Rohini Ramhari Bhadale Vs Assessing Officer (ITAT Pune)
Section 50C Valuation Dispute: ITAT Directs DVO Reference, Remands ₹48.12 Lakh Addition
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) directed a fresh assessment after obtaining a Departmental Valuation Officer’s report under Section 50C(2) in a dispute involving a ₹48.12 lakh capital gains addition. The assessee had challenged the adoption of stamp duty value for a property sold for ₹75 lakh.
In Rohini Ramhari Bhadale vs. Assessing Officer, Ward-2(2), Pune, ITA No. 2767/PUN/2026, concerning Assessment Year 2015-16, the Tribunal set aside the CIT(A)/NFAC order and restored the matter to the Assessing Officer. The order dated 14 October 2026 was passed by Accountant Member Manish Borad and Judicial Member Vinay Bhamore.
Reassessment Following Information on Financial Transactions
The assessee, an individual, had not originally furnished her return of income for the relevant year. Information on the Income Tax Department’s Insight portal indicated substantial financial transactions whose tax implications remained undisclosed.
The Assessing Officer issued a notice under Section 148A(b) on 19 March 2022. After receiving no response, he passed an order under Section 148A(d) and issued a notice under Section 148 on 4 April 2022.
In response, the assessee filed her return on 5 May 2022, declaring total income of ₹54,480. She subsequently complied with statutory notices and explained that her income comprised capital gains and income from other sources, without business or professional income.
₹48.12 Lakh Added Under Section 50C
The assessee’s computation disclosed long-term capital gains of ₹57,50,901 after claiming indexed acquisition cost, commission and other expenses. She claimed a deduction of the same amount under Section 54F.
The Assessing Officer noticed that the property had been sold for ₹75 lakh, whereas its value for stamp duty purposes was ₹1,23,12,000.
Applying Section 50C, he added the difference of ₹48,12,000 as long-term capital gains. The assessment completed on 6 February 2024 under Section 147 read with Section 144B determined total income at ₹48,66,480, against the returned income of ₹54,480.
The assessee appealed before the CIT(A)/NFAC. However, she remained absent during those proceedings, and the appellate authority dismissed the appeal and confirmed the assessment.
Assessee Explains Lower Sale Consideration
Before the Tribunal, the assessee furnished an affidavit explaining the circumstances surrounding the transaction. She stated that her father had gifted her a 1,000-square-metre plot on 2 November 2012, which she sold on 11 September 2014 for ₹75 lakh.
According to her affidavit, the entire consideration was received through banking transactions, and she received no additional amount.
She further explained that the plot could not be located because her father had sold various other plots at the same location. Consequently, the property was sold on an “as is where is” basis, which, according to her, explained why the consideration was lower than the registering authority’s valuation.
These circumstances formed the basis of her challenge to the stamp duty valuation.
Request for Independent Valuation
The assessee’s representative argued that the Assessing Officer should have referred the property to the DVO for determining its actual value, since she had not accepted the stamp duty value of ₹1,23,12,000.
Her grounds also challenged the addition on the basis that she had received only the consideration recorded in the agreement. She raised objections concerning natural justice and the validity of the reassessment notice issued by the jurisdictional Assessing Officer after the introduction of faceless proceedings.
The Tribunal’s operative relief, however, centred on the valuation dispute and the need for a DVO reference.
Calcutta High Court Decision Followed
The Tribunal relied on Sunil Kumar Agarwal vs. Commissioner of Income-tax, Siliguri, [2014] 47 taxmann.com 158, decided by the Calcutta High Court.
The High Court had emphasised that the valuation machinery provided under Section 50C should be used to ensure fair treatment where an assessee disputes the stamp duty valuation.
As reproduced in the Tribunal’s order, the High Court explained that an Assessing Officer performing a quasi-judicial function must act fairly and offer the statutory valuation route even where the assessee’s representative has not specifically requested it.
The underlying reasoning was that capital gains should not be determined merely by adopting the registering authority’s stamp duty valuation without considering the safeguard available under the law.
Fresh Assessment Ordered with Cooperation Directions
Following that judgment, the Tribunal directed the Assessing Officer to refer the property’s valuation to the DVO under Section 50C(2). After receiving the valuation report, the officer must pass a fresh assessment order according to facts and law, after providing a reasonable opportunity of hearing.
The assessee was directed to respond to notices from both authorities and produce evidence supporting her Section 54F deduction and other computation claims, without seeking adjournments under any pretext. Otherwise, the Assessing Officer could pass appropriate orders according to law.
The appeal was allowed for statistical purposes. The ₹48.12 lakh addition was thus remitted for fresh examination; the Tribunal did not finally accept the declared sale value or allow the deduction claimed.
Cases Discussed
- Sunil Kumar Agarwal Vs Commissioner of Income-tax, Siliguri — [2014] 47 taxmann.com 158 (Calcutta High Court); followed for the obligation to offer a DVO valuation under Section 50C(2).
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 12.03.2026 passed by Ld. CIT(A)/NFAC for the assessment year 2015-16.
2. The appellant has raised the following grounds of appeal :-
“(1) Ground No. (1): Grounds related to Invalid issue of Notice u/s 148 of the Income Tax Act, 1961:- The Ld. Jurisdictional Assessing Officer (JAO) Ward 2(2) Pune issued notice u/s 148 dated 04.04.2022 which is not valid after Faceless Assessment Proceedings initiated by the Income Tax Department w.e.f. 29/03/2022. Assessee by : Shri CA Deepak Sagar Revenue by : Shri Sandeep Jumale (Virtual) Date of hearing : 04.08.2026 Date of pronouncement : 14.10.2026
(2) Ground No. (2): The Ld. Assessing officer has not considered various records which were available during the course of assessment proceedings and calculated income on presumption and surmise. The Ld. AO being a Quasi – Judicial officer while performing the duty of assessment not considered the sale agreement before him/her as there was express mention of consideration of Rs. 75,00,000/- in the sale agreement and payment schedule of receipt of consideration and not appreciated the fact that the Appellant not received any amount other than consideration stated in agreement. The Hon’ble CIT ( Appeal ) confirmed the action of Ld. AO.
(3) Ground No.: (3): Ground Related to concept of Real Income Theory :- The Hon. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the Addition made by The Ld. Assessing Officer, National E-Assessment Centre (NeAC), under section 50C of The Income Tax Act, 1961 of Rs.48,12,000/- as difference between Stamp Duty Value and Actual Sales consideration. Thus Ld. AO as well as Hon’ble CIT ( Appeal ) not followed the Real Income Theory as the Appellant not earned income of Rs. 48,12,000/-.
(4) Ground No. (4): Ground related to Reference to be made to the Departmental Valuation Officer (DVO) by the Ld. Assessing Officer: The Ld. Assessing Officer should have referred the matter to the Departmental Valuation Officer (DVO) before making the addition of Difference of Rs.48,12,000/- between Stamp Duty Value and Actual Sales consideration and Hon. CIT(A), NFAC, Delhi wrongly confirmed the action of the Ld. Assessing Officer.
(5) Ground No. (5): Ground related to Principles of Natural Justice: – The Ld. Assessing Officer as well as Hon’ble CIT ( Appeal ) has not followed the Principle of Natural Justice while conducting the Assessment Proceedings.
(6) Ground No. (6):
General Ground: The Appellant craves leave to add, delete, amend, alter, vary and/or withdraw all or any of the above grounds of appeal.”
3. Facts of the case, in brief, are that the assessee is an individual and has not furnished her return of income for the period under consideration. On the basis of information available on the insight portal that the assessee has carried out substantial financial transactions, however, has not furnished her return of income, therefore, the income involved in the above financial transactions remained to be disclosed for taxation and therefore, the case of the assessee was reopened u/s 147 of the IT Act and notice u/s 148A(b) of the IT Act was issued on 19.03.2022 which was not responded by the assessee, therefore, order u/s 148A(d) of the IT Act was passed on 04.04.2022 and notice u/s 148 of the IT Act was also issued to the assessee on 04.04.2022. The assessee in response to the above notice u/s 148, furnished her return of income on 05.05.2022 declaring total income of Rs.54,480/-. Subsequently, notices u/s 143(2) & 142(1) and show cause notices respectively were issued to the assessee. The assessee complied with the above statutory notices and submitted that the assessee has only income from capital gains and income from other sources and does not have any business or professional income. As per the computation of income furnished by the assessee, long term capital gain of Rs.57,50,901/- was disclosed after claiming index cost of acquisition, commission and other expenses and deduction u/s 54F of the IT Act was claimed of the same value. It was observed by the Assessing Officer that the assessee had sold an immovable property for consideration of Rs.75,00,000/- and its value for stamp duty purposes was Rs.1,23,12,000/-. Accordingly, the Assessing Officer in the light of section 50C of the IT Act added the differential value of Rs.48,12,000/- (Rs.1,23,12,000 – Rs,75,00,000) as income from long term capital gain and added back the same to the income of the assessee. Vide order dated 06.02.2024, the Assessing Officer completed the assessment proceedings u/s 147 r.w.s. 144B of the IT Act by determining the income of the assessee at Rs.48,66,480/- as against the income of Rs.54,480/- returned by the assessee in response to notice u/s 148 of the IT Act. The above assessed includes addition of Rs.48,12,000/- being difference between the actual consideration and the fair market value for the purposes of calculation of stamp duty.
4. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the assessment order passed by the Assessing Officer.
5. It is the above order against which the assessee is in appeal before this Tribunal.
6. We have heard Ld. Counsels from both the sides and perused the material available on record including the affidavit, paper book and copy of case laws furnished by the assessee. In this regard, we find that the assessee in her affidavit has stated that she received a plot of 1000 sq. mtrs. on 02.11.2012 through gift deed from her father and sold the said plot on 11.09.2014 for a consideration of Rs.75,00,000/- which was received by her through banking transaction and apart from above amount, nothing more was received by her. Since the plot sold by her could not be located due to various other plots sold by her father on the same location, the plot was sold on as is where is basis and what is there is. Therefore, the plot could not be sold on fair market value determined by the Registering Authority for the purposes of stamp duty. In the light of these facts, Ld. Counsel of the assessee requested before us that the Assessing Officer was duty bound to refer the matter to the Departmental Valuation Officer (DVO) for determining the actual valuation of the impugned property since the assessee has not accepted the value of Rs.1,23,12,000/- which was the fair market value for the purposes of stamp duty. In support of its contention, Ld. Counsel of the assessee relied on judgment passed by Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs. Commissioner of Income-tax, Siliguri [2014] 47 taxmann.com 158 wherein Hon’ble Court held that the Assessing Officer should, in fairness, have given an option to the assessee to have the valuation made by the DVO contemplated u/s 50C of the IT Act by observing as under :-
“6. We have considered the rival submissions advanced by the learned advocates appearing for the parties. The submission of Ms. Ghutghutia that the requirement of clauses a) and (b) of sub-Section (2) of Section 50C has not been met by the assessee, can hardly be accepted. The requirement of clause (b) of sub-Section (2) of Section 50C was evidently met. The only question is whether the requirement of clause (a) of sub-Section (2) of Section 50C was met by the assessee.
7. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer.
8. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.
9. For the aforesaid reasons, the order under challenge is set aside.
10. The impugned order including orders passed by the CIT(A) and the assessing officer are all set aside. The matter is remanded to the assessing officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is made, the assessment shall be made de novo in accordance with law.”
7. Respectfully following the above judgement of Hon’ble Calcutta High Court passed in the case of Sunil Kumar Agarwal (supra) and in the light of our above discussion, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and restore the matter to the file of the Assessing Officer with a direction to refer the matter of valuation of the impugned property sold by the assessee to the DVO as per section 50C(2) of the IT Act and upon receipt of DVO’s valuation report, pass assessment order afresh and as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by the Assessing Officer and Departmental Valuation Officer in this regard and to produce relevant documents, evidences and submissions in support of claim of deduction u/s 54F of the IT Act and regarding other claims made in the computation of income without taking any adjournment under any pretext, otherwise the Assessing Officer shall be at liberty to pass appropriate orders as per law. Thus, the grounds of appeal raised by the assessee are allowed for statistical purposes.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 14th day of October, 2026.
