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Facts
The assessee filed an appeal against the CIT(A)'s order upholding the addition of Rs. 21,42,857/-. The addition was made on account of the difference between the consideration received for immovable property and the stamp duty value, under Section 56(2)(vii)(b)(ii) of the Income-tax Act. The assessee contended that the consideration was not less than the Jantri value and that excess stamp duty was paid due to a misunderstanding.
Held
The Tribunal held that the Assessing Officer ought to have referred the valuation to the DVO as per Section 55A of the Income-tax Act when the assessee objected to the valuation. The Tribunal noted that similar contentions were held in favor of the assessee by coordinate benches.
Key Issues
Whether the addition made under Section 56(2)(vii)(b)(ii) is sustainable when the assessee claims the consideration was not less than the Jantri value and the AO failed to refer the valuation to DVO upon objection.
Sections Cited
250, 143(3), 263, 56(2)(vii)(b), 50C, 55A, 56(2)(vii)(b)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI SIDDHARTHA NAUTIYAL
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT :
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi (hereinafter referred to as "CIT(A)" for short) dated 22.12.2023 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2014-15. 2. The assessee has taken following grounds of appeal:-
“1. The learned CIT(A) has erred in law and facts in upholding the order of A.O. not accepting the plea made by the assessee during the course of scrutiny proceedings u/s 143(3) r.w.s. 263 that the stamp duty paid was on higher side due to technical issues with stamp authorities.
The learned CIT(A) has erred in law and facts in not considering the ground of the appeal against addition of RS. 21,42,857/- made as income Bhavnaben Sanjaykumar Mistry Vs. ITO Asst. Year : 2014-15 - 2– from other sources u/s 56(2)(vii)(b) being 1/3 share of the assessee on the ground of discrepancy and stamp duty in as much as there is no discrepancy and the addition made is erroneous without appreciating the facts of the assessee.
3. The issue of the assessee is submitted to be covered by the decision in the case of Amarshiv Construction v/s. DCIT Circle 1(1), Ahmedabad and case of Jayashree Kothari, Hyderabad ITA No. 267/HYD/2017.
4. On the facts of the assessee no such addition of Rs. 21,42,857/- ought to have been made and the addition being erroneous ought not to have been upheld by the CIT(A) and return income of Rs. 14,08,850/- ought to have been accepted.”
The appeal filed by the assessee is barred by limitation of 139 days. The Assessee has filed Condonation Application, along with affidavit, explaining the reasons for delay. The Bench was satisfied that the assessee had a reasonable cause for non-filing of the appeal within the stipulated time; therefore, the delay was condoned and the Appeal was admitted for hearing.
In this case, the return of income for the year under consideration was filed by the assessee on 20.10.2024 declaring income of Rs.14,08,850/- which was accepted by the Assessing Officer. Subsequently, vide order dated 27.03.2019, the order of the Assessing Officer u/s 143(3) was set aside by the Ld. Pr. CIT to the file of the Assessing Officer with the directions to complete the assessment de-novo, as the Ld. Pr. CIT was of the view that the Assessing Officer was failed to apply the provisions of Section 56(2)(vii)(b) of the Act which led to under assessment of income by Rs.21,42,857/-. Subsequently, the assessment was completed u/s 143(3) r.w.s. 263 of the Act on 12.12.2019 making addition of Rs.21,42,857/- u/s 56(2)(vii)(b)(ii) of the Act. Bhavnaben Sanjaykumar Mistry Vs. ITO Asst. Year : 2014-15 - 3–
Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee.
Aggrieved, the assessee is now in appeal before the Tribunal.
Before us, Ld. AR submitted that, • The assessee has paid stamp duty of Rs. 23,70,550/- (Rs. 20,50,550 plus Rs. 3,15,000) at the time of registration of stamp duty. The market value is being calculated by capitalizing stamp duty payment at 4.90 percentage and accordingly the market value derived is Rs.4,83,78,572/-. The said value is considered as market value and consideration value being Rs.4,19,50,000/- the differential amount of Rs.64,28,572/ is held as chargeable to tax u/s 56(2)(vii)(b)(ii) of the Income-tax Act, 1961. The assessee’s share being 33.33 percentage comes to Rs 21,42,857/- and is added to the total income. • The decision of Stamp duty authority for refund of excess Stamp duty payment amounting to Rs.3,15,000/- paid due to misunderstanding on the part of advocate has not been received so far. • The Assessing Officer failed to consider following aspects of the issue before finalising the assessment raised by the assessee during the course of assessment vide letter dated 27.11.2019. • The provisions of Sec. 56(2)(vii)(b)(ii) are applicable only if the consideration towards immovable property is less than the stamp duty value. In the assessee’s case, the consideration value is not less than the Jantri value rate certified by the Sub-