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2017 (1) TMI 505 - ITAT HYDERABADDetermining value of the property - Addition made adopting the guide line value of the property for stamp duty purpose - Addition u/s 50C - adoption the value adopted by the stamp valuation authority for the purpose of computation of capital gains - AO chose to brush aside the submissions, by not referring the matter to the DVO - whether the AO can be given a second opportunity to make good his deficiencies at the cost of expenditure to be incurred by the assessee by continuing the litigation for a further period, particularly, in view of the period of limitation prescribed u/s 153? Held that:- Referring to the speech of the Finance Minister as well as circular issued by the CBDT bringing the intention of the legislature whereby it was held that the AO is duty bound to refer the matter to the Valuation officer when the reasons were thoroughly mentioned by the assessee for the FMV that the assessee could fetch in these circumstances. Despite making request to refer the matter to the DVO, the AO purposely did not refer the matter to the DVO on the ground that he is duty bound to go by the valuation adopted by the stamp valuation authority. Litigation in the Bombay, particularly, under the Maharashtra Rent Control Act, is well known and needs to be taken judicial notice. A property which is in the occupation of tenants for more than 60 years one cannot fetch full market value and in fact the party who purchased the property had agreed to the terms and conditions i.e. the property was purchased on “as is where is” condition with a specific clause that any further litigation will be dealt with by the purchaser and under those circumstances, generally, market value cannot be adopted. In these circumstances, the Courts time and gain held that reference u/s 50C(2) of the IT Act is mandatory and the AO having failed to follow the provisions of the Act, he should not be given one more chance to refer the matter to the DVO. Recently, the Hon’ble Supreme Court in the case of Manish Mahaeswari Vs. ACIT and another, and Indore Construction P. Ltd. Vs. CIT, [2007 (2) TMI 148 - SUPREME COURT OF INDIA] vis-à-vis the provisions of section 153C of the Act, observed that if the AO has not recorded his satisfaction for issue of notice u/s 153C of the Act, the proceedings deserve to be quashed rather than giving the AO another chance to record proper reasons. The same principle holds good even in this case; when the AO has not followed the procedure prescribed in law, the addition made deserved to be deleted. Under these circumstances the order of the CIT(A) in deleting the addition made by the AO, does not call for any interference. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue. - Decided in favour of assessee
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