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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI N.V. VASUDEVANAND SHRI B.R. BASKARAN, ACCOUTANT MEMBER
order dated 31.8.2017 passed by Ld. CIT(A)-1, Bengaluru and it relates to assessment year 2014-15. None appeared on behalf of the assessee even though adjournment was granted on the last occasion at the specific request of the assessee. Hence we proceed to Shri Bharath Kumar Hukamchand Rathi, Bangalore Page 2 of 6 dispose of the appeal ex-parte, without presence of the assessee.
We heard Ld. D.R. and perused the record. The grounds urged by the assessee give rise to following two issues:
a) Computation of capital gain by adopting sale consideration as per provisions of section 50C of the Income-tax Act,1961 ['the Act' for short]. b) Addition of Rs.4.01 lakhs on account of difference in gross receipts reported in form 26AS and that declared by the assessee.
The assessee is providing architectural services. In the scrutiny proceedings, the A.O. noticed that the assessee has declared long term capital gain on sale of a property. The property was sold for a sum of Rs.1,92,00,000/- and the assessee claimed that his share is 50% thereon. Accordingly, the assessee adopted the sale consideration as Rs.93.45 lakhs. The A.O. noticed that the value determined by the stamp authority was 2.25 crores and accordingly he took the view that the assessee should have adopted sale consideration as Shri Bharath Kumar Hukamchand Rathi, Bangalore Page 3 of 6 Rs.1,12,50,000/- (being 50% of Rs.2.25 crores) in terms of section 50C of the Act. When this was confronted with the assessee, the assessee submitted that the property sold by him did not have any approach road and is also away from the main road. Accordingly, the assessee submitted that the sale consideration declared by him should be accepted. The A.O. did not accept the contentions of the assessee and accordingly computed the capital gain by adopting 50% of the stamp value attributable to the assessee, which worked out to Rs.1,12,50,000/-. The Ld. CIT(A) also confirmed the same by observing that the assessee did not object to the adoption of stamp duty value.
We heard Ld. D.R. on this issue. We notice that the assessee had, in fact, objected to the adoption of stamp duty valuation before the AO by stating that the property sold by him did not have any approach road and is away from main road. In our view, the above said reply furnished by the assessee would amount to objection to the adoption of stamp duty value. In that case, in terms of section 50C(2) of the Act, the A.O. should have referred
Shri Bharath Kumar Hukamchand Rathi, Bangalore Page 4 of 6 the matter of valuation to the DVO. Since the provisions of section 50C(2) of the Act have not been complied with, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining the same afresh in terms of section 50C(2) of the Act. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law.
The next issue relates to addition of Rs.4.01 lakhs, being difference between gross receipts declared by the assessee and that was shown in form 26AS.
We heard Ld. D.R. on this issue and perused the record. We notice that the assessee is following cash system of accounting. The submission of the data before tax authorities was that his clients, who are following mercantile system of accounting, might have deducted TDS on the amount payable by them and hence those amounts have been reflected in form no.26AS. However, since the assessee is following cash system of accounting,
Shri Bharath Kumar Hukamchand Rathi, Bangalore Page 5 of 6 the amount actually received by him was declared in the income tax return filed by him. It was also submitted that the assessee did not receive the difference amount, shown in form 26AS till the date of completion of the assessment.
However, the above said explanation was rejected by the tax authorities without making further enquiries in this regard. In our view, the A.O. should have made necessary enquiries from the parties who had deducted TDS and should have taken decision accordingly. In this view of the matter, this issue also requires fresh examination of the addition at the end of the A.O. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue also.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.