Tribunal emphasizes fair market value assessment, orders remand for reconsideration and reference to District Valuation Officer

The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of requesting a referral to the District Valuation Officer (DVO) for fair market value (FMV) assessment in cases of significant variances between sale consideration and stamp valuation. The Tribunal set aside the Commissioner of Income Tax (Appeals)'s order, directing a remand to the Assessing Officer for reconsideration and a reference to the DVO to determine the FMV.

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Issues:
1. Disallowance under section 56(2)(vii)(b) of the Income Tax Act, 1961.
2. Referral to the District Valuation Officer (DVO) under section 50C(2) of the Act.

Disallowance under section 56(2)(vii)(b) of the Income Tax Act, 1961:
The appeal was against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2017-18. The Assessing Officer disallowed a difference amount in the purchase of land, invoking section 56(2)(vii)(b) of the Act. The ld. CIT(A) upheld this disallowance, stating that the Assessing Officer had given opportunities for substantiation and the differential amount was added after due inquiry. The assessee did not request a reference to the District Valuation Officer (DVO) for fair market value (FMV) assessment. The Tribunal noted the substantial difference between sale consideration and stamp valuation, emphasizing that the assessee should have asked the Assessing Officer to refer the matter to the DVO. The Tribunal set aside the CIT(A)'s order, remitting the matter back to the Assessing Officer for reconsideration, directing a reference to the DVO to ascertain FMV.

Referral to the District Valuation Officer (DVO) under section 50C(2) of the Act:
The assessee contended that under section 50C(2) of the Act, in cases of significant differences between sale consideration and stamp valuation, the Assessing Officer must refer to the DVO for FMV valuation. The ld. DR supported the lower authorities' orders, arguing that as the request for DVO referral was made only before the CIT(A), it was not necessary. The Tribunal observed that although the assessee did not request DVO referral before the Assessing Officer, raising the issue before the CIT(A) should have been considered. Therefore, the Tribunal allowed the appeal, providing the assessee with an opportunity to substantiate the claim and directing the Assessing Officer to refer the matter to the DVO for FMV determination.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of requesting a referral to the DVO for FMV assessment in cases of substantial differences between sale consideration and stamp valuation.

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