Assessing Officer's Failure in Valuation Process Deemed Invalid

The Tribunal found that the Assessing Officer's failure to refer the valuation to a Valuation Officer, despite objections by the assessee, violated the statutory obligation under Section 50C(2). This non-compliance rendered the reworking of Long Term Capital Gain (LTCG) invalid. Therefore, the addition of Rs. 72,00,000 based on the higher value was deemed unsustainable, leading to the Tribunal setting aside the CIT (Appeals) order and allowing the appeal of the assessee by deleting the contested addition towards LTCG.

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Issues:
1. Challenge to the order passed by CIT (Appeals) under Sec. 143(3) of the Income Tax Act, 1961.
2. Dispute regarding the computation of Long Term Capital Gain (LTCG) at a different value than the returned figure.
3. Interpretation of Section 50C(1) in the context of adopting circle value/segment rate for computing LTCG.

Issue 1:
The appeal was filed against the order of CIT (Appeals) sustaining an assessment made by the Assessing Officer (A.O) under Sec. 143(3) of the Income Tax Act, 1961. The appellant contested the legality of the order.

Issue 2:
The dispute centered around the computation of Long Term Capital Gain (LTCG) by the A.O, who adopted a circle value/segment rate of Rs. 1 crore as the deemed sale consideration, resulting in a higher LTCG figure than the one declared by the assessee. The CIT (Appeals) upheld the A.O's decision, leading to the appeal.

Issue 3:
The key contention revolved around the interpretation of Section 50C(1) concerning the adoption of the circle value/segment rate for computing LTCG. The assessee argued against this adoption, citing locational disadvantages and other factors affecting the property's value. Despite the objections, the A.O proceeded with the higher value, bypassing the requirement to refer the valuation to a Valuation Officer as mandated by Section 50C(2)(a).

The Tribunal, after thorough deliberation, found that the A.O's failure to refer the valuation to a Valuation Officer, despite specific objections by the assessee, was not in compliance with the statutory obligation under Section 50C(2). Citing a similar precedent, the Tribunal held that such non-compliance rendered the A.O's reworking of LTCG invalid. Consequently, the addition of Rs. 72,00,000 made by the A.O based on the higher value was deemed unsustainable and was deleted.

In conclusion, the Tribunal set aside the CIT (Appeals) order and allowed the appeal of the assessee, deleting the contested addition of Rs. 72,00,000 towards LTCG.

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