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Income Tax Appellate Tribunal, ‘D/SMC’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO
M/s. Mahesh Kumar Malhotra HUF, The Asst. Commissioner of No.150/196, Montieth Road, Income Tax, Egmore, Chennai – 600 008. Vs. Non Corporate Circle-9(1), [PAN: AAAHM 1653F] Chennai. (%&थ(/Respondent) (अपीलाथ"/Appellant) अपीलाथ( की ओर से/ Appellant by : Mr. D. Anand, Advocate %&थ( की ओर से /Respondent by : Mr. P. Sajit Kumar, JCIT सुनवाई की तारीख/Date of Hearing : 09.11.2021 घोषणा की तारीख /Date of Pronouncement : 09.11.2021 आदेश / O R D E R
Per V. Durga Rao, Judicial Member:
This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-10, Chennai in dated 29.01.2020 relevant to the Assessment Year 2011-12.
The only issue involved in this appeal relating to addition made by the Assessing Officer (A.O) in respect of Rs. 5,33,000/- u/s. 69B of the Income Tax Act, 1961 (hereinafter "the Act").
2 -: 3. The brief facts of the case are that the assessee has purchased a property for a consideration of Rs. 56,00,000/- of which the assessee’s share works out to Rs. 18,66,700/-. The Assessing Officer (A.O) has verified the purchase deed document No.2116/2010 and estimated the value of the property as per market value is at Rs. 72,00,000/- since, the assessee is entitled to 1/3rd share from the property, his share will be of Rs. 24,00,000/-. The A.O has issued a show-cause notice dated 13.11.2018 to explain as to why the difference of Rs. 5,33,300/- (Rs.
24,00,000/- - Rs. 18,66,700/- ) should not have brought to tax u/s. 69B of the Act. The A.R of the assessee objected the same vide letter dated 19.01.2018 stating as under:
The sale was a distress sale made by the seller as he was in urgent need of funds. My client as layman had negotiated for a better price and sealed the deal at Rs. 56,00,000/- for the whole property. Your goodself will appreciate the fact that the entire purchase consideration of the property acquired was made through proper banking channel and the same duty reconciles with the details as reported in the purchase deed. There is no payment made over and above the consideration mentioned in the title deeds. Your goodself. will also appreciate the fact that just because there is a payment of additional duty on the valuation of difference it doesn't tantamount to any payment made over and above the price recorded in the title deed. Your kind attention is also drawn to the fact that the provision of , section 69B of IT Act, 1961 can be invoked only when the amount of Istments, etc, is not fully recorded in books of account whereas in my client's case ali the payment made towards the purchase of the property is duly accounted. Your kind attention is also drawn to the fact that the difference in valuation which is notional figure if any, should be subject to addition only in the case of setter u/s 50C of the act for the relevant assessment year. The provision of sec, 56(2)(vii)(b)(ii) which deals with addition on account of valuation difference for the purchaser is w.e.f A.Y 2014-15 only.
3 -: Based on the above facts it is hereby clarified that the provisions of 696 cannof be invoked as all the payments made towards the purchase of the property is duly accounted and the provision of sec 56(2)(vu)(b)(ii) cannot be applied as the same is applicable w,e,f. A.Y.2014-15 only."
The A.O has considered the above explanation of the assessee and he has referred the matter to the Valuation Officer u/s. 142A of the Act on the ground that the sale consideration as per the SRO, the value is at Rs. 72,00,000/- and the value of property purchased by the assessee is Rs. 56,00,000/-, the balance amount in the hands of the assessee is Rs. 5,33,000/- is a deemed income therefore, the matter was referred to the Valuation Officer to determination of the Fair Market Value of the market as on 22.11.2010. However, the A.O has not received the report of the Valuation Officer and accordingly, he has worked out deemed income of Rs. 5,33,000/- i.e., (Rs. 24,00,000/- - Rs. 18,66,700/-) and the addition was made u/s. 69B of the Act. On appeal, the Ld. CIT(A) confirmed the order of the A.O.
The ld. counsel for the assessee has submitted that the A.O is having a doubt that whether the fair market value of Rs. 18,66,700/- or Rs. 24,00,000/- for that he has referred to Valuation Officer therefore, the A.O is not sure about the valuation of the property and without getting a confirmation/determination of the value of the property, the addition was made by the A.O is not correct.
4 -: 6. On the other hand, the ld. Departmental Representative relied on the orders of the authorities below.
Both the parties have been heard, perused the materials available on record and gone through the orders of the authorities below. In this case, the share of the property purchased by the assessee is Rs. 18,66,700/- as per sale deed. As per SRO, the value of the share of the assessee is Rs. 24,00,000/-. When the A.O was asked the assessee, the assessee has submitted that it is a distress sale as the assessee needs money immediately and therefore, it is purchased for Rs. 18,66,700/- only. However, the A.O is having a doubt about fair market value of the property and therefore, a reference was made by him u/s. 142A of the Act. However, the A.O has not received any valuation report from the valuation authority about the determination value of the property. Therefore, the A.O made an addition of Rs. 5,33,000/- by treating the deemed value of the property is Rs. 24,00,000/-. On perusal of the sale deed, it is clear that the sale consideration paid by the assessee is Rs. 56,00,000/- of which the assessee’s share works out to Rs. 18,66,700/-. According to the A.O, the assessee’e share is Rs. 24,00,000/-. Therefore, to resolve the difference between the assessee and A.O, the A.O has referred the matter to the DVO for valuation. The A.O without receiving report from 5 -: the DVO, confirmed that the sale consideration is Rs. 24,00,000/- without any basis and Ld. CIT(A) confirmed the same. It is found that the addition made by the A.O is without any basis and s. 69B of the Act cannot be survived. Therefore, the same is deleted. Accordingly, the addition made by the A.O is deleted.