Even in the absence of a specific request from the assessee, the A.O. has to give an option to the assessee to follow the course provided by law under section 50C(2) (of Income Tax Act, 1961).

1. The instant appeal filed by the assessee is directed against the order dated 07.08.2019 passed by the Commissioner of Income Tax (Appeals) Gandhinagar, Ahmedabad arising out of the assessment order dated 28.12.2017 passed by the ITO, Ward-3, Gandhinagar under Section 144 (of Income Tax Act, 1961) r.w.s 147 (of Income Tax Act, 1961) (hereinafter referred as to ‘the Act’) for Assessment Year 2013-14.

2. The brief facts leading to the case is this that the appellant has sold an immovable property of Rs. 50,00,000/- and also deposited cash of Rs. 4,50,000/- in his bank account. Upon getting such information the case was reopened under Section 148 (of Income Tax Act, 1961) by issuing notice followed by a show-cause notice dated 31.10.2017 proposing addition of Rs. 28,22,115/- being the 34% share of the worked out short-term capital gain in respect of the co-owned property which was purchased on 02.08.2010 and sold on 19.06.2012. It is relevant to mention that the said agricultural land situated at Pethapur village bearing Survey No. 6 and admeasuring 6767 sq. mtrs. was transferred by the appellant by way of sale deed registered at Sr. No. 8220 on 20.06.2012 before the office of the Sub-Registrar at Gandhinagar. The consideration as reflected in the sale deed was 50,00,000/- and the land was co-owned by the appellant with Shri Govindbhai Maganbhai Patel and Shri Hareshbhai Ramanbhai Patel which was ultimately sold to one Shri Arjunji Mahotji Gohil and 04 others. The said reassessment proceeding was ultimately finalized with an addition of Rs. 28,22,726/- on account of short-term capital gain in the hands of the assessee. During the pendency of the appeal the appellant made a request before the Ld. CIT(A) to make a reference to the Department Valuation Cell for determining the fair market value of the property in question which was not taken into consideration by the Ld. CIT(A) and the order of addition to the tune of Rs. 28,22,726/- on account of short-term capital gain has been confirmed by the Ld. CIT(A).

3. The Ld. Counsel appearing for the assessee submitted before us that the AO erred in adopting stamp duty valuation of Rs. 1,11,67,347/- under Section 50C (of Income Tax Act, 1961) and further making addition of Rs. 28,22,726/- as capital gain. He ultimately argued on this particular point that in spite of request made before the Ld. CIT(A) for referring the matter to the Departmental Valuation Officer (DVO) for determination of the valuation of the property in question in terms of the Section 50C (of Income Tax Act, 1961) the same was not considered in its proper perspective. The Ld. Counsel further drew our attention to the written submission-II made before the Ld. CIT(A) Gandhinagar wherefrom it reflects that request was duly made before the Ld. CIT(A) to determine value by the Departmental Valuation Officer(DVO) as per Section 50C(2) (of Income Tax Act, 1961). He, therefore, prays for setting aside the issue to the Ld. AO with a further direction upon him to refer the matter to the DVO for determining the valuation of the property in question in terms of the Section 50C (of Income Tax Act, 1961).

In this regard, he also relied upon two judgments passed by the Co- ordinate Bench in ITA No. 2087/Ahd/2013 (Narendra Dahyabhai Patel vs. ITO) and ITA No. 782/Ahd/2017 (Pranay N Vora vs. ITO). While dealing with the issue in the case of Pranay N. Vora vs. ITO the Ld. Co-ordinate Bench has been pleased to observe as follows:-

“6. We have heard the Learned representatives of the parties and perused the material available on record. We find that it is mandatory on the part of the Assessing Officer to refer the matter to the DVO, even if it is not asked by the assessee before the authorities below, before computation of capital gains under the facts and circumstances of the case in hand as decided by number of judgments passed by the Co-ordinate Bench of this Tribunal, the Hon’ble jurisdictional High Court as well as Hon’ble High Court of Calcutta, which the Assessing Officer has failed to do. The relevant portion of the judgments passed by the Co-ordinate Bench of this Tribunal, as relied upon by the representative of the assessee, are as follows:-

(i) Tarun Manmohan Garg vs. DCIT in ITA No.3208/Ahd/2015 for AY 2011- 12, order dated 22.08.2017

“2. Learned representatives fairly agree that whatever we decide in ITA No.3207/Ahd/2015 in the case of Manmohan Rajaram Garg vs. DCIT for the assessment year 2011-12, which we had heard along with this appeal, will apply mutatis mutandis for this appeal as well, as the issue raised in this appeal is identical to that of ITA No.3207/Ahd/2015 in the case of Manmohan Rajaram Garg for the assessment year 2011-12. Vide my order of even date, I have allowed the same issue for statistical purposes in the case of Manmohan Rajaram Garg in ITA No.3207/Ahd/2015, and the same result must follow here as well. In my said order, I have, inter alia, observed as follows:

“2. When this appeal was called out for hearing, learned counsel for the assessee invited our attention to order dated 31st August 2016, passed by this Tribunal, in the case of Narendra Dahyabhai Patel vs. ITO in ITA No.2087/Ahd/2013, by which the issue in appeal before me is said to be covered. Learned counsel submits that the short issue requiring our adjudication in this case is whether or not, in the absence of a specific request made by the assessee during the assessment proceedings for reference being made to the DVO under section 50C (of Income Tax Act, 1961), such reference could be directed by the appellate authorities. In this connection, she invites my attention to the following observations made by the Tribunal in the case of Narendra Dahyabhai Patel vs. ITO (supra).

“2. It is a case in which the Assessing Officer has adopted stamp duty valuation of the property sold, for computation of capital gains, under section 50C (of Income Tax Act, 1961). In appeal before the learned CIT(A), the assessee’s contention was that despite his request, the matter was not referred to DVO under section 50C(2) (of Income Tax Act, 1961) but the appeal was turned down on the ground that assessee could not substantiate his claim of having made such a request in the course of assessment proceedings. The assessee is not satisfied and is in further appeal before me.

3. I have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

4. I find that, as held by Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs. CIT [(2015) 372 ITR 83 (Cal], even in the absence of specific request from the assessee, the Assessing Officer has to give an option to the assessee to follow the course provided by law under section 50C(2) (of Income Tax Act, 1961). I, therefore, uphold the grievance of the assessee, and remit the matter to the file of the Assessing Officer for adjudication de novo after referring the matter to the DVO under section 50C(2) (of Income Tax Act, 1961).”

3. Learned counsel submits that as the appeal can be disposed of on the above short ground, it is not really necessary to deal with other aspects of the matter. She thus urges me to remit the matter to the file of Assessing Officer with the direction to refer the matter to the DVO under section 50C(2) (of Income Tax Act, 1961).

4. Learned Departmental Representative does not dispute the fact that the issue is squarely covered by the aforesaid decision of the Tribunal but points out that no such request for reference to DVO was made by the assessee in the course of assessment proceedings. He thus relies upon the orders of the authorities below.

5. I have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

I find that as noted by the Tribunal in the case of Narendra Dahyabhai Patel vs. ITO (supra) the law is now well settled that even in the absence of a specific request from the assessee, the A.O. has to give an option to the assessee to follow the course provided by law under section 50C(2) (of Income Tax Act, 1961). There is a direct decision to this effect by Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs. CIT [(2015) 372 ITR 83 (Cal]. No judicial precedence to the contrary has been brought to my notice. Respectfully following the esteemed view of the Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs. CIT (supra), I uphold the plea of the assessee and remit the matter to the file of Assessing Officer for adjudication denovo after referring the matter to the DVO under section 50C(2) (of Income Tax Act, 1961). As the matter has been remitted to the file of Assessing Officer with the above directions, it is not really necessary to deal with other aspects of the matter.”

3. Respectfully following the views so taken by me in the case of Manmohan Rajaram Garg vs. DCIT (ITA No.3207/Ahd/2015) for assessment year 2011- 12, the issue raised by the assessee in this appeal is also allowed for statistical purposes.”

(ii) Sarita Sangam Society vs. DCIT in ITA No.3562/Ahd/2016 for AY 2013-14, order dated 16.05.2018

“5. As a plain reading of section 50C(2) (of Income Tax Act, 1961) shows, when “the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority exceeds the fair market value of the property”, the Assessing Officer may refer the valuation of the property to the Departmental Valuation Officer. Clearly, therefore, a specific request for reference to the Departmental Valuation Officer is not at all required to be made by the assessee, and all that is required to invoke the reference to the Departmental Valuation Officer is a dispute being raised on valuation as per stamp duty valuation authority. In any event, as is the settled legal position in the light of Hon’ble Calcutta High Court’s judgment in the case of Sunil Kumar Agarwal Vs. CIT (GA No.3686/2013; judgement dated 13th March 2014) “even in a case where no such prayer is made by the assessee the Assessing Officer, discharging a quasi judicial function has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by the law’’. In the light of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the Assessing Officer with a directio to refer the valuation of property to the Departmental Valuation Officer, and to frame the fresh assessment in the light of, inter alia, Departmental Valuation Officer’s report, in accordance with the law, after affording an opportunity of hearing to the assessee and by way of a speaking order. The matter thus stands restored to the file of the Assessing Officer in the terms indicated above.

6. As we part with the matter, we may add that there is apparently also a dispute with respect of the point of time as to which stamp duty valuation is to be adopted - at the point of time when agreement to sell was finalized or when sale deed was registered. This aspect of the matter is not really relevant at present as the matter stands restored to the Assessing Officer for the purpose of Departmental Valuation Officer’s valuation. However, suffice to add, while examining this aspect of the matter, the Assessing Officer will take into account binding judicial precedents on the issue, including in the case of Dharmashi Bhai Sonani Vs. ACIT [(2016) 161 ITD 627 (Ahd)]. We leave it that for the time being.”

7. Considering the entire aspect of the matter and respectfully following the judgments passed by the Co-ordinate Bench of this Tribunal (supra), we are of the view that the matter be remitted to the file of the Assessing Officer for adjudication of the same de novo upon making reference to the DVO and to complete the assessment on the basis of the valuation so received from the DVO. We pass orders accordingly and direct the Assessing Officer to decide the matter afresh on the basis of the valuation to be made by the DVO by passing a speaking order in accordance with law upon giving a reasonable opportunity of hearing to the assessee.

8. In the result, the appeal of the assessee is allowed for statistical purposes.”

4. It appears from the judgment narrated hereinbefore and also other judicial pronouncements on this issue that it is mandatory on the part of the AO to refer the matter to the DVO under Section 50C(2) (of Income Tax Act, 1961), even if it is not requested by the assessee before the authorities below. If that view has been taken by the different judicial forum then though admittedly the said plea was not taken before the AO rejection of such request made before the Ld. CIT(A) is palpably bad in view of Section 50C (of Income Tax Act, 1961) and in that view of the matter respectfully relying upon the judicial pronouncements we do not hesitate to delete the addition made by the Ld. CIT(A). However, we find it fit and proper to remit the issue to the file of the Ld. AO with a further direction upon him to make fresh assessment upon making reference of the matter to the DVO and to complete the assessment on the basis of the valuation so received from the DVO upon giving an opportunity of being heard to the assessee.

5. In the result, assessee’s appeal is allowed for statistical purposes.

This Order pronounced in Open Court on 18/03/2021

Sd/- Sd/-

(WASEEM AHMED) (Ms. MADHUMITA ROY)

ACCOUNTANT MEMBER JUDICIAL MEMBER