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Reference to Valuation officer
At times in the process of completion of the assessment of a taxpayer or for any other purpose, the tax authorities need to ascertain the value of any capital asset. In such a case, the tax authorities can make a reference to the valuation officer for ascertaining the value of the capital asset. Section 55A contains the provision relating to the power of the tax authorities for making a reference to the valuation officer for ascertaining the value of a capital asset.
Meaning of Valuation Officer
Valuation Officer has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957. As per section 2(r) of Wealth-tax Act, valuation officer means a person appointed as a Valuation Officer under section 12A of the Wealth-tax Act, 1957, and includes a Regional Valuation Officer, a District Valuation Officer, and an Assistant Valuation Officer. Section 12A of the Wealth-tax Act, 1957 provides for appointment of valuation officers by Central Government.
There are two types of Valuer
- Registered Valuer: Registered Valuer work in private capacity and can be termed as Private Valuer. Valuation done by the Private Valuer is not binding on the tax authorities.
- Valuation Officer: Valuation officer can be termed as Departmental Valuer. They are recognised by the Income-tax Department and are authorized valuer of Income-tax Department. Departmental valuer i.e. valuation officers are the valuation officer approved/ authorised by the Income-tax Department.
The tax authorities will take the recourse of the value estimated by these valuers. In other words, if the tax authorities need to ascertain the value of an asset, then they will request the valuation officer to ascertain the value of the capital asset and the value determined by them will be taken into consideration by the tax authorities.
Conditions for Valuation
The circumstances in which reference can be made by the Assessing Officer to the valuation officer will be broadly classified as follows
- A case in which the value of the asset as claimed by the taxpayer is in accordance with the estimate made by a registered valuer and the Assessing Officer is of the opinion that the value of the asset as claimed by the taxpayer is at variance with its fair market value. In other words, in such a case there is no quantum of variation to be established to make a reference to the valuation officer.
The only requirement is that the Assessing Officer should be of the opinion that the value of the asset claimed by the taxpayer and the fair market value of the asset are in variation i.e. both the values differ. The variation i.e. the difference could be of any amount. - The Assessing Officer can make a reference to the valuation officer if he is of the opinion.
- If the value of the asset as claimed by the taxpayer and the fair market value as per the Assessing Officer’s opinion differ and the difference is either more than 15% of the value of asset or more than Rs. 25,000, as the case may be or
- That having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.
Powers of Valuation Officer
The Valuation Officer, on a reference made by the Assessing Officer, shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957.
- The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the taxpayer may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the taxpayer.
- The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the taxpayer does not co-operate or comply with his directions.
- The Valuation Officer shall send a copy of the valuation report, to the Assessing Officer and the taxpayer, within a period of six months from the end of the month in which a valuation reference is made.
- The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the taxpayer an opportunity of being heard, take into account such report in making the assessment or re-assessment.
Disclaimer: Although all provisions, notifications and updates, are analyzed in-depth by our team before writing to the public. Any change in detail or information other than fact must be considered a human error. The Guide, Articles, Blogs, FAQ and videos is to provide updated information. Tax matters are always subject to frequent changes hence advisory is only for the benefit of the general public. Hence neither TaxSmooth nor any of its Team members is liable for any consequence that arises on the basis of these write-ups.
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