Revenue appeal dismissed; CIT(A) directs property valuation under Income Tax Act

The appeal filed by the revenue was dismissed. The CIT(A) correctly directed the AO to determine the property value under section 50C(2) of the Income Tax Act, 1961, emphasizing the CIT(A)'s authority to instruct the AO for valuation and the AO's duty to offer the assessee the option for valuation by the Valuation Officer to ensure fairness and legal compliance.

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Issues Involved:
1. Whether the CIT(A) erred in directing the Assessing Officer (AO) to refer a property for valuation to the Valuation Officer under section 50C(2) of the Income Tax Act, 1961.
2. Whether the CIT(A) has the power to direct the AO to refer the property for valuation, as this may tantamount to setting aside the assessment order.
3. Whether the AO was obligated to give the assessee an option to get the property valued by the Valuation Officer during the assessment proceedings.

Issue-Wise Detailed Analysis:

Issue 1: Direction to Refer Property for Valuation
The CIT(A) directed the AO to refer the property for valuation to the Valuation Officer under section 50C(2) of the Income Tax Act, 1961. The assessee argued that the AO invoked section 50C without referring the property for valuation, as required under section 50C(2). The CIT(A), after considering the assessee's submissions and relying on various judicial precedents, including the decision of the Hon’ble Calcutta High Court in Sunilkumar Agarwal vs CIT, directed the AO to refer the valuation to the DVO and assess capital gains thereafter.

Issue 2: Power of CIT(A) to Direct AO
The CIT(A) has the power to correct errors of the AO as his power is co-terminus with that of the AO. This principle was upheld in several Supreme Court decisions, including CIT v. Kanpur Coal Syndicate, Jute Corpn. of India Ltd. v. CIT, and Commissioner of Income-tax v. Nirbheram Deluram. These cases established that the CIT(A) can do what the AO can do and direct the AO to do what he has failed to do. Therefore, the CIT(A) was within his rights to direct the AO to refer the property for valuation.

Issue 3: Obligation to Give Option for Valuation
The AO is obligated to give the assessee an option to get the property valued by the Valuation Officer if the AO seeks to adopt the value assessed for stamp duty purposes as the full value of the sale consideration. The Hon’ble Calcutta High Court in Sunil Kumar Agarwal vs CIT held that the AO has a bounden duty to give this option to avoid miscarriage of justice. The CIT(A) followed this decision and directed the AO to refer the valuation of the property to the Valuation Officer.

Conclusion:
The appeal filed by the revenue was dismissed. The CIT(A) was right in directing the AO to determine the value of the property in accordance with the provisions of section 50C(2) of the Income Tax Act, 1961. The decision emphasized that the CIT(A) has the power to direct the AO to refer the property for valuation and that the AO must give the assessee an option to get the property valued by the Valuation Officer to ensure fair treatment and compliance with the law.

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