ISHAAN PRADIP DIXIT,MUMBAI vs. NEAC, MUMBAI

On the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) [‘CIT(A)’] has erred in Assessment Year 2018-2019

On the facts and circumstances of the case and in law, the Ld. CIT(A) as well as the Ld. AO, erred in not granting sufficient opportunity to present the case and thus principles of natural justice are grossly violated.

On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the addition of Rs.50,62,460/- to the returned income of the Appellant by invoking the provisions of section 50C of the Income-tax Act, 1961(‘Act’).

On the facts and circumstances of the case and in law, the learned CIT(A) has failed to appreciate that the stamp duty valuation relates to residential and commercial ready properties, whereas the property sold by the appellant during the captioned AY was a garage and accordingly an appropriate adjustment for the same ought to have been given to the ready reckoner value as per the Stamp Valuation authority.

Without prejudice to the above Ld. CIT(A) as well as Ld. AO, erred in not referring to a Valuation officer for determination of the fair market value of the property, as mandated u/s 50C(2)&(3) of the Act.

On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the action of the Ld. AO of levying interest u/s 234B and 234C of the Act. E. Initiation of penalty u/s 270A

On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the action of the Ld. AO of initiating penalty proceedings under section 270A of the Act.

I have carefully considered the assessment order passed by the Assessing Officer (AO), the written submissions filed by the appellant, the grounds of appeal, and the material available on record. The issue involved pertains to the addition of Rs.50,62,460/- made under the head "Long Term Capital Gain" by invoking the provisions of section 50C of the Income Tax Act, 1961. 6.2 The facts of the case reveal that the appellant sold a garage unit situated at Dadar, Mumbai, for a consideration of Rs. 25,00,000/- as per the registered sale deed. The Stamp Valuation Authority (SVA), however, determined the market value of the property at Rs. 61,65,000/-. The AO, after issuing notices and considering the details furnished by the appellant, held that section 50C was clearly applicable as the consideration declared in the sale deed was less than the value adopted by the SVA. Accordingly, the AO adopted the SVA value as the deemed full value of consideration and computed long term capital gains, resulting in an addition of Rs. 50,62,460/- to the total income.

3 During the appellate proceedings, the appellant contended that the property sold was a small garage and not a commercial unit, as wrongly classified by the SVA. The appellant also submitted that the AO ought to have referred the matter to the Departmental Valuation Officer (DVO) under section 50C(2) when the valuation determined by the SVA was disputed. The appellant relied upon a valuation report from a government-registered valuer estimating the fair market value at Rs. 10,80,600/- and pleaded that the sale consideration declared was genuine and supported by bona fide evidence

1 On careful consideration of the arguments advanced, it is noted that the appellant has not disputed the fact that the sale transaction was duly registered and that the SVA determined the market value at Rs. 61,65,000/- for the purpose of stamp duty. As per the provisions of section 50C(1), where the consideration declared in respect of transfer of land or building or both is less than the value adopted or assessed or assessable by the Stamp Valuation Authority, such value shall, for the purpose of section 48, be deemed to be the full value of consideration received or accruing as a result of such transfer.

2 The AO has correctly invoked the deeming provisions of section 50C(1) as the sale consideration declared by the appellant (Rs. 25,00,000/-) was substantially lower than the value adopted by the SVA (Rs. 61,65,000/-). The contention of the appellant that the AO should have made a reference to the DVO is not found tenable, as the appellant has failed to establish any substantial discrepancy or error in the SVA's valuation nor produced any contemporaneous evidence showing that the SVA valuation was arbitrary or unrealistic. The valuation report produced by the appellant is only an estimate and does not carry any statutory recognition unless accepted by the AO or validated by the DVO. The AO's reliance on the SVA valuation, which is based on prevailing market rates notified by the State authority, is therefore in accordance with the law.

3 Further, the appellant has not furnished any concrete evidence to demonstrate that the property was erroneously classified as a commercial property by the SVA or that such classification materially affected the valuation. Mere assertions without corroborative proof cannot dislodge a statutory valuation adopted under section 50C.

4 In view of the above facts and the settled legal position, I find that the AO has rightly applied the provisions of section 50C and correctly computed the capital gains based on the stamp duty valuation. The appellant's explanation is general and unsupported by verifiable material. Hence, I find no reason to interfere with the findings of the Assessing Officer.

4 In view of the discussion held in the preceding paras, the addition of Rs. 50,62,460/-made by the Assessing Officer under the head "Long Term Capital Gain" by invoking the provisions of section 50C of the Income Tax Act, 1961, is confirmed.

5 In the result, the appeal is dismissed.”

""थ" / The Respondent. 2. आयकर आयु"/ The CIT