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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT
Before: SHRI S. S. VISWANETHRA RAVI
ORDER
PER S. S. VISWANETHRA RAVI, JM:
This appeal by the assessee against the order dated 18.03.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi for assessment year 2014-15.
The assessee raised 5 grounds of appeal
amongst which the only issue emanates for my consideration is whether the CIT(A) is justified in confirming the addition made u/s 50C of the Act.
3. I note that the assessee is an individual filed return of income declaring total income of Rs.15,88,408/-, under limited scrutiny, the Assessing Officer issued notices u/s 143(2) and 142(1) of the Act, in response to which, the assessee was represented through its authorized representative and filed details as sought by the Assessing Officer from time to time. I note that the assessee claimed deduction u/s 54F of the Act to the extent of Rs.55,36,190/-. According to Assessing Officer, the market value of property was Rs.4,32,00,000/- and sale consideration as received by the assessee was at Rs.3,25,00,000/-. The Assessing Officer asked the assessee why the value adopted by the stamp duty authority should not be taken as value of the property and referred the said issue to the valuation officer u/s 50C of the Act. The DVO determined the fair market value of the property at Rs.3,45,60,000/-. Accordingly, the Assessing Officer determined the capital gain at Rs.6,45,261/- being the difference between value determined by the DVO and capital gains shown by the assessee (Rs.75,54,044/- – Rs.69,08,783/-) as assessee’s share to the total income of the assessee u/s 143(3) of the Act.
4. Before the CIT(A), it was contended the difference of balance amount of addition made by the Assessing Officer at Rs.20.60 lakhs (Rs.3,45,60,000/- – Rs.3,25,00,000/-) is less than 7% of fair market value determined by the Assessing Officer and since it is less than 7% no addition is justified. The CIT(A) held that the Assessing Officer is bound to take the fair market value as determined by the valuation officer and difference of 7% does not ipso facto authorized the Assessing Officer to take lower value. The CIT(A) confirmed the addition made by the Assessing Officer on account of long term capital gains of Rs.6,45,261/- being the share of the assessee. Having aggrieved the assessee is before this Tribunal.
The ld. AR placed on record the decision of this Tribunal at pages 52 to 57 of the Paper Book in the case of M/s. Radhika Sales Corporation. He argued that on similar issue basing on same identical facts, this Tribunal held that the addition made in respect of long term capital gains is not warranted if the difference between the value declared by the assessee and value determined by the DVO less than 10% and drew my attention to the para nos.3 to 6 of the said decision.
The ld. DR argued that the said issue has been considered by the CIT(A) and the CIT(A) correctly held that the Assessing Officer is bound to follow the procedure contemplated u/s 50C of the Act, the value determined by the DVO.
Upon hearing both the parties, I note that the value of the property which has been sold by the assessee along with his co- owners as determined by the stamp duty value is at Rs.4,32,00,000/- Rs.3,25,00,000/-. The Assessing Officer on finding the difference between the stamp duty value and sale consideration in sale deed referred the issue to the DVO for determining the fair market value. Admittedly, the DVO has determined the value of the said property at Rs.3,45,60,000/- vide its report dated 16.12.2016. In order to come to such conclusion, the DVO considered the submissions of assessee which are at page no.22 of the Paper Book. The assessee also filed objection challenging the value determined by the DVO before the Assessing Officer which are at page no.49 – 50 of the Paper Book. On perusal of the DVO’s report, I note that the DVO has given deduction by 15% considering the High Tension Line passing from the main road side and also considering location of a village land upon main Wartha Road. Further, the DVO also considered deduction at 5% in respect of litigation of the property. The main contention of the ld. AR is that this Tribunal held no addition is warranted if the difference between the value of DVO and actual sale consideration is less than 10%. I note that this Tribunal placed reliance on the decision of the Hon’ble High Court of Patna in the case of Bimla Singh vs. CIT reported in 308 ITR 71 at page no.77 of the Paper Book.