MEGHRAJ BAID Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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Hari Om Maratha, J.M. -
(1.) THIS appeal of the assessee for asst. yr. 2003-04 is directed against the order of learned CIT(A) dt. 5th Jan., 2007.
(2.) Briefly stated, the facts of the case are that during the year under consideration the assessee had sold a property situated at Khasra No. 829/1/751 of Marudhar Grah Nirman Sahkari Samiti Ltd., Jodhpur (Narpat Nagar, Pal Road, Jodhpur) for a sale consideration of Rs. 11,31,000 but as per the sale deed the Sub-Registrar had valued the cost of this property for the purpose of registration charges at Rs. 14,96,000. The AO was of the opinion that provisions of Section 50C of the Act are applicable in this case. As per this section, if the property is sold for a value less than the DLC rate, it is to be deemed that the property was sold at the value taken by the Sub-Registrar. The assessee was show caused in this regard by the learned AO and the assessee vide his letter dt. 12th Feb., 2006 replied that since a legal suit was going on with regard to this land and there was a Nala adjacent to it that is why the land was sold below the DLC rate. But the AO after discussing Sub-section (1) of Section 50C of the Act came to the conclusion that the value of sale consideration of this plot has to be taken at Rs. 14,96,000 and thus he made the impugned addition. Certain other additions relating to claim of brokerage of Rs. 26,500 in the computation of capital gain on the sale of the above property and on account of disallowance of improvement cost were also made. All these additions were confirmed by the learned CIT(A) vide impugned appellate order. Now the assessee has raised various grounds against these additions and has claimed that under the provisions of Section 50C. particularly Sub-section (2) of the Section the AO has either to accept the declared consideration or he has to refer the matter to DVO for determination of the valuation on the date of the sale of the property in question for determining capital gains thereon.
We have heard the rival submissions and perused the evidences on record. The provisions of Section 50C are deeming provisions and according to which if the assessee declares sale consideration for the purposes of computation of the capital gain which are lower than the DLC rate, the DLC rates have to be replaced as the actual cost of consideration. Sub-section 2 of Section 50C reads as under:
(2) Without prejudice to the provisions of Sub-section (1), where-
(a) the assessee claims before any AO that the value adopted or assessed by the stamp valuation authority under Sub-section (1) exceeds the fair market value of the properly as on the date of transfer;
(b) the value so adopted or assessed by the stamp valuation authority under Sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or the High Court, the AO may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of Sub-sections (2), (3), (4), (5) and (6) of Section 16A, Clause (i) of Sub-section (1) and Sub-sections (6) and (7) of Section 23A, Sub-section (5) of Section 24, Section 34AA, Section 35 and Section 37 of the WT Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the AO under Sub-section (1) of Section 16A of that Act.
Explanation.--For the purpose of this section 'Valuation Officer' shall have the same meaning as in Clause (r) of Section 2 of the WT Act, 1957 (27 of 1957).
(3.) AFTER examining the provision extracted hereinabove in its letters and spirit, we are of the opinion that in case the AO does not agree with the explanation of the assessee with regard to lower consideration disclosed by him then he should refer the matter to DVO for getting its market rate established as on date of the sale to arrive at the correct sale consideration. If this provision is read in the sense that if the AO is not satisfied with the explanation of the assessee then he 'may' or 'may not' send the matter for valuation to the DVO then in that case this provision would be rendered redundant. The word 'may' used in this sub-section signifies that in case learned AO is not satisfied with the explanation of the assessee, he 'should' refer the matter to the DVO for the mentioned purpose. Learned Authorised Representative has relied on the decision of the Hon'ble Supreme Court rendered in the case of Ashok Leyland Ltd. v. Union of India and Ors. (1997) 105 STC 152 (SC) wherein it has been held that the deeming provisions are rebuttable one. We have examined the entire facts of this case in the light of the provisions and precedents relied before us. In our considered opinion the befitting reply of all the queries arouse in our minds as well as raised by the parties is that the matter should be restored back to the file of the learned AO with a direction that he shall refer this matter of valuation in the light of Sub-section (2) of Section 50C to the DVO for determining the consideration of this plot sold by the assessee under Section 50C of the Act. The other connected grounds are also related to this main ground. Therefore, the entire appeal is restored back to the file of the AO with the direction that he would do as directed above and also give opportunity of hearing to the assessee as per law.
In the result, the appeal is allowed for statistical purposes.;
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