BHAKTHAVALSALAM RAMDAS,PALAKKAD vs. THE INCOME TAX OFFICER, PALAKKAD

It emerges at the outset that the assessee’s sole substantive ground raised herein challenges the correctness of both the learned lower authorities’ invoking section 56(2)(vii)(b) addition of Rs.1,06,45,000/- which admittedly represents the difference between his actual purchase price and the stamp valuation adopted by the registration authorities concerned. Learned counsel seeks to distinguish the Bhakthavalsalam Ramdas application of the impugned provision that both the lower authorities have neither examined the distracting factors in the valuation of the assets purchased nor have they made any reference to the DVO under the 3rd proviso therein. Learned counsel claims that this latter argument is indeed over and above the assessee’s stand in principle that the above statutory provision itself does not apply in the given facts and circumstances of the case.

Learned Sr. D.R. has drawn strong support from both lower authorities’ action making the impugned addition once they have noticed the difference between the assessee’s actual purchase price vis-à-vis the stamp valuation of the relevant capital asset adopted in the registration process. She further claims that before an assessee pleads the above reference to the DVO before the tribunal for the first time, it was his mandatory onus to object to the stamp valuation during the course of assessment itself. We don’t find any merit in the Revenue’s instant last argument going by Sunil Kumar Agarwal v. CIT [2014] 373 ITR 83 (Cal) holding that section 50C(2) reference to the DVO; adopted in the 3rd proviso to sec.56(2)(vii)(b) is indeed mandatory in nature and is not dependent on the concerned taxpayer raising such objections before the Assessing Officer.