Tribunal Orders Fair Market Value Assessment for Property Sale

SHRI ANIL KUMAR JAIN Versus INCOME TAX OFFICER

SHRI ANIL KUMAR JAIN Versus INCOME TAX OFFICER - TMI Issues Involved:
1. Addition of short term capital gain on sale of property.
2. Refusal to refer the matter to the Valuation Officer for fair market value determination.

Analysis:

Issue 1: Addition of short term capital gain on sale of property:
The appeal was filed against the order confirming an addition of Rs.11,55,000 as short term capital gain on the sale of property. The Assessing Officer calculated the capital gain based on the stamp duty paid on the property, resulting in an addition of Rs.13,53,250 to the total taxable income. The Commissioner of Income Tax(A) upheld this addition, stating the Assessing Officer's decision was correct under section 50C(1) of the Act. However, the Tribunal found that the Assessing Officer should have referred the matter to the Valuation Officer for fair market value determination before making the addition. The Tribunal directed a fresh adjudication by the Assessing Officer after referring the matter to the Valuation Officer, allowing both parties to present evidence and contentions.

Issue 2: Refusal to refer the matter to the Valuation Officer for fair market value determination:
The counsel of the assessee argued that the Assessing Officer should have referred the matter to the Valuation Officer as the stamp valuation authority's assessment exceeded the fair market value. The Tribunal noted that the assessee had claimed the circle rate was higher than the actual market value, as per section 50C(2) of the Act. Since the Assessing Officer failed to refer the matter to the Valuation Officer, the Tribunal decided to remand the case for fresh adjudication after the valuation reference. The Tribunal emphasized the importance of following the statutory provisions for fair market value determination and directed the Assessing Officer to provide a reasonable opportunity for the assessee to be heard during the reassessment.

In conclusion, the Tribunal allowed ground no. 3, directing the Assessing Officer to refer the matter to the Valuation Officer for fair market value determination. Ground no. 2 was dismissed as premature due to the restoration of the fair market value determination issue. The appeal was disposed of with directions for a fresh assessment based on the Valuation Officer's report, ensuring a well-reasoned order by the Assessing Officer.