AO Fails to Verify FMV with Valuation Officer u/s 50C(2) upon Taxpayer’s Dispute: ITAT Invalidates STCG Addition

The Income Tax Appellate Tribunal (ITAT) invalidated the short-term capital gains (STCG) addition made by the Assessing Officer (AO) due to the failure to verify the Fair Market Value (FMV) with the Valuation Officer under Section 50C(2) of the Income Tax Act. The case involved a taxpayer who disputed the FMV determined by the AO for the purpose of calculating STCG. The ITAT held that the AO should have referred the matter to the Valuation Officer for verification of the FMV, as required under Section 50C(2). The tribunal emphasized the importance of following the prescribed procedures for determining FMV and ensuring fair assessments. This ruling provides clarity on the process for verifying FMV and supports the rights of taxpayers to challenge the AO’s determinations.