Valuation of capital asset dispute requires DVO valuation; matter remitted for fresh assessment after DVO report

Valuation of capital asset disputes require reference to the Departmental Valuation Officer when market value is contested; failure by the Assessing Officer or appellate authority to obtain a DVO report precluded proper valuation on the record, notwithstanding production of a private valuers report and comparable sale instances, and necessitated remand for fresh assessment after obtaining a DVO valuation as on the date of sale. The appellate tribunal directed de novo assessment by the AO following production of the departmental valuation report.

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Issues: (i) Whether, in dispute over valuation of immovable property for computation of capital gains, the Assessing Officer / appellate authority was obliged to obtain a valuation report from the Departmental Valuation Officer under section 50C(2) and whether the matter should be remitted for fresh assessment after such valuation.

Analysis: The assessment adopted the Sub-Registrar value while the assessee sold at a lower price and furnished a valuation report and comparable sales which the CIT(A) rejected as not from an approved valuer. Neither the AO nor the CIT(A) obtained a report from the Departmental Valuation Officer. Where valuation is disputed, section 50C(2) contemplates reference to the Valuation Officer to determine market value as on the date of transfer. Given absence of departmental valuation and the contested nature of valuation evidence, the matter required fresh valuation by the DVO and opportunity to the assessee to make submissions before a fresh adjudication.

Conclusion: In favour of the assessee. The matter is remitted to the Assessing Officer to obtain a valuation report from the Departmental Valuation Officer as on the date of sale and to proceed to fresh assessment after affording the assessee a reasonable opportunity to present submissions.

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