G.S. Pannu, Accountant Member - Since two appeals of assessee and one cross-appeal of the Revenue pertain to same assessee, they same were heard together and are being disposed of by way of a consolidated order.

2. We shall first take up cross-appeals of the assessee and Revenue pertaining to assessment year 2005-06. Both these appeals, i.e. ITA No 1304/PN/10 by assessee and cross-appeal No 1298/PN/10 of Revenue arise out of the order of the Commissioner of Income-tax (Appeals)-V, Pune dated 7.7.2010, which in turn, have arisen from the order under section 143(3) of the Income-tax Act, 1961 (in short "the Act") passed by the Assessing Officer for the assessment year 2005-06.

3. In the appeal of the assessee, the first Ground raised is with regard to the manner of determination of capital gain on sale of land and building. The limited grievance of the assessee is that the lower authorities have erred in adopting the Stamp duty value of land and building at Rs 60,75,500/- as he total sale consideration for the purpose of computing the capital gain. On this aspect, a preliminary objection raised by the appellant is that the Assessing Officer proceeded to adopt the value adopted by the Stamp valuation authority without referring the matter to the Valuation Officer, especially when the assessee had objected to the value adopted by the Stamp valuation authority. In this connection, our attention was invited to page 33 of the Paper Book wherein is placed a copy of the computation of income annexed with the return of income in which the assessee had claimed that in terms of section 50C(2)(a) of the Act, the value adopted by the Stamp valuation authority under section 50C exceeded the fair market value of the property as on date of transfer. In terms thereof, the Assessing Officer was expected to refer the matter to the Valuation Officer to ascertain the valuation and thereafter proceed in the matter as contained in section 50C(2)(a) of the Act.

4. On the other hand, the learned Departmental Representative, appearing for the Revenue has contended that it was not mandatory for the Assessing Officer to refer the matter for valuation inasmuch as the word in section 50C(2)(a) used is "may" which clearly shows the discretion on the part of the Assessing Officer in referring the matter for valuation purpose. Therefore, according to the learned Departmental Representative, the preliminary objection of the assessee has no merit.

5. We have carefully considered the rival stands and find that the plea of the assessee is quite justified. Section 50C of the Act prescribes for adoption of full value of consideration in certain cases. It is provided that where the consideration received or accruing as a result of the transfer of a capital asset being land or building or both is less than the value adopted by an authority of the State Government for the purposes of payment of Stamp duty in respect of such transfer, then the value so adopted by the State Government authority shall be deemed to be the full value of consideration received or accruing as a result of such transfer. The said provisions of sub-section (1) of section 50C are further circumscribed by sub-section (2) of section 50C. In terms of clause (a) of sub-section (2) of section 50C, it is provided that where an assessee claims before the Assessing Officer that the value adopted or assessed by the Stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, then the Assessing Officer may refer valuation of the capital asset to the Valuation Officer. In this case, factually it is evident that the assessee had claimed in the return of income itself that the value adopted by the Stamp valuation authority exceeded the fair market value as on the date of transfer as provided in section 50C(2)(a) of the Act. In our view, under these circumstances the Assessing Officer ought to have referred the matter to the Valuation Officer instea