S. 50C — Difference between sale consideration of the property shown by assessee and FMV determined by DVO u/s.50C(2) was less than 10% — AO not justified in substituting value determined by DVO for sale consideration disclosed by assessee.

The assessee received an amount of Rs.19,00,000 as sale
consideration on account of sale of basement of a building. The stamp valuation
authorities adopted the value of Rs.28,73,000. Since the assessee objected to
valuation of the stamp valuation authorities on various grounds, the AO referred
the matter to the DVO who valued the property at Rs.20,55,000. The AO thereafter
substituted this value for the purpose of calculating the capital gain.

The CIT(A) observed that the assessee has not objected to
this valuation either before the DVO or before the AO or even before him.
Distinguishing the decision of the Supreme Court in the case of C. B. Gautam v.
UOI, 199 ITR 530, the CIT(A) upheld the action of the AO.

As against value of Rs.28,73,000 adopted by stamp valuation
authorities, DVO has determined the FMV on the date of transfer at Rs.20,55,000.
This shows that there is wide variation between the two values. Further, value
adopted by the DVO is also based on some estimate. The difference between sale
consideration shown by the assessee and FMV determined by the DVO is less than
10%. Since such difference is less than 10% and considering that valuation is
always a matter of estimation where some degree of difference is bound to occur,
it was held that FMV determined by the DVO cannot be substituted for the sale
consideration received by the assessee.