2024 (5) TMI 1097 - AT - Income Tax

Addition invoking the provisions of section 50C - Reference to DVO - market/fair value of the property was less than the value adopted by stamp duty authority and that the matter may be referred to the DVO as per the provisions of section 50C - HELD THAT - AR has duly demonstrated from the assessment order as well as from the appellate order of the CIT(A) that the assessee right from the very beginning claimed that the fair market value of the property was less than the stamp duty value adopted by the stamp duty authority/collector rate and that the matter may be referred to Departmental Valuation Officer to ascertain the correct and fair value of the property at the time of transaction. The said contention of the assessee has been rejected by both the lower authorities without assigning any reason. Both the lower authorities therefore have failed to act according to the statutory provisions of section 50C(2) of the Act and summarily rejected the plea of the assessee to get fair value of the property from the Departmental Valuation Officer without assigning any reason. The addition made by the Assessing Officer under the circumstances is not sustainable in the eyes of law. The issue is squarely covered by the decision of Hari Om Garg 2019 (5) TMI 1834 - ITAT AGRA while referring to the various decisions of the Hon ble High Court including that of Sunil Kumar Agarwal Vs. CIT 2014 (6) TMI 13 - CALCUTTA HIGH COURT has held that the additions made by the Assessing Officer under such facts and circumstances are not sustainable and the same are liable to be set aside. Addition made by the lower authorities is not sustainable and the same is accordingly ordered to be deleted. Appeal of the assessee stands allowed.

Summary

Issues Involved:
1. Condonation of delay.
2. Addition u/s 50C of the Income Tax Act.
3. Non-referral to Departmental Valuation Officer (DVO).

Summary:

Condonation of Delay:
The appeal was time-barred by 389 days. A separate application for condonation of delay was filed, supported by an affidavit from the petitioner. Considering the submissions made in the affidavit, the delay in filing the appeal was condoned.

Addition u/s 50C:
The assessee was aggrieved by the CIT(A)'s confirmation of the addition made by the Assessing Officer (AO) of Rs. 17,82,513/- invoking the provisions of section 50C of the Income Tax Act. The AO noted that the assessee had shown consideration received on the sale of property at Rs. 45,00,000/-, while the stamp duty authority valued it at Rs. 62,82,513/-. The assessee contended that the stamp duty value was higher than the fair market value and requested a referral to the Departmental Valuation Officer (DVO), which the AO rejected.

Non-referral to DVO:
The assessee appealed to the CIT(A), reiterating the request for a DVO referral, which was again rejected without reason. The Tribunal noted that both lower authorities failed to act according to the statutory provisions of section 50C(2) and summarily rejected the assessee's plea without assigning any reason. The Tribunal referenced the decision in Hari Om Garg v. ITO and other relevant case laws, emphasizing that the AO has a bounden duty to refer the valuation to the DVO when the assessee disputes the stamp duty value.

The Tribunal concluded that the addition made by the AO was not sustainable in law due to the failure to follow the prescribed procedure. It was held that the department cannot be allowed a second opportunity to rectify its shortcomings, and the addition was deleted. The appeal of the assessee was allowed.