I-T – When valuation of property by stamp authority is higher than actual sale price, then before calculation of capital gain on such higher value, AO should refer capital asset to DVO for valuation even if not prayed for: ITAT

MUMBAI,  : THE ISSUE IS – Whether when valuation of property by stamp valuation authority is higher than actual sale price claimed by assessee seller, then before calculation of capital gain on such higher value, AO should refer the capital asset to DVO for valuation even if not prayed by assessee. YES IS THE VERDICT.

Facts of the case

The assessee, an Individual, engaged in business of Builders & Developers, had filed return for relevant AY. During the relevant year, the assessee had sold one plot of land for consideration of Rs. 4,00,000/- while the market value adopted by office of Sub-Registrar, for the purposes of stamp duty was Rs. 9,03,000/-. The assessee adopted actual value of consideration for computing long term capital gains (LTCG) while the AO adopted Rs. 9,03,000/- as consideration for computing LTCG. On appeal, CIT(A) adjudicated the issue against the assessee. The assessee did not ask for the reference to DVO before the AO for undertaking valuation of the plot of land for the purposes of computing full value of the consideration on sale of plot of land u/s 48. However, before CIT(A) the assessee sought reference to DVO for valuation. The CIT(A) did not refer the matter to DVO citing two reasons:- (a) It will delay the proceedings, (b) assessee had not sought the reference to DVO for valuation before the AO during assessment proceedings.

Tribunal held that,

++ it was noted that power of CIT(A) is co-terminus with the power of the AO. The CIT(A) in view of principles of natural justice and in all fairness of the matter to render substantial justice should have referred the matter to DVO for determining full value of consideration of the plot of land sold for computing long term capital gains u/s 48. Calcutta High Court vide its decision in the case of Sh. Sunil Kumar Agarwal has clearly laid down that it is AO’s duty to have given an option to assessee to have the valuation undertaken by DVO as is contemplated u/s 50C. Thus in all fairness, it was decided to set aside the order of CIT(A) and restore the matter back to the file of the AO for fresh adjudication of the entire issue on merits after referring the matter to DVO for valuation.