Tax appeal allowed by ITAT Kolkata for market value determination by DVO, emphasizing fair procedures and assessment principles.

The ITAT Kolkata allowed the appeal for statistical purposes, directing the AO to refer the case to the DVO for market value determination and decide after providing a fair opportunity to the assessee. The tribunal emphasized the importance of following proper procedures and providing opportunities for the assessee to substantiate claims in tax appeals, highlighting the necessity of referring valuation discrepancies to appropriate authorities and conducting assessments in accordance with legal principles for justice and fairness in tax matters.

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Issues:
Challenge to assessment order invoking Section 50C of the Act.

Analysis:
The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi for the AY 2019-20, where the assessee contested the addition made by the AO under Section 50C of the Act. The assessee sold a property for Rs. 1,19,60,000, with a stamp value of Rs. 2,25,36,745. The indexed cost was Rs. 96,34,800, resulting in a gain of Rs. 23,25,200. The assessee invested Rs. 45,00,000 in specified bonds, offsetting the property gain. However, the AO added long-term capital gain of Rs. 1,05,76,745 based on stamp value as deemed consideration.

The Ld. CIT(A) dismissed the appeal due to the appellant's non-compliance and failure to provide submissions or evidence supporting their claim. The Ld. CIT(A) upheld the AO's additions, emphasizing the appellant's burden of proof in appeals regarding tax assessments. Despite multiple opportunities, the appellant did not file written submissions or address discrepancies in tax payable, leading to the dismissal of all grounds of appeal.

Upon review, the ITAT Kolkata observed that the AO's addition based on stamp valuation authority instead of actual sale consideration was erroneous. The tribunal noted that if the AO believed an addition was necessary due to lower sale consideration, referral to the DVO for market value determination was mandatory. Citing a precedent from the Hon'ble Calcutta High Court, the ITAT directed the AO to refer the case to DVO and decide after providing a fair opportunity to the assessee. The ITAT allowed the appeal for statistical purposes, emphasizing the need for due process and fair opportunity in tax assessments.

In conclusion, the ITAT Kolkata's judgment highlighted the importance of following proper procedures and providing opportunities for the assessee to substantiate claims in tax appeals. The decision underscored the necessity of referring valuation discrepancies to appropriate authorities and conducting assessments in accordance with legal principles to ensure justice and fairness in tax matters.

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