SANJAY KUMAR DARYANI,INDORE vs. PR CIT -1, INDORE

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ITA 563/IND/2019Status: DisposedITAT Indore24 October 2019AY 2014-1519 pages
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What did the Tribunal hold?

The Tribunal held that the AO had not made any enquiry regarding the difference between the sale consideration and the stamp duty value, nor had the AO verified the source of registration expenses. Therefore, the Principal CIT's action under Section 263 was justified.

What were the facts?

The assessee purchased an immovable property for Rs. 1,25,00,000, but the stamp valuation authority determined its market value at Rs. 1,80,53,000. The Assessing Officer (AO) completed the assessment without adding the difference to the income. The Principal CIT initiated proceedings under Section 263, holding the AO's order erroneous and prejudicial to revenue.

What were the issues?

Whether the Assessing Officer conducted adequate enquiry regarding the property's valuation and the source of registration expenses, and if the Principal CIT was justified in revising the assessment order under Section 263.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 56(2)(vii)(b),Section 44AD

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Appellant: Shri Girish Agrawal &
For Respondent: Smt. Ashima Gupta, D.R
Hearing: 09.10.2019Pronounced: 24.10.2019

per provisions of section 56(2)(ii)(b) of the Act. But this was not found done in the scrutiny by the A.O. It was further 16

1.

[ Sanjay Kumar Daryani, Indore] observed that the assessee had claimed registration expenses out of saving and capital but the assessee has disclosed business income u/s 44AD of the Act and has not maintained books of accounts. On perusal of return of income pertaining to the assessment year 2014-15, there was no capital account found. Hence, the expenditure incurred on registration amount to Rs.14,08,345/- remained unproved/unexplained. The Ld. CIT was of the view that apparently the registration expenditure was paid on undisclosed income and was liable to be taxed which has not been done by the assessee.

14.

During the course of hearing, Ld. Counsel for the assessee was specifically asked to point out from the records that any enquiry was conducted by the A.O. regarding the value adopted by the stamp valuation authority of the property in question. He could not brought to our notice any such query or notice issued by the A.O.

[ Sanjay Kumar Daryani, Indore] Hence, it can be safely inferred that the facts of the present case would fall where the A.O. did not conduct any enquiry or examined the evidence whatsoever related to the issue under consideration. There was total absence of enquiry or verification. Therefore, we do not see any infirmity into the action of the Ld. CIT for setting aside the assessment order and remitting the assessment to the file of the A.O. with a direction to examine the issues of difference of market value of the property in question and verifying the source of expenditure incurred on registration of the property after affording proper opportunity to the assessee. Ld. Counsel for the assessee has placed on record a valuation report that was not before the authorities below. We therefore, in the interest of justice admit this valuation report as additional evidence and modify the direction of the Ld. CIT to the extent that while framing the assessment, the A.O. would also consider the objection of the assessee regarding

[ Sanjay Kumar Daryani, Indore] adoption of the market value of the property and decide the issue in accordance with law. In the light of the above discussion, the ground Nos.1 & 2 of the appeal are dismissed. However, Ground No.3 is partly allowed for statistical purposes and ground No.4 is general in nature needs no separate adjudication.

15.

In the result, the appeal of the assessee is partly allowed for statistical purposes in the terms as indicated herein above.

Order was pronounced in the open court on 24 .10.2019.

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