ITAT Orders DVO Reference in Section 50C Land Sale Case; Rejects Backdated Agreement Claim

ITAT Orders DVO Reference in Section 50C Land Sale Case; Rejects Backdated Agreement Claim

The assessee, an individual, filed his return for AY 2012-13, declaring an income of Rs.22.44 lakh. He sold a plot of land on 08.07.2011 for Rs. 14.59 lakh, whereas the stamp duty (Jantri) value was Rs. 59.90 lakh. The Assessing Officer reopened the assessment and made an addition of Rs. 45.30 lakh under Section 50C, along with other additions, completing the assessment at Rs. 72.68 lakh.

The assessee contended that an agreement to sell existed in October 2004 with part consideration received by cheque and therefore stamp value as on the agreement date should be adopted. The CIT(A) partly allowed the appeal, against which the assessee approached the ITAT.

Issue Before Tribunal: Whether the assessee was entitled to adopt the stamp duty value as on the alleged agreement date in 2004 under Section 50C, and whether the AO was required to refer the valuation to the DVO when the fair market value was disputed.

ITAT’s Order: The ITAT rejected the assessee’s claim of an agreement to sell dated 03.10.2004, holding that no such agreement fixing consideration was produced. Merely receiving an advance payment was held insufficient, especially since the property was under a registered 30-year lease that was cancelled only on the date of sale in 2011.

The Tribunal accepted the alternate plea that once the assessee disputed the stamp duty value, the Assessing Officer was mandatorily required to make a reference to the Valuation Officer under Section 50C(2). The matter was therefore set aside to the Assessing Officer with directions to obtain a DVO report and recompute capital gains after granting a proper opportunity to the assessee. The appeal was allowed.

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