Revenue has filed this appeal against order of CIT(A), Dehradun, passed in Appeal No. 357/DDN/2005-06 dt. 22nd Feb., 2007 on following effective ground: "The learned. CIT(A) has erred in law and on facts in directing AO to adopt value estimated by valuation officer and work out capital gain accordingly." relevant and material facts for disposal of this ground of appeal are that assessee is earning income from business and agriculture. She filed her return declaring income of Rs. 2,75,810. assessment has been completed o n returned income of Rs. 2,75,810 but income under head 'Capital gains' has been computed at Rs. 5 8,20,917 because AO noticed that assessee had sold her half share in property, in Agra, and full value of sale consideration declared by assessee for entire 4 properties was Rs. 40,48,000 while market value adopted for stamp duty purpose was Rs. 1,64,16,000 so AO adopted market value of property for stamp duty purposes taking recourse to s. 50C of IT Act, 1961 (in short 'the Act') and worked out capital gain in case of assessee at Rs. 58,20,917. Aggrieved with order of AO assessee filed appeal before CIT (A) and submitted that stamp duty is purely paid at circle rates which are fixed by state authorities. circle rates do not mention details and descriptions of properties. It is flatly applied to all properties which are covered in vicinity of circle rates. In fact, old tenants covered under UP Rent Control Act could not be evicted or dispossessed from properties. Also these properties have no proper location and no proper approach roads. properties under consideration were considered at same circle rates which are also applicable to those properties which are newly built, and having good location and approach roads. property No. 31/20 and 31/20, 1-16 Rawat Para, Kotwali Ward Agra was actually sold for consideration of Rs. 32,00,000. But for purposes of value of stamp duty, rates were fixed at Rs. 1,31,40,000. Similarly property No. 31/62 Lohargali, Kotwali Ward Agra and 31 / 60 Lohargali Kotwali Ward Agra were actually for Rs. 6,00,000 and Rs, 2,00,000 respectively. But for purposes of stamp duty, rate were fixed at Rs. 24,00,000 and Rs. 8,00,000 respectively. assessee has also furnished valuation reports for above properties as on 1st Nov., 2002 from registered Government approved valuer. valuer had valued FMV of property of 31/20 and 31/20,1-16 Rawat Para Agra at Rs. 31,16,000 after considering all material facts regarding it. Similarly, valuation of other properties, i.e., 31/62 and 31/60 Lohargali has been valued by valuer at Rs. 7,90,000. above properties were approximately one hundred years old and roof and walls were in dilapidated condition, which require lot of renovation and repair works. Also title of above properties was in litigation at time of sale. One trespasser Jugal Kishore s/o Ram Avtar had filed civil suits for claiming his poor title against these properties. civil suit No. 289/98 Jugal Kishore vs. Manju Rani Etc. (for properties 31/62 and 31/62) in Court of Civil Judge Senior Division Agra and civil suit No. 60/1999 Jugal Kishore v/s. Manju Rani etc. (for properties 31/20 and 31/20,1-16, Rawat Para Agra) in Court of District Judge Agra, were pending at time of sale of above properties. Similarly property No. 4/81 Seherawla Pech Near Motia Gali Chattan ward Agra was actually sold for Rs. 48,000. But for purposes of stamp duty it was considered at Rs. 76,000. property was very old property about 75 years old with estimated total life of 60 years. roof and walls of property was in dilapidated and bad condition, which required lot of renovation and repairs. Also, property was occupied by various tenants covered by UP Rent Control Act and as such could not be evicted or dispossessed from property. Considering this fact property had to be sold to Shri Ram Das Agarwal s/o Late Shri Babu Lai Ji who was one of tenants in this property. If above facts are considered valuation of above properties in question would not exceed actual sale consideration. Further, it is submitted that request was also made before AO to refer for valuation under s. 50C(2) of Act to Valuation Cell in case AO was not satisfied with valuation of above properties in question. AO turned down request of assessee and ignoring all submissions made before him, he passed impugned order. In support of his contentions he placed reliance on various case laws as detailed in order of CIT(A) to contend that from his submissions and case laws cited, market value of properties sold should be adopted at actual consideration for which they were sold (actual realized value) by assessee and not notional and hypothetical gain as assessed by AO and s o impugned addition made by AO is liable to be deleted. During assessm ent proceedings before CIT(A) learned. Authorised Representative for assessee further brought to his notice that vide letter dt. 12th Dec., 2005 assessee has requested AO to refer case to valuation cell in case value declared by assessee was not acceptable to AO but AO without referring case to Valuation Cell adopted value taken for stamp duty purposes and completed assessment ignoring provisions of ss. 50C(1) and 50C(2) of Act which provides that in case assessee adopted market value assessed by State Government for stamp duty purposes, AO should have referred case to IT Department valuation cell. CIT(A), after considering provisions of ss. 50C(1) and (2) of Act, observed that as AO adopted market value assessed by State Government for stamp duty purposes, AO should have referred case to IT. Department Valuation Cell since this was not done, he directed AO vide his office letter dt. 27th Feb., 2006 to refer case to valuation cell. AO vide his letter dt. 12th Feb., 2007 submitted his report along with report of valuation cell and value estimated by valuation cell as on 1st April, 1981 and on date of sale and same is mentioned in order of CIT(A). On considering all these facts, learned CIT(A) directed AO to adopt value estimated by valuation cell by making following observations in his order: "I have gone through submissions of Authorised Representative and valuation report of valuation officer It is admitted fact that officers working in valuation Department are far more technically qualified than authorities in State Government fixing value of property for stamp duty purposes. It is also known fact that circle rate are fixed locality wise and not with reference to particular property. Under circumstances, value estimated by valuation officer has to be taken for purpose of working out capital gain. AO is directed to adopt value estimated by working out capital gain. AO is directed to adopt value estimated by valuation officer. and work out capital gain accordingly. These grounds are allowed in favour of appellant." Notice of hearing was sent to respondent assessee by courier but s m e was returned unserved. We consider it appropriate to proceed respondent/assessee ex parte and decide appeal of Revenue on merits after hearing learned. Departmental Representative for Revenue, perusing records and carefully going through orders of tax authorities below. In order to decide issue involved in ground of appeal taken by Revenue, we are required to decide whether capital gains from property are required to be worked out by adopting market value on which stamp duty has been paid by assessee or are to be worked out as per valuation by valuation cell of IT Department. In this regard, we would like to refer to relevant provisions of ss. 50C(1), (2) and (3) of Act, which read as under: "50C. Special provision for full value of consideration in certain cases - (1) Where consideration received or accruing as result of transfer of assessee of capital asset, being land or building or both, is less than value adopted or assessed by any authority of State Government (hereafter in this section referred to as "stamp valuation authority") for purpose of payment of stamp duty in respect of such transfer, value so adopted or assessed shall, for purposes of s. 48, be deemed to be full value of consideration received or accruing as result of such transfer. (2) Without prejudice to provisions of sub-s. (1), where- (a) assessee claims before any AO that value adopted or assessed b y stamp valuation authority under sub-s. (1) exceeds FMV of property as on date of transfer; (b) value so adopted or assessed by stamp valuation authority under sub-s. (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or High Court, AO may refer valuation of capital asset to valuation officer and where any such reference is made, provisions of sub-ss. (2), (3), (4), (5) and (6) of s. 16A, cl. (i) of sub-s. (1) and sub- ss. (6) and (7) of s. 23A, sub-s. (5) of s. 24, s. 34AA, s. 35 and s. 37 of WT Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to reference made by AO under sub-s. (1) of s. 16A of that Act. Explanation - For purposes of this section, "Valuation Officer" shall have same meaning as in cl. (r) of s. 2 of WT Act, 1957 (27 of 1957). (3) Subject to provisions contained in sub-s. (2), where value ascertained under sub-s. (2) exceeds value adopted or assessed by stamp valuation authority referred to in sub-s. (1), value so adopted or assessed by such authority shall be taken as full value of consideration received or accruing as result of transfer." On reading provisions, it is clear that Finance Act, 2002, w.e.f. 1st April, 2003, has inserted new s. 50C of Act to make special provision for determining full value of consideration in cases of transfer of immovable property. s. 50C(1) of Act provides that where consideration declared to be received or accruing as result of transfer of land or building or both, is less than value adopted or assessed by any authority of State Government for purpose of payment of stamp duty in respect of such transfer, value so adopted or assessed shall be deemed to be full value of consideration, and capital gains shall be computed accordingly under s. 48 of IT Act. s. 50C(2) of Act further provided that where assessee claims that value adopted or assessee for stamp duty purposes exceeds FMV of property as on date of transfer, and he has not disputed value so adopted or assessee in any appeal or provision or reference before any authority or Court, AO may refer valuation of relevant asset to valuation officer in accordance with s. 55A of IT Act. Sub-s. (3) of s. 50C of Act further provided that if FMV determined by valuation officer is less than value adopted for stamp duty purposes, AO may adopt such FMV to be full value of consideration. However, if FMV determined by valuation officer is more than value adopted or assessed for stamp duty purposes, AO shall not adopt such FMV and shall take full value of consideration to be value adopted or assessed for stamp duty purposes. Thus, sub-s. (3) of s. 50C of Act would mean that if value ascertained by valuation officer exceeds stamp value; value adopted for computation of capital gains, stamp value alone would be adopted. It means that if value ascertained by valuation officer is lower than value adopted for purpose of payment of state duty same would be adopted as value of such property and in case it is higher than value adopted for purpose of payment of stamp duty, full value of property for purposes of capital gains would be payment of stamp duty paid by assessee in respect of such transfer of property. In instant case, undisputedly assessee contended before AO that actual consideration received by assessee should be taken as market value of properties sold and not amount paid as stamp duty for purposes of transfer of properties because same was on higher side in view of existing details and descriptions given by assessee before AO. Further, assessee in accordance with provisions of s. 50C(2) of Act requested AO to refer properties for valuation to valuation cell of Income -tax Department and adopt same as full market value of properties for working out capital gains. AO has not done so, hence, in our opinion, CIT(A) on considering provisions of s. 50C(2) of Act has rightly directed AO to refer properties to valuation cell of IT Department for purpose of valuation of property and, thereafter, adopt valuation for working out capital gains. Since, direction issued by CIT(A) is in accordance with provisions of s. 50C of Act, we find no illegality or infirmity in well reasoned order of CIT(A) and, accordingly, same is upheld and ground of appeal taken by Revenue is rejected. In result, appeal filed by Revenue is dismissed. *** INCOME TAX OFFICER v. SMT. MANJU RANI JAIN