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TMI Blog2024 (10) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... the objection by the appellant and passing the order without waiting for the report simply shows that the Ld AO has not properly applied the provisions of law which is unlawful and unjustified. 3. The Ld. AO is wrong in facts and law by completing the assessment by adopting the stamp duty value and not waiting for the valuation report. Moreover, the Ld AO should at the very first instance before invoking the provisions of section 50C and preparing the draft assessment order should have referred the case to the valuation officer, as the appellant in his very first submission in response to notice u/s 142(1), had stated that the stamp duty value adopted by the authority is much more than the fair market value of the property. 4 That the Ld. CIT (A) summarily dismissed the case disregarding the material on record, i.e. statement of facts and grounds of appeal which was placed before him, and other provisions of law applicable. Under this situation, the order of CIT (A) is arbitrary, illegal and unlawful and not dealing with points so raised before him on merits. 5. That the Ld. AO and the Ld.CIT(A) both are wrong on the facts and law of the case. 6. That the appellant now req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities such as water supply or the electricity was available there, (iii) the land was not directly connected with any proper road when the sale was made and this fact could also be verified from the map and (iv) the land was low lying and meshy and substantial amount has to spend to brought it to a habitable condition. Since the assessee was urgent need of funds therefore, he had sold the land under distress and the buyers had discounted the market price after considering the above negative factors attached to the land. However, the stamp authorities had ignored all these factors and valued the property solely based on the circle rate and no concession was given towards these negative factors. The AO after receiving the objections from the assessee towards the value adopted by stamp duty authorities, in terms of the provisions of section 50C(2) has made reference to the valuation officer to determine/ estimate the fair market value as on the date of transfer. However, till date no report was submitted by the valuation officer. Ld. AR submitted that though no time limit is provided in section 50C for the valuation officer to submit the report however, section 142A of the Act which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR by the Bench that as to whether any communication is received from the DVO for submission of the requisite details of the properties sold, it was replied by the ld. AR at Bar that no communication was received by the assessee till date. It is also seen that assessee has explained various reasons as to why such land was sold at a lower rate which are reproduced herein above however, none of the said reason was answered nor considered by AO nor by stamp duty authorities and since the report of DVO is not yet received, we are unable to comment about the stand taken by DVO on such factors. Before going further, we need to examine the provisions of section 50C of the Act, as existed at that point of time, which reads as under: 50C. Special provision for full value of consideration in certain cases. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. 7. Sub-section (1) of section 50C of the Act applies where the consideration received or accrues as a result of transfer by an assessee of a capital asset, being land or building or both, is less that the value adopted or assessed by any authority of the State Government i.e. stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. In that case, the value so adopted or assessed shall, for the purposes of computing capital gains u/s 48, be deemed to be the full value of the consideration received or accruing as a result of such trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the report of the valuation officer that has never come and under these circumstances the capital gains as computed by the AO has not attained the finality even on the part of the AO and the assessee was asked to pay the taxes on such provisional amount of capital gains. As per sub-section (3) to section 50C, the assessee is liable to pay capital gains tax when the valuation officer has valued the capital asset at the price more than the value determined by the stamp authorities. Since till date no report is submitted nor any time limit is provided in section 50C of the Act, assessee should not be punished for such an inordinate delay of almost 4 years which is solely attributable to the valuation officer and is beyond the control of the assessee. 11. Now the next issue came up for our consideration is with regard to the limitation in submitting the report by valuation officer to the AO. For this before taking resort to the provisions of General Clauses Act or Limitation Act, we have to examine whether any time limit is provided under any other section of Income Tax Act for submission of the valuation report. As per the Income Tax Act, 1961 other sections where reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer may refer the valuation of capital asset to a Valuation Officer- (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value; (b) in any other case, if the Assessing Officer is of opinion: (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16-A, clauses (ha) and (i) of subsection (1) and sub-sections (3-A) and (4) of section 23, subsection (5) of section 24, section 34-AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to capital gains in those cases where provisions of section 50C are not applicable. Section 142A can be invoked for estimation of value including fair market value of an asset, property or investment for the purposes of assessment or reassessment. As per the scheme of the Income Tax Act, Section 50C and 55A are special provisions for determination of the fair market value of capital asset for computing capital gains whereas section 142A is a general provision for estimation of value of any asset, property or investment for the purposes of assessment / reassessment. Therefore, the scope of section 142A is very vide which also includes reference to valuation officer for valuation to compute capital gains. Since sections 50C and 55A are special provision applicable for estimation of fair market value of a capital asset to compute capital gains, thus, as per the maxim Generalia specialibus non derogant, special provision will prevail over general provision and, therefore, where the issue is of computation of capital gains, for estimating the value of a capital asset, reference to DVO can be made only u/s 50C or 55A of the Act, as the case may be, and not u/s 142A. However, from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by 31.03.2016 but since the AO has made a reference to the valuation officer u/s 142A of the Act, vide letter dated 19.02.2016, and the valuation report was filed on 20.7.2017, the said period will have to be excluded for determining the time limit. However, the question before us is the period allowed to the DVO to submit the report. u/s 142A of the Act, the valuation report has to be submitted within six months from the date of the receipt of the reference. Admittedly, in the case before us, the valuation officer has submitted the report beyond a period of 15 months. Whether this period can be enlarged or condoned is to be seen. As rightly pointed by the learned Counsel for the assessee, the word used in sub-section 6 of section 142A is "shall" and in other sub sections, the word used is "may". The Hon'ble Delhi High Court in the case of B.K. Khanna & Co. vs Union Of India And Others on 14 September, 1984 (Supra) has clearly held that where the words "may" and "shall" are used in various provisions of same sections, then both of them contain different meaning and the word "shall" shall mean "mandatory". As argued by the learned Counsel for the assessee, the AO was requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, we are not inclined to accept the contention of the ld. Sr. DR that the assessee would be given credit on the basis of the DVO's report as and when the said report was received as it tantamount to delay the justice for indefinite time period. This will give the AO enhanced period for making the assessment in their own way. When the valuation officer is guilty of breach of the law by not submitting the valuation report within a reasonable time period thus for the breach of all such legal provisions, the lower authorities should not get some premium by enhancing the limitation period by leaving the assessment open with such condition for indefinite period. We are live to the issue that though the interest of revenue is vital, such interest cannot override considerations of probity and fairness in tax governance. A fair tax regime where no assessee is harassed is equally crucial. The reference was made to the valuation officer on 22.03.2021 and thereafter the assessment was completed on 18.04.2021 as by making reference of limitation for completing the assessment, the same cannot be extended now solely for want of the valuation report, at the same time, necessary steps shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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