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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI OM PRAKASH KANT, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 27.09.2022 for assessment year 2014-15.
The assessee has raised seven (7) grounds of appeal
. However, the main grievance of the assessee is against the action of the Ld. CIT(A) confirming the addition of AO amounting to Rs.93,98,000/- (Rs.47,82,000/- + 46,16,000/-) u/s 56(2)(vii)(b) of the Income Tax Act, 1961 (hereinafter “the Act”).
3. Brief fact of the case is that the assessee is an individual who derives income from commission & brokerage for consultation of sale and purchase of land. And he had filed his return of income on 27.03.2016 declaring total income of Rs.1,96,160/-, which return of income was later selected for scrutiny under CASS. After service of statutory notices, the assessee was directed to file details of land 2 A.Y. 2014-15 Sadhashiv Budhaji Sase transaction made during the relevant AY. Pursuant to the direction, the assessee brought to the notice of the AO that he has purchased two (2) immovable properties at Rs.10 Lakhs each (total Rs.20 Lakhs) at village Dongasthe Taluka Wada and got it registered (purchase deed) on 20.11.2013 at Rs.56,16,000/- (survey no. 40/5A at village Dongaste) and Rs.57,82,000/- (survey no. 40/5A/1 at village Dongaste). The AO show caused the assessee as to why the difference between the stamp duty valuation and the actual consideration paid should not be treated as his deemed income u/s 56(2) of the Act and brought to tax. Pursuant to it, the assessee objected to the suggestion of AO and submitted that the immovable properties which were purchased were both agriculture land. And therefore, it doesn’t fall in the definition “capital asset”. However, the AO brushed aside such a contention by stating that the assessee has not proved that he was carrying on agriculture activities in this land in question which was purchased. Therefore, he applied Section 56(2)(vii)(b) of the Act and made an addition of Rs.47,82,000/- and Rs.56,16,000/-, after taking note of the purchase consideration of Rs.10,00,000/- each (i.e. Rs.20 Lakhs). Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the aforesaid addition (and was pleased to delete Rs.4,98,667/- which was added by the AO u/s 68 of the Act which we are not concerned). Aggrieved by the aforesaid action of the Ld. CIT(A) confirming the addition of Rs.93,98,000/- (Rs.47,82,000/- + Rs.46,16,000/-), the assessee is before us.
3 A.Y. 2014-15 Sadhashiv Budhaji Sase 4. We have heard both the parties and perused the records. The assessee is in the business of sale and purchase of land. He has purchased two (2) immovable properties for Rs.10 Lakhs each (total Rs. 20 Lakhs) at village Dongaste, Taluka Wada, Dist. Thane. The properties were purchased on 20.11.2013 and as per the Stamp Valuation Authorities the market value fixed were at Rs.56,16,000/- and Rs.57,82,000/-. Taking note of the aforesaid transactions, and the AO having noted the difference in sale consideration paid and market value of the land, he suspected the possibility of unaccounted cash payment over and above the price shown in the agreement of purchase. Therefore, he asked the assessee as to why the difference between the valuation made by stamp duty authority and the actual consideration paid should not be treated as deemed income u/s 56(2) of the Act. The assessee objected to such a proposal and contended that immovable properties in question were agriculture properties. And therefore, does not fall in the definition of “capital asset”. However, the AO didn’t accept the contention of assesse on the ground that assesse has not done any agricultural activities in both the immovable properties in question and brought to tax the difference in purchase consideration (Rs.20 lakhs) as the market value fixed by the Stamp Valuation Authority (Rs.56,16,000 + Rs.57,82,000). On appeal, the assesse also brought to the notice of the Ld. CIT(A) that he has already sold both the lands in question vide agreement dated 04.06.2014 to one Shri Manish Chandrabhan Thakur for consideration of Rs.20,87,000/- and the value adopted by stamp valuation authorities was also Rs.20,87,000/-. Thus, it was pointed out that while he purchased the 4 A.Y. 2014-15 Sadhashiv Budhaji Sase same property, it was fixed at Rs.1,13,98,000/- (Rs.56,16,000/- + Rs.57,82,000/-) whereas when he sold immediately in the succeeding year i.e. 2014, the very same Stamp Valuation Authority fixed the valuation of the property at Rs.20,87,000/-. According to the assessee, this fact itself goes to show that the actual purchase consideration was only Rs.20 Lakhs. Moreover, according to the Ld. AR, even his request to refer the matter [for valuation of the properties in question] to Departmental Valuation Officer (DVO) as the value adopted by stamp valuation authority far exceeded the fair market value of the properties, the AO did not heed to such a request, which according to Ld. AR was an omission from the part of AO. According to the Ld. AR, when the assessee claims that the market value as per stamp valuation authorities was higher than the fair market value of the asset transferred, the AO as per Section 50C(2) of the Act was duty bound to refer the same to DVO. And therefore, he pleaded that AO as well as Ld. CIT(A) erred in adopting Rs.56,16,000/- and Rs.57,82,000/- as the fair market value of the properties which was excessive and they could not have adopted the same unless the valuation of land in question was referred to DVO.
It is noted that the assessee had disputed the value of the property as adopted by the stamp valuation authority because according to assessee it was higher than the fair market value. And therefore, according to him, the AO ought to have referred the valuation of the properties in question to the DVO; and the DVO after hearing the assessee ought to have computed the fair market value of the properties in question and thereafter only the AO ought to have 5 A.Y. 2014-15 Sadhashiv Budhaji Sase computed the income if any. We find force in the contention of the Ld. AR of the assesse. Taking into consideration the facts of the case as discussed (supra), we set aside the impugned order of Ld. CIT(A) and restore the matter back to the file of AO with a direction to refer the valuation of the immovable properties in question to the DVO, and the DVO while valuating the property in question has to take into consideration the contention of the assessee that the properties were agricultural properties and when he sold the property in the year 2014, the stamp valuation authority had accepted the sale consideration received by the assessee at Rs.20,87,000/- (for both the properties). Therefore, we set aside the impugned order of the Ld. CIT(A) on this ground and restore this ground back to the AO for de- novo consideration. And after reference to the DVO as discussed (supra) to pass order on this issue. Needless to say that proper opportunity be given to the assessee for filing of relevant documents to substantiate its claim before DVO/AO.