from the sale.
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The assessee’s case was selected for scrutiny under Section 143(3). The Assessing Officer(AO) found that the stamp valuation showed the property’s value at Rs. 4,98,83,550, while the declared consideration was Rs. 2,15,00,000.
The AO, noting the assessee’s objections and the land’s disputed nature, referred the valuation to the DVO. The DVO valued the land at Rs. 3,17,86,000, compared to the Jantri rate of Rs. 4,98,83,550. Based on this, the AO made an addition of Rs. 1,82,33,314 as LTCG.
The assessee appealed the assessment order to the CIT(A), who upheld the AO’s decision on 10.08.2016. The assessee then appealed to the ITAT, which dismissed the appeal on 18.11.2019 due to lack of pursuit.
The AO later noted that Girishbhai Prahladbhai Patel, a co-owner with a 20% share, did not seek DVO valuation. The AO of the co-owner used the Jantri Value of Rs. 4,98,83,550 for assessment. Consequently, the AO reassessed the property for the assessee, adding Rs. 1,08,58,530 based on the Jantri value. This addition was challenged, and the CIT(A) allowed the assessee’s appeal.
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The revenue appellant, aggrieved by the CIT(A)’s decision to delete the additions made by the AO, filed an appeal before the Tribunal.
The Tribunal contended that the CIT(A) correctly noted the assessee’s serious objections to the Stamp Valuation Authority’s valuation. The Jantri value used by the AO did not reflect the property’s true sale value due to inherent title issues. The AO should have referred the matter to the DVO under Section 50C(2) of the act.
The appellate tribunal referenced cases showing that if the assessee disputes the stamp duty value, the AO must refer the matter to the DVO under Section 50C(2) and use the DVO’s valuation if it’s lower.
The two-member bench comprising Siddhartha Nautiyal (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) dismissed the Departmental appeal contending that the CIT(A) had correctly required the matter to be referred to the DVO and found no grounds to interfere with the CIT(A)’s order .
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