Case Law Details

Case Name : Sudha Garg Vs ITO (ITAT Delhi)
Appeal Number : ITA No. 141/DEL/2018
Date of Judgement/Order : 14/08/2018
Related Assessment Year : 2009-10

Sudha Garg Vs ITO (ITAT Delhi)

The assessing officer made the assessment order u/s 147/143(3). The only issue involved in this appeal is regarding computation of long term capital gain on sale of property located at Ghaziabad. The assessee has declared the long term capital gain on the sale of the said property claiming real sale receipt value of the property.

 It was to decide the sale value among the four values which were as follows.

A. Circle Rate Value Of Rs. 34.85 Lakhs

B. Real sale value of Rs. 20 Lakhs

C. Govt. Valuation Value of Rs. 21.78 Lakhs.

D. Govt approved valuer value of Rs. 19.65 Lakhs.

Circle Rate Value Rs. 34.85 Lakhs- The learned Assessing officer has taken the value as per circle rate though he was having the forwarding letter to Govt Valuation officer & report of the Govt. approved Valuer (Private) . He simply ignored the information in his hand and keeping a blind eye on the documentary evidences without acknowledging the fact that the valuation has been sought from the DVO u/s 55AA in his assessment order.

Real sale value of Rs. 20.00 lakhs –  A copy of sale deed was produced before the assessing officer with a payment tail of the said money to the bank account.

Govt. Valuation Value of Rs. 21.78 Lakhs.- On dated 28/10/2016 , the learned Assessing officer has sought the valuation from the Department Valuation officer.On 24/02/2017 , the DVO has given a provisional figure of valuation of Rs. 21.78 Lakhs . The same have been submitted with the assessing officer. The final valuation report with the figure of Rs. 21.78 Lakhs on 07/03/2017.

Govt approved valuer value of Rs. 19.65 Lakh– During the course of assessment proceedings, a valuation report of the said property for Rs. 19.52 lakhs from the Govt. Approved valuer Dr S.N.Bansal  was produced before the Assessing officer . Being unsatisfied with the report he called for DVO report u/s 55AA.   

As the case was getting time barred. The A.O. accordingly passed the assessment order dated 26-12-2016 u/s 147/ 143(3) of the Act taking Circle Rate Value Rs. 34.85 Lakhs. The A.O. was requested to pass a protective order as the case was getting time barred but A.O passed the final order and also didn’t opt for rectification of order u/s 155 as the valuation was mistake apparent from the record.

The assessee has moved an appeal before the CIT (A) , Ghaziabad. That having regard to the facts and circumstances of the case, the Ld. CIT (A) erred on facts and in law for not giving effect to the valuation report which was submitted to him along with the submissions. He acknowledges the receipt of the letter from DVO but ignored the report and finalized the order. He erred in not taking the remand report over the issue. Otherwise the matter could be adjudicatory judicially at that time itself. Learned CIT (A)  further erred in not considering the DVO report  filed before him before adjudicating the appeal of the appellant notwithstanding the fact that the Ld. A.O. had passed the final order u/s 147 . The assessee further prayed before the learned CIT(A) that the addition made by the A.O. be deleted. It was also submitted the DVO report to the CIT (A) .

The CIT (A) confirmed the order of AO while rejecting the ground of appeal. The order having a noting that AO is bound by the circle rate is erroneous. The circle rates are only indicative and not determinative. The CIT (A) order was passed by her concluding remark.

The stamp Duty Act, UP,2008 permits appellant to dispute the valuation of property for fixation of value on the basis of rate fixed by the Collector. However no such challenge has been made by the appellant i.e appellant has admitted and accepted the value of property determined in accordance with the stamp duty act. It is not understood how can one value of property be adopted before one authority and the same is being disputed before Income Tax authorities. There cannot different value of property for the different authorities here stamp valuation authority and income tax authority. Thus the action of AO making addition of Rs. 14.82 lakhs is upheld. In view of these facts this ground of appeal is dismissed.

The learned Assessing Officer called for DVO report and the purpose of the report narrated here that ‘ On receipt of the order under sub-section (3) or sub-section (5) from the Valuation Officer, the Assessing Officer shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer’. However in this case the Assessing Officer was compelled to complete the assessment without receipt of DVO report to avoid the same getting time-barred. Such a technicality should not be taken at the cost of the assessee.

ITAT held that when the stamp duty value adopted by the Stamp duty authorities is more than the fair market value determined by the Department of valuation officer, than such valuation made by the departmental valuation officer is taken as the full value of consideration. As the Ld. assessing officer was not satisfied with the valuation report of the government-approved valuer, he referred the matter or valuation to the district valuation officer. There is no specific manner provided by the act for making a claim before the Ld. assessing officer under section 50C of the income tax act. Such claim can also be made in the return of income as well as in various communications before the assessing officer. As the assessee has submitted the report of the registered government approved valuer, Therefore, it cannot be said that the assessee has not claimed before the Ld. assessing officer that valuation adopted by the Stamp duty authorities is not the correct valuation of the property sold. Otherwise there would have been no occasion for the ld. assessing officer to refer the matter to the district valuation officer. there is no such provision in section 50 C of the income tax act with respect to the difference between the value determined by the district valuation officer and the actual sale consideration. The provisions of section 50 C are amended w.e.f. 1/4/2019 only for ignoring the stamp valuation authority valuation if it does not exceed 105% of the consideration received. However, that applies only when comparing the stamp duty valuation with the actual sale consideration of the property. In view of above facts directed the Ld. assessing officer to work out the capital gain by considering the deemed sale consideration of the property at Rs. 21.78 Lacs and then work out the capital gain chargeable to income tax act.

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