ITAT Kolkata Remands Capital Gains Assessments Over Mandatory DVO Reference Under Section 50C(2)

On 18 June, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) remanded a capital gains assessment after holding that an Assessing Officer is duty bound to refer a property valuation dispute to the Departmental Valuation Officer (DVO) when a taxpayer seeks such reference under Section 50C(2) of the Income Tax Act, 1961.

Judicial Member Yogesh Kumar U.S. and Accountant Member Rakesh Mishra was hearing an appeal filed by Tapan Das against an order upholding an addition of Rs. 63.52 lakh towards long-term capital gains arising from the sale of land. The Tribunal observed:

“It is well-settled that when the taxpayer disputes the value of consideration and subsequently requests the Assessing Officer for referral to DVO, the Assessing Officer is duty bound to refer the matter to the DVO as per section 50C(2) of the Act.”

Tapan Das contended before the Tribunal that both the Assessing Officer and the appellate authority had acted in violation of Section 50C(2) by rejecting the request for reference to the Departmental Valuation Officer, despite a specific plea disputing the stamp duty valuation adopted for computing capital gains.

The Revenue submitted that the taxpayer had failed to establish the source of income and that the addition had been made in accordance with law, warranting no interference by the Tribunal, and therefore sought dismissal of the appeal.

The Bench held that the Assessing Officer had violated the statutory mandate under Section 50C(2) by rejecting the request for a DVO reference.

Accordingly, the ITAT restored the matter to the file of the Assessing Officer for fresh adjudication and directed the taxpayer to substantiate the source of consideration utilised for purchasing the property in question.