ITAT cannot allow AO to cover up the deficiency in its case

it is a very settled position that the power of ITAT in setting aside cannot be exercised so as to allow Assessing Officer to cover up the deficiency in its case.

When Assessee claims before Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub section (1) exceeds the fair market value of the property as on the date of transfer, the Assessing Officer should referre the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty.

——————————–

1. The relevant facts as per the assessment order are that the assessee computed long term capital gain treating the fair market value as consideration received on the transfer of the property. The Assessing Officer asked the assessee as to why the fair market value may not he taken, as taken by the authority of State Government for the purpose of payment of stamp duty, as per the provisions of section 50C of the I. T. Act. The explanation of the assessee that the sale was subject to several distressing circumstances and hence, the value adopted for the purposes of stamp valuation does not at all reflect the fair market value of the land was not accepted by the Assessing Officer. The Assessing Officer also not accepted the request of the assessee for making a reference to the valuation officer under the provisions of sub section (2) to 50C. The Assessing Officer instead took the fair market value of the land in question as per value determined by the state authority for the purpose of stamp duty and capital gain was worked out accordingly. The Id. CIT held the assessment in question on the issue as not valid in the eyes of law. The Id. CIT (Appeals) has accordingly annulled the same.

2. In support of the ground, the Id. Sr. DR has basically placed reliance on the assessment order. He submitted that the Assessing Officer has followed the procedure laid down under section 50C of the Act. He submitted that if any irregularity of procedure is there in the assessment order, the same may be set aside to the file of the Assessing Officer to pass fresh assessment order on the issue after following the prescribed procedure under the provisions of the Income Tax Act, 1961.

Please become a Premium member. If you are already a Premium member, login here to access the full content.