Tribunal Confirms Mandatory Interest Under Sec 234B & Validates AO's Property Valuation Under Sec 50C.

The Tribunal upheld the levy of interest under section 234B, emphasizing its mandatory nature, dismissing the assessee's arguments regarding unforeseen tax liability. Regarding the property valuation under section 50C, the Tribunal confirmed that the AO correctly adopted the DVO's valuation, as it was lower than the Stamp Valuation Authority's figure, thereby affirming the CIT(A)'s order.

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Issues Involved:
1. Levy of interest u/s 234B of the Act.
2. Adoption of property value u/s 50C of the Act.

Summary:

Issue 1: Levy of Interest u/s 234B of the Act
The assessee contended that the ITO wrongly levied interest u/s 234B without considering the peculiar circumstances stated in section 50C, making it difficult to estimate the correct tax liability. The CIT(A) upheld the AO's action, confirming the levy of interest u/s 234B. The Tribunal, referencing the Hon'ble Karnataka High Court's decision in Gouli Mahadevappa, held that interest u/s 234B is mandatory and cannot be avoided by the assessee. The Tribunal dismissed the assessee's grounds, stating that the assessee was aware of the value adopted by the registering authority for stamp duty purposes at the time of executing the sale deed and thus could foresee the income to be assessed.

Issue 2: Adoption of Property Value u/s 50C of the Act
The assessee sold a property for Rs. 2,11,68,000, but the Stamp Valuation Authority valued it at Rs. 3,27,66,000. The AO, following the CIT's direction u/s 263, referred the matter to the DVO, who valued the property at Rs. 2,67,59,000. The AO adopted this value for computing capital gains. The assessee argued that since the DVO's valuation was less than the SVA's, the AO should accept the sale deed value. The Tribunal, referencing the statutory provisions and CBDT Circular No. 8/2002, held that the AO correctly adopted the DVO's valuation as it is binding when it is less than the SVA's value. The Tribunal dismissed the additional ground raised by the assessee, affirming the CIT(A)'s order.

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