2025 (7) TMI 1482 - AT - Income Tax

Addition u/s.56(2)(vii)(b) - difference in value adopted by the assessee and market value of the property as per stamp duty valuation - no reference to valuation to the DVO - HELD THAT - As seen from the e-proceedings response acknowledgement that though request was made to refer valuation to the DVO but no reference was made to DVO. It is therefore clear that the assessee had requested the CIT(A) several times to refer the matter for valuation to the DVO however the same has not been referred to. All these facts are available on record and no new fact has been brought by the appellant in respect of the additional grounds raised before the Tribunal. National Thermal Power Co. Ltd. 1996 (12) TMI 7 - SUPREME COURT (LB) held that there was no reason why assessee should be prevented from raising a question before the Tribunal for the first time so long as the relevant facts are on record. There is no reason to restrict the power of Tribunal u/s 254 only to decide the ground which arise from the order of CIT(A). In view of the above facts and the decision of Hon ble Supreme Court cited supra the additional ground is admitted and the order of CIT(A) is set aside. The matter is restored to the file of AO with direction to refer valuation of the property to the Valuation Officer and thereafter pass fresh assessment order after giving reasonable opportunity of hearing to the assessee. The ground is allowed for statistical purpose.

Summary

ISSUES:

Whether addition under section 56(2)(vii)(b) of the Income Tax Act, 1961 is justified on account of difference between the value adopted by the assessee and the stamp duty valuation of the property.Whether the exemption claimed under section 54B of the Income Tax Act, 1961 can be restricted to the actual purchase consideration paid or should be allowed in full as claimed by the assessee.Whether long-term capital gain on sale of agricultural land should be computed without taking indexed cost of acquisition and without allowing deduction under section 54B.Whether the Assessing Officer and Commissioner of Income Tax (Appeals) erred in not referring the matter to the Valuation Officer (DVO) for determination of cost of acquisition as on 01.04.1981 and for determining fair market value of agricultural land purchase under section 56(2)(vii)(b).

RULINGS / HOLDINGS:

The addition of Rs. 41,00,208/- under section 56(2)(vii)(b) was upheld by the Commissioner of Income Tax (Appeals) and confirmed by the Tribunal, as the assessee did not file any compliance to the show cause notice regarding the difference in valuation.The exemption under section 54B was allowed only to the extent of Rs. 26,85,667/-, being the actual purchase consideration paid by the assessee, and not the full claimed amount of Rs. 76,64,867/-.The Assessing Officer erred in computing long-term capital gain without allowing deduction under section 54B; however, the Tribunal did not express any opinion on the correctness of the deduction under section 54B and left it open for fresh consideration.The Tribunal admitted the additional grounds regarding non-referral to the Valuation Officer and set aside the order of the Commissioner of Income Tax (Appeals) with directions to the Assessing Officer to refer the valuation matter to the Valuation Officer and pass a fresh assessment order after giving reasonable opportunity of hearing to the assessee.

RATIONALE:

The Tribunal relied on the statutory provisions of the Income Tax Act, 1961, particularly sections 54B and 56(2)(vii)(b), and the procedural rules under section 250 and section 254 for appellate proceedings.The Tribunal applied the principle from the Supreme Court decision that the assessee is not precluded from raising a question before the Tribunal for the first time if relevant facts are on record (National Thermal Power Co. Ltd. vs. CIT), thereby admitting the additional grounds regarding referral to the Valuation Officer.The Tribunal noted the absence of reasons in the appellate order for rejecting the request to refer the matter to the Valuation Officer and emphasized the importance of valuation by the DVO for determining fair market value and cost of acquisition in disputes involving stamp duty valuation differences.The Tribunal refrained from expressing any opinion on the merits of the deduction under section 54B, indicating that the matter requires fresh adjudication after proper valuation and hearing.