Veena Ojha Vs DC/ACIT (ITAT Varanasi)
The appeal was filed by the assessee against the order of the Learned Addl./Joint Commissioner of Income-tax (Appeals)-6, Delhi dated 25.07.2024 for Assessment Year 2017-18. The assessee challenged the dismissal of the appeal, contending that the Assessing Officer (AO) had not followed the procedure prescribed under Section 50C(2) of the Income Tax Act, 1961 by failing to refer the valuation of the property to the Departmental Valuation Officer (DVO) despite the assessee disputing the stamp duty valuation and furnishing an approved valuer’s report.
The assessee had filed the return of income on 28.03.2018 declaring total income of Rs. 23,75,460. The case was selected for scrutiny under the Computer-Assisted Scrutiny System (CASS). During the proceedings, the assessee, Smt. Veena Ojha, expired on 26.09.2019 and her legal heir, Sri Sudhakar Ojha, was substituted. The AO invoked Section 50C of the Act and computed capital gains by adopting the circle rate notified by the Stamp Valuation Authority, resulting in an addition of Rs. 43,94,000. The appeal before the Commissioner (Appeals) was dismissed without examining the merits, following which the assessee appealed before the Tribunal.
Before the Tribunal, the authorised representative submitted that both the AO and the Commissioner (Appeals) failed to appreciate the facts correctly and did not refer the valuation dispute to the DVO. It was argued that the assessee had objected to the adoption of the stamp duty value and had produced an approved valuer’s report. According to the assessee, once such an objection is raised under Section 50C, the matter is required to be referred to the DVO for determining the correct fair market value of the property. It was also submitted that the Commissioner (Appeals) failed to consider the valuation report produced during the appellate proceedings.
The Departmental Representative supported the orders passed by the lower authorities.
After considering the submissions and examining the record, the Tribunal noted that the Commissioner (Appeals) had recorded that the assessee had produced an approved valuer’s report. It further found that the valuation report had also been submitted before the Assessing Officer, but the AO proceeded to make the addition towards capital gains without considering the assessee’s objection.
The Tribunal observed that there was no ambiguity in law that where an assessee objects to the adoption of the fair market value based on the circle rate under Section 50C(2), the Assessing Officer is under a statutory mandate to refer the matter to the DVO for determining the correct fair market value. It found that neither the AO nor the Commissioner (Appeals) had referred the matter to the DVO.
Accordingly, the Tribunal held that the orders of the lower authorities were not in consonance with the mandate of law. It set aside the impugned order and restored the assessment to the file of the Assessing Officer for a de novo assessment after obtaining a valuation report from the DVO as contemplated under Section 50C(2) of the Income Tax Act, 1961. The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT VARANSI
The present appeal has been filed by the assessee against the order of the Learned Addl/Joint Commissioner of Income-tax (Appeals)-6, Delhi dated 25.07.2024, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: –
“1. Because the learned JCIT(A) has erred in law as well as on facts in dismissing the appeal by misconstruing the provisions of law and also by not appreciating the facts and circumstances of the case in the correct legal perspective
2. Because the learned JCIT(A) has erred in law as well as on facts in not appreciating that the AO had not followed the correct procedure prescribed u/s 56(2) by not referring the matter to DVO when the assessee had disputed the stamp duty valuation duly supported by approved valuer’s report.
3.Because the authorities below have acted against the clear provisions of law by not referring the matter to DVO and hence the addition made deserves to be deleted.
4. Because the learned JCIT(A) has erred in law as well as on facts in has incorrectly observed that the assessee has not disputed the stamp duty valuation whereas this fact is very clearly mentioned at several places in the statement of facts, AO’s order as well as in the order of learned JCIT(A).”
2. The facts in brief are that in this case, the assessee is an individual filed her return of income on 28.03.2018 showing total income at Rs.23,75,460/-. Thereafter, the case was selected for under Computer-Assisted Scrutiny System (CASS). During the course of hearing, the assessee Smt Veena Ojha expired on 26.09.2019 and her legal heir Sri Sudhakar Ojha was substituted. Subsequently, the Assessing Officer (“AO”, for short) invoked provisions of Section 50C of the Income Tax Act, 1961 (“Act”, for short) and assessed capital gain on the basis of circle rate notified by the Stamp Valuation Authority. Thus, he made an addition of Rs.43,94,000/- on that account. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee without adverting on the merits of the case. Now, the assessee is in appeal before this Tribunal.
3. Apropos to the grounds of appeal, the Ld. Authorized Representative for assessee contended that the Ld. CIT(A) failed to appreciate the facts in right perspective and without adverting to the merits of the case proceeded to dismiss the appeal. He further submitted that the Assessing Authority as well Ld. CIT(A) did not refer the matter to the Departmental Valuation Officer (DVO) for ascertaining the correct market value of the property. Even, the Ld. CIT(A) failed to consider the value of property furnished during the appellate proceedings. He drew our contention to the provisions of Section 50C of the Act to buttress the contention that once an assessee objects to the adoption of the fair market value of the property as per the circle rate as notified by the Stamp Valuation Authority. In that event, the matter is required to be referred to the DVO for ascertaining the correct fair market value of the property.
4. On the other hand, the Ld. Departmental Representative for Revenue supported the orders of the lower authorities.
5. Heard the Ld. Representatives of the parties and perused the materials available on record. We find that the Ld. CIT(A) has noted the facts that the assessee had produced the valuation report of approval valuer. Even before the Assessing Authority, the assessee had submitted a valuation report of the property but the AO without considering the objection of the assessee proceeded to make impugned addition on account of capital gain. There is no ambiguity under the law that if the assessee in terms of Section 50C(2) of the Act objects against the adoption of fair market value as per circle rate, the AO is under statutory mandate to refer the matter to a DVO for ascertaining the correct fair market value. In the facts of the present case, neither the Assessing Officer nor the Ld. CIT(A) referred the matter to the DVO for determination of the fair market value of the property. Therefore, looking to the totality of the facts, the order passed by the authorities below is not in consonance with the mandate of law. We, therefore, set aside the impugned order and restore the assessment to the file of the Assessing Authority to make de novo assessment after calling a valuation report from the DVO as contemplated under section 50C(2) of the Act. The grounds raised by the assessee are partly allowed for statistical purposes.
6. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order deemed to be pronounced under Rule 34(4) of IT(AT) Rules on 20/07/2026.
