2015 (2) TMI 1289 - AT - Income Tax

Validity of notice U/s 148 - AIR information received from CIB it came to notice that the sale value of a property sold by the assessee was adopted by the Sub-Registrar - Held that - Assessing Officer has vast power U/s 147 within four years when there was no scrutiny assessment in the case of the assessee. The case laws cited by the learned counsel for the assessee are squarely not applicable. The information received from CIB is simple information has not construed any opinion. It is for AO to decide whether this information can be part of the reason to believe or not. In this case it is undisputed fact that the assessee has not taken sale consideration of the immoveable property as per Section 50 which is deeming provision on computation of capital gain. Therefore we confirm the reopening made by the Assessing Officer confirmed by the learned CIT(A). This ground of assessee s appeal is dismissed. Taking sale value consideration on the basis of sale deed for stamp valuation and computing capital gain - non reference of valuation of land to the DVO - Held that - It is undisputed fact that the assessee simply challenged the sale consideration on the basis of stamp valuation authority but had not requested to refer this issue to the DVO but the Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT Siliguri 2014 (6) TMI 13 - CALCUTTA HIGH COURT as held the valuation by the departmental valuation officer contemplated u/s 50C is required to avoid miscarriage of justice - The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty - Even in a case where no such prayer is made by the learned advocate representing the assessee who may not have been properly instructed in law the AO discharging a quasi-judicial function has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law thus the order is set aside and the matter is remitted back to the AO as directed to refer the valuation of land to the DVO for the purpose of valuation of the land on the date of sale Decided in favour of Assessee for statistical purposes only..

Summary

Issues involved:
1. Validity of notice U/s 148 of the Income Tax Act, 1961.
2. Computation of capital gain based on sale value consideration.
3. Referral to Valuation Cell under Section 50C(2) of Income-tax Act, 1961.

Detailed Analysis:
1. Validity of notice U/s 148 of the Income Tax Act, 1961:
The appeal challenged the validity of the notice issued under Section 148 of the Income Tax Act, 1961, based on information received regarding the sale value of a property. The Assessing Officer reopened the assessment under Section 147, and the CIT(A) upheld this decision. The appellant argued against the reopening, citing legal precedents. The Tribunal confirmed the reopening, emphasizing the Assessing Officer's discretion within four years for cases without scrutiny assessments. The Tribunal held that the received information did not form an opinion but provided a basis for the Assessing Officer's belief, thus dismissing this ground of appeal.

2. Computation of capital gain based on sale value consideration:
The appeal contested the computation of capital gain based on the sale value consideration adopted by the Sub-Registrar. The Assessing Officer calculated the gain using the value of Rs. 98,20,156, differing from the Rs. 27 lakh declared by the assessee. The CIT(A) partially allowed the appeal, considering the stamp valuation authority's value of Rs. 47,34,400 for land. The appellant argued that the actual sale consideration was Rs. 27 lakh, excluding construction costs borne by the buyer. The Tribunal directed the Assessing Officer to refer the valuation of the land to the DVO for accurate assessment, setting aside the previous order.

3. Referral to Valuation Cell under Section 50C(2) of Income-tax Act, 1961:
The appellant contended that the Assessing Officer erred in not referring the matter to the Valuation Cell as required under Section 50C(2) of the Income-tax Act, 1961. The Tribunal agreed with the appellant, citing legal precedents and directing the Assessing Officer to refer the valuation of the land to the DVO for a fair assessment. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for proper valuation procedures under the law.

This judgment highlights the importance of following due process in assessing capital gains, including proper valuation of property and adherence to legal provisions under the Income Tax Act, 1961.