Preet Networks Private Limited Vs DCIT (ITAT Delhi)
AO Cannot Reject Registered Valuer’s Report in Silence: Accept It or Refer the Property to DVO u/s 50C(2)
The Delhi Bench of the ITAT has held that where an assessee disputes the stamp-duty value and supports the declared sale consideration with a report from a registered valuer, the AO cannot ignore the report and mechanically adopt the stamp-duty value u/s 50C. The AO must either point out defects in the assessee’s valuation or refer the property to the Departmental Valuation Officer u/s 50C(2). On the peculiar facts, the Tribunal adopted the registered valuer’s figure, applied the 10% safe-harbour tolerance and deleted the addition of ₹65,35,000.
The assessee, Preet Networks Pvt. Ltd., sold an industrial property bearing Plot No. J-25A, Sector 63, Noida, to M/s Savita Polymers. The total sale consideration recorded in the registered sale deed was ₹5 crore.
For stamp-duty purposes, the Sub-Registrar valued the property at ₹5,65,35,000. This valuation comprised ₹5,41,20,000 towards the land and ₹24,15,000 towards the construction standing thereon.
The assessee disputed the stamp-duty valuation and produced a report from an approved registered valuer. The valuer estimated the fair market value of the property at approximately ₹5,49,58,488. In the valuer’s computation, the land was valued at the same circle-rate figure of ₹5,41,20,000, but the old construction was valued at only ₹8,38,488.
Thus, the material difference between the valuation adopted by the Sub-Registrar and the assessee’s registered valuer related to the value of the old construction, rather than the underlying land. While the stamp authority valued the construction at ₹24.15 lakh, the registered valuer estimated it at ₹8.38 lakh.
The assessee relied upon the 10% safe-harbour provided in the third proviso to section 50C(1). It contended that, having regard to the fair market value determined by the registered valuer, the variation was within the permissible tolerance and no addition could be made by invoking section 50C.
The AO did not accept the assessee’s contention. He neither identified any specific defect in the registered valuer’s report nor referred the valuation dispute to the DVO. Instead, he proceeded on the basis that the stamp-duty value would automatically prevail under section 50C.
Accordingly, the AO substituted ₹5,65,35,000 for the actual sale consideration of ₹5 crore and added the entire difference of ₹65,35,000 while computing the assessee’s capital gains. The CIT(A) confirmed the addition.
Before the Tribunal, the assessee reiterated that once the stamp-duty valuation was disputed and a supporting valuation report was produced, the AO could not mechanically invoke section 50C(1). The statutory valuation mechanism prescribed in section 50C(2) was required to be followed.
The ITAT noticed that the assessee had furnished a report from a registered valuer estimating the property at ₹5.49 crore. The AO had not pointed out any defect or factual error in that report. Nor had he rejected it through a reasoned finding.
More importantly, the AO had not referred the property to the DVO despite the assessee’s objection that the value adopted by the stamp authority exceeded the property’s fair market value on the date of transfer.
The Tribunal held that the AO had only two legally sustainable alternatives. He could accept the registered valuer’s report produced by the assessee, or, if he disagreed with it, refer the property to the DVO for determination of its fair market value in accordance with section 50C(2). He could not disregard the report without giving reasons and straightaway adopt the stamp-duty value.
Ordinarily, the appropriate course after finding such a procedural failure may have been to restore the matter to the AO for making a DVO reference. However, the Tribunal considered that a remand was unnecessary due to the smallness of the disputed valuation difference and because a registered valuer’s report was already available on record.
The ITAT therefore adopted the value determined by the registered valuer at approximately ₹5.49 crore. When compared with the actual sale consideration of ₹5 crore, the variation was found to be less than 10%. Consequently, the transaction fell within the safe-harbour tolerance contained in the third proviso to section 50C(1).
The addition of ₹65,35,000 was accordingly deleted and the assessee’s appeal was allowed. The Tribunal also condoned the preliminary delay of 16 days in filing the appeal after finding sufficient cause for the belated filing.
Author’s Comments
The decision reinforces an important procedural safeguard within section 50C. The stamp-duty value is a statutory starting point, but it is not always the property’s actual fair market value. Where the assessee disputes it and produces credible valuation material, the AO must engage with that evidence. Silence is not rejection, and mechanical adoption is not adjudication.
The case was particularly suited for valuation scrutiny because both parties accepted the same land value. The entire controversy arose from the value assigned to an old structure. This was a property-specific issue on which a technical valuation report had direct relevance.
However, the manner in which the safe harbour was applied requires careful reading. The statutory third proviso ordinarily compares the stamp-duty value with 110% of the declared consideration. Here, the original stamp value of ₹5.65 crore exceeded 110% of ₹5 crore. The Tribunal first accepted the registered valuer’s lower fair market value of approximately ₹5.49 crore and thereafter treated the difference as falling within 10%. Therefore, the relief rests materially on the Tribunal’s acceptance of the valuer’s report in place of the stamp-duty valuation.
The ruling should consequently not be read as establishing that any privately obtained valuation automatically replaces the stamp value. Its stronger and more generally applicable principle is that once a reasoned valuation objection is raised, the AO must either rebut the registered valuer’s report through cogent reasons or obtain a DVO’s valuation. Section 50C creates a deeming fiction, but it does not authorise valuation by administrative convenience.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order dated 26.12.2025 of the Ld. Commissioner of Income Tax (Appeals-27), New Delhi [hereinafter referred to as “CIT(E)”] in Appeal No. CIT(A), Delhi-27/10044/2021-22 relevant to assessment year 2022-23. Assessment was framed by the DCIT/ACIT, Central Circle-19, New Delhi vide order dated 4.3.2024 u/s 143(3) of the Act.
2. At the threshold, it is noted that there is delay of 16 days in filing the appeal before the Tribunal. After hearing both the sides, we find sufficient cause has been attributed to the assessee for filing the belated appeal, thus, the delay of 16 days is condoned and appeal is admitted for adjudication.
3. The only issue in this appeal of the assessee is against the order of the Ld.CIT(A) confirming the action of the AO in not allowing 10% Safe Harbor Limit.
4. The brief facts are that during the year under consideration, the assessee sold a property, being industrial plot bearing no. J-25A, Sector 63, Noida to M/s Savita Polymers for a total sale consideration recorded in the sale deed at Rs. 5 crore. As per circle rate the Sub-Registrar registered the sale deed by valuing the property for the purpose of computing stamp duty of Rs. 5,65,35,000/-. The assessee before the AO submitted a Valuation Report valuing the property at Rs. 5,49,58,488/-. The assessee before the AO claimed in view of 3rd proviso to section 50(1) by Safe Harbor Rule of 10% that there is no addition can be made by invoking the provision of section 50C of the Act. The approved valuer of the assessee valued the property i.e. at Rs. 5,49,58,488/- comprising land value at circle rate of Rs. 5,41,20,000/- and value of old construction of Rs. 8,38,488/-. Whereas stamp duty valuation of Rs. 5,65,35,000/- comprising of land value at circle rate of Rs. 5,41,20,000/- and value of construction at Rs. 24,15,000/-. The AO was of the view that stamp duty valuation in terms of section 50C will prevail and he accordingly treated the differential amount of Rs. 65,35,000/- as income of the assessee and added to the returned income of the assessee by invoking the provisions of section 50C of the Act. Aggrieved, assessee preferred appeal before the CIT(A) who CIT(A) also confirmed the action of the AO. Aggrieved, asseesee is in appeal before us.
5. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has submitted valuation report prepared by the Registered Valuer valuing the property at Rs. 5,49,58,488/- comprising of land value at circle rate of Rs. 5,41,20,000/- and value of old construction of Rs. 8,38,488/- whereas the stamp duty value is Rs. 5,65,35,000/- comprising the land value of Rs. 5,41,20,000/- and value of construction of Rs. 24,15,000/-. The admitted facts are that the AO has never referred the matter to the DVO despite the objections of the assssee as against the value determined by the Stamp Duty Valuation Authority. AO did not rely on valuation report submitted by the assessee to support the amount of sale consideration without pointing any defect in the stamp duty without pointing any defect in the same or without rejecting the same. Once this is the case, the AO has to accept the valuation report submitted by the assessee i.e. registered valuer or he should refer the matter to the DVO for valuing the Fair Market Price in terms of section 50C(2) of the Act.
Because the assessee has claimed that the value adopted by the Stamp Valuation Authority under sub-section (1) of section 50C exceeds the Fair Market Value of the property as on the date of transfer by filing the fair market value estimated by the registered valuer. Due to smallness of amount, we are not remitting back the matter to the AO for adjudication because the registered valuer valuation is available with us by taking the value at Rs. 5,49,54,488/- the Safe Habour Rule of 10% in terms of 3rd proviso to Section 50C the difference is less than 10%. Hence, we delete the addition and allow the appeal of the assessee.
Order pronounced in the open court on 07.07.2026.
