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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya
This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-58 dated 18.01.2019 and pertains to assessment year 2014-15.
Grounds of appeal
read as under:-
1. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in upholding the addition of income under Section 56(2)(vii)(b)(ii) of Rs. 15,81,450/-
2. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in not accepting the decisions of various authorities relied by the appellant ruled in favour of the assessee.
3. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in considering the tolerance of 5% as mentioned in Finance Act, 2018 which is not to be applied retrospectively.
4. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in not considering the additional grounds of appeal mentioned by the appellant in the submissions before them.
3. The AO made the impugned addition by observing as under:-
“On going through the submissions and investment details filed during the assessment proceedings, it is seen that the assessee had purchased a Flat at Pioneer Heights, Khar (W) - 400 052 for Rs. 1,50,00, 000/- and market price of the property as per Stamp Valuation Authority is Rs.1,63,58,300/-. Since value as per agreement is less than value as per Stamp Valuation Authority by 13, 58,300; -, vide notice u/s. 142(1) dated 26/12/2016, the assessee was requested to show cause as to why the difference of market value and purchase consideration of Rs. 13,58,300/- should not be added as the income from other source of relevant previous year u/s 56(2)(vii)(b)(U) of the IT. Act, 1961.
In response to the above notice issued, no reply has been received by the undersigned.
As per section 56(2)(vii)(b) (ii) of the I.T.Act, 1961 where an individual or a Hindu undivided family receives, in any previous year, from any person or persons, any immovable property for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be chargeable to income tax under the head income from other sources (Finance Act, 2013).
It is further provided that the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub clause.
In the instant case, the date of agreement fixing the amount and date of registration are same.
Further, the assessee has not brought anything on record to show that they have paid the Stamp duty under protest or have filed any appeal against the high Stamp duty levied.
In view of the above, the value of the property as per stamp valuation authority is taken as the value of the property and an amount of Rs. 13,58,300/- being amount exceeds the agreement value is treated as income from other sources u/s 56(2)(vii)(b)(ii) of the l.T. Act, 1961 and added as income from other sources to the total income of the assessee.”
Upon assessee’s appeal Ld.CIT(A) confirmed the addition by holding as under:-
Before me the submission gyrates on the fact that the difference is less than 10% and relies on case decisions in (a) Income Tax Appellate Tribunal, Bench 'B' Kolkata in the case of Income Tax Ward 2(3), Kolkata vs. M/s LGW Limited, ITA No. 2677Kol/123. (b) Income Tax Appellate Tribunal, Bench A" Hyderabad in the case of Asst, CIT Circle-1, vs. M/s. Smt. S Suvarna Rekha, ITA No. 743/Hyd/2009. (c) Income Tax Appellate Tribunal Bench 'B' Pune in the case of Rahul Constructions vs. Dy. Commissioner of Income Tax, ITA No. 1543/PN/2007.
The limits set in statute brought in vide Finance Act, 2018, even if applied retrospectively acknowledges tolerance of 5%. In instant case the difference is 9.05%. Hence the deviation is substantial not enough to ignore or overrule. Even otherwise 9.05% is a significant deviation not to be ignored when appellant forfeited right to challenge the valuation under section 50C(2). In para 2.8 and 2.9 of written submission appellant deals with merit of figure adopted by stamp duty authority. This needs no consideration as no objection as specified in statute was made before Assessing Officer in accordance with provisions of section 50C(2).”
Against the above order, assessee is in appeal before us.
I have heard the Ld. DR and perused the record. I note that when AO is substituting the price paid with the value as per stamp duty authority and the assessee is disputing the said substitution, it is incumbent upon the AO to refer the matter to DVO. Hence, in the interest of justice, I remit the issue to the file of the AO. The AO shall refer the valuation to DVO and thereafter decide as per law.
In the result, this appeal by the assessee stands allowed for statistical purposes.
Pronounced in the open court on 15.12.2021