Case Law Details
Facts of the case: The ld. AO noted that the assessee had purchased agricultural land Rs.4,10,000/- on 30-10-2000 which he sold for Rs.5 lakhs on 08-05-2007. On verification of the aforesaid sale deed, it was noticed that the market value of the said property for the purpose of stamp duty was Rs.60,80,000 which was challenged by the Collector of Stamps where he determined the market value of the land for stamp duty purposes at Rs.53,25,000/- under Bombay Stamp Act, 1958. The AO further noted that the assessee has not filed his return of income declaring capital gain on sale of the said land. Therefore, the AO issued notice u/s.148 of the I.T. Act. During the course of assessment proceedings the AO noted that the assessee had computed the long term capital gain in the original return at Rs.1,21,996/-. However, in the revised return, the long term capital was declared at Nil. The AO in the assessment after considering the indexed cost of acquisition at Rs.5,56,429/- determined the long term capital gain at Rs.47,68,571/-. Similarly, he also determined the income from house property at Rs.4,45,200/- as against Rs.1,11,300/- declared by the assessee. Accordingly, the AO determined the total income of the assessee at Rs.52,13,771/-, i.e. (Capital gain – Rs.47,68,571 + Hose property income – Rs.4,45,200).
Order before ld. CIT(A): Before the ld. CIT(A), the assessee challenged the action of the AO in not allowing sufficient time to produce the valuation report of the property during assessment proceedings. The contention was rejected on the ground that despite having sufficient time the assessee did not produce valuation of the property either during assessment proceedings or before him during appellate proceedings.
Contention of the Assessee: The Ld. Counsel for the assessee submitted that the value of the property for stamp duty purpose at Rs.60,80,000 was subsequently reduced to Rs.53,25,000/-. Further, it was submitted that although an amount of Rs.53,25,000/- was taken due to the deeming provision of section 50C, no such amount was received by the assessee from the value of the said land. He submitted before CIT(A) also that the assessee has stated that the AO did not give any opportunity to produce the valuation of the property to the assessee so as to justify the addition. The ld. Counsel relied on the decision of the Pune Bench of the Tribunal in the case of K.K. Nag Ltd. Vs. Addl.CIT 52 SOT 381, where it was held that although section 50C is a deeming provision and ostensibly involved in creation of an additional tax liability on the assessee, notwithstanding the presence of the expression “may” in section 50C(2)(a), the AO ought to refer the matter to the valuation officer for ascertaining the value of the capital asset.
Contention of the Revenue: The Revenue submitted that nowhere the assessee has asked the AO or the CIT(A) to refer the matter to the DVO.
Judgment of the Hon’ble Tribunal: The Hon’ble Tribunal while relying on the Judgement of the case of KK Nag ltd. (supra) where the matter was remanded to the AO to refer the matter to valuation officer for ascertaining the value of the capital asset in question.He Accordingly submitted that in the interest of justice the matter may be restored to file to AO to determined the market value on the basis of the report of DVO recompute the capital gain.
Accordingly, the appeals of the Assessee were allowed.
