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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI C.M. GARG
BEFORE SHRI C.M. GARG, JUDICIAL MEMBER Assessment Year: 2016-17 Sarthak Singhal, Vs. ITO, C-379, FF, Ward-20(2), DSIIDC Industrial Area, New Delhi. Narela, New Delhi. PAN: GAUPS5422Q (Appellant) (Respondent) Assessee by : Shri Gaurav Pahuja, CA Revenue by : Shri Om Prakash, Sr. DR Date of Hearing : 04.05.2022 Date of Pronouncement : 18.05.2022 ORDER
This appeal has been preferred by the assessee against the order of the CIT(A)-7, New Delhi, dated 24.01.2020 for AY 2016-17.
The ld. Sr. DR did not controvert the submissions of the ld. Assessee’s representative (AR) that the appellant along with four other persons purchased a property, C-379, Narela Industrial Area, Delhi- 110 040 and the sale consideration declared was Rs.1,45,00,000/-, the value as per circle rate for stamp duty purpose was Rs.3,58,57,500/-. It is also not in dispute that the AO made
Rs.42,80,000/- u/s 56(2)(vii) of the Act being 20% share in the hands of five purchasers including the present assessee.
The ld. Sr. DR also did not controvert the contention of the ld. AR that the ld. CIT(A), Delhi, in the cases of three co-owners, i.e., Shri Vikas Singhal, Shri Vinay Singhal and Shri Vivek Singhal by the orders dated 16.03.2020, 17.03.2020 and 17.03.2020, respectively, has restricted the addition to Rs.5,70,404/- and the same has been added to the income of the respective assessees as ‘Income from other sources’ u/s 56(2)(vii)(b)(ii) of the Act. The relevant findings of the ld.CIT(A) recorded in the case of Shri Vikas Singhal, a co-owner are as follows:- “Findings:- 4.1 I have considered the material on record including oral and written arguments/submissions of the appellant/AR and the (impugned) assessment order. 4.2 The appellant’s case was selected for limited scrutiny under CASS for the reasons “Large investment in property (AIR) as compared to total income including exempt income and agricultural income in Part B- Tl”. The appellant is stated to be engaged in the business of manufacturing PET bottles and pre forms. During the relevant year, the appellant along with four other persons purchased a property at C-379, Narela industrial Area, Delhi-110040. While the sale consideration declared was Rs. 1,45,00,000/- the value as per circle rate for stamp duty purpose was Rs.3,58,57,500/-. The AO issued a show cause to the appellant stating that one-fifth share of the appellant as per stamp value was Rs.71,80,000/- whereas it was claimed to be Rs.29,08,500/- as per the valuation report submitted by the appellant. After considering the reply of the appellant, the AO added the difference amount of Rs.42,71,500/- u/s 56(2)(vii)(b)(ii) of the Act.
4.3 Aggrieved by the order, the appellant filed an appeal on 21.01.2019 against the impugned assessment order passed u/s 143(3) dated 20.12.2018. As per statement of facts, it has been informed that the appellant requested the AO to refer the case to the Valuation Officer of the Department which was not done in his case. However, it has been informed that a reference was made to the DVO by the AO during the course of scrutiny proceedings, in case of one of the co-owners Sh. Vivek Singhal (Appeal no. 194/10189/18-19). The AO passed the assessment order in that case without Waiting for the report from the DVO. Accordingly, the AO was asked to submit the status of the valuation report in light of the reference made to the DVO u/s 55A vide his letter dated 10.12.2018. The AO submitted the remand report dated 02.03.2020 through the JCIT, Range-35 stating the following: “The assessee filed the return of income for AY 2016-17 on 04.09.2016 declaring total income of Rs.5,99,240/- and the case was selected for scrutiny through CASS and notice u/s 143(2) was served upon the assessee within the stipulated period. During the year under consideration the assessee along with 4 other namely Vikas Singhal, Vinay Singhal, Sarthak Singhal and Manoj Kumar Singhal (all having 1/5 th of the share of property under consideration) had purchased C- 379, Narela Industrial Area, Delhi-110040, the circle rate of the property was Rs.3,58,57,500/- whereas sale consideration was Rs.1,45,00,000/-. However on perusal of purchase deed, it was found that the stamp value of the property was Rs.3,59,00,000/-. 1/5th share as per stamp value comes to Rs.71,80,000/-. Hence, the assessee was asked to show cause as to why the difference of the same amounting to Rs.42,71,000/- should not be added back to the returned income. In response to the show cause notice, the assessee had submitted compliance on 17.12.2018. The assessing officer referred the matter u/s 55A of the Income Tax Act, 1961, in respect of property bearing no. C-379, Narela Industrial Area, DSIDC, Delhi-110040, measuring 350 sq. mtrs in the case of Vivek Kumar Singhal for AY 2016-17 to the Chief Engineers, Departmental Valuation Officer, New Delhi on 10.12.2018 to submit the valuation report in respect of the above mentioned property. This being the time barring matter and no report received till the date of passing of assessment order from the DVO, the assessing officer had no option otherwise thereto make the addition of Rs.42,71,500/- being 1/5th of the difference between Circle rate and sale consideration
56(2)(vii)(b)(ii) of the I.T. Act, 1961. Now, the Departmental Valuation Officer had sent his report to this office on 28.03.2019 wherein the fair market value of the alleged property had been stated as Rs. 1,73,52,018/- as against the value of Rs. 1,45,00,000/- as provided by the assessee. Therefore, in my opinion based on the facts and merits of the case and the report of the Departmental Valuation Officer, the appeal of the assessee may be decided on the merits of the case.” 4.4 The appellant was confronted with the remand report to which he has expressed no objection to the DVO’s report. Since, the property in question is the same and the appellant is an equal co- owner of one-fifth share, the facts and findings remain identical. Accordingly, in view of the valuation report of the DVO, remand report of the AO and the rejoinder of the appellant, the purchase price of the property is held to be at Rs.1,73,52,018/- as against the declared value of Rs.1,45,00,000/-. Accordingly, one fifth of the difference amount (i.e. Rs.28,52,018/-) which is Rs.5,70,404/- is to be added as income from other source u. s 56 (2)( vii)(b)(ii) of the Act, in hands of the appellant.”
In view of the above, the grievance of the present assessee is squarely covered by the above order of the CIT(A) in the case of co-owner Shri Vikas Singhal dated 16.03.2020 (supra) and other two orders. Therefore, in line with the above order, I partly allow the claim of the assessee and restrict the addition to Rs.5,70,404/- u/s 56(2)(vii) of the Act.