Shashikant Damodar Patil Vs ITO (ITAT Mumbai)
AO duty-bound to refer valuation dispute to DVO u/s 50C(2)- Failure to seek DVO Report vitiates 50C addition- ITAT Remands Case to AO
In Shashikant Damodar Patil v. ITO, the Mumbai ITAT set aside a long-term capital gains addition made u/s, holding that AO was duty-bound to refer the matter to DVO when the assessee disputed the stamp duty valuation.
Assessee had sold inherited land for ₹50 lakh pursuant to an agreement to sell originally executed by his father in 1981 and modified in 1983. Due to prolonged litigation, the conveyance deed was executed only in May 2011. The stamp valuation authority adopted a value of ₹6.76 crore, leading the AO to substitute it u/s50C(1) & compute capital gains, adding ₹3.29 crore as the assessee’s share.
Before the Tribunal, Assessee argued that the sale consideration was fixed decades earlier & that u/s 50C(2), AO was required to obtain a DVO valuation once the valuation was contested. ITAT found merit in the plea, noting that both the AO & CIT(A) ignored this statutory mandate, causing prejudice to the assessee.
Accordingly, the ITAT set aside the CIT(A)’s order & remanded the matter to AO for fresh adjudication after obtaining a DVO valuation, directing that Assessee be given a fair opportunity of hearing.
