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Income Tax Appellate Tribunal, DELHI BENCH : G : NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI C.M. GARG
BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER Assessment Year: 2014-15 Syed Mohd. Ilyas, Vs. ITO, 458-A, 4th Floor, Plot No.8, Ward-28(1), Zakir Nagar, New Delhi. West Zamia Nagar, New Delhi. PAN: ABRPM3695B (Appellant) (Respondent) Assessee by : Shri Manish Agarwal, CA Revenue by : Shri Abhishek Kumar, Sr. DR Date of Hearing : 04.07.2022 Date of Pronouncement : 08.07.2022 ORDER
PER C.M. GARG, JM:
This appeal filed by the assessee is directed against the order dated 28.02.2018 of the CIT(A)-10, New Delhi, relating to Assessment Year 2014-15.
The assessee has taken the following grounds of appeal:- “i) That on the facts and circumstances of the case and in law, Ld CIT (A) has erred by sustaining the addition of Rs. 4,34,900/- which is merely less than 2% of sales consideration. ii) That on the facts and circumstances of the case and in law, Ld CIT (A) has erred by sustaining the addition of Rs. 4,34,900/- in view
Section 50C vide Finance Act, 2018 allowing the variation upto 5% of the value assessed or adopted by the stamp valuation authority, which is explanatory in nature. iii) The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”
The ld. Counsel for the assessee submitted that in this case, the ld. CIT(A) has erred by sustaining the addition of rs.4,34,900/- which is merely 2% of the total sale consideration. He further submitted that in the facts and circumstances of the case and as per applicable provision of the Act, the ld. First appellate authority has erred in sustaining the addition in view of the amendment to Section 50C of the Income-tax Act, 1961 (for short, ‘the Act’) vide Finance Act, 2018 wherein the legislature has allowed the variation or different between sale consideration and value picked up by the AO. Therefore, the ld. AR submitted that in view of the order of ITAT Jaipur Bench dated 27.07.2016 in the case of Smt. Sita Bai Khetan, in and order of ITAT ‘E’ Bench dated 09.05.2018 in ITA No.5791/Mum/2014 in the case Surendra S. Gupta vs. Addl. CIT the issue is squarely covered in favour of the assessee as per these orders of the coordinate Benches.
Replying to the above, the ld. Sr. DR submitted that the provisions of section 50C of the Act empower the AO to make addition in the hands of the seller of capital asset wherein there is a difference between the actual sale consideration shown by the assessee and the value adopted by the Stamp 2
Valuation Authority and, in the present case, the difference of Rs.4,34,900/- has been ascertained on the basis of valuation given by the Departmental Valuation Officer (DVO). Therefore, the proposition rendered by the coordinate Benches is not applicable to the present case. He did not place any other argument.
Placing rejoinder to the above, the ld. AR drew our attention towards para 4.2 of the order of the ITAT Jaipur Bench, wherein the order of ITAT Pune Bench in the case of Rahul Construction vs. ACIT in has been referred and the ITAT Pune Bench by referring to the judgement of the Hon’ble J&K High Court in the case of Honest Group of Hotels Pvt. Ltd. vs. CIT (2002) 177 CTR (J&K) 232, held that when the difference between the actual sale consideration and the value as given by the DVO was less than 10%, the difference is liable to be ignored and the addition made by the AO cannot be sustained. We find it appropriate to reproduce the relevant para 4.2 of the order of ITAT, Jaipur Bench in the case of Smt. Sita Bai Khetan (supra) which read as follows:-
“4.2. We have heard rival contentions and perused the material available on record. We find that the Hon'ble Coordinate Bench in in the case of Rahul Construction vs. DCIT (supra) has held as under :- " We find that the Pune Bench of the Tribunal in the case of Asstt. CIT vs. Harpreet Hotels (P) Ltd. vide ITA Nos. 1156-1160/Pn/2000 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT (A) had deleted the unexplained investment in house construction on the ground that the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide for the asst. yr. 1992-93 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by the AO cannot be sustained. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at Rs. 20,55,000/- as against the ITA No. 826/JP/2013 Smt. Sita Bai Khetan vs. ITO actual sale consideration of Rs. 19,00,000 disclosed by the assessee. We, therefore, set aside the order of the CIT (A) and direct the AO to take Rs. 19,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed." In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%. Therefore, respectfully following the decision of the Hon'ble Coordinate Bench, we hereby direct the AO to adopt the value as declared by the assessee. This ground of the assessee is allowed.”
In the present case, the ld. Sr. DR has not disputed that in view of the sale consideration, the amount of Rs.4,34,900/- is less than 2%. Therefore, in our humble view, the proposition rendered by the Hon’ble J & K High Court in the case of Honest Group of Hotels (P) Ltd. (supra) squarely apply to the present case and the margin or difference between the actual sale consideration as given by the 4
DVO is less than 10%, therefore, the difference is liable to be ignored and the addition made by the AO and confirmed by the ld.CIT(A) cannot be sustained. The sole grievance of the assessee is, hence, allowed and the AO is directed to delete the entire addition.