Tribunal directs reassessment with High Court decision, DVO valuation, indexed cost, and due process.

The Tribunal remanded the case to the Assessing Officer for fresh consideration, directing to consider the decision of the Hon'ble Rajasthan High Court, refer the matter to the DVO for Fair Market Value determination, address the non-allowance of indexed cost of acquisition, and grant the assessee a reasonable opportunity before making a decision. The appeal of the assessee was allowed for statistical purposes.

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Issues Involved:
1. Assessment of long-term capital gain.
2. Validity of the sale deed under fraudulent circumstances.
3. Applicability of Section 50C and determination of Fair Market Value (FMV).
4. Non-allowance of indexed cost of acquisition.

Issue-Wise Detailed Analysis:

1. Assessment of Long-Term Capital Gain:
The primary issue is whether the long-term capital gain assessed at Rs. 81,58,720/- by the Assessing Officer (AO) is correct. The AO based this assessment on the value determined by the Stamp Duty Authority. The assessee contends that the transaction was fraudulent, and no capital gains liability arises from such a sham transaction. The AO, however, held that the sale deed indicated a transfer of property, and thus, capital gains tax was applicable.

2. Validity of the Sale Deed Under Fraudulent Circumstances:
The assessee argued that the sale deed executed was under fraudulent circumstances, and the buyer did not fulfill the promises made. The AO and CIT(A) did not accept this contention, stating that the sale deed indicated a completed transaction with possession handed over. The assessee had filed an FIR and a civil suit, and the High Court directed to maintain the status quo regarding the possession, alienation, construction, and creation of third-party interest in the suit land. The Tribunal referred to the decisions of the Hon'ble Punjab & Haryana High Court and the Hon'ble Patna High Court, which held that registration of a sale deed, though evidentiary, is not conclusive if the transaction is proven to be sham or fraudulent.

3. Applicability of Section 50C and Determination of Fair Market Value (FMV):
The AO adopted the value determined by the Collector (Stamps) at Rs. 81,58,722/- under Section 50C. The assessee contended that the actual consideration was Rs. 5,00,000/- as recorded in the sale deed and that the AO should have referred the matter to the DVO for FMV determination. The Tribunal noted that in a similar case involving the assessee's brother, the ITAT had held that Section 50C could not be invoked when the sale consideration declared by the assessee was accepted by the Sub-Registrar. The Tribunal directed the AO to refer the matter to the DVO and determine the FMV before substituting the sale consideration as per the Collector (Stamps).

4. Non-Allowance of Indexed Cost of Acquisition:
The AO did not allow any deduction for the indexed cost of acquisition while computing the long-term capital gain. The Tribunal directed the AO to consider the assessee's contention regarding the non-allowance of indexed cost of acquisition and decide as per law.

Conclusion:
The Tribunal set aside the matter and remanded it to the AO for fresh consideration. The AO was directed to:
- Take into account the decision of the Hon'ble Rajasthan High Court in the writ petition.
- Refer the matter to the DVO for FMV determination.
- Consider the assessee's contention regarding the non-allowance of indexed cost of acquisition.
- Provide the assessee with a reasonable opportunity before deciding the matter.

The appeal of the assessee was allowed for statistical purposes.

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