DHIRAJ S. MAKHIJANI L/H OF LATE SHYAMLAL A MAKHIJANI,GODHRA vs. DCIT, CENTRAL CIRCLE-1, BARODA

ITSSA 236/AHD/2018Status: DisposedITAT Ahmedabad02 April 2024AY 2010-1112 pages
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What were the facts?

The assessee, the legal heirs of late Shri Shyamlal A Makhijani, filed appeals against the orders of the CIT(A) for Assessment Years 2010-11 and 2011-12. The appeals arose from assessment orders passed under Section 153A read with Section 143(3) of the Income Tax Act, 1961. The assessee was subjected to search proceedings under Section 132 on April 9, 2010. During the search, the assessee admitted to an investment of Rs. 21.5 Lakh from unaccounted sources in land property during FY 2009-10, which he intended to offer to tax. However, this income was not offered in the subsequent return. The Assessing Officer (AO) made an addition of Rs. 11,97,275/- after allowing telescoping of Rs. 9,52,725/- based on the statement recorded under Section 132(4). The assessee also sold property for Rs. 6,71,495/- less than the stamp duty value, which the AO added to the total income.

What did the Tribunal hold?

On the first issue, the Tribunal noted that the assessee's claim that the statement was made without basis and not supported by evidence was not sufficiently substantiated. However, the Tribunal also observed that the assessment order did not mention any specific document, transaction details, or investment amounts related to the land transactions, with the Rs. 21.5 lakh admission being the sole basis for the addition. The Tribunal found that the AO had not exercised the jurisdiction conferred under Section 50C(2)(a) by referring the matter to the DVO for valuation. The Tribunal held that the CIT(A) ought to have accepted the fair market value disclosed by the assessee as the sale consideration. Consequently, the addition made by the AO under Section 50C was set aside, and the ground of appeal was allowed. The Tribunal also noted that the assessee had accepted the addition on the ground of appeal, leading to the dismissal of that specific ground. The Tribunal's reasoning for the Section 50C issue was that the AO was mandated to refer the valuation to the DVO when the assessee claimed the stamp duty value exceeded the fair market value. Therefore, the CIT(A)'s order confirming this addition was set aside.

What were the issues?

1. Whether the Learned CIT(A) erred in confirming the addition of Rs. 11,97,275/- based solely on a statement recorded under Section 132(4) of the Income Tax Act, 1961, despite the assessee's subsequent claim that the admission was without basis and not supported by corroborative evidence found during the search. - Assessee's contention: Additions based on a Section 132(4) statement require corroborative documentary evidence, which was lacking. The admission was made without proper appreciation of facts and due to ill health. The assessee alternatively sought telescoping of income offered in the return and preceding years. - Revenue's contention: The statement was voluntary, not retracted, and accepted in subsequent correspondence. The assessee did not prove coercion or undue influence. 2. Whether the Learned CIT(A) erred in confirming the addition of Rs. 6,71,495/- made by the AO under Section 50C of the Income Tax Act, 1961, when the assessee claimed the fair market value was lower than the stamp duty value and requested a reference to the District Valuation Officer (DVO). - Assessee's contention: The AO failed to refer the matter to the DVO for valuation of the fair market value as per Section 50C(2)(a), despite the assessee's claim that the fair market value was less than the stamp duty value. - Revenue's contention: The order of the authorities below is supported.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 132(4),Section 50C,Section 48,Section 16A,Section 23A,Section 24,Section 34AA,Section 35,Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘’C’’ BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED

For Appellant: Ms. Urvashi Sodhan, A.R
Hearing: 05/03/2024Pronounced: 02/04/2024

PER WASEEM AHMED ACCOUNTANT MEMBER:

Both the appeals have been filed by the same Assessee against the orders of the Ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad, arising in the matter of the Assessment Order passed u/s 153A r.w.s. 143(3) of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years 2010-2011 & 2011-12. Since the issues involved in all these appeals are identical, we proceed to dispose of all the appeals by way of this common order for the sake of conve

The order continues below.

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