FMV u/s 50C can be used to compute capital gains only after giving opportunity of being heard to assessee

[2019] 104 taxmann.com 131 (Madras)

IT: It is only after hearing objections of assessee, that Fair Market Value of capital asset as per ‘Guidance Value’ can be determined by authorities

Section 50C, read with section 48, of the Income-tax Act, 1961 – Capital gains – Special provision for computation of full value consideration (Reference to DVO) – Assessment year 2012-13 – Whether provision of section 50C only enables revenue to adopt Guidance Value declared by State for payment of stamp duty as Fair Market Value under section 48, but, that Guidance Value cannot, ipso facto, be taken as valuation for purpose of computing Capital Gains Tax liability in hands of assessee/seller – Held, yes – Whether sub-section (2) of section 50C itself provides for reference to Departmental Valuation Officer (DVO) if assessee objects to invoking of section 50C (1) – Held, yes – Whether an assessee cannot be denied an opportunity to raise his objections even against presumptive Fair Market Value under section 50C (1) or report of DVO under section 50C (2) and Assessing Authority or Appellate Authorities, whose powers are co-extensive with those of Assessing Authority, cannot refuse to meet those objections point by point – Held, yes – Whether thus, where presumptive value under section 50C giving rise to additions to extent of Rs.2.61 crores to declared sale value, as disclosed by assessee, was adopted by Appellate Authorities, without meeting objections of assessee, matter was to be remanded back to Assessing Authority for adjudication afresh – Held, yes

Jagannathan Sailaja Chitta