Assessee wins appeal as authorities failed to refer disputed property valuation to DVO under section 50C(2)

The ITAT Kolkata allowed the assessee's appeal against addition under section 50C. The assessee claimed the fair market value was less than stamp duty value and requested reference to Departmental Valuation Officer (DVO) as per section 50C(2). Both lower authorities rejected this request without reasons, failing to follow statutory provisions. The tribunal held that authorities must refer matters to DVO when fair value is disputed, following precedent in Hari Om Garg and Sunil Kumar Agarwal cases. The addition was deleted as unsustainable.

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Issues Involved:
1. Condonation of delay.
2. Addition u/s 50C of the Income Tax Act.
3. Non-referral to Departmental Valuation Officer (DVO).

Summary:

Condonation of Delay:
The appeal was time-barred by 389 days. A separate application for condonation of delay was filed, supported by an affidavit from the petitioner. Considering the submissions made in the affidavit, the delay in filing the appeal was condoned.

Addition u/s 50C:
The assessee was aggrieved by the CIT(A)'s confirmation of the addition made by the Assessing Officer (AO) of Rs. 17,82,513/- invoking the provisions of section 50C of the Income Tax Act. The AO noted that the assessee had shown consideration received on the sale of property at Rs. 45,00,000/-, while the stamp duty authority valued it at Rs. 62,82,513/-. The assessee contended that the stamp duty value was higher than the fair market value and requested a referral to the Departmental Valuation Officer (DVO), which the AO rejected.

Non-referral to DVO:
The assessee appealed to the CIT(A), reiterating the request for a DVO referral, which was again rejected without reason. The Tribunal noted that both lower authorities failed to act according to the statutory provisions of section 50C(2) and summarily rejected the assessee's plea without assigning any reason. The Tribunal referenced the decision in Hari Om Garg v. ITO and other relevant case laws, emphasizing that the AO has a bounden duty to refer the valuation to the DVO when the assessee disputes the stamp duty value.

The Tribunal concluded that the addition made by the AO was not sustainable in law due to the failure to follow the prescribed procedure. It was held that the department cannot be allowed a second opportunity to rectify its shortcomings, and the addition was deleted. The appeal of the assessee was allowed.

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