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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
आदेश / O R D E R
PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-1, Bhopal dated 24.3.2017. The assessee has raised following grounds of appeal:
1. That the Ld. CIT(A) erred in sustaining addition of Rs.28,75,000/- out of total addition of Rs.62,02,879/- made by Ld. A.O. u/s 50C of the I.T. Act.
2. That the Ld. A.O. erred in sustaining addition of Rs.12,50,000/- made by Ld. A.O. on account of unexplained investment in property. 3. The facts in brief giving rise to the present appeal are that the assessee had filed return of income declaring total income of Rs.10,82,220/- and agricultural income of Rs.25,84,166/-. The case was selected for scrutiny assessment. During the scrutiny assessment, the A.O. noticed that the assessee has a low withdrawal for household expenses. Therefore, he made addition of Rs.4 lakhs. Further, the A.O. by invoking the provisions of section 50C of the Income Tax Act, 1961 (herienafter called as ‘the Act’) in respect of the sale of property made addition of Rs.62,02,879/- by adopting the stamp valuation for the commercial property. Further, the A.O. made addition of Rs.12,50,000/- on account of unexplained investment in the property. Hence, the A.O. assessed total income of the assessee at Rs.89,30,099/- against the income of Rs.10,82,220/- disclosed by the assessee in return of income. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A)-1, Bhopal, who after considering the submissions sustained addition of Rs.28,75,000/- out of total addition of Rs.62,02,879/- and sustained addition of Rs.12,50,000/- made on account of the unexplained investment in the property. Against this, the assessee has preferred the present appeal.
4. Ground No.1 is against sustaining addition of Rs.28,75,000/- out of total addition of Rs.62,02,879/- made by the A.O. by invoking the provisions of section 50C of the Act. Apropos to this ground, Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the assessee are that Ld. CIT(A) did not adopt Collector’s guidelines for the financial year 2010-11, which was filed by the assessee instead of that Ld. CIT(A) chose to make his own estimation. It is further submitted that Ld. CIT(A) erred in adopting the fair market value of the property at Rs.2.40 crores as on 16.03.2011. When the assessee transferred his rights, the fair market value of the property as on 16.3.2011 as per the guidelines was Rs.1,12,41,300/- on the relevant time. It is further contended that the Ld. CIT(A) erred in adopting fair market value of Rs.2.40 crores as on 16.3.2011, which is based on the adhoc estimate but not on the basis of stamp valuation authority or circle rate of the said property. Such estimation is not permissible under section 50C of the Act. The assessee was not confronted with the report of the Inspector. It was further submitted that the material gathered as a result of enquiries was not disclosed to the assessee, hence principles of natural justice gets violated. The reliance is placed on the judgement of the Hon'ble Supreme Court in the case of Kishan Chand Chellaram Vs. CIT 125 ITR 713 to buttress the argument that the assessment is allowable to be set aside where it is made on the basis of the private enquiries conducted behind the back of the assessee.
Ld. D.R. opposed these submissions and supported the orders of the authorities below.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. Ld. CIT(A) has decided the issue by observing as under:
It is evident from the above finding that Ld. CIT(A) has estimated the value of plot of her own. In our view, Ld. CIT(A) ought to have obtained the valuation report from DVO when value for the stamp valuation authority was not been considered. There is another aspect of the matter that the A.O. invoked section 50C of the Act. As per Section 50C of the Act, the A.O. is authorised to adopt the value of property as assessed/computed by the stamp valuation authority under the stamp valuation Act. In the present case, Ld. CIT(A) has estimated the value by her own estimation albeit the valuation made by the A.O. was discarded, relying on the stamp valuation rate prevailing during the months of Mar’11 and Nov’11. The valuation of property as per the stamp valuation rate would be applicable on the date when the sale deed is presented for registration of sale deed. In the present case, as recorded by the A.O. vide agreement dated 16.3.2011, assessee had transferred his right in the plot of land. Therefore, the stamp valuation rate of Mar’11 ought to have been applied.
The A.O. had adopted the value of land and building despite the fact as per the agreement the assessee has sold only plot of land. The Ld. CIT(A) has accepted the contention of the assessee that only plot of land was sold.
It is submitted before us that the revenue has not challenged finding of the Ld. CIT(A). Therefore, this finding that the only plot of land was sold remains unchallenged.
Considering the fact that the A.O. invoked provision of section 50C of the Act, we therefore, set aside the order of the Ld. CIT(A) and direct the A.O. to adopt the stamp valuation of the plot as per the stamp valuation rate. This ground of the assessee’s appeal is allowed in the terms indicated herein above.
Ground No.2 is against sustaining the addition of Rs.12,50000/- made by the A.O. on account of unexplained investment. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. Ld. Counsel for the assessee submitted that it is a settled law that if an evidence recorded is used against the assessee, it is obligatory on the part of the A.O. to allow the assessee an opportunity in the interest of principles of natural justice.
On the contrary, Ld. D.R. opposed the submissions and supported the orders of the authorities below. Ld. A.R. submitted that the assessee was given due opportunity to explain. However, he chose not to make any submission before the authorities.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. After considering the contention of the assessee that evidence so gathered by the revenue was not confronted to him, and looking to the totality of the facts placed on records we are of the considered view that A.O. ought to have given opportunity to the assessee to rebut the evidences related to third parties collected and used against the assessee. Hence, the impugned order on this issue is hereby set aside. The issue is restored to the file of the A.O. for decision afresh. Needless to say that the A.O. would afford sufficient opportunity to the assessee to 10 rebut the evidences gathered from the sellers of the property. This ground of the assessee’s appeal is allowed for statistical purposes.
Ground unnumbered is general in nature and needs no separate adjudication.
Appeal of the assessee is partly allowed for statistical purposes.
Order was pronounced in the open court on 20.08.2019.