ITAT Remands Section 50C Addition of Rs. 27.22 Lakh for Fresh Assessment After AO Fails to Consider DVO Report:

The Income Tax Appellate Tribunal (ITAT), Surat Bench, has remanded the case of Amity Land Developers for a fresh assessment after the Assessing Officer made an addition of Rs. 27.22 lakh under Section 50C of the Income Tax Act without considering the Departmental Valuation Officer (DVO)’s report. The Tribunal directed the AO to reconsider the matter after examining the valuation report and the assessee’s submissions.

The case relates to Assessment Year 2013-14. Amity Land Developers had filed its income tax return declaring nil income. Subsequently, the AO reopened the assessment after receiving information that the firm had sold two immovable properties for amounts lower than their respective stamp duty values.

AO found that one property was sold for Rs. 1.62 lakh whereas the stamp duty valuation of the property was Rs. 22.04 lakh resulting into a difference of Rs. 20.42 lakh. The second property was sold for Rs. 54,000, while the stamp duty value was Rs. 7.34 lakh, a difference of Rs. 6.80 lakh.

The AO invoked the provisions of section 50C of the Income Tax Act and treated the total difference of Rs. 27,22,775 as the additional income and assessed the total income of the firm to the same extent. The assessee filed an appeal with ITAT against the order of CIT(A), NFAC, Delhi confirming the assessment.

During the course of appeal, the Tribunal observed that the AO had made a reference to the DVO on the request of the assessee. However, the DVO report was not received before the assessment deadline of 31 March 2022 and the AO completed the assessment without considering the valuation report.

The counsel of the assessee Shri Krutarth Desai has brought to the notice of the Tribunal the DVO report dated 27.10.2022. After considering the report and objections and submissions of the assessee, he called for the matter to be sent back to the AO for fresh consideration. The request was approved by the Departmental Representative.

Considering the submissions, the Bench of the ITAT comprising of Judicial Member Suchitra Kamble and Accountant Member B.M. Biyani remanded the matter back to the AO for fresh assessment. The Tribunal has directed the AO to give full opportunity of hearing to the assessee and to consider all submissions without being influenced by the earlier assessment order.

Accordingly, the appeal was allowed for statistical purposes.