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Income Tax Appellate Tribunal, PATNA BENCH VIRTUAL HEARING AT KOLKATA
Before: SHRI P.M. JAGTAP, VICE-(KZ)]
order
: September 07, 2021 O R D E R
PER P.M. JAGTAP, HON’BLE VICE-PRESIDENT:
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals), Patna-1 dated 25.09.2018 and the solitary issue involved therein relates to the addition of Rs. 14,11,000/- made by the AO u/s 56(2)(vii)(b) of the Income Tax Act, 1961 and confirmed by the Ld. CIT(A).
The assessee in the present case is an individual who filed his return of income for the year under consideration on 05.02.2016 declaring a total income of Rs. 7,14,660/-. The said return was selected for limited scrutiny through CASS for the reason that the purchase consideration of the property shown by the assessee was less than the value as per stamp value. As (A.Y. 2015-16) Priyankar Bhadani noted by the AO during the course of assessment proceedings, the assessee had purchased two properties during the year under consideration for a total consideration of Rs. 21,23,000/- as against the value of Rs. 35,34,000/- determined for the purpose of stamp duty. The assessee, therefore, was called upon by the AO to explain this difference and since the explanation offered by the assessee, in this regard, was not found acceptable by him, the AO added the difference of Rs. 14,11,000/- u/s 56(2)(vii)(b) to the total income of the assessee in the assessment completed u/s 143(3) of the Act vide an order dated 28.11.2017. On appeal, the Ld. CIT(A) confirmed the said addition made by the AO and dismissed the appeal of the assessee vide his appellate order dated 25.09.2018. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that even though the valuation as determined by the concerned authorities for the purpose of stamp duty, which was more than the consideration shown by the assessee for the purchase of property, had been disputed by the assessee, there has no reference made by the AO to the Departmental Valuation Officer for determining the fair market value of the said property as required by the Provisions of Section 50C(2) read with 1st proviso to section 56(2)(vii). It is also observed that a reference
(A.Y. 2015-16) Priyankar Bhadani was specifically made by the Ld. CIT(A) in paragraph no. 8 of his impugned order to this mandatory condition. He, however, overlooked the same apparently because the assessee never sought such reference to be made to the DVO. In this regard, the ld. counsel for the assessee has relied on the decision of Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs CIT 372 ITR 83 wherein it was held that the valuation by the Departmental Valuation Officer, contemplated u/s 50C, is required to avoid miscarriage of justice and there is no reason why the machinery provided by the Legislature should not be used and the benefit thereof should be refused. It was held that even if in a case where no such prayer is made by the assessee specifically for referring the matter to DVO, the Assessing Officer discharging a quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. As submitted by the ld. counsel for the assessee, a similar view has also been taken by the Hon’ble Patna High Court. I accordingly set aside the impugned order of the Ld. CIT(A) and restore the matter of the file of the AO for deciding the same afresh after making a reference to the DVO for determining the fair market value of the property purchased by the assessee and also after giving proper and sufficient opportunity of being heard to the assessee. As undertaken by the ld. counsel for the assessee, the assessee shall make due compliance before the AO / DVO and (A.Y. 2015-16) Priyankar Bhadani shall extend all the possible cooperation in order to enable the AO to complete the assessment afresh expeditiously.
In the result, the appeal of the assessee is treated as allowed for statistical purpose.
Order Pronounced in the Open Court on 7th September, 2021.