Auditors Find 112 Cases Of Property Undervaluation, Real Estate News, ET RealEstate
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KOCHI: The office of the principal accountant general has found undervaluation of many properties registered with the Ernakulam sub-registrar office.
The audit report, released early this month, found undervaluation in many properties registered with the office in the past two years during the inspection of documents and registers in June this year.
The audit covered property registrations from January 2020 to December 2022. The audit team found undervaluation in as many as 112 cases entailing revenue deficit of stamp duty worth Rs 1.26 crore and registration fee of Rs 33 lakh. These cases are pending for revision at the district registrar office.
The sub-registrar replied to the auditing team that the details of the undervalued properties were submitted to the district registrar and final orders on it are pending.
The district registrar will have to take up proceedings under Section 458 of the Kerala Stamp Act 1959 to get back the lost money.
It also found that not fixing fair value of some lands and shortcomings in the valuation certificates being issued by the approved valuers for buildings also lead to revenue loss.
Test checks of conveyance deeds (sale deeds) at Ernakulam sub-registrar office by the auditing team have found instances of non-compliance of stipulations set by the government, in valuation of buildings (other than apartment complexes) by the valuers, causing reduction in stamp duty and registration fee.
As per the rules, an approved valuer (private agency) shall follow the criteria approved by the central public works department for determining the value of a building and apply cost inflation index under Section 48 of the Income Tax Act 1961 to arrive at the current value of the building at the time of transfer.
At the time of registration, the registrar only needs to verify the document brought before him/her and ensure that the value of such buildings fixed in the document is lot less than the value assessed by the approved valuer.
The report cited six property registrations made in 2022 where the valuer has not applied cost inflation index to arrive at the present cost of the building at the time of transfer, leading to undervaluation of the properties.
“The auditor has realized that the undervaluation of the buildings is caused by the approved valuer and not the registration officials. The sub-registrar’s responsibility is to check the document coming before him/her. The field study is conducted by the valuer. All these years, sub-registrars were squarely blamed for the undervaluation of buildings and loss of revenue. It is up to the government to fix the irregularity in this,” said a registration official in the district.
The auditor cites that the state exchequer continues to incur revenue loss due to lack of relevant provision in the Kerala Stamp Act or Registration Act to fix liability on such authorities and impose penalties for losses arising out of shortcomings in valuation certificates issued by them.
District registration officials had earlier found undervaluation cases in other sub-registrar offices in Ernakulam as well.