SHRI KARSANBHAI KEHARBHAI BARAD,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-11(3), AHMEDABAD

Concerning Ground No.1, the Assessing Officer (AO) observed that bank statement of the assessee reveals piecemeal deposit in cash aggregating to Rs.1,95,000/- which could not be explained. He accordingly invoked section 68 of the Act and added the same to the total income of the assessee. The CIT(A) confirmed the aforesaid action. With the assistance of the ld.AR for the assessee before us, we find that it is the case of the assessee that aforesaid cash deposit in the bank is from agricultural income and internal cash accruals which is supported by cash book and other records. We find that the CIT(A) has not given reference to the aforesaid documents while adjudicating against the assessee. We consider it expedient that the plea of the assessee is re-examined de novo in accordance with law in the light of submissions made in this regard. Consequently, the issue is set aside to the file of the AO for de novo consideration. Needless to say, reasonable opportunity shall be granted to the assessee while adjudicating the issue.

Ground No.2 concerns addition of Rs.29,48,720/- made by invoking s.50C of the Income Tax Act, 1961 (hereinafter referred to as "the Act") in respect of capital gain arising on transfer of capital asset by replacing the actual sale consideration claimed to be received with valuation assigned by competent authority for the purpose of Stamp Duty Valuation. It is the case of the assessee that he has sold certain agricultural land situated at Singarwa, Ahmedabad for Rs.21 lakhs as per sale-deed. The sale-deed was registered with the competent authority. The AO observed that for the purposes of Stamp Duty Valuation, the price of the property under sale was valued at Rs.91,06,200/- by the registering authority. Consequently, the AO adopted deemed sale price for the purpose of determination of capital gains. The differential amount was thus subjected to taxation towards Long Term Capital Gain (LTCG) in terms of s.50C after taking into account proportionate rights of the assessee as co-owner. Resultantly, addition of Rs.29,48,720/- was made in the hands of the assessee towards LTCG having regard to deemed sale consideration of the agricultural land. In first appeal, the CIT(A) confirmed the action of the AO in terms of section 50C of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

Aggrieved, the assessee preferred appeal before Tribunal.

In view of the express obligation enjoined on AO under s.50C(2) of the Act, we find merit in the plea of the assessee. Section 50C(2) provides that the AO is under duty to examine the aspects of the fair market value when so disputed by the assessee before AO. Accordingly, we consider it expedient to remit the issue back to the file of the AO for de novo examination in accordance with law after affording proper opportunity of being heard to the assessee in this regard. The assessee on its part shall be entitled to adduce such evidences as may be consider expedient to support its claim that value adopted by Stamp Valuation Authority exceeds fair market value on the date of transfer.

As a result, ground No.2 of assessee’s appeal is set aside and restored back to the file of AO for fresh determination.