ITAT Rajkot: Assessing Officer Cannot Ignore Request for Valuation Officer Reference Under Section 50C(2)

In a significant ruling concerning the valuation of capital assets for tax purposes, the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, has reinforced the procedural safeguards available to an assessee under the Income Tax Act, 1961. In the case of Vishal Navinchandra Shah Vs CIT, the Tribunal held that when an assessee disputes the value adopted by the Stamp Valuation Authority and requests a reference to the Departmental Valuation Officer (DVO), the Assessing Officer (AO) is duty-bound to accede to such a request before making additions.

The Tribunal emphasized that Section 50C must be administered in its true legal spirit, ensuring that the assessee is granted a fair opportunity to substantiate the Fair Market Value (FMV) of the property transferred.

Factual Matrix of the Case

The dispute arose from the assessment proceedings for the Assessment Year (AY) 2013-14. The details of the case are as follows:

Background and Transaction

The assessee is an individual engaged in the business of manufacturing stationery items. For the relevant assessment year, the assessee filed a Return of Income on September 29, 2013, declaring a total income of Rs. 15,15,940.

During the scrutiny proceedings conducted under Section 143(3) of the Income Tax Act, 1961, the Assessing Officer noted that the assessee had sold two properties located at Kalher, Taluka Bhiwandi, District Thane.

• Sale Consideration Reported: The registered sale deeds reflected a total consideration of ₹31,89,100.
• Stamp Duty Valuation: The Stamp Valuation Authority had assessed the value of these properties at ₹55,15,000.