2016 (5) TMI 1297 - AT - Income Tax

Adoption of sale value of the property as per stamp valuation made by the Stamp Valuation Authority - reverence to DVO - whether the DVO and Stamp Valuation Authority were justified in treating the property in question as commercial? - Held that - There is no reference in the sale deed that the property was commercial. On the contrary it is stated that the property is residential in nature. From the evidence in the form of letter dated 16-10-2007 of the authorized officer of JDA it is stated to be a residential property. It is noticed that the method applied for adopting valuation by the DVO is DLC rate for corresponding land. The reason for adoption of such method is stated that this being the time barring case hence no sale instances were available. It is further observed by the DVO that the land is situated on Ancillary Road to Main Amer Road just before Jorawar Singh Road Gate. From the observations of the valuation report it can be inferred that the DVO has not given his finding with regard to the nature of land as on 15-01-2010 whether the land was being used for commercial purposes. We notice that there are clear contradictions in the evidences given by the JDA and the reasonings given by the DVO. It is incumbent upon the DVO to give clear finding about the nature of property as on 15-01-2010 i.e. when the land was transferred by the assessee. We feel that JDA is a competent authority to comment upon the nature of property. After considering the materials placed on record in the form of DVO s report and letters of the JDA we are of the considered view that the report submitted by the DVO is faulty and does not inspire confidence. Hence we deem it proper that the issue of nature of the land in question as on 15-01-2010 when sale deed was executed by the assessee requires verification. Thus the orders of the authorities below are set aside on this issue and the issue in question is restored back to the file of the AO to decide it afresh. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Adoption of sale value as per stamp valuation by the Stamp Valuation Authority.

Analysis:
Issue 1 - Adoption of sale value as per stamp valuation by the Stamp Valuation Authority:
The case involved an appeal against the order of the ld. CIT(A) confirming the addition of a certain amount as short-term capital gain on the sale of a plot. The Assessing Officer (AO) referred the valuation issue to the District Valuation Officer (DVO), who determined the fair market value of the property at a higher amount than the sale consideration declared by the assessee. The AO then assessed the income based on the DVO's valuation. The assessee contended that the DVO's valuation was mechanical and contrary to the law, arguing that the property was residential, not commercial. The assessee cited precedents to support their argument. The Revenue supported the authorities' orders, stating that the DVO's report was justified and that the assessee did not provide a contrary valuation report. The Tribunal observed contradictions between the JDA's statements and the DVO's reasoning, noting that the DVO did not clearly determine the nature of the property at the time of transfer. The Tribunal found the DVO's report faulty and lacking credibility, directing the AO to verify the nature of the property as of the transfer date. The AO was instructed to conduct independent inquiries and consider the residential nature of the property, setting aside the lower authorities' orders and directing a fresh assessment based on the property's actual nature.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing the AO to reassess the case considering the residential nature of the property and the inconsistencies in the valuation report.