Section 50C stamp-duty value substitution in summary ITR processing u/s 143(1) held impermissible; AO must offer DVO option

Whether an assessing officer may invoke section 50C to substitute stamp-duty value for declared sale consideration while processing an ITR under section 143(1): held that such adjustment is impermissible; following precedent, no addition under section 50C can be made in summary processing under section 143(1), and the adjustment made by the AO was illegal - appeal allowed. Whether the assessee must be afforded an option for valuation by the DVO: applying authority, the AO has a duty to offer the assessee the statutory option of DVO valuation to avoid miscarriage of justice, and the DVO valuation must be used if elected.

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Issues: Whether an adjustment/addition under Section 50C of the Income-tax Act, 1961 can be made while processing the income-tax return under Section 143(1) of the Income-tax Act, 1961.

Analysis: The Tribunal examined whether the deeming operation in Section 50C(1) can be effected by making an adjustment during processing under Section 143(1). It considered the Explanation to Section 143(1)(a) concerning "incorrect claim apparent from any information in the return" and the scheme of Section 50C read as a whole, including the statutory right given to the assessee under Section 50C(2) to object and seek referral to the Departmental Valuation Officer. The Tribunal followed coordinate-bench decisions holding that making an addition under Section 50C at the processing stage deprives the assessee of the procedural protection and opportunity to have valuation determined by the DVO, and therefore falls outside the limited scope of adjustments permissible under Section 143(1).

Conclusion: Adjustment under Section 50C cannot be made while processing the return under Section 143(1); the addition made under Section 50C is deleted and the appeal is allowed in favour of the assessee.

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