The Assessing Officer has adopted the jantri value for my land sale because a co-owner's assessment used it, even though I objected that the title was defective. Must he refer the valuation to the DVO instead?
Yes. The Ahmedabad Tribunal held that once the assessee objects that the stamp duty value exceeds the fair market value, the Assessing Officer is duty bound to refer the valuation to the Departmental Valuation Officer under section 50C(2). He cannot adopt the jantri value simply because the officer assessing a co-owner did so. Here the assessee had raised serious objections about defective and disputed title, and the officer knew of them. The Commissioner (Appeals) was right to delete the addition made by substituting the jantri value of Rs 4,98,83,550 for the DVO's earlier valuation of Rs 3,17,86,000, and the Revenue's appeal was dismissed.
Decided by the ITAT (Income Tax Appellate Tribunal, 'C' Bench, Ahmedabad; Siddhartha Nautiyal, Judicial Member, and Makarand V. Mahadeokar, Accountant Member) on 2024-08-07, reported as I.T.A. No. 103/Ahd/2020, ITAT Ahmedabad 'C' Bench, assessment year 2012-13. It bears on section 50C(2), section 50C, section 147, section 143(3), section 55A of the Income Tax Act 1961, in Capital Gains and Assessment & Scrutiny matters.
Section 50C(2) is written as an option for the assessee, and officers often treat the reference to the DVO as discretionary. This order holds it is not: an objection on record that the stamp value exceeds fair market value obliges the officer to refer, and the Tribunal collects the authority for that proposition, including PCIT v Ravjibhai Nagjibhai Thesia (Gujarat), Dr Indra Swaroop Bhatnagar and Chandra Narain Chaudhri (Allahabad), and the Tribunal decisions in K.K. Nag Ltd, Smt Indira Bai and Madhukumar N. (HUF). It is also useful on a second front, the co-owner problem. Where one property is sold by several people and their assessments are made by different officers, the Revenue frequently reopens the assessment of the owner who got a favourable DVO valuation to bring him into line with the co-owner who did not ask for one. The Tribunal calls that the path of least resistance and rejects it: the co-owner's assessment is not a substitute for the officer's own duty to value.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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A plot of land was bought jointly, the assessee's share being 60 per cent, at a purchase price of Rs 8,15,000 under a deed registered on 19 December 2006. The plot was sold by the assessee and two others for Rs 2,15,00,000 by a conveyance deed executed on 3 March 2012, stamp duty of Rs 24,44,500 being paid. For assessment year 2012-13 the assessee returned income of Rs 11,33,490 on 28 September 2012 without offering long-term capital gain on the land. In scrutiny under section 143(3) the Assessing Officer found that the jantri or circle rate value was Rs 4,98,83,550 against the declared consideration of Rs 2,15,00,000, so section 50C applied. The officer accepted the assessee's contention that the plot was defective and disputed land and that the stamp valuation exceeded fair market value, and referred the matter to the Departmental Valuation Officer, who valued the land at Rs 3,17,86,000. An addition of Rs 1,82,33,314 was made on that basis. The Commissioner (Appeals) upheld it on 10 August 2016 and the Tribunal dismissed the assessee's appeal on 18 November 2019 in ITA No. 2634/Ahd/2016 because it was not pursued. Later the officer noticed that a co-owner with a 20 per cent share, Girishbhai Prahladbhai Patel, had not sought a DVO reference and had been assessed on the jantri value. On that footing the officer reopened the assessee's assessment, taking Rs 1,08,58,530, being 60 per cent of the difference of Rs 1,80,97,550 between the jantri value and the DVO's value, as having escaped assessment, and by order under section 143(3) read with section 147 dated 19 November 2018 assessed the sale on the jantri value, the assessee's share being Rs 2,99,30,130. The Commissioner (Appeals) allowed the assessee's appeal on 29 November 2019 and the Revenue appealed.
The Revenue's appeal was dismissed and the order of the Commissioner (Appeals) deleting the addition was upheld. The Tribunal held that the Commissioner (Appeals) had taken the correct legal view: when the assessee objected to the jantri value adopted by the stamp valuation officer, the correct course for the Assessing Officer was to refer the matter to the Departmental Valuation Officer for expert opinion under sub-section (2) of section 50C. The assessee had raised serious objections to the stamp valuation, on the ground that there were inherent infirmities in the title which reduced the value of the property, and that was within the officer's knowledge. On those facts the officer was duty bound to refer the valuation and could not adopt the jantri value. The Tribunal endorsed the finding that the officer had adopted the path of least resistance and had been over-swayed by the assessment order made in the case of the co-owner, Shri Girishbhai P. Patel. The Tribunal found no infirmity in the order of the Commissioner (Appeals) calling for interference.
The Tribunal set out the scheme of section 50C. Where the consideration received on transfer of a capital asset is less than the value assessed or assessable by a State Government authority, that value is taken as the full value of consideration for computing capital gains. Sub-section (2) gives the taxpayer an option to dispute it: he may ask the Assessing Officer to refer the valuation to the Departmental Valuation Officer on the claim that the stamp value exceeds the fair market value of the property on the date of transfer. The Tribunal then drew on a line of authority to hold that the option, once exercised, binds the officer. In PCIT v Ravjibhai Nagjibhai Thesia the Gujarat High Court held that the officer must compute capital gain on the value given by the Valuation Officer under section 50C even where it is lower than the stamp valuation authority's value. In Dr Indra Swaroop Bhatnagar the Allahabad High Court held the DVO's valuation binding on the officer who had referred the matter. In Chandra Narain Chaudhri the same Court held that where the assessee objects that the value adopted under section 50C(1) exceeds fair market value, the officer may either accept the approved valuer's report filed by the assessee or refer the question to the DVO. The Tribunal decisions in K.K. Nag Ltd v ITO, Smt Indira Bai v ITO and Madhukumar N. (HUF) v DCIT were to the same effect, that a request under section 50C(2) cannot be ignored and that the reference is mandatory once the objection is taken. Applying that, the Tribunal found the objection here to be specific and substantial: the title to the property was said to be defective and the land disputed, which meant the jantri value did not represent the correct sale value. Since that objection had been raised and was known to the officer, the reassessment could not proceed on the jantri value merely because a co-owner's assessment had used it.
once the assessee objects to the value of property proposed to be adopted by the Assessing Officer, then the assessing officer is duly bound to refer the matter to the DVO in terms of Section 50C(2) of the Act
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Handle my notice → Ask a CA on WhatsAppYes. The Ahmedabad Tribunal held that once the assessee objects that the stamp duty value exceeds the fair market value, the Assessing Officer is duty bound to refer the valuation to the Departmental Valuation Officer under section 50C(2). He cannot adopt the jantri value simply because the officer assessing a co-owner did so. Here the assessee had raised serious objections about defective and disputed title, and the officer knew of them. The Commissioner (Appeals) was right to delete the addition made by substituting the jantri value of Rs 4,98,83,550 for the DVO's earlier valuation of Rs 3,17,86,000, and the Revenue's appeal was dismissed. This was decided by the ITAT (Income Tax Appellate Tribunal, 'C' Bench, Ahmedabad; Siddhartha Nautiyal, Judicial Member, and Makarand V. Mahadeokar, Accountant Member) and bears on section 50C(2), section 50C, section 147, section 143(3), section 55A of the Income Tax Act 1961. It is reported as I.T.A. No. 103/Ahd/2020, ITAT Ahmedabad 'C' Bench, assessment year 2012-13. Section 50C(2) is written as an option for the assessee, and officers often treat the reference to the DVO as discretionary. This order holds it is not: an objection on record that the stamp value exceeds fair market value obliges the officer to refer, and the Tribunal collects the authority for that proposition, including PCIT v Ravjibhai Nagjibhai Thesia (Gujarat), Dr Indra Swaroop Bhatnagar and Chandra Narain Chaudhri (Allahabad), and the Tribunal decisions in K.K. Nag Ltd, Smt Indira Bai and Madhukumar N. (HUF). It is also useful on a second front, the co-owner problem. Where one property is sold by several people and their assessments are made by different officers, the Revenue frequently reopens the assessment of the owner who got a favourable DVO valuation to bring him into line with the co-owner who did not ask for one. The Tribunal calls that the path of least resistance and rejects it: the co-owner's assessment is not a substitute for the officer's own duty to value. If it applies to you, the first step is this: Put your objection to the stamp duty value in writing during the assessment, and say expressly that the value assessed exceeds the fair market value on the date of transfer; that is the trigger in section 50C(2).
A plot of land was bought jointly, the assessee's share being 60 per cent, at a purchase price of Rs 8,15,000 under a deed registered on 19 December 2006. The plot was sold by the assessee and two others for Rs 2,15,00,000 by a conveyance deed executed on 3 March 2012, stamp duty of Rs 24,44,500 being paid. For assessment year 2012-13 the assessee returned income of Rs 11,33,490 on 28 September 2012 without offering long-term capital gain on the land. In scrutiny under section 143(3) the Assessing Officer found that the jantri or circle rate value was Rs 4,98,83,550 against the declared consideration of Rs 2,15,00,000, so section 50C applied. The officer accepted the assessee's contention that the plot was defective and disputed land and that the stamp valuation exceeded fair market value, and referred the matter to the Departmental Valuation Officer, who valued the land at Rs 3,17,86,000. An addition of Rs 1,82,33,314 was made on that basis. The Commissioner (Appeals) upheld it on 10 August 2016 and the Tribunal dismissed the assessee's appeal on 18 November 2019 in ITA No. 2634/Ahd/2016 because it was not pursued. Later the officer noticed that a co-owner with a 20 per cent share, Girishbhai Prahladbhai Patel, had not sought a DVO reference and had been assessed on the jantri value. On that footing the officer reopened the assessee's assessment, taking Rs 1,08,58,530, being 60 per cent of the difference of Rs 1,80,97,550 between the jantri value and the DVO's value, as having escaped assessment, and by order under section 143(3) read with section 147 dated 19 November 2018 assessed the sale on the jantri value, the assessee's share being Rs 2,99,30,130. The Commissioner (Appeals) allowed the assessee's appeal on 29 November 2019 and the Revenue appealed. The matter was decided on 2024-08-07 by the ITAT (Income Tax Appellate Tribunal, 'C' Bench, Ahmedabad; Siddhartha Nautiyal, Judicial Member, and Makarand V. Mahadeokar, Accountant Member). On those facts the ITAT held as follows. The Revenue's appeal was dismissed and the order of the Commissioner (Appeals) deleting the addition was upheld. The Tribunal held that the Commissioner (Appeals) had taken the correct legal view: when the assessee objected to the jantri value adopted by the stamp valuation officer, the correct course for the Assessing Officer was to refer the matter to the Departmental Valuation Officer for expert opinion under sub-section (2) of section 50C. The assessee had raised serious objections to the stamp valuation, on the ground that there were inherent infirmities in the title which reduced the value of the property, and that was within the officer's knowledge. On those facts the officer was duty bound to refer the valuation and could not adopt the jantri value. The Tribunal endorsed the finding that the officer had adopted the path of least resistance and had been over-swayed by the assessment order made in the case of the co-owner, Shri Girishbhai P. Patel. The Tribunal found no infirmity in the order of the Commissioner (Appeals) calling for interference.
The Tribunal set out the scheme of section 50C. Where the consideration received on transfer of a capital asset is less than the value assessed or assessable by a State Government authority, that value is taken as the full value of consideration for computing capital gains. Sub-section (2) gives the taxpayer an option to dispute it: he may ask the Assessing Officer to refer the valuation to the Departmental Valuation Officer on the claim that the stamp value exceeds the fair market value of the property on the date of transfer. The Tribunal then drew on a line of authority to hold that the option, once exercised, binds the officer. In PCIT v Ravjibhai Nagjibhai Thesia the Gujarat High Court held that the officer must compute capital gain on the value given by the Valuation Officer under section 50C even where it is lower than the stamp valuation authority's value. In Dr Indra Swaroop Bhatnagar the Allahabad High Court held the DVO's valuation binding on the officer who had referred the matter. In Chandra Narain Chaudhri the same Court held that where the assessee objects that the value adopted under section 50C(1) exceeds fair market value, the officer may either accept the approved valuer's report filed by the assessee or refer the question to the DVO. The Tribunal decisions in K.K. Nag Ltd v ITO, Smt Indira Bai v ITO and Madhukumar N. (HUF) v DCIT were to the same effect, that a request under section 50C(2) cannot be ignored and that the reference is mandatory once the objection is taken. Applying that, the Tribunal found the objection here to be specific and substantial: the title to the property was said to be defective and the land disputed, which meant the jantri value did not represent the correct sale value. Since that objection had been raised and was known to the officer, the reassessment could not proceed on the jantri value merely because a co-owner's assessment had used it. In the words reproduced by the source cited on this page: "once the assessee objects to the value of property proposed to be adopted by the Assessing Officer, then the assessing officer is duly bound to refer the matter to the DVO in terms of Section 50C(2) of the Act"
It was decided by the ITAT on 2024-08-07 and is reported as I.T.A. No. 103/Ahd/2020, ITAT Ahmedabad 'C' Bench, assessment year 2012-13. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 50C(2), section 50C, section 147, section 143(3), section 55A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed and the order of the Commissioner (Appeals) deleting the addition was upheld. The Tribunal held that the Commissioner (Appeals) had taken the correct legal view: when the assessee objected to the jantri value adopted by the stamp valuation officer, the correct course for the Assessing Officer was to refer the matter to the Departmental Valuation Officer for expert opinion under sub-section (2) of section 50C. The assessee had raised serious objections to the stamp valuation, on the ground that there were inherent infirmities in the title which reduced the value of the property, and that was within the officer's knowledge. On those facts the officer was duty bound to refer the valuation and could not adopt the jantri value. The Tribunal endorsed the finding that the officer had adopted the path of least resistance and had been over-swayed by the assessment order made in the case of the co-owner, Shri Girishbhai P. Patel. The Tribunal found no infirmity in the order of the Commissioner (Appeals) calling for interference. It arises in Capital Gains and Assessment & Scrutiny matters, on section 50C(2), section 50C, section 147, section 143(3), section 55A of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, 'C' Bench, Ahmedabad; Siddhartha Nautiyal, Judicial Member, and Makarand V. Mahadeokar, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Support the objection with specifics that reduce value, such as a defect or dispute in title, encumbrance or litigation, and file a registered valuer's report if you have one. If the officer adopts the jantri value without a reference, take the failure to refer as a ground of appeal in its own right, and cite the decisions the Tribunal relied on here. Where a co-owner's assessment has been used to reopen yours, argue that another officer's valuation in another assessment cannot displace the DVO's report in yours.
Still good law. A Tribunal order of 7 August 2024 following a consistent line of High Court and Tribunal authority on section 50C(2), including PCIT v Ravjibhai Nagjibhai Thesia (Gujarat). The source page records no case citing it. Whether the Revenue has appealed to the Gujarat High Court under section 260A was not checked in this session. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order names the assessee as Ketaben Janakbhai Patel in the cause title but at one point in paragraph 4 refers to her as Kantaben Patel; the record does not resolve the discrepancy. It does not address the validity of the reopening under section 147 at all, so the case decides nothing about whether a co-owner's assessment is tangible material for reassessment; it turns only on the merits of the valuation. Nor does it explain how a fresh addition on the same capital gain could be made when the original assessment on the DVO's value had already been upheld by the Commissioner (Appeals) and by the Tribunal in ITA No. 2634/Ahd/2016. The Commissioner (Appeals) reasoned partly under section 55A, which governs reference for fair market value generally, while the Tribunal decided under section 50C(2); the difference between the two provisions is not discussed. The batch line gave the sections as 50C and 50C(2), which matches what the Tribunal decides. The judgment identifies the cases it relies on by name and by taxmann.com report numbers only, which have not been independently verified in this session, and the orders of the Commissioner (Appeals) and of the co-owner's Assessing Officer were not read. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed and the order of the Commissioner (Appeals) deleting the addition was upheld. The Tribunal held that the Commissioner (Appeals) had taken the correct legal view: when the assessee objected to the jantri value adopted by the stamp valuation officer, the correct course for the Assessing Officer was to refer the matter to the Departmental Valuation Officer for expert opinion under sub-section (2) of section 50C. The assessee had raised serious objections to the stamp valuation, on the ground that there were inherent infirmities in the title which reduced the value of the property, and that was within the officer's knowledge. On those facts the officer was duty bound to refer the valuation and could not adopt the jantri value. The Tribunal endorsed the finding that the officer had adopted the path of least resistance and had been over-swayed by the assessment order made in the case of the co-owner, Shri Girishbhai P. Patel. The Tribunal found no infirmity in the order of the Commissioner (Appeals) calling for interference.
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