Section 55A related to DVO reference not apply in a reverse case – High Court

Section 55A related to DVO reference not apply in a reverse case when value claimed by assessee exceeds the fair market value as determined by the AO-High Court

ABCAUS Case Law Citation:
ABCAUS 2227 (2018) (02) HC

The appellant assessee had filed an appeal under Section 260-A of the Income Tax Act, 1961 (the Act) against the order of the Tribunal.

One of the questions of law referred to was whether the Tribunal was justified in not considering that once the Assessing Authority disbelieved the report of approved valuer relied by the assessee, he was duty bound to refer the case to the valuation cell as per Section 55A of the I.T. Act ?” 

The department relied on a decision of Bombay High Court in which it had been laid down that it is not mandatory to make a reference under Section 55A of the Act. 

The Hon’ble High Court opined that a reference is to be made under Section 55A of the Act only when the circumstances as specified in the Act are attracted, i.e.  when the Assessing Officer is of the opinion that the fair market value of the assets exceeds the value of the assets as claimed by the assessee and not in a reverse case as was in the instant case where the assessee claimed the value by himself to be exceeding the fair market value as determined by the AO.

The Hon’ble High Court noted that in the instant case, the AO, for computing the long term capital gains, had assessed the cost of land on 01.04.1981 @ Rs. 6/- per sq, whereas the assessee claimed it to be Rs. 200/- per sq.

It was observed that the Tribunal had recorded that no reliable evidence was placed by the assessee on the basis of which it was claimed that the fair market value was approximately 200.

The Hon’ble High Court observed that there was no dispute on facts and the finding of the Tribunal was clear.

Accordingly, it was held that clearly the provisions of Section 55A were not attracted in the present case. The question therefore was answered in favour of the department and against the assessee.