Top Stories Failure to refer matter to Departmental Valuation Officers for Assessing Fair Market Value of Land Property: ITAT Partly allows Appeal [Read Order] The ITAT observed that the lower authorities ought to have referred the matter to the DVO for valuing the fair market value of the land By Aiswarya Krishnadas – On February 24, 2024 4:03 pm – 2 mins read The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) has directed readjucation on the concerned grounds due to the lower authority’s failure to refer the matter to the Departmental Valuation Officers ( DVO ) for assessing the fair market value of the land property.

The appeal stemmed from the addition of Rs. 36,81,810/- made by the Assessing Officer ( AO ) under the deeming provisions of Section 50C of the Income Tax Act, 1961. The taxpayer, an individual who filed ITR Form No. 3 on 01.11.2019, contested this addition, claiming that the fair market value of the property was Rs. 15 lakh. Despite mentioning this value in the computation of capital gains, the assessing officer computed the gain based on the Stamp Valuation Authority’s valuation of Rs. 51,81,810/-, resulting in the disputed addition. The tribunal observed that the assessee in column no. ‘B’ of Schedule ‘CG’ has stated the full value of consideration received/receivable at Rs. 15 lakh. Against the value of property as per Stamp Valuation Authority, the assessee has mentioned Rs. 51,81,810/-.

However, under the column ‘full value of consideration’ adopted as per Section 50C of the Income Tax Act for the purpose of capital gain the assessee has mentioned Rs.15 lakh only. When the case was processed under Section 143(1)(a) of the Income Tax  Act, the computer system by default picked up the figure of value of property as per Stamp Valuation Authority i.e. Rs. 51,81,810/- and computed the long term capital gain accordingly thereby making addition of Rs. 36,81,810/-. Somnath Ghosh, representing  the assessee was  that the fair market value of the property was Rs. 15 lakhs only and for this purpose a letter was also filed to the District Collector, Hooghly dated 18.12.2010 requesting to initiate the proceedings for determination of the market value of the land in question sold by the assessee.

The ITAT found that the judgment rendered by the Jurisdictional High Court in the case of Sunil Kumar Agarwal directly applied to the facts of the present case and the issue at hand. The bench observed that the assessee has asserted that the sale consideration received, amounting to Rs. 15 lakh, represented the fair market value of the land, rather than the value determined by the Stamp Valuation Authority at Rs. 51,81,810/-. The bench of Sanjay Garg ( Judicial member ) and Manish Borad ( Accountant member ) observed that the lower authorities ought to have referred the matter to the Departmental Valuation Officer for valuing the fair market value of the land property. Conequently, the particular ground was directed for readjudication and the appeal was partly allowed. To Read the full text of the Order CLICK HERE