Stamp duty valuation vs consideration in immovable property transfers requires DVO valuation; excess treated as income under section 56(2)(vii)(b)

Where immovable property is acquired for consideration less than the stamp duty value, the excess of stamp duty value over consideration is assessable as income under section 56(2)(vii)(b); that excess is chargeable under the head income from other sources. If the assessee disputes the stamp duty valuation on grounds matching the tests in section 50C(2), the assessing officer must refer valuation to a Valuation Officer for determination; failure to do so vitiates the assessment. The matter is remitted to the assessing officer for de novo adjudication after obtaining a DVO report; grounds allowed for statistical purposes.

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Issues: Whether the addition made under section 56(2)(vii)(b) for the difference between stamp duty value and declared consideration was sustainable without referring the valuation to a Valuation Officer under section 50C(2) of the Income-tax Act, 1961.

Analysis: The value adopted by the stamp duty authority exceeded the consideration and the stamp duty value was not disputed in any appeal, revision or reference before any authority or court, thereby fulfilling the conditions of section 50C(2). Under those circumstances, the Assessing Officer had the statutory power and obligation to refer the valuation to a Valuation Officer (DVO) before making an addition under section 56(2)(vii)(b). The orders under challenge failed to obtain a DVO valuation despite the assessee's dispute and submissions, and therefore the matter requires fresh adjudication after obtaining the valuation report and providing a reasonable opportunity of hearing.

Conclusion: The matter is restored to the file of the Assessing Officer for de novo adjudication after seeking a valuation report from the Valuation Officer as per the provisions of the Act; the impugned order is set aside and the grounds raised are allowed for statistical purposes.

Ratio Decidendi: Where the stamp duty value exceeds the consideration and the stamp duty value is not the subject of an existing appeal or reference, the Assessing Officer must refer the valuation to a Valuation Officer under section 50C(2) before making any addition under section 56(2)(vii)(b).

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