Substitution of stamp duty value cannot be made at return-processing; such valuation adjustments require regular assessment proceedings.

Whether stamp duty value can be substituted for declared consideration at the return-processing stage is the central issue. The article explains that substitution operates as a deeming fiction that carries a statutory right for the taxpayer to object and seek reference to the Departmental Valuation Officer; therefore it does not qualify as an "incorrect claim apparent from the return" for processing adjustments. Consequently, upward valuation adjustments of this nature cannot be validly effected during return processing and must be made only through regular assessment proceedings.

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Issues: Whether an upward adjustment under section 50C of the Income-tax Act, 1961 substituting stamp duty value for declared consideration can be made by the Assessing Officer while processing the return under section 143(1) read with clause (a)(ii) of section 143(1).

Analysis: The Tribunal noted that substitution of stamp duty value under section 50C is a deeming provision which confers on the assessee statutory rights of objection and referral to the Departmental Valuation Officer under section 50C(2). Co-ordinate benches have consistently held that such an adjustment is not an "incorrect claim apparent from any information in the return" within the meaning of section 143(1)(a)(ii) and therefore cannot be effected at the processing stage under section 143(1). The Tribunal further held that failure of the assessee to respond to an intimation under the first proviso to section 143(1)(a) does not enlarge the statutory scope of section 143(1) or cure a jurisdictional defect; an adjustment that is beyond the jurisdiction of section 143(1) remains unsustainable even if the assessee did not file a response at the processing stage.

Conclusion: The impugned addition/upward adjustment of Rs. 33,80,000 made under section 50C while processing the return under section 143(1) is unsustainable in law and is deleted. The appeal is allowed in favour of the assessee on this ground; other grounds are infructuous.

Ratio Decidendi: A substitution of consideration under section 50C, being a deeming fiction coupled with the statutory right to object and reference to the DVO under section 50C(2), cannot be treated as an "incorrect claim apparent from any information in the return" and therefore cannot be adjusted during processing under section 143(1)(a)(ii); such adjustments require proceedings under the regular assessment provisions.

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