ITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nPage 1 of 5
\nIN THE INCOME TAX APPELLATE TRIBUNAL
\nAHMEDABAD \u201cC\u201d BENCH, AHMEDABAD
\n[Coram: Pramod Kumar (Vice President)
\nand Madhumita Roy (Judicial Member)]
\nITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nLovy Ranka \u2026\u2026\u2026\u2026\u2026\u2026\u2026.\u2026\u2026Appellant
\nB 205, Gala Luxuria
\nSouth Bhopal Road, Ahmedabad 380058
\n[PAN: AAPHJ1831D]
\nVs
\nDeputy Commissioner of Income Tax
\nCircle 5(2), Ahmedabad \u2026\u2026\u2026\u2026\u2026..\u2026……..Respondent
\nAppearances by
\nChitranajan Bharadia for the appellant
\nS K Dev for the respondent
\nDate of concluding the hearing : January 2, 2019
\nDate of pronouncement : April 1, 2019
\nO R D E R
\nPer Pramod Kumar, VP:
\n1. This is an appeal filed by the assessee and is directed against the order dated 12th June
\n2017, passed by the CIT(A) in the matter of assessment under section 143(3) of the Income
\nTax Act, 1961, for the assessment year 2013-14
\n2. The short grievance of the assessee is that the impugned addition of Rs 12,12,402 in
\nthe computation of the capital gains be deleted as fair market value of the property is less
\nthan the valuation, as per DVO\u2019s valuation report, adopted for computation of capital gains
\nunder section 50C(2) of the Act. In effect thus, correctness of the DVO\u2019s report has been
\nassailed before us, but then, as is the settled legal position, when a reference is made to the
\nDVO, the Assessing Officer has a duty to \u201cso far as the valuation of the asset in question is
\nconcerned, proceed to complete the assessment in conformity with the estimate of the
\nValuation Officer\u201d. The question then arises whether we can deal with the question of
\ncorrectness of the DVO\u2019s report- particularly when the Assessing Officer apparently has no
\nsay in this regard.
\nITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nPage 2 of 5
\n3. It was in this backdrop that we put it to the parties whether this Tribunal has any
\npowers to tinker with the DVO\u2019s valuation of an asset for the purposes of computing capital
\ngains under section 50 C of the Act. While learned counsel for the assessee pointed out
\nseveral decisions in which the coordinate benches have infact altered the valuations made by
\nthe DVOs, learned Departmental Representative submitted that when the valuation of an
\nasset is referred to the DVO, and the value so arrived at by the DVO is less than the stamp
\nduty valuation, the Assessing Officer has no option but to adopt DVO\u2019s valuation for the
\npurpose of computing capital gains. It was submitted that when the Assessing Officer is
\nunder a statutory obligation to adopt such a valuation, no fault can be found is his action of
\ndoing so, and, therefore, appellate authorities cannot question that action either. As for the
\nstand of the coordinate benches, learned Departmental Representative submitted that what is
\nimportant is the legal framework of the relief granted by the coordinate benches and these
\norders do not throw any light on existence of such a legal framework enabling adjudication
\non correctness of the DVO\u2019s report. Learned counsel for the assessee, in rejoinder, submitted
\nthat the Tribunal has wide powers for advancing the cause of justice and to pass such orders
\nas it thinks fit. A pedantic view of our powers will result in gross miscarriage of injustice
\ninasmuch in such a situation no grievance redressal will be available against the DVO\u2019s
\nreport. This report, after all, cannot be treated as the last word on valuation, and there has to
\nbe a grievance redressal mechanism against incorrectness of the DVO\u2019s valuationparticularly
\nwhen the DVO has not properly disposed of the objections of the assessee.
\n4. Let us first take a look at the relevant legal provisions. Section 50 C, as it stood at the
\nrelevant point of time, was as follows:
\nSpecial provision for full value of consideration in certain cases.
\n50C. (1) Where the consideration received or accruing as a result of the transfer
\nby an assessee of a capital asset, being land or building or both, is less than the
\nvalue adopted or assessed or assessable by any authority of a State Government
\n(hereafter in this section referred to as the “stamp valuation authority”) for the
\npurpose of payment of stamp duty in respect of such transfer, the value so
\nadopted or assessed or assessable shall, for the purposes of section 48, be deemed
\nto be the full value of the consideration received or accruing as a result of such
\ntransfer.
\n(2) Without prejudice to the provisions of sub-section (1), where\u2014
\n(a) the assessee claims before any Assessing Officer that the value
\nadopted or assessed or assessable by the stamp valuation authority under
\nsub-section (1) exceeds the fair market value of the property as on the
\ndate of transfer;
\n(b) the value so adopted or assessed or assessable by the stamp valuation
\nauthority under sub-section (1) has not been disputed in any appeal or
\nrevision or no reference has been made before any other authority, court
\nor the High Court,
\nthe Assessing Officer may refer the valuation of the capital asset to a Valuation
\nOfficer and where any such reference is made, the provisions of sub-sections (2),
\nITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nPage 3 of 5
\n(3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6)
\nand (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and
\nsection 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary
\nmodifications, apply in relation to such reference as they apply in relation to a
\nreference made by the Assessing Officer under sub-section (1) of section 16A of
\nthat Act.
\nExplanation 1.\u2014For the purposes of this section, “Valuation Officer” shall have
\nthe same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of
\n1957).
\nExplanation 2.\u2014For the purposes of this section, the expression “assessable”
\nmeans the price which the stamp valuation authority would have,
\nnotwithstanding anything to the contrary contained in any other law for the time
\nbeing in force, adopted or assessed, if it were referred to such authority for the
\npurposes of the payment of stamp duty.
\n(3) Subject to the provisions contained in sub-section (2), where the value
\nascertained under sub-section (2) exceeds the value adopted or assessed or
\nassessable by the stamp valuation authority referred to in sub-section (1), the
\nvalue so adopted or assessed or assessable by such authority shall be taken as the
\nfull value of the consideration received or accruing as a result of the transfer.
\n5. It is sufficient, for our purposes, to take note of the fact that the provisions of Section
\n23A(1)(i) of the Wealth Tax Act, 1957, \u201cshall, with necessary modifications, apply in relation
\nto such reference as they apply in relation to a reference made by the Assessing Officer under
\nsub-section (1) of section 16A of that Act\u201d. Section 23A(1)(i) of the Wealth Tax Act provides
\nthat \u201cAny person\u2026\u2026. objecting to any order of the Valuation Officer under section 35
\nhaving the effect of enhancing the valuation of any asset or refusing to allow the claim
\nmade by the assessee under the said section \u2026\u2026\u2026\u2026\u2026may appeal to the
\nCommissioner (Appeals) against the assessment or order, as the case may be, in the
\nprescribed form and verified in the prescribed manner \u2026\u201d. In effect thus, by the virtue of
\nSection 23A(1)(i) being incorporated, with necessary modifications, in Section 50C, the
\ncorrectness of a DVO\u2019s report can indeed be challenged. It is, however, also important to note
\nthat the provisions of Section 23A(6) of the Wealth Tax Act shall, with necessary
\nmodifications, also apply in the present context- as has been provided in Section 50C(2)
\nitself. Section 23A(6) of the Wealth Tax Act provides as follows:
\n(6) If the valuation of any asset is objected to in an appeal under clause (a) or
\nclause (i) of sub-section (1), the Commissioner (Appeals) shall,\u2014
\n(a) in case where such valuation has been made by a Valuation Officer under
\nsection 16A, give such Valuation Officer an opportunity of being heard;
\n(b) in any other case on request being made in this behalf by the Assessing
\nOfficer, give an opportunity of being heard to any Valuation Officer nominated
\nfor the purpose by the Assessing Officer.
\nITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nPage 4 of 5
\n6. Section 24(5) of the Wealth Tax Act, 1957, the scheme of which also stands
\nincorporated in Section 50C as is specifically stated therein, provides as follows:
\n(5) The Appellate Tribunal may, after giving both parties to the appeal an
\nopportunity of being heard, pass such orders thereon as it thinks fit, and any
\nsuch orders may include an order enhancing the assessment or penalty :
\nProvided that if the valuation of any asset is objected to, the Appellate Tribunal
\nshall,\u2014
\n(a) in a case where such valuation has been made by a Valuation Officer
\nunder section 16A, also give such Valuation Officer an opportunity of being
\nheard;
\n(b) in any other case, on a request being made in this behalf by the
\n51[Assessing Officer], give an opportunity of being heard also to any Valuation
\nOfficer nominated for the purpose by the Assessing Officer
\n7. What essentially follows from the above provision is that in the event of the
\ncorrectness of the DVO\u2019s report is called into question in an appeal before the Commissioner
\n(Appeals), the DVO is required to be given an opportunity of hearing. While the above
\nprovision refers to valuation under section 16A of the Wealth Tax Act, 1957, the provisions
\nof Section 50 C of the Income Tax Act, 1961, specifically refer to the provisions of Section
\n16A of the Wealth Tax Act, 1957. Accordingly, a valuation under section 50C(2) is also
\ncovered by the requirements of Section 23A(6) which are, as specifically stated in Section
\n50C, applicable in the present context. The same is the position with respect to the
\nproceedings before this Tribunal. While the correctness of the DVO report can indeed be
\nchallenged before us as well, as a corollary to the powers of the CIT(A) which comes up for
\nexamination before us, once again the rider is that the Valuation Officer is to be given an
\nopportunity of hearing. This opportunity of hearing to the DVO is a mandatory requirement
\nof law. That is the unambiguous scheme of the law.
\n8. With this clarity on the scheme of the law, let us revert to the facts of this case.
\n9. The assessee before us is an individual. During the course of scrutiny assessment
\nproceedings, the Assessing Officer noticed that the assessee has sold a bungalow for Rs
\n1,15,00,000 but the stamp duty valuation of the said bungalow, as evident from the sale deed,
\nwas Rs 1,40,00,000. The assessee, however, contended that the fair market price of the
\nproperty was much less than the stamp duty valuation, and, accordingly, a reference was
\nmade to the Departmental Valuation Officer under section 50C(2). The valuation as per DVO
\nwas Rs 1,27,12,402. The assessee made elaborate submissions on incorrectness of this
\nvaluation, and submitted that the objections taken by him before the DVO were not properly
\ndealt with. The Assessing Officer was of the view that the valuation done by the DVO binds
\nhim and it is his duty to pass an order in conformity with the DVO\u2019s report. He referred to,
\nand relied upon, various judicial precedents in support of this proposition. Aggrieved,
\nassessee carried the matter in appeal before the CIT(A) but without any success. Learned
\nCIT(A) observed that \u201cSection 50C of the Act is a deeming provision\u201d and \u201ca deeming
\nITA No.: 2107\/Ahd\/17
\nAssessment year: 2013-14
\nPage 5 of 5
\nprovision is to be strictly applied without enlarging its scope\u201d. Learned CIT(A) was of the
\nview that \u201cconsidering the provisions of Section 50C, the value taken by the AO is correct\u201d
\nand no interference is thus called for. The assessee is not satisfied and is in further appeal
\nbefore us. He is once again challenging the correctness of the DVO\u2019s report, is pointing out,
\nwhat he perceives as, glaring errors in the methodology adopted by the DVO and is
\nsubmitting that the CIT(A) fell in error in not adjudicating upon the same on merits.
\n10. In view of our analysis of the legal provisions earlier in this order, the assessee is
\nindeed correct, even though somewhat serendipitously. that the CIT(A) ought to have
\nexamined the matter on merits. Of course, before doing so, the CIT(A) was under a statutory
\nobligation to serve notice of hearing to the DVO and thus afford him an opportunity of
\nhearing. Clearly, learned CIT(A) took too narrow and somewhat superficial a view of his
\npowers under the scheme of the law, and the assessee did not point out the specific legal
\nprovisions to him either. Be that as it may, the fact remains that correctness of the DVO\u2019s
\nreport is to be examined on merits and there is no adjudication, on that aspect, by the CIT(A).
\nIn view of these discussions, as also bearing in mind entirety of the case, we deem it fit and
\nproper to remit the matter to the file of the CIT(A) for adjudication on merits in accordance
\nwith the scheme of the law, after giving a due and reasonable opportunity of hearing to the
\nassessee as also to the DVO, and by way of a speaking order. We further direct the CIT(A) to
\ndispose of the remanded proceedings within three months of receiving this order, and, in case
\nthe DVO does not avail the opportunity of hearing, on the basis of material on record and
\nsubmissions of the assessee. Ordered, accordingly.
\n11. In the result, the appeal is allowed for statistical purposes in the terms indicated
\nabove. Pronounced in the open court today on the 1st day of April, 2019
\nSd\/- Sd\/-
\nMadhumita Roy Pramod Kumar
\n(Judicial Member) (Vice President)
\nAhmedabad, dated the 1st day of April, 2019
\nCopies to: (1) The Applicant (2) The respondent
\n(3) CIT (4) CIT(A)
\n(5) DR (6) Guard File
\nBy order
\nTrue Copy
\nAssistant Registrar
\nIncome Tax Appellate Tribunal
\nAhmedabad benches, Ahmedabad<\/p>\n","protected":false},"excerpt":{"rendered":"
It is sufficient, for our purposes, to take note of the fact that the provisions of Section 23A(1)(i) of the Wealth Tax Act, 1957, \u201cshall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act\u201d. Section 23A(1)(i) of the Wealth Tax Act provides that \u201cAny person\u2026\u2026. objecting to any order of the Valuation Officer under section 35 having the effect of enhancing the valuation of any asset or refusing to allow the claim made by the assessee under the said section \u2026\u2026\u2026\u2026\u2026may appeal to the Commissioner (Appeals) against the assessment or order, as the case may be, in the prescribed form and verified in the prescribed manner \u2026\u201d. In effect thus, by the virtue of Section 23A(1)(i) being incorporated, with necessary modifications, in Section 50C, the correctness of a DVO\u2019s report can indeed be challenged. It is, however, also important to note that the provisions of Section 23A(6) of the Wealth Tax Act shall, with necessary modifications, also apply in the present context- as has been provided in Section 50C(2) itself<\/p>\n