ITAT directs reassessment on valuation issue under section 50C(2) for fair treatment.

The ITAT allowed the appeal for statistical purposes, directing the AO to re-examine the valuation issue in compliance with section 50C(2) and conduct necessary inquiries into discrepancies in gross receipts. The ITAT emphasized the importance of fair treatment for the assessee by ensuring proper valuation procedures and investigations into reported discrepancies.

---

---

Issues:
1. Computation of capital gain by adopting sale consideration as per section 50C of the Income-tax Act, 1961.
2. Addition of Rs. 4.01 lakhs on account of difference in gross receipts reported in form 26AS and declared by the assessee.

Issue 1: Computation of Capital Gain

The assessee declared long term capital gain on the sale of a property, claiming 50% share of the sale consideration. The Assessing Officer (AO) determined the stamp value at Rs. 2.25 crores and concluded that the sale consideration should be Rs. 1,12,50,000 (50% of the stamp value) as per section 50C of the Act. The assessee argued that the property lacked an approach road and was distant from the main road, justifying the declared sale consideration. However, both the AO and the Ld. CIT(A) upheld the adoption of the stamp duty value without referring the matter to the DVO as required by section 50C(2) of the Act. The ITAT set aside the CIT(A)'s order, directing the AO to re-examine the valuation issue in compliance with section 50C(2) after giving the assessee a fair hearing.

Issue 2: Addition of Rs. 4.01 Lakhs on Gross Receipts Discrepancy

The assessee, following a cash system of accounting, reported a difference in gross receipts compared to form 26AS due to TDS deductions by clients using the mercantile system. The assessee clarified that the actual amounts received were in line with the income tax return, as he had not received the additional amount shown in form 26AS at the assessment completion date. Despite this explanation, the tax authorities rejected it without conducting further inquiries. The ITAT held that the AO should have investigated with the parties deducting TDS before making a decision. Consequently, the ITAT set aside the CIT(A)'s order, requiring the AO to re-examine the addition after conducting necessary inquiries.

In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of valuation issues under section 50C and proper inquiries into discrepancies in gross receipts to ensure fair treatment for the assessee.

---