2025 (11) TMI 809 - AT - Income Tax

Appeal dismissed; s.50C sale consideration and DVO valuation upheld for long-term capital gain on 1/4 land share

ITAT, Pune upheld CIT(A)'s decision rejecting the assessee's grounds and affirmed the AO's adoption of the sale consideration under s.50C for computation ... Computation of long term capital gain from the sale of 1/4th share of land located at Sadesatranali, Hadapsar - HELD THAT:- CIT(A) has dealt with all the issues raised by the assessee in the instant appeal and further on considering the Departmental Valuation Report determining the valuation of land at Rs. 1,56,98,000/- has accepted the sale price adopted by ld. AO as per the provisions of section 50C since the DVOs report was not received before the culmination of the re-assessment proceedings. Since there is no representation on behalf of the assessee about the issues raised in the instant appeal inspite of being providing sufficient opportunities assessee has failed to furnish any submissions/details, fail to find any infirmity in the finding of ld.CIT(A). Accordingly, all the grounds of appeal raised by the assessee are dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Assessing Officer (AO) and Commissioner (Appeals) correctly applied Section 50C of the Income-tax Act to adopt the stamp-duty valuation as deemed sale consideration when the stamp-duty valuation exceeded the contractual sale consideration and a DVO report was not available at the time of assessment. 2. Whether a departmental valuation (DVO) report received after completion of reassessment proceedings but showing a value higher than the stamp-duty valuation affects the validity of the deemed sale consideration adopted under Section 50C. 3. Whether the AO was justified in adopting the cost of acquisition as on 01.04.1981 at Rs.161.40 per sq. metre based on rates used in regular assessments of other similar cases without specific material from the assessee. 4. Whether the claim that the property belonged to a Hindu Undivided Family (HUF) and not to the individual assessee should have been accepted in absence of documentary evidence. 5. Whether the Commissioner (Appeals) erred in admitting/deciding the appeal filed in Form 35 and/or in failing to decide the appeal on merits where the assessee did not appear or file supporting material despite opportunities. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Application of Section 50C where stamp-duty valuation > contractual sale consideration and DVO report not available at assessment Legal framework: Section 50C deems the value assessed by the stamp valuation authority for stamp duty purposes to be the full value of consideration for transfer of land where the consideration as per agreement is less than the stamp-duty value. Section 50C(2) permits the AO to refer valuation to a Valuation Officer (DVO) and proceed subject to the DVO's report. Precedent Treatment: No prior judicial precedents were cited in the judgment; the Court relied on the statutory scheme of Section 50C and the administrative sequence of valuation referral to the DVO. Interpretation and reasoning: The AO adopted the stamp-duty valuation (Rs.1,14,84,140) as deemed consideration since that valuation exceeded the contractual consideration (Rs.66,42,000) and because the DVO's report was not available before completion of the reassessment. The AO explicitly treated the computation as 'subject to findings/conclusion of the DVO' and, on receipt of the DVO report during appellate proceedings, noted that the DVO-determined fair market value (Rs.1,56,98,000) exceeded the stamp-duty valuation. The Commissioner (Appeals) concluded that since the DVO value was higher than the stamp-duty valuation, the AO's adoption of the stamp-duty valuation under Section 50C was correct. Ratio vs. Obiter: Ratio - Where stamp-duty valuation exceeds contractual sale consideration and the DVO report is not available at assessment, the AO may provisionally adopt the stamp-duty valuation as deemed consideration under Section 50C, subject to revision if the DVO report later warrants it. Obiter - Observations about relative magnitudes of DVO and stamp-duty valuations serve explanatory purpose. Conclusion: The AO and Commissioner (Appeals) correctly applied Section 50C; adopting the stamp-duty valuation as deemed sale consideration was proper in the circumstances, especially given that the subsequently received DVO report indicated an even higher value. The appellate dismissal of the challenge to Section 50C treatment was upheld. Issue 2 - Effect of a DVO report received after reassessment which shows a higher value than stamp-duty valuation Legal framework: Section 50C(2) contemplates referring valuation to a Valuation Officer; the outcome of such reference can affect the deemed consideration adopted under Section 50C. Precedent Treatment: No earlier judicial authorities were invoked; the reasoning is rooted in the statutory provision and sequence of events. Interpretation and reasoning: The DVO report was received after passing of the reassessment order but before or during appellate proceedings. The DVO determined a fair market value higher than the stamp-duty valuation already adopted by the AO. The Commissioner (Appeals) treated the DVO report as corroborative of the AO's reliance on stamp-duty valuation-holding that the AO's adoption remained correct (in fact conservative) because the DVO value was higher. Ratio vs. Obiter: Ratio - A DVO report received post-assessment that confirms a value equal to or higher than the stamp-duty valuation validates the AO's earlier adoption of the stamp-duty value under Section 50C, and does not, by itself, render that adoption incorrect. Obiter - Procedural nuances about timing of receipt are elaborative. Conclusion: The late receipt of the DVO report did not invalidate the AO's use of the stamp-duty valuation; rather, the DVO's higher valuation reinforced the correctness of the AO's approach and supported dismissal of the assessee's challenge on this point. Issue 3 - Adoption of cost of acquisition as on 01.04.1981 at Rs.161.40 per sq. metre based on rates applied in other assessments Legal framework: For property acquired before 01.04.1981, cost of acquisition for indexed cost must be determined as on 01.04.1981; the AO may rely on material on record to fix such rate. Precedent Treatment: No authorities cited; decision rests on evidentiary principle and reasoned administrative practice. Interpretation and reasoning: The assessee failed to produce material to substantiate a lower cost-as-on-01.04.1981. The AO adopted Rs.161.40 per sq. metre since identical or similar regular assessments for other individuals in the same locality had used that rate. The Commissioner (Appeals) found no infirmity in adopting that rate in absence of contrary evidence from the assessee. Ratio vs. Obiter: Ratio - In the absence of material from the assessee challenging the rate, the AO may adopt rates established in other regular assessments of similar properties in the same locality; such adoption is permissible and not to be disturbed without contradictory evidence. Obiter - Comparative reliance on other assessments is pragmatic but not binding precedent between parties. Conclusion: The AO's adoption of Rs.161.40 per sq. metre as cost of acquisition on 01.04.1981 was upheld because the assessee did not furnish evidence to rebut the adopted rate. Issue 4 - Claim that property belonged to HUF and not to individual assessee without evidence Legal framework: Ownership and entitlement to capital gains depend on title and evidentiary proof; claims of HUF ownership require supporting documents to effect apportionment among members. Precedent Treatment: No precedents cited; standard evidentiary rules applied. Interpretation and reasoning: The assessee asserted during proceedings that the land belonged to an HUF of which he was karta and claimed apportionment among five members. The assessee failed to produce documentary evidence-title deeds, partition deeds, family particulars or contemporaneous records-to substantiate HUF ownership. The Commissioner (Appeals) rejected the claim for lack of evidence. Ratio vs. Obiter: Ratio - A bald assertion of HUF ownership without documentary evidence is insufficient to displace individual ownership reflected on record; the claim may be rejected for want of proof. Obiter - None material beyond evidentiary observation. Conclusion: The HUF ownership claim was rightly rejected for lack of supporting material; capital gains were properly taxed to the individual assessee. Issue 5 - Admissibility and adjudication of Form 35 appeal and effect of assessee's non-appearance/non-filing of material Legal framework: Appellate process requires filing of Form 35 and may proceed ex parte where the appellant fails to appear despite notice; the appellate authority must consider issues on record and available material. Precedent Treatment: No judicial authorities referenced; the Tribunal applied procedural norms. Interpretation and reasoning: The assessee repeatedly failed to appear at multiple scheduled hearings and furnished no submissions or evidence despite opportunities. The Commissioner (Appeals) addressed the grounds pressed and rendered reasoned findings. The Tribunal noted that the Commissioner (Appeals) dealt with the issues and that, in the absence of representation or material from the assessee, there was no infirmity in dismissing the appeal. Ratio vs. Obiter: Ratio - Where an appellant does not appear or fails to produce material after sufficient opportunity, the appellate authority may proceed ex parte and decide on the available record; denial of further relief under such circumstances is permissible. Obiter - Requests for further hearing unsubstantiated by effort to participate are not grounds for upsetting considered findings. Conclusion: The Commissioner (Appeals) did not err in admitting and deciding the appeal on merits based on the record; the dismissal was justified by the assessee's non-participation and lack of evidentiary support.