The AO has taken the circle rate as my purchase value. Can I make him send it to the Valuation Officer?
You can ask, and the decided cases treat the request as something the officer has to act on. The proviso to s.56(2)(x)(b) says that where the assessee disputes the stamp duty value on the grounds in s.50C(2) the Assessing Officer 'may' refer the valuation to a Valuation Officer, and applies s.50C and s.155(15) to the reference. Read with the s.50C case law, that permissive word has been treated as a duty once the value is genuinely disputed, and an addition made without the reference has been set aside for a fresh valuation.
The machinery is borrowed rather than free-standing. The proviso to s.56(2)(x)(b) reads: 'Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections'. So the grounds are the s.50C(2) grounds - that the stamp duty value exceeds the fair market value and that the value has not been disputed before, or accepted in, any stamp valuation proceeding - and the consequences, including the ceiling in s.50C(3) that the DVO's figure cannot be adopted if it exceeds the stamp duty value, are borrowed too.
The word is 'may'. The Calcutta High Court in Sunil Kumar Agarwal v. CIT (in this library) refused to read it as a discretion in the s.50C context: the legislature had provided machinery to give fair treatment to the taxpayer, the officer discharges a quasi-judicial function, and he must offer the option even where the assessee never asked for it. That reasoning has been carried into s.56(2)(x). In Clayking Minerals LLP v. ITO the Ahmedabad bench, following Sunil Kumar Agarwal, set aside an addition of Rs. 72.90 lakh on agricultural land where the buyer had disputed the jantri value and no reference had been made, and restored the matter for a DVO valuation.
What the reference is worth is a separate question from whether it must be made. In NFAC v. NRB Developers (in this library) the DVO's figure replaced the stamp authority's and, with the reference date taken as the date of allotment, brought an addition of Rs. 9.04 crore down to Rs. 81.19 lakh. So the reference is not a formality; it is often the whole case. But it is only worth asking for if the difference survives the tolerance band, which is the higher of Rs. 50,000 and 10% of the consideration, and if you can meet the second condition in s.50C(2) - that you did not contest the value before the stamp authority and it was not accepted in those proceedings.
Sequence matters. Dispute the value in writing during the assessment, on the s.50C(2) grounds and in those words, and ask in terms for the reference. If the officer proceeds without it, the failure becomes a ground of appeal in its own right rather than merely an argument about quantum - and the appellate authorities have generally responded by restoring the matter for valuation rather than deleting the addition outright, which is a result worth anticipating when you decide whether to run the point.
Most s.56(2)(x)(b) additions are made by simply lifting the stamp duty value into the computation. The reference is the only route in the statute to a different figure, and it is available to the buyer just as it is to the seller under s.50C. Missing it at the assessment stage costs a year, because the usual outcome on appeal is a remand rather than a deletion.
The shares are listed but locked in. Do I value them at the market quotation?
Our family settled a property dispute orally and only filed a memorandum with the authorities. Someone now says the settlement is void because it was never registered. Is it?
The AO adopted the stamp duty value and I never asked for a DVO reference. Can he do that?
I paid the whole price and took possession of a factory under an agreement for sale in December 2016, but the sale deed was only registered in March 2018. Can the department tax the stamp-value difference under section 56(2)(x) in the later year?
The only addition is the gap between the stamp duty value and my price. Can that carry a s.270A penalty?
I bought agricultural land below the jantri rate. Can s.56(2)(x) apply when the land is not even a capital asset?
I bought unquoted shares from family members at Rs 540 when the officer's rule 11UA working says Rs 661. Can a discount for lack of marketability and the company's real position be brought into the valuation?
The Approving Panel held that my client's arrangement is NOT an impermissible avoidance arrangement, but the Assessing Officer has taxed the same transaction under another section anyway. Can he do that?
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