Section 50C valuation safeguard must be awaited before assessment is finalised; writ relief remained available.

Section 50C(2) requires the assessment to await the Valuation Officer's report where the assessee invokes the statutory safeguard against stamp valuation being adopted as full value of consideration. The Madras HC held that finalising the assessment before receipt of that report denied the assessee the protection built into the capital gains computation mechanism, so the assessment order was unsustainable and was quashed for fresh consideration after the valuation certificate. The Court also held that the existence of an appellate remedy did not bar writ jurisdiction on these facts, because the statutory safeguard had been effectively defeated by the premature assessment.

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Issues: (i) Whether the assessment order could be sustained when the reference made under Section 50C(2) of the Income-tax Act, 1961 had not culminated in a valuation report before completion of assessment. (ii) Whether the availability of an appellate remedy barred exercise of writ jurisdiction in the facts of the case.

Issue (i): Whether the assessment order could be sustained when the reference made under Section 50C(2) of the Income-tax Act, 1961 had not culminated in a valuation report before completion of assessment.

Analysis: Section 50C provides a special mechanism for determining full value of consideration in cases of transfer of land or building, and sub-section (2) gives the assessee a statutory right to seek reference to a Valuation Officer where the stamp valuation exceeds the fair market value. The assessment was completed on the stamp valuation basis before the valuation report was received, thereby denying the assessee the benefit of the statutory safeguard. The Court treated this safeguard as material to the computation of capital gains and held that the assessment ought not to have been finalised without awaiting the valuation report.

Conclusion: The assessment order was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether the availability of an appellate remedy barred exercise of writ jurisdiction in the facts of the case.

Analysis: Though an appeal was available under Section 246A, the Court held that the rule of alternative remedy is not absolute. In the present facts, the reference for valuation had already been made at the assessee's instance, the assessee's statutory protection under Section 50C was affected by the premature assessment, and the circumstances justified invocation of Article 226. The Court therefore declined to treat the appellate remedy as an effective bar.

Conclusion: The writ petition was maintainable notwithstanding the appellate remedy.

Final Conclusion: The assessment was quashed and the matter was sent back for fresh consideration after receipt of the valuation certificate, with the assessee entitled to the statutory valuation process under Section 50C.

Ratio Decidendi: Where Section 50C(2) is invoked by the assessee, the assessment should not be finalised on the basis of stamp valuation before the Valuation Officer's report is received, and the existence of an appellate remedy does not bar writ relief where the statutory safeguard has been denied.

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